PA Superior Court revives trespass claim against fracking company

Originally published by Barclay Nicholson (US) and Robby Marcum (US).

Last Monday, a three-judge panel of the Pennsylvania Superior Court revived a trespass claim against a fracking company. The claim, which was previously defeated by summary judgment, could return to the trial court for determination of its merits.

In 2015, plaintiffs filed suit against the fracking company alleging trespass and conversion. Plaintiffs claim the company used hydraulic fracturing to extract natural gas beneath the plaintiffs’ property, where the company did not have a lease, from an adjacent tract on which it had a lease.

Pennsylvania has long recognized the rule of capture, the principle that allows producers to collect, without incurring an obligation to pay neighboring landowners, oil and gas that flows to their wells from neighboring tracts. Under the rule, neighboring landowners are encouraged to “go and do likewise”—to produce oil and gas themselves—to protect their interests. The trial court relied on the rule of capture in granting summary judgment for the company.

Plaintiffs in this case argue the rule of capture should not apply when producers use hydraulic fracturing to collect oil and gas from neighboring tracts. They contend the differences between conventional oil and gas production and hydraulic fracturing, specifically the active way in which producers create channels for oil and gas to escape via hydraulic fracturing, make the rule of capture ill fitted to the technique. Hydraulic fracturing, they argue, allows producers to collect otherwise nonmigratory oil and gas in addition to the free-flowing oil and gas historically contemplated by the rule of capture.

The Pennsylvania appellate panel agreed with the plaintiffs and held that “hydraulic fracturing may constitute an actionable trespass where subsurface fractures, fracturing fluid, and proppant [sand] cross boundary lines and extend into the subsurface estate of an adjoining property for which the operator does not have a mineral lease, resulting in the extraction of natural gas from beneath the adjoining landowner’s property.” The court concluded that hydraulic fracturing, if protected by the rule of capture, would allow producers to expand their leases without incentive to negotiate with neighboring landowners.

It is uncertain whether the fracking company will appeal the decision. Regardless, if the case returns to the trial court, it will be plaintiffs’ burden to show that the fracking company’s fractures, fluid, and proppant entered the plaintiffs’ subsurface estate, and to demonstrate the amount and value of gas collected by the company as a result. The Pennsylvania appellate court noted these significant “evidentiary difficulties.”

Of note, in 2008 the Texas Supreme Court decided a similar case and held that “damages for drainage by hydraulic fracturing are precluded by the rule of capture.” The Texas Supreme Court focused on the remedies already available to neighboring landowners—self-help, lawsuits, and pooling—and the “preferable authority of the Railroad Commission to regulate oil and gas production.”

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