| One of the nation's energy giants is playing hardball with West Virginia.
Chesapeake Energy has squashed plans to build a $35 million headquarters in Charleston, retaliating against a recent 5-0 WV Supreme Court ruling that refused to hear an appeal on a $404 million Roane County verdict favoring state royalty holders.
The suit claimed Chesapeake and other gas producers fraudulently took advantage of royalty holders for millions of dollars, cheating them.
Chesapeake spokesman Scott Rotruck said the company's decision was made because the West Virginia Supreme Court declined to hear the case.
Rotruck called the state Supreme Court decision not to hear the appeal "stunning, as it means we will not have the opportunity to challenge the verdict."
Chesapeake, NiSource and other producers have never accepted their actions have hurt royalty holders in West Virginia.
Rotruck said Chesapeake believes the state Supreme Court's refusal to hear an appeal "sends a profoundly negative message about the business climate in the state. The reality of this decision is that nobody in West Virginia, similarly situated, has a guaranteed right of appeal in the judicial system," he said.
Chesapeake says it will join NiSource in appealing the case to the United States Supreme Court.
Gov. Joe Manchin introduced a gas industry bill during last summer's special legislative session, he said would "clarify" the state's royalty laws.
The bill failed to pass.
Following the Roane County verdict, Chesapeake vowed to pull out of the state, but then changed its mind, doing business as usual leasing and drilling wells in what is likely the biggest natural gas boom ever in West Virginia.
The change of heart was followed by a groundbreaking in Charleston for the giant office building, where Gov. Manchin said he would try to get the industry bill through the legislature.
"Businesses want continuity, they want to be treated fairly," he said. "We're going to put balance in this - it needs balanced out."
During the groundbreaking Manchin said "On behalf of a grateful state...I guarantee we won't let you down."
"I contend West Virginia's going to be the best partner you've ever had...That's our goal, our commitment. That's what I mean by 'Open for Business'...We'll make sure we work hard and give you an opportunity to make a market return on your investment," he continued.
Chesapeake made headlines when news broke in 2007 that the company was behind a massive "Coal is Filthy" advertising campaign in Texas, to favor natural gas over coal.
Chesapeake Energy, based in Oklahoma City, is the nation's third-largest natural gas owner, behind ExxonMobil and ConocoPhillips.
Former judge and Spencer attorney George Scott told the Times-Record Roane County Reporter this week "It's a sad note Garrison Tawney did not live to see the end of it and appreciate the magnitude of what he commenced."
"It tuned out Mr. Tawney's determination to do something would result in tremendous benefit to thousands of people for years to come," Scott said.
"I think things have already changed, big-time, because of this verdict," Scott told the paper. "Major companies are evaluating their business practices and the way they are treating their royalty owners."
Scott said the verdict, which is accumulating interest at a rate of 9.75 percent per year, now stands at more than $450 million.
He said the defendants' hopes of convincing the U.S. Supreme Court to hear their appeal is a long shot.
"The Supreme Court of the United States looks for issues of national significance involving instances of misapplication or misconstruction of the U.S Constitution," Scott said.
"This case just simply does not present any such questions. It's hard to believe even the most ardent advocate of the defendants' position could believe that the Supreme Court will show any interest whatsoever in this case," he continued.
Spencer Newspapers said if the attorneys were awarded one-third of the $404 million, and the remainder was divided equally, each royalty owner would receive nearly $26,000 before any interest is added.
Scott said the payments could be awarded on a prorated basis, depending on the amount of royalty involved with each well.
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