An oil and gas lessee (usually an operator) has an implied right to use the land as reasonably necessary to produce and remove the minerals but must exercise that right with due regard for the landowner’s rights. Many of us are familiar with this concept, but may not realize that this rule is referred to as the accommodation doctrine.
In 1953, the City of Lubbock bought groundwater from nearby ranch to help supply its residents and those of other towns. The successor-in-interest of the ranch is Coyote Lake Ranch. In the groundwater conveyance, the ranch reserved the right to use water for domestic use, ranching operations, oil and gas production, and agricultural irrigation. In 2012, the City of Lubbock announced a plan to drill 80 water wells on the surface of Coyote Lake Ranch. Coyote Lake Ranch objected and a lawsuit ensued.
Coyote Lake Ranch argued that the City of Lubbock has a contractual and common law responsibility to use only that amount of surface that is reasonably necessary to its operations and a duty to conduct its operations with due regard for the rights of the surface owner. The City of Lubbock countered that the law imposes no duty on groundwater owners, as it does on mineral owners, to accommodate the surface owner. The Court of Appeals in Amarillo agreed with the City of Lubbock finding no precedent to apply the accommodation doctrine to groundwater issues.
On May 27, 2016, the Texas Supreme Court overruled the appellate court. The Court acknowledged that the accommodation doctrine had only been applied when mineral interests are involved. However, the Court noted that similarities between mineral and groundwater estates, as well as in their conflicts with surface estates, persuaded the Court to extend the accommodation doctrine to groundwater interests.
This is the latest decision following the Edwards Aquifer Authority v. Day decision analogizing groundwater to oil and gas. The Court has acknowledged that common law rules governing mineral and groundwater estates are not merely similar, they are drawn from each other or from the same source. The accommodation doctrine as understood in the oil and gas context has now been extended to groundwater interests.