Texas Supreme Court Applies Uniform Rule For Ownership Of Subsurface Caverns – Gravel2Gavel Construction & Real Estate Law blog — May 20, 2025
In an opinion released on May 16, 2025, by the Texas Supreme Court, in Myers-Woodward, LLC, v. Undergrounds Services Markham, LLC, – S.W.3d -, No. 22-0878 (Tex.) 2025 WL 1415892 The May 16, 2025, resolution of a long-uncertain subsurface property right in the context salt dome mining. The Court rejected a salt-specific rule, harmonizing ownership principles across subsurface formations, applying a uniform rule regardless of the type of mineral removed. By rejecting a salt-specific rule, the Court harmonized ownership principles across subsurface formations, applying a uniform rule regardless of the type of mineral removed.
The ruling is significant for developers of underground storage in Texas, including those involved in carbon capture, utilization and storage (CCUS), as it brings long-awaited clarity to the ownership of post-extraction cavern space.
Background: Salt Caverns and Subsurface Rights
The case involved a 160-acre tract in Matagorda County, where the mineral estate had been severed in 1947 and later conveyed to Underground Services Markham, LLC (USM). USM used solution-mining to extract salt and left behind large underground caves. These are the same formations that are now sought for hydrocarbon storage or CO2 storage. The surface owner, Myers-Woodward, LLC, disagreed, claiming that USM’s right was limited to salt production, and did not include the use of voids resulting from this. The Court agreed with Myers-Woodward, LLC. The Court ruled that “
mpty spaces is not a mineral” and therefore does not belong to the mineral grant. It did so by overruling the minority opinion expressed in Mapco, Inc. v. Carter, 808 S.W.2d. 262 (Tex.). App.-Beaumont, 1991, writ issued), rev’d in other grounds, 817 S.W.2d. 686 (Tex. 1991), which had long contributed to legal ambiguity surrounding pore space ownership.
Although the mineral estate is dominant under Texas law–allowing the mineral owner to make reasonable use of the surface and, to the extent retained by the surface estate, the subsurface for development–that right is not absolute. Coyote Lake Ranch, LLC v. City of Lubbock, 498, S.W.3d 54, 60 (Tex. 2016). The mineral estate dominance rule does not allow burdens that are unrelated to the mineral development of the tract. The Court found that storing hydrocarbons–especially those produced elsewhere–did not qualify as a “reasonably necessary” use for salt production and, in fact, would likely impede it.
Broader Implications Than Salt: The Court’s Preference for a Bright-Line Rule
Although the dispute arose in the context of salt mining, the Court’s reasoning reaches well beyond it. USM had asked the Court to make a distinction between solid mineral like salt and migratory mineral like oil and natural gas. They argued that the voids caused by extraction of each should be treated differently. The Court refused to do so. Instead, it endorsed a uniform rule: Subsurface cavern space created by the removal of minerals–any minerals–remains part of the surface estate unless expressly conveyed.[E]Royalty Calculation Reversal
In a secondary but important ruling, the Court also reversed the lower courts on the method for calculating salt royalties. The Court determined that the 1947 correction deed established an in-kind royalty, which means the royalty owner has a right to a share of actual minerals produced, or the proceeds from their sale, (in this instance, 1/8 of salt produced), and not just a valuation on the basis of market value. The Court’s interpretation treats all royalties equally, including those on “oil or gas or other minerals”. It rejects the idea that oil or gas should be treated differently from salt in deed construction. The case was remanded to recalculate the royalty owed using net proceeds from actual salt sales instead of fixed-price benchmarks. This could significantly increase the royalty payment and serves as a warning to operators relying on fixed-price benchmark
Implications for Carbon Capture and Subsurface Storage
This ruling has implications for emerging technologies reliant on underground formations, such as CO2 sequestration. Texas is a great location for CCUS because of its abundance of underground formations, and the vast storage capacity they offer. This capacity is estimated between 661,000,000 and 2.4 Billion tons. The uncertainty surrounding subsurface ownership has hampered project development. The Myers-Woodward ruling confirms that the surface estate is the owner of the caverns left by mining operations, unless otherwise stated. This means that companies planning to repurpose these voids for CO2 storage must negotiate directly with surface owners–whether by easement, lease or surface use agreement–to secure storage rights.
Moving Forward
As CCUS continues to gain traction, the Myers-Woodward opinion reinforces the need for early and deliberate legal diligence. Developers should carefully review legacy surface and mineral deeds to confirm ownership and anticipate the need for multiple-party agreements. The ruling is also a warning to operators who rely on outdated or unclear royalty clauses. In the absence of express language, royalty clauses can entitle grantors to a share in the actual production or sales proceeds, not a discounted or benchmarked price.
In Texas at least, it is now clear that if you want the vacant space, you will need to speak to the surface owner.
