The Oil and Gas Addendum
Legislation Revived to Protect Royalty Owners in Pennsylvania
On June 23, 2015, Representatives Garth Everett (R-Lycoming), Sandra Major (R-Susquehanna/Wayne), Matt Baker (R-Bradford/Potter/Tioga), Tina Pickett (R-Bradford/Sullivan/Susquehanna) and Karen Boback (R-Lackawanna/ Luzerne/Wyoming) re-introduced legislation which seeks to clarify and strengthen Pennsylvania’s Guaranteed Minimum Royalty Act (“GMRA”). The GMRA states that a lease for oil and gas shall guarantee a minimum royalty of 12.5%. However, many producers in the Marcellus region have been deducting post-production costs, such as transportation, compression and dehydration charges, when calculating landowner royalties. These deductions often result in a net royalty which is less than the statutory minimum of 12.5%. The bill, known as HB 1391, will prevent this practice. Section 1.4 of the bill states that “[T]he minimum royalty payment to a lessor for unconventional gas well production shall not be less than one-eighth…” The bill further provides that if a landowner is successful in establishing a violation of the GMRA, the reviewing court “shall award reasonable attorney’s fees” to the landowner.
Similar legislation known as HB 1684 was introduced last year by Rep. Everett but that version did not get a full floor vote. Bob Burnett’s article, “Pa. Should Clarify Its Approach to Post-Production Costs” published in the Pennsylvania Law Weekly on June 17, 2014 urged adoption of HB 1684. The logic and rationale espoused in this article also applies to HB 1391. Every landowner and royalty owner in Pennsylvania should closely monitor and follow the status of this critical legislation.
About Us
Oil and gas development can present unique and complex issues that can be intimidating and challenging. At Houston Harbaugh, P.C., our oil and gas practice is dedicated to protecting the interests of landowners and royalty owners. From new lease negotiations to title disputes to royalty litigation, we can help. Whether you have two acres in Washington County or 5,000 acres in Lycoming County, our dedication and commitment remains the same.
We Represent Landowners in All Aspects of Oil and Gas Law
The oil and gas attorneys at Houston Harbaugh have broad experience in a wide array of oil and gas matters, and they have made it their mission to protect and preserve the landowner’s interests in matters that include:
- New lease negotiations
- Pipeline right-of-way negotiations
- Surface access agreements
- Royalty audits
- Tax and estate planning
- Lease expiration claims
- Curative title litigation
- Water contamination claims
Robert Burnett - Practice Chair
Robert’s practice is exclusively devoted to the representation of landowners and royalty owners in oil and gas matters. Robert is the Chair of the Houston Harbaugh’s Oil & Gas Practice Group and represents landowners and royalty owners in a wide array of oil and gas matters throughout the Commonwealth of Pennsylvania. Robert assists landowners and royalty owners in the negotiation of new oil and gas leases as well as modifications to existing leases. Robert also negotiates surface use agreements and pipeline right-of-way agreements on behalf of landowners. Robert also advises and counsels clients on complex lease development and expiration issues, including the impact and effect of delay rental and shut-in clauses, as well as the implied covenants to develop and market oil and gas. Robert also represents landowners and royalty owners in disputes arising out of the calculation of production royalties and the deduction of post-production costs. Robert also assists landowners with oil and gas title issues and develops strategies to resolve and cure such title deficiencies. Robert also advises clients on the interplay between oil and gas leases and solar leases and assists clients throughout Pennsylvania in negotiating solar leases.
Brendan A. O'Donnell
Brendan O’Donnell is a highly qualified and experienced attorney in the Oil and Gas Law practice. He also practices in our Environmental and Energy Practice. Brendan represents landowners and royalty owners in a wide variety of matters, including litigation and trial work, and in the preparation and negotiation of:
- Leases
- Pipeline right of way agreements
- Surface use agreements
- Oil, gas and mineral conveyances
