CHAPTER 1 THE LEGAL FRAMEWORK FOR ANALYZING MULTIPLE SURFACE USE ISSUES

• Jurisdiction: United States

Development Issues and Conflicts in Modern Gas and Oil Plays
(Nov 2004)
CHAPTER 1
THE LEGAL FRAMEWORK FOR ANALYZING MULTIPLE SURFACE USE ISSUES
Bruce M. Kramer
Maddox Professor of Law
Texas Tech University School of Law
Lubbock, Texas

Bruce M. Kramer is the Maddox Professor of Law at Texas Tech University School of Law in Lubbock, Texas. His principal areas of teaching and research are in oil and gas law and land use planning.

Professor Kramer received his B.A. degree in International Relations from U.C.L.A., his J.D. degree from the U.C.L.A. School of Law, and his L.L.M. degree in environmental and natural resources law from the University of Illinois College of Law.

Professor Kramer is the co-author of The Law of Pooling and Unitization, Williams and Meyers Oil and Gas Law (since 1996), Williams and Meyers Oil and Gas Law - One Volume Second Abridged Edition (2004) and International Petroleum Transactions (2d ed). He has also written over 35 law review articles and treatise chapters over his academic year which started in 1974 at Texas Tech University School of Law.

He has spoken at over 50 continuing legal education programs sponsored by such organizations as the Rocky Mountain Mineral Law Foundation, Energy and Mineral Law Foundation, Center for American and International Law, University of Texas School of Law, University of New Mexico School of Law, National Association of Division Order Analysts, and the American Association of Petroleum Landmen.

I INTRODUCTION

I follow in the footsteps of over 40 lawyers and academics who have written on the general subject of issues relating to surface use by mineral owners. ¹ The issues relating to developmental conflicts between owners of the surface estate and owners of the mineral estate, or between owners of different mineral estates is caused by the power given the owner of the unified fee simple absolute in all jurisdictions to sever the surface and mineral estates and to further sever the various minerals that may make up the mineral estate such as through a grant of the coal to A, a grant of the oil to B and a grant of the gas to C. ² This paper will look at the historical development of what is now commonly called the implied easement of surface use. It will then discuss what the author believes to be the long dormant notion that the relationship between a severed mineral owner and a surface owner is not unidimensional, but is in fact multidimensional, requiring the court to look at, and balance, the sometimes competing interests of the surface and mineral owners. ³ The classic statement of the unidimensional test is provided by the Texas Supreme Court in Warren Petroleum Corp. v. Monzingo: ⁴ "The oil and gas lessee had the right to use so much of the premises and in such a manner as was reasonably necessary to comply with the terms of the lease and effectuate its purpose." ⁵ The multidimensional approach, on the other hand, is sometimes referred to as the "due regard" standard or the more recently coined phrase the "reasonable accommodation" doctrine. ⁶ I will then analyze the legislative reaction to the common law development through the passage of various surface damages acts which clearly change the common law rules, be they the traditional unidimensional approach or the "newer" multidimensional approach. Whenever there are competing uses of a valuable "asset" conflicts are inevitable. The common law doctrines designed to resolve these conflicts should be flexible to deal with changing societal needs and norms. As with the rule of capture, however, the common law changes lagged behind the changing societal needs and norms triggering legislative solutions that fix in stone, absent legislative repeal, the relationship between surface and mineral owners. While providing for a degree of certainty, legislative solutions may or may not be responsive to further changes that the common law may now be precluded from embracing.

II THE COMMON LAW HERITAGE

A. Express or Implied Easements

In most, but not all, situations, the owner of a severed mineral estate cannot exploit his resources unless the owner receives some type of interest in the surface estate. That interest is commonly called an easement. ⁷ The existence and the scope of the interest may be expressly stated, as is usually the case with an oil and gas lease, ⁸ or implied as is the case with most deeds. ⁹ As the common law easement doctrine developed, few cases dealt with the express language used to create or define the scope of the easement. ¹⁰ Instead the implied easement doctrine took over and the language of the deed or lease became irrelevant. In Landreth v. Melendez, ¹¹ this issue was center stage as the court was dealing with a mineral deed that specifically set out the scope of the easement of surface use. In addition to the typical laundry list of specific surface uses allowed including laying pipelines, building tanks, shafts, tunnels or power stations, the deed authorized the mineral owner "to take all usual, necessary and convenient means for working, preparing, getting out and removing said oil, gas and other minerals." ¹² The surface owner was asking the lessee to make the type of accommodation that had been found appropriate under the multidimensional implied easement doctrine, namely that the pump jacks either be depressed or ramps built over them to allow for the surface owner to install and operate a center-pivot irrigation system for its cotton. ¹³ The court rejects the application of the implied easement doctrine and states:

Given the rights reserved to the mineral owners by the reservation, it follows that this is not a situation where the usual rights implied from a standard lease in favor of the mineral estate are to be exercised with due regard to the rights of the surface owners to be accommodated in the existing use being made of the surface. . . Instead, it is a situation where the mineral owners are under no obligation to accommodate the surface owners in the existing use made of the surface so long as the mineral owners use all usual, necessary and convenient means in conducting their operations. ¹⁴

While I might disagree that the phrase "all usual, necessary and convenient means" necessarily embraces the unidimensional test, the court quite properly looks to the express language of the instrument creating the easement as the primary source material to determine the scope and extent of the surface use easement. ¹⁵

The existence of implied easements and implied easements by necessity long antedated the problems created by the severance of the surface and mineral estates. For example, the requirements for an implied easement are rarely mentioned in surface use cases. These requirements include: "(1) a conveyance (2) of a physical part only of the grantor's land . . . ; (3) before the conveyance there was a usage on the land that, had the two parts then been severed, could have been the subject of an easement appurtenant to one and servient upon the other (4) this usage is, more or less, 'necessary' to the use of the part to which it would be appurtenant; and (5) the usage is 'apparent."' ¹⁶ While 4 of the 5 requirements would normally be found in the deed or lease situation, the third requirement, namely that there be an existing use or quasi-easement, would almost never be met. Thus, it appears as if often the case in oil and gas law, that traditional notions of property law that form the backbone of oil and gas law have been "mangled" in order to achieve a socially desirable objective. ¹⁷ As for implied easements by necessity, which have many of the same requirements as does an implied easement, courts have regularly ignored the strict necessity element given the broad acceptance of the unidimensional approach to surface use easements. ¹⁸ Nonetheless, the issues underlying the implied easement by necessity are the same that affect the surface use easement in the severed minerals situation. Professor Powell in his well respected treatise had the following commentary on implied easements by necessity:

Whether easements by necessity are believed to be products of public policy or to be the embodiments of inferences as to the intent of the parties, they should be established by proof that they are necessary to the reasonable utilization of the claiming dominant parcel. Only so can the public interest in land utilization be safeguarded. Only so can the probable intent of the parties be effectuated. ¹⁹

One of the few cases to apply the traditional implied easement by necessity doctrines is Peacock v. Schroeder. ²⁰ The lessee of a 160-acre lease located within the boundaries of a larger surface estate comprising some 1906 acres asserted that he had an implied easement by necessity to cross over a portion of the 1906 acres not subject to the lease in order to have access to the well. The right-of-way, that had been in existence for many years was over 2-1/2 miles long. After many years of use, the surface owner informed the lessee that the lessee did not have the right of ingress and egress over the non-leased surface estate to access the lease.

The court identifies the requirements for an implied easement by reservation of a right of way. They are: "(1) unity of ownership of the dominant and servient estates prior to the severance; (2) access must be a necessity and not a mere convenience; and (3) the necessity must exist at the time of the severance of the two estates." ²¹ The court also identifies the requirements for an implied easement appurtenant which include: "(1) unity of ownership of the dominant and servient estates prior to severance; (2) the use of the easement must have been apparent at the time of the grant; (3) the use of the easement must have been continuous so that the parties must have intended that its use pass by the grant; and (4) the use of the easement must be reasonably necessary to the use and enjoyment of the dominant...