West Virginia House passes co-tenancy bill
Expands gas drilling options
CHARLESTON — The West Virginia House of Delegates on Thursday passed a bill allowing natural gas drilling on a single property provided at least three-quarters of the mineral rights owners agree.
Called the co-tenancy bill, it was passed along party lines 60-40 with support predominantly from Republicans.
Only two Democrats voted in favor of the legislation.
House Bill 4268 now goes to the Senate, also Republican controlled.
“That’s nice,” said Alvin Engelke of Wirt County, saying he was being sarcastic. Engelke has opposed the co-tenancy bill and a forced pooling bill also in the Legislature.
Supporters, including the West Virginia Chamber of Commerce, said the bill will lead to further development of the natural gas industry in West Virginia.
Opponents said the bill trounces upon the rights of property owners.
The bill will allow a company to drill provided three-quarters of the owners of the mineral rights are in agreement. Non-consenting owners would be overruled by the majority.
A major problem with the bill is it could allow companies to acquire the mineral rights at much less than they are worth, Engelke said.
“It’s not a jobs bill,” he said. “It’s a rip off the state bill.”
However, Dwayne O’Dell, director of government affairs for the West Virginia Farm Bureau, said the bill strikes a fair balance between the rights of the majority and the minority owners. West Virginia was one of only three states that didn’t have a co-tenancy law, he said.
It also, through several amendments added in the House, would send half of the royalties for owners who could not be located to the Public Employees Insurance Agency for seven years and the other half to a reclamation fund.
“Overall we are in support of the bill,” O’Dell said.
He also pointed out the co-tenancy bill is not forced-pooling. It only impacts one property and is only applicable when there are more than seven owners, he said.
All of the local delegates representing Wood, Wirt, Pleasants and Ritchie counties voted in favor. While it was adopted with mostly Republican support, five Republicans voted no with the Democrats.
Delegate Vernon Criss, R-Wood, called the passage “a step in the right direction” but noted it will probably undergo changes in the Senate.
“A lot of things can happen to that thing before it comes back to us,” he said.
Criss said the legislation will benefit people who cannot earn money from their mineral rights if co-owners can’t be located. He noted it only applies to parcels with more than seven owners.
“If there’s seven people or less, then they should be able to work it out among themselves,” Criss said.
An amendment to raise the threshold from 75 percent to 90 percent was rejected in the House Wednesday. Criss was among those voting against it.
“It’s still a super majority,” he said.
Delegate Bill Anderson, R-Wood, said the bill was an important step in modernizing the mineral rights laws in the state of West Virginia.
It allows a single tract of land with multiple owners, like in cases with multiple cousins, to be leased when all of the owners cannot be located and not hold up the process.
“It allows the lease to move forward and everyone can receive the benefits from it,” Anderson said.
The law is similar to what is in place in Pennsylvania and Ohio.
“It will put West Virginia on a more level playing field,” Anderson said.
It allows state residents to acquire wealth from what is on their property and generates needed tax revenue for the state, he said.
“The development of mineral and natural gas resources will further develop jobs for the state,” Anderson said.
The West Virginia Surface Owners Organization didn’t support the bill that was reported out of the Energy Committee, David McMahon, an attorney and founder of the organization, said. Changes made in the Judiciary Committee, which requires the driller to get the agreement of the surface owner to locate a well pad on their property, made it supportable, he said.
“They have to get the surface owners consent,” he said.
It also allows for the surface owner to acquire the rights if the mineral owners never show up, he said. Half of the royalties will be used to plug orphan wells, of which there were at least 203 orphan wells in Wood County by last count in 2016, McMahon said.
However, the other half of the royalties goes to PEIA, he said.
“We’re disappointed in that, but still support the bill,” McMahon said.
(Staff writer Brett Dunlap contributed to this story.)