Briggs Update: Pennsylvania Superior Court Affirms Dismissal of Landowners’ Subsurface Trespass Claim While Leaving Door Open for Future Landowners

The Pennsylvania Superior Court returns to the Briggs case after the Supreme Court reversed its prior decision.  On December 8, 2020, the Superior Court reconsidered whether the trial court properly granted summary judgment against landowners as to their subsurface trespass claim.  The landowners claimed that a natural gas operator’s hydraulic fracturing operations on its neighboring leased property constituted a subsurface trespass onto their property.  The Superior Court originally vacated the trial court’s decision.  However, on January 22, 2020, the Pennsylvania Supreme Court reversed the Superior Court’s decision.

The Supreme Court “rejected as a matter of law the concept that the rule of capture is inapplicable to drilling and hydraulic fracturing that occurs entirely within the developer’s property solely because drainage of natural resources takes place as the direct or indirect result of hydraulic fracturing, or that such drainage stems from less ‘natural’ means than conventional drainage.”  Briggs v. Southwestern Energy Prod. Co., 224 A.3d 334, 348-49 (Pa. 2020).  The Supreme Court held that a plaintiff asserting a cause of action for trespass must be able to prove all elements of that claim –including that physical intrusion under its property occurred.  Id. at 349.  The Supreme Court remanded the case back to the Superior Court for its consideration as to whether the landowners “may proceed on a physical-invasion trespass cause of action.”  Id. at 351.

On remand, the Superior Court held that the landowners failed to “specifically allege that the [operator] engaged in horizontal drilling that extended onto their property.  Briggs, v. Southwestern Energy Prod. Co., 2020 WL 723311, *2 (Pa. Super. Ct. Dec. 8, 2020).  As such the Superior Court reinstated the trial court’s grant of summary judgment in favor of the operator.

Pennsylvania Commonwealth Court Allows Attorney General to Pursue UTPCPL Claims Against Oil and Gas Companies

On March 15, 2019, the Pennsylvania Commonwealth Court in Anadarko Petroleum Corporation v. Commonwealth held that the Attorney General can bring claims under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) against companies that lease oil and gas rights from landowners.  The companies argued that the UTPCPL was “designed to only protect consumers against underhanded behavior of sellers, rather than all parties to a given transaction” and because they “were not selling or distributing anything” the UTPCPL was not applicable.  The Court rejected this argument and held that the UTPCPL’s definition of “trade” and “commerce” was broad enough to include claims against purchasers, as well as sellers.  The Court noted that the UTPCPL places restrictions on the ability of private citizens to file suit, but that those restrictions do not apply to the Attorney General.  The language of the UTPCPL quoted by the Court suggests that its holding does not open the door for private UTPCPL claims against oil and gas lessees.  The Court also addressed whether the UTPCPL supports antitrust claims.  The Court held that the UTPCPL “is not designed to render all antitrust violations actionable.”  The Court dismissed the Attorney General’s antitrust claim that was based on the premise that “joint venture and market sharing agreements intrinsically violate[] the UTPCPL.”  However, the Court held that the Attorney General did allege an actionable UTPCPL antitrust claim when it claimed that the companies were “giving [landowners] misleading information, and/or failing to disclose information, regarding the open market’s true appetite for subsurface mineral leases, as well as the whether the terms of the agreed-to leases ‘were competitive and fair.’”

Judge Covey issued a concurring and dissenting opinion, arguing that the “Majority manipulate[d] the language of the UTPCPL for a purpose the General Assembly never intended” – i.e. that the UTPCPL “a consumer protection statute intended to bolster consumers’ bargaining powers, can authorize legal action against a purchaser.”  Jude Covey concurred in the Majority’s dismissal of the Attorney General’s UTPCPL antitrust claim.  The case may be appealed to the Pennsylvania Supreme Court.

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