Judge gives EQT more time to decide on lawsuit against DEP

CLARKSBURG, W.Va. — A federal judge has agreed to give EQT until Sept. 17 to decide if it will continue its civil suit against the state Department of Environmental Protection, seeking to have legislation forbidding deductions from certain drilling leases declared unconstitutional.

EQT requested the extension of the stay in its suit against the DEP – the case is called Caperton after the DEP secretary – on July 19 (the original stay was granted Feb. 19 and EQT was supposed to give a status report by July 19).

At the time, EQT was awaiting the final order in the settlement of a related royalty-payment case, called Kay. Both are in the U.S. District Court for the Northern District of West Virginia.

EQT said that the outcome of Kay might prompt it to dismiss the Caperton case.

EQT also noted that it has undergone a change of leadership and the new team might need time to review the case and decide how to proceed. On July 10, EQT shareholders elected seven board members supported by Toby and Derek Rice, brothers who previously ran Rice Energy, which EQT acquired. The shareholders also elected five board members approved by the Rice brothers and EQT. The board then named Toby Rice president and CEO.

The final order in Kay was issued on July 22. EQT has agreed, without admitting any wrongdoing to pay $53.5 million. Plaintiffs alleged that EQT and its midstream and downstream chain of subsidiaries wrongly deducted post-production expenses and severance taxes from their royalty checks, and did not report the sale of natural gas liquids.

The DEP did not object to EQT’s motion to extend the previous stay.

District Judge Thomas Kleeth issued his order to extend the stay on Monday. Although the final order in Kay had been issued by then, he also took into account the changes at EQT.

So the company has until Sept. 17 to file a status report and decide if it will continue the case or move to dismiss it.

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