ELEMENTS B POWER POINT SLIDES Class #24 Monday, October 26, 2015 National Pumpkin Day.

ELEMENTS B POWER POINT SLIDES

Class #24 Monday, October 26, 2015

National Pumpkin Day

Music to Accompany White:

Stan Getz & the Oscar Peterson Trio

(Recorded 1957)

Stan Getz, Tenor Sax * Oscar Peterson, PianoStan Getz, Tenor Sax * Oscar Peterson, PianoHerb Ellis, Guitar * Ray Brown, BassHerb Ellis, Guitar * Ray Brown, Bass

Argument By AnalogyOil & Gas: 1st Possession

Are Pierson/Liesner/Shaw Good Tools for Determining 1st Possession of Oil & Gas?

Three Common Approaches 1.Significance of Factual Similarities & Differences (DQ2.23 = Last Time)2.Usefulness of Doctrine (DQ2.24 = Last Time)3.Usefulness of Alternatives (DQ2.25 = URANIUM)


DQ2.24. Usefulness of Doctrine

On Exam, Can Have Discussion About Whether Particular Factor

or Test is Useful or Not (with Arguments Both Ways)


DQ2.25 (Uranium)•Disputes Most Likely to Occur Among Various Owners of Surface Above Oil & Gas Pools•Westmoreland:– Owning surface gives you only right to “hunt”– No permanent claim on unextracted oil & gas– Only way to get permanent claim is actual possession

POSSIBLE ALTERNATIVES?

Argument By AnalogyOil & Gas: 1st Possession (Uranium)

DQ2.25. Some Alternatives•First in Time– First to Extract (Westmoreland)– First to Drill into Pool Gets Whole Pool– First to Provide Relevant Notice (Registration?)

•Rights Proportional to Surface Ownership– Pure Proportional Ownership – Proportional Ownership with Fair “Fee” for

Labor

•State Ownership

Argument By AnalogyOil & Gas: 1st Possession (Uranium)• DQ2.25. Pros & Cons–Westmoreland (Rule of Capture) v. – Distribution of Profits Proportional to

Surface Area (w Reasonable Fee to Drillers for Labor and Risks)

• Assume Some Large Oil/Gas Fields Under Multiple Surface Lots

• Think About, e.g., Ease of Operation, Incentives, Effects on Market, etc.

First Some Preliminary Qs to Help See What’s at First Some Preliminary Qs to Help See What’s at StakeStake


DQ2.25. Pros & Cons: Preliminary Qs

Westmoreland & Incentives•What are people likely to do when they see that a neighbor is producing oil or gas from a well?

•What problems might that cause?

Argument By AnalogyWestmoreland & Incentives: Wichita Falls, TX

Argument By AnalogyOil & Gas: 1st Possession (Uranium)DQ2.25. Pros & Cons: Preliminary Qs

Westmoreland & Incentives•What are people likely to do when they see that a neighbor is producing oil or gas from a well?•What problems might that cause?– Unneeded Wells: Environmental

Concerns & Increased Cost of Extraction –Decreased Total Production (Loss of

Pressure)


DQ2.25. Pros & Cons: Preliminary QsWestmoreland & Incentives

•What are people likely to do when they see that a neighbor is producing oil or gas from a well?•Resulting problems? Readings refer to “Oversupply”

– Primarily of concern to industry low prices, low profits

– Good for consumers in short run– Long run, may encourage overuse of petroleum

products b/c cheap (cars v. mass transit, etc.)

Argument By AnalogyOil & Gas: 1st Possession (Uranium)DQ2.25. Pros & Cons: Preliminary Qs

Proportional Allocation (w Labor Fees)

•How do you determine where the oil or gas field lies in order to determine proportional interests? In 1889? Today?

•How do you decide where drilling occurs?

Argument By AnalogyOil & Gas: 1st Possession (Uranium)DQ2.25. Other Pros & Cons?

Westmoreland v. Proportional Allocation (w

Labor Fees)

(I’ll Add Slide w Best Suggestions)

Argument By AnalogyOil & Gas: 1st Possession: DQ2.25

Westmoreland Preferable to Proportional

•Certainty– Hard to Divy Up w/o

Good Geologic Info– Low Administrative

Costs

•Rewards Labor & Clear Act of Extraction

Proportional Preferable to

Westmoreland

•Fairer to Small Landowners

•Lower Externalities

FACT PATTERN L: Ownership of Uninhabited Island

• 1100-1200 A.D1100-1200 A.D.: Tulyans begin to travel to .: Tulyans begin to travel to Arynisha Island 2-3x/yr to fish & gather fruitArynisha Island 2-3x/yr to fish & gather fruit

• By 1400 A.D.: By 1400 A.D.: Ts build stone huts on South Ts build stone huts on South endend– Stay in huts when on A (through 20Stay in huts when on A (through 20thth Century) Century) – Carved religious symbols on some hutsCarved religious symbols on some huts– Rooves of fronds & clay replaced if necessaryRooves of fronds & clay replaced if necessary


• Pre1200 Present: Ts travel to Island 2-3x/yr to fish & gather fruit

• 1400 Present: Ts build/stay in stone huts on South end; religious symbols; regularly replace rooves

• 18551855: Phormycans build lighthouse on north : Phormycans build lighthouse on north tiptip– Staffed by two people from P; supplies sent from PStaffed by two people from P; supplies sent from P– P Staffers also gather some fish/fruit from Island P Staffers also gather some fish/fruit from Island

• 19251925: T becomes part of new nation (MIF): T becomes part of new nation (MIF)• 19351935: Per Int’l Custom, P publicly claimed : Per Int’l Custom, P publicly claimed

island; put on official maps. Nobody objected.island; put on official maps. Nobody objected.


• Pre1200 Present: Ts travel to Island 2-3x/yr to fish & gather fruit

• 1400 Present: Ts build/stay in stone huts on South end; religious symbols; regularly replace rooves– Late 20Late 20thth C C: Ts add Plexiglass Rooves & Astroturf : Ts add Plexiglass Rooves & Astroturf

floorsfloors

• 1855: Ps build/staff lighthouse on north tip; gather some fish/fruit

• 1925: T becomes part of new nation (MIF)• 1935: P publicly claimed island; Nobody objected.• 20062006: MIF Surveys Island; Finds Oil; : MIF Surveys Island; Finds Oil; Ps &Ps & MIF Claim MIF Claim


• Review Problem 2A: Exam Q1 (Custom):–DF Sessions Fri 10/30 & Mon 11/2

• Review Prob. 2F: Exam Q1 (1st Possession)–URANIUM: In Class Today (I’ll Post Comments &

Models on This Issue after Class to Help w 2I)

• Review Problem 2I: Exam Q2 (1st Possession)• KRYPTON & RADIUMRADIUM: In Class Wednesday

EXAM Q1 (1st Possession): REVIEW PROBLEM 2F

Krypton Krypton & & RadiumRadium: Use to Help Set Up Problem 2I : Use to Help Set Up Problem 2I for Wednesdayfor Wednesday

URANIUM: Apply 1st Possession ACs to Dispute for Arynishia; Custom Not Binding

Just Working with the Following Counsel:

FOR TULYANSFOR TULYANS

O’NeilO’Neil

PimentelPimentel

UtsetUtset

FOR PHORMYCANSFOR PHORMYCANS

BramsBrams

FerrerFerrer

OsceolaOsceola

1st Possession (Custom Not Binding)

for T/MIF: O’Neil; Pimentel; Utsetfor P: Brams; Ferrer; Osceola• Pre1200 Present: Ts travel to Island 2-3x/yr to

fish & gather fruit• 1400 Present: Ts build/stay in stone huts on

South end; religious symbols; regularly replace rooves– Late 20th C: Ts add Plexiglass Rooves & Astroturf floors

• 1855: Ps build/staff lighthouse on north tip; gather some fish/fruit

• 1925: T becomes part of new nation (MIF)• 1935: P publicly claimed island; Nobody objected.• 2006: MIF Surveys Island; Finds Oil; Ps & MIF

Claim

Oil & Gas: “Escape” *Starting Point:

What Hammonds calls “Escape”

the industry calls “Reinsertion”

*Featuring “Sybil Green” Font (reinsertions into empty spaces)

Oil & Gas: “Escape”

Factual Setting of Hammonds & White

•Gas pool underneath multiple surface lots

•All usable gas extracted from pool

•Gas Co. (G) uses empty pool for storage:– G has lawful access from some point on surface– G wants to extract and reinsert at will– G does not want to pay surface Os for right to

store gas in the underground parts of their lots


Legal Issue in Hammonds & White

•White (p.101): [W]hether title to natural gas[W]hether title to natural gas, once having been reduced to possession, is lost by is lost by the injection of such gas into a natural the injection of such gas into a natural underground reservoir underground reservoir for storage purposes.

Oil & Gas: “Escape”Legal Issue in Hammonds &

White•White (p.101): [W]hether title to natural gas[W]hether title to natural gas, once having been reduced to possession, is lost by the injection of such gas into a is lost by the injection of such gas into a natural underground reservoir natural underground reservoir for storage purposes.

•Hammonds (p.96-97): “[W“[W]hether the gas]hether the gas, having once been reduced to possession …, was restored was restored to its original wild and natural statusto its original wild and natural status, by being by being replaced in a similar reservoirreplaced in a similar reservoir of nature….”

Hammonds v. C. Ky. Nat’l Gas Co.

KRYPTON:BRIEF & DQ2.28

RADIUM:RADIUM:DQ2.26-2.27 & 2.29DQ2.26-2.27 & 2.29

Hammonds v. C. Ky. Nat’l Gas Co. FActs & LEGAL CLAIM (KRYPTON)

• Dfdt CKNG has gas it extracted from different places.

• Stores “vast quantities of gas” in depleted underground reservoir, a portion of which is part of Plaintiff Hammonds’s land.

• H sues for trespass.

Means what here? Who (allegedly) is trespassing

where?

Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis DQ2.26: Cost/Benefit Analysis

(RADIUM) (RADIUM)

Material Harm to H if CKNG stored its gas in the part of the reservoir in her land?


(RADIUM)(RADIUM)• Material Harm to H if CKNG stored its gas

in the part of the reservoir in her land?

– Alternate Uses? Very Unlikely (Shoe Storage??)

– Danger from Reinsertion: Very unlikely to have leaks or explosions b/c in original reservoir surrounded by non-permeous rock + CKNG knows it’s liable for this kind of harm + H didn’t raise

– Noise/Fumes: Likely no more than from original extraction; 54-acre lot mostly not affected.

Other Kinds of Harm?


(RADIUM)(RADIUM)• Other Harm to H if CKNG stored

its gas in the part of the reservoir in her land?

– Loss of Rental Value (if she’s entitled to)

– More Psychological/Abstract Harm:

• Unlikely to be aware of presence of gas (but see “The Princess & the Pea”)

• Maybe need to protect allall property rights (“Just bugs me that …”)


(RADIUM)(RADIUM)

HarmHarm to H = Loss of Property Rights & Rental Value

BenefitsBenefits to society if gas was stored underground rather than on surface?


(RADIUM)(RADIUM) • Harm to H = Loss of Ppty Rts & Rental

Value• Benefits to society if gas was stored

underground rather than aboveground: – Safety Safety ((SeeSee Sylvester Stallone) Sylvester Stallone)– Aesthetics Aesthetics ((Try to Avoid Seeing Try to Avoid Seeing New Jersey)New Jersey)– Cost Savings Cost Savings (No Tanks or Surface Space) (No Tanks or Surface Space)

Cheaper FuelCheaper Fuel

• Big Social Benefits Outweigh Harms Unless Great Value Given to Abstract Property Rights

Hammonds v. C. Ky. Nat’l Gas Co. DQ2.27: BARGAINING (RADIUM)DQ2.27: BARGAINING (RADIUM)

Why parties were not able to bargain to a satisfactory solution in Hammonds?•Ordinary Transaction Costs (see DQ1.29(b))•Unsurprising if big gap between positions:– Hammonds has little to lose from holding out– CKNG has to worry about similar deals w lots of owners

of small surface lots, so unlikely to want to give much


Cf. Trespass & Airline Overflights

•Airlines want to use empty space technically owned by surface Os–High value to airline & passengers– Little value to surface Os– Bargaining very expensive (every lot

from NY LA)

Oil & Gas: “Escape”Cf. Trespass & Airline Overflights

•Airlines want to use empty space technically owned by surface Os•Solution is Federal Statute Removing Surface Rights Above X Feet•Could Do Something Similar for Reinsertion–We’ll Do As Alternative to Escape ACs in

DQ2.36• For Practice: Fact Comparisons: Reinsertion v.

Airspace

–Will Become Part of Our Standard Analysis of Takings Cases (See DQ3.03, 3.09, 3.10, 3.17, etc.)


Factual Settings: Hammonds v. White

•Gas Co. (G) uses empty pool for storage•Hammonds = Dispute betw G & Surface O•White = Different Problem– Reinserted Gas Leaked into Adjacent Gas Pool– Person with Interest in Adjacent Pool Wants to

Pump Out Reinserted Gas Through That Pool

Hammonds v. C. Ky. Nat’l Gas Co.

Logic of Case

• Hammonds (p.96-97): Statement of “Issue”:

– ““[W[W]hether the gas]hether the gas, having once been reduced to possession …, was restored to its original wild and was restored to its original wild and natural statusnatural status, by being replaced in a similar by being replaced in a similar reservoirreservoir of nature….”

Not Immediately Obvious Why This Q is Relevant to Trespass!!

Hammonds v. C. Ky. Nat’l Gas Co. Logic of Case

1. Natural Gas = Wild Animal 2. If Animal Escapes Back to Wild, OO Loses

Property Rights3. THUS: If Natural Gas “Escapes” Back to

Wild, OO Loses Property Rights4. OO Loses Property Rights = No Trespass

Problems With Use Of Analogy Here?(Volunteers on Wed: Kryptons then Others)

ELEMENTS B POWER POINT SLIDES Class #24 Monday, October 26, 2015 National Pumpkin Day.

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Transcript of ELEMENTS B POWER POINT SLIDES Class #24 Monday, October 26, 2015 National Pumpkin Day.