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On May 21, 2025, the United States Court of Appeals for the Fifth Circuit dismissed environmental groups’ suit challenging EPA’s decision to grant Louisiana’s Class VI Primacy request, holding that each of the groups failed to establish standing to sue. Deep South Center for Environmental Justice v. EPA, No. 24-60084 (5th Cir. 2025).

The groups, Deep South Center for Environmental Justice, Healthy Gulf, and Alliance for Affordable Energy, filed a petition in February 2024 with the Fifth Circuit requesting that the court “hold unlawful, vacate, and set aside” EPA’s final rule that approved Louisiana’s 2021 application for Class VI Primacy. Several intervenors in the suit, including the State of Louisiana and oil and gas trade associations, disputed the groups’ ability to establish standing. To rebut the intervenors’ standing argument, the groups alleged a number of economic, aesthetic, and recreational injuries, among others, resulting from EPA’s approval of Louisiana’s primacy application.

However, the Fifth Circuit found that the groups’ alleged injuries associated with the grant of primacy to the State of Louisiana for permitting Class VI wells were too hypothetical and rested on a “highly attenuated chain of possibilities.” The groups’ expenditures to oppose the Class VI buildout, the chance that EPA’s approval of the Louisiana program would increase energy costs to consumers, and the potential injuries of group members should a Class VI well be permitted and experience some mishap were all held to be too speculative to establish the standing required to challenge EPA’s grant of primacy. Accordingly, the Fifth Circuit dismissed the groups’ petition for review for a failure to demonstrate standing.

This decision, of course, does not foreclose the ability of a citizen or group to challenge an individual Class VI permit given the right set of facts to establish standing in that particular case.

After withstanding this judicial challenge, Louisiana remains one of just four states with Class VI Primacy.

For further questions regarding Class VI wells or related topics, contact Liskow attorneys Greg Johnson, Jeff Lieberman, Clare Bienvenu, and Colin North.

 In this episode of “Energy Law This Week,” hosts Matt Jones and April L. Rolen-Ogden discuss recent cases in energy law, focusing on lease disputes, surface versus mineral rights, and the complexities of royalties. They emphasize the importance of written agreements, the implications of production and post-production costs, and the legal pitfalls associated with royalty demands. The conversation highlights key rulings from the Texas Supreme Court and offers practical insights for those involved in the energy sector.

Listen to the full episode on the Oil & Gas Global Network here.

On May 23, 2025, the Texas Supreme Court issued a long-awaited opinion in Cromwell v. Anadarko E&P Onshore, LLC, in which it held that two habendum clauses written in the passive voice did not specifically require production by the lessee, but instead could be perpetuated by production from anyone on the leased premises.  This case concerns two oil and gas leases that contained habendum clauses that provided that the leases shall continue so long as minerals are produced; however, the leases did not specify who must produce the minerals.  As such, the Court considered whether David W. Cromwell, the lessee, must produce the minerals himself to perpetuate his leases. Because the leases did not require Cromwell to personally produce the minerals and there was continuous production in paying quantities on the property under another oil and gas lease, the Court determined that Cromwell’s leases did not terminate. 

Cromwell and Anadarko E&P Onshore, LLC (“Anadarko”) both own working interests on the same land in Loving County, Texas (the “Subject Land”) and, as such, are co-tenants in the mineral estate.  Anadarko obtained its interest in the Subject Land and drilled three wells thereon prior to Cromwell obtaining his working interest.  After Cromwell obtained his interest in the Subject Land, Anadarko drilled three additional wells.

In February and March of 2009, Cromwell executed two leases, one with Carmen Ferrer (the “Ferrer Lease”) and one with the Tantalo Trust (the “Tantalo Lease”), that contained similar habendum clauses, both of which were written in the passive voice.  The Ferrer Lease’s habendum clause read:

This lease . . . shall be in force for a term of three (3) years from this date (called “primary term”) and as long thereafter as oil, gas or minerals are produced from said land, or land with which said land is pooled hereunder, or as long as this lease is continued in effect as otherwise herein provided.

The Tantalo Lease’s habendum clause provides:

Subject to other provisions contained herein, this lease shall be for a term of five (5) years from the date first above written (hereinafter called the “primary term”) and as long thereafter as oil, gas, liquid hydrocarbons or their constituent products, or any of them, is produced in commercial paying quantities from the lands leased hereby.

Following the execution of the Ferrer Lease and the Tantalo Lease, Cromwell submitted same to Anadarko and requested to participate in Anadarko’s wells, but Anadarko never responded to Cromwell’s request.  Over a nine-year period, Cromwell sent between eight and ten requests to Anadarko seeking to enter a joint operating agreement (“JOA”) and participate in production from the Subject Land.  Anadarko never sent Cromwell a JOA.  However, when one of the wells reached payout in August 2009, Anadarko sent Cromwell a request to confirm his net working interest in the well.  Beginning in September 2009, Anadarko sent Cromwell monthly joint interest billing (“JIBs”), which itemized Cromwell’s share of the revenues and expenses for the well that had reached payout.  Cromwell paid his share of the costs for the months in which costs exceeded revenues, and Anadarko paid Cromwell his proportionate share of the proceeds  for the months in which revenues exceeded costs.  This pattern continued from September 2009 through this lawsuit.  Additionally, Anadarko sent Cromwell an authorization for expenditure (“AFE”), which stated that it was sent “[p]ursuant to the terms of the governing Operating Agreement,” for a new compressor for one of the wells.  Cromwell elected to participate in the installation of the new compressor by signing the AFE and paid his proportionate share.  Moreover, Anadarko referred to Cromwell as “working interest owner” in one of the wells in its correspondence.

The Ferrer Lease’s primary term ended in February 2012 and the Tantalo Lease’s primary term ended in March 2014. Anadarko argues that because Cromwell did not personally cause production on the Subject Land, the Ferrer Lease and the Tantalo Lease terminated at the end of their primary terms.  Following the end of the primary terms of both leases, Anadarko continued to send Cromwell JIBs, and its internal records and continued to refer to Cromwell as a working interest owner who had leases that were held by production.  Nonetheless, in 2017, Anadarko executed top leases with Cromwell’s lessors, attempting to washout Cromwell’s interests.  Over a year later, Cromwell inquired about his interest in a well, and Anadarko responded that (1) Cromwell’s leases had expired “[d]ue to the passage of time” and Anadarko’s “never receiv[ing] from [Cromwell]” a JOA or AFE, and (2) Cromwell’s interests were leased to “[third] parties thereafter,” i.e., to Anadarko.

Cromwell sued Anadarko for various causes of action, including declaratory relief and trespass to try title.  Cromwell and Anadarko both agreed that production in paying quantities occurred on the Subject Land at all relevant times.  However, the parties disagree on whether Cromwell’s leases expired because Cromwell himself did not produce minerals from the Subject Land.  The parties each moved for summary judgment on the issue of whether Cromwell’s leases terminated.  The trial court granted Anadarko’s motion, denied Cromwell’s motion, and rendered judgment in favor of Anadarko that Cromwell take nothing.  The court of appeals affirmed and held that Cromwell’s leases had automatically terminated at the end of their primary terms due to Cromwell’s failure to personally produce minerals in paying quantities during the primary term.  Relying primarily on Cimarex Energy Co. v. Anadarko Petroleum Corp., 574 S.W.3d 73 (Tex. App.—El Paso 2019, pet. denied), the court of appeals concluded that even though the plain language of the habendum clauses did not identify who needed to cause production, Cromwell himself needed to have taken action to cause production on the Subject Land to perpetuate the leases.  The court of appeals chalked up Cromwell’s payment of the JIBs and the AFE as nothing more than reflecting Cromwell’s payment of those types of operating expenses that non-participating co-tenants typically owe.  On review, the Supreme Court of Texas reversed and held that the plain language of the Ferrer Lease and the Tantalo Lease habendum clauses did not require Cromwell to personally produce on the Subject Land to maintain his interest.  Moreover, the Court overruled Cimarex to the extent it holds otherwise.

To determine the meaning of the habendum clauses, the Court applied general principles of contract interpretation.  Both the Ferrer Lease and the Tantalo Lease’s habendum clauses were written in the passive voice and provided that leases would automatically terminate if minerals are not produced from the Subject Land at the end of the primary term or at any point during the secondary term.  The Court examined the plain language of the clauses, which did not specify who must produce for the leases to continue, and it noted that had the parties intended, they could have written the Ferrer Lease and the Tantalo Lease’s habendum clauses to provide that the leases shall continue “as long as oil or gas is produced by the lessee.” But they did not, and the Court declined to rewrite the leases.  Because the leases did not require Cromwell himself to cause production and production in paying quantities occurred on the Subject Land at all relevant times, the Court held that Cromwell’s leases did not terminate.  The Court explained that its holding did not leave Anadarko without a remedy.  Because Cromwell and Anadarko are oil-and-gas co-tenants, the Court stated that Anadarko could sue Cromwell for an accounting if Cromwell were to refuse to pay his proportionate share of the operating expenses.

Notably, the Court went further and stated that it disapproves of a string of cases on which the court of appeals relied—Mattison v. Trotti, 262 F.2d 339 (5th Cir. 1959), Hughes v. Cantwell, 540 S.W.2d 742 (Tex. Civ. App.—El Paso 1976, writ ref’d n.r.e.), and the aforementioned Cimarex Energy Co. v. Anadarko Petroleum Corp., 574 S.W.3d 73 (Tex. App.—El Paso 2019, pet. denied)—to the extent that they hold that a passive-voice habendum clause automatically requires production by the lessee.  The Court determined that each of these opinions departed from the plain language of the lease and their rationale “rest[ed] on shaky foundation.”  Each of these cases rested on the “incorrect[] premise[]” set forth by the Fifth Circuit in Mattison: that the prime consideration of the lease is the drilling for and production of minerals.  The Court corrected this premise and provided that “the ‘vital consideration’ in an oil-and-gas lease is ‘royalties on mineral production.’”

For further questions regarding this update, contact Liskow attorneys Jana Grauberger, J.T. Kittrell, Sam Allen, and Margaret Chavez, and visit our Energy Litigation practice page.

In this episode of Energy Law This Week, hosts Matt Jones, April Rolen-Ogden, and Liskow attorney Michael Rubenstein cover significant legal updates regarding climate change litigation and bankruptcy in the energy sector. The episode discusses the recent Colorado Supreme Court ruling allowing Boulder to sue oil companies for climate change damages, an offshore regulatory update, and the complexities of bankruptcy types, creditor rights, and the implications of reorganization versus liquidation. They also delve into the process of acquiring assets from bankrupt entities and provide practical tips for navigating bankruptcy proceedings.

Listen to the full episode on the Oil & Gas Global Network here.