Barnett Shale Spotlight - Lisa Vaughn Interviewed as New Chair of Energy Section of Tarrant Area Bar June 15 2009
Monday, June 15, 2009
BARNETT SHALE SPOTLIGHT
www.barnettshalenews.com ISSUE OF JUNE 15, 2009 11 of 50
Q&A: Barnett Shale Legal Issues with Attorney Lisa Vaughn
With a variety of legal issues prevalent in the Barnett Shale, the Powell Barnett Shale Newsletter presented the following questions to attorney Lisa Vaughn, a partner in the Fort Worth office of Shannon, Gracey, Ratliff & Miller, LLP, practicing energy and business litigation. Vaughn is also the incoming chair of the Tarrant County Bar Association’s Energy Section. She will be speaking on the topic of unleased mineral interests at the Fort Worth Business Press Shale Symposium to be held on Thursday, June 18 at the downtown Fort Worth Hilton Hotel. Lisa Vaughn can be reached at lvaughn@shannongracey.com.
PBSN: The Tarrant Bar Association established the Energy Section last year in response to the surge in activity in the Barnett Shale. As the new chair, what are your goals for the Energy Section? What do you envision for the Energy Section going forward?
LV: Companies that deal in oil, natural gas and alternative energy face decisions with local, regional and global scope and consequences. One of my goals as the new chair is to create an ongoing debate with attorneys in the Tarrant County Bar Associations’ Energy Section, using our meetings to not only understand the status of current laws, but to explore where laws should go. As a litigator, it’s important I continually stay on top of developments in the oil and gas industry. The more we educate each other about the laws and the policies affecting them, the more we can help our clients and the industry.
PBSN: The conflict between the surface estate and the mineral estate is a frequent legal issue for oil and gas. Recently, here in Tarrant County we had a case where the court ruled in favor of the surface owner based on the accommodation doctrine. Are you seeing a lot of these kinds of disputes?
LV: Most accommodation cases are quite fact specific, so it can be difficult to generalize, and the Sansom Park case had particularly usual facts leading to claims of tortious interference. We have always seen conflict between surface owners and lessees and as a trial lawyer, it is important to watch for trends so I can better protect my clients. The Sansom Park case, combined with a case just last year out of the Texas Supreme Court in which the surface owner was able to force the placement the well site without regard to the operator’s expenses for it, may indicate that the pendulum is swinging in favor of surface owners, and so we are advising operators to tread especially lightly.
PBSN: Several municipalities have recently passed drilling ordinances which have imposed more restrictions and are coming closer to preventing mineral owners from having their minerals developed. A proposed bill in the Texas Legislature which would have restricted the ability of local authorities to impose strict drilling ordinances failed to pass during the just-completed legislative session. Are you seeing any pushback from mineral owners and/or energy companies frustrated with some of the provisions in some of the local ordinances? What about the perspective of the municipalities with regard to protecting their citizens while not trampling on state law?
LV: Is there push-back from the energy companies? You bet: that’s why the bill was introduced. However, I have not seen frustration from urban mineral owners; instead, it appears that municipalities are imposing the more difficult restrictions in response to nervous surface owners in what many believe to be misguided attempts to “protect” (or over protect) the citizenry and surface property values at the expense of the mineral owners.
PBSN: Has the routing and installation of natural gas pipelines in the urban area become much of a legal issue other than the condemnation cases which have been reported in the media?
LV: Most lawyers see this issue as a formidable challenge and that is why there were moves at the legislature this year to allow pipelines to be run under city streets. The struggle to find the best balance between the differing interests here - the property owners, those trying to find a way to get their gas to market, the companies themselves, and even the public - is part of the dialog I am hoping to encourage with the energy lawyers of Tarrant County.
PBSN: In Louisiana, in the Haynesville Shale area, some residents who signed leases early before lease prices skyrocketed have filed lawsuits claiming that they were shortchanged and deserve the big bonuses like those who signed later received. Even though lease prices have collapsed, do you know of any suits of this type filed in Tarrant County by people who believe they deserve the high bonuses which were being paid in the first half of 2008?
LV: It’s a good question and I’ve discussed this with several fellow lawyers, including a couple knowledgeable in Louisiana law. They believe these cases will not go far because the lease language will prevail. Based on my experience here, I don’t believe these types of cases will be a concern in Tarrant County, but we are concerned about, and have been preparing for, the potential for lawsuits from people who signed leases near the end of 2008, but who were then told the leases – and the promised bonuses – were not going to be honored.
PBSN: There has been an upsurge in activity of firms offering to purchase mineral rights from property owners in exchange for cash. The honesty of some of these companies has been brought into question. Have you seen anything about any alleged fraud in circumstances where individuals sold their mineral rights to these types of companies?
LV: I love talking about how attorneys can help clients solve or prevent problems and, as an advocate for my clients’ interests, I often get a chance to do exactly that. Although I have not been involved with such a case, it’s important for us to educate the public on how to become better informed in regards to their mineral rights. Sellers need to be extremely careful when entering into these transactions and I always recommend people consult with an attorney, an accountant, or both to fully understand what they’re getting into.
PBSN: Last year, for the first time, the Railroad Commission of Texas ruled in a Tarrant County case in favor of operator forced pooling of unleased properties. Have you seen any other cases where it is possible that this will occur again? Since you’re speaking at the FWBP shale symposium on unleased mineral rights, do you have any other comments, perspectives on this issue?
LV: You are referring to the Finley Resources case, which was ground-breaking in many respects. And yes, it appears there have been two other similar cases filed with the RRC. The RRC has already heard one, although the proposed decision has not been made final. If that decision is not appealed or changed, the RRC has sent a loud message that they will not permit operators to get too greedy, and will force-pool unleased mineral interests only when it’s the only way for the leased and the unleased minerals to be developed. I will be diving deeper into this issue in an upcoming article in the Fort Worth Business Press and will be discussing forced pooling in more detail at the Barnett Shale Symposium breakfast on June 18.
PBSN: Anything else you would like to add?
LV: Since high school, I have known I wanted to be trial lawyer because I could help people and their companies who were wronged. The law – and those 12 people sitting on the jury – are the great equalizers. As attorneys, we have the privilege of keeping that noble goal of equality and fairness alive both by our passion for advocacy and our ability to educate ourselves and those around us about the issues affecting all of us. That’s the essence of the discussions I plan to have with my fellow attorneys as Chair of the Tarrant County Bar Association’s Energy Section.
POWELL BARNETT SHALE NEWSLETTER www.barnettshalenews.com ISSUE OF JUNE 15, 2009 11 of 50
