WHEELING — A federal judge on Monday approved a $53.5 million settlement against West Virginia’s second-largest gas producer in a lawsuit that said the company withheld money owed to state residents and businesses.
A trial was scheduled to begin in November, but was canceled after lawyers agreed to settle. The class-action lawsuit was brought on behalf of about 9,500 people who said Pittsburgh-based EQT Corp. had wrongly deducted post-production expenses from their royalty payments.
The lawsuit was among many that said natural gas companies were unfairly deducting expenses from royalty checks, or shortchanging residents on payments by forming shell companies to buy gas at reduced rates.
Natural gas companies have been doing this for years, even after state lawmakers and courts have attempted to protect leaseholders from deductions.
This lawsuit was among the royalty cases highlighted last year by the Charleston Gazette-Mail and ProPublica that examined how West Virginia’s natural gas producers continue to avoid paying royalties promised to thousands of residents and businesses. EQT and other companies say they’ve done nothing wrong and that the royalty payments are fair.
Now, people who leased their rights to EQT between Dec. 8, 2009, and Dec. 31, 2017, will be able to file claim forms and receive a settlement. EQT also agreed to pay up to $2 million in administrative fees and to stop deducting post-production costs from royalty payments.
Monday’s settlement conference lasted about 15 minutes. There were no objections to the settlement, and Bailey asked only a few questions of each side.
“When you have that small of an amount opt out, and you have no objection to the approval and you have no objection to attorneys’ fees, I’m pretty much a little robot up here,” Bailey said from his bench in Wheeling Monday morning.
David Hendrickson, a lawyer for EQT, asked that Bailey not issue his order until July 15. That’s “perfect,” Bailey responded: “I’m going on vacation later this week and I won’t be back until the 15th.”
After Bailey issues his order, claim forms will be sent out to businesses and people affected by the settlement. Less than 1 percent have opted to exclude themselves from the settlement, said Marvin Masters, the lead lawyer for the plaintiffs. (Masters is a investor in HD Media, which owns the Gazette-Mail.)
Masters said he wasn’t sure when checks would start being sent. He attributed Monday’s quick hearing to a lack of people who wanted to object or comment on the settlement.
“I think people thought it was a fair settlement,” he said.