Pennsylvania

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Gas royalties bill likely dead this session

The controversial royalties bill was on the House schedule earlier this week, but wasn't voted on.

AP Photo/Matt Rourke

Given the waning number of voting days left in the legislative calendar, the controversial gas royalties bill is likely dead.

A bill aimed at addressing allegations natural gas drilling companies are cheating Pennsylvania landowners out of royalty money appears to be dead this legislative session.

HB 1391 was introduced following years of complaints some drillers charge exorbitant fees for processing gas. In Pennsylvania’s northern tier, people have received notices their royalty account has a negative balance, saying they owe thousands of dollars to drillers.

“I’m very disappointed for the landowners,” says the bill’s prime sponsor Garth Everett (R- Lycoming). “All we were asking for was a chance to get it to the floor.”

The measure was scheduled for second consideration in the state House earlier this week, but did not come up for a vote. It reappeared again on Monday’s calendar, but House GOP spokesman Steve Miskin said Friday afternoon it’s been pulled from the schedule.

“Everybody has been diligently trying to come up with a fair resolution. There’s not a single member who doesn’t understand why this bill was crafted,” says Miskin. “Clearly, we haven’t gotten to that point yet.”

Every bill needs three public airings in both chambers. With HB 1391 off Monday’s schedule, the waning number of voting days in the House and Senate won’t allow enough time. There were rumors session days could be added to the calendar, but Miskin says he’s not aware of any discussions.

“Mathematics alone would preclude it from becoming law this year,” he says.

Although the bill cleared a House committee in June, it remains controversial. The measure seeks to ensure landowners are paid the state’s legal minimum royalty rate, which is 12.5 percent. The industry has been lobbying against the bill, arguing it would violate the constitution’s prohibition on the impairment of contracts. Depending on the language of a lease contract, drillers and landowners may share post-production costs. These are expenses incurred when gas is processed and transported to market through pipelines. But people allege some companies are charging fraudulent post-production costs.

“A legislative response to this issue will not bring the relief that some are promising, as a lease is a binding contract and any disputes that may arise will always be most effectively resolved by the courts,” says Erica Clayton Wright, a spokeswoman for the gas trade group, the Marcellus Shale Coalition. “With the current market realities putting incredible pressure on energy producers and royalty owners, it’s absolutely critical that lawmakers turn their attention to encouraging natural gas infrastructure development and use.”

Jackie Root heads the Pennsylvania chapter of the National Association of Royalty Owners, which has been pushing for the bill’s passage. She says her group will be back in the Capitol Monday, regardless of whether the House takes it up.

“Everyday this goes by, landowners continue to have their gas stolen,” says Root. “It’s really sad. People don’t know where to turn. They’re looking to their legislators for help, and certain legislators are not standing up for their constituents.”

HB 1391 marks Everett’s second attempt to address the royalty complaints. A previous bill died during the last legislative session and was never allowed to come up for a vote. He says he will reintroduce a new one in 2017.

“I’ve been at this four years,” says Everett. “I’m disappointed, but I’m a sometime marathon runner. I’m in this for the long run.”

 

Comments

  • pghsheep

    Bait and Switch is Illegal in Pennsylvania.

  • Penn

    If Root is involved with any conversations, there is no chance of passage. She is just “oily”, not trusted or believed.
    Bottom line it is greed from the landowners fighting the financial bottom line of the investors. Not one landowner is putting one dime into the exploration for oil and gas. But the free money created by the sale of their buried assets is never enough. The leases are private contracts between capable people and businesses. It is not the government role to rewrite anyone’s business.

    • gasdem

      So, you are advocating for someone to steal my property. How so conservative of you. And, so I am not part of the “Investors” as I bought MY property to make money. How sad you think that way.

      I am in the middle of negotiation to lease my gas. I say, yea cause they say so, that I will pay for a share of post production costs. Typically that has been 2-3 percent. they drill the well, for a year they pay me my 15% minus my share of 3 percent. Then, they start taking out, 10, 20, 30, 90 percent out of my agreed to royalty. Exactly why? Please elucidate me.

      Transportation costs are fixed by mid stream/transmission companies. They get paid a fixed price per MCF. How the hell then should my costs for post production go up??? They are typically long term contracts.

      have yet to see a reasonable explanation for the increase in post production costs. In the case of Chesapeake, they created a spider’s web of company to increase the cost for each transition of gas.

    • TShields

      In English common law royalty meant a share of the proceeds, not a subservient partner who is sent a negative check .

  • TShields

    Sad day when lawmakers shield thieves. 30years ago post-production expenses didn’t exist.

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