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Monday, January 27, 2014

Virginia House panel tables bill apparently aimed at stopping lawsuits over natural-gas royalties

The Virginia General Assembly subcommittee last week tabled a bill that would empty gas royalties "escrow accounts holding at least $30 million that are now the subject of a series of federal class-action lawsuits," Michael Owens reports for the Bristol Herald Courier. "The bill attempts to fine-tune a 20-year-old law initially crafted by former industry lawyers in an attempt to spur Southwest Virginia’s energy sector without getting bogged down in drawn-out legal battles over gas ownership."

The bill, "which legal experts say could have stopped the lawsuits in their tracks, included suggestions by EQT Production, one of two main defendant companies targeted by the lawsuits," Owens writes. It is sponsored by by Rep. Terry Kilgore, R-Gate City. "The company donated $3,000 to Kilgore’s uncontested 2013 election campaign, according to political finance watchdog Virginia Public Access Project. Of that money, $1,000 landed in his campaign’s coffers two days after his election victory Nov. 5."

Landowners have always had a difficult time getting access to the royalties, Owens writes. "Under current law, they can touch the royalties only if they split it with the coal owners, win a costly court battle, or win an out-of-court arbitration. Virginia legislators imposed the hurdles rather than decide whether the gas royalties belong to the person holding the deed for the coal or the person with the deed for the gas estate. And so energy companies look to the escrow accounts each time they drill a coal seam where the deeds to the coal and to the gas are linked to multiple owners. Kilgore’s proposal declared the owners of the gas title to be the rightful recipients of the royalties as long as coal owners did not step in with a claim. The goal was to begin emptying the nearly 1,000 existing escrow accounts of all royalties by mid-2015." (Read more)

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