"Rigging Up" - Issues of Surface Use Between the Mineral Estate and Surface Estate Interests
It is well recognized under Texas law that the mineral estate (that is, the person or entity that owns the mineral interests) is the dominant estate over the surface estate (the person or entity that owns the surface of the property). What this means is that the mineral estate has the right of ingress, egress, and regress (to enter, leave, and return) to the property surface, as well the right to use as much of the surface estate as is reasonably necessary to produce and remove the minerals.
In instances where the mineral and surface estate interests have not been severed, this is usually not a problem since the person who owns the mineral interest also owns the surface. Bigger issues arise, however, when the estates have been severed, the surface estate has changed hands multiple times, and now the mineral interest owner wants to develop the mineral estate by entering into an oil and gas lease with a “lessee.”
Most surface owners will first become aware of such an issue when they receive a letter in the mail from an oil and gas exploration company who wants to conduct geo-seismic testing on the property, or is contacted by an oil and gas company who wants to begin drilling operations. What are the rights of the surface owner? Does the surface owner have to allow the company to come onto their property? What happens if something is damaged or destroyed while drilling operations are ongoing? These are just a few questions that surface owners often have when they face such a situation.
Many land owners are surprised to learn that the mineral estate owner or its lessee has a legal right to enter and use the property to explore for and produce oil and gas, even without permission or consent from the surface owner. This is referred to as the Dominant Estate Rule.
The mineral estate owner’s right to use the surface estate is, however, limited to what is reasonably necessary for the production of oil and gas. The seminal case in this area is Getty Oil v. Jones, 470 S.W.2d 618 (Tex. 1971). In that case, Getty Oil installed a pump jack to produce oil from a well located on farmland. The pump jack was too tall, and interfered with a rotating irrigator which was used to water crops. The Texas Supreme Court opined what is known as the Accommodation Doctrine, which states:
where there is an existing use by the surface owner which would otherwise be precluded or impaired, and where under the established practices in the industry there are alternatives available to the lessee whereby the minerals can be recovered, the rules of reasonable usage of the surface may require the adoption of an alternative by the lessee.
Getty Oil, 470 S.W.2d at 622.
Although this grants some reprieve, the burden is ultimately on the surface owner to show what established practices in the industry are available as an alternative to whatever the mineral interest owner and/or its lessee wants to do on the surface. Using the Getty Oil case as an example, the land owner showed that Getty Oil could sink the pump jack further into the ground so that it would not interfere with the irrigation equipment.
There are also standards of liability when a mineral interest owner or its lessee operates a well or conducts exploration on the property. In most instances, a negligence standard applies, meaning that if the damage sustained to the surface owner’s property, such as crops or livestock, is a result of the operator’s negligence, then they will be held liable for such damages.
There are also other laws which the operator must follow, such as local ordinances, statutes, and regulations promulgated by the Texas Railroad Commission, which oversees and regulates all oil and gas operations in the State of Texas. These include rules for proper clean up and restoration of the surface property, filling in and plugging drilled boreholes, and other environmental regulations.
Lastly, most oil and gas companies are cognizant of the rights and concerns of the surface owner. The last thing an operator wants is to be dragged into a courtroom and forced to explain the details of an event to a jury of the landowners’ peers. As such, oil and gas companies are often open, although not necessary required, to negotiate terms of their surface use. This can include making sure any drilling activity is done with a specified minimum distance from structures, prohibiting the use of surface water, or requiring payment for necessary damage to crops or livestock.
While the mineral interest owner or its lessee has a right to use the surface in a way that is reasonably necessary for the development of the mineral estate, it is not an unfettered right to use the surface in anyway it so chooses. If you have been contacted by a mineral estate owner or its lessee and are unsure of what to do, it is important to contact someone with the knowledge and experience to handle such a situation to ensure that your rights are protected, your property is secure, and that a working relationship can be established with the mineral interest owner.
If you have these, or other oil and gas issues, I encourage you to contact our office for an initial consultation.