Natural gas producers would be able to force holdout mineral owners to allow drilling, under an industry-backed bill that passed the West Virginia Senate on Wednesday and now heads for the House with a little more than a week left in this year’s legislative session.
Senators approved the legislation on a 19-14 vote, after rejecting an amendment aimed at providing due process to unwilling mineral owners by allowing them to appeal to the state Oil and Gas Conservation Commission to seek “just and reasonable consideration” for their property.
Supporters of Senate Bill 576 say the legislation is needed to spur more development in the state’s Marcellus Shale region by allowing drillers to more easily put together large gas reservoirs for their operations.
Opponents say the bill unfairly takes the mineral property of West Virginians without ensuring much-needed protection for surface landowners and modernizing — increasing — the royalty payments contained in decades-old leases to match the economics of the modern industry.
“We’ve made billions of dollars for oil and gas companies today — nothing for our citizens, nothing for our state,” said Sen. Mike Romano, D-Harrison, who proposed the due-process amendment and voted against the bill. “The only difference between the deal we just made and the deal our forefathers made with the coal barons a hundred years ago is that we won’t be able to wave at the coal trains as they leave West Virginia.”
The bill, the top priority this session for the state’s natural gas industry, contains a “co-tenancy” provision that allows drilling over the objections of a co-owner of mineral rights, unless that co-owner controls at least 25 percent of the mineral rights. In a separate section for what proponents call “joint development,” the bill allows modern horizontal drilling through older leases, written when that technology wasn’t used, unless those older leases somehow specifically prohibited the practice.
Industry technology has fueled an economic boom in the area, but it also has created problems for surface owners who worry about damage to their homeplaces and peaceful rural lifestyle. The drilling boom also has generated conflicts between gas companies and mineral owners over how the wealth created is being divided.
Senate Judiciary Chairman Charles Trump, R-Morgan, described the legislation as imperative for the gas industry and said his committee worked hard to provide protection for land and mineral owners. But Trump also said it’s not fair for co-owners of small portions of mineral tracts to be able to block the majority owners from selling their gas.
“Our law is that one fractional interest can stop everyone else, and it’s not fair,” Trump said. “Those formations hold for West Virginia the promise of jobs and prosperity for which we could only have dreamed 10 or 15 years ago.”
Two years ago, a bill with similar goals — it was referred to then as the “forced pooling” bill, a name supporters are trying to avoid this session — died on the last night of the session in a rare tie vote, with liberal Democrats and conservative Republicans opposing it as a violation of private property rights.
Several bills with similar goals have been tossed around this session, but using somewhat different tools and labels than the “forced pooling” bill that went down in 2015. Efforts to work out a compromise among a collection of various parties with both conflicting and overlapping interests in the matter fell apart.
Last week, the current version of the bill emerged from the Senate Judiciary Committee just two days after hundreds of oil and gas workers attended a rally on the Capitol steps, during which industry lobbyists promoted what they say is their need for the legislation.
Four Democrats — Sens. Palumbo, Plymale, Prezioso and Woelfel — voted with 15 Republicans for passage of the bill. Six Republicans — Sens. Azinger, Boley, Gaunch, Mann, Smith and Sypolt — voted with eight Democrats against the bill.
Republicans voting for the bill were Sens. Blair, Boso, Clements, Cline, Ferns, Hall, Karnes, Maroney, Maynard, Mullins, Swope, Takubo, Trump, Weld and Carmichael. Democrats voting against it were Sens. Beach, Facemire, Jeffries, Miller, Ojeda, Romano, Stollings and Unger. Sen. Rucker, a Republican, was absent.
Reach Ken Ward Jr. at email@example.com, 304-348-1702 or follow @kenwardjr on Twitter.