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Pennsylvania Court Rules on Unfair Trade Practices as to Natural Gas Leasing

By Michael Vennum

On March 15th, the Pennsylvania Commonwealth Court issued its opinion in Anadarko Petro. Corp. v. Pennsylvania, No. 60 C.D. 2018 (Pa. Commw. Ct. March 15, 2019), holding that the Pennsylvania Attorney General could file action for unfair lease negotiations under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (the “Unfair Trade Law”), but could not currently use the Unfair Trade Law to assert antitrust violations as to such alleged activity.  The Attorney General alleged that Anadarko and Chesapeake agreed to split portions of northeast Pennsylvania between them so that each would effectively have exclusive areas in which to seek oil and gas leases, without the fear that the other would tender competing offers to private landowners who were prospective lessors.   The Attorney General equated this practice as deceptive and actionable antitrust behavior pursuant to the Unfair Trade Law.  Anadarko and Chesapeake, however, argued that the Unfair Trade Law does not apply to the leasing of private mineral interests and, moreover, being private matters, the Attorney General was precluded from asserting his claims.

The court held that the Unfair Trade Law was enacted to benefit the public at large by eliminating practices as asserted by the Attorney General and, further, the Unfair Trade Law does not place restrictions on the Attorney General to bring such claims.  The court noted that a landowner's relinquishment of title to oil and gas rights for terms of years was the functional equivalent of a sale, which is covered by the Unfair Trade Law.  As to the antitrust assertion, the court noted that the Unfair Trade Law permits the Attorney General and General Assembly to both define monopolistic behavior, but such definition must be completed through a statutory rule making process.  As of now, neither the Attorney General nor the General Assembly has done so.  Therefore, the court concluded that the Attorney General could not proceed with an antitrust claim because the asserted collusive actions have not been expressly defined as monopolistic behavior for purposes of the Unfair Trade Law.

Tags: deceptive leasing practices, Oil and Gas, leasing, anti-trust, Energy, Pennsylvania

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