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Multiyear litigation over unconventional oil and gas development—specifically, hydraulic fracturing or “fracking”—has caused a stir in Pennsylvania courts regarding the interpretation of a long-standing property law rule.
Established in the late 1800s, the “rule of capture” considers subsurface oil and gas owned only when it is “captured” or produced from a well. The rule was originally born out of necessity due to the fugitive nature of oil and gas and the complex relationship between neighboring landowners regarding the ownership of shared subsurface oil and gas deposits.
Traditionally, the rule of capture protected the right of property owners to use their land for oil and gas exploration. However, fracking companies have abused the rule, essentially assuming it allowed them to drill a well on its leased property, tap subsurface oil and gas from adjoining properties, and be absolved from legal liability. This legal exploit is exactly how Texas-based Southwestern Energy Company (SWN) extracted natural gas from the Briggs family property in northeast Pennsylvania, and the family argues that this practice constitutes an illegal trespass onto their property.
Stemming from the family's 2015 complaint, the Supreme Court of Pennsylvania must now decide whether the rule of capture extends to fracking. In 2017, the trial court extended the meaning of the rule to encompass fracking practices. The trial court’s decision effectively halted the Briggses’ trespass action. On appeal in 2018, the Superior Court reversed the lower court’s decision, stating that SWN could be held liable for damages in trespass. The Superior Court refused to recognize the rule of capture as a defense to trespass related to fracking because of the intrusive nature of fracking. SWN appealed the Superior Court’s decision, and the Supreme Court of Pennsylvania granted its petition on November 20, 2018.
On Sept. 12, lawyers from both sides argued the following issue in front of the Supreme Court of Pennsylvania:
“Does the rule of capture apply to oil and gas produced from wells that were completed using hydraulic fracturing and preclude trespass liability for allegedly draining oil or gas from under nearby property, where the well is drilled solely on and beneath the driller’s own property and the hydraulic fracturing fluids are injected solely on or beneath the driller’s own property?”
Attorney Robert L. Byer pleaded SWN’s case first in front of the Court, and his argument relied heavily on long standing precedent recognizing the rule of capture as precluding trespass liability. When questioned why the injection of fracking proppants (the solid material used to keep fractures open) on to a neighbor’s property should not be considered a trespass, Byer deferred to the uncertainty involved in the fracking process.
He stated that the technology does not exist to sufficiently prove that SWN’s proppants crossed the property line, entering the Briggs' land. Furthermore, when asked to distinguish this practice from slant drilling, which the rule of capture does not absolve trespass liability, Byer stated that slant drilling violates the rule of capture because the driller physically and consciously crossed on to the neighbor’s property. Byer concluded that the state Legislature is more fit to solve this issue rather than a “retroactive” judicial decision.
Conversely, Laurence M. Kelly, the Briggs' attorney, advocated that the rule of capture does not preclude trespass related to fracking activities. Kelly compared the invasive nature of injecting proppants into a neighboring subsurface to the drill bit used in illegal slant drilling practices. He asserted that SWN consciously and physically injected proppants into the Briggs’ subsurface property, continuously leaching fuel from their land without consent.
We think this is an important case to watch because if the Court decides in SWN’s favor, there could be negative implications for Pennsylvania landowners with subsurface gas and oil at their property’s boundary. Oil companies like SWN could shop around, establish a lease with one landowner at the cheapest price, tap the communal oil, and owe no royalties to the neighbor. Contrary to SWN’s argument, this will create negative economic impacts as neighboring landowners could be forced into a race to the bottom to establish a lease in order to capitalize on oil beneath their land.
Furthermore, such an interpretation of the rule will necessarily strip the non-leasing landowner of any legal recourse. As the fracking boom continues in many areas of Pennsylvania, the Court’s upcoming decision may help to clarify the interplay between the rule of capture and fracking across property lines.