Dairy Farmers Recover Damages Against Gas Company For Failure to Restore Land Following Installation of Pipeline

Posted: May 16, 2010

A mixed verdict was received by farmers following the installation of natural gas pipelines and a compressor station on their land.

by Ross Pifer

Two Erie County dairy farmers, Ronald and Catherine Gates, have received a mixed verdict in litigation following the installation of natural gas transmission lines and the construction of a compressor station on their land.  Gates v. Exco Resources, Inc., 2010 WL 1416740 (W.D. Pa. Apr. 8, 2010).  The Gates executed an oil and gas lease with Exco Resources in 1998, and three gas wells were drilled on the property in 2001.  Subsequently, transmission lines were installed and a compressor station was constructed in conjunction with the three producing wells.  Among the many claims asserted in the lawsuit, the Gates sought damages for a devaluation of their property due to improper reclamation of the property following installation of the pipelines.  The court agreed that 20 acres of land had been “rendered almost unable to be used again” due to damaged drainage tiles and the presence of rocks near the transmission lines.  Accordingly, the court awarded $16,000 in damages.  The court, however, rejected a claim that poor drainage on an additional 25 to 30 acres was attributable to drilling activities.  The court also rejected a claim that the Gates were entitled to royalties on gas from their wells that was utilized in the operation of the compressor station.  Pursuant to the lease agreement, the Gates were entitled to royalties “for gas marketed and used off the premises.”  As the gas to operate the compressor station was neither marketed nor was it used off the premises, the court denied the requested relief.

For more information on legal issues associated with natural gas, please visit the Agricultural Law Center’s Natural Gas Resource Area.