(CN) — Energy companies fighting Arkansas’ natural gas royalty act met a wall at the Eighth Circuit Wednesday as judges indicated a separate ruling leaves them little choice but to clear the way for a law allowing higher payments to landowners with private mineral rights.
At issue before the appellate panel is whether to dissolve a temporary bar on Act 1024, a 2025 Arkansas statute restricting natural gas producers from deducting gathering, compression and transportation fees — known as post-production costs — when calculating royalty checks to landowners.
Attorney James Rankin, representing the energy companies, urged the appellate panel to preserve a lower court’s preliminary injunction to shield operators from catastrophic losses, arguing lifting the order forces a lose-lose scenario for the state’s energy market.
“Wells get plugged earlier, royalty owners lose royalties, gas becomes unrecoverable and leases are lost,” he said — noting the act would leave operators stuck with permanent uncompensated losses beyond what they agreed in the initial lease.
For decades before the new law was enacted, “net proceeds” were not explicitly defined by state statute, and energy companies ope...