December 13, 2015
Pennsylvania Attorney General Kathleen Kane has filed a lawsuit against Oklahoma-based gas drilling company Chesapeake Energy claiming it had landowners sign "deceptive" leases that cheated them out of millions of dollars in royalty checks.
The lawsuit, filed last Wednesday in Bradford County, seeks tens of millions of dollars in restitution on behalf of about 4,000 landowners, in addition to civil penalties, according to ABC News.
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Specifically, the lawsuit alleges that Chesapeake, the nation's number two gas producer, practiced a "bait and switch scheme" regarding land rights to drill in the Marcellus Shale, the largest known reservoir of natural gas in the United States. The company is accused of making unauthorized deductions for post-production expenses from royalty checks to Pennsylvania landowners.
The issue, which landowners have fought for several years, is on track to be resolved through a pending settlement agreement between Chesapeake and the landowners. Kane, in filing the lawsuit, hopes to modify that civil settlement so that her own lawsuit can proceed.
Chesapeake has denied the allegations as "baseless" and plans to contest them in court. The suit alleges that the leases with landowners were negotiated in bad faith during the early "rush" to grab large tracts of land for future drilling.
Landowners' groups, such as the Pennsylvania chapter of the National Association of Royalty Owners, have expressed support for the lawsuit, which was filed following a two-year investigation during which Kane's office interviewed and reviewed the lease paperwork of hundreds of people in northeastern Pennsylvania.