Oil or renewables?
Pecos County land rights battle over a solar farm could shift balance of power
The process seemed straightforward in 2015: Landowner Gary Drgac agreed to lease hundreds of acres of his land in Pecos County to Austin-based Midway Solar so the company could put up a large array of its energy producing panels.
It turned out to be anything but simple, and a case involving the agreement could soon be headed to the Texas Supreme Court. The project could be derailed not by who owns the surface land or is building the solar project, but by someone who owns a portion of what lies beneath.
The case reveals how land leasing in Texas continues to favor fossil fuel production even as the industry confronts s wider move to cleaner energy sources, and its outcome could hamper future development of wind and solar power.
Despite who owns a deed on land, mineral owners, or those who own the rights to any minerals that may lie beneath the land’s surface, have long had the right in Texas to use as much of the surface land as needed to extract what lies below.
But those rights have started to bump up against those of surface owners who want to enable renewable energy companies to cover the land with acres of solar panels or construct massive wind turbines. In the Pecos County case, two people who inherited a 1948 deed to mineral rights beneath a portion of Drgac’s land say the solar panels above most of their claim would make it difficult for them to lease their mineral rights to companies seeking to extract and sell whatever they
may find.
“It’s a conflict not going away anytime soon, although this case could help set the framework from the supreme court,” said Adam Friedman, an attorney for Midway Solar. “As solar and renewables grow, it just makes more opportunities, or more of a likelihood, for conflict between the two.”
Patchwork of owners
Texans have been leasing portions of their property for oil and gas exploration since the 1901 gusher at Spindletop, said Tiffany Dowell Lashmet, an associate professor and extension specialist in agriculture law with Texas A&M University. In the ensuing 120 years, court rulings and state laws have made the process relatively easy, with some leases only two or three pages long.
But as property across the state has changed hands, so, too, have the claims on potential oil and gas deposits beneath the surface. Landowners who decided to sell their land may have decided to keep their rights to the minerals and only sell the surface, or decide to keep their surface deeds but sell the rights to anything underneath. That has created a statewide patchwork with different owners at the earth’s surface and below.
As petroleum became the economic lifeblood of the state, laws began to tilt in favor of oil companies and mineral owners, Lashmet said.
“If one person owns minerals and one person owns the surface, the mineral owner is dominant estate,” Lashmet said. “They can use as much as of the surface as they need to produce that mineral.”
That hasn’t been much of an obstacle for surface owners in places where there’s a lot of oil, which tend to be sparsely populated. They can still use the land for hunting leases or ranching, but a portion might have an oil rig or fracking well on it. It’s also not inconvenient if a surface owner wants to lease land for wind turbines, which don’t take up much square footage on the land.
More issues arise when folks want to build solar arrays, which can span thousands of acres. And when it comes to new electricity generation in Texas, solar is red hot.
In April, the Electric Reliability Council of Texas estimated that solar energy capacity in Texas could triple in the coming months, from 7,212 megawatts to 21,119 by September 2022. One megawatt is enough to power about 200 homes on a hot summer day. Wind, by comparison, is expected to grow by less than 6,000 megawatts over the same time, although it remains the dominant form of renewable energy in the state.
Solar developers ‘hesitant’
Surface owners and renewable energy companies that operate in the state are well aware of mineral rights and how that could affect renewable land leases, and they often know how to work with each other without overstepping, said Fidel Garza, co-founder of Lyssey Energy Enterprises. The company helps landowners negotiate leases with energy companies, and he said he hasn’t yet encountered a situation where the two sides have gotten into a dispute.
“A lot of lands we’ve looked at in the past, what they do is leave access in leases for oil and gas exploration — it’s not completely shut off most of the time,” Garza said. “And vice versa, usually oil and gas companies and renewables have conversations and figure out a way to go forward without interfering with each other.”
That’s not always the case. Even though Midway Solar collected signatures from 15 mineral rights owners on
Drgac’s property, two — Kenneth Lyle and Linda Morrison — objected to the project once it was built. The solar project ultimately covered about 70 percent of their subsurface stake with photovoltaic panels, although Midway left two tracts on either side of the array in case they wanted to explore for oil and gas.
But Lyle and Morrison worried that wouldn’t be enough to entice potential oil and gas companies to lease their minerals, and they filed a lawsuit in Pecos County. A local judge ultimately dismissed the case because Lyle and Morrison hadn’t taken steps to explore or lease their minerals, writing that they didn’t have reason to object because they weren’t actively trying to access the oil below.
The 8th Circuit Court of Appeals in El Paso also sided with Midway Solar, but sent the case back to the trial court. Now, Lyle and Morrison have asked the Texas Supreme Court to weigh in. With the case still unsettled, solar companies have slowed their project development, Lashmet with A&M said.
“Solar developers are hesitant to lease unless they find somebody who owns or controls all the mineral rights or get surface use waivers or agreements from mineral owners,” she said. “I think we’re going to have to get answers to some of the questions that are not completely clear.”