With Implications for Oil and Gas, Justices Weigh Underground Trespassing

Just how far below the earth’s surface do property lines extend? And can someone trespass on another’s property — more than a mile underground?

The Texas Supreme Court grappled with those questions on Tuesday as it heard oral arguments in a groundwater case that the state’s surging oil and gas industry says could significantly impact production.

The dispute pits an injection well operator in Liberty County, Environmental Processing Services, against a nearby rice farm, FPL Farming, whose representatives say wastewater from a well that plunges 8,000 feet below ground has migrated into a saltwater aquifer beneath its land. The farm says the waste has polluted its groundwater, amounting to trespassing for which it should be compensated.

The case, which reached the state Supreme Court in 2011 but was remanded to a lower court, has largely flown under the radar of environmentalists and property rights advocates. But oil and gas representatives have been following it closely, saying a ruling in the farm’s favor could threaten production.  

A jury originally sided with the well operator. An appellate court in Beaumont later reversed that decision, ruling that the operator should be held liable for trespassing. 

At the sparsely attended hearing, the justices did little to reveal any leanings, but at least one 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.

In 1997, Environmental Processing Services finished drilling an injection well about 400 feet from FPL Farming’s land, which the farm contested early on. Since then, the company has injected more than 100 million gallons of wastewater, gradually expanding the well's underground footprint.

The well in question is labeled Class I and used for nonhazardous industrial waste. It is not one of the 50,000 Class II wells that drillers typically use. But lower-court opinions have drawn no distinction between the wells. That has stirred concerns among oil and gas producers that a ruling in the farm’s favor would complicate efforts to dispose of drilling waste, thereby stalling production.

“Because the ability to produce oil and gas is inextricably tied to the availability of injection wells,” the Texas Oil and Gas Association says in a brief, “a new common law cause of action that threatens operation of injection wells likely threatens oil and gas production."

Justice Eva Guzman cited the those concerns when asking, “Should [a trespassing right] be absolute, or do we need to engage in an inquiry because of [the industry’s] impact on the state?”

The farm’s representatives say they worry that the waste, which includes the flammable liquid acetone, will contaminate its groundwater and erode the value of its property. Though the water is too salty to drink, those on the farm’s side contend that it is valuable because desalination technology could make it drinkable.

“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 and its supporters maintain that 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 attorney argued that nothing is keeping FPL from using its surface property. In his argument, he did not address the farm’s contention that it could later use technology to clean up the water. But in an interview, he suggested that future technology could, perhaps, also filter out the industrial waste. 

It may be impossible to observe the pollution first-hand, but environmental experts can predict whether and when it has occurred.

In a previous hearing, according to court documents, Bob Kent, a former Texas environmental regulator and FPL Farming’s expert witness, testified that the waste plume had probably traveled across the property lines. He based those conclusions on a formula widely used by state and federal regulators.

When evaluating a drilling application, state regulators generally calculate where the waste might migrate 10 and 30 years into the future.

“Proof in this case is a lot easier than you think,” Frost said. “Once [the waste] is there, the trespass has occurred.”

The well operator's supporters do not dispute that migration has occurred, but they say predicting the precise path of the mirgration is difficult if it's to be used in a trespassing claim.

But Frost argued that state's trespassing law does not require proof of harm anyway, and that that the court — in its historic 2012 ruling in the Edwards Aquifer Authority v. Day case and others — has already confirmed the Legislature’s intention to deem groundwater private property. 

“Established Texas statutes and law support each and every one of FPL’s claims,” she said.

The court should consider the mere storage of waste below another’s property — akin to storing items in a neighbor’s garage without asking — as a trespass, Frost argued.

The Supreme Court has previously weighed the idea of underground trespassing, but in the context of mineral rights, not land rights.

In 2008, it ruled against a group of mineral owners who sued Coastal Oil & Gas for trespassing, saying that the company, which had lawfully drilled a nearby well, had drained some of the gas beneath the group’s adjacent property through the fracking process. The court said Texas’ “rule of capture” — mineral owners' nearly unfettered right to the oil and gas produced by wells on their property — barred neighboring mineral owners from recovering royalties on any gas they lost.

But had fracking been found to damage the neighboring property in other ways (in that case, it had not), the court said the owners could be liable for trespass.

The groundwater case has drawn little attention from property rights advocates. The Texas Farm Bureau, which traditionally supports those interests, filed the lone brief in support of the farm, but didn’t do so until Jan. 2.

Regan Beck, assistant general counsel for the Farm Bureau, told The Texas Tribune in December that the group had only recently learned that the case had returned to the Supreme Court.