Reed Smith Client Alerts

In Environmental Processing Systems, L.C. v. FPL Farming Ltd., a landowner sued the operator of a neighboring wastewater disposal facility on the theory that deep subsurface wastewater trespassed beneath the landowner’s property. On February 6, 2015, after a series of appeals, the Texas Supreme Court ultimately reversed the court of appeals and reinstated the trial court’s take nothing judgment against the landowner. The Court held that lack of consent is an element of a trespass cause of action that the landowner failed to prove. In doing so, the Court declined to answer whether deep subsurface wastewater migration is actionable as a common law trespass under Texas law. An electronic copy of the Court’s opinion can be accessed here.

Factual Background In 1996, Environmental Processing Systems (EPS) leased a five-acre tract where it operated a wastewater disposal facility under a permit from the Texas Natural Resources Conservation Commission, now known as the Texas Commission on Environmental Quality. FPL Farming subsequently bought an adjacent tract that it primarily used for rice farming.

In 1999, EPS applied to amend its TNRCC permits to increase the volume of wastewater EPS could inject. FPL Farming protested the application on the basis that wastewater would likely enter the subsurface of FPL Farming’s land. The TNRCC granted the amendment over FPL Farming’s objection, and FPL Farming appealed to the district court. The district court affirmed the amendment, and the court of appeals affirmed the district court, noting that “should the waste plume migrate to the subsurface of FPL Farming’s property and cause harm, FPL Farming may seek damages from EPS.”

Procedural Background Approximately three years later, FPL Farming sued EPS for injunctive relief and damages for trespass, negligence and unjust enrichment. FPL Farming alleged that wastewater migrated into the deep subsurface of its land, possibly contaminating the briny ground water beneath it. The jury charge defined “trespass” as “an entry on the property of another without having consent of the owner.” FPL Farming unsuccessfully objected to this definition, arguing that consent should be treated as an affirmative defense. The jury found that EPS did not commit a trespass and the trial court entered a take nothing judgment in favor of EPS. FPL Farming appealed.

The parties’ first trip to the Supreme Court resulted in the Court holding that a government issued permit does not shield the permit holder from civil tort liability. Upon remand, the court of appeals reversed the trial court’s take nothing judgment, holding, among other things, that (1) Texas recognizes a common law trespass cause of action for deep subsurface water migration and (2) consent is an affirmative defense to trespass, not an element of a trespass cause of action. Both parties filed a second appeal to the Texas Supreme Court.

Second Trip to the Texas Supreme Court EPS challenged the court of appeals’ holding that deep subsurface water migration could constitute a trespass under Texas law and that consent is an affirmative defense to trespass. The Court reviewed its historical treatment of trespass going back to 1841 and found that it has consistently defined “trespass” as entry onto the property of another without the property owner’s consent or authorization. Thus, the Court rejected the notion that consent was an affirmative defense and held that it is an element of trespass.

Because the jury charge provided the correct definition of trespass and the jury found in favor of EPS, the Court held that any error in submitting the trespass question to the jury was harmless. Therefore, the Court declined to address the question the energy industry hoped to have answered: Does Texas law recognize a trespass cause of action for deep subsurface water migration? The Court neither approved nor disapproved of the court of appeals’ analysis and holding on this issue.

Conclusion The Court’s February 6, 2015 decision leaves the door open for future plaintiffs to claim that neighboring wastewater injection operations are causing a trespass. As a result, the energy industry’s need to economically dispose of wastewater will likely give rise to future trespass lawsuits. Whether those trespass claims are viable under Texas law will have to be determined in future court opinions.

In the meantime, the courts have provided the following guidance for subsurface wastewater migration claims:

  • A plaintiff in a subsurface trespass case must prove lack of consent or authorization as an element of trespass
  • The act of obtaining a disposal permit does not immunize the permit holder from civil tort liability from private parties for actions arising out of use of the permit
  • The Court will treat injection operations for purposes of increasing oil and gas production, i.e., secondary recovery or water floods, separate from injection operations for purposes of wastewater disposal See Coastal Oil & Gas Corp. v. Garza, 268 S.W.3d 1 (Tex. 2008)

The circumstances for each potential trespass claim will be unique. Our team is well versed in handling these disputes and advising on risks involved in such circumstances. Leah Rudnicki is a partner and Stephan Selinidis is a senior associate in Reed Smith’s Houston office. Leah and Stephan have a litigation practice where they represent companies in disputes relating to the drilling and/or production of hydrocarbons.


Client Alert 2015-027