Who Owns the Rights to Salt Caverns?

In 2022, in a case decided by the Corpus Christi Court of Appeals, the issue was who owns the right to use underground salt caverns: the mineral owner or the surface owner? In this case, Myers-Woodward, LLC v. Underground Services Markham, LLC and United Brine Pipeline Co., ___ S.W.3d ___, 2022 WL 2163857 (Tex.Civ.App.—Corpus Christi–Edinburgh 2022), pet. granted (Aug. 30, 2024), the Court also considered how a salt royalty should be calculated.

Underground Services Markham, LLC (“USM”) owns the minerals as well as a right of ingress/egress to mine the salt. Myers owns the surface and a 1/8 royalty in the minerals. The underground caverns were created by a salt extraction process by USM. USM is currently using the salt caverns to store hydrocarbons.

The Court of Appeals held that: 1) the surface owner owns the subsurface caverns; 2) since the deed to USM specified the caverns’ use, USM could not use the caverns to store hydrocarbons; and 3) the royalty due Myers is 1/8 of the value of salt production at the wellhead. The Court specifically declined to follow an earlier case by the Beaumont Court of Appeals, Mapco, Inc. v. Carter, 808 S.W.2d 262, 278 (Tex.Civ.App.-Beaumont 1991), rev’d in part on other grounds, 817 S.W.2d 686 (Tex. 1991) that held that the salt (i.e., mineral) owner owns and is entitled to compensation for the use of an underground storage cavern.

Both parties have petitioned the Texas Supreme Court for review, and both petitions have been granted recently. Given the long tradition in Texas jurisprudence that recognizes below surface assets other than minerals belong to the surface owner (like groundwater for example), my guess is that the Supreme Court will rule for the surface owner.