379 Merriman v. XTO Energy, Inc.

Richard F. Brown

 
The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
 
Merriman v. XTO Energy, Inc., No. 10-09-00276-CV, 2011 WL 1901987 (Tex. App- Waco May 11, 2011) held that no bright lines can be drawn by which to categorize the “existing use” of the surface estate when applying the accommodation doctrine, but the surface owner’s burden is to show that there is no reasonable alternative for a particular existing surface use, rather than a general surface use. Merriman owned the surface estate of a 40-acre tract in Limestone County on which he maintained a home, a barn, and permanent fencing and corrals related to his cattle operations. Once a year, he conducted a roundup which required additional temporary catch-pens and corrals to be used in conjunction with the permanent fencing and structures. Over Merriman’s objections, XTO Energy, Inc. (“XTO”) drilled a well on Merriman’s land very close to the barn and permanent facilities. The evidence showed that XTO’s well interfered with Merriman’s annual roundup and related cattle operations. The issue in the case was the scope of the “existing use” of the surface estate to be considered when applying the accommodation doctrine.
 

A party possessing the dominant mineral estate has the right to go onto the surface of the land to extract the minerals, as well as those incidental rights reasonably necessary for the extraction. The incidental rights include the right to use as much of the surface as is reasonably necessary to extract and produce the minerals. If the mineral owner or lessee has only one method for developing and producing the minerals, that method may be used regardless of whether it precludes or substantially impairs an existing use of the servient surface estate. On the other hand,

[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.

 
To obtain relief on a claim that the mineral lessee has failed to accommodate an existing use of the surface, the surface owner has the burden to prove that (1) the lessee’s use completely precludes or substantially impairs the existing use, and (2) there is no reasonable alternative method available to the surface owner by which the existing use can be continued. If the surface owner carries that burden, he must further prove that given the particular circumstances, there are alternative reasonable, customary, and industry-accepted methods available to the lessee which will allow recovery of the minerals and also allow the surface owner to continue the existing use.
 
The surface owner’s burden is “not met by evidence that the alternative method [of surface use] is merely more inconvenient or less economically beneficial than the existing method.” Rather, the inconvenience or financial burden of the alternative method must be “so great as to make the alternative method unreasonable.”
 
The court considered whether Merriman was required to show the lack of reasonable alternatives for his particular cattle operation, or for general agricultural use. The court of appeals had broadly categorized Merriman’s use as “agricultural.” As a result, Merriman had the very difficult burden of showing that there was no available alternative for any type of agricultural use, rather than simply showing no alternative for the specific type of cattle operation he conducted on his tract.
 
The court summarized the underlying principle of the accommodation doctrine as “balancing the rights of surface and mineral owners to use their respective estate while recognizing and respecting the dominant nature of the mineral estate.” According to the court, “the issue is one of fairness to both parties in light of the particular existing use by the surface owner . . . .” “[I]t is clear that no bright lines can be drawn by which to categorize ‘existing uses’ of surface estates.”
 
The court held that Merriman’s surface use should be characterized more narrowly to address the specific cattle operations at issue, rather than the broad “agricultural” category applied by the court of appeals. A narrow definition of “existing use” favors the surface owner. Merriman’s burden was substantially lower, because he only needed to demonstrate the lack of a reasonable alternative for his specific cattle operations. Nevertheless, after reviewing the evidence, the court concluded that, while the evidence undoubtedly showed added expense and inconvenience for Merriman’s surface operations, there was no evidence that the cattle operation could not be conducted somewhere else on the tract. According to the court, the evidence amounted to nothing more than evidence of additional expense and reduced profits, but it did not constitute evidence demonstrating the absence of a reasonable alternative.
 
Merriman relied on the alleged violation of the accommodation doctrine in order to support his claim for injunctive relief. Because the evidence failed to raise a fact issue as to whether XTO had violated the accommodation doctrine, the court did not address whether failing to accommodate an existing use would be a wrongful act entitling a surface owner to injunctive relief.
 
The significance of the case is that it generally strengthens the position of the surface owner. The mineral owner can no longer contend that the accommodation doctrine is not triggered until the surface owner can show that there is no other alternative use of the surface. Because the mineral owner is generally faced with a greater financial risk, the absence of “bright lines” also favors the surface owner as to the “existing use.” Is the existing use farming? Irrigated farming? Wheat? Irrigated wheat? Perhaps the biggest question remaining is defining the appropriate remedy. Damages? Injunctive relief? Conditional injunctive relief? Express surface easements will now be perceived as more valuable and more necessary, and the implied surface easement under the common law as more limited as to its utility.