Opinion filed August 30, 2013




                                       In The


        Eleventh Court of Appeals
                                    __________

                                No. 11-11-00237-CV
                                    __________

                         JUD WALTON, Appellant
                                  V.
                       CITY OF MIDLAND, Appellee


                     On Appeal from the 238th District Court
                             Midland County, Texas
                        Trial Court Cause No. CV-47,184


                                   OPINION
      Jud Walton appeals the trial court’s order granting the City of Midland’s
plea to the jurisdiction. In his sole issue, Walton contends that the trial court erred
in granting the City’s plea to the jurisdiction. We affirm.
                                  Background Facts
      Walton owns the surface estate of a 35.4-acre tract located inside the city
limits of Midland. Endeavor owns an oil and gas lease that includes Walton’s
tract. Endeavor applied for a permit from the City to drill a well on Walton’s tract.
The City initially denied Endeavor’s application. Endeavor subsequently filed suit,
contending that the City’s decision constituted inverse condemnation. Endeavor
and the City ultimately reached a settlement agreement, and as part of their
agreement, the City granted the previously denied drilling permit application.
Walton alleges that the City’s act of granting Endeavor a permit to drill constitutes
a regulatory taking under TEX. CONST. art. I, § 17.
       In his trial court pleadings, Walton asserted that the granting of the permit to
drill on his property constituted a physical invasion of his surface estate. He
additionally alleged that a provision of the permit that required the drilling of a
water well for maintaining trees constituted an invasion of his groundwater. He
asserted a cause of action for inverse condemnation based upon these allegations.
       On appeal, Walton focuses primarily on the water well requirement of the
drilling permit. He asserts that this provision constitutes a physical invasion of his
property that is indefinite and without restriction. The requirement provides in
relevant part as follows:
              Operator shall drill one (1) freshwater well for the provision of
       irrigation water to maintain the trees required above. Said water well
       shall not be closer than five hundred (500) feet to the permitted oil
       and gas well. Operator shall maintain all required trees in a healthy
       and growing condition. The operator is authorized to drill only one
       well for irrigation purposes.

The drilling permit also required Endeavor to place trees around the well and to
provide for their care for a period of time. Walton contends that the water well
requirement required Endeavor to drill a water well on his property for landscaping
purposes and that this requirement exceeded Endeavor’s right to use water under
its oil and gas lease.
                                 Standard of Review
       A plea to the jurisdiction challenges a court’s subject-matter jurisdiction and
is a question of law that is reviewed de novo. Tex. Dep’t of Parks & Wildlife v.

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Miranda, 133 S.W.3d 217, 227–28 (Tex. 2004). Subject-matter jurisdiction is
essential for a court to have the authority to resolve a case.         Tex. Dep’t of
Transp. v. Jones, 8 S.W.3d 636, 638–39 (Tex. 1999). To invoke the subject-matter
jurisdiction of a court, the one bringing the claim must allege facts that
affirmatively demonstrate that the court has jurisdiction to hear it. Miranda, 133
S.W.3d at 226; Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446
(Tex. 1993). To prevail on a plea to the jurisdiction, a defendant must show an
incurable jurisdictional defect apparent from the face of the pleadings that makes it
impossible for the plaintiff’s petition to confer jurisdiction on the district court.
Bybee v. Fireman’s Fund Ins. Co., 331 S.W.2d 910, 914 (Tex. 1960). Courts must
consider evidence when necessary to decide jurisdictional issues. Miranda, 133
S.W.3d at 221; Tex. Natural Res. Conservation Comm’n v. White, 46 S.W.3d 864,
868 (Tex. 2001); Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554–55 (Tex.
2000). We do not look to the merits of the plaintiff’s case in conducting our
review, but consider only the plaintiff’s pleadings and the evidence pertinent to the
jurisdictional inquiry. Miranda, 133 S.W.3d at 225–26. We presume all well-
pleaded facts to be true and construe the pleadings liberally in favor of conferring
jurisdiction. Id. at 226–28.
      Sovereign immunity, unless waived, protects the State and its various
divisions from damage suits. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692,
694 (Tex. 2003); Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591,
594 (Tex. 2001). As opposed to the State and its various divisions, the term
“governmental immunity” is the appropriate term to apply to immunity enjoyed by
political subdivisions of the State, including counties, cities, and school districts.
Wichita Falls State Hosp., 106 S.W.3d at 694 n.3. Governmental immunity has
two components: immunity from suit and immunity from liability. Tooke v. City of
Mexia, 197 S.W.3d 325, 332 (Tex. 2006). Immunity from suit bars suit against a
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governmental entity altogether. Id. When a political subdivision of the State is
immune from suit under the doctrine of governmental immunity, a court lacks
subject-matter jurisdiction over the suit. Jones, 8 S.W.3d at 638. Immunity from
suit can be waived only by statute or legislative resolution. Fed. Sign v. Tex. S.
Univ., 951 S.W.2d 401, 405 (Tex. 1997). Governmental immunity from suit is
properly asserted in a plea to the jurisdiction. See Miranda, 133 S.W.3d at 225–26.
                                       Analysis
      Walton has alleged a claim for inverse condemnation against the City.
When a landowner’s property has been taken or damaged for public use without
compensation, the landowner may bring an inverse condemnation proceeding. See
City of Carrollton v. HEB Parkway South, Ltd., 317 S.W.3d 787, 792 (Tex. App.—
Fort Worth 2010, no pet.). The proceeding is “inverse” because the property
owner brings the suit, as compared to a condemnation proceeding brought by a
governmental entity to appropriate private property for a public purpose. Id. The
Texas constitution provides a clear and unambiguous waiver of immunity from suit
for inverse condemnation claims under the takings clause. TEX. CONST. art. I,
§ 17; El Dorado Land Co., L.P. v. City of McKinney, 395 S.W.3d 798, 801 (Tex.
2013); Steele v. City of Houston, 603 S.W.2d 786, 791 (Tex. 1980). However, a
trial court lacks jurisdiction and should grant a plea to the jurisdiction where a
plaintiff cannot establish a viable takings claim. Tex. Dep’t of Transp. v. A.P.I.
Pipe & Supply, LLC, 397 S.W.3d 162, 167 (Tex. 2013).
      The elements of an inverse condemnation claim are (1) the governmental
entity intentionally performed an act in the exercise of its lawful authority, (2) that
resulted in the taking, damaging, or destruction of the claimant’s property, (3) for
public use. See City of Houston v. Trail Enters., Inc., 377 S.W.3d 873, 878 (Tex.
App.—Houston [14th Dist.] 2012, pet. filed). An inverse condemnation claim may
be based on a physical or regulatory taking. Mayhew v. Town of Sunnyvale, 964
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S.W.2d 922, 933 (Tex. 1998). Walton’s inverse condemnation claim involves an
alleged regulatory taking.
      The Texas Supreme Court recently addressed regulatory takings in Edwards
Aquifer Authority v. Day, 369 S.W.3d 814, 837–41 (Tex. 2012). Citing Sheffield
Development Co. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004), the court
noted that Texas courts have generally been guided by the United States Supreme
Court’s construction and application of the similar guarantee provided by the Fifth
Amendment to the United States Constitution. The court recognized that the
Supreme Court has developed three analytical categories for regulatory takings as
summarized in Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005). The court
quoted the following text from Lingle:
             Our precedents stake out two categories of regulatory action
      that generally will be deemed per se takings for Fifth Amendment
      purposes. First, where government requires an owner to suffer a
      permanent physical invasion of her property—however minor—it
      must provide just compensation. See Loretto v. Teleprompter
      Manhattan CATV Corp., [458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d
      868] (1982) (state law requiring landlords to permit cable companies
      to install cable facilities in apartment buildings effected a taking). A
      second categorical rule applies to regulations that completely deprive
      an owner of “all economically beneficial us[e]” of her property.
      [Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019, 112
      S.Ct. 2886, 120 L.Ed.2d 798 (1992) (emphasis in original).]

             ...

             Outside these two relatively narrow categories (and the special
      context of land-use exactions ... ), regulatory takings challenges are
      governed by the standards set forth in Penn Central Transp. Co. v.
      New York City, [438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631] (1978).
      The Court in Penn Central acknowledged that it had hitherto been
      “unable to develop any ‘set formula’” for evaluating regulatory
      takings claims, but identified “several factors that have particular
      significance.” [Id. at 124, 98 S.Ct. 2646.] Primary among those

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      factors are “[t]he economic impact of the regulation on the claimant
      and, particularly, the extent to which the regulation has interfered with
      distinct investment-backed expectations.” Ibid. In addition, the
      “character of the governmental action”—for instance whether it
      amounts to a physical invasion or instead merely affects property
      interests through “some public program adjusting the benefits and
      burdens of economic life to promote the common good”—may be
      relevant in discerning whether a taking has occurred. Ibid. The Penn
      Central factors—though each has given rise to vexing subsidiary
      questions—have served as the principal guidelines for resolving
      regulatory takings claims that do not fall within the physical takings
      or Lucas rules.

             Although our regulatory takings jurisprudence cannot be
      characterized as unified, these three inquiries (reflected in Loretto,
      Lucas, and Penn Central) share a common touchstone. Each aims to
      identify regulatory actions that are functionally equivalent to the
      classic taking in which government directly appropriates private
      property or ousts the owner from his domain. Accordingly, each of
      these tests focuses directly upon the severity of the burden that
      government imposes upon private property rights.

Day, 369 S.W.3d at 838–39 (quoting Lingle, 544 U.S. at 538–39) (alterations in
original).
      Walton contends that the water well requirement in the permit constitutes a
taking under Loretto because it required him to suffer a permanent physical
invasion of his property. We disagree. We initially note that the provision did not
require Endeavor to drill the water well on Walton’s property. The requirement
only provided that the water well was to be located no closer than 500 feet to the
permitted oil and gas well. Thus, the water well could have been drilled on
someone else’s property and still have complied with the permit’s requirement.
Accordingly, the water well provision did not require Walton to suffer a permanent
physical invasion of his property.



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       Additionally, a drilling permit granted to Endeavor to drill an oil and gas
well did not compel Walton to suffer a physical invasion of his property. The
Texas Supreme Court held in Magnolia Petroleum Co. v. Railroad Commission,
170 S.W.2d 189, 191 (Tex. 1943), that a permit to drill an oil and gas well is
“purely a negative pronouncement” that “grants no affirmative rights to the
permittee to occupy the property.” The court recently reaffirmed the holding in
Magnolia Petroleum Co. in FPL Farming Ltd. v. Environmental Processing
Systems, L.C., 351 S.W.3d 306, 310–12 (Tex. 2011), wherein the court held that,
as a general rule, a permit granted by an agency does not act to immunize the
permit holder from civil tort liability from private parties for actions arising out of
the use of the permit. The court in FPL Farming cited a recent opinion from the
Amarillo Court of Appeals for the following proposition: “‘[O]btaining a permit
simply means that the government’s concerns and interests, at the time, have been
addressed; so, it, as a regulatory body, will not stop the applicant from proceeding
under the conditions imposed, if any.’” 351 S.W.3d at 311 (alteration in original)
(quoting Berkley v. R.R. Comm’n of Tex., 282 S.W.3d 240, 243 (Tex. App.—
Amarillo 2009, no pet.)).
        Under the authorities cited above, the permit issued by the City did not grant
any affirmative rights to Endeavor to occupy or use Walton’s property. The permit
did not authorize Endeavor to undertake any action that was not otherwise
authorized, and it did not shield Endeavor from any liability to Walton. 1 Securing
a permit does not immunize the recipient from the consequences of its actions if
those actions affect the rights of third parties.                Berkley, 282 S.W.3d at 243.
Furthermore, a permit also does not authorize the recipient to act with impunity
toward third parties. Id.

       1
         We express no opinion regarding Endeavor’s potential liability to Walton for any action it took
on his property.

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        The ordinance at issue in Loretto provided that a landlord “must permit a
cable television company to install its cable facilities upon his property.” 458 U.S.
at 421. The ordinance in Loretto also contained a provision that limited the com-
pensation due the landlord from the cable company to a one-time payment of one
dollar for the intrusion. 458 U.S. at 423–24. Loretto is inapplicable to the facts in
this case because the permit issued by the City does not require Walton to
acquiesce in any action taken by Endeavor. Furthermore, the permit does not
contain any provisions limiting the compensation that Walton could seek from
Endeavor.2
        Walton also contends that he asserted a viable claim under Lucas. As noted
previously, Lucas applies to regulations that completely deprive an owner of all
economically beneficial use or productive use of his or her property. Day, 369
S.W.3d at 838; Sheffield, 140 S.W.3d at 671.                      A Lucas taking is sometimes
referred to as a total regulatory taking. Lingle, 544 U.S. at 538, 548; Hallco Tex.,
Inc. v. McMullen Cnty., 221 S.W.3d 50, 56 (Tex. 2006). It is limited to the
extraordinary circumstance when no productive or economically beneficial use of
land is permitted and the landowner is left with a token interest. Sheffield, 140
S.W.3d at 671.
        Walton contends that the City’s act of granting a permit to Endeavor to drill
an oil and gas well on his property deprived him of all economically beneficial use
of the property. In asserting this contention, Walton states that, at the time that he
acquired his property, he did not anticipate that the City would permit the owner of
the mineral estate to drill on his property. We conclude that Walton has not

        2
         Walton contends that the permit contains “coercive” provisions designed to force a landowner to
acquiesce in the drilling of a water well on his property. He contends that, if the landowner consents to
the water well, the permit requires the operator to periodically test the water well but that, if the land-
owner does not consent, the operator is not required to test the well. However, Walton has not cited a
provision in the permit setting out this requirement for the water well to be drilled for landscaping
purposes.

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asserted a viable claim under Lucas. Walton’s evidence indicates that his property
had a value of at least $3,000 per acre after Endeavor drilled the well.
Accordingly, the granting of the permit did not deprive him of all economically
beneficial use of the property to the extent that he was only left with a token
interest.
       Walton concedes that he acquired the property subject to the mineral
severance in favor of Endeavor and its predecessors. As noted by Walton, “the
City simply allowed what the title itself would have allowed.” Thus, the City’s act
of granting a permit to Endeavor to drill an oil and gas well comports with the
parties’ already existing property rights. As noted previously, the permit did not
confer any rights to Endeavor that it did not otherwise possess. Accordingly, the
permit granted by the City to Endeavor simply does not rise to the level of a taking.
Walton’s sole issue on appeal is overruled.
                                          This Court’s Ruling
       We affirm the judgment of the trial court.



                                                                   TERRY McCALL
                                                                   JUSTICE


August 30, 2013
Panel consists of: Wright, C.J.,
McCall, J., and Judge Herod.3

Willson, J., not participating.




       3
           Steven R. Herod, Judge, 91st District Court, Eastland, sitting by assignment.

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