Opinion ID: 2717574
Heading Depth: 2
Heading Rank: 3

Heading: Unlawful Drainage

Text: The Second Amended Complaint alleges a claim for “unlawful drainage,” which Appellants allege is actionable under La. Rev. Stat. Ann. §§ 31:9 28 and 10. 29
The first obstacle to Appellants’ second cause of action is that Louisiana law plainly precludes drainage claims: [a] landowner has no right against another who causes drainage of liquid or gaseous minerals from beneath his property if the drainage results from drilling or mining operations on other lands. This does not affect his right to relief for negligent or intentional waste under Articles 9 and 10, or against another who may be contractually obligated to protect his property from drainage. La. Rev. Stat. Ann. § 31:14 (emphasis added). In an attempt to avoid Article 14’s plain prohibition on claims for drainage (and sole listed exception for waste), Appellants argue that “every violation of correlative rights constitutes ‘waste’ within the meaning of Article 14.” Appellants’ theory, however, blurs the recognized distinction between viable waste claims and nonviable drainage claims. In Guste, for example, we explained: “Correlative rights ‘means the right of each lessee to be afforded an equal opportunity to explore for, develop, and produce, without waste, oil or 28“Landowners and others with rights in a common reservoir or deposit of minerals have correlative rights and duties with respect to one another in the development and production of the common source of minerals.” 29 “A person with rights in a common reservoir or deposit of minerals may not make works, operate, or otherwise use his rights so as to deprive another intentionally or negligently of the liberty of enjoying his rights, or that may intentionally or negligently cause damage to him. This Article and Article 9 shall not affect the right of a landowner to extract liquid or gaseous minerals in accordance with the principle of Article 8.” 19 Case: 13-20307 Document: 00512731357 Page: 20 Date Filed: 08/12/2014 No. 13-20307 gas, or both, from a common source.’ The definition of correlative rights excludes claims for drainage losses and is consistent with the rule of capture.” 832 F.2d at 943 (emphasis added). Therefore, we concluded, “Louisiana’s third cause of action is limited to an assertion that [the defendant] is committing waste.” Id. Additionally, if all claims for drainage are indeed claims for waste, then Article 14’s proclamation that “[a] landowner has no right against another who causes drainage” would be a nullity; the exception for “negligent or intentional waste under Articles 9 and 10” would swallow the rule against drainage actions. See Williams v. Humble Oil & Refining Co., 432 F.2d 165, 171–172 (5th Cir. 1970) (“The general rule in Louisiana is that the landowner has no cause of action for damages against the owner of the adjoining property or his lessee for drainage of oil and gas from beneath his land.”); Breaux, 163 So. 2d at 413 (“[A] landowner is not entitled to recover Damages from the Owner or lessee of adjoining lands on the ground that oil and gas have been drained from beneath his property by wells located on the adjacent tract, unless it is established that the oil or gas withdrawn from the common reservoir has been wasted, that the waste was caused by the negligence of defendant or by his willful intent to injure plaintiff . . . .” (emphasis added)). 30 30 See also Knighton v. Texaco Producing, Inc., 762 F. Supp. 686, 689–90 (W.D. La. 1991) (“If Louisiana had adopted the rule in an unmodified form, an owner could have drilled as many wells on his land as he cared to drill. To avoid actual or perceived drainage, however, his neighbor could have drilled as many retaliatory wells as he deemed necessary. . . . Society would not tolerate the unbridled lust for oil and gas to dissipate a natural resource. The property owner’s unlimited right to explore had to be curtailed in the name of conservation. Thus, exercising its police power to prevent waste, the Louisiana Legislature passed conservation measures that were, and are, administered by the Department of Conservation, headed by a Commissioner of Conservation.” (emphasis added)). 20 Case: 13-20307 Document: 00512731357 Page: 21 Date Filed: 08/12/2014 No. 13-20307 Appellants’ attempts to reframe their claim for drainage as a general claim for “violations of correlative rights” under Article 9 and 10 are similarly unavailing. Their complaint states it is seeking to remedy “unlawful drainage.” For example, Appellants allege that “[b]ecause Defendants unlawfully drained minerals from the K-1 sands (acting wastefully and in violation of their own lease), they are liable to Plaintiffs for unlawful drainage.” Article 14 precludes claims for drainage, subject to the exceptions discussed below, without prejudicing distinct claims for waste. See Guste, 832 F.2d at 943 (“The definition of correlative rights excludes claims for drainage losses and is consistent with the rule of capture. Therefore, Louisiana’s third cause of action is limited to an assertion that [Defendant] is committing waste . . . .” (emphasis added)).
It is undisputed that there is an exception to Article 14’s prohibition against drainage actions when the defendant has committed trespass onto the aggrieved landowner’s property. This exception is embedded in Article 14’s text: “[a] landowner has no right against another who causes drainage of liquid or gaseous minerals from beneath his property if the drainage results from drilling or mining operations on other lands.” La. Rev. Stat. Ann. 31:14 (emphasis added). If the drainage results from trespass that takes place on the aggrieved landowner’s property, then Article 14 is inapplicable. Appellants argue that they have alleged trespass in this case, and, in the alternative, that Article 14’s Rule of Capture does not apply when a landowner procures minerals in violation of MMS regulations.
Appellants allege that “[d]rainage of minerals in violation of the lease and applicable law is tantamount to a trespass, and for this reason, is not 21 Case: 13-20307 Document: 00512731357 Page: 22 Date Filed: 08/12/2014 No. 13-20307 protected by the rule of capture” (emphasis added). Significantly, Appellants do not allege that Appellees physically trespassed onto their land. Instead, their claim is that Appellees violated the terms of their own lease “and for that reason, [they] trespassed on federal property when they took minerals without permission” (emphasis added). As an initial matter, Appellants are alleging trespass on behalf of a third party (in this case the federal government). The trespass exception in Article 14 conditions the Rule of Capture’s applicability to instances when the “drainage results from drilling or mining operations on other lands.” La. Rev. Stat. Ann. 31:14. Even if Appellants are correct that Appellees “trespassed” onto the government’s lands, this would still be “other lands” under the text of Article 14. Moreover, trespass in these circumstances commonly takes the form of subsurface trespass. See, e.g., Nunez v. Wainoco Oil & Gas Co., 488 So. 2d 955, 959 (La. 1986) (noting that “subsurface trespass . . . involves bottoming of a well on the land of another without his consent, and/or invading or intruding upon the subsurface of another’s land”). Appellants rely on Gliptis v. Fifteen Oil Co., 16 So. 2d 471, 474 (La. 1943), for the proposition that a regulatory violation equates to an unlawful trespass. But in Gliptis, “defendant’s well was drilled at an angle from a vertical or upright line, causing it to pass into and through, and have its bottom in, property from which plaintiff alone had the right to extract gas and oil.” Id. at 473. The Court recognized that the Rule of Capture “necessarily excludes the right of any person to invade the subsurface of his neighbor’s land and to extract therefrom fugacious minerals, such as oil and gas. Such invasion would be a trespass.” Id. at 474. Appellants do not allege that Appellees physically invaded their land; accordingly, Appellants have not alleged an exception to the Rule of Capture and their drainage claim is barred. 22 Case: 13-20307 Document: 00512731357 Page: 23 Date Filed: 08/12/2014 No. 13-20307 b. Regulatory violations do not constitute an exception to Article 14. Alternatively, Appellants argue that trespass is not the only exception to Article 14’s prohibition against drainage claims. They contend that “[t]he rule of capture does not protect unlawful conduct”; specifically, they argue that “a party who takes minerals in violation of applicable regulations has engaged in conduct ‘prohibited by law,’ and cannot hide behind the rule of capture.” Appellants’ argument contravenes the text of Article 14, which does not condition its prohibition of drainage actions on regulatory compliance. Appellants argue that the general codification of the Rule of Capture in Article 8 contains a requirement that the landowner comply with regulations. Article 8 provides that “[a] landowner may use and enjoy his property in the most unlimited manner for the purpose of discovering and producing minerals, provided it is not prohibited by law.” La. Rev. Stat. Ann. § 31:8 (emphasis added). Appellants do not convincingly explain why Article 8’s general statement of the Rule of Capture should control over Article 14’s specific prohibition of drainage actions. Appellants rely on Elliff v. Texon Drilling Co., 210 S.W.2d 558 (Tex. 1948), a Texas case cited in the comments to Article 10. See La. Rev. Stat. Ann. § 31:10. Importantly, Appellants’ description of Elliff recognizes that, “[i]n Elliff, the plaintiffs sued for negligent waste and dissipation of minerals following the blowout of a well being drilled by defendants on adjacent property” (emphasis added); see Elliff, 210 S.W.2d at 560 (“[O]ur attention will be confined to the sole question as to whether the law of capture absolves respondents of any liability for the negligent waste or destruction of petitioners’ gas and distillate, though substantially all of such waste or destruction 23 Case: 13-20307 Document: 00512731357 Page: 24 Date Filed: 08/12/2014 No. 13-20307 occurred after the minerals had been drained from beneath petitioners’ lands.” (emphasis added)). Appellants extract their proposed rule—that drainage claims can proceed if the landowner is in violation of regulations—from the following passage in Elliff: The landowner is privileged to sink as many wells as he desires upon his tract of land and extract therefrom and appropriate all the oil and gas that he may produce, so long as he operates within the spirit and purpose of conservation statutes and orders of the Railroad Commission. These laws and regulations are designed to afford each owner a reasonable opportunity to produce his proportionate part of the oil and gas from the entire pool and to prevent operating practices injurious to the common reservoir. . . . But from the very nature of this theory the right of each land holder is qualified [sic], and is limited to legitimate operations. . . . Elliff, 210 S.W.2d at 562 (emphasis added). But Elliff recognizes that a landowner’s regulatory noncompliance is relevant to waste claims: “In like manner, the negligent waste and destruction of petitioners’ gas and distillate was neither a legitimate drainage of the minerals from beneath their lands nor a lawful or reasonable appropriation of them.” Id. 563 (emphasis added); id. (“Thus under the common law, and independent of the conservation statutes, the respondents were legally bound to use due care to avoid the negligent waste or destruction of the minerals imbedded in petitioners’ oil and gas-bearing strata.” (emphasis added)). The Court concluded, “[w]e are therefore of the opinion [that] the Court of Civil Appeals erred in holding that under the law of capture the petitioners cannot recover for the damages resulting from the wrongful drainage of the gas and distillate from beneath their lands,” id., but the opinion maintains the distinction between negligent waste (as evidenced by unlawful drilling) and drainage, which does not deprive landowners “the 24 Case: 13-20307 Document: 00512731357 Page: 25 Date Filed: 08/12/2014 No. 13-20307 opportunity to produce his fair share of the recoverable oil and gas beneath his land.” Id. at 562. 31 Article 14, by its plain terms prohibits the drainage claims Appellants press in this case: “[a] landowner has no right against another who causes drainage of liquid or gaseous minerals from beneath his property.” La. Rev. Stat. Ann. § 31:14 (emphasis added). Appellants’ drainage claim therefore fails.