West Virginia Gov. Joe Manchin called the state legislature into special session over the weekend to consider a slew of bills, including one that seeks to add more consistency and certainty to the state’s oil and natural gas royalty and tax systems.

The special session began Sunday and is expected to wrap up late Tuesday. During that time, the Democratic governor has asked legislators to act on a total of 16 bills, said Carte Goodwin, general counsel to Manchin.

One bill (HB 216, SB 2008) would establish statutory presumptions of what certain phrases, such as “at the well” and “at the wellhead,” mean for the purpose of calculating royalties. The goal is to make the payment of royalties under leases “as transparent and predictable as possible,” and to limit future jury verdicts such as the $404 million one imposed on NiSource Inc. for underpayment of royalties, he said.

In June, NiSource Inc. lost an attempt to overturn a $270 million punitive damage award that topped off $134 million in compensatory damages for underpayment of royalties in West Virginia (see Daily GPI, June 29). A Roane County, WV, judge ruled against a motion to set aside the punitive damages portion of the jury verdict that was issued in January (see Daily GPI, Jan. 30).

The measure backed by Manchin also would revise the definition of shallow well in the Onondaga Formation in West Virginia, extending it to a depth of 75 feet from the existing 20 feet, Goodwin said.

In addition, the bill would place the responsibility for payment of oil and natural gas severance taxes on the first purchaser rather than producer, creating a “much smaller universe of taxpayers,” he noted. It would reduce the severance tax to 4.8% from its current rate of 5% as well.

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