CHIEF JUSTICE HECHT delivered the opinion of the Court, in which JUSTICE GREEN, JUSTICE JOHNSON, JUSTICE GUZMAN, JUSTICE DEVINE, and JUSTICE BROWN joined.
Absent an agreement to the contrary, an oil-and-gas lessee has an implied right to use the land as reasonably necessary to produce and remove the minerals but must exercise that right with due regard for the landowner's rights.
Coyote Lake Ranch
In 1953, during "`the most costly and one of the most devastating droughts in
To date, 18 wells have been drilled on the Ranch for irrigation or domestic use, and the City has drilled seven wells on the northern edge of the Ranch.
In 2012, the City announced plans to increase water-extraction efforts on the Ranch, possibly drilling as many as 20 test wells in the middle of the Ranch, followed by 60 additional wells spread across the Ranch. The Ranch objected that the proposed drilling program would increase erosion and injure the surface unnecessarily. The City claimed that it was acting well within the broad rights granted by its deed. Unable to reach agreement, the City began mowing extensive paths through the native grass to prospective drill sites, and the Ranch sued to enjoin the City from proceeding.
The Ranch pleaded in part that the City "has a contractual and common law responsibility to use only that amount of surface that is reasonably necessary to its operations" and "a duty to conduct its operations with due regard for the rights of the surface owner." The City contended that it has full rights under its deed to pursue its plans and that the law imposes no duty on groundwater owners, as it does on mineral owners, to accommodate the surface owner.
At the temporary injunction hearing, the Ranch's manager testified that mowing or removing vegetation from the surface causes destructive wind erosion, exacerbated by cattle tromping over mowed paths. According to the manager, wind, drought, and grazing cattle prevent grass from growing back, particularly in the areas the City mowed — the sandiest, hilliest part of the Ranch. He proposed an alternative plan for different well sites and fewer roads. The Ranch also presented evidence that elevated power lines would allow hawks to roost and prey on the Lesser
The trial court granted the Ranch a temporary injunction, concluding
The court enjoined the City from
The City appealed,
We granted the Ranch's petition for review.
"As a rule, parties have the right to contract as they see fit as long as their agreement does not violate the law or public policy."
The deed gives the City the right to drill wells "at any time and location" but only "for the purpose of" conducting operations to access the groundwater.
The same is true for the Ranch's complaint that overhead power lines will unnecessarily threaten the Lesser Prairie Chicken habitat on the Ranch. Given the City's concerns that buried power lines are more expensive and possibly problematic in shifting sand dunes, overhead power lines are necessary and incidental to the City's plan. But if the Ranch's environmental concern were equally important to the City, buried power lines would be necessary or incidental to its plan. The "necessary or incidental" standard may prohibit a merely wasteful use of the surface, but it does not resolve the disagreement between the Ranch and the City.
We thus disagree with the City that the deed provisions alone determine its rights
Texas law has always recognized that a landowner may sever the mineral and surface estates and convey them separately.
The mineral and surface estates must exercise their respective rights with due regard for the other's.
"Under such circumstances", we said, "the right of the surface owner to an accommodation between the two estates may be shown".
Jones's irrigation system afforded "the most advantageous, and perhaps the only reasonable means of developing the surface for agricultural purposes."
Two years later, in Humble Oil & Refining Co. v. West, we applied the doctrine in a different situation.
We remanded the case to the trial court to determine whether the volume of native gas on which the Wests were entitled to a royalty could be established with reasonable certainty, thus balancing their right to a full profit with Humble's right to preserve the storage capability of the reservoir.
In 1993, in Tarrant County Water Control and Improvement District No. One v. Haupt, Inc., we held that the doctrine applied to a government entity that had acquired the surface estate through condemnation.
"The issue", we said, "is one of fairness to both parties in light of the particular existing use by the surface owner and the principle underlying the accommodation doctrine: balancing the rights of surface and mineral owners to use their respective estates while recognizing and respecting
The accommodation doctrine, based on the principle that conflicting estates should act with due regard for each other's rights, has provided a sound and workable basis for resolving conflicts between ownership interests. The paucity of reported cases applying the doctrine suggests that it is well-understood and not often disputed. We have applied the doctrine only when mineral interests are involved. But similarities between mineral and groundwater estates, as well as in their conflicts with surface estates, persuade us to extend the accommodation doctrine to groundwater interests.
Groundwater and minerals both exist in subterranean reservoirs in which they are fugacious. An interest in groundwater can be severed from the land as a separate estate,
Analogizing groundwater to minerals in determining the applicability of the accommodation doctrine is no less valid than it is in determining ownership. Common law rules governing mineral and groundwater estates are not merely similar; they are drawn from each other or from the same source. The dispute here over the City's right to use the Ranch is much the same as the disagreement between Getty Oil and Jones. Resolution of both requires an interpretation of the severed estate's implied right to use the surface. The accommodation doctrine has proved its worth in such cases.
Nevertheless, the City argues that the doctrine should not extend to groundwater estates. For one thing, the City argues, a groundwater estate has never been held to be dominant, as a mineral estate is. But as we have noted, "dominant" in the law of servitudes means only benefitted, not superior.
Accordingly, we hold that the accommodation doctrine applies to resolve conflicts between a severed groundwater estate and the surface estate that are not governed by the express terms of the parties' agreement. As stated in Merriman, the surface owner must prove that (1) the groundwater owner's use of the surface completely precludes or substantially impairs the existing use, (2) the surface owner has no available, reasonable alternative to continue the existing use, and (3) given the particular circumstances, the groundwater owner has available reasonable, customary, and industry-accepted methods to access and produce the water and allow
The trial court's temporary injunction prohibits the City from all mowing, blading, or destroying grass on the Ranch. The Ranch concedes that this operates as a de facto moratorium on any surface activity by the City. Rather than preserve the status quo, which is its proper function,
The Ranch argues that the injunction is an appropriate means of stopping the City's improper use of the surface pending a final resolution of the dispute. But an injunction "so broad as to enjoin a defendant from activities which are a lawful and proper exercise of his rights" is an abuse of discretion.
The principle, absent an agreement to the contrary, that a severed mineral estate's implied right to use the surface must be exercised with due regard for the surface estate's rights, and the rules common to mineral and groundwater estates, compel the conclusion that the accommodation doctrine extends to groundwater estates. For this reason, the court of appeals' judgment reversing the temporary injunction and remanding the case for further proceedings is
Affirmed.
JUSTICE BOYD filed a concurring opinion, in which JUSTICE WILLETT and JUSTICE LEHRMANN joined.
JUSTICE BOYD, joined by JUSTICE WILLETT and JUSTICE LEHRMANN, concurring.
"Absent an agreement to the contrary, an oil-and-gas lessee has an implied right to use the land as reasonably necessary to produce and remove the minerals but must exercise that right with due regard for the landowner's rights." Ante at 55. This is the common-law "accommodation doctrine," and it is a well-established tenet of our oil-and-gas jurisprudence. See Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 249 (Tex.2013); Tarrant Cty. Water Control & Imp. Dist. No. One v. Haupt, Inc., 854 S.W.2d 909, 911 (Tex.1993); Getty Oil Co. v. Jones, 470 S.W.2d 618, 621 (Tex. 1971). Addressing an issue of first impression, the Court announces in this case that the "similarities between mineral and groundwater estates, as well as in their
I agree, but the key to the Court's holding is that the accommodation doctrine only applies to groundwater rights — just as it only applies to mineral rights — when the parties' dispute is "not governed by the express terms of the parties' agreement." Ante at 64. When the parties' agreement expressly addresses the dispute, it is unnecessary and improper for courts to imply rights and obligations through the accommodation doctrine. As the Court explains, the "parties have the right to contract as they see fit as long as their agreement does not violate the law or public policy," and this rule "applies to a mineral owner's use of land." Ante at 59.
In this case, I conclude that the parties' primary dispute is "governed by the express terms of" the deed through which the City obtained its groundwater rights. In that deed, the Ranch expressly conveyed to the City not only the right to the "water in, under and that may be produced from" the land, and the "exclusive right to take such water from said tracts of land," but also:
(Emphases added.)
Exercising these rights, the City developed a plan to draw substantially more water by drilling up to eighty additional wells in various locations. After the City selected the well sites and began mowing
The Court affirms, but it concludes that the accommodation doctrine applies in this case because the deed is "simply silent" on the parties' disagreement and "does not resolve this dispute" or "determine [the City's] rights to use the Ranch." Ante at 59. In the Court's view, "the deed leaves unclear whether the City can do everything necessary or incidental to drilling anywhere, as it claims, or only what is necessary or incidental to fully access the groundwater, as the Ranch argues." Ante at 59.
I disagree. The Ranch's position is that the accommodation doctrine requires the City to adopt "an alternative plan for different well sites and fewer roads." Ante at 57. The deed, however, expressly grants the City the right to drill water wells "at any time and location ... for the purpose of" accessing the groundwater. If the City chooses to drill sixty new water wells, the deed expressly grants the City that right. And if the City chooses to drill those wells where native grass grows on sand dunes, the deed expressly grants the City that right. Because the express terms of the parties' agreement address the issue, the accommodation doctrine does not apply and the Ranch cannot rely on the doctrine to require the City to adopt an alternative plan for different well sites.
I do agree, however, that the accommodation doctrine may apply to the issue of where and how the City can construct access roads, as opposed to the issue of where it may locate wells. Although the deed grants the City the right to drill wells anywhere and at any time, it permits the City to construct access roads and other improvements only as "necessary or incidental" to its operations and to otherwise use the land only as "necessary or incidental" to taking water at those sites. Because phrases like "necessary or incidental," "necessary or useful," and "necessary and convenient" leave substantial room for disagreement, we have applied the accommodation doctrine to inform their meanings by imposing a reasonableness standard on the uses the agreements permit. See, e.g., Merriman, 407 S.W.3d at 249 (applying the accommodation doctrine to a lease that permitted the lessee to use the surface as necessary or useful in its operations); Moser v. U.S. Steel Corp., 676 S.W.2d 99, 100, 103 (Tex.1984) (applying the accommodation doctrine when deed conveyed "all necessary and convenient easements for the purpose of" the mineral estate).
Thus, to the extent the Ranch contends that the City's paths, roads, and power lines are not "necessary or incidental" to the taking of water from the well sites the City has selected, I agree that the trial court should apply the accommodation doctrine on remand to resolve that issue. But to the extent that the Ranch seeks to require the City to select different or fewer well sites, the accommodation doctrine does not apply because the deed expressly grants the City the right to drill water wells "at any time and location."
"[Grantors convey to the City] all of the percolating and underground water in, under, and that may be produced from the hereinafter described tracts of land, situated in Bailey County, Texas, together with the exclusive right to take such water from said tracts of land and to use the same for disposition to cities and towns situated in Bailey, Cochran, Hockley, Lamb and Lubbock Counties, Texas, together with the full and exclusive rights of ingress and egress in, over, and on said lands, so that the Grantee of said water rights may at any time and location drill water wells and test wells on said lands for the purpose of investigating, exploring producing, and getting access to percolating and underground water; together with the rights to string, lay, construct, and maintain water and fuel pipe lines and trunk, collector, and distribution water lines, power lines, communication lines, air vents with barricades, observation wells with barricades, if required, not exceeding ten (10) square feet of surface area, reservoirs, booster stations, houses for employees, and access roads on, over and under said lands necessary or incidental to any of said operations, together with the right to erect necessary housing for wells, equipment and supplies, together with perpetual easements for all such purposes, together with the rights to use all that part of said lands necessary or incidental to the taking of percolating and underground water and the production, treating and transmission of water therefrom and delivery of said water to the water system of the City of Lubbock only; subject to the rights reserved in [Grantors] to such quantities of water as may be required to carry on usual and normal domestic and ranching operations and undertakings upon said lands, excluding irrigation, and such quantities of water as may be required for normal and customary operations for the production of oil and gas and other minerals ... as are now normal and customary in the area where said land is located, and subject also to the exceptions and reservations hereinafter provided....
"This conveyance is expressly made subject to the rights reserved by [Grantors] ... to drill and use water from one irrigation well for agricultural, irrigation purposes only, such wells to be equipped with one (1) pump having only one column pipe, which pipe shall not exceed ten (10") inches in diameter, to be located on each of the following described [16] tracts of land ..., not more than one well to any one tract [except one section] on which two wells are permitted.