STATE LAW REGIMES: GULF COAST REGION (TEXAS, LOUISIANA)
| Jurisdiction | United States |
STATE LAW REGIMES: GULF COAST REGION (TEXAS, LOUISIANA)
Ryan A. Cooper
Dupuis & Polozola
The Woodlands, TX
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I. Introduction
The Oil and Gas division of the Railroad Commission of Texas regulates the exploration, production and transportation of oil and natural gas in Texas. However, the Railroad Commission of Texas lacks jurisdiction to regulate the use of the surface estate except in limited circumstances. Therefore, the mineral owner's use of the surface estate is generally controlled by common law. In Texas, the surface estate and the mineral estate may be severed into two separate estates. The mineral estate is the dominant estate, and the party possessing the mineral estate has the right use the surface estate to extract minerals, as well as those incidental rights reasonably necessary for the extraction.1
II. What constitutes "reasonably necessary" use of the surface?
A surface owner is not entitled to recover damages to the surface unless it can prove that the mineral owner used more of the surface than was reasonably necessary or that the mineral owner was negligent.2 There have been numerous lawsuits in Texas regarding the mineral owner's use of the surface estate. Mineral owners have been given broad rights to use the surface, including the rights to conduct seismic testing, construct roads, maintain pipelines, facilities and other structures on the surface estate. Also, the mineral owner has the right to use surface and subsurface water for drilling and production operations. The mineral owner has the right to choose its surface location, even though the location may interfere with the surface owner's use.3 The mineral owner has no obligation to compensate the surface owner for its use of the surface estate.4 Further, the mineral owner has no obligation to maintain or restore the surface in the absence of a statute or agreement requiring such restoration.5
The following cases are a few examples of where the mineral owner's use of the surface was found to be excessive or negligent:
(1) Brown v. Lundell, 344 S.W.2d 863 (Tex. 1961) - Lessee disposed saltwater in a surface pit that seeped into underground water supply. Court held that Lessee was negligent in its disposal and should have known that it would cause pollution.
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(2) Oryx Energy Co. v. Shelton, 942 S.W.2d 637 (Tex. App. - Tyler 1996, no writ) - Lessee held liable for excessive use of the surface. Lessee had numerous oil spills and saltwater leaks which had adverse effects on the value of the surface.
(3) Texaco, Inc. v. Spires, 435 S.W.2d 550 (Tex. Civ. App. - Eastland 1968) - Lessee was on notice that a cattle guard had been negligently constructed resulting in the death of a horse. However, note that a mineral owner has no common law duty to fence its operations and is generally not liable for injuries to livestock that occur within its area of operations. Santana Oil Co. v. Henderson, 855 S.W.2d 888 (Tex. App. - El Paso 1993).
III. Restrictions on use of the surface estate
(A) The Accommodation Doctrine
Although the mineral estate is the dominant estate, Texas courts have limited the mineral owner's use of the surface by the accommodation doctrine. In Getty Oil Co. v. Jones, The Texas Supreme Court found that "where there is an existing use by the surface owner which would otherwise be precluded or impaired, and where under the established practices in the industry there are alternative available to the lessee whereby the minerals can be recovered, the rules of reasonable usage of the surface may require the adoption of an alternative by the lessee."6
In 1955, Jones purchased a 635 acre tract of land, which was subject to prior oil, gas and mineral leases. Getty owned one of the oil, gas and mineral leases, covering 120 acres on the west half of the tract. Jones drilled several irrigation wells on the surface that were used to irrigate his tract of land. He originally used hand-moved, and later power roll, irrigation equipment. However, in 1963, he installed a self-propelled sprinkler irrigation system known as the "Valley System." The system used 1,300 feet of pipe and was supported at seven feet above the ground by a series of steel towers which rotate around a pivot point. There were six pivot points which provide for irrigation of the entire tract except for a few corner areas of the tract. At the time when Jones installed the system, Getty had one producing well on the tract which had a pumping unit taller than seven feet in height. However, the well was outside of the range of the irrigation system and did not interfere with Getty's operations.
In December of 1967, Getty drilled two additional wells on Jones' tract of land. Getty installed two pumping units, one of which was seventeen feet high and the other thirty-four feet
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high. The height of the pumps prevented Jones' use of four pivot points of his irrigation system, which caused depreciation in the value of the land. Prior to the time Getty developed its two new wells, Adobe Oil Company, the owner of a lease on the east half of Jones' tract of land, had drilled two wells that would have interfered with the irrigation system, but they were placed in concrete cellars to provide clearance. Jones sued Getty to prevent them from using the vertical space interfering with the irrigation system.
The Court acknowledged that the mineral estate is the dominant estate and that the mineral owner can use so much of the surface as is reasonably necessary to produce and remove minerals. However, the Court stated that implied rights in favor of the mineral owner have to be exercised with due regard for the rights of the servient estate (surface estate).
As evidenced by the Adobe wells on Jones' lands, the court stated that Getty had alternative methods to produce oil and that the alternative methods were reasonable. Further, the Court found that the irrigation system used by Jones was perhaps the only reasonable means of developing the surface for agricultural purposes. The Court held that Getty was required to accommodate Jones' irrigation system by using different methods of producing oil.
Therefore, as laid out in Getty Oil Co. v. Jones, the mineral owner must accommodate the surface owner's use of the surface if the following elements are met:
(1) There is an existing use of the surface by the surface owner;
(2) The mineral owner's operations are interfering with the surface use; and
(3) The mineral owner has reasonable alternatives to conduct its operations.
The determination of whether the mineral estate owner is required to accommodate the surface owner's existing use of the surface is fact specific, and the surface owner has the burden of proof.7
(1) Existing use of the surface owner
Since Getty Oil, the question of what constitutes an existing use by the surface owner has remained uncertain. It's important to note that in Getty Oil, the surface owner's irrigation system was not existing at the time the oil, gas and mineral lease was taken. In addition, the Lessee had established production on the lands prior to the installment of the irrigation system.
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In Texas Genco, LP v. Valence Operating Company, the accommodation doctrine was applied despite the fact that the surface owner was not currently using the portion of the surface that was affected by a gas well.8 In that case, the surface owner acquired a 450 acre tract to use as a landfill. The lessee proposed to drill a straight-hole gas well on a portion of the lands that were not currently used by the surface owner. However, the surface owner had plans to use the portion of the surface estate where the well was located within seven to ten years. Although the surface owner was not currently using the portion of the surface affected by the well, the court found that the portion of the surface was indisputably a part of a deed-recorded and state-registered landfill. If a straight-hole well was drilled at that particular location, the surface owner would have to redesign its landfill which would be a great expense. Moreover, the court found that the lessee could reach its bottom hole location by directionally drilling the well, which was an established practice in the industry. Therefore, the court found that the mineral estate owner must accommodate the surface owner.
(2) Mineral owner's interference with the surface use
The accommodation doctrine does not apply unless the surface owner's use of the property is substantially impaired, and mere inconvenience to the surface owner's use will not trigger the accommodation doctrine.9
The Texas Supreme Court recently issued its...
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