Pennsylvania

Energy. Environment. Economy.

Royalties bill on the back burner until fall

A controversial bill aimed a limiting gas companies from withholding royalty money from landowners will be set aside until the fall legislative session.

House Bill 1684 would limit the practice of charging landowners for post-production costs– the expenses associated with processing and transporting natural gas.

Rep. Garth Everett (R- Lycoming) is the prime sponsor of the bill. He says House leadership told him the measure is on the back burner.

“They just said it’s not going to be a top priority for them right now, and I understand that. We have got the budget to do.”

At issue is a 1979 state law that requires oil and gas companies to pay a minimum 12.5 percent royalty. Some landowners have alleged companies are fraudulently withholding money, citing post-production costs.

Most of the royalty complaints have been centered on Oklahoma-based Chesapeake Energy, but Everett says he gets complaints from constituents about other drillers too.

“It appears, since the bill has gone away, that there are more companies starting to nibble away at royalty money with post-production costs,” he says.

The oil and gas industry has lobbied heavily against the measure, which it calls a “vast legislative overreach” interfering with a legitimate business practice. They note many people signed leases which explicitly allow for post-production costs to be shared between landowners and gas operators.

Chesapeake’s royalty practices have sparked lawsuits across the country, including a class-action suit in Pennsylvania. In response to a request earlier this year by Governor Corbett, state Attorney General Kathleen Kane is investigating the company’s business practices.

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