The Pennsylvania Supreme Court has agreed to hear what is likely to be a landmark appeal, granting a petition filed by Southwestern Energy Co. that asked the justices to decide whether the rule of capture applies to oil and natural gas produced using hydraulic fracturing (fracking) and whether operators can be held liable for subsurface trespass.
Southwestern filed the petition in July after the state Superior Court declined the company’s application for reargument of a decision earlier this year that called into question the rule of capture and how it applies to unconventional development. In its petition, Southwestern said the case has drawn national attention because it has the potential to “disrupt” oil and gas exploration across the country.
The rule is considered a fundamental principle in energy law that has been applied to conventional development from shallow reservoirs for more than 100 years. It prevents liability for draining migratory oil and gas from underneath private land.
Originally filed in 2015 in the Susquehanna County Court of Common Pleas by Adam Briggs, his wife and other family members, the plaintiffs allege that Southwestern for years has been unlawfully extracting gas under an 11-acre unleased parcel of land they own from an adjoining leased property. The Briggs are seeking punitive damages.
Southwestern has argued that the Briggs’ claims are barred by the rule of capture. The trial court agreed and said the rule precludes the plaintiffs from recovering damages and asserting trespass. On appeal to the Superior Court, however, the Briggs argued that there are significant differences between fracking and the “conventional process of tapping into a pool or reservoir of fluids.” They argued that gas in shale formations would remain trapped forever if not for the “forced extraction” through fracking.
The Superior Court agreed, issuing an opinion that reversed and remanded the case to the lower court to determine if Southwestern committed trespass with its shale wells. Depending on the outcome, the state’s unconventional producers could find themselves liable if rock fissures formed through fracking techniques deep underground stretched beneath unleased property near drilling units.
“The Superior Court’s two-judge precedential decision, issued without the benefit of oral argument and representing the views of only one commissioned judge, rejects the continuing application of this rule to the most common method of oil and gas extraction used today — hydraulic fracturing,” the company wrote in its petition to the state Supreme Court.
In a statement on Wednesday, Southwestern said it welcomed the high court’s decision to review the matter, especially “given the case’s potential to negatively impact Pennsylvanians who depend on natural gas for royalty payments, jobs and affordable energy.” It added that “bringing legal clarity and certainty to this potentially far-reaching matter, while avoiding pitting neighbor against neighbor in costly and speculative legal disputes that could unnecessarily overburden our courts,” is a top priority.
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