Court appears to end, for now, ‘trespass-by-frac’ litigation that jeopardized rule of capture

The following is from the January 2021 issue of The PIOGA Press, written by Kevin Moody, PIOGA General Counsel and Vice President for Government Affairs. Since this was published, the deadline for appeal to the Pennsylvania Supreme Court has passed.

On December 10, the Superior Court affirmed, without an opinion, the August 8, 2017, opinion and order of the Court of Common Pleas of Susquehanna County that granted summary judgment to Southwestern Energy Production Company, now known as SWN Production Company, LLC., holding that the lessors’ (the Briggses) claims for trespass, conversion and punitive damages failed as a matter of law because of the rule of capture.

The Pennsylvania Supreme Court’s January 22, 2020, decision confirming “that the rule of capture immunizes oil and gas owners or their lessees when hydraulic stimulation activities conducted within the boundaries of the leased premises allegedly drain oil or natural gas from adjacent properties” also remanded the case to the Superior Court to determine whether the Briggses had alleged a trespass by physical intrusion. (See “State Supreme Court reinstates rule of capture,” by George A. Bibikos, Esq., Managing Member, GA BIBIKOS LLC, The PIOGA Press, February 2020).

On remand, the parties submitted briefs on the remand issue, but the Superior Court, which had initially reversed the trial court’s grant of summary judgment to Southwestern, this time simply affirmed without opinion the trial court’s opinion and order. The trial court had noted “a dispute between the parties…as to the exact nature of Plaintiffs’ trespass claim”:

Defendant asserts that Plaintiffs base their claim solely on the fact that Defendant has drilled gas wells “too close” or “nearby” Plaintiffs’ property…. Meanwhile, Plaintiffs assert that the placement of Defendant’s wells is not at the heart of their claim, but rather their trespass claim, and by extension their other claims, rest on the removal of gas from under their property by the well that is “too close” to their property line.

The trial did not decide which party’s interpretation was correct “because assuming arguendo that Plaintiffs’ broader assertion is right, their claim still fails as a matter of law.” The trial court held that the Plaintiffs’ claims failed because Southwestern removed the gas through legal and permissible means, so title to the gas vested in Southwestern. The Superior Court’s per curiam affirmance of the trail court’s opinion and order shows that on remand the Superior Court agreed.

Attorney Bibikos had identified “several takeaways” from our Supreme Court’s January 2020 decision concerning the issue remanded to the Superior Court:

Third, the court seemingly imposed a more heightened pleading standard for trespass-by-frac claims.  The opinion explains that plaintiffs must allege an actual physical intrusion with specific facts.  Although the court stated that plaintiffs can do so “on information and belief,” they cannot rely on general pleadings or assumptions about fractures necessarily causing drainage even if they cross subsurface boundaries.

Fourth, if plaintiffs survive the pleading stage, they will be compelled to prove with expert testimony on a case-by-case basis that a physical intrusion actually occurred.

Finally, the court only expressly identified two types of potential “physical intrusions” that may support a trespass claim: laterals crossing subsurface boundaries (i.e., a slant hole) or propelling proppants or fluids across adjacent property lines.  The court did not expressly state that fractures alone (excluding proppants or fluids) qualify as a “physical intrusion” even if they cross subsurface boundaries.

The deadline for the Briggses to request the Pennsylvania Supreme Court to hear their appeal of the Superior Court’s affirming the trial court’s decision was January 8. As of the date of preparation of this article, January 11, the court docket sheets did not show that an appeal request had been filed.

So, it appears that this litigation is ended, but the takeaways noted by Attorney Bibikos offer guidance to litigants concerning “trespass-by-frac” claims.