Nearly two weeks after a natural gas royalties bill was moved from the West Virginia Senate’s Energy, Industry and Mining Committee to its Judiciary Committee, property rights advocates held a news conference Monday morning to try to push the bill forward.
Senate Bill 360 seeks to eliminate post-production expenses, such as transportation or severance taxes from royalty owners’ checks. The proposed legislation would reverse the so-called “Leggett Decision” — the state Supreme Court’s ruling last year that reversed its 2016 decision to allow natural gas drillers to deduct post-production costs from royalties owed to mineral owners. The court reheard the case after Justice Beth Walker replaced Justice Brent Benjamin.
A 1982 law updated terms on “flat rate” leases and called them “wholly inadequate compensation.” Instead of small, flat rates, companies would now have to pay royalties amounting to one-eighth of gains from that site to the mineral owner. Before the case was reheard, the initial Supreme Court ruling decided that companies couldn’t deduct post-production costs from those royalties.
S.B. 360, advocates say, will right what the Supreme Court did and make sure money will stay in mineral owners’ pockets in West Virginia and not go to large, out-of-state companies.
Charles Clements, R-Wetzel, said he introduced the bill after seeing mineral owners try to figure out what was being taken out of their royalty checks.
“We need to figure out how we’re going to compute that and, if post-production expenses are allowed, what is allowed, and there must be transparency so the people can understand exactly what’s happening,” he said. “This is their money; it’s not the gas company’s money.”
Tom Huber, president of the West Virginia Royalty Owners Association, called it an emergency situation for mineral owners.
“If they can deduct their post-production expenses from your one-eighth royalty, there’s no telling how low they can take you,” he said.
In the 2017 Supreme Court ruling, the majority opinion, written by then-Chief Justice Allen H. Loughry II, and the concurring opinion, written by Justice Margaret Workman, said the Legislature needed to update its stance on how much royalty owners are owed.
On Monday morning, Charles Wilfong, president of the West Virginia Farm Bureau, called on lawmakers to move the bill forward.
“We need the leadership of the Senate to push this forward and get this out there to a vote at the Senate,” he said, “and we need to get this done and passed out of the Legislature and signed by the governor.”
Asked when the Judiciary Committee would hear the bill, Chairman Charles Trump, R-Morgan, said he didn’t know, but hadn’t heard any concerns about the bill during caucus.
“The answer to that question has not yet been determined,” he said.