Hello Guest
Landowner Rights Denied By Moratorium      NY: 10 Years, 3 Months | DRBC: 9 Years, 5 Months
YOUR SUPPORT KEEPS US OPEN       
       More Information

“Co-tenancy Modernization and Majority Protection Act” (HB 4268)

  • 11 Replies
  • 2390 Views
*

mmwv

  • 31
    • My LinkedIn page
The Co-tenancy bill was just introduced in the House. It is available online here: http://www.wvlegislature.gov/Bill_Status/bills_text.cfm?billdoc=hb4268%20intr.htm&yr=2018&sesstype=RS&i=4268

The bill will be considered in the House Energy Committee, probably starting this week.

Highlights:

•             Co-tenants owning 75% of the undivided interest must “consent” in writing to development
•             Operators must use reasonable efforts to locate and/or to lease all “non-consenting” co-tenants
•             Non-consenting co-tenants have 45 days after receipt of operator’s best and final lease offer in which to elect to either:
o             Accept their pro-rata share of royalty at the highest royalty rate paid to a consenting owner in the same mineral tract free of post-production costs; or
o             To Participate in the development
•             Unlocatable owners’ pro-rata royalty to be held and delivered to the state
•             Non-consenting co-tenants who elect to take a royalty should benefit from terms of the consenting co-tenants’ leases which are favorable to the non-consenting co-tenant
•             The O&G Conservation Commission may create rules to govern non-consenting owners who elect to participate
•             The surface over any mineral tract with a non-consenting owner cannot be used without an agreement with the surface owner, whether or not the surface owner owns an interest in the minerals.
•             Procedures for handling royalties due to unknown or unlocatable interests are laid out, and an interest-bearing Unknown and Unlocatable Interest Fund is created within the State Treasury
I worked around most of Western PA and WV, as well as on projects in several other places as a Landman for over a decade.
Now I am a first year law student at WVU.

*

ghrit

  • 3416
  • Member since October 05, 2008
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #1 on: January 24, 2018, 01:46:13 PM »
Second bullet:  Who decides if the effort is reasonable?  That is a court case awaiting in the wings.
There are two kinds of ships.  Submarines and targets.
www.survivalmonkey.com

*

mmwv

  • 31
    • My LinkedIn page
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #2 on: January 25, 2018, 01:16:37 PM »
The "reasonable" efforts to identify and locate unknown or unlocatable interest owners are spelled out in the bill fairly specifically.

The specific language for reasonable negotiation just says (note: the bill defines royalty owners as owners of executory interests):

"If an operator or owner makes reasonable efforts to negotiate with all royalty owners in an oil or natural gas mineral property and royalty owners vested with at least three fourths of the right to develop, operate, and produce oil, natural gas, or their constituents, ....consent to the lawful use or development of the oil or natural gas mineral property, the operator’s or owner’s use or development of the oil or natural gas mineral property is permissible, is not waste, and is not trespass."


My initial argument on behalf of the gas company would be that if 75% or more of the interest owners accepted the deal we are offering, it has to be considered "reasonable." 
If I have offered you the same or better deal than most of the other owners have already accepted, I think that it will be hard to argue that I am being unreasonable.

I worked around most of Western PA and WV, as well as on projects in several other places as a Landman for over a decade.
Now I am a first year law student at WVU.

*

macal

  • 9617
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #3 on: January 25, 2018, 02:26:20 PM »



  Are you dealing with a lot of coal heirs.

*

mmwv

  • 31
    • My LinkedIn page
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #4 on: February 06, 2018, 09:38:23 AM »
I deal with a lot of heirs. Lots and lots.

I had meant to mention that the Co-Tenancy bill is being moved with a companion bill, HB 4270, which is nicknamed the "Check Stub Bill" and has a lot of requirements for disclosure of sales and deductions on royalty statements.

http://www.wvlegislature.gov/Bill_Status/bills_History.cfm?input=4270&year=2018&sessiontype=rs
I worked around most of Western PA and WV, as well as on projects in several other places as a Landman for over a decade.
Now I am a first year law student at WVU.

*

mmwv

  • 31
    • My LinkedIn page
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #5 on: February 16, 2018, 05:41:36 AM »
Yesterday the WV House of Delegates passed both 4268 and 4270.
4268, co-tenancy, was amended in several ways. It now only asapplies if there are 7 or more owners of the mineral tract. It also includes a provision allowing surface owners to gain title to that portion of the minerals owned by unknown or unlocatable heirs. There were otherchanges from the original, including adding an appeals process to the oil and gas conservation commission for nonconsenting cotenants.
4270, the check stub transparency bill, was also sent to the Senate yesterday.
I worked around most of Western PA and WV, as well as on projects in several other places as a Landman for over a decade.
Now I am a first year law student at WVU.

*

mmwv

  • 31
    • My LinkedIn page
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #6 on: March 05, 2018, 11:06:01 AM »
Pending the House concurring with the Senate's title amendment, this bill has passed and the governor has said he will sign it.

http://www.wvlegislature.gov/Bill_Text_HTML/2018_SESSIONS/RS/bills/HB4268%20SUB%20ENG.pdf
I worked around most of Western PA and WV, as well as on projects in several other places as a Landman for over a decade.
Now I am a first year law student at WVU.

Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #7 on: March 06, 2018, 07:40:32 PM »
This part is interesting:

"§37B
-1-2.  Declaration of public policy; legisla
tive findings.
It is declared to be the public policy of this state and in the public interest to:
1
(1)  Foster,  encourage  and  promote  exploration  for  and  development,  production,  and 
2
conservation of oil, natural gas and their constituents
;
3
Eng.
CS for HB 4268
7
(2) Prohibit waste of oil, natural gas, and their constituents
 and unnecessary surface loss
4
of
oil, natural gas, and their constituents
;
5
(3) Encourage the maximum recovery of oil, natural gas, and their constituents

6
(4) Safeguard, protect and enforce the
correlative rights of operators and mineral owners
7
in that each such operator and mineral owner may obtain his or her just and equitable share of
8
production;

9
(5) Safeguard, protect and enforce the integrity of the passive royalty owner
’s interest in
10
his o
r her minerals.
11
(6) Safeguard, protect and enforce the rights of surface owners; and
12
(7) Protect and enforce the clear provisions of contracts lawfully made"

I wonder what impacts that will have on the lawsuits of the operators vs purchasing companies...? 

I also didn't find the bit about clear statements showing deductions but maybe that was another bill?

Thanks for posting this! ;)

*

mmwv

  • 31
    • My LinkedIn page
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #8 on: March 07, 2018, 08:48:24 AM »
The Check Stub Bill is HB 4270. It is still pending in the Senate Judiciary Committee after having passed the house on 2-15 and then passed out of the Senate Energy committee on 2-28.

It is actually on the Judiciary agenda for their 3pm meeting today.

Tracking: http://www.wvlegislature.gov/Bill_Status/bills_History.cfm?input=4270&year=2018&sessiontype=rs

The Bill: http://www.wvlegislature.gov/Bill_Text_HTML/2018_SESSIONS/RS/bills/HB4270%20SUB.pdf





Also of note, the Legislature has passed and the governor is expected to sign SB 360, amending the portion of code which prohibits granting well permits to flat rate leases (the law that requires a minimum of 1/8 be paid on old flat rate leases).  The law will now require that no permits may be issued on the old flat rate leases unless the royalty to be paid is 1/8 free of post-production costs.

This does not apply to all leases, however, only to the older leases which call for flat rate payments.

SB 360: http://www.wvlegislature.gov/Bill_Status/bills_History.cfm?input=360&year=2018&sessiontype=rs
I worked around most of Western PA and WV, as well as on projects in several other places as a Landman for over a decade.
Now I am a first year law student at WVU.

*

Wax

  • 6370
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #9 on: March 07, 2018, 10:42:14 AM »
The Check Stub Bill is HB 4270. It is still pending in the Senate Judiciary Committee after having passed the house on 2-15 and then passed out of the Senate Energy committee on 2-28.

It is actually on the Judiciary agenda for their 3pm meeting today.

Tracking: http://www.wvlegislature.gov/Bill_Status/bills_History.cfm?input=4270&year=2018&sessiontype=rs

The Bill: http://www.wvlegislature.gov/Bill_Text_HTML/2018_SESSIONS/RS/bills/HB4270%20SUB.pdf





Also of note, the Legislature has passed and the governor is expected to sign SB 360, amending the portion of code which prohibits granting well permits to flat rate leases (the law that requires a minimum of 1/8 be paid on old flat rate leases).  The law will now require that no permits may be issued on the old flat rate leases unless the royalty to be paid is 1/8 free of post-production costs.

This does not apply to all leases, however, only to the older leases which call for flat rate payments.

SB 360: http://www.wvlegislature.gov/Bill_Status/bills_History.cfm?input=360&year=2018&sessiontype=rs
The law will now require that no permits may be issued on the old flat rate leases unless the royalty to be paid is 1/8 free of post-production costs.

Would that not constitute, changing a signed contract ? Something I hear is unconstitutional, by many on this forum.

*

mmwv

  • 31
    • My LinkedIn page
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #10 on: March 07, 2018, 11:00:39 AM »
I think that is why it was written the way that it was originally.

It doesn't invalidate flat rate leases. It doesn't say that I can't keep paying you the flat rate on the old wells on the property.

It just says that the DEP cannot issue permits for wells to be drilled under flat rate provisions.
I worked around most of Western PA and WV, as well as on projects in several other places as a Landman for over a decade.
Now I am a first year law student at WVU.

*

Wax

  • 6370
Re: “Co-tenancy Modernization and Majority Protection Act” (HB 4268)
« Reply #11 on: March 07, 2018, 12:59:34 PM »
I think that is why it was written the way that it was originally.

It doesn't invalidate flat rate leases. It doesn't say that I can't keep paying you the flat rate on the old wells on the property.

It just says that the DEP cannot issue permits for wells to be drilled under flat rate provisions.
Thanks,
understand