Pennsylvania High Court Upholds Rule of Capture for Hydraulic Fracturing

January 24, 2020

On Jan. 22, 2020, the Pennsylvania Supreme Court issued its highly anticipated ruling in Briggs v. Southwestern Energy Prod. Co., affirming that the rule of capture applies to unconventional oil and gas development “that occurs entirely within the developer’s property.” However, the state Supreme Court declined to decide whether the rule of capture precluded trespass claims where a “physical invasion” of unleased property is alleged to have occurred, finding that the issue had not been preserved for the Supreme Court’s review.

Consequently, while the decision upholds long-established precedent that the rule of capture will foreclose claims arising from the migration of natural gas across property boundaries, it also leaves open — at least for now — claims for subsurface physical trespass.

The Supreme Court’s decision reverses the Pennsylvania Superior Court’s holding that the rule of capture was not applicable to hydraulic fracturing. The plaintiffs, owners of an 11-acre tract of land adjacent to property leased to Southwestern, alleged that Southwestern’s hydraulic fracturing operations on adjoining lands constituted trespass and conversion of their gas. The Superior Court reasoned that hydraulic fracturing “artificially” induced the flow of gas from unleased subsurface strata to wellbores located under leased property, resulting in higher costs that might preclude individual landowners from drilling their own offset wells to prevent draining from their properties.

Ultimately, the Supreme Court vacated the Superior Court opinion and remanded, neither electing to reinstate the trial court’s order granting summary judgment nor finding that the plaintiffs may now proceed on a physical-invasion trespass theory. Notably absent from the decision, however, was clear guidance on what would constitute a “physical invasion” and what the applicable standards for pleading and proving one will be. These issues will no doubt be litigated in the future.