West Virginia Supreme Court Justice Beth Walker says she does not have to disqualify herself from a controversial rehearing of a case over natural gas royalty payments, because her husband sold all of his stock in energy companies, according to records revealed by the court on Monday.
This morning, the justices are scheduled for oral argument in the rehearing that Walker helped to approve for EQT Corp., which had lost the case under a previous lineup of justices who ruled the company was wrong to deduct payments from post-production expenses when it sent checks to a certain group of mineral royalty owners.
Lawyers for the royalty owners had sought to stop today’s rehearing of the case, arguing that Walker should not have taken part in the vote to grant that rehearing and that she should have disqualified herself from any consideration of the issue because her husband, Michael Walker, owned stock in a long list of natural gas and energy companies that could potentially be affected by the court’s eventual decision. Michael Walker had loaned his wife’s campaign $525,000 during last year’s election race.
Last week, the court released a one-page order that reported that today’s argument would go forward and that Walker had declined to disqualify herself. That order, dated April 26, did not provide any reasons for Walker’s decision.
On Monday, the court provided a one-page memo, also dated April 26, in which Walker had explained that she found no basis to disqualify herself because, “Neither I nor my husband has an economic interest in the subject matter in controversy.”
And, the court on Monday also provided a new order and memo, both dated Monday, in which Walker elaborated on her reasons for not stepping down from the case.
The new memo says that, “Out of an abundance of caution, my husband has divested himself of ownership of shares of stock of any company engaged in the business of producing coal, oil and gas, wind or solar energy.” The memo did not indicate when Michael Walker divested himself of those stock holdings.
In a financial disclosure form filed with the state Ethics Commission, Walker had reported that her husband owned stock in a variety of natural gas-related companies, including Chevron Group, Columbia Pipeline Group, Dominion Resources and Exxon Mobile. Exxon is the parent company of XTO Energy, which has significant natural gas operations in West Virginia. That financial disclosure was filed on Jan. 27, two days after Justice Walker had voted in favor of rehearing in the gas royalties case.
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.
Reach Ken Ward Jr. at email@example.com, 304-348-1702 or follow @kenwardjr on Twitter.