Thursday, August 20, 2015

Court: Producers responsible for paying severance taxes

(AP) — Kentucky's Supreme Court says natural gas producers are solely responsible for paying severance taxes on the fuel.

In a divided ruling Thursday, the court said landowners are exempt from paying part of the taxes, unless specified to do so in lease contracts.

The ruling came in a dispute between a Pike County landowner and EQT Production Co., a natural gas producer.

Appalachian Land Co. claims it was underpaid the royalties owed in exchange for EQT extracting natural gas from its property. EQT used a calculation factoring in post-extraction processing costs that included severance taxes.

Writing for the majority, Justice Bill Cunningham said the tax is assessed for the privilege of severing or processing the gas. He said that privilege is given to the producer, not the landowner.