Don’t Mess With My Assets

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When we look at a company’s key component we are seeking to identify the asset that is owned or controlled that provides a competitive advantage in the market. Which asset is the key component depends on a variety of criteria but probably the most important is leadership’s perspective because that will influence how the business is organized to provide goods and services to its clients. In a New York Times article, Wastewater Case Raises the Concept of Underground Trespassing, by Jim Malewitz, we are presented with the case of a rice farm, F.P.L. Farming, who is suing an injection well company, Environmental Processing Services, claiming “wastewater from those wells has migrated into a saltwater aquifer below its land. It calls the migration trespassing, for which it should be compensated. ”

“Representatives of the farm say they worry that the waste, which includes the flammable liquid acetone, will contaminate its groundwater and erode the value of its property. Though the water is too salty to drink, those on the farm’s side contend that it is valuable because desalination technology could make it drinkable.”

While “[t]he well operator and its supporters, …, say the waste will make the groundwater no more polluted than it is naturally. And they say it is a moot point because recognizing a subsurface trespassing argument is nearly unprecedented.”

This is a very interesting ROKC situation because the water from the aquifer under the  farm is not a key component nor is it used in the process of producing rice. The land may be the key component but this does not seem to be the case since F.P.L. Farming is not arguing the quality of the water has an impact on the quality of the soil or rice production. Instead, it seems like F.P.L. is trying to safeguard a future benefit the land may bring to the company from the production of water for drinking or, maybe, cultivation.

How can a court of law balance the rights of these two parties to engage in their respective economic activities today when one is making claims about an uncertain tomorrow? It will be interesting to see how the Texas Supreme Court rules on this case.


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