WV Surface Owners’ Rights Organization, February 10, 2018

Improved “Co-Tenancy” Bill Clears House Judiciary Committee

View this Alert Online

Dear Friends,

After yesterday’s public hearing on the “co-tenancy” bill (HB 4268), the House Judiciary Committee took up and passed an improved version of the bill that, most importantly, addresses the problems we raised regarding surface use and the need to require surface owner’s consent.

If version of HB 4268 that came out of the House Judiciary Committee passes, if the driller uses the statute to get the right to drill into the mineral tract beneath a surface owners’ land or into any neighboring mineral tract, the driller will have to get the agreement of the surface owner to locate the well pad on their surface, regardless of whether the surface owner owns an interest in the minerals.

Requiring the surface owners consent is very important, and a significant improvement that makes it worth supporting the bill.

Why? Let’s start with the legal background.

Current law says that the mineral owner/driller has the right to make “reasonably necessary use” of the surface if that use was in “in the contemplation of the parties” at the time of the severance (or at the time of the lease IF the lease was before the severance) in order to get his minerals out (otherwise the minerals are useless – at least until horizontal drilling).

But does the driller have the right to the use the surface to drill horizontal wells bores into neighboring mineral tracts that were not part of the surface at the time of severance? We say no.

The drillers say yes. They say that the only economical way to drill and produce the Marcellus under a surface owner’s land is to drill horizontals that extend into neighboring mineral tracts, so it is a “reasonably necessary use” of the surface to do so. And they say that the “contemplation of the parties” only applies for radical new surface uses like strip mining vs. shaft mining, not horizontal drilling.

We say the drillers are wrong because there is no need at all to use our surface if they can develop the mineral tract under our surface from 1-2 miles away. And we say that the horizontal drilling is like cases that ruled our way for surface owners on the contemplation theory.

That question of who is right, us or the drillers, will soon be decided by the West Virginia Supreme Court on the appeal of a case where a Doddridge County Circuit Court judge agreed with WV-SORO that a driller cannot use a surface owner’s land to drill wells horizontally into neighboring mineral tracts without the surface owner’s consent.

We are worried that the Supreme Court might decide for the drillers.

However, if the version of HB 4268 that came out of House Judiciary passes, then if driller uses the statute to get the right to drill into the mineral tract under a surface owners land, or any neighboring mineral tract, the driller will have to get the agreement of the owner of the surface to locate the well pad on their surface. Many, if not most, of the wells they drill will use the statute. So if it passes in its current form, in most cases the surface owner’s consent will be needed even if the Supreme Court decides against surface owners.

We believe this requirement is an important enough, that it is worth supporting the bill. This inclusion of these provisions is key to our support. It’s unclear if these provisions will stay in the bill as it works it’s way through the process, and we will only support it if the Senate agrees to leave these surface owner protections in.

House Judiciary Chair, Delegate John Shott (D-Mercer) deserves special thanks for listening to our concerns and making sure these provisions were included in the bill.

In addition to surface owner’s consent, the bill provides that if missing and unknown mineral owners do not show up after seven years, the millions of dollars that would go to them during that time will be used to plug some of the 4,000 orphaned wells out there that need plugged. After that, the surface owner can go to court and get title to whatever share of the minerals the missing or unknown person had, and get future royalties. This reunification of surface and minerals is also a good thing.

The version of the bill that passed the House Judiciary Committee, also strengthened the protections for the non-consenting mineral owners. We need to take a closer look at these provisions, but some of these protections include royalties paid being based on no deductions, and no storage/injection/arbitration/or venue clauses. For our members who are mineral owners we would have preferred a due process hearing before the Oil and Gas Commission, so that they can get better terms rather than be stuck with what their cousins got talked into by the drillers, but balancing what the bill does for surface owners, we can live with what is in the bill for mineral owners.

The Legislature believes that the 75% of owners who want development and royalties etc. should be able to do so and it is unfair for the minority co-tenants to block all the others from the benefits of their land ownership. We believe the Legislature will pass some bill to that effect, and for that reason and the reasons outlined above we worked to improve the bill to get better protections for surface owners, but we support it if and only if these provisions stay in.

We hope this clarifies our position on the bill. Please reply to this update if you have questions or concerns. (info@wvsoro.org)

We appreciate your support and value the trust you put in us to represent your interests at the Capitol! We’ll continue to keep you posted.

Julie Archer, Executive Director
WV Surface Owners’ Rights Organization
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org 304 346 5891

Forced pooling like a bad penny keeps showing up

Public Hearing on “Co-Tenancy” Friday, February 9th at 8:30AM

— View this Alert Online —

Dear Friends,

The House Judiciary Committee will hold a public hearing on the ”co-tenancy” bill (HB 4268) this Friday, February 9 starting at 8:30AM in the House Chamber. Anyone who would like to travel to Charleston to speak out against the bill and share their concerns will have the opportunity to do so. However, considering the high level of interest in the bill and the limited amount of time, speakers will likely have only a minute or two to make their comments.

If you plan to make the trip: Arrive early to sign up.

Prepare your remarks ahead of time and keep them brief. If you have more to say than you can share in a minute or two, you can submit additional written comments to the committee.

If you can’t make it to Charleston, please make some calls and send some emails to House Judiciary Committee members and your Delegate(s).

Click here for a list of committee members with their phone number and email address, followed by a ‘list’ of emails for all members that can easily be copied and pasted into the ‘To’ field of your email.

For your convenience, here is our list of problems with HB 4268:

First, in order to drill a horizontal well the driller has to start on one surface tract, drill down to the mineral tract underlying that surface tract, and then drill horizontally a mile or more through many neighboring surface tracts. Under current law, if the driller while drilling horizontally for that mile or more runs into that mineral tract where the driller only has leases from, say, 90% of the mineral owners, the driller has to stop.

If this bill passes the driller will be able to keep drilling even longer horizontal well bores through those neighboring mineral tracts. This means more time on the first surface owner’s land, more trucks, more noise, more light, more dust, and other air pollution to drill the longer horizontal.

As the bill is currently drafted the surface owner’s consent is not needed if they use the bill to drill through that neighboring mineral tract. The current bill only requires surface owner consent if the bill is used for the one mineral tract directly under the surface owner.

The bill should require the driller to get the surface owner’s consent if the bill is used to drill not only the mineral tract under the pad, but any mineral tract being accessed from the pad. If they use this statute to drill longer laterals to develop other mineral tracts they should be required to get your consent!

Second, the bill contains a loophole that would allow a driller with an existing surface use agreement or other valid contract that pre-dates horizontal drilling to be used to locate well pads for horizontal drilling on a surface owner’s land. Surface use agreements should be for development methods and technologies contemplated at the time of the agreement, not agreements that contemplated conventional drilling.

Last but not least, the bill requires that non-consenting cotenants be paid the highest royalty in leases signed by the consenting owners. This is an improvement over the earlier bill. A knowledgeable mineral owner still might be able to negotiate a better deal but if 75% of their out-of-state cousins sign bad leases with low bonuses, with low royalties, with clauses that allow disposal wells to be drilled on the property, or other bad lease provisions, then they are stuck with those terms.

The bill lacks due process (right to appeal, etc.) for non-consenting owners. Those mineral owners who do not like their cousins’ leases should get a due process hearing before the existing Oil and Gas Conservation Commission to try to get better lease terms.

Julie Archer, Executive Director
WV Surface Owners’ Rights Organization
1500 Dixie Street, Charleston, WV 25311

info@wvsoro.org 304 346 5891

Uncompleted Well Pad in State Forest

Gas Company Wants New Ruling on W.Va. Royalties

From an Article of the Associated Press, WV Public Broadcasting, December 22, 2016

A Pittsburgh-based natural gas producer has asked West Virginia’s top court to reconsider its recent ruling that gas companies cannot take deductions for post-production costs from royalty payments to the state’s landowners for mineral rights.

The State Journal reports EQT Production Co. wants the Supreme Court to withdraw its November ruling and rehear the case.

The ruling was requested by the U.S. District Court for the Northern District of West Virginia, where Patrick Leggett and several other mineral rights owners sued EQT, arguing the company was improperly deducting fees from royalty payments.

Leggett owns a farm in Doddridge County where EQT has about 20 wells. He says the company deducted 25 to 30 percent from royalty payments for years.

EQT’s lawyers argue the court misinterpreted state law.

• >  >  >  >  >  >  >  >  >  >  >

Pa. still fighting over royalty money from forest drilling

From an Article by Marie Cusick, PA StateImpact NPR, December 19, 2016

Photo: An uncompleted well pad in the Loyalsock State Forest.

The Commonwealth of Pennsylvania continues to haggle with natural gas companies over royalty money it believes it’s owed from drilling on state land.

There are 386,000 acres of publicly-owned forest land leased to gas companies, and like private landowners, the state has had problems getting paid properly.

In September StateImpact Pennsylvania reported the Department of Conservation and Natural Resources (DCNR), which manages state forests, recovered $1.3 million in royalty money over the past year, after ramping up auditing efforts and hiring a new accountant to oversee the issue.

In the past three months, the department has recovered another $150,000.  “As the DCNR identifies discrepancies in the amounts received, it works toward a resolution,” department spokesman Terry Brady writes in an email. “Pending audits and resolutions may result in the collection of additional corrected royalty amounts. ”

The department has repeatedly declined to say how much money it believes it’s still owed.

A 2014 report by StateImpact Pennsylvania shows DCNR has spent years disputing payments made by some drillers. Internal emails show the agency complaining about inaccurate or murky reporting on everything from how much gas is produced at wells, to its selling price.

See also: www.FrackCheckWV.net

Hello, Everyone: Date: September 11, 2015

Many people have been approached with contracts for easements, roads, pipeline rights of way, and other legal documents for access to property. Bear in mind, these contracts are written for the benefit of the company, not the landowner.

It is up to each landowner to read these and decide what they want in the contract – that is, IF they wish to sell. But IF you must, you also MUST be armed with information. If you can’t afford a lawyer, at least read up.

Please see, attached and below, the list of recommended additional specifications to be added to Right of Way offers to protect landowners.  Pay special attention to points 8 and 22. Please feel free to forward this to others who may be or may know land and/or mineral owners.  Besides the ones contained herein, you can add your own. 

Too many landowners have been made to feel that they have no choice in whether or not they should sign a contract for the use or sale of their land for pipelines. Companies have been illegally citing Eminent Domain as a reason to give up claim or sign for less than the property, or the LOSS of it, is worth. Do not be taken in by this argument.

If you do not wish to sign, there is no compunction to do so at this time, because, and THIS IS IMPORTANT, the interstate pipelines ACP and MVP have not yet been approved by FERC, and this approval is required before ED can be applied. And if you do hold out, the rewards could be greater if you are forced into court. 

With a pipe this large (42″) going through, your property will be devalued up to 75% by what will soon be an outdated piece of infrastructure, when you might have instead put in some solar panels that would increase your property value. Not to mention a life-changer. Interestingly, the ACP is at one point less than half a mile from Buckhannon-Upshur High School, straddling route 20. Can you imagine the mayhem in our county if that line exploded? Promises are just that: words.  How smart is it to trust a for-profit company with our lives?

If you have already signed and you feel that it was done under duress, fraud, or misrepresentation, you may have legal grounds to revoke the contract (so don’t spend that money yet!). Contact a lawyer who handles Eminent Domain Abuse, such as Joe Lovett, Isak Howell, or Chuck Lollar.

As landowners and citizens in this time of taking private property for corporate gain, we must stay abreast of information which keeps the power in our hands. The future of our families and our state depend upon it.

>>>>>> April Keating, Concerned Citizen, Buckhannon, WV

………………………………………..
Pipeline Easement and Right-of-Way Agreements - 
A Landowner’s List of Terms to Negotiate

From the Blog posted by Attorney Eric C. Camp on December 9, 2013 

The following article (blog) discusses terms a landowner should consider when negotiating a Pipeline Easement or Right-of-Way Agreement (collectively called “Easement Agreement”). This list is not exhaustive; each situation is different, as are the laws of each state. This list is not legal advice. When negotiating an Easement Agreement, a Landowner should seek independent legal advice at the outset of negotiations, not just before signing the Easement Agreement or condemnation proceedings.

In this list, the terms “easement” and “right-of-way” are interchangeable. Also, the Grantee is called the “Pipeline Company” and the Grantor is called the “Landowner.”

You can View Blog here.

Drill pads anywhere (and everywhere)?

Oil and gas industry aims to get its way

Guest Commentary by William R. Suan, Morgantown Dominion Post, March 1, 2015

The Marcellus shale once sounded like a financial opportunity that I wanted to be part of; however, it seems we now have an industry out of control using its money, lobbyists and political muscle to bully West Virginia property owners. The issue of forced pooling, fair pooling or lease integration, or whatever the industry wants to call it, is the taking of personal property rights to benefit profits of private corporations.

The industry argues that they cannot develop some mineral tracts because of lost and unaccounted for heirs. West Virginia has a statute addressing the issue, and it is a fair law. When there are missing and unknown heirs, the driller can lease that interest and put royalties in escrow for seven years. After the time is up, the property and royalties go to the surface owner.

The industry complains that the unwilling mineral owners who refuse to sign a lease are stopping them from developing mineral tracts to their full potential. Against unwilling owners who have a partial interest in a mineral tract and are unwilling to sign a lease, the industry can bring a partition action to settle the issue. Another issue is the industry saying we already have forced pooling in the Utica shale. This is a misleading statement. This law was passed before horizontal drilling and was passed for well-spacing purposes.

The gas industry has thousands of acres held by production (old leases) that they are not drilling. The industry says they can drill multiple wells on one Marcellus pad. Why are they not drilling more wells on existing pads? The gas industry has enough acres and leases to drill for many years.

The industry will use a forced pooling law to bully West Virginia property owners. Land men already use the tactic, “If you don’t sign this lease, we will just take it.” I have been threatened this way.

The oil and gas industry can come onto a person’s property, take acres of it because the minerals have been severed and owned by another party. Try to imagine owning property and being helpless when this industry shows up with its equipment and takes whatever it wants. They now want to lay pipelines by using eminent domain and can lay pipelines on property according to terms of an old lease. Now the industry is asking lawmakers to give them the right to come and take the mineral rights you own and tell you what you will be paid for them. This will be used to bring down the price of leases and eliminate negotiation. The mineral owner would have to make his or her case to not be “forced pooled” to the industry-friendly oil and gas commission.

The natural gas industry is a long way from running out of leased mineral tracts to drill. There is no need for a forced pooling law. The industry wants forced pooling to benefit its profits and investors, not West Virginia’s workers and mineral owners.

The industry has pushed this issue in past legislative sessions and it has failed. With the new “business friendly” leadership, I am sure the industry feels this is an opportunity to get its way.

If you want to protect private property rights, contact your legislator and tell them to vote “no” on the forced pooling law.

>>> William R. Suan is a mineral and farm owner near Lost Creek, in southern Harrison County, WV.

Landowners are fighting for the right to appeal drilling permits, as described in the Charleston Gazette on September 22^nd. The state Supreme Court will hear arguments in a significant case that could decide if surface landowners are able to appeal oil and gas drilling permits on their land. Industry lobbyists and the state Department of Environmental Protection all seem to agree that West Virginia’s oil and gas statute doesn’t specifically allow such appeals.

But though justices appear to have incorrectly cited that statute in a ruling 10 years ago, citizen groups argue now that the court reached the correct result. They say surface landowners should have a due process right to have their challenges to drilling permits heard.

“We are asking the courts to recognize the surface owners’ constitutional right to a hearing – a hearing after the driller files the permit application, and to appeal if the DEP errs in issuing the permit,” said Julie Archer of the West Virginia Surface Owners’ Rights Organization. Archer’s organization filed a “friend of the court” brief in support of Doddridge County resident Matthew Hamblet in his effort to challenge an EQT Production Co. gas well permit on his land.

Hamblet owns the surface of a 443-acre parcel, but does not own the rights to the oil and gas underneath the land. When EQT obtained a lease and applied for a permit to drill on the site, Hamblet objected to parts of the company’s permit application, noting damage from previous drilling and urging DEP to require changes in the company’s plans. DEP’s Office of Oil and Gas approved EQT’s plans anyway, and Hamblet filed a lawsuit in circuit court to challenge that approval.

In his case, lawyers Cynthia Loomis and Isak Howell cite a 2002 Supreme Court opinion that said surface landowners have the right to file court appeals of DEP permit actions on oil and gas wells. But the statute cited by the court in that case doesn’t actually grant that right to landowners — only to coal owners who are concerned about nearby gas drilling.

Broad coverage information on Marcellus drilling and fracking can be found at:

www.WVsoro.org       and         www.FrackCheckWV.net