The “accommodation doctrine” is a judicially created doctrine that governs the manner in which a mineral owner and surface owner may use the surface of a tract of land for their respective purposes. The mineral estate is considered the “dominant” estate, and is permitted to use so much of the surface as is reasonably necessary for exploration and development of the minerals. However, the mineral estate owner’s rights are not absolute. The accommodation doctrine was adopted in Getty Oil Co. v. Jones, 470 S.W.2d 618 (Tex. 1971) to balance the rights of the surface and mineral owners, and it requires them to exercise their respective rights with due regard for the other’s.
Lyle v. Midway Solar, LLC — S.W.3d —-, 2020 WL 7769632, (Tex.App. – El Paso [83rd Dist.] 2020) deals with the question of whether the accommodation doctrine applies to a tract of land upon which the mineral estate is undeveloped and the majority of the surface is being used as a solar facility. The El Paso Court of Appeals held that the accommodation doctrine could apply to the dispute, but that its application was premature until the mineral owner actually seeks to develop its minerals.
The Lyles own 27.5% of the mineral estate in a 315-acre tract in Pecos County, Texas. No mineral development has occurred on the tract, and the Lyles have never executed an oil and gas lease on the tract.
Midway Solar, LLC (“Midway”) is the lessee of a solar lease executed by the owners of the surface estate in the 315-acre tract. The solar lease allows Midway to build a solar facility on the tract, and grants the right to place solar panels, transmission lines, and cable lines anywhere on the tract. It expressly recognized that the surface owner did not own the mineral estate in the tract, and that ownership of minerals in third parties constituted a title encumbrance. The solar lease was subsequently amended to provide “Designated Drill Site Tracts” on the property. Specifically, the amendment designated an 80-acre tract at the north end of the tract, and a 17-acre tract on the south end of the tract, which were stated to be for the benefit of any present or future operator. Midway then placed solar panels on that part of the tract not designated as “Designated Drill Site Tracts.”
Prior to constructing the solar facility, which was located on the 315-acre tract as well as adjacent lands, Midway obtained waiver agreements from mineral owners in adjacent tracts, as is customary. Although the opinion does not state whether it attempted to obtain such an agreement from the Lyles, one would presume that it attempted to do so but was unsuccessful. Some of the waivers from the adjacent mineral owners erroneously purported to waive surface rights on the 315-acre tract. Some were subsequently amended, and Midway filed a “Disclaimer of Interest” in which it states that the waivers did not grant any rights to Midway on the 315-acre tract.
After Midway constructed its solar facility, the Lyles sued Midway, the surface owners, and the parties who signed the mineral waiver agreements on the adjacent lands. There are several claims asserted by the plaintiffs, but the focus of this comment is whether the accommodation doctrine applies to the claim that Midway and the surface owners denied the Lyles reasonable access to their minerals by covering 70% of the surface with solar panels and transmission lines.
The Lyles argued that the accommodation doctrine did not apply because the deed in which the mineral estate was severed expressly describes the rights of the parties, which makes application of the doctrine unnecessary and inappropriate. They point to the language in the deed wherein the grantor reserved the minerals and the right to use the surface “as may be usual, necessary, and convenient” in the use and enjoyment of the mineral estate. Specifically, they argued that the use of the term “usual” expressed the intent to reserve the right to use vertical drilling, which was the “usual” method of development when the minerals were severed in 1948. At that time, directional drilling was at best unusual, and horizontal drilling had not been invented. It follows that if the deed allowed vertical drilling to develop the mineral estate, eliminating 70% of the surface acreage from possible development would be a violation of its rights as mineral owner.
The Court acknowledged that Texas public policy strongly favors freedom of contract, and if the express terms of a deed determines the parties’ rights with respect to surface use, then the accommodation doctrine would not apply. However, the Court disagreed with the Lyles’ argument that the quoted language was intended to determine the rights of the parties and supplant the application of the accommodation doctrine. It found that the deed did not use the term “usual” in the context of drilling methods, but used it instead in a more general sense. Had the grantor in the deed intended to specify a particular drilling method, it should have simply said that it could drill a vertical well anywhere it wanted to.
The Lyles also argued that the following “elimination of liability provision” dictates how this dispute should be governed:
And neither Grantors herein nor their heirs, assigns, successors in title, nor any persons holding or claiming under them shall ever be liable to Grantees herein, their heirs, assigns, and successors in title for any damage or injury to the surface estate by reason of such use or for any damage or injury or for any damage or injury resulting from or claimed to have resulted from the exercise of the rights and privileges hereinabove reserved in connection with the reservation of the oil, gas, and general mineral estate.
The Lyles’ argument goes that because this clause provides that they can destroy any surface obstruction without liability, this negates any basis for accommodating competing surface uses. However, the Court disagreed, stating that the clause relieves the Lyles from liability only from exercising “the rights and privileges hereinabove reserved[.]” Therefore the language does not define the scope of rights and privileges, but simply states only what the common law requires.
Given that the 1948 deed does not preclude application of the accommodation doctrine, Midway argued that the Lyles must be either using the mineral estate or planning to use the mineral estate in order for the doctrine to apply. In response, the Lyles argued that they have already suffered damages because they cannot realistically pursue mineral development when the solar facility covers 70% of the surface of the tract. The Court resolved the dispute by stating that the answer lies in a proposition of logic as much as one of law. If the Lyles exercise their right to use the surface in connection with their mineral estate, Midway must yield to the extent required by the accommodation doctrine. However, because the Lyles are not using their rights, there is nothing to be accommodated. Accordingly, the Court concluded that the Lyles’ claims are premature until the Lyles actually seek to develop their mineral estate.
The author finds this case noteworthy and interesting for several reasons. First, it adds to the caselaw on the accommodation doctrine, particularly in terms of when these kinds of controversies become ripe and warrant judicial intervention. Also important is the identity of the parties and the broader implications of this kind of dispute. The Court was keenly aware that this case was between a mineral owner and the owner of a solar facility. It began the opinion by recognizing that Texas is a leader in energy, producing more oil and gas than any other state. However, it stated that Texas public policy “favors adding renewable energy sources into the State’s energy portfolio.” (Id. at 1). As renewable energy grows in the coming years, there will no doubt be more disputes between mineral owners and solar developers.