Pennsylvania Farm Bureau (PFB) is supporting legislation introduced by state Representative Garth Everett that would forbid gas well companies from assessing production cost deductions that would drop royalty payments below the state mandated minimum rate.

“Farm families across Pennsylvania are seeking assurances that gas well companies will not be able to assess production costs that would reduce royalty payments below the 12.5% (or 1/8) rate,” said PFB President Rick Ebert.  “Some Pennsylvania farmers with gas wells on their properties have been receiving royalty payments far lower than the state guaranteed rate, because gas well companies have been claiming deductions for costs associated with the capture and transmission of gas from the wells.”

During a news conference hosted by Representative Everett at the state Capitol Rotunda, PFB’s President Ebert, who is a full-time dairy farmer from Westmoreland County, said the cause of lower natural gas prices are not unlike what he and other dairy farmers across the state are experiencing with current milk prices.

“Strong milk production and changing market conditions have caused a significant decline in the price I receive for my milk.  However, I do not have the luxury of passing my costs of production on to others to help reduce the financial challenges I am experiencing on my dairy farm due to lower prices received for my milk,” added Ebert.

Farm Bureau is urging members of the state General Assembly to provide strong bipartisan support for House Bill 1391 in order to ensure that royalties paid by gas well operators are in line with the Guaranteed Minimum Royalty Act (Act 60 of 1979).

“The intent of the original state law was to guarantee that landowners would receive a minimum 12.5% royalty payment for gas extracted from the land they own, but some gas companies have chosen to interpret the law differently to justify a reduction in payments to cover production costs.  The goal of H.B. 1391 is to stop gas companies from significantly digging into royalty profits meant for landowners,” concluded Ebert.