2018-05-10 / Front Page

No Settlement Reached in State vs. Chesapeake, Anadarko Case

By Cain Chamberlin

Following several hours of deliberation in Bradford County court today, May 10, presiding Judge Kenneth Brown was unable to arrange a settlement agreement between members of the PA Attorney General’s Office and attorneys for Chesapeake Energy and Anadarko Petroleum Corp., regarding mineral royalties withheld from Pennsylvania leaseholders.

“We didn’t reach a settlement, but I do feel we made progress,” said Judge Brown on Thursday afternoon upon leaving the courtroom. “We still have a ways to go, but I thought today’s proceedings went well.

In the case, which has been going on since December of 2015, the Commonwealth is seeking royalty restitution for landowners who were under contract with these energy companies.

For years, landowners with natural gas leases associated with Anadarko and Chesapeake, as well as some of its sister companies, have dealt with post-production cost deductions in their royalty checks that were often so high, they were subsequently being paid nothing (or in some cases billed by the companies) while vast quantities of natural gas were continually extracted from their properties.

Because no settlement was reached in court, another settlement conference has been scheduled for Friday, Aug. 10, says Judge Brown.

“We have kind of a long road ahead of us that will likely go beyond August,” he said. “In these private settlement conferences, I speak to each side privately and ask them to be as candid and frank as possible so we can really get to the bottom of the issue.”

The state Attorney General’s Office sent three of its attorneys to today’s hearing, which was closed to the public, said Brown.

The Aug. 10 hearing will also be held in private.

While this case continues in Bradford County, there is also an ongoing case in the Commonwealth Court pertaining to the same issue.

Back in December 2017, Judge Brown ordered that the Office of Attorney General could proceed with invoking provisions of the Unfair Trade Practices and Consumer Protection Law (UTPCPL) against the aforementioned energy companies for their alleged unfair acts and practices.

Brown filed the order in the Bradford County Court of Common Pleas, finding that the UTPCPL applies in this case even though the natural gas leaseholders (landowners) are theoretically the sellers in the transactions and not the consumers, generally protected by the law.

Brown concluded it would be best for the Commonwealth Court to settle that debate of law.

“The Commonwealth Court can affirm or reverse my decision,” he said.

Although he found natural gas leases fit within the definition of trade and commerce protected by the UTPCPL, which typically extends to business transactions, he felt there is “substantial ground for a difference of opinion” on the matter, according to court documents.

Judge Brown told the Rocket-Courier that there is another hearing scheduled in the Commonwealth Court case in August as well.

He said if a settlement is reached in Bradford County court during the Aug. 10 conference, the litigation in the Commonwealth Court could come to an abrupt end.

“I’m not optimistic or pessimistic that a settlement will be reached. It’s a very complicated case,” he said. “However, I thought today’s conference was fruitful.”

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