Recently the Supreme Court of Texas issued a decision that is important for Texas surface owners and mineral owners and the Texas oil and gas attorneys who represent them. The case is Homer Merriman v. XTO Energy Inc. I discussed the background of the Supreme Court decision previously, and you can access that article here.
As you may recall, Homer Merriman bought a piece of land in 1996, but he bought only the surface rights, and the deed clearly reserved the minerals. XTO Energy Inc. had previously leased the mineral rights. Mr. Merriman used the land for his cattle business and used the particular tract in question to sort his cattle, with stock panels and electrical fences which he testified were not permanent fixtures. In 2007, XTO wanted to drill a well on this tract, and offered Mr. Merriman $10,000 in compensation for this use, but he refused and the case went to court.
The the trial court granted summary judgment to XTO and said Mr. Merriman did not show that XTO had violated the accommodation doctrine. The Texas Court of Appeals affirmed the trial court decision. In Texas, the accommodation doctrine provides that the mineral rights owner and its lessee must accommodate the surface owner’s pre-existing surface uses, so long as other means of production or extraction of the minerals are available. To obtain relief under this doctrine in Texas, the surface owner must prove that the use by the mineral lessee, in this case XTO, completely precludes or substantially impairs the existing use by the surface owner and there is no reasonable alternative method available to the surface owner by which the existing use can be continued.
The Texas Supreme Court Decision:
The Texas Supreme Court upheld the decisions of the appeals court and the trial court in favor of XTO. The opinion, written by Justice Phil Johnson, affirms the lower court decisions on slightly different grounds. Specifically, the Supreme Court found that requiring Mr. Merriman to consider using other land he leased was an inappropriately high burden to meet in order to demonstrate that a reasonable alternative was available for his cattle operations. The cattle leases on other properties might only be for a short term and so these other lands should not be considered. The Supreme Court also found it was unfair to characterize the surface owner’s use as a general “agricultural” use. Instead, the appropriate test is a balancing of the surface owner’s cattle operation against the use by XTO.
The Court went on to compare Mr. Merriman’s cattle operations and the proposed drilling by XTO and found no evidence that Mr. Merriman could not complete his sorting of the cattle on a different part of this same 40 acre tract. Mr. Merriman offered no evidence of why the corrals and fences, which were not permanent fixtures, couldn’t be moved. The evidence did show that XTO’s activities would impair the use of existing pens and corrals, but Mr. Merriman did not meet his burden of proof to show that there were no other reasonable means of conducting his cattle sorting operation elsewhere on the same 40 acre piece of land.
The message of this decision is clear: a lessee is not violating the accommodation doctrine if the surface owner’s use does not involve more permanent fixtures that can be readily and inexpensively relocated elsewhere on the same land. This decision is significant because it further clarifies the accommodation doctrine in Texas for both surface owners and mineral owners.
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