WV Supreme Court won’t cancel gas royalty case rehearing

Walker

The West Virginia Supreme Court has refused to cancel its reconsideration of a significant case in which justices are deciding whether natural gas drillers can deduct post-production costs from the royalties paid to certain mineral owners.

In a one-page order dated Wednesday, Court Clerk Rory Perry said a motion to stop this week’s scheduled oral argument in the case was “moot” because Justice Beth Walker notified Perry of her decision not to recuse herself in the case.

Natural gas royalty owners who are suing EQT Corp. over the company’s payment practices said Walker improperly took part in a vote in January in which the court decided to grant EQT’s request to reconsider the case. They cited the fact that Walker did not take part in the court’s original ruling in the case and that 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 Patrick Leggett said in their motion filed with the Supreme Court.

Perry’s order did not include any explanation of Walker’s decision not to disqualify herself and, through a court spokeswoman, Walker has declined to comment on the issue.

In the case, the court had ruled on Nov. 17, 2016, 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 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, 2016.

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 Dec. 5, 2016, and her term began Jan. 1.

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

The oral argument on the rehearing is set for Tuesday.

Reach Ken Ward Jr. at

kward@wvgazettemail.com,

304-348-1702 or follow

@kenwardjr on Twitter.

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