Texas Oil and Gas Attorney Blog
Last year, the Texas Supreme Court decided the case of Coyote Lake Ranch, LLC v. City of Lubbock that dealt with whether the “accommodation doctrine” should be applied to groundwater.
The accommodation doctrine is actually an oil and gas doctrine, which states that absent an agreement to the contrary, an oil-and-gas lessee has an implied right to use the surface of the land as reasonably necessary to produce and remove the minerals, but must exercise that right with due regard for the surface owner’s rights.
Coyote Lake Ranch, in Bailey County, Texas in the Texas Panhandle, is a fairly large ranch, used primarily for agriculture and raising cattle. Most of the ranch is covered with sand dunes covered by dune grasses, although some parts of the Ranch are irrigated cropland. The Ranch gets its water from the Ogallala Aquifer, which is the principal source of water for the high plains of Texas and several other states, including Lubbock.
The Ranch sold its groundwater to Lubbock in 1953, but reserved water for domestic use, for ranching operations, for oil and gas production and for agriculture. In 2012, Lubbock decided to increase its water extraction efforts exponentially, by drilling as many as 20 test wells followed by 60 additional wells. The Ranch claimed that this many wells and the roads to access the wells would destroy the grasses, increase erosion and destroy the surface of the Ranch. Lubbock claimed that they were only doing what they had a right to do under the 1953 water deed. The Ranch filed suit and claimed that Lubbock had a duty and responsibility to use only that amount of the surface that was reasonably necessary to its operations and to conduct its operations with due regard for the rights of the surface owner. In other words, the Ranch wanted the accommodation doctrine to apply to the activities of the city of Lubbock.
The 1953 deed limited the City’s use of the surface to whatever is necessary or incidental to operations to access the groundwater. Unfortunately, the deed did not address whether the City could do everything necessary or incidental to drilling anywhere on the surface, or only what is necessary or incidental to fully access the groundwater. Apparently, a lot fewer than 80 wells could fully access the groundwater.
The Texas Supreme Court held that the accommodation doctrine applies to groundwater rights as a means for balancing the rights of the surface landowner and the groundwater rights owner. The reasoning behind the Court’s decision flows naturally from the accommodation doctrine, which provides a framework for these property owners to resolve conflicts that occur as each party exercises its own property rights.
The Court notes that its easy to substitute a groundwater rights owner for the mineral rights owner in the accommodation doctrine. There are many similarities between the mineral estates and groundwater estates, and groundwater rights cleanly fit into the accommodation doctrine model originating from oil and gas rights. Owners of groundwater rights face the same sorts of conflicts with surface owners as mineral rights owners, making an extension of the Texas accommodation doctrine to groundwater a logical and reasonable solution.