A recent landmark decision by the Pennsylvania Superior Court involving hydraulic fracturing, also known as fracking, could impact litigation strategy in the dynamic area of oil and gas products in the Commonwealth. By way of background, Pennsylvania has adopted the “rule of capture,” which holds that there is no liability for the drainage of oil and gas from one property to another, so long as there has been no trespass and all relevant laws and regulations have been followed. In this case, Briggs v. Southwestern Energy Production Company, the Plaintiffs alleged that Southwestern had unlawfully extracted natural gas from beneath their property during the energy company’s operation of drilling units located on an adjoining property. The Plaintiffs further alleged, among other things, that Southwestern’s actions constituted a past and continuing trespass.
In response to Plaintiffs’ Complaint, Southwestern argued that Plaintiffs’ claims were barred by the “rule of capture.” The trial court agreed with Southwestern that, as a matter of law, the “rule of capture” precluded recovery by Plaintiffs. On appeal, the Pennsylvania Superior Court reversed the trial court’s finding that hydraulic fracturing is distinguishable from conventional methods of oil and gas extraction. Generally, the “rule of capture” assumes that oil and gas originates in the subsurface and can migrate freely across property lines. According to the Superior Court, when oil and gas is trapped in a shale formation (e.g. Marcellus Shale), it is non-migrating in nature; therefore, such gas is unable to migrate to adjoining properties absent the application of an external force.
Based on the aforementioned reasoning, the Superior Court ruled that the entry of summary judgment in favor of Southwestern was premature, and it remanded the case back to the trial court, where the Plaintiffs will be afforded the opportunity to fully develop their trespass claim.
The significance of the Superior Court’s decision is yet to be determined, although it could serve as a trigger for future trespass claims against companies involved in hydraulic fracturing. However, because several issues of import are raised by the Superior Court’s decision, such as, whether the “rule of capture” applies to all drilling, including modern shale drilling or fracking, it is likely that the decision will be appealed to the Pennsylvania Supreme Court.