The Texas Supreme Court heard argument recently on an important case for both landowners and operators, Merriman v. XTO Energy. Although I wrote about this case several months ago, a revisit is prudent. To refresh memories, the Texas Supreme Court was asked to clarify what a surface owner is required to prove when alleging that a mineral owner has violated the accommodation doctrine. Under the accommodation doctrine, mineral owners may be required to adopt available alternative methods for the recovery of minerals when a surface owner’s existing use would be precluded or impaired by a proposed recovery method.

The facts of the case are this: Merriman owned the surface estate of a 40 acre tract that he used in his cattle operations. XTO Energy, Inc., owner of the oil and gas lease covering the 40 acre tract, proposed a well site. Merriman notified XTO that the proposed well location would interfere with his cattle operation. Although XTO offered surface damages as a settlement, Merriman refused, and XTO constructed the well site.

After the well was drilled, Merriman sued XTO, and asked the Court for an injunction against XTO, claiming that the well site’s location violated the accommodation doctrine. He alleged that the location of the well interfered with his cattle operation because once a year he had to place temporary fencing and corrals on the land and the well site prevented him from doing so. The lower court held that “the surface owner must show that any alternative uses of the surface, other than the existing use, are impracticable and unreasonable under all of the circumstances.” The court ultimately held that there was no violation of the accommodation doctrine because Merriman had alternative uses of his land that were not impracticable or unreasonable. Merriman appealed to the Texas Supreme Court, which initially denied Merriman’s Petition for Review. However, after a Motion for Rehearing, the Court granted review.

In oral argument, Merriman argued that the lower court improperly added a third element to an accommodation doctrine claim, “requiring proof that the surface owner does not have any reasonable alternatives for conducting his surface use”. Merriman stated that this third requirement is “contrary to and inconsistent with this Court’s precedents” in addition to other established Texas authorities.

In contrast, XTO Energy argued that the Court need not address the accommodation doctrine directly, as the real issue rested in equity. Specifically, XTO Energy complained that Merriman did not judicially assert his position until after the well was completed. XTO Energy argued that to rule in favor of Merriman, which would mean the destruction of the well, equaled waste.

In response to the Court’s questions regarding the accommodation doctrine, XTO Energy claimed that the surface owner must accommodate first. The Court asked XTO Energy whether such accommodation required the surface owner to radically change their existing use, which could be the interpretation of the lower court’s decision. While XTO Energy stated that was not the holding, nor XTO Energy’s position, the Court noted that the accommodation doctrine had an inherent problem in application: the existing authority could be both broadly and narrowly interpreted, requiring a complete change of use by the surface owner, or a simple adjustment. The court expressed concern that to rule in favor of XTO Energy could be interpreted as allowing the mineral estate to ignore the surface estate’s existing use, even if the mineral estate had an alternative method for recovery.

As is typical with most oral argument, it was difficult to tell if the Court had a leaning one way or the other. But I do expect them to offer much needed clarity on the accommodation doctrine, based upon the questions they asked and the concerns they raised. An opinion will follow, which will impact the rights of surface owners and operators, if the Court does indeed attempt to clarify the doctrine. Although most of you may not be on the lookout for the Supreme Court’s opinion, I will revisit this case as soon as a decision is reached, as the impact could be significant to Texas oil and gas operations.