Conflicts Between Mineral Owners and Surface Owners
by Eric Camp
When there has been a severance of minerals from surface ownership, the mineral estate is the dominant estate and the surface estate is the servient estate. Accordingly, the mineral owner has an implied right to use as much of the surface as is reasonably necessary to produce the minerals under the property.
Generally speaking, mineral owners are not liable to surface owners for normal surface damages caused by drilling operations— including ingress and egress to the site and construction of surface facilities and pipelines. Two common-law safeguards exist, however, as checks on the mineral owner’s right to use the surface—the “rule of reasonable use” and the duty of “due regard.”
The “rule of reasonable use” requires the mineral owner to limit its surface use to operations “reasonably necessary” to produce the property’s minerals. The duty of “due regard” requires the mineral owner to exercise its rights with “due regard” for the surface owner’s rights. The surface owner bears the heavy burden of proof of establishing that the mineral owner’s surface operations were unreasonable.
In 1971, the Texas Supreme Court expanded the duty of “due regard” to require a mineral owner, under special circumstances, to employ an alternative development method to accommodate the surface owner’s existing surface use. Getty Oil Co. v. Jones, 470 S.W.2d 618 (Tex. 1971) (operator’s decision to install pumping units that interfered with surface owner’s irrigation system was impermissible because other available pumping units would have accommodated the system). This became known as the “accommodation doctrine.”
The accommodation doctrine allows a surface owner to force the mineral owner to adopt an alternative development method if:
- The surface owner’s use existed prior to the mineral owner’s conflicting use;
- The surface owner has no reasonable means to develop its land other than with the pre-existing use;
- The mineral owner’s use or proposed use substantially interferes with the existing surface use; and
- The mineral owner has other options which:
a. are usual, customary, and reasonable methods;
b. are practiced in the industry on other similar lands put to similar uses;
c. would not interfere with the surface owner’s preexisting use; and
d. are available on the premises.
The surface owner again bears the heavy burden of establishing all of these elements.
These common law rules sometimes produced harsh consequences for surface owners. To balance the competing interests of surface and mineral development, the Texas Legislature enacted the “Mineral Use of Subdivided Land Act” in 1983 to allow the creation of “qualified subdivisions.” Tex. Nat. Res. Code Ann. § 92.001.
The statute’s scope is extremely limited—the “qualified subdivision” can be no larger than 640 acres and must be located in a county with more than 400,000 people, a county with more than 140,000 people that borders a county with more than 400,000 people, or on a barrier island. When the statute’s remedies are available, however, a surface owner can restrict a mineral owner’s surface operations in the “qualified subdivision” to specifically designated “operations sites.”
The statute requires a surface owner to create a plat of the proposed “qualified subdivision” and apply to the Railroad Commission for approval. The plat must contain a separate “operations site” for each 80 acres within the subdivision, each containing at least two acres where the mineral owner may conduct exploration and production activities. The plat must also contain provisions for road and pipeline easements for the operations site.
If the Commission approves the surface owner’s plat, the mineral owner’s operations are restricted to those approved in the plat. To maintain the “qualified subdivision” status, the surface owner must commence actual construction of roads or utilities and sell a lot within the “qualified subdivision” to a third party by the third anniversary date of the Commission’s order.
Advancements in horizontal drilling have significantly reduced oil and gas operators’ surface use requirements, but the encroachment of significant exploration and production operations into urban areas will inevitably lead to high-stakes surface use conflicts between mineral and surface owners.
Eric Camp is an associate with Whitaker Chalk Swindle & Schwartz PLLC and practices in the firm’s oil and gas section. He is a member of the DBA’s Energy Section and can be reached at firstname.lastname@example.org.