Matthew Burger and Sean Moran, shareholders in the firm's Energy section, comments on the Pennsylvania Supreme Court's recent decision to agree to review a lower court's determination that the state's Attorney General could sue two gas producers. Read more in Law360's article "Drillers on Edge as Pa. Justices Mull Consumer Law's Scope."
If this decision stands, you will see a very significant number of unfair trade practice claims in any instance where the attorney general and district attorney would view a company as acting unfairly,” said Matt Burger, who chairs Buchanan Ingersoll & Rooney PC's energy group and frequently represents gas drillers.
By concluding that drillers could be sued under the state's consumer protection law over how they acquire leases, the Commonwealth Court of Pennsylvania essentially said the law covers sellers of products as well as buyers, Burger said. Potential lawsuits alleging deceptive conduct under the law could cover a wide range of drillers' leasing practices, whether it's securing a lease, entering into joint ventures or agreeing to partition gas lease interests, he said.
“Typically, that was not a statute that remotely applied in those circumstances,” Burger said. “If the Commonwealth Court opinion were affirmed, I think you would have another weapon in the arsenal of the attorney general, but it would apply to a much larger volume of conduct.
Sean Moran, who chairs Buchanan Ingersoll's oil and gas group, said an expansive view of consumer protection law by the court could also carry risks for landowners. While the crux of the underlying case involves drillers offering leases to landowners and allegedly making false promises, Moran said there have been plenty of instances where landowner groups have been formed to offer leases to gas companies.
“If things don't turn out well for industry [in those situations], are they then protected?” Moran said. “It's just the law of unintended consequences when you attempt to apply something to a situation that wasn't intended.”