Royalty bill battle is not over

Local leaders who have been supportive of passage of House Bill 1391, which would have made sure landowners who lease their land to natural gas drillers don’t get less than one-eighth of the dollar value of produced gas from wells on their land or in which they are a unit, are disappointed that the bill did not come to vote, but that doesn’t mean they are giving up.

Bradford County Commissioner Doug McLinko said that Chesapeake, the main natural gas drilling company in Bradford County, “has taken a quarter of a billion dollars in landowner lease money out of our county, and the Legislature let them get away with it.”

“Just under 300,000 acres are leased to them,” McLinko said. “That’s about 35 percent of our land mass.”

A town hall meeting earlier this year in Towanda drew several hundred unhappy landowners and leaseholders who wanted action from the state Legislature to keep gas drillers from reducing royalty payments below the state limit of 12.5 percent by withholding “production costs” from payments, but the failure of the bill to come to a vote “is a big deal” to the Bradford County economy.

Several of those same people traveled by bus to Harrisburg to pressure the Legislature to deal with the issue.

People who signed leases with Chesapeake were “really hurt” by decrease in royalty payments, which in some cases turned into a negative amount, with leaseholders owing the industry, McLinko added.

“People expanded their farms to stay in business. When they take them all out it really becomes a problem for the local economy. And that has affected the economy,” McLinko said.

State Rep. Matt Baker, R-Wellsboro, said the House bill would have protected lease owners by guaranteeing that a minimum royalty payment for unconventional gas well production would not be less than one-eighth or 12.5 percent.

“I am frustrated we were not able to get this legislation across the finish line before the end of the 2015-16 legislative session; however, I will continue to fight for the rights of property owners when the new session begins in January,” Baker said.

Rep. Garth Everett, R-Muncy, author of the bill, said “there are people in my caucus who agree there is a problem with the royalty issue but don’t think my bill is the solution to the problem, and they happen to be the majority leader and he decides which bill comes to the floor.”

According to Everett, Rep. Dave Reed, R-White Township, said in caucus “after a lot of discussion that he doesn’t think it is exactly the right solution and wouldn’t move it forward in its current form. We do agree royalty owners are not getting paid fairly.”

Everett said the bill came out of committee with a bipartisan vote, so he knows there is support for it in the Legislature.

Everett said he “worked with the royalty owners’ association and people’s attorneys that work with landowners and they helped me tighten up some definitions that made it more clear.”

He said he also worked with “folks from the conventional gas industry,” who are “not the problem.”

“They helped me with the knowledge to tighten it up even more. The essence of the bill is very simple. We have had a minimum royalty statute since 1979 and it is very clear, and the point of my bill is you can’t use smoke and mirrors and accounting magic to reduce the payments below one eighth, so it can’t be interpreted another way,” Everett said.

Everett vowed to bring the bill back “with some adjustments to it as soon as the bill desk opens.”

“I will bring it back next session. I wouldn’t be doing it if I didn’t think it was the right solution. It has some amendments to it, and I think it gets better each time, this will be the third time. We had good momentum going, with their help and landowners from across the state in the capitol every day asking for appointments with Reed every day,” Everett added.

Everett said lobbying from the gas industry was “huge.”

“There was huge pressure from the industry not to do it. I think it is a great thing for are area, state and country. I used to be one of the people they would come to, but I am persona non grata these days. I told them I don’t do this for them. We decided early on not to take any contributions from them. I represent my constituents. When it comes between my constituents and the gas company, I am out,” he said.

“The only time we ever get any real traction on it is when we push hard,” he added.


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