By: Senator Gene Yaw
(R-Bradford, Lycoming, Sullivan, Susquehanna & Union Counties)
Our state government is guided by two documents. One is the Constitution of the United States and the other is the Constitution of Pennsylvania. Both of these documents give us the right to bear arms, a right which many say they will die to protect. These Constitutions also provide that “No State shall….pass any…Law impairing the Obligation of Contracts….” In an orderly society, we cannot pick and choose which Constitutional provision we will or will not support. All are entitled to equal support irrespective of whether we like or agree with the result of upholding those provisions.
I am fully aware of the post production deduction issues which have arisen in existing lease agreements over the past several months. A few, out of ignorance, have suggested, “Just make a new law defining certain terms.” Yes, that could be done, but because of the Constitutional restrictions, such a change would have no effect whatsoever on any lease or contract in existence at the time of passage. Such a change would affect only the interpretation of new lease agreements. So, changing the law in that manner has little benefit, if any, to current royalty issues.
The Pennsylvania Supreme Court case of Kilmer vs. Elexco has been routinely cited as an answer to all post production issues. A Letter to the Editor appearing in The Daily Review stated that the Supreme Court said the legislature should clarify the term “royalty.” Such a suggestion was never made by the court. What was said was that the “wellhead price” and the “point of sale” were one and the same under the Guaranteed Minimum Royalty Act and if they were to be different, that was a policy decision for the legislature. The court said nothing about changing the definition of “royalty.”
I have consistently stated that the remedy for current contract issues is through the court system. Some have criticized this position, but that is why the system is there – to resolve disputes. Current contract issues will not, and cannot, be resolved by changes in legislation. Such an effort would not be worth the paper it is written on. I will not introduce legislation which I know will not pass constitutional standards just because it will make popular headlines in the press. I believe in being honest and up-front, not deceptive for popularity. Sometimes doctors are required to give patients bad news. It might not be popular, but it is the right thing to do.
Those who continuously reference the Kilmer case need to read it before citing it as authority. There, the Supreme Court specifically stated:
“While Landowners present a concern that gas companies may inflate their costs to drive down the royalties paid, we find that claim unconvincing because gas companies have a strong incentive to keep their costs down, as they will be paying seven-eighths of the costs. IF A LANDOWNER SUSPECTS THAT A GAS COMPANY IS CHARGING HIGHER COSTS THAN THE GAS COMPANY IS ACTUALLY PAYING, THEN THE LANDOWNER CAN SEEK A COURT ORDERED ACCOUNTING.” (Emphasis added)
As I noted previously, I have been criticized for suggesting that if someone feels they are being treated unfairly or improperly under their lease, they should take legal action. That, however, is precisely what the Pennsylvania Supreme Court directs.
I do find it interesting that none of the letter writers who have written to The Daily Review or the Rocket Courier have taken the time to contact my office or speak with me on this matter. I must believe that they have their minds made up and do not want to be burdened by anything contrary to their position or to their personal agenda. Therefore, I will seek to address this in two ways.
First, while the legislature cannot waive a magic wand and change the language of thousands of contracts, I have been working on legislation which will provide tools to landowners to obtain more detailed accounting information regarding gas pricing, well income and post production costs. I am also working on legislation which would protect landowners from retaliatory conduct by a gas company if a landowner challenges the company’s activities. I am confident this approach will pass any constitutional questions. So, we can take a knee jerk superficial headline approach or we can take a reasoned and rational approach to a problem which will stand. Perhaps my mistake has been in working for a sound result rather than a politically expedient one.
Legislation has been introduced in the House of Representatives which purports to solve all of the problems according to the letter writers. If this is correct, and the House legislation is passed, I have said publicly that I will support it. On the other hand, if that effort is unsuccessful, we still have those efforts which I have outlined above. It seems to me that two approaches to resolving the problem places Bradford County in a much stronger position. There is certainly value to having legislators who have differing ideas.
Second, for a Daily Review letter writer to suggest that I have not supported Bradford County is just silly. I was a supporter of Act 13 from the outset – support which was criticized by your commissioners as they considered rejecting the benefits of that law. The net result, from a law I championed, has been that the county and its municipalities have received over $40 million in the last two years. I sponsored a bill amending the Clean and Green law to give tax relief to those Bradford County landowners who would be hit with heavy tax bills for having well pads on their property. I was the prime sponsor of legislation requiring DEP to post well production information on its website. I have also sponsored bills which would provide for a statutory Pugh clause with respect to the formation of units. I am the prime sponsor of a bill which would provide surface owners a clearer path to obtaining oil and gas rights when subsurface owners can’t be found and rights have not be exercised for over 50 years. I voted for the transportation bill which would increase the Dirt and Gravel Road program by sevenfold, a program which Bradford County uses more than any other county in the state. I have introduced two bills regarding expansion of gas service to un-served and under-served areas of the state which were generated by a hearing held in Wysox. I am the sponsor of Senate Bill 1010 to increase the weight limit for certain milk trucks, which was generated by a request from Bradford County farmers. I was a cosponsor of the Senate bill which addressed the elimination of death taxes for family farm operations. Finally, I have chosen to maintain a full time presence in Bradford County by keeping one of my two district offices located in Towanda. Two full time staff members are also available to meet with any individual who may be having a government-related problem or concern.
To those letter writers who claim that Bradford County’s voice is not heard because I’m also an attorney from Lycoming County, I challenge you to do your research. President Abraham Lincoln is attributed to once saying, “Better to remain silent and be thought a fool than to speak out and remove all doubt.”