Code of Virginia

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Code of Virginia
Title 45.2. Mines, Minerals, and Energy
Chapter 16. Virginia Gas and Oil Act
10/16/2021

§ 45.2-1624. (Effective October 1, 2021) Release of funds held in escrow or suspense because of conflicting claims to coalbed methane gas.

A. For a coalbed methane gas well that was force-pooled prior to July 1, 2015, the coalbed methane gas well operator shall, on or before January 1, 2016, apply to the Board for the release of the funds in escrow and give written notice of such application to every conflicting claimant identified in the pooling orders, or to the successor of such claimant where the successor is known to the coalbed methane gas well operator or has identified himself to the coalbed methane gas well operator or the Board. Such notice shall be in accordance with the applicable provisions of § 45.2-1618 and, if any unknown person or unlocatable conflicting claimant is subject to escrow, such notice shall also be published in a newspaper of general circulation in the county or counties where the drilling unit is located once each week for four successive weeks. The application shall include a detailed accounting in accordance with subdivision B 5 of § 45.2-1622. The Board shall order payment of the principal and accrued interest, less escrow account fees, held in escrow, along with all future royalties attributable to the drilling unit, to each gas claimant identified in the pooling order unless, within 45 days of the coalbed methane gas well operator's notice of its application, the coal claimant provides the Board and the coalbed methane gas well operator with evidence of a proceeding or agreement. The Board, pursuant to its authority granted by § 45.2-1614, may extend the time for filing the application and delay the payment of funds for a gas title conflict, the existence of an unknown gas claimant, the existence of an unlocatable gas claimant, an unresolved gas heirship issue, or any other reason beyond the reasonable control of the coalbed methane gas well operator and shall not order payment if the gas claimant fails to provide the Board with information needed under applicable law or regulation to distribute the funds.

B. For a coalbed methane gas well force-pooled on or after July 1, 2015, the Board, in its pooling order, shall direct the coalbed methane gas well operator to pay royalties to the gas claimant unless the coal claimant provides the coalbed methane gas well operator and the Board with evidence of a proceeding or agreement not later than the time and place of the pooling hearing. The coalbed methane gas well operator shall provide written notice of the hearing to every gas claimant and coal claimant in accordance with § 45.2-1618. However, the Board, pursuant to its authority granted by § 45.2-1614, shall not order the coalbed methane gas well operator to make payment to a gas claimant if there exists any gas title conflict, unknown gas claimant, unlocatable gas claimant, unresolved gas heirship issue, or other reason beyond the reasonable control of the coalbed methane gas well operator or if the gas claimant fails to provide the coalbed methane gas well operator with the information required under applicable law or regulation to pay royalties. If the Board so declines to order payment to be made to a gas claimant, the coalbed methane gas well operator shall provide each affected gas claimant and the Board with written notice of the reason payment is not required to be made in accordance with the applicable provisions of § 45.2-1618. If payment is not required to be made due to the gas claimant's failure to provide needed information under applicable law or regulation, the notice shall identify the information that is needed to enable the payment to be made.

C. For a coalbed methane gas well voluntarily pooled at any time, the coalbed methane gas well operator shall pay royalties, including past royalties held, to each gas claimant unless, within 45 days of the coalbed methane gas well operator's provision of written notice to the coal claimant that the operator will be paying royalties to the gas claimants, the coal claimant provides the coalbed methane gas well operator and each gas claimant with evidence of a proceeding or agreement. For any unit voluntarily pooled before July 1, 2015, the coalbed methane gas well operator shall provide such written notice to each gas claimant and coal claimant on or before January 1, 2016. For any unit voluntarily pooled on or after July 1, 2015, the coalbed methane gas well operator shall provide such written notice to each gas claimant and coal claimant not later than 45 days after production commences. However, the coalbed methane gas well operator shall not be required to make payment to a gas claimant if there exists any gas title conflict, unknown gas claimant, unlocatable gas claimant, unresolved gas heirship issue, or other reason beyond the reasonable control of the coalbed methane gas well operator or if the gas claimant fails to provide the coalbed methane gas well operator with information to process or pay royalties. If the Board so declines to order payment to be made to a gas claimant, the coalbed methane gas well operator shall provide each affected gas claimant with written notice of the reason payment is not required to be made in accordance with the applicable provisions of § 45.2-1618. If payment is not required to be made due to a gas claimant's failure to provide needed information, the notice shall identify the information that is needed to enable the payment to be made.

D. Any pending judicial or arbitration proceeding shall be pursued by the coal claimant with diligence and shall not be voluntarily dismissed or nonsuited without the consent of the gas claimant. No default judgment shall be entered against a gas claimant in such proceeding. Royalties shall be paid as determined by the final order in the proceeding. A prevailing gas claimant may recover from the nonprevailing coal claimant reasonable costs and attorney fees if such gas claimant substantially prevails on the merits of the case and the coal claimant's position is not substantially justified.

E. A coalbed methane gas well operator paying funds to a gas claimant in accordance with this section shall have no liability to a coal claimant for the payments made by the coalbed methane gas well operator to a gas claimant.

F. This section shall not operate to extinguish any other right or cause of action or defense thereto, including any claim for an accounting or claim under § 8.01-31. Nothing in this section shall create, confer, or impose a fiduciary duty.

2015, c. 396, § 45.1-361.22:2; 2021, Sp. Sess. I, c. 387.

The chapters of the acts of assembly referenced in the historical citation at the end of this section may not constitute a comprehensive list of such chapters and may exclude chapters whose provisions have expired.