August 2020

Natural Resources Law Insights

The Civil Jurisdictional Landscape in Eastern Oklahoma Post McGirt v. Oklahoma 

Dylan R. Hedden-Nicely, University of Idaho
Monte Mills, University of Montana

The Supreme Court’s decision in McGirt v. Oklahoma has caused considerable unrest in Eastern Oklahoma as non-Indian individuals, businesses, and organizations try to determine how the decision might affect them. That unrest sets the stage for potential conflict and litigation over tribal and state authority in the region. Read the entire article:

ONRR Processed Gas Reporting – Common Validation Errors and How to Resolve Them

Judith M. Matlock
Davis Graham & Stubbs

The federal gas valuation regulations adopted by the Office of Natural Resources Revenue in 2016 require lessees who sell their gas under percentage of proceeds and similar contracts to convert their reporting, retroactively to January 2017 production, to the more complex processed gas reporting. This article addresses some of the more common validation errors they may experience when attempting to upload a processed gas reporting royalty report and how to resolve them. 
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Climate Change Litigation on the Horizon with Trump Environmental Overhaul

Marcella Burke, NIkesh Jindal, I. Cason Hewgley IV 
King & Spalding LLP

On July 16, 2020, President Trump’s Council on Environmental Quality (“CEQ”) published the long-awaited final rule revising the implementing regulations for the National Environmental Policy Act (“NEPA”). 85 Fed. Reg. 43,304 (July 16, 2020). NEPA requires federal agencies to consider the environmental impact of major federal actions, which include permitting for energy projects on federal land. Pipeline projects, solar and wind farms, oil and gas development, and other infrastructure projects must go through the lengthy NEPA permitting process before construction can begin. This process takes 4.7 years on average and can exceed seven years in some cases, and critics say these lengthy delays unnecessarily stymie construction and development and diminish America’s ability to compete in the global energy market. 
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Paul Yale 
Gray Reed

The authors of the first Texas State Constitution enshrined the English common law Rule Against Perpetuities (the “Rule”) as the law in Texas from the near beginning. In Yowell v Granite Operating, the Texas Supreme Court recently applied the Rule to the reservation of an overriding royalty that included an “anti-washout” clause to preserve the royalty in the case of an extension, renewal, or new lease. Rather than invalidate the clause, however, the court provides lawyers and landmen the opportunity to be introduced or reacquainted with the Cy Pres Doctrine and the practical problems associated with applying the doctrine.
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Mines and Maui : So Much for Regulatory Certainty

Chris Thomas, Andrea Driggs, Eric Fjelstad
Perkins Coie LLP 

The Supreme Court’s decision in County of Maui disrupted long-settled understandings of the scope of the Clean Water Act and has created uncertainty for the mining industry and others. The Court’s ruling not only expands the discharge pathways subject to NPDES permitting, but also suggests that federal permits might be required for surface discharges dozens of miles and decades away from a traditional navigable water.
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State School Lands: What’s an In-Lieu Selection and Who Owns the Minerals? 

Brian R. Bjella
Crowley Fleck PLLP

When most states in the western United States were admitted into the Union, they were granted sections of land for the support of common schools. In many states, such as North Dakota and Montana, they received Sections 16 and 36 in every township. Enabling Act, 25 Stat. 676 (1889). However, on occasion certain Sections 16 and 36 were not available to grant to the states by virtue of prior federal land reservations. When this occurred, the states then had the right to select what has become known as “in-lieu” or “indemnity” lands elsewhere within the state. However, a rather unique anomaly also developed by which states could select in-lieu lands by virtue of rivers or lakes being located within a particular Section 16 and 36. As a result, the state received title to the entire section, but then released its rights to the bed of the water body. Read the entire article:

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New Constituent Law School 

The South Texas College of Law Houston (STCLH), was granted Constituent Law School (CLS) status at the annual Trustees Council meeting in July. Achieving CLS status is not an easy process for a law school. It requires a detailed application that must be approved by the Foundation’s Credentials Committee, the Board of Directors, and the Trustees Council.

STCLH is home of the Harry L. Reed Oil & Gas Institute and their curriculum includes oil, gas, and mineral law, mineral title examination, energy law, petroleum transactions, environmental law, water law, an environmental law seminar, international petroleum transactions, and many other courses. Professor Kulander, the Director of the Oil & Gas Law Institute, speaks annually at the Foundation’s Oil and Gas Law Short Course and has spoken at a total of six annual and special institutes. 

Professor Kulander remarked on why STCLH pursued CLS status, “A couple of years ago, after many years of speaking at RMMLF events and publishing in its various outlets, I was quite surprised to discover that South Texas College of Law Houston was not yet, in fact, a Constituent Law School. The school is well established, approaching its 100th year, and is the only law school located right in the downtown core of the energy capital of the Western Hemisphere, if not the world. The fourth largest city in America! South Texas Houston offers approximately five different oil and gas law-related courses a year, as well as courses on water and domestic energy law. South Texas Houston is a natural fit within the firmament of Constituent Law Schools that shine on the Foundation.”

Professor Ernest E. Smith and Judith M. Matlock were awarded Honorary Trustee status for their contribution to the natural resources law profession and the Foundation. 

Professor Ernest Smith has a long history of supporting the Foundation and is a legend in the oil and gas legal community. He is the winner of the 1998 Clyde Martz Award for excellence in teaching and served as an RMMLF Trustee for the University of Texas for 25 years. He has authored 12 papers for the Foundation, served on the faculty of Oil & Gas Law Short Course for 10 years, and chaired the 1991 Natural Resources Law Teachers Institute. He is the author or co-author of Oil and Gas Law (6^th ed. 2013), Texas Law of Oil and Gas (2d ed., 2010), International Petroleum Transactions (3d. ed., 2010), Cases and Materials on Property (9^th ed. 2017), and Texas Wind Law (2011). To recognize his achievements and contributions, the University of Texas renamed their annual oil and gas conference the Ernest E. Smith Oil, Gas and Mineral Law Institute.

Professor Owen Anderson commented, “First and perhaps foremost, Ernest is an excellent teacher and recipient of the Massey Award for outstanding teaching. As Dean, he diversified the faculty and the student body, hiring the first female and minority faculty and championing the admission of larger numbers of women and minorities to the law school. . . . As an indicator of the respect Ernest enjoys as a scholar, other writers have cited Ernest’ writings in over 350 articles. Appellate courts have cited his writings in nearly 100 cases within and outside Texas.”

Professor John Dzienkowski said, “For over half a century, Ernest Smith has been a mentor to thousands of students, practitioners, and teachers. His teaching and scholarship have shaped the fields of oil and gas law, wind energy, and international petroleum transactions. His service to the Rocky Mountain Mineral Foundation helped to form its relationship with academic institutions and students.”

Professor David Pierce added, “Nobody ponders and communicates complex legal concepts with the creativity, clarity, dignity, and grace that Ernest exudes. His contributions to the Foundation, and his contributions as a mentor and example for other law professors, are significant and lasting.” And Professor Monika Ehrman said, “Although [Professor Smith] is unquestionably a giant in his academic fields, his grace and humility underlie all his profound achievements. . . . His passion for and dedication to service is best illustrated by his longstanding work with Rocky Mountain Mineral Law Foundation, where he promoted a greater understanding of critical natural resources, in addition to fostering relationships with the academic community and the Foundation membership.”

Judy Matlock also has long history of supporting the Foundation including serving as the Secretary, Board Member, and Trustee, chairing an annual institute, chairing 9 special institutes and short courses, serving on the Scholarships Committee for almost 30 years, and for the last 5 years as overall chair, and chairing or co-chairing the Foundation’s most important committee, the Special Institutes Committee, for a total of nine years. Most impressively, she has authored a staggering 25 papers for the Foundation. In addition, she was a 1981-1982 recipient of the Joe Rudd Scholarship.

Deborah Gibbs Tschudy, the former Deputy Director of ONRR, said of Judy, “Judy’s knowledge of Federal and Indian royalty reporting and valuation, attention to detail, and ability to explain it all in simple, understandable terms is incredible. In her interactions with the Department of Interior, Judy has always been the consummate professional working in a collaborative manner with Federal officials to ensure her clients comply with applicable laws and regulations. Judy has volunteered countless hours in support of the Rocky Mountain Mineral Law Foundation and has truly earned the role of honorary trustee for life.”

Former President Jonathan Hunter, who has worked with Judy on a number of Foundation programs, commented, “Not only has Judy provided her clients with exemplary representation, but she has devoted her time to educate hundreds of lawyers (including me), accountants, and agency personnel in the intricacies of royalty reporting and payment, thereby reducing disputes between industry and the federal government.”

Peter Schaumberg, the former Deputy Associate Solicitor for Mineral Resources, said, “Judy truly is the leader in her field of law, and for decades has epitomized the highest levels of scholarship and professional collegiality that the RMMLF represents. Judy has more than willingly shared her unique knowledge and insights into federal mineral and royalty law with more than a generation of lawyers and other professionals through Foundation short courses and special institutes. ”

Walter Stern, former Foundation President, commented, “Knowing of Judy’s tireless and effective contributions to, and passionate support for, the Foundation and its work, I was pleased to select Judy Matlock to serve as the Program Chair for the 56^th Annual Institute in Banff, Alberta. Judy, of course, did not disappoint! I cannot say enough about Judy and her commitment and love for the Foundation.” 

And Judy’s colleague, current Foundation Board member Katie Schroder, added “Judy is extraordinarily curious and extraordinarily dedicated to her clients. She answers any question with meticulous detail so that she is certain she is providing not just a good answer but the precisely correct answer. And, as shown by the many articles she has authored for the Foundation, she is willing to share these answers with her colleagues because she sees the benefit in a common understanding of complex issues. . . . We’re lucky to work with her.” Kathleen C. Schroder, Davis Graham & Stubbs 

New Officers, Board Members, and Trustees-at-Large

Congratulations and welcome to the slate of Officers, Board Members, and Trustees-at-Large elected by the Trustees Council to serve for the 2020-2021 term:

Officers:

Stuart R. Butzier, Modrall Sperling, President

Scot W. Anderson, Hogan Lovells, Vice President

Sandi A. Snodgrass, Holland & Hart, Treasurer

Neil G. Westesen, Crowley Fleck, Secretary

Board Members-at-Large:

Keith B. Hall, Louisiana State University

Connie L. Rogers, Terra Law Group

Kathleen C. Schroder, Davis Graham & Stubbs

Returning Board Members-At-Large:

Past President, 2019-2020: Rebecca W. Watson, Wellborn Sullivan Meck & Tooley, P.C.

Past President, 2018-2019: William B. Prince, Dorsey & Whitney LLP

Reed D. Benson, University of New Mexico

Jana L. Grauberger, Liskow & Lewis

Carlos Vilhena, Pinheiro Neto Advogados

Trustees-at-Large:

Highlights of Recent Programs

The Foundation held the Virtual 66^th Annual Institute on July 23-25, 2020. We had over 1,150 attendees join us for sessions that addressed Energy Security and the Energy Transition After a Crisis, Whistleblower Investigations, Oil and Gas Law Updates and Oil and Gas Law and what the next 10 years will hold, Colorado River Drought Contingency Plan, Agency Streamlining Priorities and Eroding Agency Deference, Growth of Environmental, Sustainability and Governance Policies and the Push for Ethical Mineral Supply Chain Management, and Ethics and Environmental Risk in a Distressed Energy Market. As part of the Institute, we held seven Virtual Networking Events, including a Portia’s Reception, a Public Lands, Environmental, Water & Mining Practitioners reception, and an Oil and Gas Practitioners reception. We received incredibly positive feedback from attendees for both the educational sessions and the virtual networking events. If you missed any of the Virtual Annual Institute presentations, they are now available on our Online Natural Resources Education platform here.

The Foundation held a webinar on The Supreme Court’s Ruling in County of Maui: What Does it Mean for Water Practitioners on June 26, 2020. Our esteemed speakers included Richard Lazarus, the Howard and Katherine Aibel Professor of Law at Harvard University, and Buzz Thompson, the Robert E. Paradise Professor in Natural Resources Law at Stanford Law School. The Supreme Court’s ruling in the Maui case has the potential to expand significantly the scope of the Clean Water Act to waters with a hydrologic connection to a surface waters, but the precise extent of that expansion is far from clear. If you missed Professor Lazarus and Professor Thompson, hear the presentation discussing the Court’s opinion and the implications for water practitioners on our Online Natural Resources Education platform here.

The Wonderful World of WOTUS: The Ever-Changing Meaning of Waters of the United States webinar was held on July 2, 2020. Our panel included Ann Navaro, a partner at Bracewell LLP and former trial lawyer at the Department of Justice who managed all civil works litigation for the Army Corps, Daniel P. Ettinger, a partner at Warner Norcross + Judd with extensive Clean Water Act experience, and Ashley G. Chrysler, an associate at Warner Norcross + Judd. The new Trump administration Waters of the United States (WOTUS) rule that went into effect on June 22 streamlines the definition in an attempt to simplify its application and provide certainty to developers. If you would like to see this timely and informative presentation that illustrates the application of the new WOTUS rule as compared to prior versions and provides practical advice to industry as to WOTUS compliance obligations, it is now available on our Online Natural Resources Education platform here.

The Foundation has also held three conversations as part of our Young Natural Resources Professionals Coffee Break Series Conversations with Industry and Foundation Leaders. These discussions bring together young professionals to engage in conversation with an industry or Foundation leader about their career, how they overcame challenges, managed risk, defied conventional standards, and became the unique leaders they are today. The first conversation was held on June 19, 2020 with Alex Ritchie, the Foundation’s Executive Director and former Leon Karelitz Chair in Oil & Gas Law at the University of New Mexico School of Law. The second conversation was held on July 17, 2020 with Rebecca Watson, Former President of the Foundation and a shareholder with Welborn Sullivan Meck and Tooley, P.C., and former Assistant Secretary for Land and Minerals Management of the U.S. Department of Interior. Our third conversation was held in Spanish on August 21, 2020 with Elisabeth Eljuri, an Independent Arbitrator and Energy Consultant and former Vice President, Chief Negotiator, and Chief Legal Counsel.