ELEMENTS GH: INFORMATION MEMO #6 (11/15/06)
(A) Post-Thanksgiving Office Hours, Review Session
& Related Information
(1) Post-Thanksgiving Office Hours
MON 11/279:45- 11:15 a.m.
WED 11/299:45- 11:15 a.m.
THU 11/309 a.m.-Noon
FRI 12/19 a.m.- Noon
MON 12/49 a.m.- Noon
THU 12/72-6 p.m.
FRI 12/89 a.m.-Noon2-6 p.m.
SAT 12/99 a.m.-1p.m.2-6 p.m.
(2) Review Session FRI 12/8 7:00 p.m. Room 309
(a) I’ll talk about approaching each type of question
(b) I’ll answer questions re exam technique & substance
(c) Session will be videotaped & CDs placed on reserve at circulation desk.
(3) General Info on Reading Period Availability:
(a) Office Hours are first come- first served.
(b) You can ask questions by e-mail or telephone, but students in the office take priority. I’ll get back to you by phone or e-mail as soon as I can.
(c) If you do one exam question under exam conditions and get it to me in person or by e-mail before 6 p.m. on Friday 12/8, I will go over it with you or get it back to you with comments before the test.
(d) I go off duty after office hours on the Saturday 12/9 (the day before the test). Phone calls and e-mails received after 6 p.m. that day will not be returned. However, I will stay and finish up with students who arrive at office hours before 6 pm, and will then answer phone calls and e-mails received before 6.
(4) Return of written work: My goal is to have completed grading all written work by the start of office hours on Thursday 12/7. Sometime soon, I will start posting “grading status” alerts on the course page that will tell you where I am in the grading process and what is available for pickup from my assistant. I will continue these updates while I am grading the exams, so you can get a sense of my progress.
(B) Oil & GasBriefs: Comments & Models from Prior Years
(1) Hammonds v. Central Kentucky Natural Gas Co.
a. Citation: 255 Ky. 685, 75 S.W. 2d 204 (1934) or 75 S.W. 2d 204 (Ky. 1934)
b. Statement of Case: Hammonds, owner of land that included part of a depleted underground gas field, sued CKNG, which had reinserted gas into the field, for damages for trespass.
(i) A number of you included the phrase “using & occupying,” which the court used in its description of her claim. I don’t think these words add anything to the version of the statement above. You should get into the habit of trying to edit or translate the court’s account of the case. You can often make it more concise. In addition, putting it in your own words enables you to see if you really understand what’s going on.
(ii) A number of you referred to the gas as being “under” Hammonds’s land. However, as a technical matter, she owns the area underneath as well as the surface of the parcel. Thus, a portion of the gas field is part of her land, not merely underneath it.
c. Procedural Posture: Judgment for defendant. Plaintiff appealed.
d. Facts: Hammonds owned land that included a small part of a large underground gas field. Pursuant to leases with owners of other parts of the field, CKNG legally extracted the gas from the field. It then reinserted gas extracted elsewhere into the field for storage. CKNG had no lease with Hammonds and did not seek her permission to use the field.
(i) As is usually the case, precise numbers were not crucial to the court’s analysis. Thus, you did not need to include the acreages involved and the value of the stored gas.
(ii) For some reason, this case seemed to give rise to an unusually large number of mistakes regarding the correct form of the possessive. For a singular noun ending in “s” like Hammonds, either of two possessive forms is acceptable: Hammonds’s orHammonds’. I prefer the former because it makes clear that the word is not plural. In any event, Hammond’sis wrong. It is the possessive form of the name “Hammond.”
e. Issue/Holding Did the lower court err in granting judgment for defendant on the grounds that parties who have natural gas in their possession and release it into a natural underground basin do not retain property in the gas and therefore do not commit trespass when the gas travels onto land owned by another?
(i) Narrow Holding: NO.The lower court did not err in granting judgment for defendant because parties who have natural gas in their possession and release it into a natural underground basin do not retain property in the gas and therefore do not commit trespass when the gas travels onto land owned by another.
(ii) Possible Broad Holding: Where parties have liquid or gaseous minerals in their possession and release them underground into areas that formerly contained that mineral, they do not retain property in the mineral.
(iii) Be careful about buying too far into the court’s use of the animals metaphor. For example, many of you gave as the issue the court’s “question” on page 77 about whether the gas “was restored to its original wild and natural status.[1] Whether gas has become “wild and natural” hardly seems to be a legal question. I think it is important that you try to distance yourself from the court’s more colorful language and try to figure out what is really at stake, which is, “Who owns gas that is reinserted into the ground?”
(iv) Some of you listed as a holding that Hammonds was “the absolute owner” of the gas underneath the area of the surface she owned, relying on the Mills & Willingham citation on page 76. However, the text refers to gas that has not yet been extracted and states that the gas can be lost through “escape,” when a neighbor withdraws the gas from a well on an adjoining lot.[2] Thus, the passage doesn’t tell you what happens when the gas is first possessed and then reinserted. Moreover, this was unlikely to be the holding in a case where nobody argued that Hammonds owned the gas. She argued that it belonged to the gas company and the gas company argued that it belonged to nobody.
(v) A number of you mixed rationales into the holdings both here and in the White briefs. A holding generally takes the form of a legal rule: “Where X facts are present, Y legal result follows. If you find yourself adding a clause that begins, “because,” you probably are drifting into the rationales.
f. Rationales:
(i) Doctrinal Rationales
(A) Gas is like animals. Westmoreland; Willis treatise. When animals escape into their natural element, they return to their unowned state. The same should be true of gas.
(B) Gas is also like underground water. If you pull water out of the ground it is yours. If you return it into the ground, you lose property rights. Willis treatise. Hill. Rock Creek. The same should be true of gas.
(C) When gas is returned to underground storage, it is taxed as part of the land, not as separate personal property of the surface owner. Willis treatise. This suggests that the property rights in the gas are the same as those in gas that has never been extracted: the owner of the surface has ownership rights unless the gas is legally extracted by another.
(ii) Possible Policy Rationales:
(A) The court may have been unfavorably inclined toward Hammonds because it may have perceived that she was trying to make easy money where she had not exerted labor nor experienced harm. The holding would prevent her from gaining an unearned benefit.
(B) The court may have been concerned that deciding in Hammonds’s favor would encourage numerous small landholders to bring similar suits, and decided for the gas company to prevent a flood of litigation.
(C) The court may have wanted to protect the gas companies who are performing useful labor by extracting and storing gas. Deciding this case in their favor limits their liability for trespass (although it also puts their reinjected holdings at risk of capture by others).
(D) Note that the case contains no policy discussion at all. The court never discusses whether the metaphor or the result is good or bad for society. Thus, any policy rationales you include should make clear that you are hypothesizing.
(iii) When the court provides several rationales for its decision, you should try to list them separately. Each one is a tool you can use later on. You will find them more effective tools if you have delineated them clearly to begin with.
(2) White v. N.Y. State Natural Gas Corp.
a. Citation: 190 F. Supp. 342 (W.D. Penn. 1960)
b. Statement of the Case: White, owner of rights to some of the proceeds of a gas well, sued NYSNGC (NY) and Tennessee Gas Transmission Co (Tenn.), the companies that owned and operated the well who had curtailed its production, to get an accounting and to force further production.
c. Procedural Posture: Decision following bench trial.
d. Facts: P had rights to part of proceeds from gas well that had not produced much gas for many years. Tenn. & another gas company were using a nearby gas pool for storage of gas, unaware that it connected to the pool that fed the gas well at issue. The stored gas was from another area and had a different chemical make-up than the local gas. The stored gas leaked underground into the adjoining pool, and gas production from the well suddenly increased significantly. Ds believed that the gas coming out of the well was stored gas and curtailed production.
(i) Most students included too many facts. The history of the ownership of the fields and the geographical details mostly don’t matter to the analysis in the case. The dates the names of the people and the gas fields and the well all seem unnecessary to the understanding of the case.
(ii) One way to help summarize information more concisely is to rewrite the relevant passages in your own words. That may help you see what points are significant and to recognize unnecessary repetition. Many of you seem to be simply typing the court’s fact sections into your briefs. A higher level of engagement with the material will improve your understanding.
e. Factual Disputes/Findings: Was the gas coming out of the well stored gas or local gas? By the time of trial, all the local gas was gone and only stored gas was coming out of the well.
(i) Whether the gas had “escaped” or had “returned to its natural habitat” are legal issues, not factual disputes. They require the court to decide whether the facts fit into a legal category.
f. Issue/holding: Does gas reinserted into the ground remain the property of the party reinserting it where it remains in the control of the reinserting party and it is chemically different from local gas?
(i) Narrow Holding: Yes. Gas reinserted into the ground remains the property of the party reinserting it where it remains in the control of the reinserting party and it is chemically different from local gas.
(ii) Broader Holding: Yes. Gas reinserted into the ground remains the property of the party reinserting it.
(iii) The issue in White is essentially the same as in Hammonds: Does the owner of gas lose property rights when the gas is reinserted into a natural underground field? White says no, explicitly rejecting the Hammonds reasoning. The issue arises in the slightly different context in White because if the gas was unowned, defendants presumably would have a duty to continue to operate the well for White’s benefit.
(iv) Many of you just copied the court’s version of the question presented here. In this case (although not always), that was a useful way to identify the issue. However, you may wish to examine cases and see if the court’s analysis contains other facts that seem particularly important to the court and include them in the issue and narrow holding. remember that a future court might decide that the absence of those facts changes the outcome.
g. Rationales
(i) rationales based in precedent: These all respond to the P’s argument that the court should follow Hammonds and declare the stored gas to be escaped and therefore available to the first finder.
(A) Pennsylvania courts do not use the animals analogy in every oil and gas case. Thus, it is proper for the court to refuse to apply it here.
(B) Even if the animals analogy applied, the escape cases would not apply because the gas had not really “escaped,” because it remained in the control of the defendants since they could get to it at any time. Thus, ownership of the gas remains with the gas companies storing the gas. [Note that the court here rejects the reasoning of Hammonds.]
(C) Even if the escape cases applied, the gas had not returned to its “natural habitat,” because it came from another part of the country. Thus, the gas would still belong to the gas companies. [Note that this is at least facially inconsistent with Mullett.]
(i) rationales based in policy:
(A) Pennsylvania statutes demonstrate that the state has a policy favoring underground storage of gas. To encourage the use of underground storage, the Supreme Court of Pennsylvania would want companies that store gas underground to retain property rights. [Note that the court doesn’t simply announce the policy in question. Instead, it provides evidence of the policy in the form of a number of Pennsylvania statutes. ]
(B) The ruling also rewards the labor and investment of the gas companies. However, the court never refers to this concept so you would need to make clear that it is, at most, an implicit rationale for the decision.
(C) POST-PENN CENTRAL TAKINGS LAW
For informational purposes only.
I will only test you on the cases up to and including Penn Central.
(1) Changes In The Court: Only Stevens remains (in dissent in Penn Central)
a. Stewart O’Connor Alito
b. Burger Kennedy
c. Powell Scalia
d. Brennan Souter
e. Marshall Thomas
f. White Ginsburg
g. Blackmun Breyer
f. Rehnquist Roberts
(2) Physical Invasion Line of Cases
a.Penn Central: More likely Taking if physical invasion of private property
b.Loretto (1982): Always taking if “permanent physical invasion”
c.Yee (1992): Limits “permanent physical invasions”
i) Only in category if did not invite invading entity
ii)Not in category if you invite people & then government regulates
(3) Loss of Property Value Line of Cases
a.Penn Central: No Taking if Reasonable Rate of Return
b.Lucas (1992): What to do if value reduced to 0?
i) Taking unless government could eliminate the desired use of the property under “background principles of property law”
ii) E.g., nuisance, adverse possession, implied easements, etc.
iii) Unclear if applies when no reasonable rate of return but value > 0
(4) Connection between government purpose & means chosen to implement
a.Normally: rationally related to legitimate govt. purpose
b.Penn Central: top para. p.105: “a use restriction on real property may constitute a ‘taking’ if not reasonably necessary to the effectuation of a substantial public purpose.”
c.Subsequent developments: Contract zoning cases: local gov’t requires landowner to give up some property rights in exchange for waiving land use regulations
i) Nollan (1987): requires substantiallyadvancing purpose behind regulation
ii) Dolan (1994): requires rough proportionality between harm prevented and burden exacted
iii) Del Monte Dunes (1999) seems to limit Dolan holding to contract zoning.
(5) Last Word: Palazzolo (2001): Regulatory Takings claim not barred just because challenged regulation was already in place at time land was purchased
(D) Review Assignment (pp.81-82):
Comments and Models from Prior Years
There were two years when I gave this assignment as a graded written project. These comments & best answers come from student submissions from those years. The Fact Patterns identified by letter refer to the following old exam questions
Fact Pattern A: Spanish Treasure
Fact Pattern C: Fern Roots
Fact Pattern D: Software Programs
Fact Pattern E: Tribal Symbols
Fact Pattern F: Jokes
General Comments
1) Exam Question I v. Exam Question II: Your task on Exam Question I will be to discuss which of the parties in the fact pattern is entitled to the property in question. The midterm and Assignments I and II all provide examples of this task. Much of your time will be spent applying legal tests and policies to the facts of the problem.
By contrast, your task on Exam Question II is to discuss whether the animals cases provide a good method for resolving problems like the one in the fact pattern. Your time should be spent making arguments similar to those you were asked to do for this assignment. Much of your time will be spent discussing why the legal tests and policies are (or are not) appropriate tools to resolve the kinds of disputes illustrated in the fact pattern. Keep in mind that the fact that you could use the animals cases doesn’t mean you should use them.
While doing Question II you occasionally may want to apply one of the rules to the facts of the problem to demonstrate whether the rule works well in that context. However, you should not be spending much of your time applying rules to facts or arguing that one of the parties should prevail. You will not receive credit on Question II for arguments appropriate to Question I.
2) Consider Fact Pattern and Similar Cases: For Question II, you should address the applicability of the animals cases not just to the specific case in the problem but to other cases of the same kindthat are likely to arise. For example, when the Pennsylvania Supreme Court chose to use the animals cases to resolve Westmoreland, it did so with the awareness that it was setting precedent for a range of different kinds of oil and gas disputes.
Thus, for Fact Pattern A, you would consider whether the animals cases should apply to sunken treasure disputes generally, not just the two disputes described in the problem. Similarly, for Fact Patterns D and E, past exams, you would address the applicability of the animals cases to disputes about ownership of computer programs generally and about ownership of Native American tribal symbols generally. The wording of Question II on this year’s exam will make this explicit.