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Texas Agriculture Law

Year in review

By Tiffany Dowell Lashmet

Editor’s note: Tiffany Dowell Lashmet, a Texas A&M Agri-Life Extension Service specialist in Amarillo and author of the Texas Agriculture Law Blog, is among the top 100 legal bloggers in the nation, according to an announcement by the editors at the ABA Journal. Following are excerpts from her “Texas Agriculture Law Year In Review” for water and oil. To view both articles in their entirety, please visit http://agrilife.org/texasaglaw/.

Water-Related Highlights
Bragg takings decision will stand. In May, the Texas Supreme Court declined to hear an appeal in Bragg v. Edwards Aquifer Authority, a groundbreaking groundwater law case in Texas. This means that the opinion of the San Antonio Court of Appeals remains in force. That opinion found that when the Edwards Aquifer Authority denied permits to a Medina County pecan farmer, a taking occurred, requiring just compensation be paid to the farmer. This case is the first in Texas to find a taking did indeed occur when a permit was denied and to award compensation. Currently, the case is on remand to the trial court to properly calculate just compensation based on the difference in the value of the property with and without the requested irrigation water.

Texas Supreme Court hears oral argument in City of Lubbock v. Coyote Lake Ranch. In October 2015, the Texas Supreme Court heard oral argument from counsel about whether Texas should recognize the accommodation doctrine when dealing with groundwater. The doctrine, which has been applied for years in Texas oil and gas law, offers protection to preexisting surface owners in limited circumstances when oil and gas operations commence on the property and substantially interfere with the existing surface use. In this case, the city of Lubbock purchased groundwater rights from the ranch in the 1950s and included the right to use the surface of the ranch to produce the water in the deed.

When Lubbock was ready to start drilling in 2012, the current owners of the surface estate argued that the accommodation doctrine should prohibit Lubbock from interfering with their current use of the land. The trial court found for the landowners, issuing an injunction preventing Lubbock from moving forward. The Amarillo Court of Appeals reversed, holding that the accommodation doctrine doesn’t apply to groundwater as it is not part of the dominant mineral estate as is oil and gas. The Texas Supreme Court decision, which will likely be issued sometime in 2016, will be the first pronouncement from the state’s highest court on this important question.

Texas Supreme Court punts on underground trespass question. When the Texas Supreme Court issued its opinion in Environmental Processing Systems v. FPL Farming, I read with excitement the answer to the important question posed: Would Texas recognize an underground trespass claim? In this case, a rice farmer owned property that neighbored property owned by a disposal well company. Over a decade, the disposal well company pumped more than 100 million gallons of waste water over a mile beneath the ground into an unproductive aquifer. The rice farmer argued that because of the time and volume of water, the plume had crossed property lines, which should allow him to recover for subsurface trespass. Whether Texas would recognize this type of claim was a question of first impression. Unfortunately, the question was not answered, as the court decided the case on a technicality regarding burden of proof, and was “without the need to decide whether Texas law recognizes a trespass cause of action for deep subsurface water migration.” Thus, the question remains until another case can make its way through the Texas court system where the answer is critical to a decision.

Oil-Related Highlights
Court clarifies that control of subsurface rests with surface owner, not mineral lessee. Lightning Oil Co. v. Anadarko E&P Onshore LLC raised a very interesting issue of who has control over a property’s subsurface. Here, one oil and gas company sought to drill through the subsurface owned by a ranch whose minerals were leased to a second oil and gas company. The first company obtained consent from the ranch to drill through the subsurface in order to reach their own mineral lease on neighboring land. The second oil and gas company filed suit claiming that it, as the mineral owner, should have the right to determine whether someone could drill through the mineral estate. The San Antonio Court of Appeals found that it was the surface owner, here the ranch, that controlled the subsurface of the property. It remains to be seen whether the mineral owners will appeal this decision.

Texas Supreme Court addresses cost-free royalty issues in Chesapeake Exploration LLC v. Hyder. Texas courts have long sought to define the circumstances under which royalty language could successfully prohibit oil and gas companies in requiring royalty owners from sharing in post-production costs. This case involved an oil and gas lease between Chesapeake and Hyder, in which Hyder sought to do just that. Out of three different provisions, one was found by the Texas Supreme Court to allow Mr. Hyder’s interest to be free from post-production costs. Currently, a motion to reconsider is pending at the Texas Supreme Court. 

Contact Tiffany Dowell Lashmet at 806-677-5600 or tdowell@tamu.edu. To view both articles in their entirety, please visit http://agrilife.org/texasaglaw/.