In June, the Texas Supreme Court revisited the accommodation doctrine for the first time in 20 years. The court picked a prime time to do so, as horizontal drilling and hydraulic fracturing technologies have spurred a burst of development around the state.
Merriman v. XTO Energy Inc., the Supreme Court reaffirmed the dominant nature of the mineral estate, once again recognizing the mineral owner’s “right to use as much of the surface as is reasonably necessary to extract and produce the minerals.”
The court also clarified the substantial burden the surface owner must meet before using the accommodation doctrine to limit the mineral owner’s use of the surface.
The accommodation doctrine traces its origins in Texas to
Getty Oil Co. v. Jones (1971). In
Getty Oil, the Supreme Court established the elements a surface owner must prove to force the mineral owner—the owner of the dominant estate—to accommodate a preexisting surface use.
The surface owner must prove: 1. The mineral owner’s use of the surface “precludes or substantially impairs” the surface owner’s existing use, 2. there is no “reasonable alternative method” to continue the existing use, and 3. there is a “reasonable, customary, and industry-accepted” alternative method available to the mineral owner to continue development while not interfering with the existing surface use. This is a high burden that requires a substantial evidentiary showing by the surface owner.
Merriman, Homer Merriman claimed that mineral lessee XTO failed to accommodate his existing cattle operation when XTO drilled a gas well. The Supreme Court ultimately ruled against Merriman, finding that he failed to show any evidence that he had no reasonable alternative method by which to continue his cattle operation.
In doing so, the court clearly articulated the requirements of the accommodation doctrine first announced in
Getty Oil. But the court also fine-tuned the inquiry, observing that the characterization of the existing use must be fair to both parties. The court stated that the proper analysis in
Merriman was not whether an alternative method existed for Merriman to continue any agricultural use of the land—as the court of appeals suggested—but whether a reasonable alternative method existed for Merriman to continue his cattle operation.
Thus, though the burden remains very high,
Merriman conceivably allows a surface owner to concentrate his evidence on a single, specific existing use of the surface rather than an entire category of uses.
The decision’s importance lies in its timeliness. The oil and gas boom is pushing industry and people closer and closer. More development and more infrastructure mean increased tension between surface owners and lessees. Neighborly agreements can resolve many disputes, but some parties ultimately will file lawsuits.
Merriman firmly reestablishes the dominant nature of the mineral estate, it also arguably offers something for the surface owner, by narrowing the accommodation inquiry to a particular existing use. Both plaintiffs and defendants in today’s lawsuits will no doubt point to
Merriman, potentially shaping the accommodation doctrine for the next 20 years.
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