Bradford County commissioners ask U.S. attorney to investigate Chesapeake Energy
TOWANDA - The Bradford County Commissioners announced this week that they have sent a letter to U.S. Attorney Peter J. Smith which asks him to investigate the large decline in the size of royalty payments made by Chesapeake Energy Corp.
The decrease in the size of royalty checks has affected a large number of Bradford County royalty owners, the commissioners said.
The letter, which is dated July 10, explains that the commissioners "continue to receive an incredible number of calls and letters from leaseholders within the county asking for assistance in what they believe are unfair deductions" from their royalty checks, the commissioners wrote in a press release that they issued this week about the letter.
"Both Pennsylvania Attorney General Kathleen Kane and Governor Tom Corbett have stated their intent to investigate the issue," the commissioners wrote in their press release. "However, the commissioners are not aware of any action that has been taken. The commissioners have contacted the state legislators through letters, phone calls and personal visits but to date no legislation has passed to address the issue. Inaction by those elected to represent us in Harrisburg continues to negatively impact the residents of our county, region, and state.
"The commissioners want a serious effort to address the issue of clarifying what was the Legislature's intention of the '1979 Minimum Royalty Act,'" the commissioners' press release states. "They believe the minimum royalty should be guaranteed at 12.5 percent as originally defined in 1979. The current silence of many in Harrisburg is deafening.
"The extraordinary reduction of royalties paid to landowners (mostly working families and senior citizens) results in reduced economic activity as well as reduced tax receipts that the state would receive," the release states.
"In March, a rally was held on the front steps of the courthouse asking the Legislature for support of House Bill 1684, in June this bill was tabled and will not be voted on before the summer break begins," the press release says. "This extremely serious issue has caught the attention of royalty owners and operators across the nation. The commissioners believe this matter impacts interstate commerce as it involves out-of-state companies conducting business activity in Pennsylvania."
House Bill 1684, which the Bradford County commissioners support, would guarantee that landowners receive, at a minimum, a 12 1/2 percent royalty payment, without any post-production costs being taken out of that minimum payment.
State Sen. Gene Yaw said that he would, as he has stated numerous times in the past, vote for House Bill 1684 if it passed the House and were brought before the Senate.
Yaw said it is unfair for the commissioners to portray him as not doing enough to assist leaseholders.
"I have three bills that are all related to gas issues - Senate Bill 1236, Senate Bill 1237 and Senate Bill 1238 - that have all passed the Senate several months ago," Yaw said. "Since then, they have been sitting in the House. So don't tell me that I haven't done anything."
Yaw said he has also authored two other bills that would increase access to natural gas, which have also passed the House and "are sitting in the Senate."
By contrast, two senior members of the House, Tina Pickett and Matt Baker, could not get House Bill 1684, which they sponsored, through the House of Representatives, Yaw said.
Yaw said that at this point, if House members want to assist leaseholders and other local residents, they should pass the five gas-related bills that he got through the Senate.
Senate Bill 1236 would allow those receiving royalties the opportunity to inspect records of natural gas companies to verify proper payments. In addition, the bill requires all royalty payments be made within 60 days of production unless otherwise stated in the lease. Any delinquent payments are to be paid with interest.
Senate Bill 1237 would prohibit a gas company from retaliating against any royalty interest owner by terminating their lease agreement or ceasing development on leased property because a royalty interest owner questions the accuracy of current royalty payments. Companies found to have violated the provisions of this act face civil penalties of up to $1,000 per day.
Senate Bill 1238 would require a gas company to record a surrender document in the county Recorder of Deeds office where the oil and gas well is located within 30 days upon expiration, termination, or forfeiture of an oil and gas lease.
Yaw said he believes that Attorney General Kane's investigation is underway, but that she is not publicizing information about it.
Yaw said it is normal for law enforcement agencies, including the Attorney General's Office, to not publicize information about ongoing investigations.
"What the Attorney General is doing is completely normal and what I would expect in a situation like this," Yaw said.
Yaw said that he does not expect a U.S. attorney to launch an investigation into the royalty payment issue when it is already being investigated by the Pennsylvania attorney general, particularly since the U.S. Attorney General's Office is under Democrat control and Kane is a Democrat.
"The chance of a U.S. attorney usurping the power of a Democratic (Pennsylvania) attorney general is probably about nil," Yaw said.
Chesapeake Energy Corp. has declined to provide comment for this story, according to Gordon Pennoyer, a spokesman for Chesapeake Energy.
James Loewenstein can be reached at (570) 265-1633; or email: email@example.com.