“Co-Tenancy” Advances to the Senate Floor Unchanged

Since we wrote to you last week, the “co-tenancy” bill (HB 4268), has passed two committees unchanged (except for a title amendment which is a technical change that doesn’t affect the substance of the bill) and is now on the Senate floor, where it will be voted on Saturday, if the Senate decides to meet this weekend, or Monday. The bill passed the House well ahead of Crossover Day (the deadline for bills to be out of the house of origin) and cleared its first hurdle in the Senate last week with approval by the Senate Energy, Industry, and Mining Committee.

The next step in the process for HB 4268 was consideration by the Senate Judiciary Committee, which passed the bill on Tuesday. In an interesting twist, Governor Justice urged the Senate to reject the bill prior to the Judiciary Committee vote saying he was strongly considering vetoing it and calling the Legislature into special session “to find a way out through co-tenancy and joint development and the mineral rights people … you’ve got to find a way that satisfies everybody and raises the severance tax on natural gas” in order to provide teachers and state employees with raises, and fix PEIA. The Governor’s proposal was not well received by legislators and other interested parties. However, the Governor walked back this idea and the bill continued to advance.

Although the title amendment is not substantive, it does mean the bill must go back to the House for approval, provided it is passed by the Senate.

In other news:

Yesterday, the Senate unanimously passed SB 360, which would change the way royalties are calculated for flat-rate leases by reversing a decision by the state Supreme Court that says oil and gas companies can take deductions for production expenses from the royalty payments paid under these leases. Read more here. The House passed an identical version of the bill (HB 4490) on the same day, and after receiving word that the Senate had passed SB 360, they took the bill up for immediate consideration rather than requiring the bill to go through the committee process another time. The bill has been read twice on the House floor and will be up for a final vote (third reading) tomorrow.

Another good bill for mineral owners that is working its way through the legislative process is HB 4270. The purpose of this bill is to provide for the timely payment of royalties (within 120 days of the date of the sale of the oil, gas, or natural gas liquids produced) from horizontal wells; to require that specific information related to production and deductions from payments be provided to royalty owners along with their royalty payments; and to provide penalties for late payments (an interest penalty at the prime rate plus two percent). The bill passed the House of Delegates on February 15 and is currently pending in the Senate Judiciary Committee.

Unfortunately, most of the bills that were a priority for WV-SORO this legislative session are dead because they were not taken up by their assigned committees and sent to the floor in time to meet yesterday’s deadline (often referred to as Crossover Day) for bills to be out of the house of origin. This includes our our “land reunion” bill, SB 148, which was approved by the Senate Natural Resources Committee last week, but stalled in Senate Finance; as well as bills that would require continuous monitoring of air, noise, dust, and particulates as recommended by the studies mandated by the 2011 Horizontal Well Act (HB 2990); and that would allow property owners to share financially in the gains from the various interstate pipeline projects, if they are approved and built (HB 3011). The latter two bills were never taken up by the House Energy Committee. It’s extremely disappointing to have to report the lack of progress on these bills that would have helped those most affect by drilling and natural gas infrastructure.

The 2018 legislative session ends on Saturday, March 10. We’ll try to update you one more time between now and them to let you know where things stand. We appreciate your support – financially – but most importantly your taking the time to contact your legislators to on these issues. Thank you!