July 29, 2026 | By: Byron Keeling

On March 3, 2026, the Texas Supreme Court released its opinion in Fasken Oil & Ranch, Ltd. v. Puig. In recent years, the Texas Supreme Court has seemingly issued at least one royalty opinion every term. Fasken Oil is the latest in that line of royalty opinions.

The dispute in Fasken Oil arose from a mineral deed in which the Puig grantors reserved a nonparticipating royalty interest of “an undivided one-sixteenth of the oil, gas and other minerals … in, to, and under or that may be produced from [the property] … free of cost forever.”

The owner of the mineral estate, Fasken Oil, operated several oil and gas wells on the property. After producing minerals from the wells, Fasken Oil transported, treated, and processed the minerals, and then it sold all of the minerals — including the Puigs’ 1/16th share of the minerals — to a third-party purchaser at a downstream location.

Fasken Oil paid the Puigs on a net proceeds basis. More specifically, Fasken Oil calculated its royalty payments to the Puigs as follows: it paid the Puig grantors 1/16th of the downstream sales price for Fasken Oil’s production minus the Puig grantors’ 1/16th share of “the costs incurred between the wellhead and the point of sale.”

The Puigs protested that the term “free of cost” in their mineral deed meant that they were entitled to receive their royalty payments on a gross proceeds basis. They argued that they were entitled to receive 1/16th of the gross proceeds that Fasken Oil received on the sales of its mineral production from the property, not 1/16th of the net proceeds.

The Puigs’ argument required the Texas Supreme Court to navigate the contours of several of its recent royalty opinions.

The royalty clause in the Puigs’ mineral deed was an in-kind royalty clause: it expressly reserved to the Puigs 1/16th of the mineral production in-kind. Thus, for every unit of minerals that Fasken Oil produced from the mineral estate, 1/16th of that production belonged to the Puigs.

As the owners of 1/16th of Fasken Oil’s production, the Puigs had the right to take physical possession of their royalty share of the production. And if they had taken physical possession of any of the production, the Puigs could then have sold their share of the production — on their own terms — to a third-party purchaser.

Most royalty owners, especially nonparticipating royalty interest owners, have no practical ability either to take physical possession of any oil and gas production or to market their royalty share of the production. In that event, a producer may sell the royalty owner’s share of the production on the royalty owner’s behalf. Fasken Oil did so. It sold the Puigs’ 1/16th share of the production along with the remainder of its production.

Two of the supreme court’s recent royalty cases, Nettye and Myers-Woodward, suggest that if a producer sells the royalty owner’s share of the production under an in-kind royalty clause, the producer must pay the royalty owner on a net proceeds basis — i.e., it must pay the royalty owner for the royalty owner’s share of the net sales proceeds. As, indeed, Fasken Oil did.

Yet, the Texas Supreme Court in another of its royalty cases, Hyder, has previously commented that the term “cost-free” in a royalty clause “clearly frees the … royalty” of the burden of any “postproduction costs” and therefore contemplates that the royalty owner will receive payment on a gross proceeds basis.

Not surprisingly, the Puigs relied heavily on Hyder to argue that they were entitled to 1/16th of the gross proceeds from Fasken Oil’s downstream sales. The supreme court in Fasken Oil, however, concluded that Fasken Oil properly paid the Puigs on a net proceeds basis rather than a gross proceeds basis. Distinguishing Hyder, the supreme court ruled that under the terms of the Puigs’ mineral deed, the term “free of costs” meant only that the Puigs’ royalty interest was free of production costs:

We hold that the “free of cost forever” language refers to raw minerals produced at the wellhead, not to processed minerals sold downstream. Thus, it does not preclude deduction of postproduction costs from a downstream sales price to arrive at the market value of raw minerals produced at the wellhead.

Fasken Oil may have the effect — intended or unintended — of limiting the “cost-free” discussion in Hyder to its specific facts.

Even so, the result in Fasken Oil is reasonable and fair. If an in-kind royalty owner takes physical possession of its royalty share of the production, it must itself bear the post-production costs necessary to prepare the production for sale in a downstream market. The same should be no less true when the producer markets and sells the royalty owner’s share of the production: the royalty owner should bear its proportional share of the post-production costs necessary to prepare the production for sale.

At the same time, Fasken Oil reinforces what the Texas Supreme Court has frequently recognized in its royalty opinions: the specific terms of the parties’ agreements will control the outcome in any royalty litigation, and the parties are free to agree on terms that may deviate from the general rule or practice.

Especially after Fasken Oil, prudent producers may want to enter into separate purchase agreements with any in-kind royalty owners. Under such agreements, producers could purchase an in-kind royalty owner’s share of the production at the wellhead, specifying that the price they will pay for the royalty owner’s share of the production will be the net proceeds that they receive for that share of the production on selling it — i.e., the price that the purchasers receive for the royalty owner’s share of the production minus the royalty owner’s share of the purchasers’ post-production costs.

The advantage of such separate purchase agreements is that they could more plainly spell out the parties’ respective rights. One of the key lessons in Fasken Oil, as in all of the Texas Supreme Court’s royalty opinions, is that producers and royalty owners should strive to ensure that their royalty agreements plainly say exactly what they intend for them to mean.

This Alert was prepared by Byron Keeling, a member of GableGotwals’ Energy, Oil & Gas Team in the Firm’s Houston office. For questions about this decision or related oil and gas matters, please contact Byron or another member of the team.

Byron Keeling

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

July 15, 2026 | By: Tim Sowecke and Tyler A. Self

The Department of Justice has renamed its Environment and Natural Resources Division (ENRD) the Energy and Natural Resources Division. Same acronym. Different signal. DOJ announced the change on June 29, 2026, after Principal Deputy Assistant Attorney General Adam Gustafson previewed the move in a Wall Street Journal op-ed titled “New Name, New Mission at the Justice Department.” DOJ framed the change around a blunt proposition: “Energy security is national security.”

The rename is not just a branding exercise. It aligns DOJ’s environmental and natural resources litigation shop with the Administration’s broader energy program: domestic production, grid reliability, critical minerals, expedited permitting, defense of federal energy actions, and affirmative challenges to state policies DOJ views as anti-energy or federally preempted. Executive Order 14154, “Unleashing American Energy,” directs agencies to identify and address actions that burden domestic energy development and instructs the Attorney General to consider litigation positions tied to those policy changes.

Why the Name Change Matters

ENRD has always handled more than traditional environmental enforcement. It defends federal permitting decisions, public lands decisions, energy infrastructure approvals, tribal and natural resource matters, and agency action across the federal environmental docket. DOJ’s announcement places that work squarely within the Administration’s broader energy-security agenda.

That is the point for regulated industry. DOJ is signaling that infrastructure, production, and reliability are not peripheral to environmental litigation—they are central to it. In practical terms, that means DOJ will be staffed and directed toward lawyers who understand the operational side of regulated facilities: pipelines, power generation, production, transmission, refining, waste management, permitting timelines, and the constant work of fitting square operations into the round hole of layered federal and state regulation.

But that does not mean environmental enforcement disappears. DOJ expressly stated that ENRD’s environmental enforcement work will continue. The better read is narrower and more useful: facilities should expect an enforcement philosophy that gives more weight to compliance, correction, operational reality, and energy reliability, while still reserving penalties and criminal enforcement for serious, repeated, and fraudulent conduct.

Compliance First Overlay

The DOJ rebrand also fits with EPA’s recent “compliance first” orientation vis-à-vis its “Reinforcing a ‘Compliance First’ Orientation for Compliance Assurance and Civil Enforcement Activities.” For industry, “compliance first” should not be read as “enforcement last.” EPA and DOJ are signaling a preference for correcting violations efficiently, achieving timely compliance, and resolving matters without unnecessary punitive drag where the facility is acting in good faith. Companies still need to monitor, maintain, and update their permits, monitoring, reporting, corrective action records, and audit results—while communicating all of this to regulators in a disciplined, documented manner.

But these two actions, among others, signal a tone shift within the agencies. A compliance first program should favor getting facilities into compliance and keeping them operating lawfully, rather than allowing disputes to become endless penalty exercises detached from environmental outcome—and reality. The best regulated entities will use that shift by moving quickly when issues arise.

National Security Is Now Part of the Environmental Docket

The most important legal signal is the national-security framing. The Administration’s grid reliability order states that rising electricity demand from AI data centers and domestic manufacturing strains the grid and that reliability affects national and economic security.

That framing changes the litigation posture around energy facilities. Environmental permitting disputes, infrastructure challenges, and related disputes may increasingly be argued not only as environmental or administrative law questions, but also as reliability, defense, supply-chain, and economic security questions.

The same point is reinforced by global oil-market pressure tied to Iran and the continuing strategic importance of the Strait of Hormuz. Those external risks sharpen the domestic argument: energy infrastructure, reliability, and production are no longer being treated as ordinary regulatory subjects. They are being framed as national-security assets.

What Regulated Companies Should Take From This

The immediate takeaway is not that compliance risk has gone away. It has not. The takeaway is that the federal enforcement and litigation environment is becoming more operationally literate and more tied to energy security.

Companies should be prepared to show that they are operating responsibly, correcting problems quickly, and maintaining reliable service while complying with permits and environmental laws. That means compliance programs should be current, field-tested, and documented. It also means regulatory communications should be practical, technical, and tied to corrective action.

The new ENRD will likely be more receptive to arguments that lawful operations, energy reliability, and compliance solutions can coexist. But those arguments work only when the facility has the facts to support them.

The best posture is therefore simple: operate, document, correct, and communicate. The federal government may be moving away from enforcement for enforcement’s sake, but it is not moving away from compliance. It is reframing compliance as part of the work required to keep energy and industrial infrastructure moving.

For assistance with regulatory compliance, permitting, enforcement, and related matters, please contact Tim Sowecke or Tyler A. Self. GableGotwals’ Administrative & Regulatory, Energy, Oil and Gas, and Environmental and Natural Resources teams regularly advise clients on environmental, regulatory, and energy matters.

Tim Sowecke
405-568-3308
tsowecke@gablelaw.com

Tyler A. Self
405-235-5589
tself@gablelaw.com

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

July 1, 2026 | By: Jason T. Seay, AIGP, CIPP-US

Artificial intelligence is rapidly transforming how companies operate, but with that transformation comes increasing legal scrutiny, regulatory complexity, and operational risk. AI is no longer an emerging issue—it is a current business and legal priority.

Here are seven key takeaways from my presentation at the BSidesOK AI Security Summit.

1. AI Risk Is Broad, Immediate, and Business-Critical

Organizations must evaluate AI beyond technical performance, focusing on legal, reputational, and operational consequences.

• AI-related harms can include:
  • Reputational damage
  • Regulatory exposure
  • Discrimination and bias risks
  • Data privacy violations
  • Economic and societal impacts
• AI amplifies existing risks due to its scale, speed, and automation capabilities

Why does it matter?
Failure to proactively identify and mitigate these risks can lead to enforcement actions, litigation, and brand damage—often before issues are fully understood.

2. There Is No Single AI Law, But Significant Legal Exposure Exists

In the U.S., AI is governed through a patchwork of existing laws and emerging state regulations, not a single comprehensive statute.

• Existing laws already apply, including:
  • Consumer protection (e.g., misleading AI claims)
  • Anti-discrimination laws (e.g., hiring, lending)
  • Privacy and data governance laws
• Regulators such as the FTC are actively taking enforcement action for AI-related misconduct

Why does it matter?
Companies cannot assume they are “unregulated” simply because there is no omnibus AI law. Legal exposure already exists across multiple fronts.

3. State-Level AI Regulation Is Accelerating Quickly

Several states have already enacted AI-specific laws with immediate and near-term compliance obligations:

• California (2026):
  • AI transparency requirements for training data
  • Disclosure obligations for chatbots and synthetic content
• Colorado (2026):
  • Anti-discrimination and reporting requirements for high-risk AI (subject to change under new legislation currently under consideration in Colorado; see SB 26-189)
• Texas (2026):
  • Comprehensive AI governance framework and regulatory sandbox
• New York & Illinois (2026):
  • Reporting, safety, and civil rights implications for AI systems

Why does it matter?
Businesses operating across multiple jurisdictions must manage inconsistent and evolving compliance obligations, increasing operational complexity and risk.

4. Your Role in the AI Ecosystem Determines Your Liability

Regulatory frameworks increasingly distinguish between different participants in the AI lifecycle, such as:

• Providers: Design and develop AI systems (highest regulatory burden)
• Deployers: Use AI within business operations (compliance and oversight obligations)
• Importers/Distributors: Ensure systems meet regulatory requirements before market entry

Why does it matter?
Understanding your role is critical. Liability and compliance obligations vary significantly depending on how your business interacts with AI.

5. AI Governance Must Span the Entire Lifecycle

Effective AI governance is not a one-time exercise; it must be embedded across the full AI tool lifecycle:

• Planning and problem definition
• Data collection and bias mitigation
• Model development and documentation
• Testing for fairness and accuracy
• Deployment with oversight and reporting
• Ongoing monitoring and maintenance
• Proper decommissioning and data handling

Why does it matter?
Regulators and stakeholders increasingly expect “governance by design,” not retroactive fixes after deployment.

6. Risk-Based Frameworks Are Becoming the Global Standard

Most regulatory approaches categorize AI systems by risk level, such as:

• Prohibited: Banned uses (e.g., certain biometric surveillance)
• High Risk: Subject to strict oversight and documentation
• Limited Risk: Transparency and disclosure requirements
• Minimal Risk: Voluntary standards

Why does it matter?
Companies must assess where their AI tools fall within these categories to determine compliance obligations and acceptable use cases.

7. Data, Cybersecurity, and Liability Are Emerging Pressure Points

Key trends shaping AI-related risk include:

• Data quality and bias: AI outputs are only as reliable as training data
• Cybersecurity and confidentiality: Increased threat exposure through the use of AI systems
• Product liability questions: Whether AI systems will be treated as “products” under existing product liability laws
• Internal governance gaps: Lack of policies, training, and oversight structures

Why does it matter?
These issues are likely to drive the next wave of enforcement and litigation, particularly for companies deploying AI at scale.

What Businesses Should Do Now

To stay ahead of regulatory and operational risk, organizations should:

• Conduct an AI risk assessment across all business functions
• Map AI use cases to applicable laws and regulatory frameworks
• Implement governance policies covering development, deployment, and monitoring of AI tools
• Establish internal accountability (legal, compliance, IT, and business stakeholders)
• Audit data sources and outputs for bias, accuracy, and compliance
• Prepare for disclosures and transparency requirements

AI presents significant opportunities, but also heightened legal, regulatory, and reputational risk. Organizations that take a proactive, structured approach to AI governance will be best positioned to innovate confidently while minimizing exposure.

This Alert was prepared by Jason Seay, AIGP, CIPP-US, a member of GableGotwals’ Cybersecurity and Data Privacy Team. For more information, please contact Jason or a member of the team.

Jason T. Seay, AIGP, CIPP-US

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

June 18, 2026 | By: Win Colbert

The regulatory environment for energy, infrastructure, and other projects is undergoing a dramatic shift. New executive orders, evolving agency priorities, landmark court decisions, and pending federal legislation are reshaping permitting, enforcement, and environmental compliance across the United States.

For energy companies, developers, and investors, success in 2026 will depend not only on understanding the rules, but on strategically navigating a rapidly changing regulatory landscape.

Key Takeaways

1. The Fundamentals of Regulatory Success Haven’t Changed

Despite shifting political priorities, core project management principles remain essential:

• Develop deep, cross-functional project knowledge
• Identify short- and long-term project goals early
• Establish realistic permitting timelines and milestones
• Anticipate notice, review, and compliance requirements
• Prepare proactively for enforcement and dispute resolution
• Maintain both “macro” regulatory awareness and project-specific focus

2. Executive Orders Are Reshaping Energy and Environmental Policy

Since January 2025, the administration has issued numerous executive orders aimed at:

• Expanding domestic energy and mineral production
• Accelerating permitting timelines
• Reducing regulatory burdens
• Increasing federal support for fossil fuel and infrastructure development

Key initiatives include:

• EO 14154: Unleashing American Energy
• EO 14156: Declaring a National Energy Emergency
• EO 14270: Zero-Based Regulatory Budgeting To Unleash American Energy

These directives are driving agencies to:

• Re-evaluate existing regulations
• Streamline approvals
• Prioritize domestic production and infrastructure reliability

3. Courts Are Limiting Agency Authority and Expanding Project Leverage

Recent Supreme Court decisions have fundamentally altered administrative law:

• In West Virginia v. EPA, the Court strengthened the “major questions doctrine,” limiting expansive agency action without clear congressional authorization.
• In Loper Bright Enterprises v. Raimondo, the Court overturned “Chevron deference”, requiring courts to independently interpret ambiguous statutes. Previously, the Chevron deference doctrine (established by the Supreme Court in 1984; see Chevron U.S.A., Inc. v. Natural Resources Defense Council) required federal courts to defer to a government agency’s interpretation of an ambiguous statute that the agency was tasked with administering, provided the agency’s interpretation was “reasonable” or “permissible”.

Agencies now face greater legal constraints, and regulated entities have stronger grounds to challenge aggressive regulatory interpretations.

4. NEPA Reviews Are Becoming Narrower and Faster

Recent case law is also reshaping the scope of environmental review under the National Environmental Policy Act:

• Marin Audubon Society v. FAA limited the authority of the Council on Environmental Quality to impose binding NEPA regulations.
• Seven County Infrastructure Coalition v. Eagle County narrowed the scope of environmental review and reinforced judicial deference to agencies.

Result:

• Shorter environmental analyses
• Reduced review obligations for indirect impacts
• Greater agency discretion in defining project scope

However, courts may still invalidate reviews if they are deemed too vague or unsupported.

5. EPA Enforcement Is Shifting Toward “Compliance First”

The Environmental Protection Agency is signaling a major enforcement philosophy shift:

• Increased emphasis on:
  • Voluntary compliance
  • Self-reporting and corrective action
  • State-federal coordination
  • Tailored remedies rather than punitive enforcement

Enforcement actions are expected to require clear and well-supported findings of violation. In response to any enforcement action, proactive engagement and transparency may significantly reduce enforcement exposure.

6. Pending Legislation Could Dramatically Accelerate Permitting

Several federal bills propose to streamline environmental review and infrastructure development, including:

• Shortened litigation windows
• Increased permit certainty
• Digital and AI-assisted environmental review processes
• Faster infrastructure and critical mineral approvals

Proposed federal legislation includes the following:

• SPEED Act (The “Standardizing Permitting and Expediting Economic Development Act” seeks to modernize NEPA by shortening environmental review timelines, limiting judicial review windows, and redefining what qualifies as a “major federal action”).
• Interactive Federal Review Act (would require U.S. DOT to encourage recipients of federal highway funding who are conducting environmental reviews under NEPA to  use of certain digital platforms and models.
• Streamlining Critical Mineral Permitting Act (would amend the Solid Waste Disposal Act to allow an owner/operator of a critical energy resource facility to obtain an  interim permit subject to final approval by U.S. EPA).
• REPAIR Act  (goal is to enhance funding and support for critical repairs).

7. Energy Development Is Becoming a National Strategic Priority

Federal policy increasingly links energy production to:

• National security
• AI and data center growth
• Supply chain resilience
• Critical mineral independence

This broader policy alignment is creating:

• More favorable permitting conditions
• Increased government support for infrastructure expansion
• Greater emphasis on energy reliability and domestic production

8. Long-Term Stability Still Requires Caution

While current trends favor accelerated development:

• Regulatory priorities can shift with future administrations
• Agency interpretations may continue evolving
• Litigation risk remains significant

Best practices include:

• Maintaining strong compliance records
• Structuring projects to withstand policy changes
• Building flexible permitting and operational strategies
• Evaluating both short-term opportunities and long-term stability risks

The Bottom Line

The 2026 regulatory landscape presents a rare combination of opportunity and uncertainty for the regulated community. Executive orders, judicial decisions, and proposed legislation are creating new tools to accelerate permitting and reduce regulatory friction, but the environment remains politically and legally fluid.

Companies that combine proactive planning, strategic regulatory engagement, and adaptable compliance strategies will be in the best position to capitalize on today’s opportunities while protecting long-term operational stability.

This series covers topics featured during GableGotwals’ Annual Energy Market Drivers and Current Legal Issues Seminar. To receive Alerts and information on future Firm events, subscribe to our mailing list.

Win Colbert

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

June 11, 2026 | By: Jason T. Seay, AIGP, CIPP-US

Cybersecurity and privacy are no longer back-office concerns for the energy sector; they are front-line legal and operational risks. With expanding federal directives, evolving threat tactics, and an increasingly aggressive privacy litigation landscape, some energy companies are rethinking how they manage cyber and data risk. This Alert highlights the latest developments and what they mean for your business.

Key Takeaways

1. Federal Cybersecurity Mandates Are Expanding Rapidly

• The Transportation Security Administration (TSA) continues to roll out mandatory cybersecurity directives for critical pipeline infrastructure.
• These apply to designated pipeline owners and operators and are evolving annually.
• Expect more assets to be classified as “critical infrastructure,” increasing regulatory reach.

2. Compliance Now Requires a Structured, Documented Cyber Program

• TSA directives establish a two-layer framework:
  • Governance and Reporting (01 Series):
    • Designated cybersecurity coordinator (24/7 availability)
    • Mandatory incident reporting to the Cybersecurity and Infrastructure Security Agency (CISA)
    • Formal risk assessments and governance structures
  • Mitigation and Testing (02 Series):
    • Cybersecurity Implementation Plans
    • Incident response and recovery planning
    • Ongoing testing, validation, and documentation
• Key shift: Regulators now expect audit-ready evidence of compliance, not just policies.

3. 2025–2026 Updates Signal a Move Toward Continuous Oversight

• Recent TSA updates emphasize:
  • Performance-based compliance
  • Real-time monitoring and detection capabilities
  • Stricter reporting timelines and remediation tracking
• Implication: Cybersecurity is now an ongoing operational obligation, not a periodic exercise.

4. Threat Actors Are Targeting Identity, Not Just Systems

• Attack strategies are evolving quickly:
  • Help desk impersonation and social engineering
  • Multi-factor authentication (MFA) fatigue (“push-bombing”)
  • Identity provider (IdP) compromise (e.g., centralized access systems)
  • Exploitation of non-human identities (API keys, service accounts)
• Generative AI is accelerating:
  • Phishing sophistication
  • Malware development
  • Attack scale and speed
• Takeaway: Traditional perimeter defense is becoming obsolete.

5. Privacy Litigation Is Expanding Beyond Traditional Targets

• The California Invasion of Privacy Act (CIPA) is being applied to:
  • Website tracking technologies (cookies, pixels)
  • Chatbots and AI tools
  • Session replay and user interaction tracking
• Plaintiffs argue that third-party tools “intercept” user communications—triggering potential liability under California state law.
• Risk exposure: Up to $5,000 per violation, with broad applicability to any site accessible in California.

6. New Privacy Laws Add Another Layer of Compliance

• The Oklahoma Privacy Act (effective 2027) introduces:
  • Enforcement by the Attorney General
  • Penalties up to $7,500 per violation
• At the same time, updated California Consumer Privacy Act regulations require:
  • Risk assessments for high-risk data processing
  • Cybersecurity audits for covered businesses
• Notably: Sensitive data like precise geolocation is a key focus.

7. Proactive Risk Management Is Now a Business Imperative

• Leading practices include:
  • Comprehensive data and AI tool inventory (chatbots, analytics, tracking tools)
  • Vendor contract scrutiny (data use, model training, reuse rights)
  • Regular audits (at least every 6 months)
  • Stronger consent frameworks (clear disclosures and enforceable terms)

The Bottom Line

Legal, IT, and operations teams must work in lockstep as cybersecurity and privacy risks in the energy industry are converging and intensifying. Federal mandates, sophisticated cyber threats, and expanding privacy litigation, are creating a complex, high-stakes environment.

Companies that treat cybersecurity and data governance as core business functions, not just compliance exercises, will be best positioned to manage risk, maintain operational resilience, and avoid costly enforcement actions.

This series covers topics featured during GableGotwals’ Annual Energy Market Drivers and Current Legal Issues Seminar. To receive Alerts and information on future Firm events, subscribe to our mailing list.

Jason T. Seay, AIGP, CIPP-US

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

June 8, 2026 | By: Kat Statman

In a significant decision impacting the utility and energy industries, the Texas Supreme Court recently issued an opinion in Boerschig v. Rio Grande Electric Cooperative, Inc., making clear the limited scope of an easement by estoppel.

Private land in Texas, with one of the highest rates of private land ownership (more than 96%) and the second largest state by land size in the United States, is crisscrossed with utilities and energy extraction and delivery operations that date back more than a century. As a result, the recent opinion issued by the Texas Supreme Court, which concluded that easements by estoppel are to be narrowly construed in terms of scope, may have an impact on any utility or energy easement holders that are not properly recorded for historical reasons, significantly limiting what the easement holder can and cannot do within its easement rights.

In Boerschig, the Texas Supreme Court was tasked with determining

• Whether an electric cooperative held an easement by estoppel for its power distribution lines that were built pursuant to an agreed, albeit unrecorded, easement with the prior ranch owners and
• Whether the scope of that easement by estoppel allowed the electric cooperative to upgrade the power distribution lines that increased the number of power lines originally constructed.

Based on these questions, the Texas Supreme Court concluded that the electric cooperative did have an easement by estoppel; however, in a significant decision, the Court concluded that the power distribution line upgrades exceeded the scope of the easement by estoppel because the cooperative did not offer any evidence “that the upgrade was reasonably necessary to continue its existing use of the line.”

What Happened?

The Rio Grande Electric Cooperative was originally formed in 1945 to provide electricity to rural ranches and property owners in south, central, and west Texas. Since 1945, Rio Grande has expanded to cover 18 counties in Texas and two in New Mexico. In 1947, Rio Grande acquired a “Right of Way Easement” over the property at issue, giving it “the right to place, construct, operate, repair, maintain, relocate and replace an electric transmission or distribution line or system on 5,684 acres” of the property at issue. However, the easement was never recorded in the real property records.

The distribution line was constructed after Rio Grande obtained the easement and crossed 1.6 miles of the property at issue. Subsequently, in 2002, John Boerschig purchased the U-Bar Ranch in Kinney County, Texas, which included the plot of land where Rio Grande’s utility easement ran. Mr. Boerschig was aware of the distribution line at the time of purchase, as he observed the distribution line in addition to the fact that it was marked on a survey that was prepared in connection with the purchase transaction.

In 2012, Rio Grande provided notice to Boerschig about its plan to bulldoze and upgrade the existing feeder along the utility line easement. Additionally, Rio Grande planned to move the distribution line approximately 15 feet and add to the line to serve new customers (specifically a gas compressor station and a new electric substation Rio Grande was planning to build to accommodate anticipated future demand and growth). While Boerschig contended that he never received the letter, after observing a bulldozer for Rio Grande starting to clear a route through his property, he demanded copies of the easements covering the route. Rio Grande did not provide the specific easement covering the area at issue, only providing other easements it held over the property.

Boerschig filed a suit against Rio Grande for trespass and obtained a temporary restraining order. Rio Grande filed a counterclaim seeking a declaratory judgment that it had a valid express easement or, in the alternative, that it had a prescriptive easement or one by estoppel. During the course of the litigation, the parties agreed Rio Grande would cease construction. Rio Grande also alleged that Boerschig had interfered with its easement rights and potential contracts to reroute the distribution line through the town of Brackettville, Texas.

Throughout the litigation, Boerschig offered to allow Rio Grande to build a new line in a different area of his property and alongside a different existing transmission line owned by another company. Rio Grande, however, refused. After Boerschig dropped his opposition to the continued construction, subject to his trespass claim that the upgrade was not authorized by a valid and enforceable easement, Rio Grande decided to keep the line on the original footprint, but upgraded it to include additional poles and lines as originally planned.

The dispute between the parties eventually went to trial, and the jury returned a verdict that Rio Grande did not have a written or prescriptive easement but concluded that it did have an easement by estoppel. The jury also concluded that Rio Grande’s upgrade to the distribution lines failed to exceed the scope of the easement, which included utilizing 60 poles carrying seven wires versus the original distribution line that was 20 poles carrying four wires.

On appeal, the Court of Appeals was presented with two questions:

1. Whether there was sufficient evidence for the jury to find that there was an easement by estoppel; and,
2. Whether there was sufficient evidence for the jury’s failure to conclude that the transmission line upgrades by Rio Grande exceeded the scope of the easement by estoppel.

The Court of Appeals found that there was sufficient evidence for both jury findings.

Supreme Court’s Fundamental Legal Analysis

Whether There Was Sufficient Evidence for Easement by Estoppel Jury Finding

The elements to prove a claim of easement by estoppel are relatively well-settled under Texas law.

1. “[T]he owner of the burdened estate represented that an easement would be conveyed,
2. The holder believed the representation, and
3. The holder relied on the representation to its detriment.”

The question the Supreme Court focused on was whether the defective easement, because it was unrecorded, could be evidence to establish Rio Grande’s easement by estoppel claim.

The Texas Supreme Court answered this in the affirmative and upheld the Court of Appeals, while declining to adopt the Restatement (Third) of Property. As the Supreme Court stated:

A writing that fails as an express easement can be some evidence supporting the representation element of an easement by estoppel. The function of such easement is to preserve reliance interests for uses of land intended by the parties but not supported by formal written documentation. Thus, easements by estoppel arise only in cases in which an express easement fails to cover the use at issue. An easement that the parties intended but failed to perfectly memorialize is no less relevant than an easement the parties intended to memorialize by a handshake.

Based on this, the Court concluded that there was legally sufficient evidence based on the unrecorded written easement from 1947 that the jury could rely on finding that Rio Grande had an easement by estoppel.

Did Rio Grande’s Upgrade Exceed the Scope of its Easement by Estoppel

The second issue presented to the Supreme Court was on the scope of the easement by estoppel and whether the upgrades by Rio Grande exceeded its scope. This is where the Supreme Court reversed both the trial court and the court of appeals’ conclusions, finding that as a matter of law Rio Grande exceeded the scope of its easement by estoppel under Texas law. Therefore, Boerschig, the property owner, is entitled to judgment as a matter of law on his trespass claim.

In coming to this conclusion, the Supreme Court specifically looked at the public policy surrounding easements by estoppel. As the Court noted, because easements by estoppel are not recorded like express easements, determining their scope is more difficult and is fraught with other considerations, like this situation where the easement would be extended to subsequent property owners such as Boerschig. Based on this, the Court stated “[T]he scope of such an easement [by estoppel] is limited to preventing injustice by protecting the holder’s reliance interest—that is, the actual investment (or other change of position) that the holder made to use the land in reasonable reliance on the owner’s representations.” Based on this, the Court made clear that easements by estoppel are limited in scope to that which “would be discovered by reasonable inspection or inquiry.”

In support of this conclusion, the Court looked closely at separation of powers issues,

Courts and juries are not free to give away more of a landowner’s property rights whenever they feel that the societal benefit of an expanded use outweighs its burden on the landowner. That judgment is for the other branches of government and entities on which they have conferred condemning authority, and our Constitution demands that the landowner be compensated when a greater easement is taken.

There are additional considerations that can be made in assessing whether an easement by estoppel holder exceeded the scope of its easement, such as whether the activity is “reasonably necessary to fairly enjoy the usage rights defined by the representations, reliance, and knowledge.” This assessment of whether the use is reasonably necessary must be narrowly drawn, however, “to burden the landowner as little as possible.”

In undertaking this analysis, the Supreme Court concluded that Rio Grande’s increasing the number of distribution line poles, increasing the height of those poles by seven feet, and increasing the number of lines on those poles was not an activity that was reasonably necessary for it to enjoy the usage of the easement based on the representations it received and relied upon as well as the knowledge of the easement.

In essence, the issue boiled down to whether Rio Grande could continue to use and maintain its line in its present form, which was not contested. However, the Rio Grande CEO testified that the changes made constituted an upgrade and would provide electric services to a new gas compressor station as well as connect a new electrical substation to accommodate anticipated future growth. The CEO also testified that the existing line served roughly 1,000 consumers. This testimony at the trial court showed that under the narrow construal of the easement by estoppel, Rio Grande had exceeded its scope because it was taking additional steps beyond simply using and maintaining the distribution line and easement that had been in place since the 1940s.

On this basis, the Court concluded as a matter of law that Rio Grande trespassed on Boerschig’s property when it upgraded the distribution line and remanded the case to the trial court for further proceedings regarding the appropriate relief.

Key Takeaways

With Texas’ historic amount of private property, utility and energy companies are often holders of easements that crisscross private landowners’ land. The decision in this case is likely to have an impact on what easement holders can or cannot do within their easement where the easement is not properly recorded. This is likely to be a greater consideration when the land where the easement runs is transferred to a new property owner, as in Boerschig. Many of these easements may have been inherited from prior producers or utility companies or granted by prior landowners before the sale of the property to the current landowner. It is fundamental, particularly with these historic property rights, to confirm both that any easements supporting the utility or infrastructure owned are appropriately recorded in the real property records and review the scope of those express easements to ensure that the activity complies with the use and scope of the express easement.

Additionally, it is necessary to understand the narrow limitations on what rights an easement holder may have under the Boerschig decision. Under the rule expressed in Boerschig, an easement by estoppel will be very narrowly construed in scope, limiting what actions the easement holder may take as reasonably necessary for the use and enjoyment of the limited property right they have.

The Boerschig decision underscores the critical importance of proper recording of easements in the property records for utility and energy companies operating across Texas and beyond. Additionally, it underscores the importance of confirming that historical easements, such as the one at issue in Boerschig, were recorded in the property records when obtained to avoid the risk of losing an easement or significant narrowing of an easement already negotiated and obtained years prior.

Attorneys at GableGotwals have experience advising energy clients on the full spectrum of easement and real property issues impacting operations — from auditing existing easement portfolios, ensuring proper recordation in county real property records, and defending real property disputes such as in the Boerschig case.

Kat Statman

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

June 3, 2026 | By: Ethan T. Mock and Alex R. Telarik

In energy and land transactions, few legal doctrines create as much hidden risk as the Rule Against Perpetuities (RAP). Often overlooked during drafting and diligence, RAP can quietly invalidate valuable property interests or trigger costly disputes years after a deal closes. This Alert outlines how RAP applies to oil and gas transactions and what landmen and deal professionals can do to avoid unintended consequences.

Key Takeaways

1. RAP Is Designed to Prevent Long-Term Uncertainty in Property Rights

The rule requires that property interests must vest, if at all, within 21 years after a “life in being” at the time the interest is created. Its purpose is to prevent indefinite control of property (“dead-hand control”) and ensure assets remain transferable and commercially usable.

Key risk: Interests tied to uncertain future events may violate RAP at inception, even if the issue doesn’t surface immediately.

2. Oil & Gas Interests Are Not Exempt

Oklahoma courts treat many energy-related interests as real property, meaning RAP applies to:

• Overriding royalty interests (ORRIs)
• Non-participating royalty interests (NPRIs)
• Working interests and related assignments

Common transaction documents impacted include:

• Mineral deeds
• Leases
• Assignments

Implication: Routine deal structures can unintentionally trigger RAP violations.

3. Violations Can Be Severe, But Outcomes Are Evolving

Historically, RAP violations rendered interests void from the outset. Modern Oklahoma statutes allow courts to reform defective provisions and attempt to honor the original intent of the parties.

Reality check: Judicial reformation is unpredictable and should not be relied upon as a primary safeguard.

4. Drafting Missteps Are the Most Common Trigger

High-risk provisions include:

• Open-ended contingencies (e.g., tied to indefinite future events)
• Delayed-commencement “top leases” or other interests transferred only upon uncertain future occurrences
• Poorly structured renewal or extension clauses

Even protective mechanisms like anti-washout provisions can create fiduciary obligations and fail if not carefully limited within RAP-compliant timeframes.

Bottom line: Precision in drafting is critical—small ambiguities can create major legal exposure.

5. Recent Case Law Highlights Ongoing Uncertainty

In a recent appellate opinion, the Oklahoma Court of Civil Appeals found certain lease structures violated RAP due to indefinite commencement triggers but ultimately upheld the transaction because related unrecorded agreements imposed a defined time limit and saved the transaction from a RAP violation.

Takeaway: While courts may evaluate transactions holistically, outcomes remain fact-specific and unsettled. In fact, the dissent in Tributary Resources argued the unrecorded instruments should not have been considered because, in the dissent’s view, RAP compliance is determined only by recorded instruments.

6. Proactive Risk Management Is Essential

Best practices include:

• Due diligence: Identify RAP risks early (via comprehensive title work) and account for them in deal pricing
• Portfolio review: Audit existing assets for latent issues
• Drafting discipline:
  • Tie contingencies to clear, finite time periods
  • Include RAP savings clauses
  • Avoid vague or open-ended triggers

Don’t rely on courts: Reformation is a fallback, not a strategy

The Bottom Line

The Rule Against Perpetuities remains a powerful, and often underestimated, constraint on energy transactions. Left unaddressed, it can undermine deal value, cloud title, and disrupt operations long after closing.

Companies and land professionals who proactively identify and mitigate RAP risk through careful drafting and diligence will be far better positioned to protect their investments and avoid costly surprises.

This series covers topics featured during GableGotwals’ Annual Energy Market Drivers and Current Legal Issues Seminar. To receive Alerts and information on future Firm events, subscribe to our mailing list.

Ethan T. Mock

Alex R. Telarik

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.

May 27, 2026 | By: Jason T. Seay, AIGP, CIPP-US and Francesca A. Walentynowicz

Emerging technologies are actively transforming how energy companies operate, transact, and compete. From blockchain-enabled digital tokens to the rapid rise of generative AI, these tools offer significant upside, but also introduce legal, regulatory, and operational risks. This Alert explores what energy companies need to know now.

1. Technology Is Now a Core Driver of Performance and Value

Adoption of advanced technologies is directly impacting:

• Operational efficiency
• Emissions reduction
• Cost control and uptime

Companies leveraging AI, sensors, and analytics are:

• Producing more efficiently
• Reducing compliance risk
• Gaining a competitive edge

2. Digital Tokens Go Far Beyond Cryptocurrency

Digital tokens are used to create blockchain-based representations of:

• Asset ownership (e.g., royalties, working interests)
• Contract rights
• Units of value or access rights

Built on distributed ledger technology, they enable:

• Secure, transparent recordkeeping
• Programmable transactions and automated settlement

Key distinction: Tokens can be fungible or non-fungible, depending on their structure.

3.Tokenization Can Help Transform Energy Transactions

Practical use cases include:

• Fractional ownership of energy assets
• Tokenized royalty or production interests
• Streamlined commodity trading and settlement

Platforms like VAKT demonstrate:

• Faster settlement cycles
• Reduced administrative burden
• Improved auditability

Business impact: Lower transaction costs and broader market participation.

4. Adoption Barriers for Digital Tokens Remain Significant

Key challenges include:

• Regulatory uncertainty (securities, tax, and financial regulations)
• System fragmentation across energy data platforms
• Integration complexity with existing infrastructure

Successful implementation requires targeted use cases and strong governance, not wholesale transformation.

5. Generative AI Is Unlocking New Operational Capabilities

Tools like ChatGPT and Microsoft Copilot enable:

• Natural-language querying of complex operational data
• Predictive maintenance insights
• Automated reporting and documentation

AI can also:

• Identify anomalies in equipment performance
• Translate data into actionable insights
• Serve as a knowledge repository for field and office teams

6. AI Use Cases Span the Entire Energy Industry

• Operations:
  • Equipment monitoring and failure prediction
  • Maintenance automation and workflow generation
• Business and Legal Functions:
  • Contract review and due diligence
  • Market analysis and reporting
  • Regulatory and compliance documentation
• Cybersecurity:
  • Threat detection and incident response support
• Customer & Vendor Interaction:
  • AI-driven chatbots and communication tools

7. AI Introduces New Legal and Risk Considerations

Key concerns include:

• Liability exposure (e.g., whether AI outputs create legal risk)
• Data quality and reliability
• Cybersecurity and confidentiality risks
• Rapidly evolving regulatory frameworks

Takeaway: Governance and internal policies are essential for responsible deployment.

8. Competitive Advantage Will Favor Strategic Adoption

Companies that move beyond experimentation and:

• Integrate AI into workflows
• Identify high-value tokenization use cases
• Invest in data infrastructure

Will benefit from:

• Faster decision-making
• Lower operational costs
• Better resource allocation

The Bottom Line

Digital tokens and generative AI are shifting how energy companies operate and transact. While both technologies offer meaningful efficiency gains and new business models, they also introduce complexity across legal, regulatory, and operational domains.

Energy companies that take a measured, strategic approach, focusing on governance, targeted implementation, and risk management, are best positioned to unlock value while avoiding costly missteps.

This series covers topics featured during GableGotwals’ Annual Energy Market Drivers and Current Legal Issues Seminar. To receive Alerts and information on future Firm events, subscribe to our mailing list.

Jason T. Seay, AIGP, CIPP-US
918-595-4832
jseay@gablelaw.com

Francesca A. Walentynowicz
918-595-4889
fwalentynowicz@gablelaw.com

This article is provided for educational and informational purposes only and does not contain legal advice or create an attorney-client relationship. The information provided should not be taken as an indication of future legal results; any information provided should not be acted upon without consulting legal counsel.