CHARLESTON — While the Legislature figures out longterm revenue sources to fund the Public Employees Insurance Agency plan for teachers and state workers, a Democratic delegate from Randolph County has a plan — and his amendment narrowly passed in a 49-47 House vote Wednesday.
Delegate Phil Isner's amendment to House Bill 4268, a co-tenancy bill which would allow oil or natural gas development provided that three-fourths of the royalty owners of a piece of property agree, is up for passage Thursday.
The bill creates a fund known as the Unknown and Unlocatable Interests Owners Fund. Interests owned by unknown or unlocatable owners would be reserved and deposited in that created fund until they are either claimed or transferred to the Oil and Gas reclamation Fund, which, under the original version of the bill, would go toward plugging abandoned oil and gas wells.
Isner's amendment sought to split proceeds from the Oil and Gas Reclamation Fund evenly between efforts to reclaim abandoned gas wells as well as the PEIA Stability Fund.
“For the last 36 days, everyone in this chamber talked about finding a way to fix PEIA,” Isner said. “The fund created by this bill would dedicate money to unknown and un-locatable owners.”
Isner said money would go toward lowering premiums and reducing cuts.
“Isn't that what we have said we want to try to do? A freeze is not a fix,” Isner said. “It may be a while before it comes in. There's a seven-year period that you can't locate someone. If everyone is serious about finding a fix … here's new money — new money we haven't had before that we will dedicate 50 percent to reclaim abandoned wells and 50 percent to PEIA.”
Delegate John Shott, R-Mercer, opposed the amendment, saying the goal is to find a predictable permanent fix to the problem.
He also wondered how the time period of waiting until 2023 would factor into the situation. He said the bill should stay as is with money going toward addressing abandoned wells.
“It's not only an aesthetic blight of an area, but it's an environmental hazard,” Shott said.
He said if that money is cut in half, he doesn't know how likely it would be to address abandoned wells.
Isner said he understands the money would not come out until 2023. However, he said money will still be needed for PEIA then.
“If you think it will be permanently fixed by 2023 and we won't be dealing with additional problems as our population gets older, then that thinking is foolish,” Isner said. “The gas wells will continue to be there until 2023.”
Isner said this issn't about picking between addressing abandoned wells or putting money into PEIA.
“This isn't about picking between two things,” he said. “This is helping two important causes.”
Isner's amendment was one of four offered that was adopted to the bill. Delegate Michael Folk, R-Berkeley, offered an amendment that would set a minimum number of owners before the 75 percent threshold kicks in. At first, that threshold was nine, but Folk later changed the minimum to seven owners.
Shott said many situations would have more than seven royalty owners.
“The number of situations excluding development will be minimal,” Shott said. “Most situations, there are more than seven royalty owners. I don't think qualifying this threshold will cause great damage or substantial impairment of the ability to develop the resource and at the same time, it will protect mineral owners.”
Folk's amendment was adopted in a 90-6 vote.
An amendment offered by Delegate D. Rolland Jennings, R-Preston, also was adopted. This would allow consenting co-tenants to develop only the specifically targeted formation and 100 feet above and below that formation. Non-consenting co-tenants or unknown interest owners will retain all rights to all other formations unless reasonable efforts are made to re-negotiate the contract for an additional formation. If consenting co-tenants made a lease only for a certain formation, non-consenting co-tenants or unknown co-tenants shall receive the highest royalty in the least executed for that particular formation.
Shott spoke in favor of the amendment.
“The bill basically requires non-consenting co-tenants to get the benefit of the best bargain made within that boundary of mineral rights,” Shott said. “There are a number of protections to make sure that takes place. But there's a possibility that the 75 percent did not make a good deal. This additional protection raised an issue to protect people to get the best deal... but if the best deal is not a good deal, then this and other provisions provide additional protections for non-consenting co-tenants.”
Another amendment offered by Shott, R-Mercer, made some technical changes to the bill. The amendment was adopted in a voice vote.
Two amendments were rejected. Delegate Barbara Fleischauer, D-Monongalia, proposed an amendment that would have changed the 75 percent threshold to 90 percent. Her amendment was rejected in a 40-57 vote.
Supporters said a majority should not be able to take away rights of minority owners. However, those who opposed Fleischauer's amendment said the minority shouldn't be able to determine what a majority of owners do with their property.
“If we are going to compromise private property rights, we should have the highest burden possible,” Fleischauer said. “Ninety percent is fair.”
Delegate Mark Zatezalo, R-Hancock, said he felt property would be bypassed for development.
“I agree we need to strike a balance which is exactly what the committee has done with 75 percent,” Zatezalo said.
Shott said he didn't think it's fair to deny the majority owners the right to develop. He used the example of four owners of a tract of land.
“Is it fair for me to deny those three people to use and benefit from ownership in minerals,” Shott said. “Is that fair?”
Another amendment rejected was one offered by Delegate Andrew Robinson, D-Kanawha. Under Robinson's amendment, the share of royalty would be calculated using the highest payments by the operator, owner, or affiliates for interests greater than 5 acres within a 10-mile radius of the mineral property.
Shott said he thought this would create logistical problems including figuring out where the 10-mile radius would begin.
Robinson's amendment was rejected in a 38-57 vote.
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