Utility scale solar plants are making massive bets in South Texas according to the U. S. Energy Information Administration (EIA). The agency survey reports that Texas added 2.5 GW of solar capacity in 2020, will add another 4.6 GW by the end of 2021, and add an additional 5.4 GW of utility-scale solar capacity in 2022. The significant rise in solar investment in Texas, particularly in the West Texas Permian Basin region, is largely created by the unique environment.
Currently, West Texas produces a large quantity of wind power – up to 22.8% – as reported by ERCOT in its 2020 State of the Grid Report. However, most wind power generation is low during the day when solar generation is greatest. This has created an opportunity for solar developers to take advantage of the abundant sunlight in the region by utilizing the available transmission lines during the day, creating record breaking solar capacity additions in the Permian Basin where about 30% of the state’s planned solar capacity will be built. This, coupled with an excellent low tax climate, have been attracting new utility scale solar projects to the region.
Solar Projects and Title Due Diligence
West Texas, however, has traditionally been known for its oil and gas exploration and production. And, over the long history of Texas energy production, those in the industry has learned that title issues can impede project completion and give rise to expensive and time-consuming litigation. Typically, this occurs because of the separation of surface rights from mineral rights.
Surface rights and mineral rights in Texas can be and often are severed, especially in highly resource rich areas like the Permian Basin. This severance can mean that mineral estates may or may not belong to a landowner, even if they occupy the entire surface of the estate. This is relevant to solar energy providers because of the Texas mineral rights doctrine.
Mineral Rights Doctrine
The state has long given privilege to mineral rights owners over surface owners. The dominant estate doctrine greatly strengthens mineral title owners’ access to the surface in order to drill for oil, gas, or other minerals. If a solar project impedes upon the dominant mineral estate, such as by not providing sufficient access for drilling, this conflict could easily lead to lawsuits.
Before a property owner can lease solar equipment from a business and attach the equipment to the property, they must first engage in title due diligence to make sure that the owners of the minerals beneath are contacted and that tracts remain accessible to their owners should they decide to drill.
But as any Texas landman will tell you, digging up titles to be examined is an entire process unto itself. Often, in rural counties the titles are multiple decades old and there are minimal electronic records. An additional layer of complication comes into play when there are fractional mineral rights owners that have claims to the oil and gas beneath the surface, and each one of them can legally lease their portion of the property to drilling companies at any time.
It is also not uncommon to discover that these mineral titles have exchanged hands many times, and so establishing a chain of title can also complicate the establishment of ownership. Furthermore, these title defects, or “clouds,” may not be significant enough to hinder a project, but with awareness, there may be steps or strategies a company could engage in to limit its risk exposure.
As oil and gas companies have learned, solar companies can also benefit from the counsel of experienced title attorneys, such as the lawyers at the Peissel Law Firm, in order to avoid unnecessary lawsuits. Our attorneys have almost two decades of experience examining mineral titles and rendering title opinions in complex title matters with large datasets. We can advise on all matter of title encumbrances and defects, and can help mitigate legal and financial risks to solar energy projects.
As with all of our title opinions, we prescribe cures for any title defects and can work with a company’s in house legal team to get a firm understanding of the ownership of property that impacts your project. When working with our firm, you get access to legal counsel who understand the nuances of the Texas Property Code, Texas Natural Resources Code, and the relevant caselaw that is grappling to deal with the current changing trends of the energy industry.
Solar Title Opinion Attorney
Additionally, our Managing Partner John Peissel has personally reviewed hundreds of mineral titles and produced title opinions often involving numerous companies, landowners, and other interested parties, for nearly two decades. Mr. Peissel is Board Certified by the Texas Board of Legal Specialization in Oil, Gas and Mineral Law and is an active member in of the Houston Association of Professional Landmen (HAPL) as well as the Permian Basin Landmen’s Association (PBLA).
If your solar company or solar company clients are investing in large tracts of land, or securing leases from landowners, we invite you to contact us to discuss how we can assist you with any title related issues.