Tonello proposes increasing N.Y.'s outdated gas royalty rate to help landowners

John Tonello, Democratic candidate for the 53rd District state Senate seat, announced today that as Senator he will lead an effort to increase the minimum royalty New York farmers and landowner can earn on gas well leases from 12.5 percent to at least 16 percent, a move that will help protect landowner interests and save taxpayers money.

"The law has not been changed since the early 1960s, and it's hurting average New Yorkers who are being tricked into signing deals that are not in their best interests," Tonello said. "The 12.5 percent rate is artificially low, and it needs to be brought up to date. Outdated lease royalties leave landowners at the mercy of the gas industry."

Increasing the minimum royalty rate from 12.5 percent to 16 percent also would mean a windfall for New York state during these tough economic times because the state currently only accepts the minimum 12.5 percent lease rate on all state-owned land, Tonello said.

"The state is giving away New Yorkers' natural gas at bargain-basement rates," he said. "That's hurting taxpayers."

Other states have raised their minimum gas lease rates, including Alabama, Michigan and Pennsylvania, which have set royalty minimums at 25 percent, 16.7 percent and 16 percent respectively. Meanwhile, companies exploring the Marcellus Shale region already are paying much more for rights outside of New York State. For example, Fortuna Energy pays 38 percent royalties in Canada and 51 percent in Algeria, according to industry reports.

"New York is lagging behind because special interests -- in this case the gas companies -- are blocking legislation that would protect landowners and taxpayers," Tonello said. "My opponent's law firm has worked for Fortuna Energy, and Fortuna Energy, Chesapeake Energy Corp., Columbia Gas Transmission Corp. and others have underwritten George Winner's re-election campaigns. It is no surprise that he has placed their interests ahead of his constituents' interests."

Winner also has been part of the Senate majority that has blocked legislation (S06424) that seeks merely to publish information that would help educate real property owners who are entering into gas and oil leases, legislation introduced by David Valesky, D-Syracuse, that died in the Senate's Environmental Conservation committee.

"Mr. Winner and others are purposely making it difficult for average New Yorkers to get a fair deal," Tonello said.