For several months Bradford County’s Commissioners have been complaining some gas companies are cheating their constituents out of royalty payments.
Now they’re complaining their state senator Gene Yaw (R- Bradford) isn’t listening.
“If [Yaw] was fighting as hard for the property owners as he is fighting against us, maybe we’d be getting somewhere,” says Republican Commissioner Doug McLinko.
At a meeting yesterday, all three commissioners (two Republicans and a Democrat) called on the legislature to take action on a resolution they passed last spring, urging Harrisburg to re-examine the state’s 1979 Guaranteed Minimum Royalty Act.
The law says an oil and gas lease is not valid unless it provides a one-eighth (or 12.5 percent) royalty.
Many local landowners have been complaining some gas companies are withholding large amounts of money from their monthly checks for so-called “post-production costs” — the expenses of moving the gas from the well to the market.
“What was the legislature’s intent for that 12.5 percent? Was it 12.5 before or after deductions?” says Republican Commissioner Daryl Miller, “Can they clarify that? If it wasn’t for people to receive 12.5 what was their intention?
In a unanimous 2010 State Supreme Court decision, the court held that since there was no definition of the word “royalty” in the law, the industry could use its own definition and withhold post-production costs.
Yaw has said he doesn’t believe there is an easy legislative fix to the issue and has urged landowners who feel they’ve been cheated to take legal action.
Yaw’s office did not respond to a request for comment.
In an editorial for the Towanda Daily Review this week entitled “Facts Rather Than Ignorance”, Yaw wrote:
The word “ignorance” struck a nerve.
I am fully aware of the post production deduction issues which have arisen in existing lease agreements over the past several months. A few, out of ignorance, have suggested “Just make a new law defining certain terms.” Yes, that could be done, but because of Constitutional restrictions, such a change would have no effect whatsoever on any lease or contract in existence at the time of passage.
Commissioners Doug McLinko and Daryl Miller, both gas industry supporters, say they were insulted by the tone of the editorial.
“I don’t know why [Yaw] did what he did,” says Miller, “I’m offended he considers the people up here ignorant.”
“He isn’t a supreme court justice,” says McLinko, “[Constitutionality] is not for him to decide.”
Yaw sponsored a new law which was originally aimed at requiring gas companies to clarify the deductions. However the measure has been called a “Trojan horse” by a landowners group because it contains a controversial clause allowing companies to pool leases.
The law has not officially taken effect yet, but it’s already been used by one gas company to sue a group of landowners in Western Pennsylvania and there is an attempt by another Republican legislator to repeal it.