The Pennsylvania Supreme Court ruled Wednesday that the attorney general’s office does not have authority under the consumer protection law to sue natural gas exploration firms over their leasing practices.
The Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) declares unlawful “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” The controversy began in 2015 when the attorney general’s office sued two natural gas exploration companies, Anadarko Petroleum Corporation and Chesapeake Energy Corporation of Oklahoma City. The complaint alleged that the firms engaged in unfair competition practices by entering into a joint venture whereby the companies divided up the territories in which they acquired oil and gas leases among themselves. The alleged effect of the agreement was to eliminate competition in the negotiation of lease terms, depriving Pennsylvania landowners of receiving signing bonuses and royalties.
Anadarko argued that it was not a seller of services, but rather that it was acting as a buyer or purchaser in the oil and gas lease transactions at issue. Therefore, the defendants asserted that they were not subject to action under the UTPCPL. The lower courts ruled that the attorney general’s office’s consumer protection claims were “legally viable.” The court reasoned that Anadarko’s conduct constituted trade and commerce under the UTPCPL because the “leases were, in essence, sales.”
The Supreme Court overturned the lower courts’ decisions, agreeing with the defendants that the UTPCPL does not allow sellers to take action against buyers. The court reasoned that trade and commerce, as defined within the commonwealth’s consumer protection law, is exclusively limited to acts of sellers. Moreover, the court stated that the legislative purpose of the UTPCPL is to deter “sellers from using unfair, deceptive, and fraudulent practices.
In response to the ruling, Pennsylvania’s Attorney General Josh Shapiro stated that he would “ask state lawmakers to update Pennsylvania laws ‘to better protect those mislead by corporations like this one.'”