By Jackie Root
NARO PA is concerned about the many royalty deduction issues facing mineral owners in Pennsylvania and just so you know we are not alone, mineral owners across the country face the same issues. This was a frequent topic of discussion at the 2015 NARO Convention in Las Vegas last week. Our legislative committee has fought for clarification to the Guaranteed Minimum Royalty Act with what is now HB 1391, we continue our work to educate legislators about the damage done to their constituents by post production costs that reduce the promised 12.5%.
We are also awaiting the results of the Attorney General's investigation into deductions. And, last but not least, we have individual and class action lawsuits that are attacking the issue in the courts. One of these cases, the "Demchak Case." has been closely followed by NARO PA from the initial filing. In August 2013 a proposed settlement was filed but the judge never issued the order to certify. It was falsely reported by several news sources that the case was settled and many thought that the announced $7.5 million was paid, NOT SO!
The settlement class was certified by the judge on October 2, 2015 in the Demchak Partners, LLP (and others) v Chesapeake Appalachia, LLC case. This warrants very close scrutiny IF you are a Chesapeake Lessor in PA with a lease containing a "Market Enhancement Clause" whether or not you are currently receiving royalties. That is a rather large class of folks!
Perhaps you have received a "Notice of Class Action Settlement" for other settlements unrelated to royalties? Usually, your decision not to participate is inconsequential. Not so with this proposed royalty owner settlement. This is an "opt out" settlement, meaning if you do nothing and the settlement goes forward and you are included and bound by all the terms laid out in the settlement.
According to the October 2nd order, "The Settlement Administrator shall complete the mailing of the Settlement Notice to the Settlement Class Members no later than 30 days from the entry of this order." Each potential class member should receive an official notice with three options:
1) Remain a class member (if you do nothing this applies)
2) Exclude yourself or opt out
3) Object, or comment, on the proposed settlement (it is unclear whether there is an opportunity to opt out once you choose this option.)
It is important to note that any member who wishes to opt out must do so, carefully and according to the instructions, by December 17, 2015. If you receive a court authorized notice regarding this case you must not ignore it.
Seek advice from your attorney; a wrong move will affect your royalty stream for generations.
NARO PA, does not recommend any particular course of action regarding this settlement. However, it is imperative that potential class members understand exactly how this settlement will affect their mineral interest now and into the future.
I cannot emphasize enough that you must not ignore the notice and you have a very short time to make a decision to participate, opt out or comment.
Jackie Root- CMM
NARO PA Chapter President
Thank you for the information!
Not in relation to this issue.