Oil and gas association applauds Superior Court decision making acquiring subsurface rights more difficult

By Anna Aguillard | Nov 30, 2015

After the development the drilling of the Marcellus Shale in Pennsylvania, many legal battles have emerged across the state as surface owners claim subsurface rights to oil and gas.

WEXFORD – After the development the drilling of the Marcellus Shale in Pennsylvania, many legal battles have emerged across the state as surface owners claim subsurface rights to oil and gas.

On Nov. 6, the state Superior Court upheld a trial court’s decision that effectively makes it more difficult for surface landowners to acquire rights to what's below the surface.

Kevin Moody, general counsel for the Pennsylvania Independent Oil & Gas Association (PIOGA), told the Pennsylvania Record that the court’s decision is definitively a positive one.

The decision overturned the 1989 default judgment in favor of surface owners in Northern Forests II, Inc. v. Keta Reality Company, et al. The 1989 judgment awarded ownership rights to surface owners who sought quiet title actions based on adverse possession.

However, the 2015 court found multiple problems with the previous decision, including the plaintiff’s failure to name indispensible parties, its failure to properly serve the defendants, and its failure to prove either actual or adverse possession.

Moody pointed to a particular issue that the Superior Court found with Northern Forests' suit. Northern Forests had served the defendants by publication only. However, according to the Superior Court, the affidavit explaining the reasoning behind service by publication did not reflect the “extraordinary” circumstances that render service by publication acceptable.

“In this case, there was nothing to support the service of publication,” Moody said. “It was ridiculous, and it said nothing.”

According to Moody, the Court’s strict qualifications of an attorney’s ability to serve by publication is one of the major results of this decision.

“Attorneys are on notice: you need to have more diligent searches to find people, if you want to have service by publication," he said. 

Additionally, Moody points to another important part of the decision. In an attempt to gain subsurface rights, Northern Forests argued that because it had contracted business based upon the 1989 judgment, it was entitled to equitable considerations, as striking the judgment now would be unjust.

The Court rejected this argument with one notable line: “Unlike fine wine, void judgments in Pennsylvania do not improve with age; void ab initio, void for all time.”

According to Moody, this particular case is one of many disputes over the subsurface ownership of oil and gas.

“People are trying to get rights to the shale, in one way or another, because they see dollar signs,” Moody said. “It is a real problem, and it has been escalating.”

“There are a lot of cases that are in the pipeline. Certainly at the Superior Court. We have seen, probably, four reported decisions involving some manner of surface owners trying to acquire subsurface rights that they do not really have any claims to.”

IOGA has recently pushed for the state to address the issues with quiet title actions.

“We think that its an abuse of quiet title action for surface owners to require subsurface rights that they don’t have,” Moody said. “Looking through quiet title actions over the last few years in several counties, we uncovered that all of these services by publication were not really diligent searches."

According to Moody, recent quiet title actions have not been valid.

“No one ever responds to a default or quiet title action, because no one ever knows about it. The court can’t enter judgment unless there is a valid cause of action, and all of these trial courts are granting judgment when there isn’t even a valid cause of action,” Moody said.

The issue is being addressed currently by multiple branches of Pennsylvania’s government. Senate Bill 258, now dead, was introduced in the state’s previous legislative session to qualify quiet title actions involving subsurface rights. In April, the Supreme Court proposed rule changes in the area.

"So far, nothing has been finalized," Moody said.

More News

The Record Network