Briggs v. Southwestern Energy is another way to say “chaos” in Pennsylvania. The Superior Court ruled that fracking may constitute a trespass when subsurface frac-fluid and proppants cross boundary lines and extend into the subsurface estate of an adjoining property owner from whom the operator does not have a mineral lease, resulting the extraction of natural gas from beneath the adjoining property.
Briggs owns 11 acres in Susquehanna County. Southwestern as lessee of the adjoining tract operates two gas units and engages in hydraulic fracturing. Briggs sued for trespass and conversion by which Southwestern produced gas from Briggs’ property. Southwestern answered that the claims were barred by the rule of capture.
Questions considered by the court (summarized) in this case of first impression:
- Was Southwestern liable under theories of trespass or conversion for gas produced from its wells that originated under the plaintiff’s lands and was extracted by hydraulic fracturing.
- Does the rule of capture apply to the extraction of gas from land owned by third party through hydraulic fracturing so as to preclude liability for trespass and conversion even if the gas originated from the neighbor’s land?
The trial court acknowledged that hydraulic fracturing is now essential to economic production of gas and granted summary judgment for Southwestern. Kudos to the trial judge for an informative description of the fracking process (see pages 12-13).
The Superior Court recited four principles of Pennsylvania law:
- The law imposes trespass liability for a defendant’s entry onto another’s land or failure to remove from the latter a thing which he is under a duty to remove.
- Pennsylvania has long recognized the rule of capture.
- Ownership of a property owner in hydrocarbons is not absolute until it actually is within his grasp and brought to the surface.
- One can invade another’s interest by propelling or placing a thing beneath the surface of land.
In reversing and remanding, the court then relied on the concurring and dissenting opinion in the Texas case of Coastal Oil v. Garza and a West Virginia federal court decision, Stone v. Chesapeake Appalachia, LLP. The rationale (also summarized):
- The majority in Coastal got ahead of itself by addressing the issue of damages before determining whether hydraulic fractures that extend across lease lines constitute a trespass.
- In conventional production, the fugitive nature of oil and gas results in fluids naturally flowing from high pressure to low pressure. In that situation the rule of capture is a necessity. Fracking causes production by artificial means. The forced extraction by fracking of non-migratory hydrocarbons from naturally impermeable shale makes a difference.
- “Go and do likewise”, where the landowner is free to drill his own well, is not readily available to the average landowner.
- Evidentiary difficulties in proving the occurrence of subsurface trespass to determine the value of gas drained is not sufficient justification for precluding recovery.
- Precluding trespass liability based on the rule of capture effectively allows a mineral lessee to expand its lease by locating a well near his boundary line and producing gas from beneath the adjoining property for which he does not have a lease. Such an allowance would nearly eradicate a lessee’s incentive to negotiate mineral leases with small property owners.
Needless to say, this opinion has far-reaching implications for oil and gas exploration in Pennsylvania. The Pennsylvania Supreme Court will have to decide how this important question should be answered. It doesn’t present much of an opportunity for baby-splitting.
Charles Neville, RIP.