Legislation that would clarify a minimum royalty payment in state law was reported out of the House Environmental Resources & Energy Committee this week. House Bill 1684 is sponsored by four Republican legislators in the heart of drilling country: Reps. Garth Everett (Lycoming), Tina Pickett (Bradford), Matt Baker (Tioga) and Sandra Major (Susquehanna).
Some energy companies have, or have attempted to, decrease royalties below the statutory minimum by passing on post-production costs to landowners. This practice has caused due concern among the states thousands of landowners involved in natural gas drilling leases.
While a 1979 state law guarantees a minimum royalty to landowners of one-eighth, or 12.5 percent, the law was written before unconventional wells and does not specify certain terms that lawmakers feel are being used as loopholes for reduced payments.
“In my mind this is simply a matter of fairness to the lease holders in my district and in other parts of the Commonwealth as well,” said Everett.
The bill, which had previously received hours of scrutiny from the committee, now advances to the full House for its consideration.
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