If state legislators don’t fix the Virginia Gas and Oil Act, here’s what’s going to continue to happen:

Thousands of Southwest Virginia landowners, many of them forced by the state to lease their mineral interests to private companies, will not get paid for what rightfully belongs to them. And the escrow fund that now holds their royalties – currently more than $24 million – will continue to swell to the benefit of no one but the bank that manages it.

For almost 20 years, energy corporations have pocketed enormous profits from natural gas belonging to these mineral owners, some of whom have died without seeing a penny. This is a colossal failure of government to pay people for their property, and it requires immediate action from state lawmakers.

The $24 million in escrow reeks of scandal. It is both scandalously large – as money that belongs in the pockets of mineral owners – and scandalously incomplete, because companies have failed to make the legally required payments, as a Bristol Herald Courier investigation revealed. The fund also is scandalously monitored: Just two state employees have the job of overseeing the royalties in escrow, answering questions from royalty owners and ensuring gas corporations pay the required amounts. And the officials at the Division of Gas and Oil do this without the help of any electronic compliance checks that would flag things like missing payments.

At the heart of the problem is the lingering question of coalbed methane ownership – an issue the 1990 legislature left to the courts to decide. And more than four years ago, the Supreme Court of Virginia did decide – in favor of landowners. The high court ruled landowners were entitled to full rights to the coalbed methane beneath their land, even if their ancestors had sold the coal rights a century ago.

Yet, that high court decision is not enough for the state agency that determines how royalty owners are paid.
The Department of Mines, Minerals and Energy decided that mineral ownership in Southwest Virginia is too complicated to be resolved by a one-size-fits-all judicial ruling, even from the commonwealth’s highest court.

Simply put, the legislature’s decision to let courts determine coalbed methane ownership has failed, and so it comes back to the legislature like a boomerang.

There is a simple fix, recommended by at least one area legislator and the attorney who won the Supreme Court ruling for Buchanan County surface owners: amend the law to reflect the high court’s ruling that if you sold only your coal, you have full rights to coalbed methane royalties.

This newspaper supports such a fix, which would shift the burden of proving ownership onto the mineral owners best able to shoulder it: The coal companies that bought the coal, and sometimes other minerals, from surface landowners. The current burden effectively forces landowners of often limited means to hire attorneys, or agree to split their royalties. This extraordinary burden is the reason why royalties pour into escrow and trickle out.

Who is to blame for the escrow problem?

It is tempting point the finger at the multibillion-dollar energy conglomerates that have failed to pay into escrow sums that are pocket change for them. It is tempting to blame the seven-member regulatory board that is supposed to regulate the industry, or the two officials, David Asbury and Diane Davis, who handle all of the board’s work. But the task is too much for a two-person staff, and maybe too much for a board that meets monthly and whose members hold down day jobs or are retired.

The largest share of the blame goes to the legislature that created a way to tap the state’s vast coalbed methane reserves, but neglected to figure out how to compensate people for the use of their gas and then neglected to be a responsible custodian of their money.

Legislators need to find a better way to retrieve money from escrow, and they need to provide Asbury, Davis and company with reasonable resources to monitor what goes into the fund.

They need to do it now.