One year ago, in the May 2014 issue of the Energy Newsletter, we highlighted the case of Environmental Processing Systems, L.C. v. FPL Farming Ltd., (2015 WL 496336) an important environmental trespass case pending before the Texas Supreme Court. Many expected that the Court's decision would answer the question of whether migrating saltwater and other disposed wastewaters can give rise to a trespass cause of action. The issue is an important one in Texas, which has more than 30,000 saltwater disposal wells in operation. These disposal wells are critical to the functioning of the state's oil & gas industry, which must do something with its produced saltwater. In February of 2015, the Court issued its decision. Unfortunately, for those expecting an answer on this important subsurface trespass issue, the holding was a narrow one. The decision does not answer the question of whether one who injects wastewater under a valid permit can be found liable for trespass, should the injected water migrate underneath the property of another. For now, those producing and handling wastewater will remain in limbo as to whether they have trespass exposure.
The FPL case has a long procedural history. In the case, Environmental Processing Systems (EPS) received a permit from the Texas Commission on Environmental Quality (TCEQ) to construct and operate deep wastewater injection wells on leased land. A neighboring rice farm—FPL—brought suit claiming that the injection wells were causing a subsurface trespass of wastewater underneath the farm. At trial, the jury found that a trespass had not occurred and accordingly found for the defendant, EPS. FPL appealed, arguing that the jury charge had wrongly placed the burden of proof on it, the plaintiff, to show that it had not consented to the trespass, as well as other grounds. At the first stop on appeal, the intermediate Beaumont Court of Appeals avoided the jury charge issue and instead focused on whether the plaintiff could assert a trespass claim at all for deep wastewater disposal that crosses property lines. It held that there could be no liability for such trespass, because TCEQ had authorized and permitted the well. In 2011, the case went before the Texas Supreme Court, for the first time. The Court reversed and remanded the Beaumont Court, holding that simply because the well was permitted did not mean there was not a trespass. Nonetheless, the Supreme Court declined to decide the larger issues: "whether subsurface wastewater migration can constitute a trespass, or whether it did so in this case." Instead, it sent the case back to the Beaumont court to address these matters.
On remand, the Beaumont Court of Appeals reexamined the trespass issue and determined that the rice farm—FPL—did indeed have standing to sue for trespass. It further determined that there was sufficient evidence that the injection operations had created a plume that affecting the briny water under FPL's land, albeit more than a mile beneath the surface. "We conclude that Texas law recognizes FPL's property interest in the briny water underneath its property . . . [and that] FPL has a cause of action for trespass at common law." The Beaumont court then ordered a new trial on the trespass claim because the original jury charge had erroneously placed the burden on FPL to show that it had not consented to the trespass.
EPS appealed, and the case went back to the Texas Supreme Court for the second time. It was widely expected that the Court would decide the fundamental issue of whether wastewater disposal can constitute a trespass. Instead, the Court issue a much more limited holding by focusing on which party had the burden to prove a trespass occurred. The Court rejected FPL's contention that the defendant had the burden to prove consent as an affirmative defense; rather, it was "the plaintiff's burden to prove that the entry was wrongful, and the plaintiff must do so by establishing that entry was unauthorized or without its consent." Because the jury had been correctly charged, and because—given this correct charge—the jury found that a trespass had not occurred, the Court held that it did not need to reach the basic issue of whether a trespass action will lie for deep subsurface water migration.
The result is undoubtedly unsatisfying for entities that create or dispose of wastewater. But the Court's decision is in keeping with the general principal that an appellate court should address the matters before it as narrowly as possible. Nonetheless, given the volume of saltwater and other water disposed in the state, it is a virtual certainty the that issue of whether deep subsurface disposal amounts to trespass will appear before the Court again. It is also possible that the Texas legislature could answer the question through a statute. For now, whether a disposal company is shielded from liability when their disposed fluids cross property lines remains an open question.
Brannon Robertson
Houston
+1 713 751 3248
brobertson@kslaw.com
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