Ky. landowners, gas drilling companies settle suit

Ky. landowners, gas drilling companies settle suit by Brett Barrouquere, March 4, 2010, The Associated Press
LOUISVILLE, KY. A federal judge has approved a $28.75 million settlement between more than 8,000 eastern Kentucky landowners and a group of natural gas drilling companies in a dispute over royalty payments. The class-action settlement released Thursday ends more than two years of litigation over royalties from drilling in Martin and Pike counties. The landowners sued Chesapeake Appalachia LLC, NiSource Inc., and Columbia Energy Group over allegations of shortchanging royalty payments and providing inaccurate statements about royalty payments to the landowners. The settlement covers royalty claims from Feb. 5, 1992, through April 23, 2009. U.S. District

Judge Karen Caldwell says the settlement is fair to all parties because there was no guaranteed outcome for either side at trial. “Given the unsettled nature of the law with respect to certain claims, a resolution of these issues by the Court would have constituted a significant risk for the class,” Caldwell wrote. “Undoubtedly, this relief is preferable to the possibility of a smaller recovery, or none at all, after an expensive and protracted trial and appeal are completed.” The settlement does not cover any acts after April 23, 2009, Caldwell noted, leaving the companies potentially liable for any underpaid royalties since then. … The plaintiffs also contended the three companies conspired to sell the natural gas produced from the wells at a below-market value price, even though the leases required the gas be sold at fair market value. The companies denied wrongdoing during the litigation and the settlement doesn’t require them to acknowledge fault. Caldwell noted that settlement negotiations went on for four months and that only 67 landowners who would have been owed $36,800 in royalties opted out of the class. Another 12 landowners objected to the settlement, with their portion of the funds totaling $243,800, said Caldwell, who overruled the objections.

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