A federal judge in West Virginia recently opined on the Texas Supreme Court case Coastal Oil & Gas v. Garza Energy Trust, saying that it allowed oil and gas drillers to “steal” from small landowners.
In the 2008 Garza case, the Texas Supreme Court overturned a verdict awarding millions of dollars to Hidalgo County landowners who claimed that hydraulic fracturing on neighboring property had caused drainage of their underground minerals to an adjacent well. The Texas high court ruled that the rule of capture applied, protecting drillers from such claims as long as they followed the law and did not, for instance, drill a slanted well underneath neighboring property.
Some legal observers have argued that in cases of hydraulic fracturing, also known as “fracking,” drainage is nearly inevitable and the rule of capture should not apply. The Texas Supreme Court said in the Garza case that the remedy for landowners worried about drainage is to dig their own well. Some landowners have said that this is not always practical.
Texas law prohibits drilling close to a neighbor’s property line, but drillers may apply to the Railroad Commission of Texas, which regulates drilling, for what is known as a Rule 37 exception. According to an analysis by the Texas Tech Law Review, such exceptions can result in drillers capturing hydrocarbons from underneath adjacent property, with landowners receiving no compensation.
Despite criticism of the rule of capture, landowners should be aware that it is still the law in Texas.