The Texas attorney general said in a formal opinion earlier this month that non-lawyers negotiating to lease sites for Texas wind farms on behalf of project developers must be licensed by the Texas Real Estate Commission.

The real estate commission has been fielding complaints about people brokering wind deals in Texas without licenses. The attorney general issued the opinion in response to a question from R. Scott Kesner, the head of the real estate commission.

The opinion is No. KP-0467 and is dated June 11, 2024.

Lawyers are expressly exempted from the licensing requirement of chapter 1101.001 et seq. of the Texas Occupations Code, which governs the activity and licensing of real estate brokers and sales agents.

A license is also not required to handle “the sale, lease or transfer of a mineral or mining interest in real property” per section 1101.005(9)(A) of the Texas Occupations Code.

Failure to have a license is a class A misdemeanor, punishable by up to one year in jail or a fine of up to $4,000. No one appears to have gone to jail for such a failure in the past 10 years.

Our interpretation of the rules, which was confirmed by a blind inquiry to real estate commission, is that the licensing requirement does not apply to an employee who is working on behalf of his or her employer, so developers working on Texas wind leases for a salary paid by, for example, a renewable energy development company need not be worried about applying for a broker license. However, there is an issue if the site lease is negotiated from an independent contractor to whom the wind development company issued an IRS Form 1099.

The reasoning behind the Texas legal opinion could easily extend to negotiation of site leases for other types of energy projects, including solar, hydrogen, geothermal and battery storage.

A different section of the Texas Occupations Code that governs the land services (and not the broker licensing requirement) was amended in the 2023 legislative session specifically to provide that the term “land services” means “negotiating the acquisition or divestiture of mineral rights or rights associated with other energy sources.” The phrase “other energy sources” was added in the 2023 amendment and includes “geothermal, hydroelectric, nuclear, solar and wind energy.”

Ken Paxton, the Texas attorney general, said the legislature had an opportunity to add the phrase “other energy sources” to section 1101.005(9)(A) of the Texas Occupations Code during the 2023 legislative session and did not. Because wind is not considered a mineral or mining interest, Paxton concluded that wind lease negotiations are not exempted by section 1101.005(9)(A) of the Texas Occupations Code, and anyone engaging in such negotiations on behalf of a third party for compensation must be a licensed broker.

Revisions to the licensing rules are ripe for reconsideration during the next Texas legislative session in January 2025.