PA Sup’r Court: Rule of Capture does not apply in fracking

 

BY REGGIE SHEFFIELD

Correspondent

A Superior Court decision in favor of a Harford Twp. family who sued Southwestern Energy for taking gas from under their property without a lease has changed longstanding gas and oil drilling law in Pennsylvania.

The Briggs family’s victory over Southwestern Energy now means that gas companies cannot use a legal defense known as the “rule of capture” if they are sued for trespassing under a property without an authorizing lease.

Because of the high number of gas leases very close to each other here in Susquehanna County, the issue is bound to come up again, said Briggs family attorney Laurence Kelly of Montrose.

“The potential for other similar cases is certainly present,” Kelly said.

For over a century drillers could use the “rule of capture” as a defense if sued. But that rule, the court said, was established last century with conventional horizontal drilling of oil and gas pools in mind. The fact that those pools naturally move, or migrate, under property lines in part gave rise to the rule. But, the court pointed out, the natural gas contained in the Marcellus Shale is of a different nature and instead lies dormant until released through non-traditional hydraulic fracking.

“In light of the distinctions between hydraulic fracturing and conventional gas drilling, we conclude that the rule of capture does not preclude liability for trespass due to hydraulic fracturing,” wrote Superior Court Judge John L. Musmanno.

Musmanno also said that allowing drillers to use the rule of capture defense “would effectively allow a mineral lessee (driller) to expand its lease by locating a well near the (property owner’s) boundary line and withdrawing natural gas from beneath the adjoining property, for which it does not have a lease.”

Jan Sieving, a spokeswoman for Southwestern Energy, said the company had not yet decided whether it would appeal.

“We believe the trial court was correct when it applied longstanding oil and gas law. We’re currently evaluating all available legal options regarding the Superior Court’s decision,” Sieving said in an e-mailed response.

“Southwestern Energy remains committed to operating safely and contributing to job growth while producing low carbon, environmentally friendly natural gas,” Sieving’s e-mail continued.

A spokesperson from the Marcellus Shale Coalition, a drilling industry advocate, declined comment as the case could be subject to appeal. The Marcellus Shale encompasses 104,000 square miles and runs from Pennsylvania and West Virginia into eastern Ohio and western New York.

In November 2015 here in Susquehanna County Common Pleas Court, the Brigg’s family sued Southwestern Energy for trespassing. In August 2017, now retired Monroe County Senior Judge Linda Wallach Miller, sitting in Susquehanna by special designation, ruled in favor of Southwestern, saying that the “rule of capture” protected its right to recover gas from under an 11-acres parcel owned by the Briggs. They appealed.

Last week, after ruling that Southwestern could not use the rule of capture as a defense; the Superior Court sent the case back to Susquehanna County court to resolve the issue of whether Southwestern’s actions nevertheless constituted a trespass.

No hearing has been scheduled as of press time. Southwestern has operated gas wells on adjacent properties since 2011.

The court’s decision clarifies the law on the property owner’s rights in horizontal drilling cases such as the Briggs’ and will now help insure that both the rights of the property owner and driller are protected, said Robert J. Burnett, a Pittsburgh attorney who has represented clients in similar cases and who is a member of the board of the National Association of Royalty Owners, which represents the interests of owners of gas and oil royalties.

“I don’t think this case is going to dramatically change Marcellus Shale development because most drillers make sure there is adequate acreage around their bore sites,” Burnett said.

“The effect of Briggs will be there will be more protective leases than perhaps otherwise,” he said.

Burnett predicted that the Briggs case will cause drillers like Southwestern to seek leases with all property owners and the leases will help to more clearly lay out the rights for all parties.

“The net effect of Briggs will be even more protections and I think a win-win for everyone,” Burnett said.

Jackie Root, the president of the Pennsylvania chapter of the National Association of Royalty Owners, said that her organization would keep a close eye on how the Briggs case eventually winds its way through the courts.

Root, of Tioga County, emphasized that the Superior Court’s decision only weighed in on the issue of capture and not the issue which was sent back to the county court: trespass.

“It’s far from settled. Now they have to prove the trespass. How’s that’s going to play out?” Root asked.

Root predicted that other questions concerning exactly how close drillers may get to property lines will come up in the determination of whether there was a trespass. Root also said she would like to see legislative action clearly delineating these terms.

“This is a prime example of why we need rules and development of unconventional oil and gas rules as they apply to spacing and unleased land owners,” Root said.

“We have no spacing rules at all. They can draw a unit any way they want. It gives them a lot of leverage over particularly smaller land owners,” she said.