In FPL Farming Ltd v Environmental Processing Systems, L.C., 54 Tex. Sup. J. 1744 (2011), the petitioner FPL Farming (FPL) owned two tracts of land that it used for rice farming. In 1996, Environmental Processing Systems (EPS) applied for a permit to operate two Class III injection wells on land adjoining one of FPL’s tracts. The purpose of the wells was to inject wastewater containing non-hazardous wastes such as acetone and naphthalene into salt water approximately a mile and a half below the surface, below any drinking water. FPL originally objected to the permit request but subsequently reached a settlement with EPS where EPS agreed to pay FPL $185,000 to avoid delays and the expense of an administrative hearing.
In 1999, EPS sought to amend the permits to increase the allowed injection rate and FPL challenged the permit modification. Following an administrative hearing, the administrative law judge (ALJ) recommended that the agency grant the amendments. Although the ALJ found that the waste plume would radiate 3,021 feet from the well facility after ten years and extend below FPL’s property, the ALJ ruled that FPL had no right to exclude others from the deep subsurface. The ALJ also found that FPL’s rights would not be impaired by the amended permits and that operation of the wells would not amount to an unconstitutional taking. The TCEQ then approved the permits. FPL appealed to the district court which affirmed the agency’s decision as did the Austin Court of Appeals.
In 2006, FPL filed suit against EPS alleging various causes of action, including trespass, negligence, and unjust enrichment, and requesting a permanent injunction and damages. A jury found no trespass and the district denied FPL’s motion for a new trial. On appeal, Austin Court of Appeals ruled the permits shielded EPS from tort liability. The court reasoned that when a state agency authorized deep subsurface injections, no trespass could occur when fluids that were injected at deep levels and then migrated at those deep levels into the deep subsurface of nearby tracts.
The Texas Supreme Court reversed the appeals court decision and remanded the case for further proceedings on the trespass claim. The Texas Supreme Court began its analysis by stating that the general rule was that permit does not act to immunize the permit holder from civil tort liability from private parties for actions arising out of the use of the permit because a permit is simply a “negative pronouncement” that grants no affirmative rights to the permittee.
The court also noted that statute authorizing the TCEQ to issue injection wells specifically provided that holders of wastewater injection well permits were not immune from civil liability. The court said the fact that EPS may have permission to inject authorized wastewater did not mean that the company was free from the consequences of acting under the permit.
The Court also said that the appeals court had improperly interpreted its prior opinions finding no trespass when injected substances had migrated beneath an adjacent property. The Texas Supreme said those prior decisions involved the extraction of minerals in the oil and gas industry, and implicated the rule of capture. The court said the rule of capture was not applicable to wastewater injection because mineral owners can protect their interests from drainage through means such as pooling or drilling their own wells but that was not necessarily the case when a landowner is trying to protect their subsurface from migrating wastewater. Moreover, the court explained, permits for injecting substances to aid in the extraction of minerals served a different purpose than permits for injecting wastewater
The court said it was not deciding if subsurface wastewater migration can constitute a trespass and if a trespass had occurred in this case. Instead, it remanded the matter for consideration of issues related to the trespass claim