Major Fracking Company Accused Of Cheating Thousands In Rural Pennsylvania

http://thinkprogress.org/climate/2015/12/11/3731125/fracking-may-have-defrauded-thousands/

by Alejandro Davila Fragoso Dec 11, 2015

If allegations put forward this week are true, one of the nation’s largest fracking companies may have to pay millions in Pennsylvania for underpaying royalties to landowners.

Chesapeake Energy Corporation and others connected with their operations in Pennsylvania allegedly defrauded thousands of landowners, including seniors, Pennsylvania’s Attorney General Kathleen G. Kane charged in a lawsuit filed Wednesday. The attorney general is seeking restitution for at least 4,000 victims, mostly from northeastern counties of Bradford, Sullivan, and Cayuga — rural communities located on top of the Marcellus Shale, the largest producing shale gas basin in the United States.

The number of affected parties could grow as many more victims are likely to come forward, said Jeffrey Johnson, deputy press secretary for the state attorney general.

“We expect that number to grow significantly,” because any Pennsylvania resident “who has signed [a lease] with Chesapeake … would be covered under this lawsuit,” he told ThinkProgress.

Chesapeake Energy, based in Oklahoma, denies the allegations. “We strongly disagree with Attorney General Kane’s baseless allegations and will vigorously contest them in the appropriate forum,” said Gordon Pennoyer, Chesapeake Energy director of strategic communications, via email.

The state attorney general accuses Pennsylvania’s largest producer of natural gas of negotiating leases promising royalties that then went underpaid, according to court documentation, which alleges that defendants took deductions from landowners’ royalties even though leases contained language prohibiting those deductions. Johnson said fines could be in the “tens of millions.”

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And yet the recent lawsuit doesn’t just accuse Chesapeake, which has been facing a mounting debt, of “artificially” inflating or creating “unreasonably” excessive costs of post-production that were passed on to landowners. It also alleges that Chesapeake’s “landman” used deceptive negotiation techniques such as failure to disclose information important to signing a lease and lying.

Some negotiators, the lawsuit alleges, gave landowners last chances to sign leases which noted that “the company would extract the gas one way or another.”

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