West Virginia Surface Owners’ Rights Organization

Public Hearing Monday on Forced Pooling Bill

The House Energy Committee will hold a public hearing on the forced pooling bill (SB 576) Monday, April 3 from 9AM to 10AM in the House Chamber. Anyone who would like to travel to Charleston to speak out against the bill 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 Energy 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.

You can also take action via http://protectwvpropertyrights.com/.

Here is the latest on SB 576:

The Senate narrowly passed the bill on Monday, on a 19 to 14 vote. Although several amendments were offered to improve the bill, most of the amendments were rejected. A clarifying amendment offered by Senator Mike Romano (D-Harrison) related to surface use in the cotenancy section was adopted. Senator Romano’s amendment clarifies that a surface use agreement is required whether or not the surface owner owns minerals, but the loophole we are concerned about related to existing agreements has not been fixed.

The only other amendment adopted was one offered by Senator Ryan Ferns (R-Ferns) that effectively reduces the severance tax on natural gas production. According to the WV Center on Budget and Policy, the cut in the tax rate will likely cost the state $21 million in revenue for the upcoming next year.

Otherwise the bill remains unchanged and we continue to have the same problems we outlined in our previous update. For your convenience we’ve outlined these concerns again below.

A bit of good news: Our “land reunion” bill, SB 369, which would begin to reverse the trend of separate ownership by giving surface owners a first chance to own any interest in the minerals under their land that are sold for non-payment of property taxes, was approved overwhelmingly by the Senate. In the House, the bill has been double referenced to the Energy and Judiciary Committees, making it more challenging to get it passed during the last week of the session.

Please contact House Energy Committee members and your Delegate(s) and urge them to support the bill.

Problems with Forced Pooling (Cotenancy and Lease Integration) Bill (SB 576)

SB 567 contains two parts: “cotenancy,” which we have dubbed “majority rules,” and “joint development”/“lease integration” or what we call “invisible ink.” Below we have outlined our problems with the different parts of the bill.

COTENANCY (Aka: Majority Rules)

Surface only owners:

-We appreciate that a surface use agreement generally is required, HOWEVER, SB 576 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.

-Also, the current version of the bill does not include provisions in earlier drafts that the royalties and ownership of missing and unknown owners go to the surface owner pursuant to the existing missing and unknown heir leasing statute. These need to be included or surface owner rights are taken away.

Surface owners who own minerals:

-We appreciate that the revised 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. However, a knowledgeable mineral owner still might be able to negotiate a better deal than his or her cousins, (or limit the lease to certain formations, or limit the size of the units or the land held by production) and the bill lacks due process (right to appeal, etc.) for non-consenting owners.

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LEASE INTEGRATION/JOINT DEVELOPMENT (Aka: Invisible Ink)

Surface only owners:

-SB 576 still allows the driller to put well pads and roads etc. on the surface owner’s land! It is appreciated that the common law rights are preserved. And $100,000 might sound like a lot, but it is only 4/100ths of 1% of the value of the gas that will be produced. And the land may have been in a family for generations or something purchased for happiness or into which tremendous energy has been invested that money cannot replace.

Surface owners who own minerals:

-SB 576 is in violation of constitutional prohibitions on altering private contracts, and in violation of the common law of interpreting contracts against the person who wrote them. The bill only modernizes old leases for what the driller wants, a pooling provision, but it does not modernize royalty amounts or give new signing bonuses.

>>> West Virginia Surface Owners’ Rights Organization

>>> 1500 Dixie Street, Charleston, West Virginia 25311
>>> 304-346-5891
>>> Join WV SORO