Federal Judge Upholds Split Decision in PA Royalty Case

A group of landowners who signed leases in western Pennsylvania with Energy Corporation of America (ECA) filed a lawsuit in June 2012 (Pollock, et al v Energy Corporation of America) alleging ECA improperly deducted certain expenses, and didn’t include certain revenues, when calculating and paying royalties. At the time, ECA counter-sued asking for summary judgment that the way they calculate royalties and revenues is OK according to accepted practice and previous court rulings.

Last fall Magistrate Judge Robert Mitchell “partially granted and partially denied” the summary judgment request from ECA. It was mostly a victory for ECA because it dismissed all but one of the charges by the landowners. The case was appealed by both sides to federal court and on Jan. 24, Judge Joy Flowers Conti of the Western District of Pennsylvania said Judge Mitchell’s interpretation of the case is correct. She upheld his decision. This is an instructive case for both landowners and drillers, and a caution to be sure the lease you sign spells out in minute detail how royalties will be calculated…

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