Court rules against Pa. drillers in royalty dispute

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shale oil and gas drilling rig

HARRISBURG, Pa. — Attorney General Josh Shapiro announced Dec. 20 a significant step towards economic justice for Pennsylvania landowners in his lawsuit against Chesapeake Energy Inc. and Anadarko Petroleum Co.

Bradford County Common Pleas Court issued an opinion and order denying preliminary objections raised by the defendant companies.

Royalties

The Office of Attorney General’s lawsuit seeks to recover for thousands of Pennsylvania landowners the money wrongfully deducted from fracking royalty checks by Chesapeake Energy and Anadarko Petroleum — in violation of the Unfair Trade Practices and Consumer Protection Law.

The complaint alleges that landowners who entered into leases with the defendants believed they would receive royalties from the sale of natural gas without post-production costs — but were charged deductions for refinement, transportation and other costs associated with processing the natural gas.

Court

The Bradford County court held: No. 1, Chesapeake Energy and Anadarko Petroleum are subject to the Pennsylvania Unfair Trade Practices and Consumer Protection Law; No. 2, The lawsuit filed by the Office of Attorney General Shapiro is in the public interest; and No. 3, The defendants’ oil and gas leasing practices are also subject to the Unfair Trade Practices law.

The court held the Office of Attorney General is “invested with the broad responsibility for policing the marketplace and protecting the people of Pennsylvania from unfair and deceptive business practices.”

The lawsuit alleges that landowners were denied the benefit of competition for leases in the form of higher royalty rates and signing bonuses when Chesapeake Energy and Anadarko Petroleum agreed not to compete against each other in securing oil and gas leases from landowners.

The impact of the unfair and deceptive practices is not limited to the Marcellus Shale but applies also to Utica Shale and any deeper natural gas formations or layers under Marcellus and Utica Shale.

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1 COMMENT

  1. Since this case appears to “turn” on an extra-legal agreement that the two companies had, before approaching the landowners, maybe these questions (directed to the Attorney General and e-mailed to his Office) are worth asking:

    DO you believe that the Commonwealth will, in fact, prevail, in court?

    Have you or others in the law-enforcement infrastructure acted in concert with the Attorneys-General of New York, Ohio, and West Virginia, to “cordon off” the financial and other resources of the defendants, so that they cannot “spin off” their assets into another company, leaving the liabilities in a “shell” that will:

    a) lose the lawsuit;

    b) declare bankruptcy; and

    c) fold, leaving the Commonwealth with a Pyrrhic victory?

    CAN every transaction be watched [i.e., through the Federal Governments “FinCen”], so that you can be notified of every payment they make?

    CAN the Clerks of Court be required to notify your office of every legal filing that either company or its subsidiaries should make, with any court?

    Is there a law on the books, TODAY, that would make it a crime for the individual, human executives within a corporation (or any business structure) to use any kind of “gentlemen’s agreement”, to transfer corporate or personal assets out of the reach of a lawsuit such as yours?

    If not, is it possible, for the law-enforcement infrastructure to “detect” such transfers; induce/deduce that such activity is going on; and “intuit” a means of “divining” the nature of the “linch-pin” holding that “gentlemen’s agreement” together, and approaching the court with a motion that would freeze the corporate officers’ AND MAJOR SHAREHOLDERS’ individual assets?

    From AG Shapiro’s Facebook page (a “Live” video)
    https://www.facebook.com/JoshShapiroPA/videos/913584419032462/

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