Cuccinelli ruling hobbled efforts to speed gas royalties

The attorney general issued an opinion that a new law did not empower the Gas and Oil Board to resolve claims.

Attorney General Ken Cuccinelli

David Ress | 981-3253

Sunday, June 23, 2013

Attorney General Ken Cuccinelli cut the ground out from under a 2010 law that aimed to cut through the years-old disputes over gas royalties in Southwest Virginia days before it would have taken effect.

The law said landowners would be presumed to have rights to gas in coal veins under their land in order to clear the way for the state Gas and Oil Board to disburse royalties.

But Cuccinelli issued an opinion letter saying the law would not expand the board’s power to resolve conflicting claims between landowners and mineral rights holders, doing so 72 days after Gov. Bob McDonnell signed the bill, which had no opposition in the General Assembly.

“It basically made the law invalid,” said state Sen. Philip Puckett, D-Tazewell, who sponsored the bill as a way to get the board to begin applying a 2004 court ruling in Buchanan County more generally.

Cuccinelli’s office later intervened to support energy companies in court when landowners, frustrated by the failure of the bill to free up royalties, started suing for their royalties.

A state lawyer’s role in those cases, including some involving a firm that gave $111,000 to his gubernatorial campaign, drew a stinging rebuke from a federal judge for her help to the energy firms on matters unrelated to the state intervention.

Cuccinelli has said Assistant Attorney General Sharon Pigeon did nothing wrong by helping the energy firms, though he added she may have been overzealous.

He has said campaign contributions had nothing to do with the state invention in those cases.

Spokesman Brian Gottstein said Cuccinelli consulted with no energy firms or energy lobbyists in writing the opinion letter overturning the 2010 law.

As the royalty cases dragged through federal court, Cuccinelli responded to landowners’ complaints about unpaid royalties with proposed legislation to return unused mineral rights to surface landowners after 35 years, and set up a process in the board to resolve conflicts over rights in light of that deadline.

“Attorney General Cuccinelli is a strong property rights proponent,” spokesman Gottstein said. “Southwest Virginia property owners came to the attorney general to share the problems they were having getting their royalties paid out. He proposed the legislation because he wanted to help resolve the issue and get property owners the money they deserved.”

Gottstein said gas companies vigorously opposed this proposed legislation and lobbied hard against it.

Puckett said he declined to sponsor the bill because he thought it wouldn’t do much to help.

After years of hearing the board say that even undocumented claims by energy firms to coalbed gas tied its hands and could only be settled in court, he agreed with landowners that the best way to get escrowed royalties was through a federal lawsuit.

Pigeon’s help to the energy firms — including advising them on a paperwork glitch that could throw one plaintiff’s claim out of court — was intended to make the point that a class action federal lawsuit wouldn’t speed royalty payments, Gottstein said.

State law now allows the board to release royalty funds when gas rights are disputed only after a court decision, an agreement between the parties or an arbitration, Gottstein said.

Cuccinelli’s opinion letter invalidating the 2010 law made the same point.

Gottstein said Puckett’s 2010 legislation “merely codified existing court precedent, but didn’t create any new option to disburse this money.”

Cuccinelli’s bill in 2011 created a fourth way to try to get money to property owners, he said.

Monday, August 12, 2013