Over 70 lawsuits are currently pending in both state and federal courts in Pennsylvania to determine whether oil and gas leases, some of which have been in effect for decades, violate Pennsylvania’s Minimum Royalty Act, 58 P.S. § 33, and should be declared void because they contractually provide for the deduction of certain expenses necessary to market gas produced from the leases.
The resolution of the matter is particularly important in light of the energy industry’s recent focus on Pennsylvania, prompted by interest in previously undeveloped natural gas reserves in an underground reserve known as the Marcellus Shale. On June 16, the Pennsylvania Supreme Court granted a petition for the exercise of extraordinary jurisdiction to hear the appeal of Kilmer v. Elexeco Land Services Inc., in order to provide guidance to the courts in the act’s interpretation. This rare exercise of what is colloquially referred to as a “king’s bench” jurisdiction is made possible by a Pennsylvania law authorizing the state Supreme Court to take control of any case pending in the lower courts when it deems a need to address an issue of immediate public importance.
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