Rule of capture

The rule of capture or law of capture is common law from England,[1] adopted by a number of U.S. jurisdictions, that establishes a rule of non-liability and ownership of captured natural resources including groundwater, oil, gas, and game animals. The general rule is that the first person to "capture" such a resource owns that resource. For example, a landowner who extracts or “captures” groundwater, oil, or gas from a well that bottoms within the subsurface of his land acquires absolute ownership of the substance, even if it is drained from the subsurface of another’s land.[2] The landowner that captures the substance owes no duty of care to other landowners.[3] For example, a water well owner may dry up wells owned by adjacent landowners without fear of liability, unless the groundwater was withdrawn for malicious purposes, the groundwater was not put to a beneficial use without waste, or (in Texas) "such conduct is a proximate cause of the subsidence of the land of others".[4] A corollary of this rule is that a person who drills for groundwater, oil, or gas may not extract the substance from a well that bottoms within the subsurface estate of another by drilling on a slant.[5][6]

Theories of ownership

When presented with oil and gas cases, early common law jurists were somewhat reluctant to recognize a corporeal possessory interest in substances they considered to be fugacious or “wild and migratory,” and therefore subject to loss by drainage.[7] Among U.S. states, two different theories of ownership of oil and gas arose. Some states, such as Texas, have adopted the “ownership-in-place” theory for oil and gas that a landowner owns a corporeal possessory interest (similar to a fee simple) in the substances beneath his land, but his ownership is a determinable fee subject to the rule of capture.[8] Other states, like Oklahoma, have adopted the “exclusive-right-to-take” theory that a landowner does not own the substances that underlie his land, but merely retains the exclusive right to capture the substances, a non-corporeal interest.[9] The difference between the two theories is primarily of import in determining remedies.

Boundary determination

Subsurface ownership boundaries are the same as those upon the surface, projected downward to the center of the earth. This concept is based upon the Roman legal principle of property law, cuius est solum eius est usque ad coelum et ad inferos (for whosoever owns the soil, it is theirs up to the sky and down to the depths).

Conservation acts

The rule of capture creates an incentive for an owner to drill as many wells as possible on his piece of land so as to extract the groundwater, oil, or gas before his neighbor. Very dense drilling can result in dissipation of the pressure within an aquifer or oil and gas reservoir, and therefore overdrafting of the aquifer or incomplete extraction of the substance. To mitigate this danger, many states have sought to supersede the rule of capture with conservation acts.[10] Such acts enforce prorationing, pooling, and limits on density of drilling to avoid physical waste and ensure maximum ultimate recovery.

Remedies/Actions Available Based on Theory of Ownership

States following the ownership in place theory. Actions available include adverse possession, trespass,

References

  1. ↑ Acton v. Blundell, 12 Mees. & W. 324, 354, 152 Eng. Rep. 1223, 1235 (Ex. Ch. 1843)
  2. ↑ See, e.g., Ohio Oil Co. v. Indiana, 177 U.S. 190, 203 (1900)
  3. ↑ Acton v. Blundell, 12 Mees. & W. 324, 354, 152 Eng. Rep. 1223, 1235 (Ex. Ch. 1843)
  4. ↑ Friendswood Development Co. v. Smith-Southwest Industries, Inc., 576 S.W.2d 21 (Tex. 1978)
  5. ↑ H. Williams and C. Meyers, Oil and Gas Terms 737 (5th ed. 1981)
  6. ↑ See also Nunez v. Wainoco Oil & Gas Co., 488 So. 2d 955, 958 (La. 1986)
  7. ↑ See, e.g., Hammonds v. Central Kentucky Natural Gas Co., 75 S.W.2d 204 (Ky.1934)
  8. ↑ Michel T. Halbouty et al., v. Railroad Commission of Texas et al., 357 S.W.2d 364 (Tex. 1962)
  9. ↑ See generally E. Kuntz, A Treatise on the Law of Oil and Gas
  10. ↑ See, e.g., Arkansas Code Annotated § 15-72-101 et seq.

See also

Further reading

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