Action Taken Against Chesapeake Energy, Corp.

HARRISBURG – The Pennsylvania Office of Attorney General today took action against Chesapeake Energy, Corp. after investigating claims of unfair natural gas royalty deductions, according to state Senator Gene Yaw (R-23).

“Since first hearing the concerns raised by many of my constituents, I have said many times that any violation of a contract should be examined by the court system,” Yaw said.  “Over the years, my office has received numerous complaints from landowners frustrated over the business practices of Chesapeake Energy and, in my opinion, the Office of Attorney General was best equipped to investigate those claims.”

As announced today by the Pennsylvania Office of Attorney General:  The lawsuit, which was filed in the Bradford County Court of Common Pleas, seeks restitution for thousands of consumers, civil penalties and legal costs. It was the result of an extensive investigation by the Office of Attorney General’s Antitrust Section and Bureau of Consumer Protection. The investigation focused on counties in northern Pennsylvania.”

On June 27, 2013, Yaw was the first to convene a public hearing of a legislative committee to discuss the issue of royalty deductions.  “During our hearing, the committee heard testimony that deductions by Chesapeake were as high as 100 percent of some royalty checks.  This raises a significant consumer protection issue for hundreds of constituents in my Senate district.”

On February 13, 2014, Yaw asked the Office of Attorney General to undertake an ‘official inquiry’ relating to the post-production cost deduction practices of Chesapeake Energy occurring in the Commonwealth.  Further, on March 4, 2015, Yaw sent subsequent correspondence to the Office asking for a status update on the investigation.

On behalf of his constituents, Yaw also forwarded 53 leases to the Attorney General’s Office for review.

The lawsuit requests the court to order the defendants to:

  • Pay restitution to all persons who have suffered losses as a result of the defendants’ conduct.
  • Pay civil penalties of $1,000 for each violation of the Unfair Trade Practices and Consumer Protection Law, and $3,000 for each violation involving a person 60 years old or older.
  • Permanently refrain from any practice that violates the Unfair Trade Practices and Consumer Protection Law
  • Directs the Chesapeake defendants to forfeit their right to engage in any business involving exploration, drilling, extraction, gathering, compression, transportation and sale of natural gas within the Commonwealth until all monies have been paid for restitution, costs and civil penalties.

“This is certainly a step forward in protecting Pennsylvania leaseholders from unlawful and unfair business practices of Chesapeake,” Yaw added.

Adam Pankake, Executive Director
(717) 787-3280