San Antonio — Do you really own your land from heaven to hell?
A lawsuit filed by an East Texas rice farm against the operator of a nearby disposal well raises that question — and the potential answer has gotten the oil and gas industry’s attention.
The Texas Supreme Court last week heard arguments in a case in which a rice farm says that a neighboring disposal well trespassed on its subsurface property by pumping millions of gallons of nonhazardous wastewater 8,000 feet underground.
The case involves the ancient common law concept that a landowner owns everything not specifically severed from the property. The idea — cujus est solum ejus est usque ad coelum et ad inferos — means “For whoever owns the soil, it is theirs up to heaven and down to hell.”
The oil and gas industry has long used disposal wells for wastewater, and the highest profile fluid being disposed of underground these days is from hydraulic fracturing. Some frac water returns to the surface, and the rock itself often produces brackish water alongside oil and gas.
But other industries such as chemical or fertilizer companies or food manufacturers use disposal wells, too.
“The potential ramifications go well beyond the oil and gas industry,” said attorney Brad Chambers of Baker Donelson in Houston.
The Texas Oil and Gas Association was among the industry groups that filed an amicus curiae brief on behalf of the disposal well company, concerned that limits on disposal wells may create a de facto limit on oil and gas production.
“On average, approximately 10 barrels of salt water are produced with every barrel of crude oil. If the operator cannot dispose of the produced water, typically through injection, it cannot produce oil and gas,” attorneys for the association wrote. “To the extent the court of appeals’s decision limits Class II injection wells, it correspondingly limits mineral production activities that depend on those injection wells.”
Texas Farm Bureau filed an amicus curiae brief on behalf of the rice farmer, arguing that the disposal company is storing millions of gallons of liquid — in a “permanent occupation” — below the farm’s surface without paying for that right.
The lawsuit involves a nonhazardous, wastewater injection well operated by Environmental Processing Systems LC, which is near two tracts of land owned by FPL Farming Ltd.
“While the groundwater remains underneath FPL’s property, neither the rule of capture nor any other rule allows a third party to physically invade, contaminate and occupy the subsurface where the groundwater is located,” attorneys for the Farm Bureau argue. “In fact, damage is shown by the very fact that EPS is utilizing property for FPL for its own commercial purpose and advantage, yet pays FPL no compensation for that use.”
The Liberty County case has a long and complicated history. A lawsuit filed in the late 1990s by the rice farm was settled, but the dispute was revived a few years ago when the permit for the property changed and the company started pumping more. The farmer sued for trespass, negligence and unjust enrichment, but lost in district court.
Attorney Mark Mathews, also of Baker Donelson, said the case raises complex questions on how to prove the trespass, absent wells at similar depth where water can be tested. “Engineers can show where they anticipate those fluids migrating. It’s an anticipation. They can’t say for certain.”
He said the energy industry is ultimately concerned about any slowdown in getting waste to a disposal well. “You don’t want to be waiting to dispose of any fluids,” Mathews said.
Regan Beck, assistant general counsel for public policy with the Texas Farm Bureau, said it’s a slippery slope. If the court says there’s no trespass at 8,000 feet, what about at 100 feet? “Where is that line where you don’t have a trespass?” Beck asked. “Even if it’s 8,000 feet down, it’s part of your property. It has commercial value. Or it may have commercial value in the future, and that’s being taken away from them.”
Last week at a hearing, Justice Paul Green said he struggled to understand how a court would penalize a well operator for a trespass that’s hidden under tons of earth and rock.
“I’m having a hard time wrapping my head around the issue of how much would be owed and when it would be owed,” he said, adding that it would prove difficult to determine when exactly the trespass took place and how much of the farm’s property — its groundwater — was damaged.
“We don’t really know, 8,000 feet below, where [the waste] goes,” Green said.
“It is polluting the groundwater,” Claudia Wilson Frost, FPL’s attorney, told the justices. “We have a real property right … and it’s being transgressed.”
Environmental Processing Services said the waste will make the groundwater no more polluted than it naturally is.
“What flows beneath FPL’s property is crud. You can’t drink it,” Craig Enoch, the well operator’s attorney, told the court, adding, “There’s no evidence that it’s polluted.”
The outcome and any ramifications for the disposal industry likely will remain in limbo for some time while the Supreme Court considers the case.
“I wouldn’t expect a resolution anytime soon from the Supreme Court,” Chambers said. “This is going to take a long time.”
The Texas Tribune contributed to this report. ___