Stalking the Wild Beast: The Rule of Capture in Texas

Stalking the Wild Beast - The Rule of

Capture in Texas

Michael F. Forlenza, PG
Editor, HGS Bulletin

Modern geologists may not think of underground fluids, such as oil, gas, and groundwater, as “occult and obscure.” But until relatively recent times, this is how these subsurface resources were viewed by the courts and legislature. For centuries, underground fluids in Texas and throughout the United States were thought of as ferae naturae, that is, free in nature like a wild beast or a feral animal, and subject to the “Rule of Capture.”

The rule of capture is founded in English common law and states that the first person to “capture” the resource owns that resource. A wild beast, such as a deer, a turkey, or a bear, which roams across the ground surface, is no one’s property until it is captured, then becoming the property of the person who captured it. Just as there is no owner for the wild beast that wanders freely across property lines, under the rule of capture, no one owns oil and gas underground because it is considered fugacious, evanescent, and fleeting. Only when the wild beast is trapped, or the oil is recovered and pumped into a container, is it owned.

Possession of the land, therefore, is not necessarily possession of the underlying oil, gas, or groundwater. If an adjoining, or even a distant, owner, drills on his own land, and taps into a gas reservoir that underlies your property, the gas that comes to his well and under his control is no longer yours, but his. The rule of capture does not give a property owner the “right” to drain a neighbor’s tract, but merely denies any liability for the person who does so.

The Rule of Capture in Texas Oil Fields

The rule of capture has been an integral part of oil and gas law in the United States since the completion of the first commercial oil well in Pennsylvania in the 1840s. Texas joined the ranks of oil producing states in 1866 when Lynis T. Barrett completed the first oil producing well at in Melrose, Nacogdoches County. In the early 1900s, the Texas legislature passed several bills relating to the use and conservation of the state's oil and gas resources. However, these regulations were largely ignored and only sporadically enforced. In 1919, the legislature assigned jurisdiction over oil and gas production to the Texas Railroad Commission. In response, the Texas Railroad Commission, established earlier to regulate the railroads, created its Oil and Gas Division.

After the East Texas oil field was discovered in 1930, a multitude of small independent operators raced to put up rigs. Production wells were drilled close together and along lease boundaries to drain reservoirs quickly. Derricks touched legs with adjoining derricks. Wells were operated wide-open to out produce the competitor across the lease boundary. The price of oil crashed. More critically, the natural water drive of the field was damaged and the resource was wasted.

When the Railroad Commission tried to step in and cut back production, action began in the courts and, at one point, state military forces were called in to regain order. It was several years before courts and the State Legislature were able to settle on the position that the Railroad Commission had the right to prorate production to conserve the state's natural resources, to protect correlative rights, and to prevent pollution.

The rule of capture was colorfully elucidated in the recent film “There Will Be Blood.” In the film, oilman Daniel Plainview, portrayed by Irish actor Daniel Day-Lewis, sinisterly explains his view of the rule of capture by remarking to a competitor:

“… if you have a milkshake and I have a milkshake, and I have a straw and my straw reaches across the room and starts to drink your milkshake: I drink your milkshake! I drink it up!"

The Rule of Capture for Texas Groundwater

While Texas has adopted state management of oil and gas production, groundwater use and production in Texas is still unregulated at the state level and the rule of capture is used to settle court disputes. Groundwater is vital to the life and health of Texans and the Texas economy. Texans use nearly 17 million acre-feet (5.5 trillion gallons) of groundwater each year, making up about 60 percent of our total water usage.

As applied to groundwater in Texas, the rule of capture provides that, absent malice or willful waste, landowners have the right to take all the water they can capture from under their land and to do with the water what they please, and they will not be liable to neighboring landowners, even if their actions deprive their neighbors of the water’s use.

The rule of capture contrasts with the “reasonable use” or the “American rule,” which provides that the right of a landowner to withdraw groundwater is not absolute, but limited to the amount necessary for the reasonable use of his land, and that the rights of adjoining landowners are correlative and limited to reasonable use. Since its adoption in Texas more than 100 years ago, the rule of capture has been widely criticized. Today, Texas stands alone as the only western state that continues to follow the rule of capture for groundwater.

The Texas Supreme Court first adopted the rule of capture for groundwater in the landmark 1904 decision Houston & Texas Central Railroad Co. v. East. The railroad company completed a water well on its property near Dennison, Texas to supply water for its locomotives. The well, which produced 25,000 gallons of water daily, lowered groundwater levels in the aquifer and dried up the household well of a neighboring landowner. The landowner sued the railroad for damages.

The court asserted that the rule of capture applied to groundwater in Texas and decided the railroad was not liable for damages: “Because the existence, origin, movement and course of such waters, and the causes which govern and direct their movements, are so secret, occult and concealed that an attempt to administer any set of legal rules in respect to them would be involved in hopeless uncertainty, and would therefore be practically impossible."

The court held that the “this inconvenience to his neighbour falls within the description of damnum absque injuria [an injury without a remedy], which cannot become the ground of an action.” By denying relief, the court essentially granted unlimited rights to take as much groundwater as can be pumped. Thus, the rule of capture is often known as “the law of the biggest pump."

Half a century later, in 1955, the Texas Supreme Court reaffirmed the rule of capture in City of Corpus Christi v. City of Pleasanton. The City of Pleasanton sued the Lower Nueces River Supply Company and the City of Corpus Christi to block them from pumping groundwater into the Nueces River and allowing the water to flow more than 100 miles downstream to Corpus Christi. The plaintiff claimed the practice was wasteful and damaged their nearby wells by lowering aquifer water levels. When fully operational, the supply wells pumped 10 million gallons of water per day into the river. Evidence showed that as much as 63 to 74 percent of the water discharged into the river was lost to evaporation, transpiration, and seepage. A trial court ruled in favor of the City of Pleasanton finding that the conduct was wasteful. But in a split decision, the Texas Supreme Court reversed the decision, holding that liability could only be established by proving that the water was to be put to an unlawful use as distinguished from a lawful use.

After examining precedents on the rule of capture, the court reiterated the common law view that “an owner of land could use all of the percolating water he could capture from wells on his land for whatever beneficial purposes he needed it, on or off of the land, and could likewise sell it to others for use off of the land and outside of the basin where produced, just as he could sell any other species of property.” Later, the case of Sipriano v. Great Spring Waters of America, Inc., also known as the Ozarka case, squarely presented the issue of whether Texas should continue to follow the rule of capture. Henderson County landowners sued when the aquifer supplying their wells was depleted by Ozarka’s pumping of 90,000 gallons of water per day. Relying on the rule of capture, the district court granted summary judgment against the landowners, and the court of appeals affirmed. The landowners then asked the Texas Supreme Court to overturn the rule of capture in favor of the rule of reasonable use. The Supreme Court refused.

Texas Senate Bill 1 and Groundwater Conservation

In 1997, the Texas legislature passed Senate Bill 1, which is commonly known as the “Water Bill.” The landmark legislation instituted a ‘bottom-up’ approach to state water planning through 16 regional groups representing the diversity of stakeholders. Senate Bill 1 confirmed that local groundwater conservation districts “are the state’s preferred method of groundwater management.” Groundwater conservation districts put resources in the hands of local stakeholders. Local groundwater conservation districts can set well-spacing requirements and pumping limits to ensure that pumping on one property minimizes draw-down of the water table on another. These rules can be modified as needed due to changes in population, water demand, and aquifer conditions. Through these rules, districts now help protect private water rights.

Currently, 84 groundwater conservation districts have been created and confirmed by local voters and five districts are pending confirmation. With the new groundwater conservation districts formed in the last few years, approximately 89 percent of Texas’ groundwater production is now managed by districts. In areas with no groundwater conservation district, the rule of capture prevails and groundwater pumping is basically unregulated.

Water has long been a contentious issue in the American West leading to prolonged legal battles and even actual hostilities. As Mark Twain famously remarked:

“Whiskey is for drinking and water is for fighting over.”

In the United States, only California and Texas do not regulate the use of groundwater at the state level. And Texas is alone among the western states in clinging to the ancient rule of capture. For groundwater issues in Texas, the wild beast still roams.

Michael Forlenza

hgs.forlenza@gmail.com