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West Virginia natural gas unitization lawsuit re-filed

CHARLESTON — Taking the advice offered by a federal judge, plaintiffs in a case to block West Virginia’s new natural gas unitization/forced pooling law re-filed the case against state regulators.

Attorneys for Bethany residents Scott Sonda and Brian Corwin filed an amended complaint Tuesday in the U.S. District Court for the Northern District of West Virginia against the state Department of Environmental Protection, the Oil and Gas Conservation Commission and Attorney General Patrick Morrisey.

Sonda and Corwin are challenging the legality of Senate Bill 694, relating to oil and natural gas conservation. SB 694 deals with the property rights of surface owners and farmers as it relates to drilling for natural gas and horizontal wells.

The West Virginia Legislature passed SB 694 in March toward the end of the 2022 legislative session. The bill passed quickly after being introduced Feb. 21 when representatives of the Gas and Oil Association of West Virginia, the West Virginia Royalty Owners Association and the West Virginia Farm Bureau came to agreement on a unitization bill after years of butting heads.

Sonda and Corwin, who spoke against the bill during a public hearing in March, filed a lawsuit against the new law in May, claiming it violates their U.S. and state constitutional rights against taking their private property without just compensation and deprives them of their property without due process. They sought a preliminary injunction and asked the court to also determine if the law violates antitrust laws.

U.S. District Judge John Bailey issued an order Sept. 9 granting a motion to dismiss the lawsuit against Gov. Jim Justice, stating that the Governor’s Office was the wrong agency to be sued.

Beyond appointing members to the Oil and Gas Conservation Commission, the state board that would make a decision regarding pooling and unitization, the Governor’s Office has no authority over the commission. Bailey dismissed the lawsuit without prejudice, meaning Sonda and Corwin could re-file the lawsuit.

“West Virginia Senate Bill 694 … may in fact be noble in its origins; however, the language contained in SB 694 in operation is antithetical to those protections of individual property rights, and from the behaviors the Antitrust Laws were designed to protect against,” wrote J. Anthony Edmond Jr., an attorney with the Wheeling law firm Edmond and Baum.

Among other things, the unitization law sets new application requirements for the combination of the tracts for oil and natural gas drilling by operators of horizontal well units. It requires horizontal well units consisting of two or more tracts to get agreements from the mineral rights owners for at least 75% of the net acreage when it comes to interest from the royalties collected. It also sets requirements for how non-consenting royalty holders get paid.

Decisions and disputes would be heard by the Oil and Gas Conservation Commission within the DEP. But Edmond argues that the commission is more of a rubber stamp.

“… An executory interest owner has no legal recourse or remedy with respect to the creation of and inclusion in a horizontal unit,” Edmond wrote. “Although a hearing may be had, within the plain language of the statute, the Commission has no ability to provide any remedy whatsoever, for the statute requires that the commission SHALL provide approval of the unit if the applicant meets all of the specifications, which the applicant itself certifies that it does indeed satisfy all requirements.”

Steven Allen Adams can be reached at sadams@newsandsentinel.com.

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