West Virginia Press Association Staff Report
CHARLESTON, W.Va. – The Senate Committee on Energy, Industry, and Mining, on Tuesday, considered a “strike and insert” amendment to HB 4292, a bill which seeks to expand damages for the nonpayment of oil and gas royalties due to land owners.
As explained by Committee Counsel Jay Lazelle, the amendment, “Provides, unless otherwise expressly provided for in writing, that royalty payments do not have to be made until the amount of the royalty exceeds $100.”
“Additionally, regardless of the amount due, payments would have to be made at least once annually,” Lazelle said. “(Payments must also) be made within 60 days, and after cessation of the production.”
Under the terms of the bill, if royalty payments are not received, land owners would be required to send written requests for payment by certified mail.
“Failure to make payment within 60-days after receipt of that certified mail will allow the mineral (land) owner to file a civil action for payment of the royalty,” Lazelle noted. “The prevailing party in the civil action would be entitled to recover attorney’s fees and costs.”
Under the introduced version of the bill, proposed by Del. Bill Anderson, R-Wood, failure to satisfy civil action within six months would result in the liable party owing “an amount equal to three times the market value of the extracted minerals for which the payment is due.” However, the amendment alters this formula for calculating penalties.
“The new section also sets out a method to calculate the damages for failing to make a timely payment,” Lazelle said. “That would be the delinquent royalty amount, plus an interest penalty equal to the prime rate plus two-percent.”
“However if any delinquent royalty payment, plus a penalty, is less than $500, then the minimum amount due would be $500,” Lazelle added.
The last change included within the strike and insert amendment is the establishment of “default due dates” for all royalty payments.
“It provides that if a payment date is not expressly set out in a written agreement, […] then the payment would be due 120-days from the first sale date, and within 60-days thereafter for each subsequent sale date,” Lazelle said.
At the conclusion of Counsel’s explanation, Sen. Ben Queen, R-Harrison, asked, “What has to happen for the $500 payment to go into effect – does a civil action have to be filed?”
“Yeah, I think so,” Lazelle replied. “I think it would be in connection with the civil action filed.”
Queen then turned his focus to the $100 minimum, asking, “The $100 minimum payment, is that an industry practice? How did we come up with that number?”
Counsel, however, was unable to answer the question, which prompted Queen to ask, “Are there a lot of people not being paid under the $100 amount?”
Lazelle was unable to answer that question, as well.
Without further questions or discussion, the committee adopted the strike and insert amendment. HB 4292 will now be referred to the Senate Committee on Finance for further consideration.
In other business, the committee advanced HB 5006, a bill which seeks to “eliminate antiquated recycling goals, and to set new criteria for evaluating the state’s success in achieving recycling goals.”
Another bill proposed by Del. Anderson, if enacted, HB 5006 would require recycling centers to report the “amount and kind of reportable recyclable material handled at the recycling establishment” to the Secretary of State’s office on an annual basis.
With no questions or discussion, HB 5006 will be reported to the full Senate with the committee’s recommendation for passage.
