By Jim Cooper,Editor
www.thetimesrecord.net
More than 10,000 natural gas well royalty owners aren't the only ones who may stand to benefit from a $400 million Roane Circuit Court verdict.
The Roane County Commission also wants a piece of the action.
County commissioners David Boothe, Rodney Cox and John Greathouse voted last week to join what is known as the Tawney case, which alleged Columbia Natural Resources (CNR) shortchanged royalty owners over a period of several years.
The suit filed in 2003 claimed CNR deducted production and other expenses from royalty checks and hid that from royalty owners that traditionally received a one-eighth share before expenses. According to the suit, CNR also was paying several flat rate leases, some for only $100 per year, even though the practice had been prohibited for several years.
Commissioners retained the services of attorneys Charles Bailey of Charleston and Rob Fisher of Ripley to represent their interests. The decision came after a nearly 30-minute executive session with the attorneys during the commission's Nov. 12 meeting.
Bailey said the Tawney verdict, which was reached after a three-week trial in January 2007, appears to open the door for the county to recoup lost revenues.
"The bottom line is that the lawsuit or portions of the settlement reimburse royalty owners and others for royalties they should have received," Bailey said. "The county is entitled to levy taxes on the 'made whole' portion."
Attorneys have reached a preliminary settlement in the case that would reduce the jury's verdict to $380 million and forego interest accumulated since the verdict. In exchange, Chesapeake Energy and NiSource, the successors to CNR, would drop their appeal to the U.S. Supreme Court.
The proposal is the subject of a hearing scheduled for Saturday in Roane Circuit Court.
Bailey said he and Fisher would attend the hearing to represent the county's interests and ask to be added to the suit. The attorneys will also represent Kanawha County's stake, and could possible add Jackson and Putnam counties in the future.
"There's really no other means by which to do it," Bailey said. "It will probably amount to a substantial amount of money."
Bailey said he could not estimate the total Roane could gain from the suit because he did not yet know how many royalty owners would have paid taxes in the county.
Commission president Greathouse said the attorneys had approached the commission with the proposal. Bailey said attorneys' fees would be 33 percent of any money that is recovered.
"It's a win-win situation for Roane County," he said. "I feel confident we have a good claim."
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