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Va. property owners press companies on royalties

By Steve Szkotak

Associated Press

Published: Thursday, Oct. 10 2013 12:27 p.m. MDT

FILE - In this April 2010 photo, miners watch as a piece of equipment passes by in the Tech Leasing and Rebuild Inc. Mine #1 in Buchanan County, Va. Coal has emerged as a defining issue in the race for governor in Virginia, even though the industry began its steady decline well before the phrase “war on coal” was coined and ahead of the introduction of new U.S. pollution limits. (AP Photo/Bristol Herald Courier, David Crigger)

David Crigger, Associated Press

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RICHMOND, Va. — Attorneys for property owners in Virginia's coalfields region who say they were cheated out of untold millions in royalty payments for natural gas drilled on their land are asking a federal judge to order two energy companies to show how much they drilled and reaped from the resource.

The request is contained in briefs seeking summary judgment in class-action lawsuits involving thousands of landowners. They want to free up nearly $30 million in disputed payments and what they say is much more in royalties they are owed because of overcharges and underpayments.

The lawsuits name EQT production Co. and CNX Gas Co., Pittsburgh-area companies that have drilled more than 7,000 wells in southwest Virginia to siphon methane gas from coal seams. Neither company immediately responded to requests from The Associated Press for comment, but each has denied the allegations in the past.

The plaintiffs' attorneys contend the disputed royalties held in a state escrow account has subjected the landowners to an "involuntary lease" and established below-market royalty payments for methane gas royalties.

Don Barrett, lead attorney for the property owners, said the lawsuits are intended to determine how much EQT and CNX truly owe the property owners.

"We know that EQT and CNX have underpaid these folks, have overcharged them on expenses and have not reported all of the gas that they sold and have shorted these people by millions and millions of dollars," Barrett said Thursday in a telephone interview from his office in Mississippi.

"They have to, under oath, come in and say here's exactly what we took in and here's what happened to it," and that they deducted only expenses that were necessary and reasonable, he said. "The fact is, much more gas has been produced than has been paid for."

The lawsuits, filed several years ago, were certified as class actions representing various claims earlier this month by U.S. District Judge James P. Jones. It was not immediately clear when he would rule on the request for summary judgment.

Attorneys for the landowners are also seeking punitive damages, which would be decided at trial.

Steve Szkotak can be reached on Twitter at http://twitter.com/sszkotakap

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