Three bills expanding the rights of landowners who are currently leased with natural gas companies were approved Monday with strong bipartisan support by the full Senate, according to prime sponsor, Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee.

The legislation, known as the Oil and Gas Lease Protection Package, aims to provide more protections for landowners.

“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,” Sen. Yaw said.  “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.  I’m sure the House of Representatives will also see the merit in approving this legislation.”

Senate Bill 1236 would expand upon the Oil and Gas Lease Act by allowing royalty interest owners 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 contract.  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. The surrender document will release the gas company’s interests in the oil and gas. This is similar to what a mortgage company would be required to do after a mortgage was paid in full.

The PA Farm Bureau applauded the Senate for passing three bills that would provide additional protection for landowners involved in leases with natural gas and oil companies.

“Farmers hope the legislation will result in improved relationships between gas and oil companies and landowners, by requiring the companies to provide relevant information about their development activities to leaseholders and require them to be more open about lease terminations,” said PFB President Carl Shaffer.

“We are urging members of the House to move quickly on these bills to improve leaseholder rights, and are also seeking swift passage of House Bill 1684 (Everett-R-Lycoming), which would amend Pennsylvania’s Oil and Gas Act to forbid gas well companies from assessing production cost deductions that would drop royalty payments under 12.5 percent,” continued Shaffer.  “Many farmers and other leaseholders are incurring dramatic reductions in royalty payments received from gas well companies due to costs claimed by those companies.  This violates the intent of the   original state law guaranteeing landowners a 12.5 percent royalty rate.”

NewsClips:

Senate Acts On Gas Lease Royalty Bills, House Negotiates

Full Refunds Demanded In Natural Gas Royalty Dispute

4/14/2014