“CORRELATIVE RIGHTS”

WHAT DOES THAT MEAN IN THE WONDERFUL WORLD

OF GROUNDWATER?

OWNERSHIP

OWNERSHIP

• EAA v. Day & McDaniel:• We decide in this case whether land

ownership includes an interest in groundwater in place that cannot be taken for public use without adequate compensation guaranteed by article I, section 17(a) of the Texas Constitution. We hold that it does.

OWNERSHIP

CORRELATIVE RIGHTS

CORRELATIVE RIGHTS

• Day interpreting East:

• “By “correlative rights”, we referred specifically to the right East claimed: to sue for damages from a loss of water due to subsurface drainage by another user for legitimate purposes. The reasons the law did not recognize that right —the “hopeless uncertainty” involved in its enforcement and the material interference with public progress — did not preclude all correlative rights in groundwater.”

CORRELATIVE RIGHTS

• Inherent in ownership

• Not created by regulation or statute

• Elliff v. Texon Drilling Co:

– ‘These existing property relations, called the correlative rights of the owners of land in the common source of supply, were not created by the statute, but held to exist because of the peculiar physical facts of oil and gas.’

OWNERSHIP

CORRELATIVE RIGHTS

FAIR SHARE

FAIR SHARE

• Elliff v. Texon Drilling [as quoted in Day]

• “Correlative rights between the various landowners over a common reservoir of oil or gas” have been recognized through state regulation of oil and gas production that affords each landowner “the opportunity to produce his fair share of the recoverable oil and gas beneath his land”

FAIR SHARE

• Elliff: • In recognition of such ownership, our courts, in

decisions involving well-spacing regulations of our Railroad Commission, have frequently announced the sound view that each landowner should be afforded the opportunity to produce his fair share of the recoverable oil and gas beneath his land, which is but another way of recognizing the existence of correlative rights between the various landowners over a common reservoir of oil or gas.

FAIR SHARE

• RRC and Rule 37 Exceptions

– To prevent waste

– To prevent “confiscation”

• Confiscation?

– Drainage without right of offset

FAIR SHARE

• RRC v. Shell Oil– The rule of fair chance or fair share is the reason for

the "confiscation" exception to Rule 37 whereby an owner or lessee can get a well permit for a small tract. (Citations omitted). In fact, it has been held that the proper test of confiscation under Rule 37 is whether an owner, with the wells which already exist, has been accorded a fair and equal opportunity with other producers of surrounding tracts within the drainage area to recover his fair share of the oil in place beneath his tract. If he has, no confiscation results.

FAIR SHARE

• Coastal O&G v. Garza

–The minerals owner is entitled, not to the molecules actually residing below the surface, but to “a fair chance to recover the oil and gas in or under his land, or their equivalents in kind.”

OWNERSHIP

CORRELATIVE RIGHTS

FAIR SHARE

IMPLICATIONS?

AREAS OF POTENTIAL APPLICATION

• MARRS V. RRC

• Disparate treatment of owners in the same field

MARRS V. RRC

MARRS V. RRC

MARRS V. RRC

• The conclusions:

• "As a result, petitioners are being forever deprived of their property. It is the taking of one man's property and the giving it to another."

• Groundwater districts “cannot indulge in unjust, unreasonable, or arbitrary discrimination between different [aquifers], or between different owners in the same [aquifer].”

MARRS V. RRC: APPLICATION?

• Disparate rules governing fields/aquifers

• Application: rules of GCD’s that fail to treat everyone in the same aquifer equally

Sec. 36.108 (d-1)

GMA 14

CONCLUSION

OWNERSHIP

CORRELATIVE RIGHTS

FAIR SHARE