WV Gov Justice Signs Bill to Guarantee 12.5% Minimum Royalty

While everyone was focused on the passage of a co-tenancy bill in West Virginia (see WV Gov. Justice Does 180 – Says He’ll Sign Co-Tenancy Bill), another bill, with arguably more impact on both rights owners and drillers, quietly made its way through the legislative process and was signed into law by Gov. Jim Justice on Friday. We’re talking about a bill that guarantees that rights owners (i.e. landowners) will get an actual, guaranteed minimum royalty of 12.5%–regardless of post production deductions. WV Senate Bill (SB) 360 is now the law! The bill was proposed to counter what landowners say was a miscarriage of justice at the hands of the WV Supreme Court in the Leggett v. EQT Production, a case in which the Supremes (in a very unusual move) reversed their own decision from a few months before and allowed EQT to deduct post-production expenses (see WV Supreme Court Reverses Itself, Post-Production Deductions OK). While this is fantastic news for landowners/rights owners in WV, you can’t escape the larger implications, which is that there is now no reason (no excuses left) why the PA version of this bill, introduced for the past three consecutive two-year sessions (six years total), can’t also get passed…

Important Note: SB 360 does NOT apply across the board, to all WV leases. It only applies to limited cases, like Leggett v. EQT, which are “flat rate royalty leases.” See a further explanation below.

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