Kane lawsuit delays natural gas royalties settlement payment

Pennsylvania Attorney General Kathleen Kane's office decision has delayed $11 million settlement payment to thousands of people. Some natural gas producers have to pay royalties to leaseholders in Bradford County. Royalty agreements between natural gas producers and landowners allow deductions of certain costs, while State law keeps the royalty not less than 12.5 percent.

Chesapeake Energy Corp in Bradford County owns Marcellus shale gas well. Lawyers and landowners hold a view that a federal class-action settlement has been agreed among companies related to Chesapeake Energy. Lead plaintiff Demchak Partners wouldn't make them whole, but hurt them financially down as the settlement allows for continued deductions of fees from royalties. 

TribLive reports that leaseholders part of the class-action have been waiting for royalties for years. Meanwhile, lawsuits over royalty payments are piling up against shale gas producers. This has created further confusion and lack of clarity. As a result, no remedy for the numerous complaints has surfaced. Many leaseholders complain that natural gas producers are improperly deducting fees from royalty payments on gas from wells or slashing excessive fees.

Jackie Root, President of the Pennsylvania chapter of the National Association of Royalty Owners, said "The folks I hear from are not unhappy that the settlement has not gone forward."

Pennsylvania Attorney General Kathleen Kane's decision is to run into a huge legal battle over royalties. This has delayed the payment of royalties by some natural gas producers to leaseholders. The delayed payment is expected to be an $11 million settlement for thousands of people. The delay was prompted by Kane's lawsuit in Bradford County. A filing in an ongoing federal case is also causing concerns for some, according to Sun Times.  

Michelle O'Brien, lead attorney for the Demchak plaintiffs, who first reached a proposed settlement in 2013, said "We do hear from a lot of landowners who would like to see this move forward. They deserve to get the money due to them."

Several cases are different in nature of complaints. Kane's office, in December, filed a State court lawsuit opposing to the Federal Demchak settlement. This is raising several questions over who can benefit from which case and how. 

Several drillers are sharing costs of processing and transportation of gas with landowners. This is significantly reducing royalty payment to landowners. Natural gas producers are deducting post production costs or gathering fees from the royalty payment. Landowners are raising voice against this and have started filing lawsuits in State count, according to StateImpact.

Michelle O'Brien, lead attorney for the Demchak plaintiffs who first reached a proposed settlement in 2013, said there's confusion over how a settlement or resolution of attorney general's complaint would affect the Demchak settlement and other several individual claims for settlement of royalties.

Natural gas companies have entered into agreements with landowners. State law fixes minimum royalty at 12.5 percent. The agreement also allows for deductions of certain costs that may reduce payment to zero level also. Individual leases might outline those deductions and costs.  

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Pennsylvania Attorney, $11 million settlement, Bradford County, landowners, Chesapeake Energy Corp

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