AG Shapiro, Chesapeake Energy Reach Settlement Amid Bankruptcy Press Release by Office of the Attorney General Josh Shapiro, March 8, 2021
Shapiro Ensures Protections for Landowners Moving Forward
TUNKHANNOCK, PA—Attorney General Josh Shapiro today announced that the Pennsylvania Office of Attorney General has reached a settlement agreement with Chesapeake Energy (Chesapeake), who filed for bankruptcy in June 2020. The settlement provides for better payment of royalties for Pennsylvania landowners with Chesapeake leases going forward; improved protections for landowners through appointment of an Ombudsman to investigate individual claims, OAG compliance and inspection rights, and annual reporting; and $5.3 million in restitution for Pennsylvania landowners with Chesapeake leases.
“The bottom line here is that this settlement will end the abuse from Chesapeake and allow landowners to take a new lease with no deductions,” I do not think it will stop Chesapeake’s law violations, pollution, harms, lies and cruelty, one bit. This settlement might make the company burp, once.
said AG Shapiro. “This case is about standing up to powerful interests when they try to take advantage of people. And it’s about my duty, as the Attorney General of this Commonwealth, to uphold the law and apply it.”
The PA Office of Attorney General (OAG) initially filed a complaint against Chesapeake Energy, the country’s second-largest national gas producer, in December 2015. The complaint alleged Chesapeake engaged in unfair and deceptive business practices in securing natural gas leases and in its improper payment of royalties to Pennsylvania landowners. The complaint was amended in 2016 to add Anadarko Petroleum (Anadarko) as a defendant and allegations that Chesapeake and Anadarko allocated markets to secure leases and deprived landowners of the benefit of competition for securing leases.
In December 2017, the Bradford County Court of Common Pleas denied Chesapeake’s preliminary objections to the complaint finding that the defendants and their oil and gas leasing practices are subject to the Unfair Trade Practices and Consumer Protection Law (UTPCPL) and that the lawsuit was in the public interest. The company then appealed the decision and in March 2019, the Commonwealth Court of Pennsylvania again found defendants and their oil and gas leasing practices were subject to the UTPCPL. The defendants appealed to the Pennsylvania Supreme Court, which conducted oral arguments in May 2020.
On June 28, 2020, Chesapeake filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. The bankruptcy court stayed the Pennsylvania Supreme Court case against Chesapeake so it could not go forward. On February 9, 2021, Chesapeake emerged from bankruptcy, but an injunction was put in place that continues to prevent the Office of Attorney General from moving forward with this case and getting the restitution landowners deserve. What a rotten court, appears to be working as Chesapeake’s personal handmaiden and magic money-maker!
The case against Anadarko is awaiting a decision by the Pennsylvania Supreme Court.
“For years, Chesapeake tried to publicly pressure my Office into settling on their terms. That didn’t happen,” said Shapiro. “They tried to argue that our court action was holding up settlements in a separate, private class-action lawsuit filed directly by landowners…None of this was necessary; they didn’t have to act like this, and the fact of the matter their conduct exposed their disregard and mistreatment of folks here in Northeastern Pennsylvania and in the Northern Tier.”
Under the settlement, Chesapeake Energy must:
- Provide an opportunity to Pennsylvania landowners with Chesapeake leases to obtain better payment of royalties going forward;
- Stop offering leases that contain “market enhancement” clauses or “ready for sale or use” clauses to Pennsylvania landowners;
- Hire an Ombudsman to investigate individual claims, selected by AG Shapiro and Chesapeake, to review and respond to landowner complaints;
- Allow the Pennsylvania OAG access to Chesapeake’s books and records to ensure compliance with the settlement agreement;
- Provide clear, transparent pricing information on their website, as well as an annual report to the Pennsylvania OAG detailing royalty payments; and
- Pay landowners $5.3 million
Peanuts. Chesapeake is the only winner here, typical of “settlements” of any kind when it comes to harms by frac’ers/oil and gas.
in restitution and $350,000 to the OAG towards its costs and fees.
The settlement has been filed in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Executive Deputy Attorney General James Donahue, Chief Deputy Attorney General Tracy Wertz, and Senior Deputy Attorneys General Joseph Betsko and Norman Marden of the Public Protection Division and Antitrust Section managed the case with assistance from the Civil Division’s Appellate and Financial Enforcement Sections. The investigation was conducted by Nina Correale and Logan Kane. The AG’s office has posted a FAQ sheet here for those interested in how this settlement will impact them.
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AG Shapiro: $5.3 Million Natural Gas Royalty Restitution From Chesapeake Energy For PA Property Owners by David E. Hess, March 8, 2021, PA Environment Digest Blog
On March 8, Attorney General Josh Shapiro announced a settlement agreement with Chesapeake Energy that provides for better payment of royalties for Pennsylvania landowners with Chesapeake leases going forward; improved protections for landowners through appointment of an Ombudsman to investigate individual claims, OAG compliance and inspection rights, and annual reporting; and $5.3 million in restitution for Pennsylvania landowners with Chesapeake leases.
“The bottom line here is that this settlement will end the abuse from Chesapeake and allow landowners to take a new lease with no deductions,” said AG Shapiro. “This case is about standing up to powerful interests when they try to take advantage of people. And it’s about my duty, as the Attorney General of this Commonwealth, to uphold the law and apply it.”
The PA Office of Attorney General (OAG) initially filed a complaint against Chesapeake Energy, the country’s second-largest national gas producer, in December 2015. The complaint alleged Chesapeake engaged in unfair and deceptive business practices in securing natural gas leases and in its improper payment of royalties to Pennsylvania landowners.
The complaint was amended in 2016 to add Anadarko Petroleum as a defendant and allegations that Chesapeake and Anadarko allocated markets to secure leases and deprived landowners of the benefit of competition for securing leases.
In December 2017, the Bradford County Court of Common Pleas denied Chesapeake’s preliminary objections to the complaint finding that the defendants and their oil and gas leasing practices are subject to the Unfair Trade Practices and Consumer Protection Law and that the lawsuit was in the public interest.
The company then appealed the decision and in March 2019, the Commonwealth Court of Pennsylvania again found defendants and their oil and gas leasing practices were subject to the UTPCPL.
The defendants appealed to the Pennsylvania Supreme Court, which conducted oral arguments in May 2020.
On June 28, 2020, Chesapeake filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. The bankruptcy court stayed the Pennsylvania Supreme Court case against Chesapeake so it could not go forward.
On February 9, 2021, Chesapeake emerged from bankruptcy, but an injunction was put in place that continues to prevent the Office of Attorney General from moving forward with this case and getting the restitution landowners deserve.
The case against Anadarko is awaiting a decision by the Pennsylvania Supreme Court.
“For years, Chesapeake tried to publicly pressure my Office into settling on their terms. That didn’t happen,” said Shapiro. “They tried to argue that our court action was holding up settlements in a separate, private class-action lawsuit filed directly by landowners…None of this was necessary; they didn’t have to act like this, and the fact of the matter their conduct exposed their disregard and mistreatment of folks here in Northeastern Pennsylvania and in the Northern Tier.”
Under the settlement, Chesapeake Energy must:
— Provide an opportunity to Pennsylvania landowners with Chesapeake leases to obtain better payment of royalties going forward;
— Stop offering leases that contain “market enhancement” clauses or “ready for sale or use” clauses to Pennsylvania landowners;
— Hire an Ombudsman to investigate individual claims, selected by AG Shapiro and Chesapeake, to review and respond to landowner complaints;
— Allow the Pennsylvania OAG access to Chesapeake’s books and records to ensure compliance with the settlement agreement;
— Provide clear, transparent pricing information on their website, as well as an annual report to the Pennsylvania OAG detailing royalty payments; and
— Pay landowners $5.3 million in restitution and $350,000 to the OAG towards its costs and fees.
The settlement has been filed in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. Executive Deputy Attorney General James Donahue, Chief Deputy Attorney General Tracy Wertz, and Senior Deputy Attorneys General Joseph Betsko and Norman Marden of the Public Protection Division and Antitrust Section managed the case with assistance from the Civil Division’s Appellate and Financial Enforcement Sections.
The investigation was conducted by Nina Correale and Logan Kane.
The AG’s office has posted a FAQ sheet for those interested in how this settlement will impact them.
The Senate and House have been wrestling with the royalty issues landowers face for years. Their last major attempt at resolving some of the issues was in 2018, without success. Read more here.
Pennsylvania agrees to settle gas drilling royalties lawsuit by Mark Scolforo, March 8, 2021, APNews
HARRISBURG, Pa. (AP) — Pennsylvania reached a settlement in a lawsuit against natural gas driller Chesapeake Energy Corp. for its handling of royalty payments to property owners, state Attorney General Josh Shapiro announced Monday.
Speaking in Tunkhannock, a northeastern Pennsylvania town in the heart of heavy Marcellus Shale natural gas production, Shapiro said the agreement called for $5.3 million in restitution and improved royalty payments going forward.
“It is the beginning of a new day and new protections for landowners,” said Shapiro, a Democrat, touting terms that include appointment of a mutually agreeable Chesapeake gets input? If so, disgusting
ombudsman to investigate landowners’ complaints.
The lawsuit was filed more than five years ago against Oklahoma City-based Chesapeake, which filed for bankruptcy protection in Texas in June.
Chesapeake communications and investor relations director Gordon Pennoyer noted the agreement still requires the bankruptcy judge’s approval.
“Chesapeake greatly values its relationships with Pennsylvania royalty owners and is pleased to have reached a global resolution with them and the attorney general that addresses royalty owners’ concerns,” Pennoyer said in an email. “The company looks forward to working collaboratively with Pennsylvania royalty owners going forward..”
The lawsuit, filed in December 2015 and amended in 2016 to include Anadarko Petroleum, claimed the two companies split up markets, keeping landowners from getting better deals by seeking competitive offers.
An appeal in the litigation involving Anadarko about whether the state’s consumer protection law applies is pending before the Pennsylvania Supreme Court.
Shapiro said Chesapeake, which emerged from bankruptcy last month, has agreed to stop making deals with Pennsylvania landowners that contain “market enhancement” or “ready for sale or use” clauses.
Depending on the type of lease they signed, affected Chesapeake lease holders will receive about $367 or about $700, as well as the ability to decide what sort of agreement they want to have with Chesapeake going forward.
“This settlement will end the abuse from Chesapeake and allow landowners to take a new lease with no deductions — that’s the bottom line,” Shapiro said.
The 2015 complaint alleged Chesapeake had cheated landowners over drilling leases, making industry-friendly deals in the boom’s early years and then deducting post-production expenses from royalty checks.

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