The Attorney General recently opined on whether a person helping to secure or negotiate a wind lease in Texas is required to be licensed by the Texas Real Estate Commission.

Photo by Gonz DDL 

Background

The Chair of the Texas Real Estate Commission (TREC) contacted the Texas Attorney General (AG) to ask “whether a person who negotiates a lease for property for the development of a wind power project on behalf of another, for compensation, must have a license from the Texas Real Estate Commission.”  Historically, TREC has taken the position that persons negotiating wind leases were exempt from the TREC licensing requirement.  A question arose regarding this position, and the Chair asked the AG for input.

Keep in mind an AG Opinion is not binding law.  A Texas court could look to this as persuasive in making an eventual ruling in a case, but courts are not required to defer to these opinions.  The value of an AG opinion, however, lies in the fact that it is a way to obtain an answer to a legal question without filing a lawsuit and/or without having a live controversy.  While courts are bound to decide the  cases before them based on the specific facts of that case, an Attorney General can speculate on how the law may apply in hypothetical situations or hypothetical cases.

Attorney General Opinion

The AG believes a person negotiating a wind lease is required to hold a TREC license. [Read Opinion here.]

Applicable Law

First, the AG’s Opinion sets forth the applicable law.

This question revolves around the meaning of the Texas Occupations Code Chapter 1101.  This statute requires a person to hold a license under Chapter 1101 before the person can “act as or represent that the person is a broker or sales agent.”  One of the specifically enumerated acts for which a license is required is the negotiation or attempted negotiation of “the listing, sale, exchange, purchase, or lease of real estate” on behalf of another for a commission or other valuable consideration.  See Tex. Occ. Code Section 11.01.002(1)(A)(iii).  Another act for which a license is required is the selling, exchanging, purchasing, or leasing of real estate on behalf of another for a commission or other valuable consideration. See Tex. Occ. Code Section 11.01.002(1)(A)(i).

There are, however, certain exceptions to this licensure requirement found in Section 1101.005.  This includes a “transaction involving the sale, lease, or transfer of a mineral or mining interest in real property.”  Thus, a person helping to negotiate a mineral lease or to sell minerals is not required to hold a license from TREC.

Statutory Language

The question centers on whether a wind interest falls within the exception from licensure for “mineral or mining interests in real property.”  This phrase is not defined in the statute.  The AG looks to Texas case law defining the term “mineral.”  Texas law focuses on whether the substance is thought to be a mineral in the ordinary and natural meaning of the term.  The dictionary definition of mineral is “a solid inorganic substance of natural occurrence; a substance obtained by mining.”  Wind meets neither of these prongs–it is not a solid and it is not obtained by mining.  Thus, the exception for “mineral or mining interests” does not include wind.  None of the other exceptions to the licensing requirement can be read to include wind, and the exceptions are written as an exhaustive list.

The AG also looks to recent amendments to the Texas Occupations Code Section 954.001.  This provision previously excepted “act relating to the lease, purchase, sale, or transfer of a mineral or mining interest in real property” from the practice of law but did not define the terms.  In 2023, the Texas legislature amended the exception to change the language “mineral or mining interest” to “land services.”  It now defines “land services” to include “negotiating the acquisition or divestiture of mineral rights or rights associated with other energy sources.”  It defines “mineral” as including “oil, gas, related hydrocarbons, coal, lignite, uranium, substances classified as base, industrial, precious, or strategic minerals.”  Importantly, the definition of “minerals” here does not include wind. Instead, wind is considered as an “other energy source” which is defined as “a natural resource other than a mineral that is necessary to produce energy, including geothermal, hydroelectric, nuclear, solar, and wind energy.”

In light of this, the AG believes a court would likely find the exception for “mineral or mining interests” does not include wind and, therefore, a person negotiating a lease for property of a wind power project on behalf of another, for compensation, is required to hold a TREC license.

Historical Interpretation

The AG writes TREC’s historical position that wind leases should be excepted from TREC licensing is not entitled to deference because there is no ambiguity in the statutory language discussed above.  “Wind is not a mineral and it is not mined.  Accordingly, we think it is unlikely a court would defer to the Commission’s historical interpretation.”

Legislative Function

The AG notes briefers have informed the AG of potential negative and far-reaching consequences of this decision.  They claim requiring licensure will “slow development of critical Texas energy resources, increase costs to Texas energy consumers, and reduce lease payments to partnering landowners.”  However, the AG states it is not for the AG’s office to judge the wisdom of the policy choices of the Legislature or to impose a different policy of the AG’s choosing. The Legislature spoke clearly when writing the exception for mineral interests, which does not include wind.  The Legislature is free to modify this provision should it wish to do so.

Summary

Generally speaking, Texas law requires TREC licensing of professionals engaged in transactions involving real property.  A wind lease involves real property.  Wind is not a “mineral or mining interest” exempt from licensing.  There is no other provision in the Texas Occupations Code that excludes transactions involving wind leases from the TREC licensing requirement.  Thus, the AG finds it likely that a court would find “a person negotiating a lease for property of wind power project on behalf of another, for compensation, is required to hold a license issued by the Commission.”

Why Do We Care?

First, for those involved in negotiating wind lease agreements, this Opinion should at least make people consider whether they need to obtain a TREC license to do this work.  Although this Opinion was limited to the consideration of wind leases, it seems to me the same rationale could potentially apply to solar leases and even carbon leases as well.

Second, this is an important reminder of the lack of case law related to wind in Texas.  In fact, no Texas case has held wind is part of the surface state versus the mineral estate.  Although landowners, companies, and lawyers assume that is the case (which is why wind leases are signed with surface owners rather than mineral owners), that has not officially been answered.  Although unlikely, were this question decided another way and if a court were to hold wind is a “mineral,” that could upend the current wind leasing practice in Texas.

Third, the impacts of this decision will remain to be seen.  As the AG notes, there are concerns from certain individuals that this decision could stifle wind energy development, increase costs to energy consumers, and lower payments to landowners.  Will this prediction come true?  Time will tell.

Fourth, if the Texas Legislature does not believe this interpretation is correct, they could modify the Occupations code to specifically exempt wind leases from the TREC licensing requirement. We will see if any bills related to this topic are introduced in 2025.

Lastly, remember this is only an AG Opinion. If this question were to find its way into litigation, a court could reach a different conclusion. But for now, this is the only official word we have analyzing this question.