Overview: Controversial Virginia Attorney General Ken Cuccinelli has gas. Or, more accurately, he has a problem caused by the gas which is trapped in the coal seams under large swaths of Southwest Virginia. In 1990 Ken Cuccinelli was walking down “the lawn” at UVa to pick up his BS in Mechanical Engineering. That same year the Virginia General Assembly passed the Virginia Gas and Oil Act. For the next 20 years Ken Cuccinelli would prove to be an ambitious and successful politician while the Oil and Gas Act would prove to be yet another almost totally incompetent piece of legislation passed by an inept state legislature. On April 19 of this year the paths of Ken Cuccinelli and the Virginia Oil and Gas Act intersected. On that day, a landowner and his attorney met with one of Cuccinelli’s top deputies to discuss a new law signed by Bob McDonnell on April 13. The landowner hopes the new law will resolve a number of the more idiotic aspects of the original law. Mr. Cuccinelli seems less convinced that the new law is much better than the old law. He has complained that the new law is “too gentle”. Mr. Cuccinelli is willing to sue the federal government, he is willing to subpoena records from the University of Virginia. Let’s hope he doesn’t “chicken out” now. I’d hate to have to admit that Mr. Cuccinelli’s legal courage wanes when the targets are big companies instead of academics and the feds. How Mr. Cuccinelli handles this situation will speak volumes about his real philosophy.
Timeline: I’ve often thought that one could win a Pulitzer Prize for reporting on the buffoonery of the Virginia General Assembly. I no longer think that to be true. I know it to be true. I know it because Daniel Gilbert of the Bristol Herald has done just that. While Mr. Gilbert might not agree that the prize was awarded for reporting on buffoonery, I think he would characterize the overall situation as sad. His excellent series of articles on the matter can be found here – http://bit.ly/9XBrBo. For those without the time required to read Mr. Gilbert’s compelling prose, let me summarize:
There is a lot of natural gas trapped along with coal underneath Virginia. The mineral rights to the natural gas belong to the landowners. In 1990, the General Assembly passed a law forcing the landowners to sell their gas rights on a pre-defined pricing schedule. Some coal companies claimed that their long ago purchase of coal rights gave them the gas rights too. In 2004, the Virginia Supreme Court ruled against the coal companies saying that the sale of coal rights did not include the sale of gas rights. This required the energy companies to negotiate with the landowners. Disputes arose. Some of the disputes are widely seen as contrived. The state of Virginia has consistently refused to use its regulatory power to adjudicate these disputes. Royalty payments from disputed gas ownership claims are put into an almost unaudited escrow fund. In 2010, Terry Kilgore patroned legislation to allow the state to adjudicate gas royalty disputes. However, there is some ambiguity in the new law (surprise, surprise). Mr. Cuccinelli has been asked for an opinion as to whether the state really has the legal position to adjudicate these disputes. While his opinion is pending, Mr. Cuccinelli has stated that he thinks the 2010 law is “too gentle” – perhaps indicating that he will opine that the state still cannot adjudicate the disputes. If the state can’t or won’t adjudicate the disputes then the landowners will have to retain counsel and sue the energy companies in court. Since many landowners are of limited means, the legal action may be prohibitively expensive. Therefore, the landowners may settle for less than the disputed amount rather than go to court.
Legislation and Regulation: Some commenters on BaconsRebellion routinely call for more government regulation as something of a cure-all for many of today’s problems. I am not among those commenters. I fundamentally believe that our government, at both the federal and state level, is too dysfunctional to be given any more power. The sad situation regarding gas rights in Virginia is just one more example of an inept government in action. Twenty years after the state passed a law forcing landowners to sell their mineral rights on a pre-ordained pricing schedule the state is still unable to get many of the landowners their money. Disputes are often invented. The escrow accounts are essentially unaudited. Recent legislation is “too gentle”. However, there may be an answer. Our newly elected Attorney General has shown he has the courage to take on the status quo. Will he do the same here? Mr. Cuccinelli, we eagerly await your opinion.
