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Solar Power vs the Mineral Owner

The El Paso Court of Appeals recently decided a case that involved the use of the surface of land by a solar farm that was objected to by the Lyles, the  mineral owners of the property. That case is Lyle et al v. Midway Solar LLC et al. 

The Defendant Midway operated a large solar facility on the property in Pecos County, Texas under a 55 year lease with the surface owner. The solar leases designated drill sites for the benefit of future oil and gas production at either end of the property. The drill sites were about 30% of the surface area. The mineral owners claimed that the solar panels and transmission and electrical lines and cables serving the facility interfered with their ability to produce their mineral interests. At the time of the litigation, the mineral owners did not have an active oil and gas lease for the property and were not actively seeking a lease. In fact, the Court noted that “(i)t is undisputed that the Lyles have never leased out their interests to any oil and gas operators and have no current plans to lease their estate or to otherwise develop their mineral interests at this time. They have commissioned no geological studies, nor entered into any drilling contracts for the minerals. Since January 1, 2015, the Lyles had not received a single request to lease or purchase the mineral estate in Section 14. And the Lyles conceded they had no plans for drilling any wells.”

The mineral owners filed suit based on several claims, including a claim that the solar panels were a trespass, and requested that the Court order all solar panels and related lines be removed from the property. The Defendants claimed that the accommodation doctrine authorized their surface use.

The accommodation doctrine was meant to balance the rights of the surface owner and the mineral owner in the use of the surface. Under the doctrine, the surface owner carries the burden to show that (1) the mineral owner’s use of the surface completely precludes or substantially impairs the surface owner’s existing use;  (2) there is no reasonable alternative method available to the surface owner by which the existing use can be continued; and 3) that given the particular circumstances, there are alternative reasonable, customary, and industry-accepted methods available to the mineral owner which will allow recovery of the minerals and also allow the surface owner to continue the existing use. (Emphasis added).

Clearly, the accommodation doctrine applies to existing uses, which the mineral owners in this case did not have. The mineral owners argued, however, that they suffered current damages because they could not realistically pursue mineral development because of the presence of the solar panels. They also offered expert testimony that any well sites would have to be located in the center of the property (something that the Defendants’ expert contested).

The Court held that “(t)he lack of an actual effort to develop the minerals by the Lyles similarly undermines both of their pleaded claims” and that “the accommodation doctrine could apply to this dispute, but under the current state of the evidence, its application, and indeed the causes of action asserted, are all premature until the mineral owners actually seek to develop their minerals.”  The Court also stated that there can be no trespass until the mineral owners actually seek to exercise their rights to produce oil and gas. The Court went on to conclude that these claims by the mineral owner should have been dismissed without prejudice to their refiling these claims in the future.

The result would’ve probably not have been different if the mineral owners have filed suit before all the solar panels and lines were installed, but it might have been different if the mineral owners had an actual oil and gas lease in place. The case has been appealed to the Texas Supreme Court and it will be interesting to see what that Court does with this.

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