Subsurface Trespass and Actual Harm
First published in Texas Lawyer, April 15, 2015
By Mark C. Rodriguez and Brock Skelley
In the wake of the Texas Supreme Court's recent decision in Environmental Processing Systems v. FPL Farming, the oil and gas industry in Texas is still left to wonder how traditional trespass claims apply to subsurface activities. According to the doctrine of ad coleum, ownership rights in real property extend up to the heavens and down to the earth's core. A right that is incidental to ownership is the right to exclude trespassers. When that right is violated, the owner has a cause of action for trespass.
For practical reasons, the doctrine of ad coleum and the law of trespass do not always coincide. On the surface, the owner's right to exclude others is nearly absolute — any unauthorized entry, regardless of whether it causes actual harm, gives rise to a cause of action for trespass. But recognizing the same right at 30,000 feet would significantly impede air travel. So, with respect to "airspace," courts have placed a practical limitation on trespass claims by requiring a plaintiff to show actual and substantial harm.
In Texas, it remains to be seen whether a similar limitation applies to claims for subsurface trespass. Specifically, does an unauthorized, yet imperceptible, entry into the core space beneath another's land give rise to an actionable trespass, even if the complaining landowner does not suffer actual harm?
Three oil and gas related activities in particular have the potential to give rise to unauthorized subsurface entry: 1. fracking and the subsurface migration of fracking fluids; 2. subsurface migration of wastewater from injection wells; and 3. horizontal drilling. To date, the Texas Supreme Court has encountered scenarios 1. and 2. but has offered little guidance on whether harm is a required element of subsurface trespass.
The Texas Supreme Court addressed fracking related subsurface trespass in Coastal Oil & Gas Corp. v. Garza Energy Trust in 2008. In that case, the plaintiff, a royalty owner, alleged that the defendant's fracking operations caused fluids to migrate under the land in which the plaintiff held a royalty interest, resulting in substantial drainage. The court held that because a royalty interest is a "non-possessory" interest in land, the plaintiff had to show actual harm in order to assert a claim for trespass.
According to the court, the rule of capture permitted production from the plaintiff's tract and therefore precluded the alleged damages. However, if the plaintiff in Garza had been an adjacent surface owner or mineral owner — both possessory interests — the court would have faced the more difficult question of whether harm is a required element of subsurface trespass.
The court faced the issue of a possessory interest owner alleging subsurface trespass in Environmental Processing Systems v. FPL Farming. The plaintiff, a rice farmer, sued the operator of an adjacent wastewater disposal facility alleging that subsurface wastewater had trespassed beneath the farmer's property, possibly contaminating the briny groundwater beneath it. After the jury returned a verdict for the operator, the court of appeals affirmed, finding that the operator's injection well permit shielded it from tort liability (the injection well in FPL Farming was a Class I injection well. A Class II well is more common and is used to dispose of waste related to oil and gas development). In 2011, the Texas Supreme Court reversed, holding that the permit did not shield the operator from liability. The court did not, however, address the merits of the plaintiff's trespass claim.
The court remanded to the court of appeals for a determination of 1. whether "lack of consent" was an element of trespass and 2. whether the jury charge should have included an instruction that injury is not a necessary element of trespass. On remand, the court of appeals reversed the jury's verdict, finding that the jury instructions improperly placed the burden of disproving consent on the plaintiff. More significantly, the court of appeals held that the subsurface migration of wastewater could give rise to an actionable trespass.
In 2013, the Texas Supreme Court granted both parties' petitions for review. Many expected the court to clarify the distinctions between traditional trespass and subsurface trespass and to answer the question of whether Texas recognizes a cause of action for subsurface trespass. Instead, the court focused strictly on the issue of consent. It held that consent is not an affirmative defense to trespass, but rather "lack of consent" is an element of the plaintiff's claim. The court reinstated the jury's verdict, noting that "any error in submitting the question of trespass for deep subsurface wastewater migration was harmless because the jury found no such liability[.]"As a result, the court "decline[d] the invitation to address the remaining question presented in this appeal — namely, whether deep subsurface wastewater migration is actionable as a common law trespass in Texas."
The Texas Supreme Court has yet to confront the question of subsurface trespass in the context of horizontal drilling. But the following example scenario suggests that day is likely coming:
The mineral owner of Tract A gets permission from the surface owner of Tract B to drill a horizontal well on the surface of Tract B. The proposed well will not produce any hydrocarbons from Tract B — meaning there will be no perforations in the portion of the wellbore that passes beneath Tract B. The proposed well also will not interfere with any current development plans held by the mineral owner of Tract B. If the well is drilled, does the mineral owner of Tract B have a claim for subsurface trespass?
One Texas court of appeals recently faced this fact pattern in Lightning Oil v. Anadarko E&P Onshore. Lightning Oil, the mineral owner of Tract B, sought a temporary injunction prohibiting Anadarko from drilling a horizontal well on the surface of Tract B. The trial court denied the preliminary injunction, and the court of appeals affirmed. Both courts held that because the well would not interfere with Lightning's current development plans, there was no showing of imminent irreparable harm required for a temporary injunction. The court did not address whether Anadarko had committed an actionable trespass, an issue that may become ripe for the Supreme Court's review as the case develops.
Texas courts will likely continue to see these types of subsurface trespass claims. The viability of these claims will depend largely on whether the plaintiff is required to show actual harm. The Texas Supreme Court will eventually have to address the issue head on. The only question is when.
Reprinted with permission from the April 15, 2015 edition of Texas Lawyer. © 2015 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.