The Texas Supreme Court, in Myers-Woodward, LLC v. Undergrounds Services Markham, LLC, — S.W.3d —, No. 22-0878, 2025 WL 1415892 (Tex. May 16, 2025), held that surface owners own subsurface salt caverns, even when such caverns are created by mineral owners. In doing so, the Court expressly overruled contrary authority from Mapco, Inc. v. Carter, 808 S.W.2d 262 (Tex. App.—Beaumont 1991, writ granted), rev'd on other grounds, 817 S.W.2d 686 (Tex. 1991).
In Myers-Woodward, the mineral owners, Underground Services Markham, LLC and United Brine Pipeline Company, LLC (collectively, "USM"), purportedly owned the salt and salt formations under certain property pursuant to an assignment from a prior mineral owner, and Myers-Woodward, LLC ("Myers"), owned the surface estate. The prior mineral owner received its interests from a mineral deed granting it "all of the oil, gas and other minerals in, on and under said land" but not specifically granting it any interest in any salt formations. The property contained an underground salt dome, and USM mined salt from the salt dome. Those mining operations created a void space in the salt dome, which resembled a cavern with walls composed entirely of salt. That subsurface cavern was suitable for storage of liquids and gases. A dispute arose between USM and Myers over who owned the right to store oil, gas, and other gases or liquids in the subsurface cavern. According to Myers, USM sought to rent the subsurface cavern to third parties to store hydrocarbons, even after USM ceased producing salt from the property, without compensating Myers.
USM filed a lawsuit requesting a declaratory judgment that it, as the creator of the subsurface cavern, owned the right to use it for storage. Myers filed a counterclaim alleging that it owned the subsurface cavern and that USM owned only the salt itself. Competing motions for summary judgment were filed, and the trial court ruled that USM owned the subsurface cavern. The court of appeals disagreed with the with district court and held that Myers retained ownership of the non-mineral elements of the subsurface, including empty space, and that USM had no right to use the subsurface cavern for purposes not specified in the mineral deed. In doing so, the court of appeals expressly declined to follow Mapco, which held that "the continued ownership interest [of] the mineral estate in an underground storage facility is acknowledged and harmonious with the decisional law of our state."
On appeal to Texas Supreme Court, USM, relying on Mapco, argued that a mineral owner's ownership of salt included the ownership of salt caverns created by mining operations, and it distinguished seemingly contrary Texas authority on the ground that they were limited to migratory minerals, like oil and gas, and not solid minerals, like salt. Myers, on the other hand, relied on the Texas Supreme Court's holdings in Regency Field Services, LLC v. Swift Energy Operating, LLC, 622 S.W.3d 807 (Tex. 2021), Lightning Oil Company v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39 (Tex. 2017), and Humble Oil & Refining Company v. West, 508 S.W.2d 812 (Tex. 1971), that the surface owner owns "the matrix of the underlying earth, i.e., the reservoir storage space." Myers further criticized Mapco because the authority it relied upon included a Kentucky Court of Appeals opinion that was overruled by the Kentucky Supreme Court four years prior to Mapco, a 1957 law review article stating that the proposition was still unsettled as of 1957, and a Texas Supreme Court case and a 1932 law review article, each of which stated only that mineral owners own the minerals in place.
The Court agreed with Myers. Although the Court acknowledged that its precedent concerning ownership of subsurface space was conceived in the context of oil and gas development, it emphasized two simple considerations that guided its conclusion that Myers owned the subsurface cavern: (1) USM owned only the salt and not the salt formations, and empty space is not salt, regardless of how it is created; and (2) Texas law is clear that surface owners own underground storage space. USM owned only the salt and not the salt formation because its predecessor in title was not conveyed any rights to the salt formations, and because grantors may not convey to a grantee a greater or better title than they hold, USM's predecessor-in-title could not convey to it any title to salt formations. The Court also opted to adhere to established Texas law because holding otherwise would create one rule for underground storage space encased in salt or other mineral formations and another rule for underground storage space encased in non-mineral rock formations, and such a distinction would create greater complexity and uncertainty in the law. Further, the Court, like the court of appeals, criticized Mapco for being "difficult to parse," citing "little Texas authority for its key holding," being not often cited, and being considered a minority view among commentators. Consequently, the Court did not find its reasoning persuasive and expressly overruled it.
The Court also addressed the extent of USM's right to use and access the subsurface cavern, and held that it could only do so for the production of salt. Mineral owners generally may only use the surface estate to the extent reasonably necessary to produce and remove minerals, which the Court agreed extended to subsurface caverns. However, the Court noted that USM sought to use the subsurface cavern for storage of hydrocarbons produced off the premises, which was more likely to hinder, rather than facilitate, salt production. As such, USM's intended use of the subsurface cavern was an impermissible use of the surface estate. And because USM's arguments in favor of storing hydrocarbons in the subsurface cavern flowed from its argument that it owned the subsurface cavern, the Court held that USM established no right to use of the subsurface cavern.
This decision resolves lingering uncertainty in Texas over the ownership of underground storage space, including pore space, that was largely created by the decision in Mapco. See, e.g., Tiffany P. Means & Ryan J. Kemrite, Energy Contracts for the Next 100 Years, 19 Tex. J. Oil, Gas, & Energy L. 146, 186 n. 242 (2024) ("It is worth noting that the question of pore space ownership is complicated by [Mapco]. . . . Thus, the question of pore space ownership in Texas is not completely settled."); Ali Abazari & Travis W. Wussow, Carbon Capture and Storage, 74 Tex. B.J. 398, 400 (2011) (relying on Mapco and stating, "Under Texas law, the question of whether pore space is owned by the surface estate or the mineral estate is relatively unsettled . . . ."); Russell W. Murdock, The State of CO2 Sequestration in the State of Texas, 41 Tex. Envtl. L.J. 65, 74 (2010) (relying on Mapco and stating, "Texas law remains unsettled with regard to whether the owner of the surface estate or the owner of the mineral estate owns the subsurface pore space.").
The resolution of this lingering uncertainty comes at a particularly pertinent time in Texas, considering its recent increased interest in carbon sequestration and storage operations. After all, the desire to store CO2 in pore space necessarily gives rise to the question of who owns the pore space, and the Court's decision provides assurance that "the surface owner, and not the mineral lessee, owns the possessory right to the space under the property's surface." Thus, CCS operators can now continue forward with their operations with the added assurance provided by the Court's decision on the state of Texas law regarding the property rights necessary to sequester and store CO2.
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