Governor, senator ask state AG to investigate Chesapeake Energy

BY BRENDAN GIBBONS
Times Shamrock Writer

The state attorney general’s office will review whether it has jurisdiction to investigate complaints about the top natural gas producer in the state holding back royalty payments from landowners.

Attorney General Kathleen Kane received letters from Gov. Tom Corbett and Sen. Gene Yaw, R-23, Williamsport, chairman of the Senate Environmental Resources and Energy Committee, asking her office to investigate Chesapeake Energy.

Yaw asked Kane’s office that “an official inquiry be undertaken immediately.”

The governor asked Kane to “examine this issue.”

Yaw said his office has been inundated with complaints from landowners about the way Chesapeake holds back money from royalty owners. He and Corbett both referenced extreme situations in which the company deducts an amount higher than the royalty payment.

In these cases, landowners are forced to pay Chesapeake for the company’s operations on their land, both letters, sent Thursday, state. Chesapeake spokesman Gordon Pennoyer declined to comment on the letters.

In a phone interview, Yaw said constituent complaints have been coming in for the better part of a year.

“As a senator, I just don’t have the tools to look into all these things,” Yaw said. “That’s why we have the AG’s office. They have a consumer protection division.”

He said he has spoken with Chesapeake employees about it, but nothing substantial has changed.

“Promises are made: ‘We’ll do these things,’ or, ‘We’re changing this,’” Yaw said. “The complaints just keep coming back.”

In the letter, he wrote, “the situation presented seems to be isolated to Chesapeake.” He said he hasn’t heard anywhere near the same number of complaints about other exploration and production companies.

Overall, Yaw supports the industry’s presence in Pennsylvania.

“When you look at it overall, I think that it is beneficial,” he said. “A lot of the other companies look at Chesapeake and think, ‘Hey, you’re doing a real disservice to the industry. We’re all going to be tarred with the same brush.’”

Jackie Root, president of the Pennsylvania chapter of the National Association of Royalty Owners, made a similar comment about Chesapeake relative to other exploration and production companies.

“We are so positive about the industry being here,” she said. “So many industry companies are doing a good job. These few that are causing the problems really need to be pulled up.”

Root said she has been listening to landowner complaints about Chesapeake’s deductions for a long time.

“When it comes down to it, they’re going outside of contracts and forcing people without resources to fight it, and it’s really a hopeless battle for a lot of people,” she said.

She mentioned a couple reasons she’s hopeful that the royalty issues could be resolved. Corbett’s and Yaw’s involvement is one, as is House Bill 1684, which prohibits gas companies from deducting a series of post-production costs from landowners’ royalties. The bill has been in the House Environmental Resources and Energy Committee since September.

“I’m feeling really upbeat,” she said. “Our organization is seeing this as a win.”

Yaw said he did not coordinate his letter with Corbett’s, though he did tell the attorney general’s office, the GOP leadership in the senate and Chesapeake. “We didn’t want to blindside anyone with what we were doing,” he said.

He said he contacted Chesapeake’s government affairs representative in Harrisburg, Barbara Sexton, telling her he would be asking the Attorney General’s office to get involved.

He said Sexton’s response was, “Thank you.” Efforts to reach Sexton were unsuccessful.