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

Stan Getz, Tenor Sax * Oscar Peterson, Piano Herb Ellis, Guitar * Ray Brown, Bass Music to Accompany White: Stan Getz & the Oscar Peterson Trio (Recorded 1957) Stan Getz, Tenor Sax * Oscar Peterson, Piano Herb Ellis, Guitar * Ray Brown, Bass

Argument By Analogy Oil & Gas: 1 st Possession Are Pierson/Liesner/Shaw Good Tools for Determining 1 st 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)

Argument By Analogy Oil & Gas: 1 st Possession DQ2.24. Usefulness of Doctrine On Exam, Can Have Discussion About Whether Particular Factor or Test is Useful or Not (with Arguments Both Ways)

Argument By Analogy Oil & Gas: 1 st Possession 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 Analogy Oil & Gas: 1 st 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 Analogy Oil & Gas: 1 st 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 Stake

Argument By Analogy Oil & Gas: 1 st 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?

Argument By Analogy Westmoreland & Incentives: Wichita Falls, TX

Argument By Analogy Oil & Gas: 1 st 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)

Argument By Analogy Oil & Gas: 1 st 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? 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 Analogy Oil & Gas: 1 st 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 Analogy Oil & Gas: 1 st Possession (Uranium) DQ2.25. Other Pros & Cons? Westmoreland v. Proportional Allocation (w Labor Fees) (I’ll Add Slide w Best Suggestions)

Argument By Analogy Oil & Gas: 1 st 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 A.D.: Tulyans begin to travel to Arynisha Island 2-3x/yr to fish & gather fruit A.D.: Tulyans begin to travel to Arynisha Island 2-3x/yr to fish & gather fruit By 1400 A.D.: Ts build stone huts on South end By 1400 A.D.: Ts build stone huts on South end – Stay in huts when on A (through 20 th Century) – Carved religious symbols on some huts – Rooves of fronds & clay replaced if necessary

FACT PATTERN L: Ownership of Uninhabited Island 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 1855: Phormycans build lighthouse on north tip 1855: Phormycans build lighthouse on north tip – Staffed by two people from P; supplies sent from P – P Staffers also gather some fish/fruit from Island 1925: T becomes part of new nation (MIF) 1925: T becomes part of new nation (MIF) 1935: Per Int’l Custom, P publicly claimed island; put on official maps. Nobody objected. 1935: Per Int’l Custom, P publicly claimed island; put on official maps. Nobody objected.

FACT PATTERN L: Ownership of Uninhabited Island 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 20 th 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 2006: MIF Surveys Island; Finds Oil; Ps & MIF Claim

FACT PATTERN L: Ownership of Uninhabited Island Review Problem 2A: Exam Q1 (Custom): – DF Sessions Fri 10/30 & Mon 11/2 Review Prob. 2F: Exam Q1 (1 st Possession) – URANIUM: In Class Today (I’ll Post Comments & Models on This Issue after Class to Help w 2I) Review Problem 2I: Exam Q2 (1 st Possession) RADIUM KRYPTON & RADIUM: In Class Wednesday

Krypton & Radium: Use to Help Set Up Problem 2I for Wednesday EXAM Q1 (1 st Possession): REVIEW PROBLEM 2F Krypton & Radium: Use to Help Set Up Problem 2I for Wednesday URANIUM: Apply 1st Possession ACs to Dispute for Arynishia; Custom Not Binding Just Working with the Following Counsel: FOR TULYANS O’NeilPimentelUtset FOR PHORMYCANS BramsFerrerOsceola

1 st Possession (Custom Not Binding) for T/MIF: O’Neil; Pimentel; Utset for 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 20 th 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

Oil & Gas: “Escape” Legal Issue in Hammonds & White [W]hether title to natural gas is lost by the injection of such gas into a natural underground reservoir White (p.101): [W]hether title to natural gas, once having been reduced to possession, is lost by the injection of such gas into a natural underground reservoir for storage purposes.

Oil & Gas: “Escape” Legal Issue in Hammonds & White [W]hether title to natural gas is lost by the injection of such gas into a natural underground reservoir White (p.101): [W]hether title to natural gas, once having been reduced to possession, is lost by the injection of such gas into a natural underground reservoir for storage purposes. “[W]hether the gas was restored to its original wild and natural status by being replaced in a similar reservoir Hammonds (p.96-97): “[W]hether the gas, having once been reduced to possession …, was restored to its original wild and natural status, by being replaced in a similar reservoir of nature….”

Hammonds v. C. Ky. Nat’l Gas Co. KRYPTON: BRIEF & DQ2.28RADIUM: DQ & 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?

DQ2.26: Cost/Benefit Analysis (RADIUM) Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (RADIUM) Material Harm to H if CKNG stored its gas in the part of the reservoir in her land?

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

DQ2.26: Cost/Benefit Analysis (RADIUM) Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (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”) all Maybe need to protect all property rights (“Just bugs me that …”)

DQ2.26: Cost/Benefit Analysis (RADIUM) Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (RADIUM) Harm Harm to H = Loss of Property Rights & Rental Value Benefits Benefits to society if gas was stored underground rather than on surface?

DQ2.26: Cost/Benefit Analysis (RADIUM) Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (RADIUM) Harm to H = Loss of Ppty Rts & Rental Value Benefits to society if gas was stored underground rather than aboveground: – Safety (See Sylvester Stallone) – Aesthetics (Try to Avoid Seeing New Jersey) – Cost Savings (No Tanks or Surface Space)  Cheaper Fuel Big Social Benefits Outweigh Harms Unless Great Value Given to Abstract Property Rights

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

Oil & Gas: “Escape” 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.)

Oil & Gas: “Escape” 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]hether the gas was restored to its original wild and natural statusby being replaced in a similar reservoir – “[W]hether the gas, having once been reduced to possession …, was restored to its original wild and natural status, by being replaced in a similar reservoir 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 Rights 3.THUS: If Natural Gas “Escapes” Back to Wild, OO Loses Property Rights 4.OO Loses Property Rights = No Trespass Problems With Use Of Analogy Here? (Volunteers on Wed: Kryptons then Others)