On June 21, 2013, the Texas Supreme Court issued its opinion on a case I have written about before, Merriman v. XTO Energy, Inc. The case, centering on the accommodation doctrine, involved a cattle rancher complaining that the location of wells on his property interfered with a prior use. The Court held that the operator did not violate the accommodation doctrine, but clarified the application of the rule, which may impact operators in the future.

As most operators know, mineral estate is dominant, and the owner of that estate has the right to go onto the surface of the land to extract the minerals. The mineral estate owner also has incidental rights, which include “the right to use as much of the surface as is reasonably necessary to extract and produce the minerals.” The accommodation doctrine adds a caveat to this long standing Texas law, which is “[i]f the mineral owner has reasonable alternative uses of the surface, one of which permits the surface owner to continue to use the surface in the manner intended… and one of which would preclude that use by the surface owner, the mineral owner must use the alternative that allows continued use of the surface by the surface owner.”

In this case, Merriman, argued that he installed permanent fences and corrals used in cattle ranching. Once a year he also installed temporary corrals and catch-pens to sort and work cattle. XTO contacted Merriman regarding a proposed location of a gas well on the tract. Merriman opposed the location, claiming it would interfere with his cattle operations. Despite Merriman’s opposition, XTO began to construct a well site. Merriman filed suit asking for a temporary and permanent injunction, and claimed that XTO failed to accommodate the existing use of the surface.

The trial court found in favor of XTO. On appeal, the Court of Appeals upheld the trial court’s decision. In making the determination, the Court of Appeals required Merriman to show that he had no reasonable alternatives for any type of agricultural use of the land. Not surprisingly, Merriman failed to make such a showing, and the Court of Appeals found in favor of XTO.

On appeal to the Supreme Court of Texas, Merriman argued that the Court of Appeals improperly added a distinct 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 claimed that this third requirement was “contrary to and inconsistent with this Court’s precedents” in addition to other established Texas authorities. Merriman asked the Texas Supreme Court to “clarify the accommodation doctrine and provide guidance to the citizens of Texas”.

The Texas Supreme Court did, in fact, agree with Merriman. It found that “[t]he issue is one of fairness to both parties in light of the particular existing use by the surface owner and the principle underlying the accommodation doctrine: balancing the rights of surface and mineral owners to use their respective estates while recognizing and respecting the dominant nature of the mineral estate. Therefore, the Court stated that “Merriman’s use can, with fairness to both parties, be classified more narrowly than the broad “agricultural” category applied by the court of appeals. His use of the land was for a cattle operation and its essential parts. That use is what must be considered in balancing his rights with those of XTO.”

This indeed provided some clarity to both operators and landowners alike. The Court let both sides know that the landowners would be protected as to their actual existing use, and not be expected to disprove all potential uses in a broad category, such as “agricultural use”. The Court did ultimately hold for XTO, on the grounds that Merriman provided insufficient evidence to show that he had no reasonable means of maintaining his cattle operations on his land. Although Merriman lost his personal battle, this was a victory for landowners. The Court, in interpreting the accommodation doctrine, more narrowly construed the classification of ‘existing use’. As a result, landowners with better evidence than Merriman now have an increased chance at showing that operators are not accommodating them, as required.