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Rule of Capture Applies to Hydraulic Fracturing in PA, but Door is Still Open to Trespass and Conversion Claims

In a split 3-2 decision, the Pennsylvania Supreme Court held that the rule of capture applies to gas wells completed using hydraulic fracturing, though the Court’s holding was limited by the undeveloped factual record in the case. See Briggs v. Southwestern Energy Production Co., No. 63 MAP 2018 (Pa. Jan. 22, 2020). With the Court’s decision, Pennsylvania joins Texas and other states that have applied the rule of capture to hydraulic fracturing. The narrow scope of the Court’s holding, however, makes it almost certain that neighboring landowners will continue to assert trespass and conversion claims against developers in Pennsylvania engaging in hydraulic fracturing until the law is further developed.

The rule of capture is an old tenet of oil-and-gas law that provides that a developer is free to extract oil and gas from a well drilled on his property even when there is drainage of oil or gas from beneath the lands of another so long as there has been no trespass, meaning an actual invasion of the subsurface such as by drilling. The rule is based on the idea that when a well is drilled on a property, oil and gas is extracted from a common reservoir in which the oil and gas naturally migrates and moves freely. The traditional remedy for a landowner at risk of having his subsurface oil or gas drained by a neighboring landowner is not to file a lawsuit but to drill an offset well.

In this case, the issue was whether the rule of capture applied to wells completed by hydraulic fracturing. Hydraulic fracturing is a process that enhances the drainage of oil and gas into the wellbore for capture. It involves pumping fluids into a wellbore at high pressure in order to open and enlarge fractures within the rock formation. While some jurisdictions like Texas had applied the rule of capture to hydraulic fracturing, the question had not yet been resolved in Pennsylvania.

In this case, the plaintiffs, the Briggs, owned real estate in Susquehanna County, Pennsylvania. Their land was adjacent to land leased by Southwestern Energy Production Company where Southwestern was using hydraulic fracturing to boost natural gas extraction from the Marcellus Shale formation. The Briggs asserted trespass and conversion claims against Southwestern on the basis that these activities unnaturally disrupted reservoirs of gas beneath their property, although the Briggs did not expressly allege that the hydraulic fracturing activities physically intruded into their property. In defense against these claims, Southwestern argued that the rule of capture precluded any liability in trespass or conversion because Southwestern was engaged in hydraulic fracturing only on land it had leased.

The Supreme Court settled the question by holding that the rule of capture applies to wells completed using hydraulic fracturing, meaning that a developer may be immunized from suit so long as there is no trespassory invasion. But the Court’s holding went no further. Specifically, whether the process of hydraulic fracturing causes a physical intrusion into the subsurface of a neighbor’s property that amounts to a trespass “is a factual question to be established through expert evidence.” The Court explained that if the wellbore invades the neighboring property, it is certainly a trespass, but the Court did not resolve whether it would be a trespass if fracturing fluid propelled beneath another’s land. 

The Court’s limited holding ultimately means that developers and landowners will continue to litigate trespass and conversion claims as long as landowners sufficiently allege an actual physical intrusion of their property. As to what constitutes a “physical intrusion” in the context of hydraulic fracturing remains an open question.