Stalking the Wild Beast - The Rule of Capture in TexasMichael F. Forlenza, PGEditor, 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 hopeles
Stalking the Wild Beast: The Rule of Capture in Texas
Tuesday, September 30, 2008
From the Editor