Motion seeks to stop WV gas royalty case rehearing

Justice Beth Walker

The state Supreme Court has been asked to cancel an oral argument scheduled for next week in a significant case in which justices are reconsidering whether natural gas drillers can deduct post-product costs from the royalties paid to certain mineral owners.

Attorneys for Patrick Leggett and other mineral owners urged the court to call off the rehearing because, they say, Justice Beth Walker should not have taken part in a vote that approved EQT Corp.’s petition for the rehearing.

The new motion, filed on Monday, argues that Walker should not have voted on the rehearing petition because she did not take part in the court’s original consideration and ruling in the underlying case.

Also, the motion argues that, the timing of her taking office aside, Walker should have disqualified herself from the matter because her husband, Mike Walker, owns stock in several different natural gas and related energy companies. Mike Walker loaned his wife’s campaign $525,000, and the combination of his stock holdings and the loans created the “appearance of impropriety,” lawyers for Leggett said in their motion filed with the Supreme Court.

Justices have not yet ruled on the motion, and as of late Tuesday afternoon, attorneys for EQT had not filed a response. Through a court spokeswoman, Walker declined to comment on the motion.

In the case, the court had ruled last Nov. 17 against EQT in part of a continuing legal battle over natural gas royalty payments that has emerged from the boom in natural gas drilling in the Marcellus Shale region of North-Central West Virginia and the Northern Panhandle.

The ruling said that EQT could not, as the company had been, deduct post-production expenses from the royalties paid to mineral owners covered by a provision of a 1982 “flat rate” state law that provides for one-eighth royalties, despite older lease language that paid less. Post-production expenses include things like transportation and processing costs.

Then-Justice Brent Benjamin wrote the opinion in the case, and was joined by Justices Robin Jean Davis and Margaret Workman. Justices Menis Ketchum and Allen Loughry dissented. The case was argued on Sept. 14 and a ruling issued on Nov. 17.

In May 2016, Benjamin lost a re-election bid to Walker in the state’s first nonpartisan Supreme Court race. Benjamin’s term was to last until the end of the year. Walker was sworn in during a ceremony on Dec. 5 and her term began Jan. 1, 2017, according to a Supreme Court news release.

EQT attorneys filed a petition for a rehearing on Dec. 19, 2016. The Supreme Court granted that petition on Jan. 25, 2017, according to the court’s website. Walker, Loughry and Ketchum voted to rehear the case. Workman and Davis voted not to rehear it.

Both sides have filed new legal briefs in the rehearing, and oral argument has been scheduled for next Tuesday.

The motion filed this week argues that only the members of the court who took part in reaching a decision in the case should vote on whether or not a rehearing is granted.

It also says that even if Walker’s participation “procedurally was appropriate,” her involvement in the rehearing vote was inappropriate because of her husband’s investments in both the oil and gas industry and his loans to her Supreme Court campaign. The motion says that the loans and Mike Walker’s gas industry stock holdings create “such a risk of actual bias or prejudgment that the practice must be forbidden if the guarantee of due process is to be adequately implemented.”

Reach Ken Ward Jr. at kward@wvgazettemail.com, 304-348-1702 or follow @kenwardjr on Twitter.

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