Gas bill will have to wait: Lawmakers call proposal too complicated for short session

tomsearls@wvgazette.com

After a public hearing Tuesday, lawmakers went home without actingon a proposal to change natural gas lease agreements in the state.

The legislation, proposed by Gov. Joe Manchin in the wake of a$404 million Roane County verdict against gas well drillers, alsocontains provisions on such topics as taxes, coalbed methane gas,environmental regulations and other items.

"That's too much to deal with in 24 hours," said House JudiciaryChairwoman Carrie Webster, D-Kanawha, whose committee held the 90-minute public hearing Tuesday morning.

On the Senate side, the Judiciary Committee never even formallyconsidered the bill during the three-day special session that endedTuesday.

Webster's committee also never gave approval to the legislation.

"This is just too complicated," she said.

Lawmakers probably aren't done with the issue. On Monday, WestVirginia's natural gas drillers announced a three-year advertisingcampaign across the state emphasizing the industry's economicperformance, job opportunities and to establish an energy curriculumin public schools.

West Virginia is the largest natural gas producer east of theMississippi River and drilling is conducted in 49 of the state's 55counties, according to www.energizewv.com, a Web site created for thecampaign. The state has 40,500 gas wells that produce 191.6 billioncubic feet of gas.

Ken Tawney, representing the oil and gas industry, said hismembers wanted lawmakers to immediately take up the issue of howclose together wells can be drilled. There was no movement to do so.

Gas well producers began withholding production costs fromroyalties paid to landowners - who leased or sold their mineralrights generations ago - after the federal government deregulated theindustry in the early 1990s. Thousands of landowners sued in RoaneCounty and won.

Webster made it clear she opposes any "retroactivity," orlegislation that would end any lawsuit already in the pipeline. Shesaid there are four natural gas industry cases pending in statecircuit courts.

She said she hasn't decided her views on the legislation, butrealized her committee members "need a substantial amount of time"before they could make an informed decision.

Tuesday's public hearing drew about 100 people to the House ofDelegates chamber, including Boone County resident Karen Roberts, whosaid her family gets royalty checks of around $25 every four monthsfrom gas companies.

"Contrary to popular belief, we do not get rich on royalties,"Roberts said. "It's the principle of the thing ... They have beenripping us off for years."

State Coal Association officials opposed changes in spacing forgas wells and want notification rules. One person noted gas drillersgive "no notice to the coal owners," similar to complaints from otherproperty owners.

Wirt County resident and gas driller Alvin Engelke, who operatesPreston Co., said that while he is a member of the state oil and gasindustry organization, he opposes its latest proposal.

"I'm not in agreement with their carrying Chesapeake's water," hesaid of Chesapeake Energy, the firm that lost the Roane County case.

Natural gas firms had plenty of representatives at the hearing,but so did big landholding firms.

Jay Perry, representing Natural Resources Partners, said hismembers, several large landholding firms, don't want lawmakersmeddling in their contracts.

"We don't need our leases legislated and being told what should bein them," he said.

Kasey Russell, a Charleston city councilwoman who represents biglandholding companies, called the bill "extremely complicated" andurged lawmakers not to take the issue up.

Charleston lawyers Marvin Master, Mike Carey and Scott Segal, whorepresented plaintiffs in the Roane County case, each had a chance tospeak.

Segal pointed out gas firms make 87.5 percent profits. "Isn't 87.5percent enough out of the hides of our royalty owners?" he said.

Masters said the attorneys found gas drillers were charging theroyalty owners for a number of items like operating costs, return oninvestments, equipment depreciation and others.

"[The plaintiffs] were told there were no deductions being takenon their royalties," he said. He said drillers have "skimmed" fromlandowners and even charged them for gas leaks.

Masters said West Virginia law is in line with other gas-producing states.

Carey noted the state Supreme Court has ruled that gas drillerscannot simply take production costs from royalty owners. Instead, itmust be spelled out in the contract, something that can beaccomplished without going to court or changing the law.

"It's easy," Carey said. "They go to the royalty owner and sign acontract that allows them to do it."

Roane County lawyer Orton Jones, a former lawmaker who was a partyto the lawsuit, noted the governor's proposal used four pages toexplain 23 legislative findings to justify the idea. Jones noted thatwas a lot of legislative findings. "It takes a lot of lipstick topretty up a pig," he said.

To contact staff writer Tom Searls, use e-mail or call 348-5198.

Gas bill will have to wait: Lawmakers call proposal too complicated for short session

tomsearls@wvgazette.com

After a public hearing Tuesday, lawmakers went home without actingon a proposal to change natural gas lease agreements in the state.

The legislation, proposed by Gov. Joe Manchin in the wake of a$404 million Roane County verdict against gas well drillers, alsocontains provisions on such topics as taxes, coalbed methane gas,environmental regulations and other items.

"That's too much to deal with in 24 hours," said House JudiciaryChairwoman Carrie Webster, D-Kanawha, whose committee held the 90-minute public hearing Tuesday morning.

On the Senate side, the Judiciary Committee never even formallyconsidered the bill during the three-day special session that endedTuesday.

Webster's committee also never gave approval to the legislation.

"This is just too complicated," she said.

Lawmakers probably aren't done with the issue. On Monday, WestVirginia's natural gas drillers announced a three-year advertisingcampaign across the state emphasizing the industry's economicperformance, job opportunities and to establish an energy curriculumin public schools.

West Virginia is the largest natural gas producer east of theMississippi River and drilling is conducted in 49 of the state's 55counties, according to www.energizewv.com, a Web site created for thecampaign. The state has 40,500 gas wells that produce 191.6 billioncubic feet of gas.

Ken Tawney, representing the oil and gas industry, said hismembers wanted lawmakers to immediately take up the issue of howclose together wells can be drilled. There was no movement to do so.

Gas well producers began withholding production costs fromroyalties paid to landowners - who leased or sold their mineralrights generations ago - after the federal government deregulated theindustry in the early 1990s. Thousands of landowners sued in RoaneCounty and won.

Webster made it clear she opposes any "retroactivity," orlegislation that would end any lawsuit already in the pipeline. Shesaid there are four natural gas industry cases pending in statecircuit courts.

She said she hasn't decided her views on the legislation, butrealized her committee members "need a substantial amount of time"before they could make an informed decision.

Tuesday's public hearing drew about 100 people to the House ofDelegates chamber, including Boone County resident Karen Roberts, whosaid her family gets royalty checks of around $25 every four monthsfrom gas companies.

"Contrary to popular belief, we do not get rich on royalties,"Roberts said. "It's the principle of the thing ... They have beenripping us off for years."

State Coal Association officials opposed changes in spacing forgas wells and want notification rules. One person noted gas drillersgive "no notice to the coal owners," similar to complaints from otherproperty owners.

Wirt County resident and gas driller Alvin Engelke, who operatesPreston Co., said that while he is a member of the state oil and gasindustry organization, he opposes its latest proposal.

"I'm not in agreement with their carrying Chesapeake's water," hesaid of Chesapeake Energy, the firm that lost the Roane County case.

Natural gas firms had plenty of representatives at the hearing,but so did big landholding firms.

Jay Perry, representing Natural Resources Partners, said hismembers, several large landholding firms, don't want lawmakersmeddling in their contracts.

"We don't need our leases legislated and being told what should bein them," he said.

Kasey Russell, a Charleston city councilwoman who represents biglandholding companies, called the bill "extremely complicated" andurged lawmakers not to take the issue up.

Charleston lawyers Marvin Master, Mike Carey and Scott Segal, whorepresented plaintiffs in the Roane County case, each had a chance tospeak.

Segal pointed out gas firms make 87.5 percent profits. "Isn't 87.5percent enough out of the hides of our royalty owners?" he said.

Masters said the attorneys found gas drillers were charging theroyalty owners for a number of items like operating costs, return oninvestments, equipment depreciation and others.

"[The plaintiffs] were told there were no deductions being takenon their royalties," he said. He said drillers have "skimmed" fromlandowners and even charged them for gas leaks.

Masters said West Virginia law is in line with other gas-producing states.

Carey noted the state Supreme Court has ruled that gas drillerscannot simply take production costs from royalty owners. Instead, itmust be spelled out in the contract, something that can beaccomplished without going to court or changing the law.

"It's easy," Carey said. "They go to the royalty owner and sign acontract that allows them to do it."

Roane County lawyer Orton Jones, a former lawmaker who was a partyto the lawsuit, noted the governor's proposal used four pages toexplain 23 legislative findings to justify the idea. Jones noted thatwas a lot of legislative findings. "It takes a lot of lipstick topretty up a pig," he said.

To contact staff writer Tom Searls, use e-mail or call 348-5198.