Class action lawsuits accuse two leading energy corp of stealing natural gas

Class action lawsuits accuse two leading energy corp of stealing natural gas by Daniel Gilbert, Bristol Herald Courier, June 16, 2010, tricities.com
ABINGDON, Va. – Twin class action lawsuits filed Tuesday accuse two leading energy corporations of stealing natural gas belonging to Southwest Virginia landowners and attack the constitutionality of the state law that has allowed it to happen for 20 years. The federal lawsuits charge that the Pittsburgh-area companies Consol Energy and EQT Corp. have illegally exploited provisions of the 1990 Virginia Gas and Oil Act to produce a gas that belongs exclusively to landowners, who have never been compensated. The plaintiffs argue that they should be paid for all of the coalbed methane gas the companies have produced from beneath their lands, past and future. The two lawsuits will be followed by a series of class action complaints seeking damages against energy companies for underpaying royalties owed to landowners in all of the gas-producing counties of Southwest Virginia, lawyers for the plaintiffs said. One lawyer for the legal team that represents both classes of plaintiffs characterized the lawsuits as “life-changing and society-transforming.” “What we are talking about here is breathtaking thievery,” said Don Barrett, a Mississippi lawyer who is a veteran of the class action lawsuits against tobacco companies in the 1980s and 1990s. “The system’s broken in Virginia, unlike any other place in the country. And that’s what they make courthouses for.” Asked to comment on the lawsuit, a spokeswoman for Consol e-mailed, “Our corporate policy is not to comment on any pending litigation.”

Adair and the Shorts never agreed to lease their mineral rights, and have never received royalties from coalbed methane, which accounts for more than 80 percent of all natural gas produced in Virginia. Instead, the Virginia Gas and Oil Board determined that they and landowners like them were in conflict with the companies that owned their coal over the rights to coalbed methane. The board granted conditional leases to companies like CNX and EQT – “subject to a final legal determination of ownership,” as state law allows – and directed the gas producers to pay a statutory one-eighth royalty into escrow accounts, pending such a determination. As of May, the more than 800 individual accounts in escrow collectively held $26.2 million.

The plaintiffs contend that the Supreme Court of Virginia resolved the ownership question in 2004, when it ruled that landowners who owned all of their minerals except coal also owned the rights to coalbed methane. In April, state lawmakers put that ruling into the Code of Virginia in an effort to resolve any lingering dispute over the gas. Before the 2004 ruling in Harrison-Wyatt, LLC v. Ratliff, it was a gamble for companies like CNX and EQT to produce coalbed methane, staking their claim to the gas through their coal holdings and leases, said Peter Glubiak, the Richmond lawyer who won the 2004 Supreme Court ruling and who is part of the legal team representing the Short and Adair classes. After the high court’s ruling, Glubiak said, producing coalbed methane was no longer a gamble for CNX andEQT. “The Supreme Court said, ‘It ain’t yours.’ After that point, [the companies] knew, and they were just stealing. They were stealing people’s gas.” The lawsuits ask a federal judge to declare that the plaintiffs alone own the coalbed methane, and to order the release of their royalties from escrow.

“Absent a class action, many members of the class will find the litigation costs regarding their claims so prohibitive that they effectively would be unable to seek any redress at law,” both lawsuits state. The plaintiffs’ team, including the firms of Barrett, Moffett and Glubiak – and the large firm of class action specialists at Lieff, Cabraser, Heimann & Bernstein LLP – will front the costs of the litigation, and absorb them if they lose. The team has sufficiently deep resources that it will “not be money-whipped” by Consol andEQT, Barrett said. Their services, however, will not come free. If the plaintiffs prevail at trial or secure a settlement, the lawyers will ask for some percentage of the total.

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