The state House is expected to consider three bills that passed the Senate earlier this week aimed at protecting landowners from being bilked on natural-gas lease royalties.
Amendments to the Oil and Gas Lease Act, S.B. 1236, 1237 and 1238, sponsored by Sen. Gene Yaw, R-Williamsport, passed the Senate on Monday. Senate Bill 1236 passed 48-0; 1237 passed 45-4; 1238 passed 49-0.
In addition to the legislation, Yaw was joined by Gov. Tom Corbett in February in asking state Attorney General Kathleen Kane to investigate post-production cost deductions by natural-gas producer Chesapeake Energy. Yaw and Corbett said they had heard from constituents who said their royalty payments from the company for the natural gas beneath their property had been, in some cases, wiped out by fees Chesapeake charged for extraction and transportation.
Because there is no other method for removing the gas, Chesapeake and other gas drillers are permitted to deduct the fees from the royalty payments.
The Attorney General's antitrust section has taken up the case.
"This three-bill package aims to level the playing field in favor of Pennsylvania landowners who are looking for fair treatment when leasing their land," Yaw posted on his Facebook page. "Hopefully, these bills, along with other legislative and investigative efforts that are presently underway, will resolve many of the royalty issues which have been brought to the attention of local legislators."
Adam Pankake, Yaw’s chief of staff, said the bill likely would be referred to the House Environmental Resources and Energy Committee, which is led by Rep. Ron Miller, R-Jacobus.
Miller said he understands the interest in the legislation, but the bills haven’t been referred to his committee yet. As a result, he didn’t have a timetable on when they might be considered.
A look at the legislation:
• Senate Bill 1236 would expand upon the Oil and Gas Lease Act by allowing royalty interest owners the opportunity to inspect records of gas companies to verify proper payments. All information provided by a gas company would be confidential in nature and could not be disclosed to any other person, other than a current leaseholder.
• Senate Bill 1237 would prohibit a gas company from retaliating against any royalty interest owners by terminating their lease agreement or ceasing development on leased property because a royalty interest owner questions the accuracy of current royalty payments.
• Senate Bill 1238 would require a gas company to record a satisfaction piece with the Recorder of Deeds office in the county where the oil and gas well is located within 30 days upon expiration, termination or forfeiture of an oil and gas lease. The satisfaction piece would release the gas company's interests in the oil and gas. This is similar to what a mortgage company is required to do after a mortgage is paid in full.