Report: Pa. attorney general widens investigation into gas royalty complaints
Pennsylvania Attorney General Kathleen Kane is reportedly widening her investigation into complaints of fraud from gas royalty owners.
So far, the allegations have centered on the state’s biggest gas driller, Chesapeake Energy. Now sources tell Capitolwire that Kane’s office has issued subpoenas “throughout the energy industry” in Pennsylvania.
It could suggest investigators are looking for background information or that the probe also includes complaints about the payment practices of other companies.
Kane spokesman J.J. Abbott and a spokesman for the Marcellus Shale Coalition, the state’s top drilling trade group, declined to comment.
Jackie Root, President of the National Association of Royalty Owners’ Pennsylvania chapter, welcomed the news.
“We know that the issues that are out there were not solely Chesapeake,” said Root, who noted the organization has heard from numerous members who have been interviewed by state investigators.
Companies are allowed to charge royalty owners for the costs of processing and transporting gas extracted from their land.
These royalty deductions – known as post-production costs – are legal in many cases. However, landowners have complained that Chesapeake, in particular, is cheating them by violating lease terms that explicitly prohibit such deductions.
Kane announced the probe in February after receiving letters from Gov. Tom Corbett and state Sen. Gene Yaw (R-Bradford) calling for a formal investigation into allegations about Chesapeake.
In May, Corbett told StateImpact Pennsylvania the problems of “that one company” were not endemic to the industry.
When asked about the possibility Kane could be broadening the scope of the investigation, spokesman Jay Pagni said the governor “would expect that she would look into any improper practices.”
In March, a state House committee approved a bill aimed at limiting the ability of companies to charge post-production costs. The measure faces strong opposition from the oil and gas industry, which regards the fees as a legitimate business practice.
Root is optimistic legislators will move on the bill when they return to Harrisburg this fall.
“Every day that ticks away with that legislation not happening is another day that landowners won’t be able to recover their royalties.”