Source: https://energytrendswatch.com/2018/04/30/pennsylvania-superior-court-fractures-long-standing-rule-of-capture/
Timestamp: 2019-04-21 10:35:32+00:00

Document:
Citing distinctions between hydraulic fracturing and conventional gas drilling, the Pennsylvania Superior Court held on April 2, 2018, in Briggs v. Southwestern Energy Production Company that the rule of capture does not preclude liability for trespass due to hydraulic fracturing, reversing a summary judgment that had been granted by the trial court in favor of Southwestern Energy Production Company. The Briggs ruling exposes operators to potential tort liability where subsurface fractures, fracturing fluid, and proppant cross boundary lines and extend into the subsurface estate of an adjoining property, resulting in the extraction of natural gas from the adjoining property.
The case has been remanded to the trial court to afford the adjoining landowners the opportunity to fully develop their trespass claim and a conversion claim that the trial court had also concluded was barred by the rule of capture. In a further development to this case, Southwestern Energy Production Company filed with the Pennsylvania Superior Court an application for reargument en banc. Absent reversal or modification of the ruling in the appellate courts, Briggs will be binding precedent that requires trial courts to permit subsurface trespass and conversion claims for hydraulic fracturing to move forward.
Often regarded as the most important single doctrine of oil and gas law, the rule of capture is so foundational that almost every law school course on oil and gas law begins with it. A common law principle that can trace its legal lineage to a dispute over a fox that crossed property boundaries, the rule of capture has been applied to oil and gas extraction for over a century. Under the rule, while a mineral estate owner has a real interest in oil and gas in place, that right does not extend to specific oil and gas beneath the property; instead, ownership of the specific molecules occurs only after the oil and gas has been captured through drilling and production. Because the mineral estate owner secures title to specific oil and gas only when it is captured, there is no liability for drainage so long as there has been no trespass and all relevant statutes and regulations have been observed.
In the leading case applying the rule of capture to hydraulic fracturing, Coastal Oil & Gas Corp. v. Garza Energy Trust, the Supreme Court of Texas held in 2008 that hydraulic fracturing was not an actionable trespass under Texas law, at least as regards to a mineral lessor who only held a royalty interest with a possibility of reverter.
The Briggs court also challenged Coastal Oil’s rationale that a landowner can adequately protect his interests by drilling his own well to prevent drainage, pointing out that hydraulic fracturing is a “costly and highly specialized endeavor,” with recourse to “go and do likewise” not necessarily readily available for an average landowner.
Finally, the Briggs court echoed the concern raised in both the Coastal Oil dissent and Stone that precluding trespass liability based on the rule of capture would eradicate a mineral lessee’s incentive to negotiate mineral leases with small property owners, since the lessee could locate a well near the lease’s boundary line and withdraw natural gas from beneath the neighbor’s land without paying a royalty.
In the appeal, there was virtually no discussion of the facts relating to the alleged trespass, the court observing that it was unclear from the record whether the hydraulic fracturing operations have resulted in a subsurface trespass to the landowners’ property and that there was no evidence, not even an estimate, as to how far the subsurface fractures extended from the wellbore of Southwestern’s lease. The case now goes back to the trial court, where the landowners will be given the opportunity to develop the factual record, even as the court acknowledged that establishing the occurrence of a subsurface trespass and determining the value of natural gas drained through hydraulic fracturing will likely present evidentiary difficulties, albeit ones that are not, in and of themselves, sufficient justification for precluding recovery. Additionally, the parties will argue on Southwestern’s application for reargument whether the Briggs decision should hold.
For now, Briggs means that operators who perform hydraulic fracturing near adjoining tracts in which they do not hold a mineral lease must now be conscious of the potential for litigation and review their completion plans in light of how those plans could later be characterized—indeed, used as evidence against the operators—at trial. Although the Briggs court identified Section 158 of the Restatement (Second) of Torts as the standard of liability for trespass, and § 158 applies only if an actor “…intentionally…enters land in the possession of another or causes a thing …to do so,” it did nothing to clarify under what circumstances such intent would be found. Moreover, having jettisoned the rule of capture for intentional torts, it would not be too much of a stretch for the court to do the same for unintentional torts, creating the possibility that operators could be held liable for negligence when fractures reach neighboring properties.
In Coastal Oil, the majority was clearly concerned that abandoning the rule of capture for hydraulic fracturing would open the floodgates to litigation and impede the single most essential technique in modern oil and gas production. Pennsylvania may now test whether these dire predictions were accurate.
 Briggs v. Sw. Energy Prod. Co., 2018 PA Super 79 (Apr. 2, 2018).
 Briggs, 2018 PA Super 79, p. 2, n.2 (citing Rule of Capture, Black’s Law Dictionary (10th ed. 2014)).
 Coastal Oil & Gas Corp. v. Garza Energy Tr., 268 S.W.3d 1 (Tex. 2008).
 In Coastal Oil, the nature of the interest of the plaintiff was pivotal. A royalty interest is not a possessory interest. Under Texas law, for a possessory interest, any unauthorized entry is a trespass, even if no damage is done. For a non-possessory interest, however, Texas law requires that actual injury be proven. Given the rule of capture—that there was no title to the oil and gas until it was captured, the holder of a non-possessory interest could not demonstrate actual injury.
 Briggs, 2018 PA Super 79, at 15-16 (quoting Coastal Oil, 268 S.W. at 14-17).
 Stone v. Chesapeake Appalachia, LLC, No. 5:12-CV-102, 2013 WL 2097397 (N.D.W.Va. Apr. 10, 2013), order vacated, 2013 WL 7863861 (N.D.W.Va. July 30, 2013)(the order was vacated as a result of a Joint Motion to Vacate due to a settlement amongst the parties).
 Briggs, 2018 PA Super 79, at 20.

References: v. 
 v. 
 § 158
 v. 
 v. 
 v.