Friday, May 31, 2013

Gerhart & Cheren against the law of capture

Following on our post on Brian Frehner's review of Terence Daintith's Finders Keepers?: How the Law of Capture Shaped the World Oil Industry, Bobby Cheren wrote in about an article he coauthored with Peter Gerhart, "Recognizing the Shared Ownership of Subsurface Resource Pools". Arguing against the view that the American law of property in oil and gas has been dominated by the rule of capture, Gerhart and Cheren write that
the common law embraced the paradigm of shared property in much of its regulation of subsurface resource pools because it essentially treated those resources as owned by tenants in common, as modified by the common law nuisance exception for injuries to subsurface resource pools.
They go on:
In our revisionist description of the common law, we show that when faced with questions about the disruption of subsurface resource pools, courts were not concerned about title but about the hidden nature of the resources and the resulting inability of courts to determine which oil and gas was underneath which surface property. Instead of focusing on the capture of wild animals, courts held that injuries to subsurface oil and gas are damnum absque injuria [loss without a wrong-DS] by analogy to earlier cases dealing with subsurface water. Moreover, although courts could not offer a remedy for diminution of subsurface resource pools because the resources were hidden, the migratory nature of the resources induced courts to develop several doctrines that required each surface owner to take into account the interests of other surface owners when deciding how to exploit the subsurface common pool resource: causes of action for malicious interference, waste, and unreasonable exploitation. Far from following the conventional ferae naturae view [i.e. analogizing to unowned wild animals that can be captured-DS], the ad coelum view [i.e. that a landowner owns everything above and below the land-DS], or a “Dril, Baby, Drill!” view, the common law recognized, on the one hand, limits on the judicial ability to regulate hidden resources while, on the other hand, recognizing the responsibilities that arose from shared migratory ownership of subsurface resource pools.
If Gerhart and Cheren are right, we have yet another case of a myth of extreme private property in natural resources obscuring a considerably more complex historical reality, a phenomenon similar to those on which I commented last week.

Let's keep uncovering and publicizing these complex realities, but let's also try to explain where the myths come from and why they're created.

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