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12/08/2021 10:01 AM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20210&cosponId=35363
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House of Representatives
Session of 2021 - 2022 Regular Session

MEMORANDUM

Posted: April 13, 2021 10:24 AM
From: Representative Eric Davanzo
To: All House members
Subject: Pennsylvania Supreme Court Referral - 2010 Kilmer v. Elexco Decision
 
In the near future, I plan to introduce legislation that responds to the Pennsylvania Supreme Court referral in the 2010 Kilmer v. Elexco decision.  The Court said: “We note that the General Assembly is the branch of government best suited to weigh the public policies underlying the determination of the proper point of royalty valuation in the deregulated gas industry…”. 

What is royalty?  Traditionally natural gas was both measured and sold at the wellhead.  With changes in industry practices and the implementation of local gathering systems, there has been confusion as to: 1) where natural gas volume is measured for production subject to royalty, and 2) where the sale price of gas is set for calculation of royalty.  My bill will define the place of measurement of volume (the mouth of the well) and the sale price (the point of sale to an unaffiliated 3rd party buyer). 

It is essential to note that this bill will not change terms of any contract. It is critical to Pennsylvania landowners and industry representatives that the definition of terms used in contracts is precise and just; this legislation will provide assurance that the two parties can work together in furtherance of this important industry.

Please join me in sponsoring this important legislation.



Introduced as HB1763