Hydraulic fracturing activities continue to rise, and are at the center of much debate and litigation focusing on the potential health risks associated with the process. But an emerging issue with fracturing activities, and one that only the Texas courts has addressed with any significance, is whether hydraulic fracturing activities can, or should, lead to actionable subsurface trespass claims.
The Texas Supreme Court has decided a handful of cases dealing with subsurface trespass claims over the years, but only one of those cases, Coastal Oil v. Garza, 268 S.W.3d 1 (Tex. 2006), presents subsurface trespass as it relates specifically to hydraulic fracturing.
However, the Texas Supreme Court’s opinions in the other subsurface trespass cases provide valuable insight to the competing interests involved in the issue, and help to inform the Garza decision.
Lessons from the Texas Supreme Court
In reviewing the Garza majority opinion, concurrence, and dissent, the Court’s concerns with the realities of hydraulic fracturing is evident. The majority opinion referred to numerous amicus curiae briefs filed by the RRC and various organizations and companies “from every corner of the industry,” and noted that all opposed liability for hydraulic fracturing, “almost always warning of adverse consequences in the direst of language.” Garza, 268 S.W.3d at 16-17.
Justice Willett’s concurrence refers to oil and gas as the “muscle” of Texas, id..at 27, and that imposing liability on fracturing activities would result in “exorbitant costs on society.” Id. at 30. And the dissent, while it argued for a finding of liability, proposed that courts should weigh the claim and the interests involved and allow such equitable considerations to influence the assessment of damages.
Additionally, the dissent was influenced by a practical concern for the rights of unsophisticated individuals who own small parcels of land and are unlikely to utilize such remedies as self help and pooling; the majority’s opinion reduces incentives for operators to lease from such property owners.
The Court similarly deferred to the importance of hydraulic fracturing in its Manziel opinion over forty years earlier. Clearly the impact of hydraulic fracturing activities is at the front of the Texas Supreme Court’s mind.
And reviewing Manziel, Garza, and FPL together provides further valuable insights, specifically as to when a subsurface invasion based on hydraulic fracturing activities can constitute an actionable trespass.
First, the Court has suggested that a subsurface invasion resulting in actual damages could constitute an actionable trespass; the Garza court noted that the plaintiff did not “claim that the hydraulic fracturing operation damaged his wells or the Vicksburg T formation beneath his property,” damages which would apparently be recoverable. Garza, 268 S.W.3d at 13.
Additionally, comparing the Manziel and FPL decisions provides evidence that actual damages could lead to an actionable trespass. Manziel declared that it is not a trespass when injected, secondary recovery forces move across leased lines if the RRC authorized the project, while FPL declared that the court of appeals was in error in determining that because the TCEQ permitted the injection wells, there was no trespass.
While these are seemingly contradictory, the Manziel decision only authorized movement across leased lines of secondary injected forces, as opposed to authorizing any injurious movement of the forces.
Additionally, the Manziel court explicitly stated that it was not granting injecting operators a “protective cloak,” and the FPL ruling held that a permit does not preclude all liability for trespass. In both decisions, the Court seems to have left the door open for an actor to be found liable for subsurface trespass when actual damages result.
Second, the Court has suggested that an actionable trespass may be based only on nominal damages if the plaintiff retains a possessory interest in the mineral rights. In FPL, the Court characterized its Garza opinion as holding that the plaintiff could not sue for trespass based on nominal damages because he was not in possession of the mineral rights.
The FPL court pointed to language in Garza stating that a trespass against a possessory interest “does not require actual injury to be actionable and may result in an award of nominal damages.” Garza, 268 S.W.3d at 13 n.36.
This article will be continued tomorrow.
Prepared by Fulbright Fracking Blog Contributing Editor and energy partner Barclay Nicholson and Fulbright energy attorney Brian Albrecht.