STCL Houston Energy Newsletter - Fall 2024

ENERGY NEWSLETTER

Letter from the Editor

On behalf of the Editorial Board and the Members of the ENERGY NEWSLETTER, we are pleased to present you Edition 1, Volume 7. The ENERGY NEWSLETTER is a student-run scholarly publication committed to bringing to the global energy community timely and unique perspectives in the industry. South Texas College of Law Houston has an extensive student, Energy Alumni association, and general footprint across the world in oil, gas, and all things energy. The ENERGY NEWSLETTER seeks to bring all their perspectives in one place at the center of the global energy community in Houston.

This is the seventh volume of our ENERGY NEWSLETTER publication through South Texas College of Law Houston. Situated in the heart of downtown Houston, our team is eager to share engaging articles authored by practitioners, alumni, professors, and students. We look forward to growing the intellectual prowess of the ENERGY NEWSLETTER and South Texas College of Law

This publication begins with a look at the complexities surrounding the allocation of existing nonparticipating royalty interests following a mineral conveyance. Next, we survey the Texas Division Order and Suspense Statute, detailing its mechanisms and the protections it offers to various stakeholders. We then turn to discuss the application of the presumed-grant doctrine in the context of adverse possession of non-operating working interests. After that we revisit foundational principles of Texas runsheet practices, highlighting their relevance in today’s digital era. Then, we analyze the use of extrinsic evidence to supplement land descriptions. Finally, we address the geopolitical ramifications of oil and gas exploration in the Svalbard Archipelago and the Arctic Circle

On behalf of the Editorial Board and the Harry L. Reed Oil & Gas Law Institute, we thank the authors who have added their support to this enterprise through their submissions. We would also like to thank South Texas and the Oil and Gas Law Society for making the ENERGY NEWSLETTER possible.

This edition of the ENERGY NEWSLETTER is dedicated to the memory of Alice Munier, a cherished student, colleague, and friend whose untimely passing leaves a profound void in our community. Alice’s vibrant spirit and passionate commitment to our academic pursuits will be deeply missed, and we honor her legacy through our continued work and dedication to the values she embodied. Rest in peace, Alice.

Sincerely

TO” INTERPRETATION:

Allocation of Existing Nonparticipating Royalty Interests after a Mineral Conveyance and the Gardner Decision (Texas) 2

The Texas Division Order and Suspense Statute: How It Works and Who It Serves to Protect 10 Application of the Presumed-Grant Doctrine to the Adverse Possession of Non-Operating Working Interest 16

Texas Runsheet 101 – Revisited 2024: Applying Time-Tested Principles in Today’s Digital Age 35

Use of Extrinsic Evidence to Supply or Supplement a Land Description 48

The New Ice Curtain: Geopolitical Implications of Oil and Gas Exploration in the Svalbard Archipelago and the Arctic Circle 59

EDITORIAL BOARD

Editor-in-Chief GUNNER WEST

Managing Editors

DYLAN PRESSWOOD MATTHEW WILLIAMS

Articles/Note Editors

CASEY KAF ALGHAZAL CAMERON ECHEVARRIA

ABIGAIL GALVAN

EMILEE MORGENSEN

MARYAM NASIZADEH

BRIAN NGUYEN

ANACELIA RAMIREZ

LATRICIA ROUNDS

SAMITA SURMAWALA

, Gunner W. West Editor-in-Chief

Disclaimer: The opinions expressed in this publication are those of the authors. They do not purport to reflect the opinions or views of South Texas College of Law Houston or the Harry L. Reed Oil & Gas Law Institute, their students, staff,

AUTHORS

D. BRADLEY GIBBS

MADISON SCHRUTKA

MICHAEL GASSMAN

RANDALL K. SADLER

TERRY CROSS

CHRISTOPHER S. KULANDER

ALEX LAM

“SUBJECT

Addressing the Allocation of Existing Nonparticipating Royalty Interests after a Mineral Conveyance and the Gardner Decision (Texas)

By: D. Bradley Gibbs 1 Oliva Gibbs LLP

Edited by: Professor Christopher S. Kulander 2

Oliva Gibbs LLP

South Texas College of Law Houston

A perennial problem in mineral conveyancing is the allocation of prior-existing nonparticipating royalty interest 3 burdens among mineral owners. The facts often play out as follows: A owns 100% of Blackacre (surface and minerals) subject to a previously-reserved nonparticipating royalty interest in favor of B. A conveys Blackacre to C by warranty deed, reserving an undivided 1/2 of the minerals. The deed does not directly address who bears the burden of B’s prior-existing nonparticipating royalty interest. Does A alone bear the entire nonparticipating royalty interest? Does C alone bear the burden? Or do they share the burden proportionately?

Several Texas cases have emerged in recent years that depending on who you ask either shed light on or further confusticate these beasts of burdens. 4 This article will attempt (possibly in vain) to demystify the current state of Texas law following the recent Flatland and Gardner decisions. 5 In attempting to reconcile these decisions, it is necessary to explore a cross-section of the cases that have led us to the present.

I. Pich v. Lankford (1957) – Is there a “Pich Presumption”? 6

In Pich v. Lankford, the Texas Supreme Court adjudged a convoluted chain of title to vest mineral and royalty ownership in varying proportions. For the sake of brevity, suffice it to say that the mineral estate was awarded to L.A. Pich (3/4ths) and A.H. Lankford (1/4th). The royalty estate was awarded to L.A. Pich (1/2), A.H. Lankford (1/4th), and Dorothy Fuehr (1/4th). 7 At issue was the allocation of Dorothy Fuehr’s free royalty between Pich and Lankford.

In deciding how Fuehr’s royalty burdened the minerals, the Texas Supreme Court stated that “[o]rdinarily the royalty interest . . . would be carved proportionately from the two mineral ownerships . . . .” 8 This seemingly innocuous statement has reverberated through the decades, vexing attorneys and land professionals alike. Both courts and commentators have struggled to determine whether Pich created a “default rule” that prior-existing nonparticipating royalty interests will proportionately burden subsequently-created mineral interests (absent evidence of contrary intent). We refer to this possible default rule herein as the “Pich Presumption.”

A view contrary to the notion of a Pich Presumption is that the above statement simply reflects the mineral and royalty interests’ “inherent nature” when a deed does not say otherwise. 9 For example, “assume a deed grants one-half of the mineral interest to A and the other half to B, subject to a reservation of one-fourth of the royalties for the grantor, without addressing how the reservation affects A’s and B’s interests. In that case, the Pich rule might properly apply [to proportionately allocate the burden].” 10

Since Pich, courts and practitioners have struggled to determine whether the Supreme Court intended to create a presumption that a prior-existing or reserved nonparticipating royalty interest will

proportionately burden subsequent owners absent clear language to the contrary. Nine years after Pich, the Tyler Court of Appeals reached a decision that has become the most oft-cited authority rebutting the Pich Presumption.

II. Selman v. Bristow (1966) – What if the Deed is Completely Silent? 11

In Selman, Mae Weeden conveyed a tract of land to E.L. Bristow, reserving a 1/8th nonparticipating royalty interest (the “Weeden NPRI”). Bristow then conveyed the land to R.E. Selman, reserving 1/4th of the mineral estate (the “Bristow Deed”). The Bristow Deed did not address allocation of the Weeden NPRI or include any form of “subject to” clause that might incorporate an outside instrument by reference. 12 A disagreement later arose as to whether the Weeden NPRI proportionately burdened both Bristow and Selman, or whether Bristow, the Grantor, alone bore the burden.

The Tyler Court of Appeals held that Selman owned an unencumbered 3/4ths mineral interest and that Bristow’s 1/4th mineral interest bore the entire Weeden NPRI. 13 This is because the Bristow Deed conveyed to Selman “an absolute fee simple title to all the interest in the land except a 1/4th interest in the minerals.” 14 The court rejected the argument that the deed conveyed 3/4ths of the minerals “subject to a proportionate reduction of the reserved royalty.” 15 Bristow appealed to the Texas Supreme Court, arguing that Pich dictated a different result. The Supreme Court refused Bristow’s application for writ of error, possibly implying that the Pich Presumption provides “only a substantive default principle that must yield to [a] deed’s plain language.” 16

In the wake of Pich and Selman, tension was evident as to whether practitioners could rely on a “default principle” that prior-existing

nonparticipating royalty interests should be borne proportionately by a subsequent mineral grantor and grantee. If Pich did create a presumption of proportionate burdens, perhaps Selman made it clear that complete failure to reference an outstanding nonparticipating royalty interest or to include a “subject to” clause in a deed overcomes the presumption.

What did begin to emerge following Selman was the idea that a deed’s plain language will prevail over arbitrary rules. Bristow purported to convey “an absolute fee simple title,” with no other mitigating provisions in the deed perhaps relegating Selman to those specific facts. Although subsequent cases did not expressly address or overrule Selman, deed provisions such as the “subject to” clause would provide a rich source of future disputes.

III. Wenske

v. Ealy (2017) – A “Four Corners” Analysis 17

After lying dormant for more than forty years, the Pich versus Selman debate surfaced before the Texas Supreme Court in Wenske v. Ealy. Benedict Wenske, et ux. owned 100% of the surface and mineral estate in a tract of land, subject to a priorexisting 1/4th nonparticipating royalty interest vested in Marian Vyvjala, et al. (the “Vyvjala NPRI”). In 2003, the Wenskes deeded the property to Steve and Deborah Ealy, reserving a 3/8ths mineral interest (the “Wenske Deed”). 18 The Wenske Deed provided in relevant part:

Reservations from Conveyance:

For Grantor . . . a reservation of an undivided 3/8ths of all oil, gas, and other minerals in and under and that may be produced from the Property. If the mineral estate is subject to existing production or an existing lease, the production, the lease, and the benefits from it are allocated in

proportion to ownership in the mineral estate.

Exceptions to Conveyance and Warranty:

[(i)] Undivided one-fourth (1/4) interest in all of the oil, gas and other minerals in and under the herein described property, reserved by Marian Vyvjala, et al. [; and (ii)] Grantor, for the Consideration and subject to the Reservations from Conveyance and the Exceptions to Conveyance and Warranty, grants, sells, and conveys to Grantee the Property. . . . 19

The Wenskes and Ealys later leased their interests, and a dispute arose as to who bore the Vyvjala NPRI. The Wenskes argued that their interest was unburdened by the Vyvjala NPRI. The Ealys, citing Pich, argued that the nonparticipating royalty interest burden should be proportionately shared. 20

The Texas Supreme Court outwardly rejected a default Pich Presumption that when a deed provides no guidance on how to allocate a nonparticipating royalty interest burden, the royalty interest would “ordinarily” be carved proportionately from the two mineral ownerships. 21 It instead applied a modern “four corners” analysis, seeking to ascertain the parties’ intent by harmonizing all provisions of the deed. 22 In doing so, the court found that the direct reference to the Vyvjala NPRI coupled with the conspicuous “subject to” language was enough to proportionately divide the interest. The Wenske Deed thus (1) granted the mineral estate to the Ealys, (2) reserved 3/8ths of the minerals to the Wenskes, and (3) put the Ealys on notice that the entirety of the minerals is subject to the outstanding Vyvjala NPRI (to avoid a warranty claim). 23 The court also sardonically acknowledged that the Wenske Deed was “not a model of clarity.” 24

In a spirited dissent penned by Justice Boyd who was joined by three others, the opposite conclusion was reached. The dissent argued that the “subject to” language in the Wenske Deed did not merely put the Ealys on notice that the entirety of the mineral was subject to the Vyvjala NPRI. It instead made the Ealys’ mineral interest expressly subject to the burden. The Deed thus subjected only the Ealys’ interest to the nonparticipating royalty interest as opposed to splitting the burden proportionately with the Wenskes. 25

The minority noticed that the 2003 Deed described one “Reservation from Conveyance” a reservation by the grantors of “an undivided 3/8th of all oil, gas, and other minerals in and under and that may be produced” from the captioned land and multiple “Exceptions to Conveyance and Warranty,” including the nonparticipating royalty interest. Further, in the minority’s eyes, the granting clause unambiguously identified what the “subject-to” clause modified. Noting that the deed identified the reservation as a “Reservation from Conveyance” and the exception as an “Exception to Conveyance and Warranty” (minority’s emphasis), the minority thought it clear that the conveyance to the Ealys was subject exclusively to the reservation and exceptions including the nonparticipating royalty interest. 26 The minority believed that the “subject-to” clause did not just act to prevent a warranty breach and that the deed described precisely one interest that was subject to the nonparticipating royalty interest the mineral interest of the Ealys.

The dissent further argued that in rejecting a “mechanical rule” or “magic words” for a fourcorner analysis the court might have made things more confusing. After all, Supreme Court decisions “can imbue words with ‘magic’ and drafters rely on that talismanic power to create certainty in their instruments.” 27

Wenske purports to reject a default rule, but arguably supports the Pich Presumption that absent intent to the contrary parties to a deed will bear a prior nonparticipating royalty interest burden proportionately. It is unclear whether Selman was implicitly overruled by Wenske, or whether it continues to stand for the idea that absent express intent or a “subject to” clause, a party receiving or reserving an interest might take it free and clear of the nonparticipating royalty interest.

The minority included in its dissent a lengthy description of precedent it claimed supported its position and that was ignored by the majority, including not only Pich v. Lankford, 28 but also Duhig v. Peavy-Moore Lumber, 29 Benge v. Scharbauer, 30 Selman v. Bristow, 31 and Bass v. Harper 32

As noted by Justice Boyd, “[t]he Wenske court purports to reject [the Pich Presumption, but] it nevertheless applies the [Pich Presumption] to hold that Vyvjala’s royalty interest must be proportionately deducted from the Ealys’ and Wenskes’ mineral interests because the court ‘see[s] no expression’ of a contrary intent.” To the casual observer, this looks suspiciously like a default rule or presumption of proportionate burdens.

IV. Brooke-Willbanks v. Flatland Min. Fund, LP (2023) – The Presumption Takes Hold 33

In Flatland, Kay Brooke-Willbanks owned a mineral interest that was subject to previously reserved nonparticipating royalty interests. She conveyed a portion of her interest to Flatland Mineral Fund LP, et al. by a deed (the “Flatland Deed”) that included the following provisions:

This conveyance is made subject to the terms of any valid and subsisting oil, gas

and other mineral lease or leases on said land; and . . . Grantor’s interest in and to the rights, rentals, royalties and other benefits accruing or to accrue under said lease or leases from the above-described land . . . .

Notwithstanding, it is the specific intent of this instrument to convey to Grantee the right to receive all bonuses, rents, royalties, production payments, or monies of any nature, including those in suspense, accrued in the past or in the future, associated with the undivided interest herein conveyed. 34

No further reservations or exceptions were set forth in the Flatland Deed, but the interest was subject to an active lease. 35 The Eastland Court of Appeals found that the “subject to” language above, coupled with the fact that there was an active lease when the deed was executed, was enough to reduce the interest conveyed and proportionately split the outstanding nonparticipating royalty interests. Thus, both Brooke-Willbanks and Flatland would bear the burden because the conveyance was made “subject to” (1) an active lease on the land and (2) BrookeWillbanks’s interest in the royalties under that lease. 36

The Flatland court first pointed to the venerable principle that a deed will be construed to confer upon the grantee the greatest estate possible, unless there is clear intention to convey a lesser estate (i.e., a reservation or exception). 37 Here, the Flatland Deed’s “subject to” language was found to reduce the interest conveyed by clarifying the amount of royalty conveyed clearly intending to convey a lesser estate. 38

The court then echoed Pich by stating that:

“[T]he conveyance of an interest in the minerals in place carries with it by operation of law the right to a corresponding interest in the royalty.” Under this principle, “a severed fraction of the royalty interest like a [nonparticipating royalty interest] generally would burden the entire mineral estate because it necessarily limits the royalty interests attached to the underlying mineral interests.” 39

The court carefully noted that although the Pich Presumption is useful in interpreting the Flatland Deed, it does not compel an outcome. Parties are free to craft an agreement to “operate differently from this basic principle of mineral conveyance” if they “plainly and in a formal way express that intention.” 40 It “reject[ed] Flatland’s argument that the absence of an exception clause” results in a grantee “not [being] burdened by previous reservations that are readily identifiable in the chain of title.” 41

In Flatland, the court looked to the four corners of the Flatland Deed, finding that it did not contain plain and formal language contrary to the Pich Presumption (a “basic principle of mineral conveyance”). Thus, it appears that the court used this “default rule” as a starting point before looking to the four corners of the deed. The court distinguished Selman, because that case dealt with a purported reservation of royalties, and the Flatland Deed contained no reservations or exceptions.

Recall that in Wenske, the conveyance in dispute included a “subject to” clause and also specifically referenced the prior nonparticipating royalty interest conveyance. Flatland seems to expand this holding to include “subject to” language that merely references an active lease.

Note again the conveyance was made subject to the terms of any valid and subsisting lease and was made further subject to the Grantor’s interest in the royalties. However, the Wenske Deed also expressed the specific intent that it conveys the “right to receive those royalties associated with the undivided interest herein conveyed.” Although the court did not dwell on this last statement, it seems possible that the Grantees were intended to receive all of the royalties associated with the undivided mineral interest conveyed, without the deduction of the nonparticipating royalty interest.

Although the four corners analysis continues to predominate, courts seem willing to rely on the “Pich Presumption” as a starting point. It is thus possible that Selman’s legacy is narrow in scope and relegated to its facts. Note that no petition for review was filed in Flatland

V. Gardner Energy Corp. v. McNeil (2023) –The Eighth District Weighs In 42

In McNeil, a 1976 deed (the “McNeil Deed”) conveyed 1/2 of the mineral interest underlying a tract of land. 100% of the mineral estate was subject to a 1/16th nonparticipating royalty interest vested in the State of Texas via the Sales Act of 1931 (the “State NPRI”). 43 The McNeil Deed made no reference to the State NPRI but included the following “subject to” clause: “This sale is made subject to any rights now existing to any lessee or assigns under any valid and subsisting oil and gas lease heretofore executed and now of legal record . . . .” 44 As usual, the issue was whether Gardner Energy Corp., successor to the Grantor (“Gardner”), bore the entire State NPRI, or whether the interest was also borne proportionately by the McNeils, the successors to the Grantee. The court found that Gardner and the McNeils bore the interest proportionately.

The court once again applied a four corners analysis and rejected Selman because, unlike the deed in Selman, the McNeil Deed contains a “subject to” clause limiting the nature of the conveyance. 45 The court then turned to Wenske and the Pich Presumption, noting that:

[T]here is no expression in the [McNeil Deed] that would lead it to conclude the parties sought to deviate from the general principle that a severed royalty interest, such as the [State NPRI], is to be allocated proportionately to all mineral interest owners. To the contrary, the [McNeil Deed’s] subject-to clause supports a finding that the Grantors intended to convey the burden of the State’s NPRI to the McNeil Grantees in proportion to their respective interests because it provides the conveyance was subject to “any rights now existing to any lessee or assigns under any valid and subsisting oil and gas lease.” 46

The El Paso Court of Appeals focused on the “general principle” set forth in Pich and took a broad reading of the “subject to” clause. It also gave a nod of approval to the Eastland Court of Appeals holding in Flatland that the deed conveyed the burden of a reserved royalty interest despite making no express mention of the same. 47

The court even went as far as to invoke the famed Westland case, noting that “any . . . reference to other documents puts the purchaser upon inquiry, and he is bound to follow up this inquiry . . . from one instrument to another, until the whole series of title deeds is exhausted and a complete knowledge of all the matters referred to and affecting the estate is obtained.” 48 The McNeil Deed’s reference to existing leases put the McNeil Grantees on notice of the same, at which point they “could have made inquiries and discovered the burden of the State’s NPRI.” 49 Note that at the

time this article was written, a Petition for Review is pending before the Texas Supreme Court. It remains to be seen whether the Supreme Court finds that there is reversible error in the appellate court’s decision.

VI. The Takeaway Following Gardner

It should come as no surprise that Texas courts will attempt to allocate prior-existing non-participating royalty interests by gleaning intent from a subsequent mineral deed. It seems that in many instances courts will start with the Pich Presumption that (i) a conveyance of minerals carries with it by operation of law the right to a corresponding interest in the royalty, and (ii) a third-party nonparticipating royalty interest will typically burden the entire mineral estate. This Presumption seems to have evolved into a “general principle” that a severed royalty interest will be allocated proportionately to all mineral interest owners.

Even if the Pich Presumption is not technically a “default rule” it has emerged as a starting place for analysis. This holds particularly true when the conveyance contains a “subject to” clause. In many instances, if a prior-existing burden is not expressly allocated, a stipulation of interest may be required. When drafting a deed in this context, the best practice is to state “plainly and in a formal way” how existing burdens are to be allocated.

Based on the cases above, several possible allocation outcomes seem to have emerged (the following list is not intended to be exhaustive):

1. If a deed expressly references a priorexisting non-participating royalty interest and clearly states how the burden is to be shared, this will typically be sufficient and binding on the parties. For example: (i) Grantor and Grantee hereby stipulate and

agree that Grantee shall alone bear that certain 1/8 non-participating royalty interest previously [conveyed to / reserved by] [________] in that certain Royalty Deed dated [________], recorded in [________]; or (ii) Grantor and Grantee hereby stipulate and agree that they shall each bear in proportion to their ownership interest that certain 1/8 non-participating royalty interest previously [conveyed to / reserved by] [________] in that certain Royalty Deed dated [________], recorded in [________].

2. If a deed does not expressly allocate a prior-existing non-participating royalty interest, but states that it is made “subject to” a specific non-participating royalty interest, or perhaps more generically is made “subject to” prior conveyances of record, it will likely result in the parties

1 Brad Gibbs is a founding partner of Oliva Gibbs LLP, a full service upstream oil and gas law firm. He is Board Certified in Oil, Gas, and Mineral Law by the Texas Board of Legal Specialization.

2 Professor Kulander is an experienced legal scholar, teacher, and practitioner. He leads Oliva Gibbs’ internal education and leadership initiative, Oliva Gibbs University (OGU). Professor Kulander also serves as the Director of the Oil & Gas Law Institute at the South Texas College of Law Houston, where he teaches energy and property law courses.

3 “A nonparticipating royalty interest is an interest in the gross production of oil, gas, and other minerals carved out of the mineral fee estate as a free royalty, which does not carry with it the right to participate in the execution of, the [b]onus payable for, or the delay rentals to accrue under oil, gas, and mineral leases executed by the owner of the mineral fee estate.” KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 75 (Tex. 2015).

4 Apologies to Mick and the gang.

5 Brooke-Willbanks v. Flatland Min. Fund, LP, 660 S.W.3d 559 (Tex. App. Eastland 2023, no pet.); Gardner Energy Corp. v. McNeil, No. 08-23-00140-CV, 2023 WL 8937162 (Tex. App. El Paso Dec. 27, 2023, no pet.).

6 302 S.W.2d 645 (Tex. 1957).

7 Id. at 650.

8 Id. (emphasis added).

9 Wenske v. Ealy, 521 S.W.3d 791, 811 (Tex. 2017) (Boyd, J., dissenting).

10 Id

sharing the burden proportionately. (Wenske).

3. If a deed does not expressly reference a prior-existing non-participating royalty interest, but states that it is made “subject to any valid and subsisting oil and gas leases of record” or includes other variations of a “subject to” clause it will likely result in the parties sharing the burden proportionately absent expressed contrary intent. (Flatland & Gardner).

4. If a deed does not expressly reference a prior-existing non-participating royalty interest and there is no “subject to” language, it may be found (absent contrary intent) that the Pich Presumption is overcome and that one or the other party is unencumbered by the burden. (Selman).

11 Selman v. Bristow, 402 S.W.2d 520 (Tex. App. Tyler 1966, writ ref’d n.r.e.).

12 Id. at 523–24.

13 Id

14 Id.

15 Id

16 Wenske v. Ealy, 521 S.W.3d 791, 812 (Tex. 2017) (Boyd, J., dissenting).

17 Wenske v. Ealy, 521 S.W.3d 791 (Tex. 2017).

18 Id at 793.

19 Id. (emphasis added). We note that the court did not discuss at any length that the reference to the Vyvjala NPRI in the Wenske Deed describes it as a mineral as opposed to royalty interest.

20 Id

21 Id. at 795.

22 Id. at 796.

23 Id. at 798.

24 Id

25 Id. at 799–800 (Boyd, J., dissenting).

26 Id. at 800 (Boyd, J., dissenting).

27 Id. at 803–04 (Boyd, J., dissenting).

28 302 S.W.2d 645 (Tex. 1957).

29 144 S.W.2d 878 (Tex. 1940).

30 259 S.W.2d 166 (Tex. 1953).

31 402 S.W.2d 520 (Tex. App. Tyler 1966, writ ref’d n.r.e.).

32 441 S.W.2d 825 (Tex. 1969).

33 Brooke-Willbanks v. Flatland Min. Fund, LP, 660 S.W.3d 559 (Tex. App. Eastland 2023, no pet.).

34 Id. at 561–62.

35 Id. at 562.

36 Id. at 563.

37 Id. at 564.

38 Id. at 565.

39 Id. (quoting Wenske v. Ealy, 521 S.W.3d 791, 797 (Tex. 2017)) (internal citations omitted).

40 Id. (quoting Benge v. Scharbauer, 152 Tex. 447, 259 S.W.2d 166, 169 (Tex. 1953)).

41 Id. at 567.

42 Gardner Energy Corp. v. McNeil, No. 08-23-00140, 2023 Tex. App. LEXIS 9618 (Tex. App. El Paso Dec. 27, 2023, pet. filed). Note that at the time this article was written this case had not yet been reported in the regional reporter. All pin cites are to the LexisNexis page number.

43 See 1931 TEX. GEN. LAWS ch. 271, §§ 1–14, at 452–56. This act, initially codified as article 5421c of the Texas Revised Civil Statutes, has been recodified throughout Chapters 51 and 52 of the Texas Natural Resources Code.

44 McNeil, 2023 Tex. App. LEXIS 9618. at *3.

45 Id. at *8.

46 Id. at *13 (emphasis added).

47 Id. at *14–15.

48 Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908 (Tex. 1982) (quoting Loomis v. Cobb, 159 S.W. 305, 357 (Tex. Civ. App. El Paso 1913, writ ref’d)).

49 McNeil, 2023 Tex. App. LEXIS 9618. at *17.

The Texas Division Order and Suspense

Statute: How It Works and Who It Serves to Protect

By: Madison Schrutka 3L Student, South Texas College of Law Houston

royalty owners, subject to the principles of unjust enrichment and detrimental reliance. Generally, detrimental reliance protects payors, while unjust enrichment protects underpaid payees.

A division order is a statement executed by all owners of interests in an oil and gas well. Every division order’s essential purpose is thus to “authorize and direct to whom and in what proportion to distribute” the proceeds acquired from the sale of oil and gas produced. 1 While the payor is entitled to a signed division order from the payee as a prerequisite for payment, it is the payor’s burden to submit the order to the payee for its signature. 2 Upon the division order’s execution, “the payor is protected from liability even if there is a mistake as to who receives what percentage of production.” 3

Creating a contractual relationship, the signed division order is binding from the moment and to the extent it has been acted on. 4 However, it “does not amend any lease or operating agreement between the interest owner and the lessee or operator or any other contracts for the purchase of oil or gas.” 5 Moreover, any provision within the division order that is “in contradiction with any provision of an oil and gas lease is invalid to the extent of the contradiction.” 6

Erroneous Division Orders: Handling the Danger of Double Liability

In the landmark case of Gavenda v. Strata Energy, Inc., the Supreme Court of Texas (SCOT) addressed whether division orders are “binding until revoked when an operator . . . prepares erroneous [division] orders [and] underpays royalty owners.” 7 Texas’s standard rule is that, until revoked, division orders bind underpaid

The binding rule serves as a safeguard for payors who would otherwise be unfairly subjected to double liability. 8 Typically, that danger arises when payors, relying on division orders, “pay out the correct total of proceeds owed, but err in the distribution, overpaying some royalty owners and underpaying others.” 9 If the resulting lawsuits “were not estopped, [payors] would pay the amount of the overpayment twice once to the overpaid royalty owner under the division order and again to the underpaid royalty owner through his suit.” 10 In this scenario, the division order remains binding and the underpaid signatory royalty owner’s only relief lies in a suit to recover from the overpaid royalty owner. The basis of that recovery is unjust enrichment: the overpaid royalty owner is not entitled to the sum of overpaid royalties that rightfully belongs to the underpaid payee. 11 Therefore, under these circumstances, the statute’s purpose is to protect the payor who detrimentally relied on the division order and the underpaid payee from an unjustly enriched, overpaid payee.

Nonetheless, payors are the parties most routinely protected by the rule that division orders are binding until revoked. This trend was validated five years before Gavenda, when the SCOT held that an erroneous division order was binding in favor of the payors, even though there was no detrimental reliance on the payors’ part, so long as “they had not profited from their error in preparing the division order.” 12 Per the SCOT, the Gavenda holding provides “stability in the oil and gas industry.” 13 To put it plainly, as long as payors do not benefit from their own mistake, it is a losing battle for payees if they sue to recover from them.

Accordingly, when a payor prepares an “erroneous division order and retains the benefits, Texas courts have held that the division orders were not binding.” 14 Therefore, the payor is liable for the entirety of the payee’s royalties it erroneously retained, but not liable for any royalties it erroneously paid out to other payees.

Strongly Construing the Texas Code in Favor of Payors

While division orders establish the mechanism of settlements and payments, they can be terminated upon 30 days of written notice and no longer bind their signatories. 15 Until then, Section 91.402 of the Texas Natural Resources Code explicitly requires a payor to distribute production proceeds to each payee within certain deadlines after the oil and gas is sold. 16

Nevertheless, there seems to be a discrepancy between the statute’s explicit language and the meaning the courts have given it. In a nutshell, the Code states that on or before 120 calendar days following the end of the month of the first sale of production, payment is due to each payee, and all subsequent payments must be made in a timely manner based upon the frequency specified in the written agreement; however, if there is no specified frequency, subsequent payments “must be paid no later than: (1) 60 days after the end of the calendar month in which subsequent oil production is sold; or (2) 90 days after the end of the calendar month in which subsequent gas production is sold.” 17

In a 2018 case, the SCOT “allowed payees to maintain a cause of action for breach of contract where their lease specified a time limit for payment of royalties,” after holding that Section 91.402 did not distinctly preclude common law claims. 18 Nonetheless, with the aim of ruling that payees cannot bring a common law breach of

contract action for overdue royalty payments, the SCOT held that it first needed “clear language from the Legislature indicating an intent to abrogate a common law cause of action,” as Section 91.402 clearly left out that language. 19

In 2021, the Legislature responded and unanimously passed Senate Bill 1259, which provided the explicit legislative intent the SCOT found previously deficient. 20 In view of the 2018 case where the SCOT recognized that Section 91.402 was “designed to protect the interest of royalty owners,” it is no surprise that the industry supported SB 1259, while royalty owners opposed it. 21 On May 24, 2021, SB 1259 became effective, enforcing from that day forward that “a payee does not have a common law cause of action against a payor for withholding payments under the Natural Resources Code unless the contract requiring payments specifies that payments to the payee may not be withheld beyond the time limits set out in the Natural Resources Code.” 22 Even in the chance that a payee does have a cause of action under this new legislation, it is required to first give the payor written notice of nonpayment by mail before pursuing judicial action. 23 Upon receipt, the payor then has 30 days to either pay the overdue proceeds or respond with the reasonable cause for such nonpayment. 24

Broadening the Safe Harbor Provision

Section 91.402 also includes the “safe harbor” provision, which permits payors to withhold payment “if there is . . . a dispute concerning title that would affect distribution of payments,” but payors must establish two facts: “(1) that a ‘dispute concerning title’ existed during the time it withheld production payments and (2) that dispute ‘would affect distribution of payments.’” 25 On May 19, 2023, the FreeportMcMoRan Oil & Gas LLC v. 1776 Energy Partners, LLC opinion came down in which the

SCOT adopted a very broad interpretation of what a “title dispute” includes within the Texas Suspense Statute. 26 The court reversed a 2021 court of appeals (COA) decision finding that a constructive trust in a related suit does not fall within that category. 27

In the opinion, the SCOT rejected the COA’s pro-payee argument that the phrase “would affect” requires a “current effect” on payment distribution, and instead, held that “would affect” simply requires “an expected future effect.” 28 Accordingly, the COA incorrectly held that the payor owed the payee interest on the suspended payments solely because the dispute does not “currently” affect payment distribution. 29 Thus, the SCOT clarified that the second element’s only necessary condition to permit the payor “to withhold the payments without interest” is that “the dispute concerning the title was, at that time, at least expected or likely to influence or alter the distribution of the payments” owed to the payee. 30 This broadens the safe harbor provision’s power in the sense that meeting the invalid “current affect” requirement has a higher threshold in comparison to the lower threshold the valid “would affect” requirement has.

Another portion of the safe harbor provision permits a payor to withhold payments if it has a “reasonable doubt” that the payee had “clear title to the interest in the proceeds of production.” 31 The SCOT additionally rejected this COA’s holding that “issues of reasonableness must be resolved by a factfinder as a question of fact rather than by a court as a matter of law.” 32 While the COA reasoned their holding by stating that “the determination as to whether something is reasonable is often an issue of fact that should be adjudicated by the factfinder because it requires comparison to surrounding circumstances,” the SCOT pointed out that “[r]easonableness has

always entailed an objective inquiry.”

33 The SCOT went on to enforce its own precedent that:

While questions of reasonableness must be submitted to a factfinder when a genuine disagreement about the facts prevents the law from generating an objective answer, . . . no case citing that proposition can be understood to say that a factfinder must resolve all issues touching on reasonableness. Rather, the legal standard for reasonableness remains objective even if the controlling facts are in doubt. Thus, reasonableness may present a question of law when from the facts in evidence but one rational inference can be drawn. 34

Applying that holding to the case at hand, the SCOT found the payee’s contention that the constructive trust placed on its own interests “established its title to the production proceeds” to be the opposite of what is true. 35 The SCOT reasoned that upon “imposing a constructive trust, a court concludes the party should not be holding the property at all, which makes the party’s title anything but clear.” 36

When rightfully withheld, payees do not have a viable cause of action for breach of contract against payors “unless, for a dispute concerning the title, the contract requiring payments specifies otherwise.” 37 Alternatively, when erroneously withheld for any reason after 30 days of receipt of the payee’s notice, the payor is liable to the underpaid payee for the amount of payment the division order entitles it to plus interest. 38 In the first instance, the statute’s function is to protect the payor from the dangers of a clouded title. Meanwhile, in the second instance, the statute’s

function is to protect the underpaid payee from a, more or less, opportunistic payor.

A Shift Away from the Pro-Payor Trend?

While Freeport-McMoRan reinforces the Texas Division Order and Suspense Statute’s strength, the Perdido Properties LLC ex rel. Bremer v. Devon Energy Prod. Co. opinion, which came down just the day before, appears to undermine it. 39 Although the case also upheld the precedent established in Gavenda, it steps away from Texas’s tradition of being pro-payor. Due to lack of Texas precedent concerning nonsignatories of a division order suing payors that paid royalties to incorrect royalty owners, the COA heavily relied upon North Dakota precedent. 40 Meanwhile, North Dakota has a substantially weaker division order arrangement than Texas.

In the situation involving a royalty owner who has not executed a division order with the payor, the North Dakota Supreme Court (NDSC) held that the payor’s reliance on the title opinion does not absolve it of double liability and the royalty owner can recover underpayment or total nonpayment from the payor. 41 In other words, North Dakota division orders are designed to provide the payor double liability protection from only those that are a signatory of the document itself, while non-signatories face no legal barriers provided by such protection. Nonetheless, the NDSC holds that to be entitled to such protection from an underpaid signatory’s suit, the payor must have “detrimentally relied” on the division order by making underpayments according to the signed and executed, yet erroneous document. 42 Meanwhile, in suits brought by non-signatories, it is of absolutely no consequence that a payor detrimentally relied and may be “exposed to double liability” because it has “not relied to its detriment on any actions taken by the nonsignatory” plaintiff. 43 Theoretically, the Texas

COA possibly adopts North Dakota’s philosophy on the issue with the logic that, by utilizing due diligence and the self-help provided to payors by the safe harbor provision, double liability to a nonsignatory is something that can be easily avoided. After all, that is the purpose of the Suspense Statute: permitting payors to suspend royalty payments without interest, if there is any suspicion of a clouded title.

Although the payors took a loss in Perdido, the Texas safeguards favoring payors prevented it from being worse than what it ultimately could have been. For the payor’s protection, the statute of limitations bars all claims for royalty nonpayment that accrued prior to four years from the date that suit is filed by or on behalf of the royalty owner. 44 However, an even more pervasive caveat to the statute is crucial to note: “a cause of action accrues and the statute of limitation begins to run when facts come into existence that authorize a party to seek a judicial remedy.” 45 Therefore, such cause of action accrues upon a wrongful act causing legal injury regardless of whether it goes undiscovered until thereafter, and regardless of whether the entirety of “resulting damages have not yet occurred.” 46

Nevertheless, a plaintiff-payee can dodge a defendant-payor’s limitations defense by invoking equitable estoppel, which requires the following elements to be proven: (1) the payor “made a false representation or concealed material facts; (2) with actual or constructive knowledge of those facts; (3) with the intent that” the payee would act on the payor’s misrepresentation; (4) to the payee, “who had no means of knowledge of the facts;” and (5) the payee “detrimentally relied” on the misrepresentations. 47 As it functions in all contract claims, equitable estoppel offers protection from the unconscionable acts of an exploitative party.

Moreover, while a debt may be otherwise barred by the statute of limitations, the statute’s effect can be precluded “if the party to be charged acknowledges the debt in writing,” thus creating a new obligation. 48 To be successful, it must be proven that the acknowledgement: “(1) [is] in writing and signed by the party to be charged; (2) contain[s] an un[ambiguous] acknowledgement of the justness or the existence of the particular obligation; and (3) refer[s] to the [specific] obligation and express[es] a willingness to honor” it. 49 To differentiate between the second and third elements, when the debt is unambiguously acknowledged, “the promise to pay is implied,” but to sufficiently refer to the specific obligation, the amount of the obligation must be capable of “ready ascertainment.” 50 Although it is agreed that modern communication largely occurs via email, there is a split in Texas authority surrounding whether a signature, as required in the first element, is satisfied by an email signature block. 51 However, Perdido might have set the record straight by concluding that “either a typed name or a signature block at the end of an email is sufficient to constitute a signature.” 52

While Perdido appears to shift away from the pro-payor trend, the various Texas safeguards

1 Gavenda v. Strata Energy, Inc., 705 S.W.2d 690, 691 (Tex. 1986).

2 TEX NAT RES CODE ANN. § 91.402(c)(1); Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 560 (Tex. App. San Antonio 2011, no pet.), abrogated on other grounds by Nath v. Tex. Children’s Hosp., 576 S.W.3d 707 (Tex. 2019).

3 JOSEPH SHADE & RONNIE BLACKWELL, PRIMER ON THE TEXAS LAW OF OIL & GAS 62 (5th ed. 2013).

4 § 91.402(g).

5 Id. (c)(2).

6 Id. (h).

7 Gavenda v. Strata Energy, Inc., 705 S.W.2d 690, 690 (Tex. 1986).

8 Id. at 692.

9 Id.

10 Id.

11 Id.

12 Id. (discussing Exxon Corp. v. Middleton, 613 S.W.2d 240 (Tex. 1981)).

that remain in place for the payor’s protection will continue to substantially limit the amount a payee can recover from it. Nonetheless, it is more than likely that the SCOT will take a hard look at this case and possibly even reverse the COA’s decision, as they have done time and time again, to maintain the pro-payor status quo.

Conclusion

The standard rule is that Texas division orders “bind underpaid royalty owners until revoked” with detrimental reliance protecting payors and unjust enrichment protecting underpaid payees. 53 Nonetheless, detrimental reliance is merely a sufficient condition for the payor’s protection, while unjust enrichment is the necessary condition for the payee’s protection. To provide “stability in the oil and gas industry,” the SCOT and the Texas Legislature tend to be propayor by minimizing the duties the Texas Division Order and Suspense Statute assigns to payors and maximizing the hoops payees must jump through for a successful cause of action. 54 A petition for review was filed on August 8, 2023, and it will be interesting to see the response pro-payee Perdido receives.

13 Gavenda, 705 S.W.2d at 692.

14 Perdido Properties LLC ex rel. Bremer v. Devon Energy Prod. Co., 669 S.W.3d 535, 549 (Tex. App. Eastland 2023, pet. filed) (emphasis added).

15 TEX NAT RES CODE ANN. § 91.402(g).

16 Id. (a).

17 Id. (emphasis added).

18 John H. H. Bennett, Oil, Gas, and Mineral Bills Enacted by the 87th Texas Legislature, 18 TEX J. OIL GAS & ENERGY L 61, 71 (2023).

19 ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 879 (Tex. 2018); Bennett, supra note 18, at 71.

20 Bennett, supra note 18, at 71.

21 Koopmann, 547 S.W.3d at 878; Bennett, supra note 18, at 71.

22 Katy Wehmeyer & Jordan Stevens, Withholding Royalty Payments After ConocoPhillips Co. v. Koopmann, 52 TEX TECH L. REV 439, 481 (2020); Bennett, supra note 18, at 71.

23 TEX NAT RES CODE ANN. § 91.404(a).

24 Id. (b).

25 § 91.402(b)(1)(A) (emphasis added).

26 672 S.W.3d 391 (Tex. 2023), reh’g denied (Sept. 1, 2023).

27 1776 Energy Partners, LLC v. Freeport-McMoRan Oil & Gas LLC, 665 S.W.3d 695 (Tex. App. San Antonio 2021), rev’d, 672 S.W.3d 391 (Tex. 2023).

28 Freeport-McMoRan, 672 S.W.3d at 397–98 (emphasis added).

29 Id.

30 Id. at 397 (emphasis added).

31 Id. at 396 (emphasis added).

32 Id. at 399.

33 Id. (emphasis added) (internal quotation marks omitted).

34 Id. (internal quotation marks omitted).

35 Id. at 400.

36 Id. (internal quotation marks omitted).

37 TEX. NAT. RES. CODE ANN. § 91.402(b-1).

38 TEX NAT RES CODE ANN. § 91.403.

39 Perdido Properties LLC ex rel. Bremer v. Devon Energy Prod. Co., 669 S.W.3d 535 (Tex. App. Eastland 2023, pet. filed).

40 Id. at 551–52.

41 Id. (citing Archer v. Tregellas, 566 S.W.3d 281, 288 (Tex. 2018)).

42 Id. at 552.

43 Id. at 551.

44 Id. at 556.

45 Id.

46 Id.

47 Id. at 557.

48 Id. at 558–59.

49 Id. at 559 (citing DeRoeck v. DHM Ventures, LLC, 556 S.W.3d 831, 834 (Tex. 2018)).

50 Perdido, 669 S.W.3d at 559.

51 Id. at 560.

52 Id. at 561.

53 Gavenda v. Strata Energy, Inc., 705 S.W.2d 690, 691 (Tex. 1986).

54 Id. at 692.

Application

Doctrine to the Adverse Possession of Non-Operating Working Interest

By: Michael Gassman Vinson & Elkins LLP

I. INTRODUCTION

The ultimate question of any property dispute may be summed up by two broad questions: (1) who owns the property and (2) what rights attach to that ownership. This is simple on the surface; however, as the property interests at play become more complex, so too do the questions of property ownership. Already complex issues can be stirred further by father time. Two recent cases, PBEX II, LLC v. Dorchester Minerals, L.P. 1 and Van Dyke v. Navigator Group, 2 illustrate the issues surrounding complex property ownership coupled with the passage of time. To address the question of ownership, the courts in Dorchester and Van Dyke utilized the doctrine of adverse possession and the presumedgrant doctrine.

The doctrine of adverse possession and the presumed-grant doctrine have a strong foundation in American property law. Together the doctrines find common ground in both policy and their operation in law settling title disputes. Traditionally, a party attempting to settle a title dispute has three general options. First, the party could establish a regular chain of title of conveyances from the sovereign to the individual. Second, the party may establish a superior claim to the hostile party out of a common source. Third, the party may establish title by limitations adverse possession. 3

With its roots in law, adverse possession provides a legal basis for quieting title over a

statutory period. Scholars in the early twentieth century described the policy behind adverse possession as the idea that “titles to property should not remain uncertain and in dispute, but that continued de facto exercise and assertion of a right should be conclusive evidence of the de jure existence of the right.” 4 Adding to the principle that titles should be certain, four justifications were identified supporting adverse possession: “the problem of lost evidence, the desirability of quieting titles, the interest in discouraging sleeping owners, and the reliance interests of [the adverse possessors] and interested third persons.” 5 With these guiding pillars, adverse possession has long been used as a tool by title professionals.

Conversely, with its roots in equity, the presumed-grant doctrine provides an equitable basis for the presumption of a grant (or deed or conveyance) into evidence when there is no physical instrument to be introduced. Just as adverse possession may assist a party in settling a title dispute through limitations, the operation of the presumed-grant doctrine would assist the same party in establishing chain of title from the sovereign. When the presumed-grant doctrine is used in conjunction with adverse possession, both doctrines are tremendously useful tools for individuals and title professionals seeking to settle title and determine rightful property ownership.

Simply put, some would argue the presumed-grant doctrine is a form of adverse possession. The best way to illustrate the relationship between the presumed-grant doctrine and adverse possession is through an example. Consider the situation whereby Owner A is trying to prove chain of title for his property as far back in time as possible. Owner A proves his title as far back as the late-nineteenth century, but he encounters a hold-up the courthouse had burned down. Some 110 years after Owner A’s chain of title ends, his ownership is challenged by Owner

B. Owner B argues that Owner A should be required to prove title back to the sovereign’s grant of the original plat. There is just one big problem the evidence of ownership burned with the courthouse. This missing link in the chain of title for the property will never be recovered.

The above facts of Jeffus v. Coon provide a textbook example of the presumed-grant doctrine’s utility. 6 If a courthouse burned down in 1865 and destroyed part of your chain of title, there are several possible ways around the title impediment. One solution is to evaluate title from the present day to the date of the fire. This could lead to complications given the fire could breed two competing chains of title. Another solution, the presumed-grant doctrine, traces the chain of title from the sovereign until the fire. After the fire, look at the chain of title from the fire to the present day. Considering all the evidence surrounding the transactions and other instruments in the chain of title, it may be reasonable to presume the owner received a grant. 7 The case illustrated in Jeffus is a simple demonstration, in its truest form, of “title by circumstantial evidence.” 8

A third way to prove title in the circumstance described in Jeffus is through adverse possession. After some 110 years, the question may arise why did adverse possession not play a factor in this case? The answer lies in the lack of possession by either party neither the true owner nor the alleged apparent owner was in possession of the property. 9 For this reason, establishing title through adverse possession was not an option. The lack of possession in Jeffus provides an illustration of the interplay between the two doctrines. Arguably, adverse possession was an easier argument to settle title; however, without possession of the property, the presumedgrant doctrine fills the void and serves to settle the title dispute.

Lastly, Jeffus demonstrates how the presumed-grant doctrine came to be known as “title by circumstantial evidence” and as “a common law form of adverse possession.” 10 By providing what is “basically a common law adverse possession cause of action,” the presumedgrant doctrine serves a useful role in conjunction with adverse possession to settle title disputes. 11 Considering both doctrines attempt “to settle titles where the land was understood to belong to one who does not have a complete record title, but has claimed a long time,” the common purpose and overlap of both doctrines becomes clear. 12

This comment will analyze the intersection and interplay of both adverse possession and the presumed-grant doctrine as they are applied today in Texas, specifically in the oil and gas context. Additionally, this comment will address how the presumed-grant doctrine may be applicable as a substitute for adverse possession in the recent decision of PBEX II v. Dorchester Minerals, L.P. Part II.A of this comment will provide a background of the knowledge versus notice requirements of the presumed-grant doctrine and adverse possession, respectively. Part II.B of this comment will provide a background of the presumed-grant doctrine to the recent decision in Van Dyke v. Navigator Group. Part II.C of this comment will provide a background on adverse possession, with a specific focus on possession of the mineral estate. Part III.A will outline the facts of both Dorchester and Van Dyke. Lastly, Part III.B will analyze the application of the presumedgrant doctrine under the facts of Dorchester (instead of an adverse possession analysis) and argue that the presumed-grant doctrine provides a more straightforward approach to the title dispute.

II. BACKGROUND

A. Knowledge vs. Notice

A central difference between the presumed-grant doctrine and adverse possession is the requirement of knowledge compared to the requirement of notice. While adverse possession requires the hostile party to behave notoriously, 13 the presumed-grant doctrine requires knowledge on the part of the apparent owner of the property. 14 Without knowledge on the part of the apparent owner, courts in Texas will not allow for the apparent owner’s acquiescence to be presumed by the jury. 15 As more specifically explained in Part II.B, Texas courts look at knowledge from the view of the individual who is the ‘apparent owner’ in the presumed-grant context. In the adverse possession context, courts instead look to the hostile party’s behavior rather than the true owner’s knowledge of events.

Black’s Law Dictionary defines knowledge as “an awareness or understanding of a fact or circumstance; a state of mind in which a person has no substantial doubt about the existence of a fact.” 16 Knowledge can further be broken down into three general categories: (1) actual knowledge; (2) constructive knowledge; and (3) imputed knowledge. 17 First, actual knowledge is defined as knowledge that is “obtained by an individual which provides direct and clear knowledge of a material fact.” 18 Second, constructive knowledge is described as “knowledge which is attributed by the law to an individual, irrespective of their actual knowledge of the facts and circumstances.” 19 Finally, imputed knowledge is defined as knowledge “attributed to a given person because of the person’s legal responsibility for another’s conduct.” 20 For example, the information obtained by an agent would then be imputed to the principal. The transition from knowledge to notice begins as the court moves from facts to operative law.

Notice is defined as a “legal notification required by law or agreement.” 21 Black’s Law

Dictionary identifies five situations in which an individual will be deemed to have notice by operation of law. 22 Thus, if an individual is found to have knowledge of a fact, they are deemed to be on notice of the same fact. Notice, however, does not always correspond to knowledge.

Like knowledge, the concept of notice can be separated into three broad categories: (1) actual or express notice; (2) constructive notice; and (3) inquiry notice (sometimes referred to as duty of inquiry). Actual or express notice can be equated to actual knowledge notice directly obtained by an individual. 23 Constructive notice is described as notice “arising by presumption of law from the existence of facts and circumstances that a party had a duty to take notice of, such as a registered deed or a pending lawsuit.” 24 Constructive notice has also been described as “notice presumed by law to have been acquired by a person and thus imputed to that person.” 25

The Texas Supreme Court in Watkins v. Edwards expanded on the principles surrounding constructive notice when discussing deed recording systems. 26 The Court noted that “[constructive notice] furnishes the means of information as to the state of title, by the use of proper diligence, and amounts to constructive notice, or sufficient notoriety, or information reasonably sufficient to protect honest purchases against prior secret conveyances and fraudulent incumbrances.” 27 The deed recording system, as identified by Watkins, serves as the classic example of a recorded deed giving constructive notice to the general public. 28

Lastly, inquiry notice follows constructive notice as “[n]otice attributed to a person when the information would lead an ordinarily prudent person to investigate the matter further.” 29 The court in Cook v. Avien, Inc. described inquiry notice as a “storm warning” that would lead “a

reasonable person [to be alerted] to the possibility of [material facts] . . . .” 30 Courts in Texas agree with this reasoning, with one adding “[a] person is on inquiry notice when [they are] ‘aware of facts that would have prompted a reasonable person to investigate.” 31 Finally, in Westland Oil Development Corp v. Gulf Oil Corp., the Court found that references to an unrecorded document in a recorded instrument served to provide inquiry notice. 32

B. Presumed-Grant Doctrine

Texas courts have long held “the opinion that a deed may be established by circumstantial evidence.” 33 While “[t]he rule is generally referred to as the presumption of a deed or grant,” courts agree that “it could be more accurately termed proof of title by circumstantial evidence.” 34 Beyond this characterization, courts have additionally stated the doctrine “has been given the most liberal interpretation and application by our courts.” 35

The Texas Supreme Court in Van Dyke v. Navigator Group stated the doctrine as: “(1) a long-asserted and open claim, adverse to that of the apparent owner; (2) nonclaim by the apparent owner; and (3) acquiescence by the apparent owner of the adverse claim.” 36 From these early elements, the doctrine has been refined to clarify that possession is not necessary to establish the presumption. 37 Lastly, several courts have further clarified that knowledge of the apparent owner, whether actual or imputed, is required to establish acquiescence under the doctrine. 38

The final consideration of the presumedgrant doctrine is its operation in law. The doctrine serves to provide a legal conclusion that a deed or conveyance was executed. 39 Further, the evaluation of the apparent owner’s knowledge is a question of fact. The Court in Walker v. Sharp

stated “[t]he presumption of a grant which arises from the long-continued possession and use of real property is a presumption of fact, and can only have a controlling effect upon the title when all the circumstances in proof are consistent with the existence of a conveyance.” 40 The evidence introduced must only lead to the point where “the conveyance might have been executed” as demonstrated by the preponderance of the evidence. 41 If the elements of the doctrine are met, there is a question of fact for the fact-finder’s determination. 42 The ultimate question, however, rests on the relative strengths of both parties’ arguments and their corresponding support. 43

1. Historical View

The historical application of the presumedgrant doctrine centered around two key policy considerations. First, courts were concerned about issues stemming from ancient transactions. 44 The Court in Magee v. Paul felt that without the presumed-grant doctrine, “numberless valid land titles could not be upheld.” 45 Many shared this concern as the courts were faced with issues surrounding both physical evidence and the lack of preservation of property instruments and issues stemming from the human condition: age and the loss of memories over time. 46 The Court in Adams v. Slattery addressed the presumed-grant doctrine and noted that the absence of written instruments makes establishing a complete chain of title challenging, if not impossible, to accomplish. 47 Second, courts rightly identified the natural human condition of greed and an eagerness to assert one’s rights. 48 This policy driver lies at the heart of the presumed-grant doctrine, but it also finds grounding in the policy underlying adverse possession. 49

These policy concerns, identified by Magee in 1920, were the same addressed some sixty years prior in Taylor v. Watkins 50 The Texas

Supreme Court in Taylor detailed these same policy drivers but hesitated as it introduced the presumed-grant doctrine into Texas law. 51 The hesitation to introduce the doctrine to Texas centered around two points: (1) the concerns surrounding patents from the sovereign to a private individual and (2) the evidentiary requirements to establish the presumption. 52 Given the 1863 decision in Taylor was less than thirty years after the Republic of Texas, the concern over presuming a grant against the sovereign to a private individual may have faded over the years. However, the sufficiency of evidence required to establish the presumption of a deed has remained a central point of contention around the application of the presumed-grant doctrine.

To satisfy the presumption of a conveyance into evidence, two frequently contested issues arise. The first issue is the level of knowledge necessary to find that the apparent owner of the property was aware of the hostile claim against their interests and, nonetheless, chose to acquiesce. The second issue is the amount of time whereby the apparent owner’s acquiescence can be inferred, and a grant may be presumed. As a result, both the facts demonstrating the apparent owner’s level of knowledge and the length of time surrounding the events must be viewed in their totality to conclude whether there is sufficient evidence to presume a conveyance or deed under the circumstances.

i. Knowledge

The knowledge required by the apparent owner under the presumed-grant doctrine is limited to the circumstances exhibiting actual or imputed knowledge but does not extend to the duty of inquiry. 53 Early cases were concerned over the assumption of the apparent owner’s knowledge in the analysis. 54 This concern was not unfounded considering the doctrine is itself a conclusion based on surrounding facts and circumstances. In

Taylor, though the Court indicated a reluctance to do so, it used the presumption of knowledge to presume a deed as fact. The Court in Taylor was reluctant to use the presumption of knowledge and presume a deed under the same facts. 55 Expressing this same concern, the Court in Stephens v. House refused to “extend the doctrine to those cases where it is necessary to impute knowledge to sustain acquiescence.” 56

While knowledge continued to be an area of concern, the Texas Supreme Court limited the scope of the inquiry with their decision in Bounds v. Little 57 There, the Court noted that it was unaware of any “rule of law which requires one who is about to purchase land to make inquiries of persons living near it.” 58 While not directly addressing knowledge, the Bounds decision expressly denounced any duty of inquiry by the apparent owner. 59 The Court further held that while there was no rule establishing a duty of inquiry, the apparent owner may not rely on their ignorance of facts leading a reasonable person to be alerted to a hostile claim. 60 With this decision, the Bounds case established a reasonableness standard for whether an individual should be aware of adverse claims to their property interests. This spectrum from knowledge to ignorance, as identified in Bounds, was refined a half-century later in Love v. Eastham. 61

The Texas Supreme Court in Love refined the earlier view and extended the knowledge requirement to include actual or imputed knowledge by the apparent owner of a hostile or adverse claim. 62 In Love, the Court considered the situation when a family moved to a different county from the disputed property. 63 The apparent owners in the litigation, the Love family, never returned to the property following their relocation. 64 The Court posed the question as whether knowledge could have made its way to the Love family in a different county. 65 Citing the

Stephens decision, the Court found that “where the ostensible owner resides in the immediate vicinity of a tract of land over which another party is exercising open and notorious dominion and control, knowledge of such dominion and control may be thereby imputed to the owner.” 66 Ultimately, given the family did not return to the county, the Court found the Loves did not have knowledge. 67

The Texas Supreme Court’s ruling in Love v. Eastham was a departure from previous cases. 68 This departure does not necessarily go against the concerns posed by earlier cases. Rather, the Court in Love identified that knowledge is a conclusion subject to the facts. 69 Thus, ignorance of facts placed in front of the apparent owner, or in their near surroundings, would be considered for the determination of their knowledge and the ultimate satisfaction of the presumed-grant doctrine.

i. Timing

While courts have identified the level of knowledge required to presume a grant into evidence, courts have yet to provide a definite timeline for the presumption of a grant. The question of time centers around whether enough time has elapsed for a presumption to be made. Alternatively, the question could be stated as whether the facts are ripe for the finding of a presumption. Contrary to adverse possession, the presumed-grant doctrine does not specify a definite period to establish the presumption of a grant into evidence. Instead, the doctrine only requires a “long-asserted and open claim.” 70 This implies that the claim is long-asserted enough for the apparent owner of the property to become aware, in some capacity, of the adverse and hostile claim to their property interests and acquiesce to the same hostile claim.

Without a definite answer to whether enough time had elapsed or whether the claim is “long-asserted,” there are two alternatives. The first is to evaluate precedent to determine a minimum time frame where the doctrine is sufficiently met. The second is to find an analog in adverse possession and compare the facts surrounding the presumption of a grant with whether adverse possession may be established under the same circumstances. 71 Certainly, both paths are not a perfect match given the differences in the two doctrines. However, considering that there is no definite answer to what is “longasserted,” the key question in the analysis is whether the circumstances surrounding the transaction are sufficient to establish the presumption of a conveyance. This implies the amount of time that has passed is weighted against the knowledge of the apparent owner to come to a satisfactory result on whether a presumption is proper. Rather than being viewed in isolation, whether a claim is “long-asserted” is viewed in the totality of the circumstances surrounding the parties’ behavior and the transaction itself.

Undoubtedly, many presumed-grant cases demonstrate a long history under their facts. For example, the facts of Jeffus illustrate a period of 100 years. 72 There is no doubt the longer the period that has elapsed without a claim by the apparent owner of the property, the stronger the presumption is that a grant or conveyance had occurred. However, there has never been a case where the court has identified an arbitrary limit on whether a claim is “long-asserted.” To the contrary, the Court in Stephens v. House identified a much shorter time frame may still be sufficient for the presumption of a grant into evidence. 73 In Stephens, the Court used an example period of twenty years to illustrate that the presumption of a grant may be conclusive. 74

While the decision in Stephens evaluated adverse possession alongside the presumed-grant doctrine, the court still found persuasive that, under the proper facts, a presumption of a grant may be found in a twenty-year time frame. 75 In Stephens, the hostile owner was in possession of the property at issue. 76 In its finding of both adverse possession and the presumption of a grant, the court noted that “if one has the apparent title to a tract of land, knowing that another has taken adverse possession, acquiesces in such adverse enjoyment of the property for a period of twenty years, a jury would be justified in presuming a grant, in the absence of circumstances tending to a contrary conclusion.” 77 This decision was further supported by the acquiescence of the apparent owner over that length of time. 78 Though elapsed time is always a concern when evaluating the presumption of a grant, the situation in Stephens illustrates how the amount of elapsed time of a non-claim by the apparent owner can support a finding of acquiescence required by the doctrine. 79

Though arbitrary, the twenty-year period identified in Stephens appears to be an absolute minimum. The balance between the minimum time frame where the apparent owner has knowledge and has acquiesced to a hostile claim and the policy concerns surrounding ancient transactions must be weighed in every presumed-grant situation. The answer for what is a “long-asserted” claim likely lies somewhere in the middle ground between the shorter twenty-year period outlined in Stephens and the lengthier century-long period identified in Jeffus. 80 Ultimately, the inquiry of “how much time is enough” is a question of fact considering the circumstances. Just as knowledge may be proven by the circumstances, so too may the question of whether a claim is “long-asserted.” Only when there are sufficient facts to establish both knowledge of the apparent owner and the long-asserted claim by the hostile party may the conveyance be presumed into evidence.

2. Gap in Title

Although the decision in Van Dyke rejected the requirement of a “gap in title” for the presumption of a grant into evidence, 81 the issue of a gap in title may be traced to the Supreme Court decision in Howland v. Hough 82 The Court in Howland noted the gap in title from the year 1845 to 1878, some thirty-three years. 83 The court of appeals found that “Howland had not established his title by a regular chain of conveyances from the sovereign” and that Howland had not established prior possession of the tract. 84 To close this thirtythree-year gap, Howland asserted the presumedgrant doctrine. In support of his superior ownership, Howland introduced nine deeds into evidence to defend his title. 85 While this determination was a question of fact, the Court indicated that the facts introduced into evidence were sufficient to presume, as a matter of law, that the deed existed, therefore establishing Howland’s chain of title and ownership of the land. 86

Referencing Magee and other Texas cases, the Court found two factors persuasive. First, strong evidence existed that supported the presumption of a conveyance no claim had been asserted by an heir of the original property and Howland was able to prove his own chain of title through evidence of a series of conveyances. 87 Second, the Court noted that Howland was in possession of the land at the time of the dispute. 88 Considering these circumstances, the Court determined that these facts were a predicate for presuming a grant into evidence and closing the gap in title. 89

Noticeably absent, however, from the Court’s opinion in Howland was any indication of a gap in title being required to satisfy the presumed-grant doctrine. Though the Court does refer to and identify the “gap” in Howland’s title

from 1845 to 1878, there is no specific statement, nor citation to any Texas authority. 90 The thirtythree-year gap in Howland was a necessary element in the application for and presumption of a grant. Irrespective of the holding in Howland, courts have continued to require (or condition) the presumption of a grant on the existence of a gap in title. 91 For example, in Van Dyke, the Eastland Court of Appeals noted that, while “the existence of a chain-of-title gap is not an express element,” many courts have typically applied the presumedgrant doctrine in situations where the dispute stems from a gap in title. 92 In support of this assertion, the court noted Texas authority where a grant was improper to presume if there was no missing link in title i.e., a gap in title. 93

However, the Texas Supreme Court decision in Van Dyke rejected the view described in Howland. 94 The Court in Van Dyke noted that “[s]atisfying the doctrine is properly difficult” and the addition of an element would be unnecessary. 95 Although the Van Dyke decision seems to clarify the matter, many courts have continued to hesitate to apply the presumed-grant doctrine where there is no gap in title. 96 For example, the court in Balmorhea Ranches, Inc. v. Heymann expressed that the doctrine has usually been applied where there is a gap in title sometime “before the Twentieth century.” 97 While not the rule under Van Dyke, 98 this statement by the court serves as a check on the liberal application of the doctrine. Inferred in these statements, the court in Balmorhea Ranches, Inc. is concerned that a jury may find a presumption where the supporting facts do not warrant such a finding.

3. Modern View: Quantum of Interest

Van Dyke brought to light the presumedgrant doctrine in a unique context adjusting the “quantum of interest.” 99 The Eastland Court of Appeals argued that the parties were using the

presumed-grant doctrine as a way to adjust the “quantum of interest.” 100 In the Court of Appeal’s view, this was an improper use of the presumedgrant doctrine. 101 This struggle between the Texas Supreme Court and the Eastland Court of Appeals illustrates exactly how the “quantum of interest” can now be addressed through the presumption of a deed through the parties’ subsequent behavior.

At first, the Eastland Court of Appeals balked at using the presumed-grant doctrine to change the mineral interest ownership percentage from one-sixteenth to one-half. The court reasoned that “[u]nlike in [Conley v. Comstock Oil and Gas, LP 102], the [party’s] claims to the mineral interest at issue here are not made in conjunction with a claim of superior right to title to the land on which the minerals are being produced.” 103 Instead, the court noted that the party asserting the presumption of a grant “do[es] not dispute title to the property itself” nor do they “dispute joint ownership in the minerals and mineral rights.” 104 Rather, the court determined that the party asserting the presumed-grant doctrine was attempting to “establish the quantum of interest in the minerals and mineral rights.” 105 The court concluded that this was an improper operation of the presumed-grant doctrine. 106

Contrary to the Eastland Court of Appeals decision, the Texas Supreme Court found that the presumed-grant doctrine was appropriate to the situation in Van Dyke. Rather than focusing on the superiority of the parties’ chain of title, the Court instead looked to the reliance on either party’s belief it owned one-half of the mineral estate. 107 Evaluating the same evidence and same facts as the Eastland Court of Appeals, the Court found that the behavior of both parties, as shown by ninety years of transactions and dealings, conclusively established the presumption of a grant of one-half of the mineral interest. 108 Under the precedent set by Van Dyke ¸ the presumed-grant

doctrine has now been applied to adjust the quantum of interest of the parties in the same property interest.

C. Adverse Possession

Adverse possession provides a legal counterpart to the presumed-grant doctrine. In Texas, courts frequently identify the central policy of adverse possession as the “settlement and repose of titles.” 109 Without the availability of adverse possession, there is the concern that titles will be “less secure against mistakes, frauds, and perjuries.” 110 However, with the help of adverse possession statutes, there is a greater chance of certainty surrounding title with the “barring [of] stale claims from coming forward after a reasonable time . . . .” 111

Generally, adverse possession consists of five elements. The claim must be (1) adverse (or hostile), (2) actual and exclusive, (3) visible and notorious, (4) continuous for the full statutory period, and (5) under a claim of right. 112 Beyond these general elements, state codes provide for a regime of adverse possession statutes specific to their state. In Texas, adverse possession follows a three-, five-, ten-, fifteen-, and twenty-five-year framework. 113 Throughout the Texas framework, the stronger the facts surrounding the hostile party’s claim to the property, the less time is required under the adverse possession statute. For example, the twenty-five-year statute allows for a hostile party to adversely possess property merely through the cultivation, use, or enjoyment without deference to disabilities of the record owner. 114 Conversely, the three-year statute requires the hostile party to hold possession under the color of title. 115 The adverse possession framework reasonably balances the length of time required with the circumstances and behavior surrounding the hostile party’s possession and their notorious use of the property.

Beyond the statutory period, Texas requires the hostile party to both adversely and peaceably possess the property. Under Section 16.021(1), adverse possession is defined as “an actual and visible appropriation of real property, commenced and continued under a claim of right that is inconsistent with and is hostile to the claim of another person.” 116 Further, under Section 16.021(3), peaceable possession is defined as “possession of real property that is continuous and is not interrupted by an adverse suit to recover the property.” 117 The key to both elements is possession of the property.

1. Possession of the Mineral Estate

The mineral estate is severed from the surface estate when the fee owner of the combined property grants the surface estate but reserves the mineral estate or vice versa creating two distinct estates. 118 Once this severance has occurred, a trespassing party who thereafter assumes possession of the surface is no longer in possession of the minerals. 119 Instead, any party who wishes to adversely possess the mineral estate must actually possess the minerals. 120

Possession of the mineral estate leads to several issues given the complexities of property ownership and the realities of who is physically developing and exploiting the minerals. 121 However, independent of these issues, courts and commentators unanimously agree that the physical act of taking possession of the mineral is required to establish adverse possession of the mineral estate. 122 Actual possession in the oil and gas context generally requires the “drilling and production of oil or gas.” 123 Among the many actions demonstrating possession, the court in Vortt Exploration v. EOG Resources noted several factors that may be persuasive: (1) drilling a new well; (2) recompleting an existing well in a new

formation; (3) the production of any oil or gas; or (4) the sale of any production from the lease. 124 Notably, however, the court identified that the maintenance of the lease and any physical signage on the surface was insufficient to establish possession of a holdover tenant. 125

Beyond the activities of the hostile party, courts in Texas have outlined the limits of adverse possession in the oil and gas context in two areas. First, courts have limited the area and interest that a hostile party may adversely possess by holding that possession can only extend to the land claimed. 126 If possession of oil and gas is established on property that is outside of the interest claimed by the hostile party, then that possession is not sufficient to establish adverse possession. 127 Second, courts have alluded to, but have not yet fully resolved, the question of which party must be in possession. For example, in the oil and gas context, what if the oil company (who is the hostile party) is not physically in possession of the produced oil? Instead, they are merely directing operations. Would these circumstances satisfy ‘possession’ of the mineral estate to establish adverse possession under Texas law?

While this has remained an open question, many courts have focused on the nature of the interest that is being adversely possessed. 128 For example, if the interest being adversely possessed is possessory in nature, then possession of that interest, by any party, may be sufficient to satisfy possession by the hostile party. 129

2. Possessory Interests in Oil and Gas

In the oil and gas context, the common interests at stake require a more in-depth analysis as to what is a possessory interest and what is not a possessory interest. Following the execution of an oil and gas lease, the mineral owner grants a fee simple determinable to the oil company or

lessee. 130 The mineral owner retains the right to receive royalties from production. 131 However, the mineral owner (now also the party entitled to the lessor’s royalties) does not bear any cost of production associated with the development and exploitation of the minerals. 132 The entire cost of production is borne by the working interest (or leasehold interest) owner the oil company. 133 After the execution of an oil and gas lease, the working interest created is possessory in nature. 134 However, the royalty interest is defined as a nonpossessory interest. 135

When there are multiple working interest holders, the parties will frequently sign a joint operating agreement (JOA). The JOA serves to accomplish four main goals. First, the agreement serves to designate an operator. 136 As a result of this designation, one party to the JOA serves as the operator of the wells with the remaining parties to the JOA serving as non-operating parties. Second, the agreement serves to describe the operator’s authority to act. 137 Third, the JOA provides a mechanism to account for and allocate all costs of production among parties. 138 Finally, the agreement serves to provide recourse should a party default in their obligations to another party under the JOA. 139

Additionally, under the JOA, parties have the option to consent or not to consent to operations. The court in Dorchester addressed this distinction when it evaluated whether going ‘nonconsent’ would interrupt continuous possession by the hostile party, thereby defeating a claim of adverse possession. 140 In its finding of adverse possession, the court noted that the status of ‘nonconsent’ does not relinquish the owner’s property rights and is instead merely a contractual decision. 141

In sum, courts have found that if the adverse party is able to receive proceeds from the

development and exploitation of the minerals, then the adverse party is in possession of the property interest for the purposes of adverse possession. Accordingly, so long as the hostile party’s interest is possessory in nature and the hostile party is able to receive proceeds from the development and exploitation of the minerals, the hostile party will be deemed to be in possession of the mineral estate for purposes of adverse possession.

III. ANALYSIS

The histrionics of both the presumed-grant doctrine and adverse possession provide a unique opportunity to read the doctrines in harmony. Given their connection and overlap, both may apply to similar title disputes dealing with long periods of alleged ownership. Though the doctrines operate differently, both have the objective of settling title. The recent case of Dorchester is relevant, allowing evaluation of the presumed-grant doctrine where the court uses adverse possession to settle the dispute. By applying the presumed-grant doctrine, instead of adverse possession, the court could dispense with any concerns over whether the adverse party had possession of the minerals or whether the operator could possess the minerals on behalf of the hostile party. Instead of taking great strides to hold adverse possession was proper, the application of the presumed-grant doctrine could reach the same result in a straightforward manner.

A. Comparison of the Presumed-Grant Doctrine and Adverse Possession

1. PBEX

II,

LLC v. Dorchester Minerals, L.P. Background

The decision in Dorchester analyzes adverse possession in the oil and gas context. In Dorchester, the court addressed a case of first impression as to whether a non-operating working

interest could be adversely possessed under Texas law. 142 The court ultimately found that the buyer of the non-operating working interest successfully adversely possessed the working interest over a twenty-six-year period. 143

The situation in Dorchester concerned a disputed conveyance of a ‘non-operating’ working interest. In 1990, Torch Energy’s predecessor-ininterest conveyed its 25% non-operating working interest in the lease at issue to Dorchester’s predecessor-in-interest. Around the time of this disputed conveyance, there was an unrecorded purchase and sale agreement that documented the transaction. From May 1990 until September 2016, Dorchester (and its predecessors-in-interest) behaved as the true owner of the non-operating working interest at issue. Finally, after twenty-six years, Torch asserted its rights to the 25% nonoperating working interest. Dorchester asserted title to the non-operating working interest through adverse possession. 144

Citing twenty-six years of activity, Dorchester claimed it and its predecessors had acted as owners through its activities as a nonoperating interest owner. In its ruling of adverse possession in Dorchester, the court sided with Dorchester and against PBEX II finding persuasive that: (1) the lease under which the working interest is created was producing (the lease was not expired); (2) the operator sold the seller’s share of production and delivered that share to the buyer; (3) the operator turned over the sales resulting from the share of production to the buyer; (4) the operator sent invoices for payment of expenses attributable to the working interest share of production to the buyer; (5) the buyer paid all the taxes due on the working interest; and (6) the buyer made JOA consent and non-consent decisions for proposed operations. During this time, Torch, the seller of the oil leases to PBEX II, did not file suit, nor did they communicate or pay

any expense (nor conversely receive any revenue from the sale of production) from the property. 145

2. Van Dyke v. Navigator Group Background

The situation in Van Dyke stems from a 1924 deed between the Mulkey and White parties. 146 The language of the deed reads: “It is understood and agreed that one-half of one-eighth of all minerals and mineral rights in said land are reserved in grantors, Geo. H. Mulkey and Frances E. Mulkey, and are not conveyed herein.” 147 However, following this deed of “one-half of oneeight of all minerals and mineral rights,” the parties then began to behave as if each owned onehalf of the mineral estate. 148 In 1946, twenty-two years after the initial deed, Ethel Stuckert, the Mulkey’s daughter, sent a letter to her brother which contains the following lines: “After several weeks of consultations . . . between Mr. G. R. White, George [F. Mulkey] and [Young] J. [Mulkey], a contract was entered into whereby Mama, and Papa’s heirs, will receive one half of the mineral rights on the old ranch land.” 149 Given that any contract, whether executed or not, “has been lost to time,” there is no way to know for sure whether this was an actual contract or just a clarification as to the interests owned by the respective parties. 150

For the next ninety years following the 1924 deed’s execution, both parties continued to transact with one another; each represented that, and behaved as if, they owned one-half of the mineral interest in the captioned land. 151 This included various division orders 152 wherein the parties were allocated and subsequently paid their respective share of royalties from the minerals produced. 153 Until 2013, no issue was raised by either party or their respective heirs and assigns. 154 In 2013, the White parties, successors and assigns of the White and Tom General

Partnership from 1924, grantee of the original 1924 deed, finally brought a quiet title action. 155 Over the course of several decades, the accumulated production and royalty payments at stake in the Van Dyke litigation totaled more than $44 million dollars. 156

After deciding the case on alternative grounds and focusing on the language of the deed, the Texas Supreme Court unanimously overturned the Court of Appeals ruling and instead focused on the presumed-grant doctrine. The Court concentrated on the amount of time the parties had behaved as if they were each owner of one-half of the mineral estate. 157 With over ninety years of evidence, actions, and reliance between the parties, the Court determined that there was sufficient evidence to support a finding that the apparent owner of the outstanding mineral interest had knowledge of the hostile party (Mulkey’s) claim. 158 Over a period of ninety years, all the White parties and their successors were aware of and acquiesced to the Mulkey’s claim of ownership. Using this evidence to assess the case, the Texas Supreme Court applied the presumedgrant doctrine to determine that the mineral interest ownership reflected both parties’ behavior over the ninety-year time span. 159

B. Application of the Presumed-Grant Doctrine to Dorchester

The decision in Van Dyke has reaffirmed and clarified the Texas Supreme Court’s view on the presumed-grant doctrine. Following Van Dyke, the doctrine is not restricted in its application; rather, the doctrine may be used to evaluate the “quantum of interest” in title disputes where the issues stretch beyond the question of superior title. 160 Additionally, the decision in Van Dyke has laid the groundwork for the application of the doctrine in the same factual situation displayed in Dorchester. By applying the presumed-grant

doctrine to Dorchester, the court would be able to reach the same decision without the risk of unintended consequences.

The dissent in Dorchester outlines two major concerns for the finding that Dorchester successfully adversely possessed the nonoperating working interest of Torch. First, the dissent raises questions surrounding the ‘possession’ of the mineral estate by a nonoperating working interest holder. 161 Second, the dissent questions whether the non-consent status of Dorchester under the JOA would interrupt Dorchester’s continuous possession of the nonoperating interest. 162 Both concerns raise wellgrounded issues of law that would be fatal to Dorchester’s claim of adverse possession. However, through the application of the presumedgrant doctrine, both dissent’s concerns are alleviated without reaching to find Dorchester in possession of the mineral estate.

The dissent in Dorchester first addresses ‘possession’ of the mineral estate as required by adverse possession. 163 The dissent argues that a mere claim on a possessory interest is not enough to establish possession. Additionally, if Dorchester were to argue that possession was maintained under an agency theory, Dorchester would run into issues with the JOA and the express disclaimer of an agency relationship between the operator and non-operator. 164

Following this first question, the dissent continues to dispute the finding of adverse possession by addressing the agency relationship and periods of non-consent under the JOA. 165 The dissent asserts that, if Dorchester established possession of the mineral estate through their agency relationship with the operator, it follows that the agency relationship was terminated during periods of non-consent under the JOA. 166 Therefore, these periods of non-consent

interrupted Dorchester’s continuous possession and defeated any claim of adverse possession for the twenty-five-year statutory period. 167

As discussed above, possession of the mineral estate is a requirement to establish a claim of adverse possession in the oil and gas context. 168 However, as the relationship between parties becomes more complex, so too do the questions surrounding who is in possession of the estate. The decision in Dorchester asserts that the working interest of an oil and gas lease is possessory in nature and subject to adverse possession. 169 The court found that it was sufficient for a finding of adverse possession that Dorchester “acted as the owners of the Working Interest.” 170

Further, the court determined that the operator under the JOA could adversely possess the non-operating working interest “on behalf of” Dorchester. 171 In support, the court stated that the “operator’s production of the minerals and accounting for the Working Interest owner’s share is analogous to that of a landlord/tenant relationship . . . .” 172 Finding that “adverse possession can occur through a tenant,” the court determined that “when the operator began paying all the production proceeds, sending all requests for payment, and sending all election requests to [Dorchester], the operator recognized [Dorchester] as the landlord/Working Interest owner[].” 173 Through this relationship, the operator was able to adversely possess the non-operating working interest “on behalf of” Dorchester. 174

Strong arguments exist against possession contrary to the holding in Dorchester. To fully defend this finding, the analysis would require addressing areas of contract law, property law, and agency law to place Dorchester in a position to adversely possess the property interest over the twenty-six-year period. However, given possession is not a requirement to establish the

presumption of a grant into evidence, this in-depth analysis would be unnecessary if the court in Dorchester instead applied the presumed-grant doctrine.

By applying the presumed-grant doctrine, the court could forge a clearer path forward to the same result. Accordingly, two facts in Dorchester paired together provide sufficient grounds to presume a grant into evidence: (1) the initial transactions and subsequent dealings between Dorchester and the operator, which serve to impute knowledge to Torch of a hostile claim to its non-operating working interest, and (2) Torch’s failure to raise a claim or assert its rights to its nonoperating working interest during the twenty-sixyear period, beginning with the alleged transaction and ending with the lawsuit in 2016.

First, Torch had sufficient knowledge to be aware of the hostile claim to its alleged nonoperating working interest. From the outset, Torch was aware that its non-operating working interest was being considered as part of a transaction. 175 Whether the unrecorded purchase and sale agreement was finalized and executed may never be resolved; however, these negotiations serve to alert Torch that Dorchester was interested in acquiring its property interest. Following this alleged transaction, Torch was then sent a division order by the operator of the working interest at issue. This division order alerted Torch to the fact its interest was reduced to 0%. 176 Not only did the division order serve to alert Torch to a change in its ownership percentage, but Torch further acknowledged the change by signing the division order and returning it to the operator. Both acts demonstrated knowledge imputed to Torch that another party was claiming an interest in their nonoperating working interest.

Following these initial dealings, Torch clearly should have been aware of Dorchester’s

hostile claim. Once the initial transactions had occurred, Torch did not receive any further communication from the operator regarding their non-operating working interest. Instead, all future communication went to Dorchester. This included Dorchester’s payment of their share of the cost of production and their corresponding revenue interests. 177 Torch, as an average owner, would likely notice a lack of correspondence and reduced revenue. This should have alerted it to the possibility of a hostile claim to its interest. Therefore, Torch could have raised the question with either Dorchester or the operator as to the rightful owner of the non-operating working interest. Taken together, the initial transactions and subsequent dealings between Dorchester and the operator serve to impute knowledge to Torch of a hostile claim to its non-operating working interest. As a result, Torch had a sufficient level of knowledge to acquiesce to Dorchester’s hostile claim under the presumed-grant doctrine.

Second, during the twenty-six-year period, Torch failed to raise a claim or assert its rights to its non-operating working interest. 178 From the beginning of the transaction, Torch was aware of at least one party’s interest in the non-operating working interest at play. This is shown by the negotiations to sell the non-operating working interest to Dorchester in the first place. 179 However, beyond the initial negotiations over the purchase and sale of the property, the subsequent dealings and flow of money provide more grounds to presume a grant into evidence. For a period of twenty-six years, there ceased to be any communication and no record of revenue flowing from the non-operating working interest. Although there was production from the property throughout the period, Torch did not receive any revenue from the operator of the working interest. This lack of revenue for an extended time frame, coupled with the fact that Torch did not seek to recover from the operator for malfeasance, lends strength to the

argument that enough time had elapsed to both establish Torch had knowledge of Dorchester’s hostile claim and the acquiescence to that same hostile claim.

Moreover, the twenty-six-year period in which Torch did not assert its rights against Dorchester’s hostile claim exceeds both case precedent for the presumed-grant doctrine and the maximum statutory period to establish adverse possession. 180 The case in Stephens provides the minimum period to establish the presumption of a grant into evidence under Texas precedent. 181 While the twenty-year period established by Stephens is somewhat short, the argument is strengthened by the relationship with adverse possession and the twenty-five-year statutory period where title by limitation may be established. Although there may be an argument for a shorter time frame to establish a “longasserted and open claim” under the presumedgrant doctrine, the fact that Torch did not assert its rights under the twenty-five-year statutory period for limitations cannot be understated. When evaluated in conjunction with the level of knowledge Torch obtained over the twenty-sixyear period, there is ample evidence to find that Dorchester’s hostile claim was sufficiently longasserted to establish the presumption of a conveyance into evidence.

Instead of making legal jumps surrounding a finding of ‘possession’ and determining that the non-consent portions of time did not interrupt continuous possession of the property for purposes of adverse possession, a cleaner path for the courts is the application of the presumed-grant doctrine. Though the two doctrines differ in some respects, both doctrines should be applied in conjunction when approaching circumstances as outlined in Dorchester. The application of the presumed-grant doctrine side-by-side with adverse possession illustrates the overlap of the doctrines and further

demonstrates how the presumed-grant doctrine may apply to fact patterns that would normally trigger the assertion of adverse possession. The situations of Van Dyke and Dorchester serve as great examples to compare the two doctrines sideby-side. As applied to the situation in Dorchester, the presumed-grant doctrine is a better means to find that Torch conveyed the non-operating working interest. Rather than attempting to force the facts of Dorchester into an adverse possession analysis, courts should embrace the presumedgrant doctrine and apply it with ease.

IV. CONCLUSION

Prior to the decision in Van Dyke, Texas courts of appeal have had few opportunities to apply the presumed-grant doctrine to long-term title disputes. In Van Dyke, the presumed-grant doctrine was used as a powerful tool with an extreme outcome the presumption of a grant or conveyance into evidence. When a court is presented with the opportunity to approach longterm title disputes with both adverse possession and the presumed-grant doctrine, it should do so. Utilizing both the presumed-grant doctrine and adverse possession provides a powerful tool for the court’s legal toolbox.

The presumed-grant doctrine does not favor either side. As the Court in Van Dyke noted, “[e]ither side . . . could find the doctrine to be important.” 182 As with the doctrine in general, the key is a thorough evaluation of all the evidence surrounding the presumption of a grant or an adjustment to the quantum of interest at stake. 183 By following this guide, courts could adhere to the historical view of the presumed-grant doctrine title by circumstantial evidence. Just as circumstantial evidence can influence a presumption, so too could title by circumstantial evidence establish that a presumption is warranted or unwarranted based on the facts.

In addition to keeping the central theme of the doctrine in mind, courts may be aided by approaching title disputes and use the presumedgrant doctrine in conjunction with adverse possession. The history and overlap between the two doctrines offer a thorough analysis of any long-term title dispute. This is especially true where the property interest at issue is nonpossessory. In this instance, an examiner should look to a potential application of the presumedgrant doctrine. Given that possession of the property is a requirement to establish adverse possession, any adverse possession claim to a nonpossessory interest is likely dead-on-arrival. However, without the element of possession, the presumed-grant doctrine can fill the void.

1 670 S.W.3d 374 (Tex. App. Amarillo 2023, pet. filed).

2 668 S.W.3d 353 (Tex. 2023).

3 See Brumley v. McDuff, 616 S.W.3d 826, 832 (Tex. 2021) (citing Rogers v. Ricane Enters., Inc. 884 S.W.2d 763, 768 (Tex. 1994)).

4 Henry Ballantine, Title by Adverse Possession, 32 HARV L. REV. 135, 143 (1918).

5 Thomas W. Merrill, Property Rules, Liability Rules, and Adverse Possession, 79 NW. U. L. REV. 1122, 1133 (1984).

6 See generally Jeffus v. Coon, 484 S.W.2d 949, 951–53 (Tex. App. Tyler 1972, no writ) (“In a trespass to try title action, where there is a missing link in the chain of title many years prior to time such issue is raised, there is a presumption liberally indulged that a deed did exist covering the period. It is the established law in this State that title may be proved by other competent evidence, including circumstances.” (citation omitted)).

7 Id. at 954 (finding the presumption of a conveyance to be proper under the evidence introduced).

8 Haby v. Howard, 757 S.W.2d 34, 39 (Tex. App. San Antonio 1988, writ denied).

9 Jeffus, 484 S.W.2d at 953 (“The fact that appellee and those under whom he claims may not have made such use of the tract here in dispute, as would be necessary to sustain a claim of title by adverse possession under the limitation statutes, is not material.”).

10 Fair v. Arp Club Lake, Inc., 437 S.W.3d 619, 626 (Tex. App. Tyler 2014, no pet.).

11 Haby, 757 S.W.2d at 39.

12 Purnell v. Gulihur, 339 S.W.2d 86, 92 (Tex. App. El Paso 1960, writ ref’d n.r.e.).

13 See TEX. CIV. PRAC. & REM. CODE ANN. § 16.021(1) (requiring an actual and visible appropriation of real property for a finding of adverse possession).

Finally, the presumed-grant doctrine provides a useful tool to determine title disputes over an extended period. As Dorchester demonstrates, the right finding may involve a legal jump to force the facts into a legal theory. As the dissent in Dorchester alludes to, there could be unintended consequences from reaching and redefining what ‘possession’ means in the context of adverse possession. Instead of this legal jump, the presumed-grant doctrine provides a cleaner path forward. By simple application of the presumed-grant doctrine, the court in Dorchester could have alleviated the dissent’s concerns over possession and the continued use of the property and found for the rightful owner of the property interest, Dorchester.

14 See Love v. Eastham, 154 S.W.2d 623, 625 (Tex. 1941) (“Of course, it cannot be said that the ostensible owner has acquiesced in a claim of ownership adverse to his title, unless it can also be said that he had knowledge of such adverse claim.”).

15 Id

16 Knowledge, BLACK’S LAW DICTIONARY (11th ed. 2019).

17 Id.

18 Id.

19 Id

20 Id.

21 Notice, BLACK’S LAW DICTIONARY (11th ed. 2019).

22 Id. (“A person has notice of a fact or condition if that person (1) has actual knowledge of it; (2) has received information about it; (3) has reason to know about it; (4) knows about a related fact; or (5) is considered as having been able to ascertain it by checking an official filing or recording.”).

23 Id

24 Id.

25 Id

26 Watkins v. Edwards, 23 Tex. 443, 448 (Tex. 1859).

27 Id

28 This illustrates an intersection between the PresumedGrant Doctrine and Adverse Possession because of the different requirements of knowledge and notice. For example, there is a possibility that the apparent owner of a property may have knowledge of a recorded instrument concerning his land. But this question is irrelevant given the fact he is put on constructive notice by the mere recording of a deed.

29 Notice, BLACK’S LAW DICTIONARY (11th ed. 2019).

30 Cook v. Avien, Inc., 573 F.2d 685, 697–98 (1st Cir. 1978) (discussing inquiry notice in the context of investment fraud).

31 Janvey v. GMAG, L.L.C., 592 S.W.3d 125, 130 (Tex. 2019) (discussing inquiry notice in the context of a fraudulent transfer).

32 Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908 (Tex. 1982) (collecting cases).

33 Bounds v. Little, 12 S.W. 1109, 1110 (Tex. 1889).

34 Fowler v. Texas Expl. Co., 290 S.W. 818, 823 (Tex. App. Galveston 1926, writ ref’d).

35 Id

36 Van Dyke v. Navigator Grp., 668 S.W.3d 353, 366 (Tex. 2023) (citing Magee v. Paul, 221 S.W. 254, 257 (Tex. 1920)).

37 Magee v. Paul, 221 S.W.2d 254, 256–57 (Tex. 1920) (establishing possession is not necessary to satisfy the doctrine).

38 Love v. Eastham, 154 S.W.2d 623, 625 (Tex. 1941).

39 See Fletcher v. Fuller, 120 U.S. 534, 552 (1887) (finding the question is one that “may be left for the jury”).

40 Walker v. Sharp, 15 S.W. 31, 32 (Tex. 1890).

41 See Fowler v. Texas Expl. Co., 290 S.W. 818, 823 (Tex. App. Galveston 1926, writ ref’d); see also Brewer v. Cochran, 99 S.W. 1033, 1038 (finding the presumption of a grant does not require the removal of all doubt as to the grant’s existence).

42 See Adams v. Slattery, 295 S.W.2d 859, 871 (Tex. 1956); see also Howland v. Hough, 570 S.W.2d 876, 880 (Tex. 1978) (finding the evidence before them sufficient for summary judgment).

43 Luminant Mining Co., v. PakeyBay, 14 F.4th 375, 380 (5th Cir. 2021) (citing Land v. Turner, 377 S.W.2d 181, 183 (Tex. 1964)) (finding that the crucial question is “the strength” of the plaintiff’s title rather than the weakness of a defendant’s claims).

44 Magee v. Paul, 221 S.W. 254, 257 (Tex. 1920) (stating that “[t]he rule is essential to the ascertainment of the very truth of ancient transactions”).

45 Id.

46 Adams v. Slattery, 295 S.W.2d 859, 871–72 (Tex. 1956) (citing Pratt v. Townsend, 125 S.W. 111, 114 (Tex.Civ.App. 1910, no writ).

47 Id. (“The destruction of the records in so many of the counties of this state, coupled with the carelessness, well nigh universal at an earlier period of our history, on the part of the people in keeping the original deeds after they had been recorded, and the disposition now so prevalent to uncover, by reason of carefully prepared abstracts of title, the absence of such written muniments of title as are necessary to make a complete chain, required, in our opinion, a liberal application of this rule for the protection of titles long relied upon in good faith, the evidence of which has been lost through carelessness or accident, the destruction of records, and the death of all persons originally connected therewith, or likely to know anything about the facts.”).

48 Magee, 221 S.W. at 256 (“Since it is not consistent with human experience for one really owning property of value to assert no claim thereto, but to acquiesce for a long period of time in an unfounded, hostile claim, the rule is sound which permits the inference that an apparent owner has parted with his title from evidence . . . .”).

49 See Thomas W. Merrill, Property Rules, Liability Rules, and Adverse Possession, 79 NW U. L. REV 1122, 1133–35 (1984).

50 See generally Taylor v. Watkins, 26 Tex. 688, 688 (Tex. 1863).

51 Id.

52 Id.

53 See Love v. Eastham, 154 S.W.2d 623, 625 (Tex. 1941).

54 See Taylor, 26 Tex. at 690–91 (Tex. 1863).

55 Id

56 Stephens v. House, 248 S.W. 30, 33 (Tex. [Comm’n Op.] 1923).

57 Bounds v. Little, 12 S.W. 1109, 1110 (Tex. 1889).

58 Id; see supra text accompanying notes 28–32.

59 Bounds, 12 S.W. at 1110.

60 Id

61 154 S.W.2d 623 (Tex. 1941).

62 Id at 625.

63 Id.

64 Id. at 624

65 Id. at 625.

66 Id.

67 Id. (holding the presumed-grant doctrine did not apply to the hostile claim).

68 Id.

69 Id.

70 Magee v. Paul, 221 S.W. 254, 256–57 (Tex. 1920).

71 See, e.g., TEX. CIV. PRAC. & REM. CODE ANN. § 16.027 (establishing 25-year statute of limitations for adverse possession cause of action).

72 See Jeffus v. Coon, 484 S.W.2d 949, 952 (Tex. App. Tyler 1972, writ denied) (110 to 90 years between presumption to present day); see also Howland v. Hough, 570 S.W.2d 876, 876 (Tex. 1978) (100 years from challenged conveyance to the time of the lawsuit).

73 Stephens v. House, 248 S.W. 30, 33 (Tex. [Comm’n Op.] 1923).

74 Id. (quoting Walker v. Sharp, 15 S.W. 31, 32 (Tex. 1890)) (“For example, where the owner of land has seen another use a way over it for 20 years, and where such use has been inconsistent with the idea that it did not have a legal origin, the presumption of a grant may become conclusive.”)

75 Id

76 Id.

77 Id.

78 Id. (quoting Walker v. Sharp, 15 S.W. 31, 32 (Tex. 1890)) (“But it is apparent that in such a case the presumption derives its main support from the acquiescence of the owner of the fee.”).

79 Id. at 33–34.

80 See, e.g., Van Dyke v. Navigator Grp., 668 S.W.3d 353, 367–68 (Tex. 2023) (finding ninety years of evidence sufficient to establish a long-asserted claim and presume a conveyance).

81 Id. at 366 n.7 (“Or, more precisely, the court of appeals made the ‘gap’ a kind of condition. Specifically, the court of appeals acknowledged that the ‘gap’ requirement ‘is not an express element’ but went on to hold that the doctrine ‘typically applie[s] . . . in cases where a party’s lack of

complete record title to land it has claimed for a long time is due to a gap in the chain of title.’”).

82 570 S.W.2d 876 (Tex. 1978).

83 Id. at 879 (demonstrating that a “gap in title” may have two different meanings: (1) a gap in time and (2) a gap in the chain of title. Frequently, the presumed-grant doctrine is used to fill a gap in the chain of title.).

84 Id.

85 Id.

86 Id. at 879–80.

87 Id.

88 Id. at 880.

89Id. at 879.

90 Id.

91 Id.

92 Van Dyke v. Navigator Grp., 647 S.W.3d 901, 909 (Tex. App. Eastland 2020), rev’d, 668 S.W.3d 353 (Tex. 2023).

93 Id. (citing Adams v. Slattery, 295 S.W.2d 859 (Tex. 1956) and Seddon v. Harrison, 367 S.W.2d 888 (Tex. App. Galveston 1963, writ refused n.r.e.)).

94 See Van Dyke v. Navigator Grp., 668 S.W.3d 353, 366 n.7 (Tex. 2023) (“[I]nsisting on the presence of such a ‘gap,’ as in the judgment below, amounts to the same thing as making it an element.”).

95 Id. at 366.

96 See, e.g., Balmorhea Ranches, Inc. v. Heymann, 656 S.W.3d 441, 450 (Tex. App. El Paso 2022, no pet.).

97 Id

98 See Van Dyke v. Navigator Grp., 668 S.W.3d 353, 366 (Tex. 2023) (finding the presumption of a grant without a gap in title in a contested Twentieth century transaction).

99 Van Dyke v. Navigator Grp., 647 S.W.3d 901, 910 (Tex. App. Eastland 2020), rev’d, 668 S.W.3d 353 (Tex. 2023).

100 Id.

101 Id.

102 356 S.W.3d 755 (Tex. App. Beaumont 2011, no pet.).

103 Van Dyke, 647 S.W.3d at 910.

104 Id

105 Id.

106 Id. (reasoning that “the presumed grant doctrine cannot operate to change the quantum of interest as expressed in the very deed . . . .”).

107 Van Dyke v. Navigator Grp., 668 S.W.3d 353, 366–67 (Tex. 2023).

108 Id.

109 Republic Nat. Bank of Dallas v. Stetson, 390 S.W.2d 257, 262 (Tex. 1965) (citing Wilson v. Daggett, 31 S.W. 618, 619 (Tex. 1895).

110 Howard v. Colquhoun, 28 Tex. 134, 145 (Tex. 1866).

111 PBEX II, LLC v. Dorchester Mins., L.P., 670 S.W.3d 374, 380 (Tex. App. Amarillo 2023, pet. filed).

112 See Nat. Gas. Pipeline Co. of Am. v. Pool, 124 S.W.3d 188, 193 (Tex. 2003); see also Henry Ballantine, Claim of Title in Adverse Possession, 28 YALE. L. J. 219, 219 (1919).

113 TEX CIV PRAC & REM CODE ANN §§ 16.024; 16.025; 16.026; 16.0265; & 16.027.

114 Id. § 16.027.

115 Id. § 16.024.

116 Id. § 16.021(1).

117 Id. § 16.021(3).

118 Lyles v. Dodge, 228 S.W. 316, 317 (Tex. App. Amarillo 1921, no writ).

119 Id. (discussing the holding in Wallace v. Hoyt, 225 S.W. 425 (Tex. App. Austin 1920, writ ref’d)).

120 Wallace v. Hoyt, 225 S.W. 425, 428 (Tex. App. Austin 1920, writ ref’d).

121 See, e.g., PBEX II, LLC v. Dorchester Min., L.P., 670 S.W.3d 374, 382 (Tex. App. Amarillo 2023, pet. filed).

122 See Kiser v. McLease, 67 S.E. 725, 726 (W. Va. 1910) (requiring the adverse party to drill wells); see also Newman v. Newman, 55 S.E. 377, 379 (W. Va. 1906) (requiring coal to be developed); see also Gill v. Fletcher, 78 N.E. 433, 435–36 (Ohio 1906) (finding that an owner does not “lose his rights by mere nonuser”), superseded by statute, Ohio Dormant Mineral Act, OHIO REV. CODE ANN. § 5301.56 (West 2014), as recognized in Peppertree Farms, L.L.C. v. Thonen, 188 N.E.3d 1061 (Ohio 2022).

123 Nat. Gas Pipeline Co. of Am. v. Pool, 124 S.W.3d 188, 193 (Tex. 2003) (citing Hunt Oil Co. v. Moore, 656 S.W.2d 634, 641 (Tex. App. Tyler 1983, writ ref’d n.r.e)).

124 Vortt Expl. Co., Inc. v. EOG Res. Inc., No. 11-07-00159CV, 2009 WL 1522661, at *8 (Tex. App. Eastland May 29, 2009, no pet.).

125 Id.

126 Hunt Oil Co. v. Moore, 656 S.W.2d 634, 641 (Tex. App. Tyler 1983, writ ref’d n.r.e.).

127 Id

128 See, e.g., Portwood v. Buckalew 521 S.W.2d 904, 919 (Tex. App. Tyler 1975, writ ref’d n.r.e.) (finding that an overriding royalty interest is not subject to adverse possess given the interest is not possessory).

129 See PBEX II, LLC v. Dorchester Mins., L.P., 670 S.W.3d 374, 377 (Tex. App. Amarillo 2023, pet. filed) (evaluating an issue of first impression: whether non-operating working interests may be adversely possessed).

130 2 EUGENE KUNTZ, A TREATISE ON THE LAW OF OIL AND GAS § 23.2 (2023) (noting Texas has taken the position that the lessee of an oil and gas lease acquires a fee simple determinable in the minerals).

131 1 ERNEST E. SMITH & JACQUELINE L. WEAVER, TEXAS LAW OF OIL AND GAS § 2.4[A], at 2-61 (2d ed. 2015).

132 Id

133 Id

134 See 1 EUGENE KUNTZ, A TREATISE ON THE LAW OF OIL AND GAS § 10.5 (2023); see also Nat. Gas Pipeline of Am. v. Pool, 124 S.W.3d 188, 192 (Tex. 2003).

135 SMITH & WEAVER, supra note 131.

136 See Cimarex Energy Co. v. Anadarko Petrol. Corp., 574 S.W.3d 73, 97 (Tex. App. El Paso 2019, pet. ref’d).

137 Id

138 Id

139 Id

140 PBEX II, LLC v. Dorchester Min., L.P., 670 S.W.3d 374, 385–86 (Tex. App. Amarillo 2023, pet. filed).

141 Id.

142 Dorchester, 670 S.W.3d at 377, 379.

143 Id. at 378.

144 Id. at 378–79.

145 Id. at 382.

146 Van Dyke v. Navigator Grp., 668 S.W.3d 353, 357 (Tex. 2023).

147 Id

148 Id. at 358 (including transactions, conveyances, leases, ratifications, division orders, etc.).

149 Id.

150 Id.

151 Id.

152 See TEX NAT RES CODE § 91.401(3) (defining a division order as “an agreement signed by the payee directing the distribution of proceeds from the sale of oil, gas, casinghead gas, or other related hydrocarbons. The order directs and authorizes the payor to make payment for the products taken in accordance with the division order.”).

153 Van Dyke, 668 S.W.3d at 358.

154 Id.

155 Id.

156 Id. (“At stake is at least $44 million in accumulated disputed royalties.”).

157 Id. at 366–67.

158 Id.

159 Id. at 366–68.

160 See supra text accompanying notes 99–108.

161 PBEX II, LLC, v. Dorchester Mins., L.P., 670 S.W.3d 374, 390 (Tex. App. Amarillo 2023, pet. filed).

162 Id

163 Id.

164 Id

165 Id.

166 Id

167 Id.

168 See supra text accompanying notes 118–29.

169 Dorchester, 670 S.W.3d at 381.

170 Id. at 382–83.

171 Id. at 384–85.

172 Id. at 385.

173 Id.

174 Id

175 Id. at 378–79.

176 Id. at 379.

177 Id.

178 Id.

179 Dorchester, 670 S.W.3d at 379.

180 Id. at 381 (finding the 25-year statute of limitations applies to the possession of the working interest); see also TEX CIV PRAC & REM CODE ANN. § 16.027 (establishing 25-year statute of limitations for adverse possession cause of action).

181 See supra text accompanying notes 75–79.

182 Van Dyke v. Navigator Grp., 668 S.W.3d 353, 368 n.11 (Tex. 2023).

183 Id

Applying Time-Tested Principles in Today’s Digital Age

By: Randall K. Sadler Sadler Law Group PLLC

The original version of this article was presented on February 18, 2006, to the San Antonio Association of Professional Landmen at its Annual Mid-Winter Seminar. In light of changes in law and technology in the last 18 years, it was suggested that an update would be welcomed. Numerous technological advances have occurred during that period, most notably the digitization of records, remote access to county records via county clerk websites, and third-party county records websites. As a result of such changes, the aggregation of documents has become more efficient and expedient; however, the fundamental methods and manner of preparing a “title runsheet” have not substantially changed, although the aggregation of the information is now primarily prepared in a digital world. In presenting this topic again, I repeated the relevant material from the 2006 paper, adding the technological adaptations and any changes in the case law.

This article discusses the manner of preparation of a title runsheet by a landman concerning interests in real property in Texas using records from an abstract company, if available, official public records of the county clerk, and minutes of the district clerk in the county where the land covered by an oil and gas lease is located. Moreover, this article provides a practical, hands-on description of the necessary steps to prepare the runsheet.

The initial section is directed toward novice landmen assigned with the responsibility of compiling a runsheet for an attorney drafting a title opinion in anticipation of an oil and gas company

drilling a well. The latter part discusses risk management as applied to the content of runsheets, which is included for company managers charged with approving the title clearance necessary to facilitate the drilling of the well.

I. RUNSHEET PREPARATION

In its simplest form, a runsheet, as the term is commonly used today in the oil and gas exploration industry, is a chronological list of all recorded instruments and proceedings of whatever kind and character affecting an estate or ownership in the subject land that are within the record chain of title. The goal of the runsheet is to identify every recorded instrument affecting the subject land and to communicate such information to the client and the examining attorney. Traditionally, following the characteristics of an abstract of title, the runsheet should cover the period from the sovereignty of the soil to the most current date obtainable in the present. With that said, each runsheet should be prepared in accordance with the client’s instructions. A runsheet containing the “record chain of title” is prepared from the official public records of the county where the subject land is located. Texas courts have held that a “chain of title” refers to the documents that show the successive ownership history of a tract of land, commencing with the severance of title from the sovereign down to and including the conveyance to the present holder.

When tasked with preparing a runsheet, a landman may receive an extensive package of materials, including lease-purchase reports, a mineral takeoff or mineral ownership report utilized for leasing the land, copies of the oil and gas leases, plats and other pertinent information possessed by the client. Other tim es, a landman will only receive a copy of the current oil and gas lease and a plat. This article has been prepared on the assumption of the latter.

The preparation of runsheets has mostly stayed the same in the last forty years, except for the introduction of digital data and the assistance of computers in the drafting and presentation of the document. Despite these technological advances, the skills and knowledge required to prepare a runsheet have remained. To prepare a runsheet, it will be helpful to have all or some of the following tools and the knowledge of how to use them: a desktop computer or laptop, a smartphone, another camera device, platting software, runsheet software, spreadsheet software, word processing software, a records index checklist, a runsheet form, plats, and an internet connection.

The tools used and their effectiveness depend on the landman’s computing skills and equipment, the county clerk’s disposition and rules, and the accessibility of the records.

Use of Abstracts

Before beginning the courthouse review, determine whether any abstracts of title are available for review. An abstract of title is a collection of all recorded instruments affecting the title to a tract of land prepared by an abstractor who certified the same as the land covered, the records, and the period covered. Historically, mineral owners/lessors were given copies of abstracts of title by the oil companies when they had completed their examination or the landowner acquired them as a part of their acquisition of the subject land, which generally is not the current real estate practice. If an abstract of title exists and is available, borrow it and forward a copy to the title examiner. If an abstract is unavailable to borrow, obtain the owner’s permission to review the abstract in the most reasonable manner possible. At that point, copy it, scan it or hand copy the

index of the documents contained, including the abstract number, the description of the land covered, and the beginning and closing date of the abstract. Upon obtaining an abstract and receiving authorization to rely on it, the runsheet shall encompass the period from the closing date of the abstract to the most current date in the public records

Abstract or Title Company

When available, the landman should utilize the records of the abstract or title company in the county where the work is to be conducted, encompassing the period from the sovereignty of the soil to include the most current date in their records. The companies’ records are set up by survey or abstract number and, therefore, quickly limit the scope of the review necessary to prepare a runsheet. Landmen should remember that many abstract companies have converted to title companies. That said, some title companies still allow landmen to use old survey books or survey cards as a beginning point for collecting information for the runsheet.

The landman will utilize the records of the abstract company to craft a preliminary runsheet, which will subsequently undergo completion through a review of the official public records. The landman will prepare the preliminary runsheet by employing some, or all, of the following steps:

• Confirm the date of the abstract company’s records, particularly concerning the records in the county clerk and district clerk offices

• Examine all cards or books on the particular survey or surveys where the property is located.

• List all instruments affecting title to the property on the runsheet, including but not

limited to patents, deeds, leases, assignments, conveyances, bills of sale, mergers, affidavits, liens, deeds of trust, abstracts of judgments, all probate matters and District Court matters.

• For each instrument incorporated on the runsheet, include the name of the parties, date of instruments, date of the recording of instruments, recording data, number of acres included in conveyance, and any relevant remarks regarding mineral reservations or conveyances, or other related documents in the runsheet.

• In addition to the survey book or survey cards in the abstract or title company office, check with the local abstractor to see if there is a name card file in the abstract company. If there is a name card file in the abstract company, check each name listed in the preliminary runsheet concerning the record title owners of the property. Names of parties in oil and gas leases or other extraneous instruments need not be researched. The name card files will reveal probate proceedings and affidavittype instruments, some of which may otherwise be difficult to locate in the official public records.

Review of Official Public Records

After the preliminary runsheet is completed at the abstract company, it is necessary to review the essential instruments in the official public records of the county clerk and district clerk. This review ensures that the runsheet covers the subject land and includes all relevant related instruments. The examination should encompass the indexes both direct and reverse of the “official public records of real property” in the county where the land is situated. These archives may encompass various

records such as deed records, oil and gas lease records, deed of trust records, state and federal tax lien records, lis pendens records, abstract of judgment records, mechanics and materialman’s lien records, financing statement records, probate records, and District Court records. Both physical records in books or volumes and digital records should be consulted to establish the record chain of title to the subject land.

Following are a few notes about terminology:

• As used in later sections of this article, the term “deed records” refers to deed records, real property records, official public records, or similar named records in which conveyances of any interest in the subject land or other instruments relating to the ownership of the subject land, such as affidavits, may be recorded.

• The term “deed of trust records” refers to deed of trust records, mortgage records, mechanics and materialman’s lien records, or similar records in which the instruments creating real property liens by agreement of the parties are recorded, but such term shall not include financing statement records.

• The term “lien records” shall refer to state tax lien records, federal tax lien records, abstract of judgment records, lis pendens, or similar records by which liens are statutorily granted or obtained by recordation of an instrument and may include mechanics and materialman’s lien records

• The term “probate records” refers to the original court files and the files as transcribed and maintained, generally organized by volume and page in the county clerk’s office, relating to the

probate or administration of a decedent’s estate.

• The term “District Court records” refers to the original court files and the minutes of the District Court, whether one or more, and include, for the purposes of this article, the lis pendens records kept in the office of the county clerk.

Check with the county clerk to determine that all deed records, deed of trust records, state and federal tax lien records, lis pendens records, lien records, and probate records were examined during the records search, and likewise, check with the district clerk regarding District Court records. Many counties have used different names for different records throughout the history of the respective county, including real records, real property records, official records, oil and gas records, oil and gas lease records, mortgage records, or any derivation of any such records. It is crucial to correctly identify the proper name of the record in which the instrument is filed in the runsheet, as such reference is the appropriate reference for the title opinion.

Also, the landman should note all discrepancies in the descriptions in the runsheet. Should any index not cover both direct and reverse, note the same in the runsheet.

All variations or inconsistencies in the official public records must be documented in the runsheet. To establish the dates and periods covered, ascertain the closing date of all records in the indexes and the daily register from the county clerk. If any index does not encompass direct and reverse records, note this in the runsheet. Additionally, any unusual records encountered during the examination should be recorded in the runsheet.

Courthouse Records Review

The following procedures generally outline the steps necessary to proceed with the preparation of the runsheet. All records are organized somewhat differently, and using a common-sense approach to the methods and procedures will be helpful. These guidelines apply regardless of whether an abstract has been reviewed or the records of an abstract company have been examined; the only difference lies in the timing of the review at the courthouse, as applicable.

1. A chain of title is “run” and established for a period of time from the sovereignty of the soil, or some later date, to the most current date present. The chain of title includes the names of all the owners of any interest in the subject land in chronological order for the period in which they own an interest in the land, which in its simplest form is a “flowchart.” The chain of title reflects the passage of title to the subject land from one owner to the next. Because Texas maintains only official grantor and grantee indexes, a landman should search under the name of each grantor from the date the grantor acquired the subject land forward to the date of filing for record the instrument that transfers all of the interest of the grantor in the subject land to a grantee.

2. A flowchart is a diagram of the transactions revealed by the abstract or review of records that contain the names of the grantors and grantees, the date of the instrument, its nature, recording reference (book/volume and page), and what it purports to cover. The flowchart facilitates the recognition of ownership of the various estates and interests in the subject land; it is a visual roadmap of the chain of title.

3. Throughout the United States, each state has recording and notice statutes that fall into one of three categories: race statutes, notice statutes, and race-notice statutes. Texas subscribes to the notice statutes. The Texas statutes hinge on the timing of conveyances rather than the filing date of the instrument. Consequently, upon encountering a name in the chain of title, the landman should search in the indexes from the date each grantor acquired the property up to the recording date of the instrument that transferred the entire interest to a grantee. Subsequently, all individuals listed in the chain of title should have their records searched up to the closing date of the runsheet to identify any conflicting instruments.

4. To establish a chain of title, begin with a copy of the oil and gas lease or leases covering the subject land. Most leases briefly describe the subject land, referencing the particular volume and page in the deed records where an instrument with a metes and bounds description is recorded. This reference instrument is usually the vehicle by which the lessor acquired title to the subject land. Once the landman locates the reference instrument, they should record the pertinent information as a beginning point.

5. If a copy of the oil and gas lease or other instrument in the chain of title does not refer to an earlier instrument, then the landman will have to use the grantee or reverse index to locate deed records. Begin with the lease date or the date of the last instrument found. Run compare the grantee index against the subject person until the instrument by which the subject

owner acquired title to the subject land is located. Continue with this or the prior method until a complete chain of title from the present owner back to sovereignty has been established. It is worth noting that many instruments contain recitals of earlier instruments in the chain of title, which will simplify the search.

6. Sometimes, when using these methods to establish a chain of title from the present owner back to sovereignty, a landman may not find a recorded conveyance of the subject land to an owner. In such case, it may be necessary to resort to one or more of the following methods:

(a) Search the index to probate records against all individuals with the same surname to determine whether the subject owner acquired the subject land by devise.

(b) Search the grantee index to deed records against all individuals with the same surname for conveyances, heirship affidavits, or other instruments that would indicate that the subject owner acquired the subject land by inheritance.

(c) When the owner is a woman, a search of the index to marriage records may determine whether her name has changed.

(d) Search the index to the District Court records to determine whether the owner acquired title through some legal proceeding.

7. If all of these methods fail, the landman should attempt to establish the chain of title from the sovereignty of the soil down

to the last owner of the subject land they have found. Search the grantee index to deed records against the name of the original patentee to find the patent or grant from the s overeign. Commence the search with the earliest index and persist until locating the patent, assuming it is of record. They should note that it is not uncommon to find a patent recorded for the first time as late as 100 years after the date of the patent. After locating the patent, initiate the search from the patent date onward in the grantor index to deed records, examining the names of the original patentee and subsequent proprietors until the chain of title is established. This process may entail multiple iterations of searching forward and backward in the grantor/grantee index to trace the early title.

8. If a recorded conveyance of the subject land out of an owner is not located meaning there is a possible gap in title one or more of the methods outlined in No. 6 may prove helpful.

Checklist of Research

Once the landman establishes a complete chain of title for the subject land, they should search each of the following indexes set against all owners of the subject land:

• Grantor index to deed records against all owners of the subject land to determine whether they have transferred the same land or any interest therein twice.

• Grantee index to deed records against all owners of the subject land to find any other instruments affecting the subject land.

• Index to probate records, where necessary, to determine ownership of the subject land.

• Index to the District Court records against all owners of the subject land to determine whether any civil suits affect the subject land.

• Grantor index to deed of trust records against all owners of the subject land to determine whether any mortgages affect the subject land.

• Index to lis pendens records against all owners of the subject land to determine whether any legal actions are pending against the subject land.

• Index to abstract of judgment records against all owners of the subject land for at least the 10 years preceding the present date to determine whether any judgment liens affect the subject land.

• Index to federal tax lien records against all owners of the subject land for at least the 20 years preceding the present date to determine whether there are any federal tax liens or abstracts of judgment affecting the subject land

• Index to state tax lien records against all owners of the subject land for at least the 20 years preceding the present date to determine whether any state tax liens affect the subject land.

• Indexes to the lien records against all owners of the subject land to determine whether any liens affect the subject land.

• A search should be made in the daily register of instruments against all owners of

the subject land from the date of the last entry in the index to official public records to the present date to determine whether any instruments affecting the subject land have been filed for record.

• Prepare a list of all names run in the records, the dates covered, and the indexes reviewed. It is more efficient to prepare this list during the examination of the record title.

Landmen should record the results of their search for each instrument or proceeding on the runsheet. The following information should be included for each instrument or proceeding: grantor, grantee, nature of the instrument, date of the instrument, date the instrument was filed for record, recording information, acreage, and remarks.

After completing the necessary steps in preparing the runsheet, regardless of the method used to record the individual instruments or proceedings, it is essential to arrange the instruments and proceedings in chronological order based on the date or effective date of the instrument. Subsequently, the information from these documents should be transferred to the final runsheet.

A landman may use a research checklist to conduct the index search efficiently. In the “name” column, record the name of each owner of the subject land, beginning with the original patentee and continuing down to the present owner. In the “date” column, for each owner, record the month/day/year in which the owner acquired the title and the month/day/year in which the conveyance out of the owner was filed for record. If the instrument includes an effective date, place the instrument in order by the effective date.

Check each index set forth on the checklist one at a

time against all owners of the subject land. The search scope for each owner will be from the date the owner acquired the title to the present. Transcribe the pertinent information about each instrument and proceeding that affects the subject land.

After a search of each index, arrange the instruments and proceedings chronologically. Determine whether any unreleased liens, leases, or other outstanding matters exist. It may be necessary to search the indexes again to find releases, heirship affidavits, or other instruments and proceedings to cure any outstanding issues

Online Research

It is unknown how many county clerk offices have records available online through their websites or commercial records research firms or when the online records begin and end. But clearly, the digitization of county clerk records and the availability of online research has been one of the most dramatic innovations for title preparation in the last few decades years.

Landman should always carefully consider whether the official public records are accessible online and, if so, the available time frame of the county clerk’s online records. Even if the official public records are unavailable via the county clerk’s website, most records are digitally available through online title search companies. As a word of caution, such online records may not cover the period from the sovereignty of the soil to the present, nor should such records be considered the equivalent of the actual records themselves. Regardless of how the records are accessed, the provider will disclaim any representation or warranty regarding the accuracy of the information and use of such service, clarifying that access to such records is at the user’s sole risk. The search engines can be difficult to maneuver within, akin

to the early digitized records in the courthouses; however, many are organized in the same manner as a grantor/grantee index. As is always the case with research or indexing records at a computer terminal, whether at the courthouse or online at one’s office, there is no standardized system for data inputting. In most cases, the person charged with data input must deduce how to abbreviate entities, trusts, or individuals with more letters than will fit in the dialog box.

Many official public records are available through a monthly paid subscription through county clerk websites or commercial title search firms. When access to online records is provided through a county clerk’s website, landmen typically rely on such records in the same manner as they rely on the physical records in county clerk offices. The best practice in this respect is to confirm with the county clerk that the records are identical. Some of the online records provide copies of the county records, but some county clerk websites and online services do not have access to older records. Many landmen have found success in utilizing online records, provided they ascertain the equivalence of these records to those in the courthouse or county clerk’s office.

It is essential to highlight that the district clerk’s records are often unavailable online. As is always the case with digitized records, poor copy quality may be an issue and may require another approach to obtain a copy of the affected instrument.

While third-party, commercial online records are a handy tool, many such services utilize unique indexing methods, which creates a risk of missing a relevant document. Our experience preparing a runsheet online has revealed it to be tedious and time-consuming. Moreover, it is essential to recognize that when preparing a runsheet online without verifying the accuracy of the courthouse or county clerk’s records, the individual landman

assumes responsibility for the data’s accuracy included in the runsheet.

An advisory note: Landmen determine the chain of title by reviewing the grantor/grantee indexes in the official public records of the county where the land is situated. Frequently, earlier-dated instruments are filed subsequent to those with later execution dates but earlier filing dates. From my experience, most landmen list the instruments in the runsheet by the date of the instrument, which could create the illusion that the instrument is correctly filed in the chain of title by date, when in reality, the instruments may be in the order of the chain of title.

Despite their inherent risk, online public records have proved to be very helpful for title attorneys in reviewing the instruments on the runsheet as needed. The courthouses are open Monday to Friday, 8 a.m. to 5 p.m., and many are crowded. While the physical records may be difficult to obtain, the online public records are available 24/7. We have also found that online records are instrumental in several situations as a stopgap measure. Still, landmen, title attorneys, and oil companies should exercise excess caution when relying on third-party websites for title information. Additionally, the secretary of state, comptroller of public accounts, Texas Railroad Commission, and most governmental agencies have websites to search for information regarding individuals and entities and drilling activity upon the subject land.

Runsheet Order and Content

Runsheets come in many shapes and sizes: Some contain all the information needed to conduct a thorough examination of title to the subject land, while others are not so thorough, as often seems to be the case when inexperienced landmen prepare the runsheet under intense pressure to meet

deadlines. To some extent, the content of a runsheet is subjective, depending on the preparer and the extent of detail beyond the basic recording information included in the runsheet. However, there are general rules that, if followed, allow for more standardization in the industry and less room for mistakes.

1. The runsheet should contain a separate entry for each instrument and proceeding determined from the review of the official public records. It should also include any instrument referenced in any other instrument, whether or not the referenced instrument seems to apply to the subject land.

2. As noted, the Texas recording statutes hinge on the conveyance date rather than the filing date of an instrument. Therefore, in Texas, all runsheets should be organized based on the instrument date or effective date, if applicable rather than the file date. This arrangement facilitates the examination process for the title attorney, enabling them to identify issues pertaining to the recording statutes promptly. These statutes come into play in Texas, for example, when a grantor transfers an interest in land that is only filed after the same grantor subsequently conveys the interest to a different grantee. If the runsheet is sorted by file date, the examining attorney would initially review the second instrument and might overlook a prior conveyance, potentially missing the application of the recording statutes.

3. Do not enter probates into the runsheet based on the will’s date or the probate filing date; instead, use the decedent’s death date since a will becomes effective upon their death. If the probate records lack

the death date, input the probate into the runsheet based on the filing date of the proceedings, not the will’s date. If the probate occurs in a county different from the land’s location, include at least the will and the order admitting the will to probate in the runsheet.

4. Insert lawsuits in the runsheet by the date of the judgment. The recording statutes of Texas only apply to instruments filed in the deed records in the county clerk’s office and not the District Court records. A person is only on notice of the instruments and proceedings of the District Court filed in the deed records. However, if there is some reference in the deed records to a lawsuit filed in the district clerk’s office, then under Texas case law, that person is on notice. The person then has a duty to make a reasonable review of the District Court records to review the file and insert those proceedings in the runsheet. Therefore, that person is only on notice of a judgment in the District Court records if a certified copy or an abstract of judgment thereof is filed in the county clerk’s office.

5. Concerning affidavits of heirship, the examination is more logical for the examining attorney if such affidavits are placed in the runsheet on the date of death of the decedent and not on the date of the affidavit. In this case, the examining attorney will recognize conveyances by the decedent’s heirs immediately and can avoid the confusion caused by such conveyances as strangers to the title.

6. As noted, it is vital to the examining attorney that the specific record where the instrument or proceedings are recorded be identified, whether deed records, official

7. Beyond the basic recording information and in the proper chronological order, what should a runsheet include? The answer depends in part on whether the examination is a “stand-up” conducted by the attorney at the courthouse or an abstract examination from the runsheet with copies of all instruments listed on the runsheet. Each approach will depend on the company ordering the runsheet and title examination.

8. A runsheet for a stand-up examination should include, as a bare minimum, the following:

a. All instruments and proceedings pertinent to the tracts, preferably in a standard, digital format.

b. Plats sufficient to identify the subject land.

c. Copies of all oil and gas leases, if only memoranda are recorded.

d. Cover letter identifying the preparer, description of the property, scope of search as to surface and minerals or any limitation thereon, the period covered, the order in which the instruments are included, the records reviewed in the preparation of the runsheet, a list of the names/entities searched, the time searched for each, and any exceptions and limitations on the runsheet

e. Tax certificates may be relied upon

for establishing the payment of taxes in prior years unless directed otherwise by the client; however, uncertified tax statements may not.

9. Like an abstract, a runsheet with copies of the instruments to be examined should include, as a bare minimum, the following:

a. Runsheet instruments and proceedings pertinent to the tracts, preferably in a standard, digital format

b. Plats sufficient to identify the subject land, but preferably plats showing the outside of tracts and, in the best situation, plats for each instrument in the runsheet, including plats prepared on a plotting program that show if the metes and bounds represent a complete and closed tract.

c. Complete copies of all instruments included in the runsheet. The instruments should contain the county clerk’s recording stamp and the volume and page number on the first page. In addition, the landman should include any curative documents located.

d. Separate copies of the current oil and gas leases for the subject land, regardless of whether the period covered by the runsheet begins after the date of the oil and gas leases.

e. Copies of the reference deeds described in any current oil and gas lease.

f. Cover letter identifying the preparer, description of the property, scope of search as to surface and minerals or any limitation thereon, the period covered, the order in which the instruments are included, the records reviewed in the preparation of the runsheet, a list of the names and entities searched, the time searched for each, and any exceptions and limitations on the runsheet

g. Tax certificates may be relied upon for establishing the payment of taxes in prior years unless directed otherwise by the client; however, uncertified tax statements may not.

II. RISK MANAGEMENT

This section will discuss risk management regarding the content limitations of runsheets, an important consideration for company management tasked with securing title clearance necessary to facilitate well drilling. Although most oil companies consider title examination a crucial aspect of their overall risk management strategy, there has been a curious trend emerging where landmen are directed to significantly restrict the scope of the runsheet. This trend may have emerged due to a need to expedite examinations and cut costs or a changing perception that title work is subject to risk assessment, similar to how production and exploration departments assess well -drilling risks. Regardless of the reason, companies must understand the risks involved when they restrict the scope of the landman’s runsheet and, consequently, the attorney’s title opinion.

Content Limitations of Runsheets

Following are some of the limitations field landmen encounter when preparing a runsheet in today’s oil and gas environment and thei r associated consequences :

• Many companies encourage landmen to review only some documents for overall content or to skim documents to determine if they apply to the subject land. Their position is that the examining attorney is responsible for deciphering the instrument and determining its relevance to the subject land. When in doubt, many companies take the position to include the instrument.

• Many companies restrict the scope of the runsheet by excluding title to the surface estate when it has been severed from the mineral estate. The runsheet will feature the instrument severing the mineral estate from the surface estate and indicate that the title to the surface was not extended beyond that date.

• Many companies limit the scope of the runsheet by excluding prior oil and gas leases of record, apart from the current client leases, with a notation in the runsheet of such omission. Various versions of this limitation exist, including selecting a specific date to exclude prior oil and gas lease titles from the search while searching for leasehold titles from all previous oil and gas leases recorded after a specific historical date. Typically, 30 years is a commonly chosen timeframe. In some instances, the runsheet limits the examination of leasehold title to prior oil and gas leases by excluding any title search conducted after the lease date, relying solely on the records of the abstract

company.

• Many companies limit the scope of the runsheet by not examining prior liens whether created by a mortgage, deed of trust, mechanics and materialman’s lien, security agreement, vendor’s lien, or supplements or amendments thereto created before a specified date. Generally, thirty to forty years is the period selected. In some cases, runsheets omit the prior lien altogether if it predates the chosen date, or if included, it may not be searched forward in the official public records. Some companies only include prior liens predating a specific date if they have been foreclosed. Many companies only list on the runsheet those prior liens occurring after the selected date that have not yet been released in the field landman’s opinion. However, if the recorded lien document does not reflect the maturity date of the underlying promissory notes referenced, all lien documents should be identified in the runsheet.

• Companies often limit the scope of the runsheet by not including any subsequent title review of easements or rights of way beyond the date of the original conveyance with the appropriate notation in the runsheet. Furthermore, the landman should exclude any lien interest created in any right of way or easement.

• Many companies will not run the District Court records unless the deed records, lien records, or other records reveal a lis pendens or abstract of judgment or an instrument in the runsheet referencing a cause of action in the District Court records.

• Many companies will limit the scope of the

runsheet not to include any review of the indexes of abstract of judgment records or lien records for more than 10 to 15 years before the closing date of the runsheet unless some instance occurs that would cause a reason to include same. The period that the runsheet should cover as to a lien search should always be at least 20 years because some tax liens and federal judgment liens remain in effect for 20 years from the date of filing of such lien. Child support liens filed on or after September 1, 1997 and before May 26, 2009, are effective indefinitely.

• Many companies will limit the scope of the runsheet by instructing the field landman not to run the name of a person or entity beyond the filing date of the instrument in which such person or entity divests itself of title to all interest in the subject land, but to run the names of all owners within the past 10 years as to surface and mineral ownership.

• For many, the most radical departure from the traditional manner of preparing runsheets has been limiting the scope by giving the preparing landman a specific date, other than severance from sovereignty, to start the review of the official public records. In some cases, the date of 1900 has been selected, with instruction to the field landman to include the patent or grant and to review all conveyances of the subject land before 1900 for any mineral reservations or conveyances.

Consequences

Every title to a specific tract of land is unique and subject to the exception of the general rules.

Although rare before the Spindletop gusher, the earliest mineral severance known to this attorney was in 1883, not including the reservations by the successive sovereigns before the Republic of Texas. Each instrument is unique, often drafted by the less artful, without consideration of the relevant statutes regarding liens and foreclosures, construction of descriptions and proper parties to conveyances, and many other discrepancies too numerous to list. Each company in today’s environment must decide about the limitation of the information on which it chooses to base its decision to spend millions of dollars for one well. Suffice it to say, each limitation placed on a landman in preparing the runsheet limits the best data available to the examining attorney and the company in assessing its risk relative to drilling a well.

While limiting the scope of the runsheet may reduce exploration and development costs, it can also expose oil companies to additional liabilities, of which many seem unaware. In practice, oil companies often assume that the risk of liability for title defects shifts to the examining attorney by nature of the title opinion, expecting that the attorney’s malpractice insurance will cover any issues. However, this assumption is not always accurate. In most title opinions today, the examining attorney explicitly states that they are relying on the landman’s runsheet and disclaim any liability arising from errors in the runsheet. Consequently, if a title defect is missed due to errors in the runsheet provided to the examining attorney, the attorney will likely be found not responsible, leaving the oil company accountable for any resulting costs. In conclusion, while ordering comprehensive runsheets dating back to the sovereignty of the soil may be more expensive initially, it ultimately minimizes risk and could lead to cost savings by providing a complete picture of title and avoiding potential liabilities. If oil companies decide to limit the scope of

runsheets, they should do so with full knowledge of the additional risks that follow.

ABOUT THE AUTHOR

Randall K. Sadler is the managing shareholder of Sadler Law Group PLLC in Houston and an adjunct professor of law at South Texas College of Law Houston, where he teaches onshore petroleum transactions, and oil and gas title examination courses. His prior experience includes roles at Mitchell Energy & Development Corp. and Cashco Energy Corp. Sadler has been board certified in Oil, Gas, and Mineral Law by the Texas Board of Legal Specialization since 1986. He earned a bachelor’s degree from East Texas State University and his J.D. from South Texas College of Law Houston.

Use

of Extrinsic Evidence to Supply or Supplement a Land Description 1

By: Terry I. Cross 2 McClure & Cross LLP

By: Professor Christopher S. Kulander 3 Oliva Gibbs LLP

South Texas College of Law Houston

Introduction

When it comes to property descriptions and the statute of frauds in a Texas deed or other instrument, perhaps the most general rule of thumb one hears is that the description needs be complete enough so that a surveyor could re-complete the purported boundaries as described in the deed or instrument and that, while the description can reference other instruments, those referenced instruments must be both in existence and complete. While it is certainly good to have such a clear and robust property description in any instrument, encounters with references and activities that dance in the twilight around the bright truth of incontrovertible, complete-inthemselves property descriptions still occur.

Regarding subsequent activities, adverse possession and the use of rules like the presumed grant doctrine can influence interpretations of property transfers and reservations or even change them entirely using facts outside the four corners of a disputed instrument. But what about situations where the use of extrinsic evidence might supply or supplement a property description? This paper considers property descriptions that reference sources outside the official public records (the “OPR”) found in the county courthouse.

The Statute of Frauds

The Texas Statute of Frauds provides that a contract for the sale of real estate is not enforceable unless it is in writing signed by the person to be charged. 4 It applies to any transfer of an interest in land, including oil and gas leases. 5 Further, to be valid, the writing must contain a sufficient description of the property to be conveyed. 6 As recently as 2017, 7 the Texas Supreme Court has again made clear in the oil and gas context that while the statute of frauds requires only that certain promises or agreements be in writing and signed by the person to be charged, as applied to real-estate conveyances, “the writing must furnish within itself, or by reference to some other existing writing, the means or data by which the land to be conveyed may be identified with reasonable certainty.” 8 As the Texas Supreme Court opined, “[t]he written memorandum, however, need not be contained in one document.” 9

To this point, the application of the rule seems rote. The cases disputing the validity of a description vis-à-vis the statute, however, often sound between the idea and the reality with semicomplete descriptions and references to other repositories outside the OPR. For example, a seemingly small error in the description of a lease on the Mortgage schedule can result in that collateral being excluded from perfection under the Mortgage. The description necessary to meet the requirements of the statute of frauds “cannot be arrived at from tenuous inferences and presumptions of doubtful validity.” 10 When resort to extrinsic evidence is proper, it should be used only for the purpose of identifying the land with reasonable certainty from the data in the memorandum, and not for the purpose of supplying its location or description. A recent example of this saw a court hold that an email that said, “I will sell my retained ORR in the Gulftex proposed 300+ acre unit for $20,000” was a legally insufficient description because it did “not contain the means or data by which the property can be

identified nor does it contain a ‘key or nucleus’ description of the property,” as required by the statute of frauds. 11

Recorded instruments often may refer to exhibits or other documents that are not of record. Obtaining such exhibits or documents can be difficult, costly and time consuming, and the contents of some such documents, such as a trust instrument, may be confidential. To maintain confidentiality and reduce recording fees, memorandums (summaries) of oil and gas leases and joint operating agreement may (should) be recorded rather than the whole lease or JOA. Many estates go unprobated and heirship has to be determined outside the chain of title. Mistakes are made, such as recorded instruments that have not been properly indexed. In general, an instrument accepted for recordation is deemed to be properly recorded even if it is unlocatable due to an indexing error.

“Described . . . with Sufficient Clarity”

In the quest to determine sufficient clarity to satisfy the statute of frauds, one of the most common tropes encountered is the company that does not want a deal to close because of faltering prices and is therefore seeking a way out via a claim that the description of the properties being conveyed did not satisfy the statute of frauds. The resultant litigation can provide examples of what courts consider “sufficient.”

In Cheetah Gas Co. v. Chesapeake Louisiana, L.P. 12 the federal district court in Houston considered a dispute over whether a legal description passed statute of frauds muster. In the mid-2000s, Chesapeake Exploration aggressively sought to purchase oil and gas leases. Cheetah owned mineral leases in Louisiana that it desired to assign to Chesapeake. In the second half of 2008, both parties executed two agreements to

govern the transfer of the leases. As prices sank, Chesapeake demurred from accepting the leases and paying the negotiated sum. Cheetah sued for breach of contract. Chesapeake argued the agreements failed to identify with reasonable certainty the oil and gas interests being assigned and, therefore, the claim was barred by the statute of frauds.

Given the price trajectory and the diverging motivations that caused among the buyer and seller, it is unlikely that the parties had a real dispute concerning the identity of the leases in dispute, but the court noted first the validity of the assignment under the statute of frauds did not hinge on the knowledge or intent of the parties. 13 In seeking to get the disputed lease assigned, Cheetah leaned on the Texas rule that an agreement to convey “all my property” within a defined area is sufficient to satisfy the requirements of the statute of frauds.

In examining the two agreements, the court noted both purported to assign “all of Cheetah’s right, title and interest” to certain properties “more specifically” described in two mysterious “Exhibit As” that were, in turn, not attached to either agreement. The court also noted that, while each agreement itself contained a description of the property to be assigned that might, according to the claims of Cheetah, be “described . . . with sufficient clarity for anyone who understands the highly complicated Public Land Survey System in Louisiana and who has access to public land records and other extrinsic documents not mentioned in the [a]greements,” 14 it was clear that the express property descriptions were modified by the referenced-but-nonexistent exhibits and therefore the actual description, as limited or modified by the missing exhibits, could not be determined from the agreements. Ultimately, the agreements did not contain an adequate description to satisfy the statute of frauds. As a

result, the “all my property” Texas rule of property conveyance did not apply.

Large transactions can involve property descriptions that change as land work continues in the background of negotiations and lending. Contemplation of future land work in an agreement may get one around an immediate need for “sufficient clarity.” The antics of Chesapeake again provide an example in Preston Exploration Company, LP v. GSF, LLC and Chesapeake Energy Corp 15 In June 2008 Preston and Chesapeake began discussing the sale and purchase of certain oil and gas leases owned by Preston and entered into a letter of intent with a closing date of Aug. 20, 2008. For various reasons the closing date was pushed back several times; and in an effort to move forward with the transaction the parties executed purchase and sale agreements (PSAs) on Oct. 7, 2008, with a closing date in early November. The PSAs made specific reference to exhibits attached to earlier drafts of the PSAs, including an exhibit describing the oil and gas leases to be conveyed and an exhibit setting out the form of assignment to be used at closing. When Chesapeake refused to close, Preston brought suit. Chesapeake defended on the ground that the agreement failed to satisfy the statute of frauds. The trial court ruled in favor of Chesapeake.

The Fifth Circuit Court of Appeals reversed. The trial court’s conclusion that the PSAs failed to satisfy the statute of frauds was based on its findings that the PSAs, standing alone, did not describe the property to be conveyed with sufficient clarity and that although the PSAs referenced exhibits that described the leases to be conveyed, the exhibits could not be incorporated into the PSAs because the documents of assignment to which they were attached were not finalized. However the PSAs clearly contemplated that additional title work would be done. The PSAs included provisions for curing title defects and

adjusting the contract price for any title defects that could not be cured. The fact that that the assignments would not be finalized until the title work was complete did not preclude their incorporation into the PSAs and the exhibits attached to them contain a sufficient description of the leases to satisfy the statute of frauds.

Parol evidence introduces doubt in statute of frauds fracases, but a small measure can seep in to make otherwise troublesome transactions go forward. Again, Chesapeake is featured in illustrative case law, as the Fifth Circuit Court of Appeals considered Coe v. Chesapeake Exploration, L.L.C 16 In July 2008 Chesapeake entered into an agreement to purchase deep rights held by plaintiffs in certain leases in the Haynesville Shale formation, for $15,000 per acre. After the price of natural gas plummeted several months later, after requesting a delay on closing, Chesapeake entirely backed out, claiming the agreement did not meet the requirements of the statute of frauds and was thus void. The district court disagreed, rendering judgment in favor of the sellers and awarding them almost twenty million dollars.

On appeal, Chesapeake again argued that the agreement was unenforceable under the Texas statute of frauds because it does not adequately identify the property to be conveyed and that the district court was in error finding otherwise. The agreement provided that Chesapeake agreed to purchase:

. . . all the Seller’s right, title and interest in certain oil and gas leases located in Harrison County, Texas (and only those located in Harrison County, Texas), such leases being shown in the map attached hereto as Exhibit “A”, excepting and reserving unto the Seller all right,

title and interest in and to the formations, intervals, strata and depths found between from the surface of the Earth and the stratigraphic equivalent of the base of Cotton Valley formation and further reserving an overriding royalty interest described below (the “Leases”).

The court noted other characteristics of the agreement, such as the “terms and conditions” section that specified that “[t]he leases to be conveyed . . . shall include approximately 5,404.75 net acres,” and “[a]djustments to the Purchase Price based on the Seller delivering more or less than 5,404.75 net acres shall be made in accordance with the allocated value of $15,000 per net acre.”

In deciding the case, the federal court of appeals, looking to Texas case law, opined that if the agreement contained a sufficient nucleus of description, then “parol evidence may be introduced to explain the descriptive words in order to locate the [property].” 17 In addition, however, “[e]xtrinsic evidence may be used only for the purpose of identifying the property with reasonable certainty from the data contained in the contract,” and “not for the purpose of supplying the location or description of the property.” 18 The court noted that the Texas Supreme Court had explained in Wilson v. Fisher, “[t]he details which merely explain or clarify the essential terms appearing in the instrument may ordinarily be shown by parol. But the parol must not constitute the framework or skeleton of the agreement. That must be contained in the writing.” 19

Blanket Descriptions

Some deeds can impact ownership of real property while not specifically describing a single

tract or interest. For example, in addition to instruments which affect the ownership rights within a specifically described and identifiable tract of land, Texas and many other states allow a grantor of minerals or an assignor of leases to convey all its property within a particular county or even within the entire state. 20 Such blanket or “catch-all” conveyances do not provide the legal description of the real property conveyed but rather grant all or a fraction of the owner’s interest within that county or state. Such blanket conveyances are common when large estates are probated, when one oil company acquires a large package of property from another company, and when title is affected by bankruptcy or litigation. These instruments can make the task of recorders, abstractors, landmen, and title attorneys exceedingly difficult. Some states that have official tract indexing have statutes or court decisions that refuse to allow a catch-all instrument to impart constructive notice regarding any parcels not specifically described.

While blanket descriptions can pass title, the location of the boundaries of all the conveyed tracts still require a good deal of extrinsic investigation. A search of the deed records would show the land to which the grantor held record title, but it is generally thought that the grant would also cover land owned by virtue of adverse possession. 21 Title by adverse possession could only be discovered and described, however, after a nearly impossible and virtually omniscient undertaking.

“My Place, You Know the One”

Names used by people that know exactly what they are talking about, but which are not widely known otherwise, are a care. If Christopher Robin attempts to convey the “Hundred Acre Wood” to Tigger the Tiger, they both may have an idea which one hundred acres are being conveyed between

them, but no one else may know which one hundred acres are included as the “Hundred Acre Wood” is described as being part of a larger forest without internal boundaries that could be recognized and traversed by a licensed surveyor.

Many such cases are old. For example, all the way back in 1881, the Texas Supreme Court heard Fulton v. Robinson, 22 wherein a grant of a “certain tract of land, being my own headright, lying on Rush creek, in the cross timbers . . . .” No county or state was mentioned. The Court still allowed the grant to pass, finding the description sufficient. Six years later, the Court considered the same issue in Morrison v. Daily, 23 wherein specific performance was sought for a contract for sale that described the captioned land as, “my place, known as the ‘James Perry Tract of Land’ . . . .” The Court again ruled that the description sufficed under the statute of frauds. Such questionable descriptions are less likely to work in modern times. Later on, for example, references to ‘the Lake Cottage,’ ‘the house,’ ‘the cottage,’ ‘my Cottage,’ and ‘the Cottage’ were found insufficient in Rowson v Rowson. 24 At least one later case suggests that if the county or state had been mentioned, the result might have been different. 25

While the “my land” descriptor can bring certainty to an otherwise inadequate description, the ownership of a tract by the grantor will not be inferred. 26 The street address used in Wilson v. Fisher, 27 did not include a city, county, or state and while the Court, in dicta, acknowledged that assertion of ownership could rehab an inadequate description, the Court was not willing to infer that the grantor was claiming “my land”: “It is not a necessary inference that Mrs. Fisher owned the property simply because she contracted to sell it.” 28

“Everybody Knows What I’m Talking About”

Commonly known location names, when used in the stead of a legally sufficient property description, can poise statute of frauds problems, especially when it turns out that the names used are not so commonly known. Judicial mixed signals exist on whether the “commonly known name” requires recognition in some community or is it enough that the contracting parties knew the location of the property. The Texas Supreme Court has stated that “the knowledge and intent of the parties will not give validity to the contract,” 29 providing that it is not sufficient that the parties merely knew what was being conveyed, but rather that the statute of frauds requires an objectively complete description.

Nevertheless, other Texas cases have long drifted into the subjective mindset of the parties. In Cunyus v. Hooks Lumber Co., 30 the court considered a disputed purchase contract where the plaintiff sought a specific performance remedy to compel conveyance of real property. The property was described as, “[s]ituated in Hardin County, Texas, part of the survey originally granted to S. K. Vanmeter, beginning at the southwest corner of said survey, . . .” with a metes and bounds description following. Testimony showed that there was an “S. K. Vanmeter” league survey of land in Hardin County the only Vanmeter survey in that county and at the time the contract was made, the Hooks Lumber Company claimed to own 2,000 acres of said survey. In overturning the trial court’s decision, the court of appeals in Austin held that, “the contract must be construed as having application to that survey; and as the plaintiff only claims that it obligated the defendants to sell him 2,000 acres thereof, we need not consider whether or not it included the entire survey. It certainly embraced as much as an undivided interest of 2,000 acres.” 31

Forty years later, in Sorsby v. Thom, 32 the contested description in another specific

performance case was simply “Rock Island Plantation” in Waller County, Texas. In overturning the lower court, the court of appeals focused on whether the parties themselves seemed to know the tract about which they were talking. There was no mention of county or state in the writing, but the court was impressed with the following facts:

(4) The property has been notoriously known all over Waller County as ‘Rock Island Plantation’ for a period of at least twenty-five years; (5) The property has been known notoriously all over Waller County as the ‘Cordsen Rock Island Ranch Tract’ for fourteen years; (6) That this property was the only property and all of the property owned by the Cordsens in Waller County, Texas; (7) E. D. Sorsby, the purchaser, and R. R. Loggins, the defendants’ agent, each knew the location on the ground of the property described in the contract of sale, and each intended the contract to apply to the Cordsen 1259-3/4 acres described by metes and bounds in plaintiff’s petition, and described in the contract of sale as above stated. 33

On the other side of the state in the same year, in Krueger v. W. K. Ewing & Co. 34 the disputed property that was held in the balance was described simply as the “San Gabriel Apartments,” without any reference to town, county, or even state. In affirming, that name was found sufficient for the passage of the property, not because of the notoriety of the San Gabriel Apartments but, as in Sorsby, because “Plaintiff’s petition alleged, and the proof shows, that the San Gabriel Apartments

are located in the City of San Antonio, Bexar County, Texas.” 35

These three cases all involved contracts for sale and presumably were between parties negotiating the transfer of known properties before deeds were passed, not two strangers passing in the night exchanging deeds for money on the barrelhead. Thus, it seems the party’s identities and knowledge vis-a-vis one another likely played a role. Nevertheless, the use of the statute of frauds to defeat an agreement tempts a results-oriented decision and Cunyus, Sorsby, and Krueger.

Stepping Outside the Four Corners

Other record repositories endure. Instruments can be recorded and filed with federal and state-level authorities, tribal governments, and in county-level repositories such as the tax appraisal district. Cases exist that validate land descriptions by allowing supplementation from the county appraisal district (“CAD”) records, but questions remain. Must the supplement be specifically referred to in the conveyance? How explicit must the reference be? And what if the writing is not housed in a permanent repository for future reference?

These questions were considered by the Texas Supreme Court in AIC Mgmt. v. Crews, 36 wherein the land description used in a 1989 tax suit was:

Tract 12 being 6.0 acres out of T.S. Roberts Survey Abstract 659 situated in Harris County, Texas, as shown in file number J659372 of the deed and plat records of Harris County, Texas. 37

The “file number J659372” reference corresponded to the Harris County clerk’s file

number for a partition deed that created an 8.51acre tract and a 15.85-acre tract from a 22.5-acre, tract. 38 Nothing in this file, however, suggested a 6-acre tract or any “Tract 12.” The 1991 constable’s deed to the city referenced the tax suit and judgment by cause number and described the property being conveyed as all the taxpayer’s estate, right, title, and interest to the property described as: “TR 12 AB 659 T.S. Roberts * situated in Harris County, Texas.”

AIC acquired the captioned land from the city through a 1997 constable’s deed that referenced the tax suit and judgment and described the property as “‘all of the state [sic], right, title and interest’ in ‘TR 12 AB 659 T.S. Roberts * situated in Harris County, Texas’ that the City had acquired under the 1991 constable’s deed.” 39

Subsequently, the conveyance was challenged. The Court noted the standard by which the sufficiency of property descriptions should be measured, asserting:

To be valid, a conveyance of real property must contain a sufficient description of the property to be conveyed. A property description is sufficient if the writing furnishes within itself, or by reference to some other existing writing, the means or data by which the particular land to be conveyed may be identified with reasonable certainty. 40

The Court then noted the “Tract 12” reference was a reference to the numbered tax tracts the Harris County Appraisal District (“HCAD”) used to divide property for tax purposes:

The “TR 12” in the property descriptions is an explicit

reference, within the four corners of the deed, to existing writings, such as tax tract maps, within HCAD records. The property description in the constable’s deeds references “TR 12 AB 659 T.S. Roberts * situated in Harris County,” which is a division within the HCAD tax rolls that can be used to assist a surveyor in locating the land. While the maps produced in 2001 could not locate the boundaries of Tract 12 at the time of the conveyance, if records still in existence from 1989 could identify the tract and where it overlapped the [taxpayer’s] property, the description would be sufficient . . .

41

The Court then concluded, “[w]ithout information from HCAD about how the tax tracts were drawn in 1989, we cannot determine whether the conveyance of all of the [taxpayer’s] interest in ‘Tract 12’ was sufficient to allow identification of the property.”

42

In summary, (1) there was no explicit reference to HCAD records, but the Court nevertheless discerned a “reference,” and (2) the cause was remanded to the trial court to determine “[i]f HCAD records show the 1989 version of Tract 12 clearly drawn on a map or described by metes and bounds.” 43 This second point recognizes that the supplemental writing must exist at critical times it cannot be an “etch a sketch” rendering but what are those times? Surely, it must exist when the conveyance is delivered. And AIC Mgmt required that it exist come litigation. Sometimes the lawsuit comes soon after delivery, sometimes it comes decades after.

If it is not a permanent public record in other words, filed in the courthouse proper then will title examiners always require the factual determination for which the AIG Mgmt. court remanded? And what if the writing is destroyed before a court rules on it? Until we get the writing in a permanent repository, is it Shrodinger’s deed, depending on the evidence available at the ultimate trial?

In WK Properties, Inc. v. Perrin SA Plaza, LLC, 44 the contract of disputed application described the land as “THE PROPERTY AT 11803–11855 Perrin Beitel Road, San Antonio, TX 78217, Perrin Oaks Plaza.” 45 The deed described the property as “BEING ALL OF LOT 8, NEW CITY BLOCK 15685, PLETZ SUBDIVISION, SITUATED IN BEXAR COUNTY, TEXAS.” 46 With the assistance of counsel, the appellate court discerned that the descriptions “were taken from” the tax assessor’s records:

Although the amended contract includes the city, county, and state for Lot P-36, the amended sales contract pages alone do not provide the size, shape, and boundaries of the conveyed property. However, as WTK’s trial counsel explained, the amended contract’s property description abbreviations were taken from the Bexar County Appraisal District (“BCAD”) records. 47

With that bit of extrinsic commentary from counsel (presumably trial counsel’s remarks were not even testimony), and without any clue from the words on the page, the court saw “explicit references” to BCAD maps, opining that, “[u]nder AIC Management, the abbreviations were explicit references to BCAD’s tax tract maps, and the maps

can show a property’s size, shape, and boundaries.” 48

It is tempting to see these cases as being “tax sale” cases, with maybe a free pass on land descriptions for some unspoken policy reason, but that argument is negated in AIC Mgmt.:

Like any other conveyance of property, a judgment for foreclosure of a tax lien upon real estate which fails to describe a definite tract of land is void. See Arnold v. Crockett Indep. Sch. Dist., 404 S.W.2d 27, 28 (Tex. 1966). A tax judgment’s property description must be sufficiently particular to allow a party to locate the specific land being identified. See Manges v. Freer Indep. Sch. Dist., 728 S.W.2d 842, 843 (Tex. App. San Antonio 1987, writ ref’d n.r.e.). 49

Notwithstanding the quote above, CAD records may still enjoy a unique status among extrinsic repositories. In the federal district court case of Preston Exploration Co. v. Chesapeake Energy Corp., 50 the seller attempted to validate abbreviated land and lease descriptions by supplementing the descriptions with the seller’s lease files. Specifically, the seller argued that unique “lease numbers” set forth in the transaction documents could be correlated to detailed land descriptions by reference to the seller’s lease files. This court rejected that argument but also tipped its hat to AIC Mgmt. articulating a unique status for CAD records:

As Chesapeake points out, however, the AIC Management decision ‘highlights the [c]ourt’s willingness to read property

descriptions in tax judgments alongside the property descriptions in related petitions and judgment rolls to identify the property conveyed, thus avoiding the inequity of erasing otherwise valid tax judgments at the public’s expense.’ AIC Management, therefore, is a case that concerns references to prior tax petitions, HCAD records, and tax tract maps, all of which are public records that were referenced using ambiguous shorthand. 51

Even when CAD records are invoked, WK Properties requires that the instrument supply the nucleus, and distinguishes In re Estate of Garcia, 52 on that basis. The court in Estate of Garcia recognized the format as coming from the CAD, but would not allow default to the CAD records:

From the record, it would appear that the description of the property in the deed was copied from a report provided by the tax assessorcollector of La Salle County, Texas. On its face, however, the deed is insufficient to identify the property with reasonable certainty. First, the description provides no county, city, or State for the property. In addition, surmising that the conveyance included several different tracts of land, the legal description omits the acreage of certain tracts. Although the appellants presented the affidavit of a land surveyor asserting that the legal description was sufficient, the surveyor states, “[t]here is a way to go beyond the four corners of the document to locate the property.”

However, extrinsic evidence may not be used to supply the essential elements of the legal description. 53

The WK Properties opinion saw “critical mass” in the instrument under its review and only resorted to CAD records for “explanation”:

“Here, the amended contract alone contains the block, lot, subdivision, street addresses, city, county, state, zip code, and common name, and the BCAD tax records and the land title survey fully explain the contract’s abbreviations.” 54

Conclusion: Correcting Instruments That Do Not Pass Muster

Can these embers of trouble be doused before they flash over into litigation? The Texas Property Code contains two statutes that allow for the correction of property instruments. The first, § 5.028, allows for any party “who has personal knowledge of facts relevant to the correction of a recorded original instrument of conveyance” to draft an execute a correction instrument making a nonmaterial change. With regards to corrections to property descriptions, § 5.028(a-1) provides:

A person who has personal knowledge of facts relevant to the correction of a recorded original instrument of conveyance may prepare or execute a correction instrument to make a nonmaterial change that results from an inadvertent error, including the addition, correction, or clarification of:

(1) a legal description prepared in connection with the preparation of the original instrument but

inadvertently omitted from the original instrument; or

(2) an omitted call in a metes and bounds legal description in the original instrument that completes the description of the property. 55

It may come as a surprise to the inexperienced that property description corrections are

1 The authors thank the Oil & Gas Legal Society at South Texas College of Law Houston for its assistance in completing this project. This article is dedicated to the memory of Robert Chandler Bledsoe, Midland oil & gas attorney and scholar, Aug. 30, 1930 – Nov. 15, 2023. © 2024 Terry Cross and Christopher Kulander. All rights reserved.

2 Founding Partner, McClure & Cross LLP, Dallas; B.A. (English) University of Houston; J.D., University of Houston Law Center. Board Certified Oil, Gas and Mineral Law in Texas and licensed in Texas and North Dakota.

3 Professor, South Texas College of Law Houston; B.S. (Geology) and M.S. (Geophysics), Wright State University; Ph.D., Texas A&M University (Petroleum Seismology); J.D., University of Oklahoma. Licensed in Texas and New Mexico.

4 TEX BUS & COMM CODE ANN. § 26.01(a).

5 Minchen v. Fields, 345 S.W.2d 282, 288 (Tex. 1961).

6 Pick v. Bartel, 659 S.W.2d 636, 637 (Tex. 1983).

7 Davis v. Mueller, 528 S.W.3d 97, 101 (Tex. 2017).

8 Morrow v. Shotwell, 477 S.W.2d 538, 539 (Tex. 1972)

9 Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995).

10 Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W2d 903, 909–10 (Tex. 1982).

11 Gary and Theresa Poenisch Fam. Ltd. P’Ship v. TMH Land Servs., Inc., No. 04-20-00300-CV, 2021 WL 4173309, at *3 (Tex. App. San Antonio Sept. 15, 2021, pet. denied).

12 Cheetah Gas Co. v. Chesapeake Louisiana, L.P., No. H08-3237, 2009 WL 416324 at *2 (S.D. Tex. Feb. 19, 2009).

13 Id. (citing Fears v. Tex. Bank, 247 S.W.3d 736, 736 (Tex. App. Texarkana 2008, pet. denied)).

14 Cheetah, 2009 WL 416324 at *2 n.3.

15 See generally Preston Expl. Co. v. GSF, LLC, 669 F.3d 518 (5th Cir. 2012).

16 Coe v. Chesapeake Expl., LLC, 695 F.3d 311 (5th Cir. 2012).

17 Id. at 317 (citing Gaut v. Daniel, 293 S.W.3d 764, 767 (Tex. App. San Antonio 2009)).

18 Id. (citing Long Trusts v. Griffin, 222 S.W.3d 412, 416 (Tex. 2006)).

19 Wilson v. Fisher, 144 Tex. 53, 56–57 (Tex. 1945).

20 See e.g., Witt v. Harlan, 2 S.W. 41, 41 (Tex. 1886) (“all my lands in Texas”) and Holloway’s Unknown Heirs v. Whatley, 131 S.W.2d 89, 91 (Tex. 1939) (“land owned by me in Liberty County, Texas”).

21 TX ST TITLE EXAMINATION 18.20, reprinted in TEX PROP CODE ANN., tit. 2, app. (“When title by adverse possession is

considered “nonmaterial” and that grantees can, by themselves, draft and record property description corrections and addendums. This might be a quiet way to bolster the sufficiency of a property description before litigation kicks off, or to even alleviate the lawsuit altogether.

perfected, the ownership in the land arising thereby is as full as can be held under any other character of title.”).

22 Fulton v. Robinson, 55 Tex. 401, 404 (1881).

23 Morrison v. Daily, 6 S.W. 426, 427 (Tex. 1897).

24 Rowson v. Rowson, 275 S.W.2d 468, 470 (Tex. 1955).

25 King v. Brevard, 378 S.W.2d 681, 685 (Tex. App. Austin, 1964, no writ.).

26 Osborn v. Moore, 247 S.W. 498, 499 (Tex. Comm’n of App. 1923) (“We are left to infer that it belonged to defendant, Moore, because he is payee in the check. Such inference is not a necessary one and will not be indulged to support a writing otherwise insufficient.”).

27 Wilson v. Fisher, 188 S.W.2d 150, 154 (Tex. 1945).

28 Id

29 Morrow v. Shotwell, 477 S.W.2d 538, 540 (Tex. 1972).

30 Cunyus v. Hooks Lumber Co., 48 S.W. 1106, 1107 (Tex. Civ. App. Austin 1899, no writ).

31 Id. at 291.

32 Sorsby v. Thom, 122 S.W.2d 275, 277 (Tex. App. Galveston 1938, writ dism’d).

33 Id. at 277.

34 Krueger v. W. K. Ewing Co., Inc., 139 S.W.2d 836 (Tex. App. El Paso 1940, no writ).

35 Id. at 838.

36 AIC Mgmt. v. Crews, 246 S.W.3d 640, 642 (Tex. 2008).

37 Id.

38 Id.

39 Id.

40 Id. at 645.

41 Id. at 648.

42 Id. at 646.

43 Id. at 649.

44 WK Props., Inc. v. Perrin SA Plaza, LLC, 648 S.W.3d 513, 515 (Tex. App San Antonio 2021, no pet).

45 Id. at 515.

46 Id. at 515–16.

47 Id. at 518.

48 Id. (citing In re Estate of Garcia, No. 04-06-00120-CV, 2007 WL 748651 at *2 (Tex. App. San Antonio Mar. 14, 2007, pet. dism’d).

49 See AIC Mgmt., 246 S.W.3d at 645.

50 2010 WL 3155893 (S.D. Tex. Aug. 10, 2010).

51 See id. at *4 (internal citations omitted).

52 See generally In re Estate of Garcia, 2007 WL 748651.

53 Id. at *2. (citing Mayor v. Garcia, 104 S.W.3d 274, 277 (Tex. App. San Antonio Mar. 14, 2007, pet. dism’d)

(internal citations omitted).

54 WK Properties, Inc. v. Perrin SA Plaza, LLC, 648 S.W.3d

513, 518 (Tex. App. San Antonio 2021, no pet.).

55 TEX PROP CODE ANN § 5.028(a-1).

The New Ice Curtain: Geopolitical

Implications of Oil and Gas Exploration in the Svalbard Archipelago and the Arctic Circle

By: Alex Lam 2L Student, South Texas College of Law Houston

I. Introduction

While Africa, the Americas, and the Middle East are well known for their oil and gas production, the Svalbard Archipelago remains a lesser-known source of untapped natural resources. This Norwegian territory is nestled between the Arctic Ocean and the Barents Sea. The Arctic is estimated to account for 13% of the world’s undiscovered oil reserves and around 30% of undiscovered gas deposits. 1 These resources, however, remain isolated and inaccessible, as the Arctic Circle is one of the planet’s coldest regions, with Svalbard’s vast natural resources buried in ice. Resource developers have long hoped for the exploration and production of oil and gas in the Arctic region, especially due to the lack of political stability in Africa and the Middle East; however, deep freezing in the region, costly shipping, environmental concerns, and geopolitical tensions between the Arctic states 2 have complicated oil and gas exploitation. 3

The Arctic region has shown its potential for exponential economic growth and may soon become a pivotal point globally, as climate change presents both its challenges and opportunities. As global temperatures rise, the North Pole’s ice caps are melting at an unprecedented rate. 4 Nevertheless, many resource developers theorize that the thawing of the Arctic Ocean will significantly reduce the costs associated with the transportation of goods, including oil and gas. 5 For

centuries, navigation through the Arctic Ocean has been physically impossible without the aid of heavy-duty icebreakers. As the Arctic Ocean becomes more accessible, it will open three distinct oceanic routes: (1) the Transpolar Sea Route, crossing through the middle of the Arctic Ocean, with Svalbard in the center of the route; (2) the Northern Sea Route, running along the northern coastline of Russia; and (3) the Northwest Passage, running along the northern coastline of Canada and Alaska. 6 While the latter two routes experience some level of activity, the Transpolar Sea Route is mostly unused. This development will position the Svalbard Archipelago in a prime location for the Arctic shipping routes and increase interest in oil and gas exploration on Svalbard as the Arctic region becomes more navigable and economically feasible. 7

Source: U.S. State Department

Although Svalbard enjoys limited autonomy, the archipelago is under Norwegian rule. 8 Many public interest groups and policymakers in Norway fear that the normalization of oil drilling on Svalbard will cause geopolitical disorder and delay the nation’s shift toward renewable energy in lockstep with the European Union. 9 Despite these concerns, Norwegian oil companies are anticipating an increase in drilling operations in the Arctic region. 10 Adding to the region’s complexity, the

Arctic Circle has long been a place of strategic importance for world powers, such as Russia and the United States. 11 Interest in the region has only increased since Russia’s annexation of Crimea in 2014 and its invasion of Ukraine in early 2022, with geopolitical instability causing price volatility and uncertainty in the oil and gas markets. 12 Russian President Vladimir Putin seeks to strengthen his position in Eastern Europe and expand his control into the Arctic Circle, 13 and the United States seeks to expand its continental shelf beyond Alaska into the Arctic. 14

As the Arctic Circle defrosts, Arctic shipping routes will become more economically feasible, thereby promoting the Svalbard Archipelago and the Arctic region into a hub for shipping, navigation, and natural resources. The Arctic, with Svalbard at the forefront, is anticipated to usher in a new era of exploration and competition as nations race to establish their presence and stake their claims in this new frontier.

II. The Svalbard Archipelago

The Svalbard Archipelago is an array of islands in the Arctic Circle recognized as an unincorporated territory of Norway. It was first discovered by the Dutch explorer William Barents in 1596, and it was inhabited by only polar bears, arctic foxes, and Svalbard reindeer. 15 The islands showcase innumerable mountains and fjords, and nearly 60% of the archipelago is covered with glaciers. The frigid weather conditions warded off settlers and was initially frequented by only fishermen and fur traders. Prior to World War I, Svalbard was called “Spitsbergen” and dubbed “terra nullius” or “no man’s land” by the international community. 16 Despite these unfavorable conditions, several permanent communities, such as Barentsburg and Pyramiden, emerged on the Svalbard Archipelago at the

beginning of the 20th century and became a coalmining hotspot for Dutch and Norwegian miners. 17

A. Svalbard’s Natural Resources

After World War II, oil companies, such as US-based Texaco, Belgium-based Petrofina, and Soviet-based Trust Arktikugol, reported discovering oil beneath the sea shelf around the Svalbard Archipelago after conducting exploratory drilling. This drilling, along with decades of coal and petroleum exploration, progressively yielded substantial anecdotal evidence of the presence of gas accumulations beneath Svalbard’s permafrost. 18 These potential gas accumulations are formed by ongoing hydrocarbon migration and are found in several stratigraphic intervals, showing both thermogenic and biogenic origins. 19 The permafrost acts as an effective seal, trapping gas across various stratigraphic layers. 20 The undulating base of the permafrost can independently form both a trap and a seal, or it may function as the top seal in conjunction with the geology beneath it. 21 This ability to seal is crucial for preventing methane a potent greenhouse gas from escaping into the atmosphere. The significance of this sealing capability is underscored by the regional and local geology in Svalbard, which is characteristically uneven and comprises multiple lithological seals and reservoirs. 22 In these permafrost traps, complex configurations of structural geology, lithology, and permafrost characteristics play a crucial role in the formation of hydrocarbon accumulations. 23

Modern research indicates that the Arctic Circle might hold between 13–22% of the world’s untapped petroleum resources. 24 “Approximately 60% of wells in the Barents Shelf offer hydrocarbon shows, indicating that the basin has at one point in the past been almost saturated with hydrocarbons.” 25 Petroleum engineers must study

and navigate the technicalities associated with drilling through permafrost. This requires specialized methods that consider sub-zero cold temperatures and the unique physical characteristics of the frozen ground. Additionally, they must address the substantial challenges related to maintaining borehole stability, managing gas hydrate formations, and implementing heated or thermally insulated pipelines. 26

While the thawing of Svalbard’s permafrost poses environmental risks through the potential release of trapped methane, a more accessible Svalbard has positive implications for global energy resources and highlights the potential for exploration and extraction of natural gas reserves in Arctic permafrost regions. 27 Oil and gas companies from around the world, such as Gazprom PJSC, ConocoPhillips, and TotalEnergies SE, have flocked to the Arctic. 28 Moreover, “from 2016 to 2020, commercial banks including JPMorgan Chase ($18.6bn), Barclays ($13.2bn), Citigroup ($12.2bn) and BNP Paribas ($11.8bn) channeled more than $314bn into the leading companies developing upstream oil and gas in the Arctic.” 29 Due to this escalation of interest and investment, the production of oil and gas in the region is set to increase by 20% by 2027. 30

B. Svalbard’s Geopolitical Significance

Following the Svalbard Treaty of 1920, Norway was granted limited sovereignty over the archipelago and established Svalbard as a demilitarized zone prohibiting military forces or bases on the island and an equal economic zone for the Treaty’s signatory states. 31 In 1976, during the Third United Nations Conference on the Law of the Sea (UNCLOS III), Norway claimed Svalbard’s underwater shelf was historically conjoined with Norway’s mainland shelf and, thus, maintained exclusive rights of exploration and

exploitation of resources (fish, oil, and gas).

32 UNCLOS III produced the United Nations Convention on the Law of the Sea (UNCLOS) the international agreement that established a new legal framework governing maritime activities and rights. 33 UNCLOS created the concept of an exclusive economic zone (EEZ) within which a country retains exclusive rights to the natural resources in the area of ocean extending 200 nautical miles from their coast. 34 Norway successfully claimed the 200 nautical-mile fishing protection zone congruent to Svalbard. 35

In response to Norway’s claim to the EEZ around Svalbard, the Soviet Union interested in maintaining access to the Arctic for strategic and economic reasons alleged that Norway had breached the Svalbard Treaty of 1920. 36 The Arctic Ocean was of strategic importance during the Cold War, while both the Soviet Union and the United States looked to secure potential launch sites and patrol routes for nuclear submarines, thereby enhancing their second-strike capabilities. 37 The Soviets were particularly interested in controlling the Barents Sea, which is located between Svalbard and the Russian coast of the Kola Peninsula. 38

Source: WorldAtlas

Then U.S. Secretary of State Henry Kissinger highlighted the advancement of Soviet military actions on the Kola Peninsula and advocated for the United States to engage in resource treaties aimed at forestalling Soviet dominance in the region and protecting American interests. 39 During negotiations concerning the demarcation of respective zones in the Barents Sea, the United States publicly recognized Svalbard as a significant petroleum hub in the Arctic Ocean and resolved that if “access was assured [for the United States], the United States [was] ready to strike a deal with Oslo.” 40 The U.S. sought to ensure that American companies would have the opportunity to participate in the exploration and exploitation of resources under the principles of the Svalbard Treaty. 41 Through these negotiations concerning Svalbard and the Arctic, the U.S. was able to maintain and expand its influence in a geopolitically strategic region to counterbalance Soviet ambitions and prevent militarization of the archipelago.

C. Russia’s New Ice Curtain

Today, Svalbard continues to be a point of great interest for Russia. The Russian Ministry of Defense considers Norway’s “attempt at establishing absolute sovereignty on the Svalbard archipelago and the adjacent 200-nauticalmilezone” a direct threat to Russia. 42 Russia seeks to extend its influence beyond the mere ability to drill and mine for resources and to promote its geopolitical, strategic, economic, and scientific objectives.

Russian President Vladimir Putin is pursuing a plan, dubbed “The New Ice Curtain,” comparable to the Soviet Union’s ambitions to construct a “Red Arctic” in the 1930s, further igniting tensions in the Arctic. 43 Recently, Russia has planted the Russian tri-striped flag directly beneath the North Pole to claim all loose territory

in the Barents Sea. In response to worldwide criticism of Russian expansion in the Arctic region, Arthur Chilingarov, a Russian explorer commissioned to the Arctic Circle, said: “[I]t’s all about resources. It’s not so much about fish as about oil, gold, and iron ore.” 44 Chilingarov also expressed his favor for Russia: “Russia must win. Russia has what it takes to win. The Arctic has always been Russian.” 45 Russia claims that Svalbard “has been covered with Russian sweat and blood for centuries.” 46

Furthermore, Russia continues its imperialistic agenda in Eastern Europe and the Arctic territories to lay claim to resources and further its military strategy. The diminishing Arctic ice is purportedly used by Russia as a pretext to intensify its military footprint in the region. In February 2022, Russia invaded Ukraine and executed a strategic reduction of oil and gas production. 47 This increased the cost of electricity generated from gas-fired power plants, triggering substantially higher energy costs across Europe in 2022–2023. 48 On September 26, 2022, the Nord Stream pipeline was sabotaged and rendered two major pipelines inoperable, putting further pressure on the European energy sector. The EU’s pursuit of energy independence from Russia has heightened Norway’s interest in oil and gas in the Svalbard Archipelago. 49

Russia’s Arctic Strategy outlines ambitious goals by 2035, such as establishing five new major oil projects on the continental shelf. Russia plans to increase its Arctic liquified natural gas (LNG) production from 8.6 million tons in 2018 to 91 million tons by 2035, which will be shipped out via the new and vital ice-free Northern Sea Route. “Arctic oil and gas is a massive economic resource for Russia, it is a big source of export revenue, and the government sees it as strategically important.” 50 Russia intends to capitalize on its Arctic continental shelf, tapping into “85 trillion

cubic metres (Tcm) of natural gas and 17 billion tonnes of crude oil sufficient to cover domestic and export demand for decades to come.” 51 Russia considers the region crucial for the movement of its “Northern Fleet” of strategic nuclear submarines in the Kola Peninsula. 52

D. U.S. Expansion of the Continental Shelf

On December 19, 2023, the United States laid claim on 386,100 square miles of “Extended Continental Shelf.” Part of this claim reaches into the Arctic and Bering Sea, where Canada, Russia, and other Arctic nations have significant claims and interests. This stretches beyond the outer limits, 200 nautical miles from the coast of the continental shelf known as the extended continental shelf (ECS). 53 The announcement astonished the world, completing the largest administrative expansion since the establishment of the U.S. Exclusive Economic Zone in 1983. 54

Source: Guice Offshore

Although the United States announcement about the extent of its continental shelf complies with international law by informing the world, the absence of a formal submission to the Commission on the Limits of the Continental Shelf (CLCS) under the United Nations Convention on the Law of the Sea (UNCLOS) leaves other countries to question the credibility of the terrestrial claim. 55 Though the claim is rooted in Article 76 of UNCLOS and the U.S. recognizes UNCLOS as the model for customary international law and determines the limits of the ECS, the United States has never ratified UNCLOS. Thereby, the U.S. is

not bound by UNCLOS to submit data to the CLCS for the extension of its continental shelf. 56

The oceanic territory claimed is so vast that the “area [is] about twice the size of California or nearly half the size of the Louisiana Purchase.” 57

If the U.S. proves that the seabed and subsoil of the submarine areas are natural prolongations of its land territory, it will have access to “economic interests in undersea territory rich in oil, natural gas, minerals and sea life to which it has sovereign rights under the law of the sea as reflected in the Law of the Sea Convention.” 58

Source: Wikipedia

The U.S. claim to its extended continental shelf highlights American strategic interests in securing these hard minerals in light of the current global shortages in minerals. “The US continental

shelf has some 50 hard minerals required for the New Economy, [it] contains nodules rich in strategic minerals and rare earth elements needed for everything from green energy to the semiconductors that drive Artificial Intelligence.” 59 The United States, as both a proponent of environmental conservation and a global leader in the exploration and production of oil and gas, possesses the capability to not only enact policies aimed at conserving these critical areas but also to propel forward the study and scientific exploration of deep-sea regions. 60

In response to the U.S. expansion, Russia has promised to defend its interests, claiming to have “exactly the same rights as the Americans, if not more[.]” 61 The U.S. claim could lead to increased military presence and infrastructure development in the region, further demonstrating the strategic importance of the region and its influence on the global scale of power both militarily and economically. 62

III. Environmental Impact of Resource Development in the Arctic

Climate change is causing sea ice in the Arctic to melt. This phenomenon is making offshore oil drilling and transportation increasingly cost-effective. 63 Coincidently, Arctic islands such as Svalbard, Iceland, and Greenland are all projected to contain reserves of natural resources as extraction and exploration technologies continue to advance. 64 Although, drilling and natural resource extraction will heighten the risk of pollution in the region. 65 Oil and gas operations could also pose a direct threat to Arctic wildlife and their habitats, including polar bears and seals. 66 Neighboring zones such as Alaska, Canada, and Russia have seen the hazardous effects of offshore Arctic petroleum production through disastrous oil spills that endangered wildlife and their habitats. 67 The

overall concern for polar marine life remains significant, notably with the Arctic Council and indigenous groups expressing concerns regarding future petroleum engineering. 68

Conversely, the thawing of permafrost due to climate change also poses a risk of naturally releasing trapped methane and would further contribute to pollution. 69 Researchers are faced with a significant dilemma regarding drilling for oil and gas in this area. On one hand, excessive drilling can lead to environmental pollution due to the release of contaminants and the disruption of ecosystems. On the other hand, refraining from drilling does not necessarily avert environmental risks; as ice caps melt due to global warming, vast amounts of methane a potent greenhouse gas could be released into the atmosphere, further exacerbating pollution and climate change issues. Therefore, extraction operations are required to meticulously assess, target, and mitigate these risks to prevent further pollution. 70

A. Arctic Climate Policy

Under U.S. President Joe Biden’s climate strategy, the United States announced a temporary halt on offshore drilling in the Arctic. 71 Pursuant to this plan, three forthcoming oil and gas lease contracts in Alaska were revoked. 72 Similarly driven by environmental concerns, the European Union advocated for a ban on the exploitation of oil and gas in the Arctic. Norway has also made commitments to reducing emissions and carbon dependence. 73

Nevertheless, Norwegian oil companies such as state-operated Equinor are still actively drilling for oil and exploring for undiscovered oil reserves. Equinor plans to develop Norway’s northernmost oil field, the Wisting field, located approximately 300 kilometers offshore in the Barents Sea. 74 Discovered in 2013, the Wisting

field is positioned further north than any other previously discovered deposits of comparable size. This project is set to be active by 2028 and produce 430 million barrels of oil until 2053. 75 Once completed, the oil extracted from the Wisting field will account for 200 million tons of CO2 in climate gas emissions, which is equivalent to 50 active coal power plants on an annual basis. 76

Furthermore, “activity in the High Arctic, be it shipping or oil exploitation, will contribute to the overall pollution,” argues Truls Gulowen, the Leader of “Friends of the Earth” in Norway. 77 Gulowen claims: “Soot and black carbon contribute to melting in this region. This is an additional element that should lead to additional caution about activity this far north in the Arctic.” 78 However, contrary to its environmental protection policies and activism, Norway has steadily allowed access to available Arctic zones for oil drilling. Following the COVID-19 Pandemic, Norway offered generous tax breaks and incentives to petroleum companies to stabilize the oil sector and boost their exploration production. 79 Consequently, this government support for the petroleum industry in Norway has led some to accuse the country of “blindly drilling for oil” by disregarding the potential climate and financial risks involved. 80

In October 2021, the European Commission implemented its Arctic Strategy, pledging to “ensure that oil, coal, and gas stay in the ground, including in Arctic regions.” 81 Furthermore, the strategy emphasizes the International Energy Agency’s Net Zero 2050 Roadmap that “no new oil and natural gas fields are needed.” 82 The architects of the strategy commit to collaborating with countries to establish a multilateral legal agreement that prevents any new development of hydrocarbon reserves in the Arctic.

B. Svalbard Environment Act

As of 2022, Norway has issued a ban on heavy-fuel ships from circumnavigating territorial waters around Svalbard. Under the Svalbard Environment Act, §82(a), “Ships calling in the territorial waters around Svalbard shall not use or have on board petroleum-based fuel with a higher viscosity, density or solidification point than permitted for marine gas oil.” 83 This policy change seeks to prevent toxic oil spills and emissions that could pollute and damage the fragile nature of Svalbard’s environment.

The Svalbard Environment Act disqualifies many ships from crossing Svalbard’s territorial waters, thereby reducing the number of vessels traversing the region that could pose a threat to wildlife and their habitats. The regulation of maritime traffic and enforcement of environmental standards allow Svalbard and Norway to enhance monitoring and security in their territorial waters, which is crucial, given the strategic importance of the Arctic for military and commercial navigation. However, the switch from heavy fuel to cleaner, more expensive fuels like marine gas oil, can significantly increase operational costs for shipping companies. These higher costs will likely lead to price increases in local communities and international trade.

This regulation applies to all ships flying any flag, which may raise a legal issue under UNCLOS law. 84 According to UNCLOS, Article 19, “innocent passage” refers to the right of a ship to pass through the territorial sea of another state, provided that such passage does not affect the security of the coastal state and is not prejudicial to the peace, good order, or security of that state. 85 However, the rules and regulations cannot apply to the design, construction, manning, or equipment of the vessel unless it is generally accepted as international rules or standards. “Further, there

must be particularly severe climatic conditions and ice covering the EEZ for most of the year so as to create obstructions or exceptional hazards to navigation, and pollution of the marine environment in the EEZ could cause major harm to or irreversible disturbance of the ecological balance for Article 234 to apply.” 86

IV. Arctic Shipping Routes

Conventionally, to transport goods from Western Europe to far-east countries like Japan, ships navigate vast distances from the Mediterranean Sea through Egypt’s Suez Canal. Shipping from the Americas to Asia is similarly vast and costly, crossing the Panama Canal and the Pacific Ocean. 87 However, the Arctic Ocean once economically infeasible is on the verge of unveiling new shipping routes. Countries such as Canada, the United Kingdom, the United States, Norway, Russia, and Greenland are actively pursuing Arctic claims to establish trade routes, sea borders, and taxation along these routes. 88

Three shipping routes will emerge from the Arctic as navigability of improves: (1) the Transpolar Sea Route (TSR), crossing through the middle of the Arctic Ocean, with Svalbard in the center of the route; (2) the Northern Sea Route (NSR), running along the northern coastline of Russia; and (3) the Northwest Passage, running along the northern coastline of Canada and Alaska. 89 Among these emerging shipping routes, the TSR is noted for its cost efficiency, spanning from the State of Alaska, across the Arctic Circle, and ending in Eurasia. 90 This will transform Svalbard into the only port between Alaska and Norway. Theoretically, a ship that utilizes this passage, instead of the conventional Panama Canal will save over 6,086 miles of sea journey from Hamburg, Germany to Yokohama, Japan. 91

Source: M.M. Bennett et al.

A. The Transpolar Sea Route and Svalbard’s Significance

The TSR runs through international waters and is subject to the least national jurisdiction of the three; however, its path on the high seas 92 invokes the United Nations Convention on the Law of the Sea (UNCLOS), particularly the provisions related to the freedom of navigation. 93 Unlike territorial waters and exclusive economic zones (EEZs), the high seas are not subject to the sovereignty of any state, allowing for free passage. However, this freedom of passage is balanced with responsibilities, including the protection of the marine environment and respect for international regulations, such as those related to safety and pollution. 94 Although the TSR traverses international waters, it also crosses Exclusive Economic Zones (EEZs) of various Arctic states, including Russia. UNCLOS Article 234 permits coastal states to regulate marine pollution

prevention in ice-covered areas within their EEZs, presenting potential legal complexities for TSR navigation due to varying national regulations. 95 Russia’s position in the Arctic gives it the opportunity to assert control or influence over segments of the TSR near its territory, along the Russian coastline. 96

Currently, there are three major logistical options for a TSR transportation system: (1) utilizing icebreakers to guide open water or icecapable vessels; (2) using polar-class vessels, especially double-acting ones that can operate in both ice-covered and open water; and (3) establishing a hub-and-spoke port system for transshipment between ice-class and non-ice-class vessels. 97 Creating a TSR icebreaker escort system requires manufacturing additional icebreakers, which is a costly and lengthy process that may require state funding. 98 Because the TSR is in high seas territory, it is difficult for one government to manage and subsidize an icebreaker fleet. Nevertheless, the Norwegian government has devoted NOK 400 million (US$43.8 million) to fund a new floating dock and terminal in Svalbard. While these renovations were aimed at supporting the Arctic cruise sector, this terminal could be expanded as part of a larger port system to support future transshipment. 99

Russia has also invested in port infrastructure on the Svalbard Archipelago because of its significant presence in the coal mining town of Barentsburg. Furthermore, all Svalbard Treaty signatories share equal rights to maritime, industrial, mining, and commercial activities within the archipelago’s land and territorial waters, so other countries, such as China, could also finance a port in Svalbard. 100 This would align with their interest in scientific research stations across the archipelago.

Additionally, the TSR’s passage through less regulated international waters, rather than territorial sea or internal waters, complicates the enforcement of environmental regulations and presents a significant hurdle for sustainable management. 101 Moreover, ships navigating through Arctic waters are not required to disclose their cargo to countries they do not visit, adding another layer of complexity to monitoring and regulation. The 2010 Arctic Council reported, “The greatest risk to the Arctic comes not from traffic originating or ending in the Arctic region, but from shipments that are simply passing through Arctic waters.” 102 Furthermore, the TSR traverses across Exclusive Economic Zones (EEZs) and territorial waters of six countries, adding layers of complexity to its regulatory framework.

Finally, the TSR will undoubtedly offer advantages to people living in communities located at the gateways of the route through the Fram and Bering Straits, including the potential for both temporary and permanent job opportunities tied to port construction and operations, as well as improved access to goods. 103 However, the shipping industry also brings challenges to the socioeconomic and cultural well-being of these areas. Residents of Svalbard have voiced their concerns over the current levels of tourism and cruise ship activity. Also, the impact of shipping on the environment and societal fabric may be even more pronounced for Indigenous Peoples in the Bering Strait region, such as the Chukchi, Iñupiat, and Yupik peoples, who depend on the marine environment for their traditional subsistence lifestyles. 104 In the vicinity of the Bering Strait, commercial shipping poses a significant risk to traditional subsistence activities such as whaling, sealing, and fishing. 105 It is essential to collaborate with Indigenous and local communities, enable them to assert their

stakeholder rights, and engage in discussions on managing maritime policy for Arctic Sea routes. 106

Ultimately, the goal is to mitigate the adverse effects of the shipping industry and to identify how the development of the TSR could provide concrete benefits for these communities. While climate change and the growth of the global ice-class fleet might not dramatically and instantly popularize the Transpolar Sea Route’s role, the advent of an ice-free Arctic will symbolize a pivotal shift in both human and environmental narratives.

B. The Northern Sea Route and Russian Dominance

The NSR is another Arctic Sea route that will offer a significant reduction in shipping time and distance between Europe and Asia. The NSR also called the “Polar Silk Route” is an alternative to the traditional sea route through the Suez Canal and the Strait of Malacca. 107 The NSR may provide relief to the global supply chain’s dependency on the Suez Canal, which has proven to be detrimental to the global economy after the canal was obstructed in 2021 by a run-aground Chinese container ship, disrupting worldwide supply chains. Additionally, piracy along the Strait of Malacca furthers the risk associated with the traditional route. 108

Vessels utilizing the Northern Sea Route from London to Tokyo could reduce 5000 miles off their itinerary. 109 Russia intends to develop the NSR further to provide an “Arctic shortcut to Asia as part of the Northern Sea Corridor, with connections via the Barents Sea and the North Sea to Europe and via the Sea of Okhotsk and the East China Sea to China and the wider Asia-Pacific.” 110 In contrast to the TSR, the NSR primarily runs along the Russian coastline within its EEZ. Russia currently holds approximately 18% of Arctic

territory, with 53% of the Arctic coastline belonging to Russia, and a significant portion of the NSR runs along the coastline of Russia. 111 Control over the NSR could solidify Russia’s strategic hegemony of the region and gain geopolitical leverage. 112 Furthermore, the NSR would allow Russian petroleum companies to access untapped reserves buried in the Arctic. The NSR presents an opportunity for pivotal projects like the Russian Novatek’s Yamal LNG to shine, showcasing their ability to deliver liquified gas across Europe and Asia. 113 The NSR would play a crucial role in transporting these resources to market, necessitating substantial investments in port infrastructure, ice-resistant vessels, and powerful nuclear icebreakers to ensure reliable and efficient transport. 114 China is also key proponent to the route, proposing that stakeholders could collaborate on connectivity, economic and social growth, including the exploration and exploitation of resources such as oil, gas, and minerals.

Source: NOVATEK

Establishing hegemony, Russia imposes specific requirements on foreign ships wishing to navigate the current state of the NSR, which entails the obligation to notify Russian authorities of their intent to pass with the proper permits. Additionally, the use of Russian icebreaker escort services is mandated along the NSR regardless of ice conditions and vessel class, for which monetary charges will be billed. 115 Russia justifies these requirements based on the need to ensure navigational safety and environmental protection

in the challenging and sensitive Arctic environment. Furthermore, Russia argues its regulations and requirements for ships crossing the NSR comply with UNCLOS under Article 234. 116 Article 234 allows, “Coastal States have the right to adopt and enforce non-discriminatory laws and regulations for the prevention, reduction and control of marine pollution from vessels in icecovered areas within the limits of the exclusive economic zone….” 117 In opposition, the United States challenges Russia’s avaricious claims over the NSR. 118 The U.S. argues for “freedom of navigation,” and contends that parts of the NSR fall under international waters where free passage should be allowed, including military vessels, without the need for prior notification or the use of Russian icebreaker services. 119 This stance is based on a broader principle of freedom of the seas and the international right of “innocent passage” under UNCLOS, Article 19. 120

V. Conclusion

1 Gonzalo Vázquez, High North, Low Tension: Norway’s Challenge in the Arctic with Russia and China, UNIVERSIDAD DE NAVARRA (Jul. 12, 2022), https://www.unav.edu/web/globalaffairs/norway%C2%B4s-challenge-in-the-arctic-withrussia-and-china [https://perma.cc/9BDZ-WNSA].

2 The Arctic Council is an intergovernmental forum dedicated to addressing issues concerning the Arctic Region. Its membership comprises the eight Arctic states: Canada, Denmark, Finland, Iceland, Norway, Sweden, the Russian Federation, and the United States.

3 Sebastian Petrick et al., Climate Change, Future Arctic Sea Ice, and the Competitiveness of European Arctic Offshore Oil and Gas Production on World Markets, 46 AMBIO 410, 410 (2017).

4 Nick Ferris, The Enduring Threat to the Arctic from Big Oil, ENERGY MONITOR (Mar. 21, 2022), https://www.energymonitor.ai/finance/riskmanagement/the-enduring-threat-to-the-arctic-from-big-oil/ [https://perma.cc/P4FZ-MK3K].

5 Mia M. Bennett et al., The Opening of the Transpolar Sea Route: Logistical, Geopolitical, Environmental, and Socioeconomic Impacts, 121 MARINE POL’Y 104178, 104179 (2020).

6 Brian Beary, Race for the Arctic, 2 CQ GLOB RSCH 215, 223–24 (2008).

7 Ferris, supra note 4.

Once an overlooked region, the Svalbard Archipelago and the Arctic Circle are quickly heading toward the center of the geopolitical stage. The region has shown extraordinary potential for the oil and gas industry and a critical position in military strategy between Western nations and Russia. The Arctic Circle is also undergoing radical changes as its deep freeze ice melts away to transform the Arctic Ocean. This thawing will pave the way for new transportation and shipping routes that will revolutionize global logistics. The rapid warming and melting processes are transforming the Arctic, a region of impassability, into an intersection of commerce, environmental preservation, international security, and natural resource competition. Svalbard and the Arctic Circle are becoming strategic flashpoints, ensnared between major powers Russia, the United States, and Norway as these nations escalate their significant rivalry in the Northern Hemisphere.

8 Andreas Østhagen, et al., Arctic Geopolitics: The Svalbard Archipelago, CTR FOR STRATEGIC AND INT’L STUD (Sept. 14, 2023), https://www.csis.org/analysis/arctic-geopoliticssvalbard-archipelago [https://perma.cc/5NVZ-JA2V].

9 Trine Jonassen & Hilde-Gunn Bye, Norway Against the Flow with Oil Drilling in the Arctic, HIGH NORTH NEWS (June 7, 2022, 2:08 PM), https://www.highnorthnews.com/en/norway-against-flowoil-drilling-arctic [https://perma.cc/RQ48-HMKG].

10 Id.

11 Donahue, supra note 11, at 53.

12 More recently, China began investing in Svalbard and plans to conduct resource hunting on Arctic shores. See Vázquez, supra note 1.

13 Peter Donahue, The Northern Sea Route and Russian Strategy 16 (Emily L. Meierding ed., Naval Postgraduate School 2022), https://apps.dtic.mil/sti/trecms/pdf/AD1173280.pdf [https://perma.cc/ZQ9F-5K4X].

14 White House Adds Nearly 400,000 Square Miles to U.S. Continental Shelf, The Maritime Exec. (Dec. 25, 2023, 3:34 PM), https://maritime-executive.com/article/white-houseadds-nearly-400-000-square-miles-to-u-s-continental-shelf [https://perma.cc/M32Z-CACU].

15 Østhagen et al., supra note 8.

16 Stefan Hedlund, Norway and Russia Clash Over Svalbard, GIS Rep., (Aug. 30, 2021),

https://www.gisreportsonline.com/r/norway-russia [https://perma.cc/GML6-4ZB3].

17 Today, Svalbard exports about half a million tons of coking coal to Russia and Norway, annually. See Thomas Nilsen, Norway Prolongs Coal Mining at Svalbard until 2025, The Barents Observer (Sept. 2, 2022), https://thebarentsobserver.com/en/arcticmining/2022/09/norway-prolongs-coal-mining-svalbarduntil-2025\ [https://perma.cc/RL73-6288]; see also Heiner Kubny, Russia to Slash Barentsburg Coal Mining by Two Thirds, Polar J. (May 17, 2023), https://polarjournal.ch/en/2023/05/17/russia-to-slashbarentsburg-coal-mining-by-two-thirds/ [https://perma.cc/S8LT-X5QR]

18 Thomas Birchall et al., Permafrost Trapped Natural Gas in Svalbard, Norway, Frontiers in Earth Sci., Dec. 13, 2023, at 1, 1, https://www.frontiersin.org/articles/10.3389/feart.2023.127 7027/pdf [https://perma.cc/AWQ5-JU3Q].

19 Id at 2.

20 Id at 18–19.

21 Id at 18.

22 Id

23 Id

24 Nengye Liu, The European Union’s Potential Contribution to Enhanced Governance of Offshore Oil and Gas Operations in the Arctic, 24 Rev. of Eur., Compar. & Int’l Env’t L. 223, 223 (2015).

25 Birchall et al., supra note 18, at 18.

26 Id. at 5.

27 Id at 19.

28 Ferris, supra note 4.

29 Id

30 Id.

31 Morgane Fert-Malka & Troy Bouffard, The Unique Legal Status of an Artic Archipelago, ARTIC IN CONTEXT (DEC. 6, 2017), https://jsis.washington.edu/aic/2017/12/06/theunique-legal-status-of-an-arctic-archipelago [https://perma.cc/6U55-NXES].

32 Beary, supra note 6, at 226.

33 Id. As of May 2023, the signatories comprise 168 countries and the European Union.

34 Beary, supra note 6, at 228.

35 Currently, Norway does not intend to initiate oil drilling in the Svalbard region. Nevertheless, the 2023 Awards in Predefined Areas, which allocates for new drilling sites in zones that have already been sanctioned for exploration, have identified many projects within proximity to the Svalbard Fishery Protection Zone. See Robin Churchill, The Disputed Scope of the Svalbard Treaty Offshore: A New Approach to Resolving the Issue, 91 NORDIC J. OF INT’L L. 544, 546 (2022).; see also, Atle Staalesen, Norwegian Oilmen Lay Out a Picture of Svalbard, THE BARENTS OBSERVER (Aug. 31, 2023), https://thebarentsobserver.com/en/climatecrisis/2023/08/norwegian-oilmen-lay-out-picture-svalbard [https://perma.cc/QDF6-7VCK].

36 Østhagen et al., supra note 8.

37 Beary, supra note 6, at 236.

38 Id. at 228.

39 Torbjørn Pedersen, International Law and Politics in U.S. Policymaking: The United States and the Svalbard Dispute, 42 OCEAN DEV & INT’L L. 120, 126 (2011).

40 Id. at 125.

41 Id. at 120.

42 Fert-Malka et al., supra note 31, at 4.

43 Robert Harriss, Arctic Offshore Oil: Great Risks in an Evolving Ocean, 58 ENV’T: SCI. & POL’Y FOR SUSTAINABLE DEV 18, 25 (2016).

44 Id.

45 Id at 20.

46 Vázquez, supra note 1.

47 Ferris, supra note 4.

48 E.M. Fazelianov, The Energy Crisis in Europe and Russian Gas Supplies, 92 HERALD OF THE RUSSIAN ACAD OF SCI S902, S905 (2022). (Internal market prices were directly linked to the cost of imported gas).

49 Vázquez, supra note 1.

50 Ferris, supra note 4.

51 Vitaly Yermakov & Anastasia Yermakova, The Northern Sea Route: A State Priority in Russia’s Strategy of Delivering Arctic Hydrocarbons to Global Markets, OXFORD INST. FOR ENERGY STUD., Nov. 2021, at 4.

52 Østhagen et al., supra note 8.

53 CAITLIN KEATING-BITONI, CONG RSCH SERV., R47912, OUTER LIMITS OF THE U.S. EXTENDED CONTINENTAL SHELF: BACKGROUND AND ISSUES FOR CONGRESS 2 (2024).

54 White House Adds Nearly 400,000 Square Miles to U.S. Continental Shelf, THE MARITIME EXEC. (Dec. 25, 2023, 3:34 PM), https://maritime-executive.com/article/whitehouse-adds-nearly-400-000-square-miles-to-u-scontinental-shelf [https://perma.cc/M32Z-CACU].

55 Jan Jacob Solski, The US Arctic Gambit: Testing the Limits of UNCLOS, THE ARCTIC INST (Jan. 16, 2024), https://www.thearcticinstitute.org/us-arctic-gambit-testinglimits-unclos/ [https://perma.cc/2RLK-4DD7].

56 Id.

57 Evan T. Bloom, Five Takeaways from the US Continental Shelf Announcement, POLAR INST. (Jan. 3, 2024), https://www.wilsoncenter.org/article/five-takeaways-uscontinential-shelf-announcement [https://perma.cc/GTA3NFEH].

58 Id.

59 Oleksandra Zimko, USA Expands Control Over Arctic Continental Shelf: Russia Responds with Threats, RBCUKR (Dec. 25, 2023, 4:29 AM), https://newsukraine.rbc.ua/news/usa-expands-control-overarctic-continental-1703468207.html [https://perma.cc/5ZWX-UBFG].

60 Id.

61 Id.

62 Id.

63 Bennett et al, supra note 5, at 1.

64 Donahue, supra note 11, at 31–32.

65Bennett et al, supra note 5, at 10.

66 Beary, supra note 6, at 215.

67 Sébastien Descamps, et al., Climate Change Impacts on Wildlife in a High Arctic Archipelago Svalbard, Norway, 23 Glob. Change Biology 490, 491 (2017).

68 Bennett et al., supra note 5, at 11

69 Ferris, supra note 4.

70 Id.

71 Jonassen et al., supra note 9.

72 Id.

73 Atle Staalesen, Norwegian Oilmen Lay Out a Picture of Svalbard, THE BARENTS OBSERVER (Aug. 31, 2023), https://thebarentsobserver.com/en/climatecrisis/2023/08/norwegian-oilmen-lay-out-picture-svalbard [https://perma.cc/QDF6-7VCK].

74 Ferris, supra note 4.

75 Id.

76 Jonassen et al., supra note 9. The Johan Castberg oilfield is another Norwegian-backed project, which is under construction off the country’s northern coast in the Arctic and set to produce a total of 550 million barrels of oil by 2049.

77 Id.

78 Id.

79 Id.

80 Ferris, supra note 4.

81 Id.

82 Id.

83 Marine gas oil, specifying viscosity, density, and solidification point, is defined in more detail in regulations issued by the ministry; see Lars Fause, Heavy Fuel Oil Ban, GOVERNOR OF SVALBARD (Jul. 5, 2023), https://www.sysselmesteren.no/en/the-governor-ofsvalbard/environmental-protection/pollution-waste-andchemicals/heavy-fuel-oil-ban/ [https://perma.cc/3XAXX3BM].

84 Henning D. F. Knudsen, No Heavy Fuel Oil at Svalbard A Legal Ban?, 31 OCEAN Y.B. ONLINE 81, 81 (2017).

85 U.N. Convention on the Law of the Sea, Dec. 10, 1982, 1833 U.N.T.S. 397, 404 [hereinafter UNCLOS].

86 Id.

87 Beary, supra note 6, at 218.

88 Id. at 215.

89 Id. at 223.

90 Id. at 224.

91 Id. at 223.

92 Id. at 224.

93 Id.

94 Bennett et al., supra note 5, 7.

95 Id.

96 Another legal nuance is the International Maritime Organization’s (IMO) International Code for Ships Operating in Polar Waters (Polar Code). The international code is used to regulate shipping in international oceans. The Polar Code sets international mandatory safety and environmental standards for ships operating in polar waters and addresses issues from ship design and construction to pollution prevention measures. Compliance with the Polar Code will be difficult for the TSR, especially in high-seas areas where jurisdictional oversight is limited because of the vast territories the route will encompass. See Id. at 9.

97 Id.; Bennett et al., supra note 5, 4,

98 Id.

99 Id. at 4–6.

100 Id.

101 Id.

102 Id. at 9.

103 Id. at 10.

104 Id.

105 Id. at 12.

106 Beary, supra note 6, at 224.

107 Yermakov, supra note 51, at 2.

108 Id.

109 Beary, supra note 6, at 218.

110 Yermakov, supra note 51, at 2.

111 Vázquez, supra note 1.

112 Id.

113 Yermakov, supra note 51, at 1.

114 Id.

115 Id. at 5.

116 Id. at 3.

117 Id.

118 Id.

119 Yermakov, supra note 51, at 3.

120 U.N. Convention on the Law of the Sea, Dec. 10, 1982, 1833 U.N.T.S. 397, 404–05.

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