District Court Dismisses State Land Conveyance Claims Against Diamondback, Holds Texas Relinquishment Act Inapplicable to 1948 Land Sales Act Conveyance
Williams O&G Resources challenged Diamondback Energy's mineral development under the Texas Relinquishment Act of 1919, but the Western District of Texas held the Act inapplicable where land was conveyed from the State in 1948 under the Texas Land Sales Act of 1931. The court rejected Williams O&G's novel interpretation of the 1937 Wintermann decision, holding that land sold under the Land Sales Act is governed by its own terms, not by the Relinquishment Act.
Background
Williams O&G Resources, LLC brought suit against Diamondback Energy, Inc. and Diamondback E&P LLC in the Western District of Texas, Midland-Odessa Division, challenging Diamondback's mineral development activities. The dispute centered on land originally conveyed from the State of Texas in 1948 under the Texas Land Sales Act of 1931. Williams O&G attempted to invoke the Texas Relinquishment Act of 1919 as the basis for Counts One and Two of its complaint.
The Statutory Interpretation Dispute
The central legal issue turned on whether the Texas Relinquishment Act of 1919 applied to land conveyed under the Texas Land Sales Act of 1931. The magistrate judge concluded that Williams O&G brought its claims under the inapplicable Relinquishment Act when the land was actually conveyed from the State in 1948 under the Land Sales Act. Williams O&G objected, attempting to exploit what the magistrate judge acknowledged was language in the 1930s-era caselaw that was "not entirely clear."
Judge Counts rejected Williams O&G's expansive reading of the Texas Supreme Court's 1937 decision in Wintermann v. McDonald. While an early Texas Supreme Court opinion had wrestled with how these two conveyance Acts should square when the latter Land Sales Act did not repeal the earlier Relinquishment Act, the court found the Wintermann holding provided no support for Williams O&G's novel theory. As Judge Counts colorfully observed, Williams O&G hoped "to drive a battleship's towline through this size eight needle, and (mostly) in the name of novelty."
The court quoted extensively from Wintermann to demonstrate the Texas Supreme Court's clear holding:
The Relinquishment Act (article 5367 et seq) deals only with oil and gas. Under the provisions of that law the landowner is only authorized to lease the land as the agent of the State for those minerals.
....
[The Land Sales Act] and the Relinquishment Act should be construed together. It is plain that the 1931 Act is not intended to repeal the Relinquishment Act; nor does the Relinquishment Act occupy the field covered by this law. This law covers a wider field than the Relinquishment Act. The land sold under the provisions of this act will be governed by the terms thereof, and not by the terms of the Relinquishment Act.
The district court emphasized that while the sentence structure and syntax in the Wintermann opinion "are no longer preferred in this age," the Texas Supreme Court's holding was clear: land conveyed under the Land Sales Act is governed by that Act's terms, not by the Relinquishment Act. The court adopted the magistrate judge's careful and thoughtful ten-page analysis rejecting Williams O&G's claims under Counts One and Two.