New York State

Court of Appeals
In the Matter of MARK S. WALLACH, as CHAPTER 7 TRUSTEE FOR
NORSE ENERGY CORPORATION, USA
Plaintiff-Appellant,
-against-
TOWN OF DRYDEN et al.,
Defendants-Respondents.
Appellate Division, Third Department, Case No. 515227.
Tompkins County Index No. 2011-0902.
BRIEF OF PROPOSED AMICUS CURIAE
COMMUNITY ENVIRONMENTAL DEFENSE COUNCIL, INC.
Dated: April 18, 2014 APL-2013-0245
DAVID SLOTTJE, Esq.
HELEN SLOTTJE, Esq.
Community Environmental
Defense Council, Inc.
Proposed Amicus Curiae
PO Box 898
Ithaca, NY 14851
(607) 277-5935
(607) 323-0505 (fax)
CORPORATE DISCLOSURE STATEMENT
Pursuant to Rule 500.1(f) of the Rules of Practice for the Court of Appeals
of the State of New York, proposed amicus curiae Community Environmental
Defense Council, Inc. makes the following disclosures: Community
Environmental Defense Council, Inc. is a New York domestic not-for-profit
corporation, and has no parents, subsidiaries or affiliates.
i
TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
STATEMENT OF INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INTRODUCTORY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
I. A Brief Description of: The Attributes Of Subsurface Oil And Gas;
The Legal Concepts Courts Have Applied To Questions Regarding
Ownership Of Subsurface Oil And Gas Resources; and The
Nature Of The Interstate Compact To Conserve Oil And Gas,
and The Circumstances That Gave Rise To The Compact’s
Formation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. The Attributes of Oil and Gas, as Those Substances Exist
Naturally in the Ground... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
B. The Legal Concepts Courts Have Applied To Questions
Regarding Ownership Of Subsurface Oil & Gas
Resources: The Rule of Capture, and the Doctrine of
Correlative Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
C. The Nature Of The Interstate Compact To Conserve Oil
ii
And Gas, and The Circumstances That Gave Rise To The
Compact’s Formation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
II. Explanation Of The Meanings (In the Context of Oil and Gas
Production) Of The Terms ‘Preventing Waste,’ ‘Protecting
Correlative Rights,’ and Providing For ‘Greater Ultimate
Recovery’; and Argument That A Decision By This Court To
Uphold Local Municipal Authority To Enact Land Use Laws
Prohibiting Gas Drilling Would Not Be Inconsistent With The
Policies of Preventing Waste, Protecting Correlative Rights,
And Providing For Greater Ultimate Recovery. . . . . . . . . . . . . . . . . 18
A. Prevention Of Waste Explained; and Why A Decision
By This Court To Uphold Local Municipal Authority
To Enact Land Use Laws Prohibiting Gas Drilling
Would Not Be Inconsistent With The Policy Of
Preventing Waste.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
B. Correlative Rights Explained; and Why A Decision
By This Court To Uphold Local Municipal Authority
To Enact Land Use Laws Prohibiting Gas Drilling
Would Not Be Inconsistent With The Policy Of
Protecting Correlative Rights.. . . . . . . . . . . . . . . . . . . . . . . . . 23
iii
C. Greater Ultimate Recovery Explained; and Why A Decision
By This Court To Uphold Local Municipal Authority
To Enact Land Use Laws Prohibiting Gas Drilling
Would Not Be Inconsistent With The Policy Of
Promoting Greater Ultimate Recovery.. . . . . . . . . . . . . . . . . . 33
III. Summary of Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
CONCLUSION, and REQUEST FOR RELIEF. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
iv
TABLE OF AUTHORITIES
NEW YORK CASES
Wagner v Mallory, 169 NY 501 (1902).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Western Land Services Inc. v Department of Environmental Conservation
of State of New York, 26 AD 3d 15 (Third Dept. 2005).. . . . . . . . . . . . 25, 39
OTHER CASES
Bernard v Monongahela Natural Gas Co., 216 Pa 362, 65 A 801 (1907).. . . . . . 11
Champlin Refining Co. v Corp. Commn. of State of Okl., 286 US 210 (1932);.. . 37
Chevron Oil Co. v Gas Conservation Commn, 435 P2d 781 (Mont 1967)... . . . . 24
Cowling v Board of Oil, Gas and Min., Dept. of Natural Resources
for State of Utah, 830 P2d 220 (Utah 1991).. . . . . . . . . . . . . . . . . . . . . . . . 12
Denver Producing & Ref. Co. v State, 1947 OK 251, 199 Okla 171, 184 P2d 961
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
HECI Exploration Co. v Neel, 982 SW2d 881 (Tex 1998). . . . . . . . . . . . . . . . . . 37
Ivey v Phillips Petroleum Co., F Supp 811 (SD Tex 1941). . . . . . . . . . . . . . . . . . 21
Johnston v Cole, 135 SW2d 524 (Tex Civ App 1940).. . . . . . . . . . . . . . . . . . . . . 39
Kingwood Oil Co. v Hall-Jones Oil Corp., 1964 OK 231, 396 P2d 510.. . . . . . . 27
Phillips Petroleum Company v Stryker, 723 So 2d 585 (Ala 1998).. . . . . . . . . . . 37
R.R. Commn. v Humble Oil & Ref. Co., 193 SW2d 824 (Tex Civ App 1946) . . . 38
v
Samson Resources Co. v Corporation Commn, 1985 OK 31, 702 P 2d 19.. . 26, 32
Syverson v North Dakota State Indus. Commn., 111 NW 2d 128 (ND 1961). . . . 35
NEW YORK STATUTES
New York Environmental Conservation Law § 23-0901(3). . . . . . . . . . . . . . . . . 29
New York Environmental Conservation Law § 23-0101. . . . . . . . . . . . . . . . . . . . 21
New York Environmental Conservation Law, The Interstate Compact
to Conserve Oil & Gas, §§ 23-2101 et seq.. . . . . . . . . . . . . . 5, 14, 16, 18, 20
New York Environmental Conservation Law § 23-0501(2). . . . . . . . . . . . . . . . . 29
OTHER STATUTES
Ark Code Ann § 15-72-102 (15) (c)... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17 Okl St Ann § 53.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SD Codified Laws § 45-9-2(6).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
OTHER AUTHORITIES
Owen L. Anderson & Ernest E. Smith, Exploratory Unitization Under
The 2004 Model Oil And Gas Conservation Act: Leveling The
Playing Field, 24 J Land Resources & Envtl L 277 (2004). . . . . . . . . . . . . 37
Stuart E. Buckley, Petroleum Conservation, 80
(Am. Inst. Of Mining and Metallurgical Engineers, 1951).. . . . . . . . . . . . . . 8
William A. Dougherty, New York, 1864-1948, 339 in Ch. 22 of
Conservation of Oil & Gas A Legal History (Blakely M. Murphy ed.,
vi
Section of Mineral Law, American Bar Association, 1949).. . . . . . . . . 15, 17
Northcutt Ely, The Conservation of Oil, 51 Harv L Rev 1209 (1938).. . . . . . . . . 36
W.P.Z. German, Legal History of Conservation of Oil and Gas in Oklahoma,
159, from Legal History of Conservation of Oil and Gas, A Symposium,
Section of Mineral Law, American Bar Association 1938.. . . . . . . . . . . . . 38
Robert E. Hardwicke, The Rule of Capture and Its Implications
as Applied to Oil and Gas, 13 Tex L Rev 391 (1935)... . . . . . . . . . . . . 10, 12
Interstate Oil Compact Commn., A Summary of the Background,
Organization Purposes and Functions of the Interstate Compact
to Conserve Oil and Gas, 1 (1969).. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 15
Interstate Oil Compact Commn., Oil and Gas Production (1951).. . . . . . . . . . . . . 9
Eugene Kuntz, A Treatise on the Law of Oil and Gas, Vol. 1 (Matthew Bender rev.
ed.).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 26
Eugene Kuntz, The Law of Capture, 10 Okla L Rev 406 (1957).. . . . . . . . . . . . . 10
Richard H. Leach, The Interstate Oil Compact: A Study in Success,
10 Ok L Rev 274 (1957).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 16, 17
Thomas A. Mitchell, The Future of Oil and Gas Conservation:
Past as Prologue, 49 Washburn L J 379, 380 (2009-2010).. . . . . . . . . . . . . 9
David J. Muchow & William A. Mogel, Energy Law and Transactions, Vol 4,
Unit IV Glossary of Energy Terms (2014).. . . . . . . . . . . . . . . . . . . . . . . . . 35
Marshall & Meyers, Legal Planning of Petroleum Production,
41 Yale L J 33 (1931-1932).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 15, 16
vii
David E. Pierce, Carol Rose Comes to the Oil Patch:
Modern Property Analysis Applied to Modern Reservoir Problems,
19 Penn St Envtl L Rev. 241 (2011).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
David E. Pierce, Reconciling State Oil and Gas Conservation Regulation
with the Natural Gas Act, 1989 BYU L Rev 9.. . . . . . . . . . . . . . . . . . 7, 8, 12
Progress Report by the Special Study Committee and the Legal Advisory
Committee on Well Spacing and Allocation of Production of the
Central Committee on Drilling and Production Practice,
Division of Production, American Petroleum Institute
(published by ‘The Committee’ through private subscription, 1942). . . . . 37
W.L. Summers, Oil and Gas § 3:8 (Vol 1, 3d ed.). . . . . . . . . . . . . . . . . . . . . . 13, 25
W.L. Summers, The Modern Theory and Practical Application of Statutes
for the Conservation of Oil and Gas, 8, from Legal History of Conservation
of Oil and Gas, A Symposium, (Section of Mineral Law, American Bar
Association 1938)... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Howard R. Williams, Conservation of Oil and Gas,
65 Harv L Rev, 1155 (1951-1952)... . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 17
Williams & Meyers et al., Manual of Oil and Gas Terms
(Martin & Kramer eds. 14
th
ed. 2009).. . . . . . . . . . . . . . . . . . . 8, 9, 12, 21, 35
Williams & Meyers, et al., Oil & Gas Law § 102 (2013).. . . . . . . . . . . . . . . . . . . . 7
Williams & Meyers, et al., Oil & Gas Law § 103 (2013).. . . . . . . . . . . . . . . . . . . . 7
Williams & Meyers, et al., Oil & Gas Law §104 (2013)... . . . . . . . . . . . . . . . . 7, 35
Williams & Meyers, et al., Oil & Gas Law, Index of Terms (2013).. . . . . . . . . . . 35
Williams & Meyers, et al., Oil &Gas Law § 203 (2013)... . . . . . . . . . . . . . . . . . . 10
Daniel Yergin, The Prize (Free Press 2009).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
viii
STATEMENT OF INTEREST
Over the last several years, a high percentage of those upstate New York
municipalities that potentially face the prospect of industrial-scale gas mining of
Marcellus shale gas deposits have enacted local land use laws – similar in effect to
the Town of Dryden local law that is the subject of the action now before this
Court – to prohibit gas mining activities within their municipal borders.
Even more communities would have enacted such laws, but have refrained from
doing so because pro-gas industry interests have explicitly threatened to bring suits
against municipal bodies and officials in those communities - in the nature of the
instant action brought against the Town of Dryden – if they persisted in attempts
to enact such protective measures.
Community Environmental Defense Council, Inc. (“CEDC”) is a public interest
law firm, based in upstate New York. One of CEDC’s charter purposes is “to help
communities, groups, and affected individuals obtain the protection of
environmental and land-use laws and regulations.”
1
To date, upwards of 200 New York towns have utilized local municipal authority
to enact land use laws prohibiting gas mining activities within their municipal
boundaries, and CEDC has provided legal assistance in the form of drafting or
consultation or both to a very high percentage of them.
CEDC has a keen interest in having this Honorable Court uphold the authority of
New York municipalities to enact land use laws prohibiting gas drilling activities
within their municipal boundaries, in order that the legitimate expectations of
CEDC clients and other municipalities in enacting their existing protective laws
will not be defeated, and in order to make manifest that the threats of suit by pro-
gas industry interests against towns which wish to enact but have not yet enacted
protective laws have no legal legitimacy.
Appellant in its papers asserts that a decision by this Court to uphold local
municipal authority to enact land use laws prohibiting gas drilling would be
inconsistent with the goals of ‘preventing waste,’ ‘protecting correlative rights,’
and providing for ‘greater ultimate recovery’ that are among the policies which
underlie enactment of the Oil, Gas, and Solution Mining Law.
2
All three of these concepts are terms of art within the oil and gas industry.
Despite the fact that Appellant in its papers asserts that these three policies “are
the driving force” of the Oil, Gas, and Solution Mining Law, “making them the
preeminent policy considerations in the preemption analysis,” Appellant, within
the combined 132 pages of argument set forth in its Brief and Reply Brief, does
not cite even one judicial decision from any jurisdiction in support of Appellant’s
position that not drilling a well in an oil or gas field that has not been previously
developed constitutes ‘waste,’ does not cite even one judicial decision from any
jurisdiction in support of the meaning of the term ‘greater ultimate recovery’
proffered by Appellant, and cites only to a single footnote in one judicial decision
to support Appellant’s view of the meaning of the term ‘correlative rights.’
CEDC has expended hundreds of hours to exhaustively research the history,
development, and application – within the oil and gas industry – of the terms
‘preventing waste,’ ‘protecting correlative rights,’ and providing for ‘greater
ultimate recovery,’ and to document the results of that research.
3
CEDC seeks amicus curiae status in this matter because we respectfully believe
that it would be of assistance to this Court to receive the results of our
comprehensive research: this brief presents law and arguments that would not
appear to have been explored in any of the other briefs submitted in this case. In
other words, we respectfully believe that a review by this Court of the results of
our research “could identify law or arguments that might otherwise escape the
Court’s consideration.”
INTRODUCTORY STATEMENT
This case presents the question of whether municipalities in New York State are
preempted from using local municipal authority to enact land use laws prohibiting
gas drilling activities within their municipal boundaries.
Appellant asserts that a decision by this Court to uphold local municipal authority
to enact land use laws prohibiting gas drilling would be inconsistent with the goals
of ‘preventing waste,’ ‘protecting correlative rights,’ and providing for ‘greater
ultimate recovery’ that are among the policies which underlie enactment of the
Oil, Gas, and Solution Mining Law (“OGSML”).
1
1
“The bottom line is that local [drilling bans] make it impossible for the NYSDEC to comply
with, and for New York State to achieve, the objectives of the OGSML and the Interstate
4
In fact, a decision by this Court to uphold local municipal authority to enact land
use laws prohibiting gas drilling would not be inconsistent with the policies of
preventing waste, providing for greater ultimate recovery, and protecting
correlative rights.
Preventing waste, protecting correlative rights, and providing for greater ultimate
recovery are terms of art in the context of the oil and gas industry. These industry-
specific policies are reflected in the Interstate Compact to Conserve Oil and Gas,
which in the words of Appellant was “the foundation from which the OGSML
arose.”
2
Full appreciation of what these terms mean within the context of oil and gas
production requires, first, an understanding of certain related matters: the
Compact of preventing waste, providing for greater ultimate recovery, and protecting correlative
rights.” Brief for Appellant Norse Energy Corp. USA, dated October 28, 2013 at 57-58. The
OGSML is codified at Environmental Conservation Law, Article 23.
2
These policies “have their basis in the IC, which is the foundation from which the OGSML
arose. These policies are the driving force of the OGSML, making them the preeminent policy
considerations in the preemption analysis.” (emphasis added.) Reply Brief of Appellant Mark S.
Wallach, as Chapter 7 Trustee for Norse Energy Corp. USA, dated January 8, 2014 at 46. New
York’s ratification of the Compact is codified in Environmental Conservation Law, Article 23.
5
attributes of oil and gas, as those substances exist naturally in the ground; the legal
concepts courts have applied to questions regarding ownership of subsurface oil
and gas resources; and the nature of the Interstate Compact to Conserve Oil and
Gas itself, and the circumstances that gave rise to the Compact’s formation.
These matters are addressed in Part I of this brief.
Part II of this brief explains in detail the meanings in the context of oil and gas
production of the terms ‘preventing waste,’ ‘protecting correlative rights,’ and
providing for ‘greater ultimate recovery,’ and demonstrates that a decision by this
Court to uphold local municipal authority to enact land use laws prohibiting gas
drilling would not be inconsistent with the policies of preventing waste, providing
for greater ultimate recovery, and protecting correlative rights.
Part III is a Summary of our argument.
6
ARGUMENT
I. A Brief Description of: The Attributes Of Subsurface Oil And Gas; The
Legal Concepts Courts Have Applied To Questions Regarding Ownership Of
Subsurface Oil And Gas Resources; and The Nature Of The Interstate
Compact To Conserve Oil And Gas, and The Circumstances That Gave Rise
To The Compact’s Formation.
A. The Attributes of Oil and Gas, as Those Substances Exist Naturally in the
Ground.
Nearly all commercial oil and gas production is from some form of sedimentary
rock.
3
Oil and gas exploration involves searching for reservoirs in the rock where
hydrocarbons have accumulated
4
and been trapped.
5
Three fluids, singly or in
combination, are found in reservoir traps: oil, gas, and water, usually salt water.
6
A
conventional reservoir, in its natural state, is under pressure. When an opening is
made in the reservoir, such as by drilling a well bore into it, a low-pressure zone is
3
Williams & Meyers, et al., Oil & Gas Law § 102 (2013).
4
Id. § 103.
5
The rock structure in which the hydrocarbons have accumulated “must be covered by
impermeable rock that serves as a ‘trap.’ Without such a trapping mechanism, the oil and gas
would through time migrate to the surface of the earth and dissipate. Therefore, an oil and gas
‘reservoir’ consists of a body of porous and permeable rock, overlain by impermeable rock
material, which contains oil, gas, or both.” David E. Pierce, Reconciling State Oil and Gas
Conservation Regulation with the Natural Gas Act: New Statutory Revelations, 1989 BYU L
Rev 9, 12.
6
Williams & Meyers, O&G Law §104.
7
created near the well bore. Material within the reservoir will then move from the
higher pressure zones of the reservoir, through the permeable rock, toward the
well bore.
7
Within the oil and gas industry, the term ‘drainage’ refers to the “migration of oil
or gas in a reservoir due to a pressure reduction caused by production from wells
bottomed in the reservoir.”
8
A reservoir or pool is “an underground accumulation of [hydrocarbons] in a single
and separate natural reservoir characterized by a single pressure system so that
production [ ] from one part of the pool affects the reservoir pressure throughout
its extent. A pool is so bounded by geologic barriers that it is effectively separated
from other pools that may be present.”
9
The naturally occurring force within a conventional reservoir that propels the oil
or gas to the well bore is referred to as the‘reservoir energy.’ Four sources of
7
Pierce, 1989 BYU L Rev at 12.
8
Williams & Meyers et al., Manual of Oil and Gas Terms (Martin & Kramer eds. 14
th
ed. 2009);
definition of “drainage.”

9
Stuart E. Buckley, Petroleum Conservation, 80 (Am. Inst. Of Mining and Metallurgical
Engineers, 1951).
8
natural energy may be present in a reservoir: (1) gas expansion, of either gas in
solution in oil or of a natural gas cap; (2) water encroachment; (3) expansion of
reservoir oil; and (4) gravity. The first three result from the reduction of pressure
by opening a well to the surface, and of the four the first two are the most
important.
10
Either gas expansion or water encroachment provides the principal
energy for most petroleum reservoirs.
11
B. The Legal Concepts Courts Have Applied To Questions Regarding
Ownership Of Subsurface Oil & Gas Resources: The Rule of Capture, and
the Doctrine of Correlative Rights.
The modern age of oil and gas production originated with the Drake well in
western Pennsylvania in 1859.
12
Believing that subsurface oil and gas were
migratory in nature – and that the belowground movement of these substances
paid no heed to above-ground property boundaries – courts in producing states
employed a number of different legal theories as they attempted to grapple with
how to describe or classify the interest of the landowner in the oil and gas which
10
Manual of O&G Terms, definition of “reservoir energy.”
11
Interstate Oil Compact Commn., Oil and Gas Production, 36 (1951).
12
Thomas A. Mitchell, The Future of Oil and Gas Conservation: Past as Prologue, 49
Washburn L J 379, 380 (2009-2010).
9
might be produced from a well located on his land.
13

Different courts took different routes to get there, but eventually all of the courts
arrived at the conclusion that ownership of subsurface oil and gas would be
subject to the Rule of Capture.
14
Application of the Rule of Capture
15
to oil and gas meant that the owner of a tract
of land overlaying a resource pool (a) had the right to drill as many wells and at
such locations on his own property as he pleased in an to attempt to recover
subsurface hydrocarbons from that pool, and (b) that in so doing he would acquire
good title to any and all oil and gas produced from those wells, notwithstanding
that some or even most of the oil or gas produced might have migrated (or been
‘drained’) from that portion of the same pool which underlays his neighbor’s
13
Williams & Meyers, O&G Law § 203.
14
Robert E. Hardwicke, The Rule of Capture and Its Implications as Applied to Oil and Gas, 13
Tex L Rev 391, 393 (1935).
15 “According to the law of capture, the landowner may capture oil and gas by operations on his
land. He owns the captured substance absolutely once it is reduced to dominion and control
although the substance [had been located within a pressure-connected common pool and]
formerly was deposited under another’s land and was induced to migrate to the point of capture
by such operations.” Eugene Kuntz, The Law of Capture, 10 Okla L Rev 406 (1957).
10
land.
16
The Rule of Capture made it economically imperative that each property owner
drill his land and produce at as a rapid a pace as possible, because otherwise his
land would be drained of oil and gas by wells on adjacent properties.
17

In that event, the owner of the adjacent or other property from which the first
landowner’s wells were pulling oil, gas, or both was legally prohibited from
protecting himself, except by drilling his own wells, in an attempt to stanch out-
migration from his portion of the common source of supply, and hopefully induce
migration to him of subsurface product that had otherwise been located under the
property of the first landowner.
18
16
“It, consequently, was held at a very early day in the history of the [industry] that a man could
not be restrained by his abutting neighbor from boring for [hydrocarbons] upon his own
premises, although he located his well within a few feet of the line and would necessarily drain
the [hydrocarbons] from his neighbor’s land, if any existed therein.” Wagner v Mallory, 169 NY
501, 505 (1902).
17
Howard R. Williams, Conservation of Oil and Gas, 65 Harv L Rev, 1155, 1159 (1951-1952).
18
“… every landowner or his lessee may locate his wells wherever he pleases, regardless of the
interests of others. He may distribute them over the whole farm or locate them on only one part
of it. He may crowd the adjoining farms so as to enable him to draw the oil and gas from them.
What then can the neighbor do? Nothing; only go and do likewise.” Bernard v Monongahela
Natural Gas Co., 216 Pa 362, 65 A 801, 802 (1907).
11
Within the oil and gas industry, the term ‘offset well’ refers to a “well drilled on
one tract of land to prevent the drainage of oil or gas to an adjoining tract of land,
on which a well is being drilled or is already in production.”
19
The inevitable (albeit in hindsight) effect of applying the Rule of Capture to oil
and gas was profligate drilling: “a race to drill as many wells as possible to extract
oil and gas as fast as possible. The reward would be title to the oil and gas beneath
one’s property, and, one hoped, a substantial portion of the oil and gas [within the
common source of supply otherwise located] beneath neighboring properties.”
20
To ameliorate the less salutary effects
21
of the Rule of Capture, the courts applied
the doctrine of ‘correlative rights’ to the situation where two or more different
parties owned separate properties, each of which lay over portions of a subsurface,
pressure-connected, common source of supply of hydrocarbons. “Rights in oil and
19
Manual of O&G Terms, definition of “offset well.”
20
Pierce, 1989 BYU L Rev at 14.
21
“This rule of law produced results that were unfair to many landowners and development
practices that were uneconomical or wasteful for all.” Cowling v Board of Oil, Gas and Min.,
Dept. of Natural Resources for State of Utah, 830 P2d 220, 224 (Utah 1991); and
“The rule of capture is frequently and scornfully called ‘the law of piracy’ or the ‘law of the
jungle [].” Hardwicke, 13 Tex L Rev at 32.
12
gas are ‘relative’ because no single owner within a common source of supply can
take action on their property without potentially impacting the rights of other
owners within the common source of supply.”
22
The concept of correlative rights is in essence a limitation of the Rule of Capture.
23
The doctrine of correlative rights is shorthand for stating that where two or more
different parties own separate properties, each of which overlays portions of a
subsurface, pressure-connected, common source of supply of hydrocarbons, “each
owner of an interest in the common source of supply of oil and gas has a legal
privilege, as against the other owners to take oil and gas by legal operations,
limited by duties to the other owners (b) not to injure the source of supply, and (c)
not to take an undue proportion of the oil and gas.” (emphasis added.)
24
C. The Nature Of The Interstate Compact To Conserve Oil And Gas, and The
Circumstances That Gave Rise To The Compact’s Formation.
22
1 Eugene Kuntz, A Treatise on the Law of Oil and Gas § 4.3 (Matthew Bender rev. ed.).
23
“Although correlative rights have been an important and recognized element of property in oil
and gas for over 100 years, they have been viewed primarily as a limitation on an owner’s oil and
gas rights: a negative right as opposed to an affirmative right.” (emphasis in original.) David E.
Pierce, Carol Rose Comes to the Oil Patch: Modern Property Analysis Applied to Modern
Reservoir Problems, 19 Penn St Envtl L Rev. 241, 246 (2011).
24
1W.L. Summers, Oil and Gas § 3:8 (3d ed.); and see Part II. B. of this brief, infra.
13
The concepts of preventing waste, protecting correlative rights, and providing for
greater ultimate recovery “have their basis in the Interstate Compact [to Conserve
Oil and Gas], which is the foundation from which the OGSML arose”.
25
The Interstate Compact to Conserve Oil and Gas (the “IOG Compact”) was formed
in reaction to a profound crisis in the oil and gas industry caused by
overproduction.
26

By 1931, the “industry found itself overburdened with success in finding more
[product] than could be currently used, transported, or consumed.”
27
The methods
of competitive exploitation then prevalent in the industry quickly transformed
potential into actual supplies, with little regard to market demands. The physical
waste and the economic losses from heedless competition were appalling.
28
“It []
25
Appellant’s Reply Brief at 46.
26
The IOG Compact “was a direct result of the glut in [resource] production which followed the
development and discovery of the vast new oil fields in Texas and Oklahoma between 1925 and
1930.” Richard H. Leach, The Interstate Oil Compact: A Study in Success, 10 Ok L Rev 274
(1957).
27
Interstate Oil Compact Commn., A Summary of the Background, Organization Purposes and
Functions of the Interstate Compact to Conserve Oil and Gas, 1 (1969).
28
Marshall & Meyers, Legal Planning of Petroleum Production, 41 Yale L J 33, 35 (1931-1932).
14
became imperative that the financial losses of overproduction be checked and that
the prodigal physical wastes be eliminated.”
29
New York was not immune from the problem of overproduction and low prices:
“Lack of proper legislation caused unlimited production and early exhaustion of
many natural gas pools, true particularly with the development in the 1930’s of the
Oriskany sands in the southern tier counties. There were no restrictions upon any
producer as to practices, quantities, or manner of production. Consequently, the
law of capture applied […]”
30
It became apparent that the problem of overproduction was an interstate one which
could not be solved by each state acting individually.
31
Things were grave indeed: the governors of both Oklahoma and Texas called out
their state militias to close down production.
32
The industry was desperate to find
29
Id. at 33.
30
William A. Dougherty, New York, 1864-1948, 339 in Ch. 22 of Conservation of Oil & Gas A
Legal History (Blakely M. Murphy ed., Section of Mineral Law, American Bar Association,
1949).
31
Summary of the Background of the Interstate Compact, 1.
32
Daniel Yergin, The Prize, at 233-234 (Free Press 2009).
15
some mechanism – other than the rifle barrels of National Guardsmen - to
constrain production. Some industry representatives were so despairing that they
attempted to have the federal government impose production controls. For
example, in 1929 the American Petroleum Institute applied to the federal
government for approval of curtailment of production, but was informed by the
Secretary of the Interior that no legal authority at the federal level could be found
to approve an agreement for the restriction of output.
33
Eventually the mechanism of an interstate compact was settled upon as the vehicle
through which curtailment of production could be achieved. In 1935 approval of
such a compact was passed by Congress and signed by the president, and that year
the IOG Compact came into existence; the states approving the Compact in 1935
were Colorado, Illinois, Kansas, New Mexico, Oklahoma, and Texas.
34
New York
approved the Compact in 1941.
35

The IOG Compact is administered by the Interstate Oil and Gas Compact
Commission (the “IOG Commission”). The IOG “Commission has no compulsive
33
Marshall & Meyers, Legal Planning, 41 Yale L J at 34, n 4.
34
Leach, Study in Success, 10 Ok L Rev at 275.
35
L 1941, ch 501.
16
power.
36
“The Commission exercises no function which attempts to tell anybody,
any individual or any state what they can or cannot do. It is an agency created for
the purpose of attempting to get the states to agree among themselves upon a
conservation program that will conserve … natural resources by the prevention of
physical waste. […] It has no power.”
37
“No instrument of force was created” by the IOG Compact; the “idea of a stronger
regulatory body” was rejected, and it “was agreed that none of the States should be
required to surrender any of their rightful powers over conservation, even to an
interstate body. Instead, the compacting states merely agreed that each in its own
ways […] would work for conservation of oil and gas and the prevention of
physical waste.”
38
No state can be called before the courts for breach of promise
under the Compact.
39
By its express terms, the IOG Compact has one and only one purpose: “to
36
Williams, Conservation, 65 Harv L Rev at 1162.
37
Dougherty, Conservation of Oil & Gas at 577, n 13.
38
Leach, Study in Success, 20 Ok L Rev at 276.
39
Dougherty, Conservation of Oil & Gas at 574.
17
conserve oil and gas by prevention of physical waste thereof from any cause.”
(emphasis added.)
40
II. Explanation Of The Meanings (In the Context of Oil and Gas Production)
Of The Terms ‘Preventing Waste,’ ‘Protecting Correlative Rights,’ and
Providing For ‘Greater Ultimate Recovery’; and Argument That A Decision
By This Court To Uphold Local Municipal Authority To Enact Land Use
Laws Prohibiting Gas Drilling Would Not Be Inconsistent With The Policies
of Preventing Waste, Protecting Correlative Rights, And Providing For
Greater Ultimate Recovery.
The text of Appellant’s Brief runs to 66 pages, and the text of Appellant’s Reply
Brief is also 66 pages. It is Appellant’s position that the policies of preventing
waste, protecting correlative rights, and providing for greater ultimate recovery
“are the driving force of the OGSML, making them the preeminent policy
considerations in the preemption analysis.”
41
It is significant, then, that within its
132 pages of argument, Appellant does not cite even one judicial decision from
any jurisdiction in support of Appellant’s position that not drilling a well in an oil
or gas field that has not been previously developed constitutes ‘waste,’ does not
cite even one judicial decision from any jurisdiction in support of the meaning of
the term ‘greater ultimate recovery’ proffered by Appellant, and cites only to a
40
New York Environmental Conservation Law § 23-2101, Title II.
41
Appellant’s Reply Brief at 46.
18
single footnote in one judicial decision to support Appellant’s view of the meaning
of the term ‘correlative rights.’
There in fact exists quite a developed body of law and academic commentary with
respect to the concepts of waste, correlative rights, and greater ultimate recovery
within the context of oil and gas production activities, and the remainder of this
Part II describes and summarizes that body of law and commentary.
A. Prevention Of Waste Explained; and Why A Decision By This Court To
Uphold Local Municipal Authority To Enact Land Use Laws Prohibiting Gas
Drilling Would Not Be Inconsistent With The Policy Of Preventing Waste.
Appellant asserts that upholding local municipal authority to enact land use laws
prohibiting gas drilling would be inconsistent with the policy of preventing
waste.
42
Appellant does not offer even a single citation of authority for its position that not
drilling a well in an oil or gas field that has not been previously developed
42
E.g., id. at 46-47.
19
constitutes ‘waste,’ but that is no surprise.

The fact is that there exists no authority for the position that not drilling a well in
an oil or gas field that has not been previously developed consititutes ‘waste,’ not
in judicial decisions, not in statutes, and most certainly not in any part of the
history of enactment of the IOG Compact.
A description of the circumstances leading up to creation of the IOG Compact is
set forth at Part I-C of this brief, supra. The suggestion that those circumstances in
any manner support Appellant’s thesis that not drilling a well in an oil or gas field
that has not been previously developed constitutes ‘waste’ is beyond our ken. The
history of the IOG Compact is straightforward, and in every respect that history
involved an attempt to find a mechanism to curtail production (as well as finding
a mechanism to support the notion that where production does take place, it ought
to take place efficiently).
There is simply no aspect of the history or purpose of the IOG Compact that
supports Appellant’s contention that not drilling a well in an oil or gas field that
has not been previously developed constitutes ‘waste.’
20
With respect to statutory authority, New York’s definition of “waste” for purposes
of the Environmental Conservation Law is set forth at item 20 of ECL § 23-0101.
That definition contains five elements, the first of which is “physical waste, as that
term is generally understood in the oil and gas industry.” The oil and gas industry
does not understand physical waste to involve a determination not to drill a well in
an oil or gas field that has not been previously developed.
43
The next two elements of the statutory definition of waste respectively involve the
“inefficient, excessive or improper use of, or the unnecessary dissipation of
reservoir energy” and the inefficient or otherwise improper “locating, spacing …
operating or producing […]” of wells. These two elements of the definition
involve requirements applicable only to circumstances where drilling operations
have taken, are taking, or will take place; they have no application to
circumstances where drilling has not, is not, or cannot take place.
44
43
Physical waste means “operational losses in the production of oil and gas. There are two main
divisions of loss of oil and gas, namely, surface loss and underground loss. Surface loss of oil is
due principally to evaporation and surface loss of gas is due principally to [flaring] or blowing
into the atmosphere. Underground loss is due to failure to recover the maximum quantity which
theoretically could be produced, as by dissipation of reservoir pressure.”(emphasis added.)
Manual of O&G Terms; definition of “physical waste.”
44
Accord, Ivey v Phillips Petroleum Co., F Supp 811 (SD Tex 1941). Ivey involved, inter alia, an
action for damages for waste brought by a landowner against a third party volunteer who had
21
The final two elements of the statutory definition – inefficient storage of oil or gas,
and improper flaring of gas from a well – likewise have no application to a
situation where drilling has not, is not, and cannot take place.
With respect to case law, we have reviewed literally hundreds of judicial decisions
regarding waste, from all across the country, and have found none to support
Appellant’s contention that not drilling a well in an oil or gas field that has not
been previously developed constitutes ‘waste.’
45
There is absolutely no support for Appellant’s position that not drilling a well in
an oil or gas field that has not been previously developed somehow constitutes
‘waste.’
entered onto the landowner’s property in an unsuccessful attempt to plug a well that had blown
out and caught fire. The court refused to apply the statutory prohibition against waste to the
volunteer, reasoning that because the waste statute made unlawful ‘the production, storage or
transportation of oil or gas in such a manner as to constitute waste,’ it applied only to persons
engaged in drilling, producing and transportation operations.
45
Of course, waste can be found to exist in the context of drilling too many wells within a field or
pool, or of drilling a well improperly, or even of not drilling additional wells in a producing field
or pool (such as, for example, an offset well to stanch or counter balance drainage). But as stated
above, we have been unable to find even one case, from any American jurisdiction, that supports
Appellant’s contention that not drilling a well in an oil or gas field that has not been previously
developed constitutes waste.
22
Accordingly, a decision by this Court to uphold local municipal authority to enact
land use laws prohibiting gas drilling would not be inconsistent with the policy of
preventing waste.
B. Correlative Rights Explained; and Why A Decision By This Court To
Uphold Local Municipal Authority To Enact Land Use Laws Prohibiting Gas
Drilling Would Not Be Inconsistent With The Policy Of Protecting
Correlative Rights.
Appellant asserts that upholding local municipal authority to enact land use laws
prohibiting gas drilling would be inconsistent with the policy of protecting
correlative rights. In that regard, Appellant asserts that upholding municipal
authority to prohibit drilling would result in the “obliteration” of correlative
rights.
46
In fact, a decision by this Court to uphold local municipal authority to enact land
use laws prohibiting gas drilling would not be inconsistent with the policy that
correlative rights be protected.
Appellant is apparently of the opinion that the concept of correlative rights
somehow involves or perhaps even requires the drilling of as many wells as
46
E.g., Appellant’s Brief at 29.
23
possible in as many communities as possible within as many New York
municipalities as possible. In this regard, it would appear that Appellant
misapprehends what correlative rights are in the context of oil and gas.
Application of the concept of correlative rights to subsurface oil and gas came
about in reaction to and as an attempt to mitigate certain undesirable consequences
that resulted from application of the Rule of Capture to oil and gas.
47
Indeed, the
concept of correlative rights in the context of oil and gas is often described as a
limitation on the Rule of Capture,
48
and both statutory
49
and judicial
50
imposition
of restrictions and limitations on production of oil and gas in the name of
protecting correlative rights are common.
51

47
See Part I. B. of this brief, supra.
48
Id. at n 23.
49
E.g. Arkansas statutorily ties correlative rights to disproportionate withdrawals: “Abuse of the
correlative rights and opportunities of each owner of oil and gas in a common reservoir due to
nonuniform, disproportionate, and unratable withdrawals …” Ark Code Ann § 15-72-102 (15)
(c).
50
E.g., Chevron Oil Co. v Gas Conservation Commn, 435 P2d 781 (Mont 1967), where the
Supreme Court of Montana held that the state (regulatory) Gas Commission “had authority to
limit production rate or otherwise control quantity of oil and gas produced [ ] to protect
correlative rights” (emphasis added), notwithstanding that the Gas Commission itself had taken
the position that it had no such authority absent a finding of waste.
51
“New York’s statutory and regulatory scheme limits the number of wells that can be drilled [ ]
thus insuring maximum recovery. A necessary consequence of limiting the number of wells is
that some people will be prevented from drilling to recover the oil or gas beneath their property.
To avoid any inequity, New York has modified the ‘law of capture’ and adopted the doctrine of
24
“The term correlative rights is merely a simple way of stating that the privileges of
each landowner in a common source of supply of oil and gas are limited by duties
to other landowners not to injure the oil and gas reservoir, or to take an undue
proportion of the oil and gas obtainable therefrom.”
52
“The term ‘correlative rights’ in oil and gas law describes a bundle of legal rights
and duties. It means that (a) each owner of an interest in a common source of
supply of oil and gas has a legal privilege, as against the other owners, to take oil
and gas by legal operations, limited by duties to the other owners (b) not to injure
the source of supply, and (c) not to take an undue proportion of the oil and gas.”
(emphasis added.)
53

The Supreme Court of Oklahoma has defined correlative rights to be “a
‘correlative rights,’ whereby each landowner is entitled to be compensated for the production of
the oil or gas located in the pool beneath his or her property regardless of the location of the well
that effects its removal.” (emphasis added.) Western Land Services Inc. v Department of
Environmental Conservation of State of New York, 26 AD 3d 15, 17 (Third Dept. 2005).
52
W.L. Summers, The Modern Theory and Practical Application of Statutes for the
Conservation of Oil and Gas, 8, from Legal History of Conservation of Oil and Gas, A
Symposium, (Section of Mineral Law, American Bar Association 1938).
53
1 W. L. Summers, Oil and Gas, § 3:8 (3d ed.).
25
convenient method of indicating that each owner of land in a common source of
supply of oil and gas has legal privileges as against other owners of land therein
to take oil and gas therefrom by lawful operations conducted on his own land,
limited, however, by duties to other owners not to injure the source of supply and
by duties not to take an undue proportion of the oil and gas.” (emphasis added).
54
“From this it can be seen that correlative rights are those rights which one owner
possesses in a common source of supply in relation to those rights possessed by
other owners in the same common source of supply.” (emphasis added.)
55
The term correlative rights “does not conceal some mysterious and bewildering
concept. It is a simple doctrine that owners of rights in a common source of supply
may not inflict loss upon one another by conduct which is considered to be
socially unacceptable.”
56
54
Samson Resources Co. v Corporation Commn, 1985 OK 31, 702 P 2d 19, 22.
55
Id.
56
1 Kuntz, Law of Oil and Gas § 4.3. [N.B. The name of the chapter in which the Kuntz editors
describe correlative rights is ‘Chapter 4 Rights of Owners of Oil and Gas Among Themselves’
(emphasis added).]
26
Correlative rights do not exist in a vacuum
57
, and it is not the case that every
member of the public, or even every member of the public who might prefer that a
local legislature not enact a municipal-level drilling ban, ipso facto possesses
correlative rights to be protected.
In the context of oil and gas, correlative rights exist – even potentially – only in
circumstances where separate owners own separate properties, each of which
overlies a pressure-connected hydrocarbon reservoir; even then, ‘correlative
rights’ do not apply to third parties, and apply only to the relationship between or
among the owners of the separate properties which overlay the pool in question.
58
57
Correlative rights only exist, even potentially, in the context where separate parties separately
own interests in a common source of supply of hydrocarbons. Some correlative rights cases speak
in terms of allowing a landowner the ‘opportunity to produce his just and equitable share of oil
and gas’. All of those cases involve (only) affording a landowner who owns an interest in a
common source of supply (only) the same opportunity, if any, as exists in favor of the other
landowners in the common source of supply. If, for example, there are a total of (say) 100
landowners having interests in the common source of supply, and for whatever legitimate reason
none of them may drill – for example, perhaps the common source of supply is in the New York
City watershed or some other place ‘off limits’ to drilling because the risks of allowing drilling in
that area are too great – then none of them may be said to have lost correlative rights. The
‘opportunity to produce’ simply means that all landowners within the common source of supply
have no greater or lesser opportunity to produce than the others.
58
“The term ‘correlative rights’ embraces the relative rights of owners in a common source of
supply to take oil or gas by legal operations limited by duties to the other owners (1) not to injure
the common source of supply and (2) not to take an undue proportion of the oil and gas.”
(emphasis added.) Kingwood Oil Co. v Hall-Jones Oil Corp., 1964 OK 231, 396 P2d 510, 512.
27
Imagine four identically shaped and sized rectangular properties, situated in a row,
as in a city block. The properties are owned by “A,” “B,” “C,” and “D,”
respectively. Next imagine that a single kidney-shaped pool of hydrocarbons
underlies the property of both A and B (but does not extend under the property of
either C or D), that a separate
59
pool of hydrocarbons underlies the property of C,
and that no pool underlies the property of D.
Under these circumstances, no correlative rights exist (even potentially) in favor
of D as to the pool under C’s property, or as to the pool that straddles the
properties respectively owned by A and B. Similarly, no correlative rights exist
(even potentially) in favor of C as to the pool that straddles the properties
respectively owned by A and B, because the pool under C’s property and the other
pool are not a common source of supply. Furthermore, no correlative rights exist
(even potentially) in favor of any third party member of the general public to
either of the aforementioned pools. The only place that correlative rights come
into play even potentially is in the context of one or both of A and B engaging in
activities to extract product from the common pool that lies beneath their property,
59
‘Separate’ in the sense that there is no pressure connection between the pool under C’s
property and the pool that lies under the property of A and B, and thus excess drilling (say) on
C’s property can not drain product from the pool under the property of A and B, or result in any
diminution of reservoir pressure from the pool under the property of A and B.
28
and in that event ‘correlative rights’ speak only to the relative rights and duties of
A and B as between themselves with regard to the common source of supply.
Correlative rights do not create a right to drill - and do not create an obligation to
drill – in an oil or gas field that has never been developed.
Imagine the situation of A and B above, but with the following refinements: (i) A
would like to use his property for gas mining; (ii) by itself, A’s property is too
small for A to receive a drilling permit from the NYS DEC; (iii) at the present
time, B does not want to use his property for gas mining, perhaps because he
believes he can get a better price for the gas sometime in the future; and (iv) the
size of A’s property is such that A does not qualify to be able to force B to
dedicate his property to drilling via the mechanism of compulsory integration.
60

In the situation described in the preceding paragraph, A cannot force B to make
60
Environmental Conservation Law § 23-0901(3) is the compulsory integration statute, and
Environmental Conservation Law § 23-0501(2) sets forth requirements regarding establishment
of permitted drilling units. Under those statutes, an owners or owners [or those, such as a lessee
under a gas lease, claiming through the owner(s)] controlling at least 60% of a drilling unit can
force (hence the term ‘compulsory’) the owners of the remaining 40% of the drilling unit to make
the latter’s property(ies) available to be used for drilling. NYS DEC anticipates that drilling units
in the context of attempts to extract gas from the Marcellus formation will generally be 640 acres
each. Thus an owner (or lessee) who controls 384 acres (being 60% of 640) can force owners of
the remaining 40% of the drilling unit (256 acres) to allow drilling to take place under their land.
29
his property available for drilling, under color of a correlative rights claim or
otherwise. And B’s election not to dedicate his property to gas mining is in no
manner, shape, or form somehow a violation of A’s correlative rights. In fact, in
this situation neither A nor B has any correlative rights, because correlative rights
as a concept exist only in the context of extraction operations in or affecting a
common pool.
All judicially recognized and statutory measures to protect correlative rights fit
within one or both of only two categories. The first category can be described as
involving requirements prohibiting or intended to prevent damage to a pressure-
connected, common source of hydrocarbons by one owner of an interest in the
common source of supply to the detriment of either other owners of an interest in
the common source of supply, or the public. An example of a measure falling into
this category would be a regulatory requirement that prohibits utilization of
drilling practices of a type that inefficiently or wastefully dissipates reservoir
energy.
The second category of judicially recognized measures to protect correlative rights
involves requirements intended, in the context of a developed oil or gas field, to
30
assure that each owner of an interest in the common source of supply obtains (or
receives an opportunity to receive) her just and equitable share of production (or
the value of such production) from the common source of supply.
61
This second category of measures to protect correlative rights may be further
divided into two sub-categories: (i) restrictions intended to prevent one owner
from obtaining the benefit of more than her fair share (vis-à-vis the other owners)
of the common source of supply;
62
and (ii) requirements designed to ensure, in the
context of regulatory action the effect of which is to restrict production (whether
to prevent waste, or otherwise), that the effect of the restriction on on-going
production is borne in equitable proportion between or among the respective
owners of interests in the common source of supply.
63
61
E.g., South Dakota’s statutory definition of this term: “Just and equitable share shall mean, as
to each person, that part of the authorized production from the pool that is substantially in the
proportion that the amount of recoverable oil or gas in the developed area of his tract or tracts in
the pool bears to the recoverable oil or gas or both in the total of the developed areas in the
pool.” (emphasis added.) SD Codified Laws § 45-9-2(6).
62
An example of a measure falling within this category would be a regulatory restriction
regarding well location that was intended to prevent drainage by one person of subsurface
hydrocarbons that would otherwise remain (in the same common pool) under property owned by
a different person.
63
An example of a measure falling within this category would be the not uncommon situation
where a regulatory agency restricts the amount of legal or allowable production – to avoid waste
and protect correlative rights – from a particular well or from all wells within a particular pool,
and then allocates or prorates the amount of allowed production (‘allowables’) between or among
the separate parties owning interests in the common source of supply as to which production has
31
The concept of correlative rights does not in any manner require the drilling of as
many wells as possible in as many communities as possible within as many New
York municipalities as possible, nor may it accurately be said that correlative
rights are somehow not ‘protected’ unless the industry is allowed to drill as many
wells as possible in as many communities as possible within as many New York
municipalities as possible.
The term ‘correlative rights’ simply embodies the concept “that each owner of
land overlying a common source of supply of oil and gas has legal privileges as
against other owners of land therein to take oil and gas therefrom by lawful
operations conducted on his own land, limited, however, by duties to other owners
not to injure the source of supply and by duties not to take an undue proportion of
the oil and gas.” (emphasis added)
64
Correlative rights are often relied upon by regulatory agencies and courts as
justification to limit the number of legal wells and to limit production from a well
or within a pool in which extractive operations are taking place, but there is
been limited.
64
Samson Resources, 702 P2d at 22.
32
absolutely no judicial or statutory authority to support Appellant’s opinion that
correlative rights create either a right to drill or an obligation to drill in the context
of an oil or gas field that has never been developed.
Accordingly, a decision by this Court to uphold local municipal authority to enact
land use laws prohibiting gas drilling would not be inconsistent with the policy of
protecting correlative rights.
C. Greater Ultimate Recovery Explained; and Why A Decision By This Court
To Uphold Local Municipal Authority To Enact Land Use Laws Prohibiting
Gas Drilling Would Not Be Inconsistent With The Policy Of Promoting
Greater Ultimate Recovery.
Appellant asserts that upholding local municipal authority to enact land use laws
prohibiting gas drilling would be inconsistent with the policy of promoting
‘greater ultimate recovery.’
65

In fact, a decision by this Court to uphold local municipal authority to enact land
use laws prohibiting gas drilling would not be inconsistent with the policy of
promoting ‘greater ultimate recovery.’
65
E.g., Appellant’s Brief at 57-58.
33
Appellant in its Briefs cites no judicial or other authority defining the term ‘greater
ultimate recovery,’ and cites no authority supporting Appellant’s opinion that
(whatever the term may mean) the policy of promoting greater ultimate recovery
will be defeated if this Court upholds local municipal authority to enact land use
laws prohibiting gas drilling.
The reason that Appellant has cited no judicial or statutory authority to support its
assertion regarding ‘greater ultimate recovery’ is most likely that Appellant was
unable to find any, and it is respectfully submitted that the reason Appellant was
unable to find any such authority is that none exists.
Appellant is apparently of the opinion that the concept of promoting greater
ultimate recovery somehow requires the drilling of as many wells as possible in as
many communities as possible within as many New York municipalities as
possible. In this regard, Appellant misapprehends what ‘greater ultimate recovery’
means in the context of oil and gas.
In oil and gas parlance, a well is said to be in ‘primary’ production or recovery so
34
long as natural reservoir energy
66
is sufficient to propel the oil or gas to the well
bore. The term ‘secondary recovery’ is applied to worn out fields where
production has declined or ceased because the reservoir pressure is about gone and
artificial energy (such as created by pumps) must be employed to bring the product
to the bore.
67
“Repressuring” of a well involves “injection of gas into oil or gas
formations to effect greater ultimate recovery.”
68
A ‘flowing well’ is a well that
produces by its own reservoir pressure.
69
“All experts on oil and gas production agree that, presently, there is no way by
which all of the oil and gas in any field can be recovered. How much of the oil and
gas will be recovered from any field depends on the pressure in the field.”
70
66
See Williams & Meyers, O&G Law, definition of “primary production; and Manual of O&G
Terms; definition of “primary production”: “Production from a reservoir by primary sources of
energy, that is, from natural energy in the reservoir […]”.
67
Williams & Meyers, O&G Law § 104.
68
14 David J. Muchow & William A. Mogel, Energy Law and Transactions, Unit IV Glossary of
Energy Terms (2014).
69
Manual of O&G Terms; definition of “flowing well.”
70
Syverson v North Dakota State Indus. Commn., 111 NW 2d 128, 132 (ND 1961). Syverson
involved a secondary recovery operation (repressuring) where it was found necessary to
repressure “the field pressure in order to secure the greatest ultimate recovery [ ] therefrom.” Id.
at 131.
35
Professor Ely observed that a “pool is an engine: it represents an equilibrium of
rock pressure, gas pressure, and underlying water pressure. Pierced by a well,
these forces propel oil or gas or water, or all three to the surface [ ]. Under ideal
conditions, those natural underground forces, i.e., ‘water drive,’ gas pressure, and
so on, may be so harnessed and controlled as to lift to the surface 90-95 percent of
the [hydrocarbons] contained in the reservoir, by flowing, over a long period of
years. But when [ ] produced without restriction, the engine figuratively races
itself to pieces.”
71
In the context of oil and gas production, the phrase promoting ‘greater ultimate
recovery’ refers to the concept of avoiding wasteful dissipation of ‘reservoir
energy’ (or pressure) with respect to a particular well or with respect to various
wells within a particular pressure-connected pool, in order that the reservoir
pressure of that particular well, or of the various wells within that particular
pressure-connected pool, will remain available for use if and when efforts are
made to bring the hydrocarbons present in the particular pool to the surface (i.e.,
recovery).
71
Northcutt Ely, The Conservation of Oil, 51 Harv L Rev 1209, 1219-1220 (1938).
36
“It is an established fact that maintenance of reservoir pressure is essential to
secure the greatest ultimate recovery of oil and gas.”
72

Wasteful or inefficient dissipation of reservoir energy has been found to occur in
any number of different situations, including: drilling too many wells within the
same pool,
73
overproduction of a particular well or pool,
74
and allowing production
to occur too rapidly.
75
72
Phillips Petroleum Company v Stryker, 723 So 2d 585, 588 (Ala 1998).
73
See, e.g., Owen L. Anderson & Ernest E. Smith, Exploratory Unitization Under The 2004
Model Oil And Gas Conservation Act: Leveling The Playing Field, 24 J Land Resources & Envtl
L 277, 278 (2004): “… the drilling of too many wells inefficiently dissipated the natural reservoir
energy [ ] thereby causing underground waste. Because of this rapid dissipation of internal
reservoir pressure, hydrocarbons that would otherwise have been produced became
unrecoverable.”
74
See, e.g., HECI Exploration Co. v Neel, 982 SW2d 881, 884 (Tex 1998), where illegal
overproduction “resulted in the permanent loss of oil and gas reserves that otherwise could have
been recovered [ ]. […] The reservoir itself was damaged because production by [ ] at excessive
rates caused oil to migrate into the gas cap overlying the reserves, which diminished the amount
of oil and gas that can be recovered.”
75
E.g., “Uncontrolled flow of flush or semiflush wells for any considerable period exhausts an
excessive amount of pressure [] and greatly lessens ultimate recovery.” Champlin Refining Co. v
Corp. Commn. of State of Okl., 286 US 210, 228 (1932); and
“An engineering analysis of the reservoir-pressure data [ ] provides definite criteria against which
the efficiency of the operations can be tested. Experience has demonstrated that most sound
production practices are employed only when production rate is restricted. It follows that, if
conservation is to be achieved, the rate of production from each field must be restricted to such
an extent that efficient producing practices may be employed.” (emphasis in original.) Progress
Report by the Special Study Committee and the Legal Advisory Committee on Well Spacing and
Allocation of Production of the Central Committee on Drilling and Production Practice,
Division of Production, American Petroleum Institute (published by ‘The Committee’ through
private subscription, 1942), 31; and
37
In contrast, there are no cases from any jurisdiction that hold that not drilling a
well in an oil or gas field that has never been developed is somehow inconsistent
with promoting greater ultimate recovery.
There are requirements that an operator correctly plug a well (so as to avoid the
dissipation of reservoir energy that otherwise would occur if the well were left
uncapped) when it wishes to cease operations from the well for whatever reason,
76
but there are no cases that require – in the name of promoting greater ultimate
recovery, or otherwise – that a well, once drilled, must continue to be operated
until every last molecule of oil or gas has been wrung from the ground.
Restrictions upon drilling and production are commonly employed
77
in the name
Permitting wells to flow to capacity continuously resulted in waste, “in that the gas pressure
would be unduly and disproportionately dissipated and used in excess of the amount required to
produce [ ] efficiently and as a result of such unrestrained operation, large quantities [ ] would be
left in the ground and unrecoverable which could be recovered by more orderly methods of
production …”, from Oklahoma Corp. Commn. Order 4882 dated Dec. 23, 1929, referenced at
W.P.Z. German, Legal History of Conservation of Oil and Gas in Oklahoma, 159, from Legal
History of Conservation of Oil and Gas, A Symposium, Section of Mineral Law, American Bar
Association 1938.
76
See, e.g., 17 Okl St Ann § 53.
77
“Just what effect unrestricted production would have on the field was not shown […].
However, the restriction in production and the retarded orderly withdrawals from the field, were
in the interest of [ ] preventing waste, and effecting a greater ultimate recovery than would be had
under unrestricted production.” (emphasis added.) R.R. Commn. v Humble Oil & Ref. Co., 193
38
of securing the greatest ultimate recovery.
78

“New York’s statutory and regulatory schemes limits the number of wells that can
be drilled into an underground pool of oil or gas by creating ‘spacing units’ thus
insuring maximum recovery.” (emphasis added)
79
The “application of conservation
measures necessarily results in curtailment of production of oil, gas or both in
order to [ ] obtain the greatest ultimate recovery from the pool.” (emphasis
added.)
80

No judicial or statutory authority exists to support Appellant’s apparent thesis that
the concept of ‘greater ultimate recovery’ requires the drilling of as many wells as
possible in as many communities as possible within as many New York
municipalities as possible.
SW2d 824 (Tex Civ App 1946) affd sub nom. Williams v R.R. Commn. of Texas, 331 US 791
(1947) and affd sub nom. Humble Oil & Ref. Co. v R.R. Commn. Of Texas, 331 US 791 (1947).
78
Production at an excess rate would “decrease bottom hole pressure, [] which would be
unfavorable to the greatest ultimate recovery [].” Johnston v Cole, 135 SW2d 524, 526 (Tex Civ
App 1940).
79
Western Land Services Inc., 26 AD3d at 17.
80
Denver Producing & Ref. Co. v State, 1947 OK 251, 199 Okla 171, 184 P2d 961.
39
The phrase ‘greater ultimate recovery’ has a very specific meaning within the
context of oil and gas production: it refers to the concept of avoiding wasteful
dissipation of ‘reservoir energy’ (or pressure) with respect to a particular well or
with respect to various wells within a particular pressure-connected pool, in order
that the reservoir pressure of the particular well, or of the various wells within the
particular pressure-connected pool, will remain available for use if and when
additional or future efforts are made to bring the hydrocarbons present in the
particular pool to the surface (which is referred to as ‘recovery’).
Accordingly, a decision by this Court to uphold local municipal authority to enact
land use laws prohibiting gas drilling would not be inconsistent with the policy of
promoting a greater ultimate recovery.
III. Summary of Argument.
Appellant asserts that a decision by this Court to uphold local municipal authority
to enact land use laws prohibiting gas drilling would be inconsistent with the goals
of ‘preventing waste,’ providing for ‘greater ultimate recovery,’ and ‘protecting
correlative rights’ that are among the policies which underlie enactment of the Oil,
40
Gas, and Solution Mining Law.
In fact, a decision by this Court to uphold local municipal authority to enact land
use laws prohibiting gas drilling would not be inconsistent with the policies of
preventing waste, protecting correlative rights, and providing for greater ultimate
recovery.
Preventing waste, protecting correlative rights, and providing for greater ultimate
recovery are terms of art in the context of the oil and gas industry.
There exists no authority to support Appellant’s contention that not drilling a well
in an oil or gas field that has not been previously developed constitutes ‘waste’ as
that term is used within the oil and gas industry.
As to ‘correlative rights,’ that term in the context of oil and gas law means (only)
that (a) each owner of an interest in a common source of supply of oil and gas has
a legal privilege, as against the other owners, to take oil and gas by legal
operations, limited by duties to the other owners (b) not to injure the source of
supply, and (c) not to take an undue proportion of the oil and gas. An ‘opportunity
41
to produce’ in the context of correlative rights simply means that all landowners
within the common source of supply have no greater or lesser opportunity to
produce than the other owners of interests within that common source of supply.
Correlative rights are often relied upon by regulatory agencies and courts as
justification to limit the number of legal wells and to limit production from a well
or within a pool in which extractive operations are taking place, but there is
absolutely no judicial or statutory authority to support Appellant’s opinion that
correlative rights create either a right to drill or an obligation to drill in an oil or
gas field that has never been developed.
Appellant apparently believes that the concept of promoting greater ultimate
recovery somehow requires the drilling of as many wells as possible in as many
communities as possible within as many New York municipalities as possible.
In the context of oil and gas production, the phrase promoting ‘greater ultimate
recovery’ refers to the concept of avoiding wasteful dissipation of ‘reservoir
energy’ (pressure) with respect to a particular well or with respect to various wells
within a particular pressure-connected pool, in order that the reservoir pressure of
42
that particular well, or of the various wells within the particular pressure-
connected pool, will remain available for use if and when additional or future
efforts are made to recover hydrocarbons from the particular pool.
There are no cases from any jurisdiction that hold that not drilling a well in an oil
or gas field that has never been developed is somehow inconsistent with
promoting greater ultimate recovery.
43
CONCLUSION, and REQUEST FOR RELIEF
For the reasons set forth hereinabove, we hereby respectfully submit that a
decision by this Court to uphold local municipal authority to enact land use laws
prohibiting gas drilling would not be inconsistent with the policies of preventing
waste, protecting correlative rights, and providing for greater ultimate recovery,
and we respectfully request that this Honorable Court affirm the unanimous
decision of the Appellate Division below.
Dated: Ithaca, New York
April 18, 2014
Respectfully submitted,
_____________________________
David F. Slottje, Esq.
Community Environmental Defense
Council, Inc.
PO Box 898
Ithaca NY 14851
Telephone: (607) 277-5935
Facsimile: (607) 323-0505
dslottje@cedclaw.org
44
/s/

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