TOWANDA — In what has been deemed as "a win for landowners” by Bradford County Commissioner Daryl Miller, an order has been filed by the Honorable Leonard J. Brown for July’s preliminary objection.
The case between the Commonwealth of Pennsylvania and Chesapeake Energy — including its sister companies — and Anadarko has been ongoing since its beginning on Dec. 9 of 2015. Since, multiple complaints have been filed and two preliminary objections have been heard.
The most recent action in the case occurred in July of 2017 as a panel of attorneys, led by Dan Brier of Scranton, represented Chesapeake, Anadarko and the companies associated with them in Bradford County Court of Common Pleas for a preliminary objection.
An order in the case has been filed, seeing many of Chesapeake’s objections denied.
The premise of the case was the Commonwealth seeking gas royalty restitution to the landowners who were under contract with the natural gas drilling companies due to post-production costs being taken out of their promised checks.
The attorney general's office argues that Chesapeake and Anadarko violated the state’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) as well as the Pennsylvania antitrust common law.
It alleges that Chesapeake and Anadarko took part in a “bait and switch” scheme where landowners were led to believe that their royalty payments would not be reduced by deductions for post-production costs. It also argues that Anadarko and Chesapeake agreed to allocate certain territories in Pennsylvania counties for leases, which would decrease the amount of bonus payments made.
During the most recent preliminary objection in July, the council of attorneys representing the natural gas companies argued that the companies serve as the consumer in the process and not sellers, adding that the landowner is in fact the seller, which would deter any violation of the UTPCPL away for it applies to the seller and not the consumer.
Brown claims that the “first and most important question that we are asked to determine is whether the Attorney General can invoke the provisions of the UTPCPL in bringing action against the Chesapeake Defendants and Anadarko Defendants for allegedly engaging in unfair acts or practices in connection with the purchase of oil and gas leases for private landowners.”
The discussion submitted by Brown includes determining if the UTPCPL applies to Chesapeake, as it argues it does not for they are the consumer.
In the end, Brown denies Chesapeake and Anadarko’s objection to the Commonwealth’s claim of violation of the UTPCPL, stating that the UTPCPL does in fact apply to Chesapeake and Anadarko.
Brown also denies the claim that the companies did not violate the Antitrust Common Law.
The Commonwealth also sought reimbursement for costs incurred by the Commonwealth during its investigation and prosecuting. Brown sided with Chesapeake, saying that the state cannot do such a thing. However, the Commonwealth can seek restoration of certain amounts of money to “any persons in interest,” which is permitted in the UTPCPL.
Chesapeake made a claim that the Bradford County Court of Common Pleas is not the proper venue for the case to be heard, because it is a foreign organization based out of Texas. Brown ruled that the Bradford County court does in fact have jurisdiction over the case.
In terms of Anadarko, brown has denied each of its claims of objection, which align with those of Chesapeake.
Brown also sided with the Commonwealth in Anadarko’s claim to dismiss claims of an existence of a joint venture agreement between it and Chesapeake.
The court has granted Chesapeake and Anadarko 30 days from the date of the order to file its answer to the Commonwealth’s second amended complaint. The answer can be extended by 30 days if agreed upon by both parties.
Brown has certified that two counts of the Commonwealth's complaint qualify for immediate appeal and review — including whether the Attorney General may utilize the UTPCPL in pursuing relief in the case and whether the antitrust allegations made by the Commonwealth fall within the definition of unfair methods of competition and unfair or deceptive acts or practices, as declared unlawful by the UTPCPL.