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Energy Law in the United States
Energy law deals with the extraction, use and taxation of both renewable and non-renewable forms of energy. The U.S. Department of Energy is tasked with administering federal energy policies, but regulating oil, coal and gas extraction is largely left to the states. Attorneys who practice energy law devote much of their time to resolving disputes over who owns certain resources and how those resources should be extracted. This is sometimes a complex area as the rights to a parcel of land with energy resources may be owned by an individual, a company, a Native American tribe or state or federal authorities.
The Rule of Capture and the Correlative Rights Doctrine
The rights to oil and gas reserves extend downward vertically from the property line. Because these resources are fluids, they may cross property lines when drilling operations begin due to gravity and seepage. The rule of capture principle allows property owners to recover any oil produced from a well on their land even if it originated on a neighbor’s property, which encourages them to pump out as much oil as they can as quickly as possible. In addition to leaving neighbors at a disadvantage, the strict adherence to the rule of capture principle encourages reckless extraction techniques that may damage the environment and reduce the total amount of oil that can be recovered. Therefore, many states have adopted the correlative rights doctrine to address these issues. This doctrine ensures that property owners receive a reasonable share of their oil and gas resources.
Ownership of Mineral Rights
Property owners who do not wish to be involved with oil or gas extraction may lease their mineral rights to an energy company or use a deed to sever themselves from their surface rights. This creates what is known as a split estate. Once mineral rights have been severed, they can be transferred or sold like any other piece of real property. This is another area of energy law that can get quite complex as mineral rights can be divided into horizontal layers and sold to several parties. The parties that buy mineral rights in this way generally have the right to occupy as much of the surface property as they reasonably need to extract the resources involved.
Energy companies must obtain state permits before wells are drilled and extraction begins. To obtain a drilling permit, they must show that their casing and cementing protocols meet state regulations and that adequate setbacks from parcel or lease boundaries will be maintained. Most states also demand regular reports about the amount of oil or gas produced and require extractors to obtain new permits when major work must be performed at drilling sites. Once the resources have been extracted, energy companies must obtain permits and plug their wells in accordance with state rules.
The Benefits of Hiring an Energy Law Attorney
Due to the number of regulatory violations related to pollution, many oil and gas companies retain attorneys who are familiar with compliance. Furthermore, attorneys can help energy companies secure capital, develop new projects and handle litigation for any business-related issues.