A four-year legal battle over the calculation of Marcellus Shale natural gas royalty payments is now in the hands of the state Supreme Court.
The court on Oct. 30 agreed to decide whether tactics used by gas extractors to obtain leases fall under the Unfair Trade Practices and Consumer Protection Law and if antitrust remedies can be pursued under that statue.
In the suit filed in 2015 in Bradford County on behalf of private l... then-Attorney General Kathleen G. Kane accused gas extractors of using deceptive, misleading and unfair tactics to obtain leases.
The suit followed an investigation sparked by property-owner protests, especially those in Bradford County, over low royalty payments.
A farmer reported getting a $1.10 check in 2014 for gas taken from two well pads on his land in the Sayre area.
“Nothing has really changed,” said Rex Kingsley who has six wells on his Bradford County properties. “They’re still taking large deductions,” he said.
In fighting the suit, Chesapeake Energy Corp., Anadarko Petroleum Corp. and their affiliates claim the Unfair Trade Practices and Consumer Protection Law does not apply to the leases.
But Lycoming County Senior Judge Kenneth D. Brown, specially assigned in Bradford County, ruled it did.
In a March 15 decision with one partial dissent, Commonwealth Court found gas leases were sales and thus fell under the consumer law. That statute provides for civil penalties of up to $1 million for each violation.
The Supreme Court has agreed to hear Chesapeake’s and Anadarko’s appeal of that decision.
“These companies have been trying to utilize the attorney general’s office as a scapegoat from the beginning,” Attorney General Josh Shapiro said Friday. “At any time, they could stop these proceedings, make these landowners whole and keep the promises they made. Instead, they continue finger-pointing. Our office continues to fight for these landowners and we have no plans of stopping.”
It is not the only litigation regarding the calculation of royalty payments.
A number of property owners in 2013 sued Chesapeake in U.S. Middle District Court contending it is improper to deduct from royalties the cost of such things as dehydration and compression.
Kiss that Triple Play goodbye johnny. Deja Vu all over again.
Will this spill over into Utica leaseholds in OH?