Bloomberg Law Quotes Jim Wetwiska on Texas Lease Payments Case
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For its article “Texas Oil Court Fight Tests ‘Safe Harbor’ for Payment Pauses,” Bloomberg Law quoted Akin Gump litigation partner Jim Wetwiska.
The article looks at a case before the Texas Supreme Court that could clarify how and when oil and gas operators can withhold lease payments while title disputes are being settled. It notes that an extant Texas law allows these operators to suspend lease payments if they have reasonable doubt as to whether a payee has the right to receive payment related to oil and gas sales.
The article also notes that, were the Texas Supreme Court to uphold the state appeals court ruling, operators could have to bear a new burden or risk of paying the wrong title owner. Wetwiska said, “They’re going to have to analyze and document what the title dispute is, and they’re going to have to document their basis for the ‘reasonable doubt’ in determining to suspend payments.”
He noted that operators might be forced to spend time and money in court arguing about their decision to suspend payments, although that was not written into the legislative intent of the safe harbor provision. In fact, Wetwiska said, the law gives operators discretion—without the need to use the court system—to suspend payments.
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