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In an apparent case of first impression that drew heavy amicus interest from natural gas industry organizations, the Pennsylvania Supreme Court has determined that the rule of capture, which precludes trespass liability for drillers where oil and gas drains from surrounding lands in the course of conventional extraction from an underground pool, applies where shale gas is extracted through hydraulic fracturing.

The high court's Jan. 22 decision in Briggs v. Southwestern Energy Production unanimously vacated an April 2018 ruling by a two-judge panel of the state Superior Court, which had itself reversed a Susquehanna County trial judge's decision granting summary judgment to defendant Southwestern Energy Production Co. on claims of trespass and conversion by a group of property owners.

In Briggs, property owners Adam, Paula, Joshua and Sarah Briggs alleged that Southwestern had unlawfully extracted gas from beneath their property while drilling on an adjoining property.

While Southwestern invoked the rule of capture in its defense, the Superior Court said the rule was inapplicable to hydraulic fracturing (also known as fracking), a process by which high-pressure liquid is used to forcibly extract natural gas from shale.

"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," Senior Judge John L. Musmanno Jr. wrote for the panel. "Therefore, hydraulic fracturing may constitute an actionable trespass where subsurface fractures, fracturing fluid and proppant 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."

Musmanno was joined by President Judge Susan Peikes Gantman. Judge Mary Murray was also listed as a member of the panel but the opinion said she did not participate in the consideration or decision of the case.

Musmanno also said the fundamental difference between fracking and conventional oil and gas production, which the rule of capture was originally intended to cover.

"Unlike oil and gas originating in a common reservoir, natural gas, when trapped in a shale formation, is non-migratory in nature," he said. "Shale gas does not merely 'escape' to adjoining land absent the application of an external force. Instead, the shale must be fractured through the process of hydraulic fracturing; only then may the natural gas contained in the shale move freely through the 'artificially created channel[s].'"

But Chief Justice Thomas Saylor, writing for the Supreme Court majority, said, "At least part of the Superior Court's opinion can reasonably be construed as setting forth a per se rule foreclosing application of the rule of capture in hydraulic fracturing scenarios, and that rule rests on faulty assumptions."

Saylor took particular issue with the Superior Court's reliance on whether oil and gas drainage occurs naturally or by some form of artificial stimulation as a test for the applicability of the rule of capture.

"This court has held that the rule of capture applies although the driller uses further artificial means, such as a pump, to enhance production from a source common to it and the plaintiff—so long as no physical invasion of the plaintiff's land occurs," Saylor said. "There is no reason why this precept should apply any differently to hydraulic fracturing conducted solely within the driller's property."

Turning to the Superior Court's determination that any time fracking causes natural gas to migrate across property lines it constitutes a physical intrusion on the plaintiff's property, Saylor said that was not a question of law, but rather a factual one for the Superior Court to decide on remand.

"By design, hydraulic fracturing creates fissures in rock strata which store hydrocarbons within their porous structure," Saylor said. "On the state of the present record, this alone does not establish that a physical intrusion into a neighboring property is necessary for such action to result in drainage from that property. We cannot rule out, for example, that a fissure created through the injection of hydraulic fluid entirely within the developer's property may create a sufficient pressure gradient to induce the drainage of hydrocarbons from the relevant stratum of rock underneath an adjacent parcel even absent physical intrusion. Nor can we discount the possibility that a fissure created within the developer's property may communicate with other, pre-existing fissures that reach across property lines. Whether these, or any other non-invasive means of drainage occasioned by hydraulic fracturing, are physically possible in a given case is a factual question to be established through expert evidence."

Saylor was unanimously joined in the majority in all aspects but one: the decision to remand the case to the Superior Court, rather than the trial court.

Justice Kevin Dougherty, in a concurring and dissenting opinion joined by Justice Christine Donohue, said that, "given the state of the record, which was apparently not complete at the time the trial court erroneously entered summary judgment, I would remand the matter to that court for further proceedings, including the completion of discovery on the factual question of physical invasion, and trial thereon as necessary."

Southwestern was represented by Robert Byer of Duane Morris in Pittsburgh. A spokesperson for Southwestern did not return a request for comment.

Counsel for the plaintiffs, Laurence Kelly of Kelly Law Office in Montrose, reached Jan. 23, said he was still reviewing the opinion and was unable to comment at the time.