Know How: Alert

Title

West Virginia Judge Rejects Texas’ Application of Rule of Capture in Fracing Case

GET KNOW HOW

Subscribe

Stay up-to-date with industry knowledge!

Does fracing that extends into an adjacent mineral owner’s property constitute an act of trespass? Courts in Texas and West Virginia both answered this question, but came to very different conclusions.

In 2008, the Supreme Court of Texas held that the adjacent mineral owner has no cause of action for trespass, stating “that damages for drainage by hydraulic fracturing are precluded by the rule of capture.” Coastal Oil & Gas Corp. v. Garza Energy Trust, 268 S.W.3d 1, 17 (Tex. 2008). Under the long-standing common law rule of capture, there is no liability for capturing oil and gas that drains from one person’s land to a well on another person’s land. In Garza, the Court listed four justifications for its decision:

1) The law affords mineral owners full recourse if there was a violation of the implied covenant to protect against drainage in the lease.
2) Allowing recovery for the value of gas undermines the authority of the Texas Railroad Commission to regulate oil and gas production.
3) It would be difficult for juries to determine the value of oil and gas drained by hydraulic fracturing.
4) No one in the industry wants to change the rule of capture under hydraulic fracturing.

Recently, a federal district judge in West Virginia rejected all four justifications cited in the Garza decision, calling them “unconvincing.” Stone v. Chesapeake Appalachia, LLC, No. 5:12-CV-102, 2013 U.S. Dist. LEXIS 71121 (N.D. W.Va. April 10, 2013). Relying heavily on the dissenting opinion in Garza, Judge John Preston Bailey concluded the West Virginia Supreme Court of Appeals, which has yet to rule on the issue, would find “hydraulic fracturing under the land of a neighboring property without that party’s consent is not protected by the ‘rule of capture,’ but rather constitutes an actionable trespass.”

To read the Garza decision, click here. For the Stone decision, click here.
 

Contributors

(281) 203-5770
The Woodlands, TX