Articles Tagged with texas supreme court

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Governmental entities in Texas like school districts, municipalities, hospital districts, and counties rely heavily on property taxes to finance their operations. Mineral interests are real property interests, and when a producing well is drilled the owners of rights to production from the well, both the working interest and the royalty owners, are subject to being levied a property tax on the value of their interests. When those property taxes are not paid, the taxing districts can file suit to foreclose their tax lien securing payment of the tax.

It has become the practice of some taxing districts to hire private law firms to file tax suits to collect taxes. Multiple small delinquent tax accounts are combined into one suit. The attorneys handling the case charge a flat fee per account to handle the matter and are responsible for trying to locate and serve the defendants with the lawsuit. In many cases, the delinquent taxes go back years and the taxing authorities have no current address for the royalty owners. So many named defendants are served by publication notice in a local newspaper or posting notice at the county courthouse. If the defendants do not answer, a default judgment is entered and the sheriff of the county is ordered to sell the royalty interests at a public sale.

Mitchell v. Map Resources, Inc. involves such a delinquent tax sale. In 1998, the Pecos-Barstow-Toyah Independent School District and the Reeves County Hospital District filed suit to foreclose Top-Tentax liens against a some 673 defendants for delinquent taxes on royalty interests. One of the named defendants was Elizabeth Mitchell. The taxing authorities’ lawyers filed an affidavit seeking the court’s permission to serve the named defendants by posting, saying that each defendants is “either nonresident(s) of the State of Texas, absent from the state or transient,” and that “the names or residences of the owner or owners of the land or lots involved in said suit … are unknown and cannot be ascertained after diligent inquiry ….” Based on that affidavit, the court authorized service of the suit on the defendants by posting notice of the suit at the Reeves County courthouse. The court appointed an attorney ad litem to represent the defendants served by posting who had not appeared or answered. Continue reading →

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Happy New Year.

The decade now ending was the decade of the Permian Basin.  Its rise in production changed the US to a net oil exporter.

Permian-Oil-Production

Permian gas production, a byproduct of the search for oil, drove down gas prices and resulted in a frenzied effort to build pipelines to move the gas to the coast.

Permian-Gas-Production

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On February 6, 2015, The Supreme Court of Texas released its second opinion in FPL Farming Ltd. (“FPL”) v. Environmental Processing Systems, L.C. (“EPS”).  The Beaumont court of appeals had held that injected fluids that migrate beyond the boundary of the land owned by the surface owner constitute a trespass on a neighbor’s property.  The Supreme Court declined to address whether or not subsurface wastewater migration is actionable as a common law trespass in Texas, and instead focused on consent as a general element of a trespass cause of action.

Until recently, subsurface wastewater migration had never been addressed by a Texas appellate court, and the assumption in the disposal industry was that such incursion was not actionable. But the Beaumont Court of Appeals, in FPL v. EPS, concluded that the neighbor does have a trespass claim.  The Beaumont Court issued two opinions in the case; the first was appealed to the Supreme Court which reversed and remanded to the Court of Appeals, and the second resulted in the opinion released February 6.

The facts in FPL are these: EPS operates an injection well for non-hazardous waste on land adjacent to the land owned by FPL. FPL had previously objected to an amendment of EPS’s permit that increased the rate and volumes allowed to be injected. The Austin Court of Appeals affirmed the permit amendment over FPL’s objections, ruling that “the amended permits do not impair FPL’s existing or intended use of the deep subsurface.” FPL Farming Ltd. v. Tex. Natural Res. Conservation Comm’n, 2003 WL 247183 (Austin 2003, pet. denied). FPL then sued EPS for trespass and negligence, alleging that injected substances had migrated under FPL’s tract causing damage. FPL lost a jury trial and appealed. The Beaumont Court affirmed, holding that because EPS held a valid permit for its well, “no trespass occurs when fluids that were injected at deep levels are then alleged to have later migrated at those deep levels into the deep subsurface of nearby tracts.” FPL Farming Ltd. v. Environmental Processing Systems, L.C., 305 S.W.3d 739, 744-745 (Tex.App.-Beaumont). The Supreme Court reversed, holding that Texas laws governing injection well permits “do not shield permit holders from civil tort liability that may result from actions governed by the permit.” FPL Farming Ltd. v. Environmental Processing Systems, L.C., 351 S.W.3d 306, 314 (Tex. 2011). But the court was careful to say it was not deciding that owners of injection wells could be guilty of trespass if their injected fluids migrated onto other lands. “We do not decide today whether subsurface wastewater migration can constitute a trespass, or whether it did so in this case.” The court remanded to the court of appeals for it to consider the other issues raised by the appeal. Continue reading →

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