Shale Play Litigation: A Study Of The Various Risks

By Patrick Byrd, Meghan Dawson and Bill Kroger, Baker Botts L.L.P., Houston | May 2011, Vol. 238 No. 5

In that case, they would have been able to bring a traditional trespass claim, one that does not require actual damages to be actionable. The rule of capture would likely be irrelevant since the plaintiffs would not need to rely on drainage damages to support their claim. Thus, the plaintiffs would have a potentially viable claim that the court might not dismiss for failure to demonstrate damages.

In addition, a court faced with that situation would seemingly need to address the broader issue of whether hydraulic fractures do in fact constitute a trespass—not just whether the plaintiff can establish damages. Given the TRC’s role in permitting hydraulic fractures, the Texas courts’ deference to the TRC, and the strong public policy to maximize hydrocarbon recovery, the court might adopt the reasoning of the concurring opinion: as matter of public policy, encroachments resulting from hydraulic fracturing are simply not trespasses. A court might instead choose simply to extend the rule of capture to apply to those with possessory interests, or choose some other method by which to avoid the broader issue which prevents a putative plaintiff’s recovery.

More recently, subsurface trespass claims in Texas have arisen in the context of deep wastewater injection wells. In FPL Farming, Ltd v. Environmental Processing Systems, FPL Farming—a rice farming company—sought injunctive relief and damages for subsurface trespass after wastewater from EPS’s injection well allegedly migrated beneath its land. Relying in part on Garza and the fact that the Texas Commission on Environmental Quality (TCEQ) permitted the well with full knowledge that EPS’s waste plume was projected to migrate into the subsurface formation underlying FPL’s property, the Texas court of appeals held that no trespass occurred. The court also relied on Railroad Commission of Texas v. Manziel to support its decision.
In Manziel, the Supreme Court of Texas found that a secondary oil and gas recovery operation involving the subsurface injection of saltwater did not cause a trespass when the water migrated across property lines. As in FPL Farming, the Manziel court emphasized the fact that the TRC had authorized the operation.

The FPL Farming case has been appealed to the Supreme Court of Texas. One of the key issues under consideration is whether EPS, as the holder of a permit from the TCEQ for a deep wastewater injection operation, is immune from trespass liability when its wastewater migrates beneath the land of a neighboring property owner. A decision in this important case is pending and will likely further shape the landscape of Texas subsurface trespass law.

Like Texas, Louisiana courts have long held that slant well drilling is a form of subsurface trespass, for which a plaintiff may seek an injunction and drainage damages. However, Louisiana law with respect to subsurface trespass has had little development since, and no development in the context of hydraulic fracturing.

The starting point for courts wrestling with subsurface trespass claims in Louisiana is Nunez v. Wainoco Oil & Gas Co. In Nunez, the plaintiff—a participant in a drilling unit—sought damages for trespass and an injunction after the defendant drilled a two-mile-deep well on the property adjacent to Nunez’s property that bottomed out under Nunez’s land.