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Pennsylvania NatGas Royalties Bill Stalls Again as Session Nears End

A bill that would protect Pennsylvania landowners from natural gas drilling post-production costs has again stalled in the General Assembly, which has only days left in this year's legislative session.

Lawmakers have tried but failed for years to pass legislation that would clarify the state's Guaranteed Minimum Royalty Act of 1979, which sets forth the minimum payment to landowners but doesn't address marketing costs and how they should be factored into royalties.

The latest attempt, HB 1391, was set to receive a second consideration in the state House of Representatives last week, but that never happened, and the bill has been pulled from the schedule. With the House in session only four more days and the Senate in session for three, it looks increasingly unlikely that any action will be taken on the bill.

The legislation cleared the House Environmental Resources and Energy Committee in June, as it did two years ago (see Shale Daily, June 30). At that time, the bill languished in the face of strong opposition from producers and a lack of support from lawmakers on both sides of the aisle (see Shale Daily, June 20, 2014). A House Republican spokesman said late last week that no compromise is near on HB 1391.

The legislation was prompted by an outcry from landowners concerning some producers that have deducted post-production costs to cover expenses such as compression, dehydration and transmission. After more than a year-long investigation, the state Attorney General's office filed a lawsuit in 2015 against Chesapeake Energy Corp. for allegedly deceptive business practices related to post-production expenses (see Shale Daily, Dec. 9, 2015). Landowners have grown more restive in recent months, as Bradford County launched a public relations campaign to pressure lawmakers into passing HB 1391 (see Shale Daily, Sept. 9).

The natural gas industry has fought against the legislation, claiming contractual disputes should be settled in court. The bill's sponsor, Republican Rep. Garth Everett of Northeast Pennsylvania, said he would again introduce the bill next year.

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