© 2015 The Texas Lawbook.
By David Baay
Perhaps as a distraction from the pain of continually falling oil prices, many in Texas have been anxiously awaiting the recent decision from the Texas Supreme Court in FPL Farming Ltd. v. Environmental Processing Systems. The issue examined by the court was whether underground wastewater migration constitutes common law trespass in Texas.
A Long and Winding Road
The facts of FPL Farming also highlight the reason plaintiffs face an uphill climb; namely, adjacent landowners are placed on notice of possible wastewater migration through the permitting process.
Environmental Processing Systems (EPS) leased a five-acre tract, where it constructed and operated a disposal facility for wastewater from oil drilling operations. Soon after it leased the land, EPS drilled a well and began injecting wastewater approximately 8,000 feet below ground into the Frio rock formation.
Several years after EPS began drilling, the adjacent landowner, FPL Farming, sued EPS and alleged that the wastewater had migrated into the deep subsurface of its land, possibly contaminating the briny groundwater beneath it. FPL Farming sued for injunctive relief and damages for trespass, negligence, and unjust enrichment. EPS won at the trial court and appellate court levels. The Texas Supreme Court reversed and reserved the question of whether subsurface wastewater migration can constitute a trespass, or whether it did so in this case.
On remand, the court of appeals reversed the trial court’s take-nothing judgment, and the case made its way back to the Texas Supreme Court. Many believed the court would take this opportunity to find that subsurface wastewater migration constituted trespass, which would potentially create significant exposure for a wide-range of operators—especially those involved in hydraulic fracking operations due to massive quantities of wastewater produced during the drilling process.
The court, however, deftly side-stepped the issue. It decided that if lack of consent is an element of a trespass cause of action as the jury charge instructed, “then we need not address whether Texas law recognizes a trespass cause of action … because the jury found in EPS’s favor on all of FPL Farming claims and any error would be harmless.”
Future Implications
To determine which party carries the burden to prove consent, the court devoted considerable attention to the historical treatment of trespass, adhering to prior decisions that established rules relating to property rights. The court concluded that at its core a trespass is “an unauthorized entry upon the land of another, and may occur when one enters – or causes something to enter – another’s property.” The court also noted the “dearth of case law” on the issue of who bears the burden to prove consent in a trespass case. The court’s comment is evidence of the reality that landowners normally have no reason to expect trespassers or know about them. In the case of subsurface wastewater storage, however, the element of surprise does not exist. The operator puts all interested parties on notice by filing its injection well permit, and, as happened in this case, the process often reveals the possibility of wastewater migration.
The court’s finding makes it very difficult for future plaintiffs to prevail on a claim of trespass for underwater migration because landowners must prove that, despite the fact they were given notice of a possible underwater invasion through the permitting process, the migration was an unauthorized entry on their land. As was true in this FPL Farming, operators must complete a lengthy permitting process before they begin injecting wastewater. The notification to landowners through that process prevents them from later arguing that the contaminated water beneath their land was unforeseen, and therefore a trespass.
In FPL Farming, EPS reached a settlement with J.M. Frost III Frost (FPL Farming’s predecessor-in-title) as the result of Frost’s efforts to prevent EPS from receiving its requested permits. At a later trial (on issues unrelated to the permitting), EPS attempted to argue that the settlement agreement (which was ultimately excluded by the trial court) was evidence of the landowner’s consent and that its consent considered and acknowledged the possibility of migration of subsurface wastewater onto its property. In fact, during the permitting process, the administrative law judge acknowledged that wastewater would likely enter the subsurface of FPL Farming’s land in the future, but found that the farm did not have the right to exclude EPS from the deep subsurface because the farm owner’s right to obtain its own injection well permit would not be impaired. Given these facts, the obvious issue at trial was whether FPL Farming consented to the alleged entry by its own conduct. The jury ultimately found that it had.
Although there will be cases that could potentially bring the issue back to life, it will continue to be a difficult road for plaintiffs to establish a claim for trespass for deep subsurface wastewater migration. Even so, it is likely they will keep trying. And if one day they do prevail, the stakes will be high.
David Baay is an energy litigator and partner in the Houston office of Sutherland Asbill & Brennan LLP.
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