West Virginia stands on the verge of an expected new boom in the oil and natural gas industry that could bring much-needed economic development to the state.
The West Virginia Farm Bureau welcomes that development, as long as it does not come at the expense of private property rights.
However, we worry that some legislators seem to believe the only way to provide for West Virginia’s future is by allowing oil and gas developers to take private property rights unfettered. In other words, they would give away the farm while pumping out millions, if not billions, of dollars to out-of-state corporations.
The Farm Bureau believes that West Virginia law should protect the private property rights of mineral owners, farmers and rural residents while also providing oil and gas companies with a reasonable platform to succeed.
That can be done, even though the lawyers and lobbyists hired by oil and gas companies for years have flooded the Capitol to tell legislators that West Virginia has “bad” laws and business climate.
To the contrary, a study released recently by the Fraser Institute says otherwise. It’s based on data from more than 300 petroleum industry executives and managers and ranks West Virginia No. 5 in overall investment business climate for oil and gas development in the entire world. That study ranks Pennsylvania No. 32 and Ohio No. 54.
During its 2018 session, the West Virginia Legislature can protect that high ranking and build on it by passing balanced legislation. That legislation would protect private property rights, modernize lease opportunities and fix unfair and oppressive practices, such as deductions for post-production expenses.
In the early 1990s, West Virginia legislators recognized that some of the oil and gas companies’ practices were an impediment to development. They put into place West Virginia Code 22-6-8(2) to address problems with flat rate lease practices. As that code states, “wholly inadequate compensation is unfair, oppressive, and works an unjust hardship on the owners of the oil and gas in place, and unreasonably deprives the economy of the State of West Virginia of the just benefit of the natural wealth of this state.”
What made sense then still makes sense now. Nevertheless, in the past two legislative sessions, a number of industry-written bills, such as last year’s Senate Bill 576, came up that would have subsidized corporate interests by taking wealth from mineral owners and landowners.
Instead of such unfair and oppressive legislation, the Farm Bureau urges Gov. Jim Justice and legislators to pass responsible legislation. That legislation should:
Update co-tenancy laws, including due process for minority co-tenants with protection for farmers and surface owners.
Address “at the well head” language to fix the post-production expense issue.
Provide for modernization of old leases due to horizontal drilling technology. Old leases put into place in the late 1800s and early 1900s had no vision of current modern drilling practices.
In addressing the old flat rate lease issue, past legislators stated in West Virginia Code 22-6-8(3) that many leases “have been in existence for a great many years and were entered into at a time when the techniques by which oil/gas are currently extracted, produced, or marketed, were not known or contemplated by the parties.” This statement still rings true in 2018.
Many West Virginians regret that the state did not pass balanced and fair laws governing coal mining when that industry was in its heyday. Many out-of-state coal interests made a lot of money at the expense of West Virginians’ welfare and the environment.
Let’s not make the same mistake with the oil and gas industry. What we do with this issue will be a generational decision that will affect our state for years.
The oil and gas industry should not be promoted on the backs of property owners, farmers, mineral owners and all other citizens of West Virginia. We strongly support reasonable oil and gas development to help provide West Virginians with jobs and other opportunities.
Another recent study, known as the McKinsey Report, identifies agriculture as an existing industry that West Virginia should maintain and support.
We agree. Let’s take some of the gas severance tax money and invest in the agriculture and forestry enterprises. These land-based businesses generate almost $4 billion in economic activity annually.
The West Virginia Farm Bureau wants to help move West Virginia forward, but we cannot support giving away the farm to enrich the few.
Dwayne O’Dell is a farmer from Roane County and director of Governmental Affairs for the West Virginia Farm Bureau.