Senate
House
Joint
Bill Status
WV Code
Audits/ Reports
Educational
Contact
home
home

Introduced Version House Bill 2435 History

   |  Email


hb2435 intr
H. B. 2435


(By Delegates Frederick, Long and Kominar)

[Introduced February 16, 2005 ; referred to the

Committee on the Judiciary.]





A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §55-12B-1, §55-12B-2, §55-12B-3, §55-12B-4, §55-12B-5, §55-12B-6, §55-12B-7 and §55-12B-8, all relating to creating the "West Virginia Joint Coal Owners Trust and Conservation Act"; and to provide a more expedient method of securing coal leases when multiple owners have an interest.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated §55-12B-1, §55-12B-2, §55-12B-3, §55-12B-4, §55-12B-5, §55-12B-6, §55-12B-7 and §55-12B-8, all to read as follows:
ARTICLE 12B. WEST VIRGINIA JOINT COAL OWNERS TRUST AND CONSERVATION ACT.

§55-12B-1. Findings and purpose.

(a) The Legislature finds that the ownership of many tracts of coal in West Virginia are divided into fractional interests among several owners who are commonly known as joint-owners or cotenants; that such fractional coal interests are frequently small, and the problems encountered in leasing and producing such coal is of such cost and complexity, so as to discourage the owners of small fractional coal interests from participating with the other joint owners in the leasing of their coal interests for purposes of production; that the failure to develop coal in a timely and efficient manner can result in the diminution of its value due to the isolation or bypassing of the coal by adjacent mining; that such circumstances can deprive both the state and joint coal owners of the benefits of such coal ownership; that the alternative remedy of petitioning the circuit courts to partition a coal tract among the joint owners is expensive, protracted and frequently impractical due to uncertainties about the actual value and distribution of coal in a given tract; and that it is reasonable and necessary for the welfare of the State and its many joint-owners of coal to establish an efficient and practical judicial procedure by which all of these joint owners may seek a just, fair and equitable remedy for the enjoyment and conservation of their coal resources. In recognition of the fact that the estate of a joint owner in coal can be enjoyed only by mining, removing, and selling the coal, and that the mining, constitutes the use and not the destruction of the common estate, the purpose of this article is to clarify the rights of joint owners of coal in this State, to promote and preserve the value of coal reserves in the State, and to maximize the recovery of coal through the orderly and efficient development of coal reserves for the benefit of all joint owners in a fair and equitable manner.
(b) The purpose of this article is to create a judicial procedure by which the joint owners of a given tract of coal may seek a remedy for the circumstances described in subsection (a) of this section by petitioning the circuit court to review a proposed coal lease or appoint a court-supervised trustee to negotiate, execute, deliver or administer a coal lease; to promote and protect the value of the coal reserves; to protect the value of the joint owners' interests; and to maximize the conservation and recovery of coal through the orderly and efficient development of coal reserves for the mutual benefit of all joint owners thereof and the State in a just, fair and equitable manner.
§55-12B-2. Definitions.
As used in this article:
(a) "Joint owner" or "cotenant" means a person or entity that is a joint tenant, a tenant in common, or a tenant by the entirety whether the title is derived by purchase, gifts, legacy, descent, operation of law or from any other source.
(b) "Coal owners" or "owners" means one or more persons or entities vested with a partial, undivided estate or other freehold interest in any coal estate, but does not include a person or entity with a leasehold or any lesser estate.
(c) "Lease" means any instrument which vests, conveys, or creates in one or more lessees a leasehold estate for the purposes of exploration, evaluation, development, production or removal of coal and any reasonable and necessary activities related thereto, including, but not limited to, an amendment, assignment, confirmation or restatement of an existing lease.
(d) "Administer" or "administration" means the power of a trustee appointed to this article, but only to the extent authorized by the court, to do all acts reasonable and necessary for the benefit, and on behalf of, the joint owners, under the provisions of any coal lease executed pursuant to this article including, but not limited to, review and monitoring of coal production plans, operations and reclamation, auditing coal production and royalty payments, and bringing a civil action on any claim or cause of action arising under the lease.
§55-12B-3. Venue.
Proceedings under this article must be brought in the circuit court of the county in which the coal tract or tracts sought to be affected, or the major portion thereof, are located.
§55-12B-4. Persons who may initiate proceedings; creation of trust; appointment of trustee; other relief; appointment of guardian ad litem; rights of surface owners preserved.

(a) If the title to one or more coal tracts is owned or controlled by two or more joint owners, then proceedings for the creation of a trust, the appointment of a trustee, and the relief authorized under this article, may be instituted upon petition to the circuit court by any person or persons: (1) Vested with an undivided fee simple interest in the coal sought to be developed; or (2) vested with a leasehold estate in an undivided interest in the coal sought to be developed by one; or more petitioners, where the undivided interest or interests represented or to petition comprise a majority of the ownership or control.
(b) The circuit court of the county in which the coal tract or tracts, or the major portion thereof, are located has the power to: (1) Declare a trust in the coal interests and fix and thereafter modify the duration thereof; (2) to appoint a trustee who shall act in a fiduciary capacity on behalf of all joint owners vested with the coal interests; (3) appoint a guardian ad litem to represent the interests of any minors, incompetents, incarcerated persons who have no guardians and for any unknown or missing owner or abandoning owner and their unknown heirs, successors and assigns not known to be alive; (4) authorize the trustee to negotiate, execute, deliver, and administer a valid lease for those coal interests on behalf of all the joint owners upon the terms and conditions approved by the circuit court pursuant to this article; and (5) upon the motion of the trustee, or as directed by the court, to empower the trustee to retain engineers, geologists or other professionals to assist the trustee in the discharge of his or her duties pursuant to this article.
(c) This article affects only coal owners, as defined in section three-c of this article, and does not affect the rights of surface owners, except to the extent that they may also be owners of the underlying coal. A petition may not be authorized under this article for the mining and removal of coal by the surface method mining unless all of the owners of the surface consent to the mining and removal of coal by the surface method of mining. The existing surface rights of any owners of a surface estate shall not be affected, diminished or impaired by any provision of, or any relief granted, pursuant to this article: Provided, That this subsection does not affect or impair any relief which may be granted pursuant to article twelve-a, chapter fifty-five of this code regarding an abandoning, unknown or missing coal owner.
§55-12B-5. Procedure; required parties; notice; qualifications, compensation and costs of the trustee and guardian ad litem; fiduciary duties of trustee; successor trustee; other remedies.

(a) The plaintiff or plaintiffs in a proceeding under this article shall join as the defendant or defendants all other persons having a legal interest in the coal proposed to be leased including all joint owners and also all persons in being who have a present, contingent or future interest in said coal of which the plaintiffs have actual or constructive notice.
(b) If in any action under this article there may be joint owners who are abandoning, unknown or missing owners, as defined in section two, article twelve-a, chapter fifty-five of this code, then these persons must be made defendants to an action under this article, and provided notice thereof in the same manner, with the same effect, and subject to the same relief as provided in section five, article twelve-a, chapter fifty-five of this code. An action filed under this article may be joined with an action under article twelve-a, chapter fifty-five of this code.
(c) A verified petition must be filed specifically setting forth the following:
(1) That the plaintiff or plaintiffs desire to negotiate, execute, deliver or administer a coal lease granting one or more lessees the right to explore for, develop, produce or remove coal from the subject coal tracts and any other reasonable and necessary activities related thereto;
(2) The legal description of the coal tract or tracts and the property interest of the plaintiff or plaintiff therein;
(3) The apparent interest of the defendant or defendants in
the said coal tract or tracts;
(4) The coal lease proposed by the plaintiffs, if any, which shall be attached as an exhibit to the petition;
(5) That the plaintiff or plaintiffs desire to lease defendants' coal for purposes of removal and production thereof and request that the court:
(A) Review a lease proposed by plaintiffs to determine whether it is fair and equitable to all joint owners pursuant to the provisions of this section, and thereafter, appoint a trustee to execute, deliver or administer the lease; or
(B) Appoint a trustee for the purposes of soliciting and negotiating with potential lessees, that upon completion of negotiations, that the trustee file with the court and serve upon the parties a report of his or her activities, factual findings and recommendations and a proposed lease, that the court thereafter conduct a hearing upon the said report and proposed lease to determine whether it is fair and equitable to all the joint owners pursuant to the provisions of this section and, upon the court's finding that it is fair and equitable, thereafter authorize the trustee to execute, deliver or administer the lease.
(d) Any person appointed as a trustee or guardian ad litem pursuant to this article must be an active member in good standing of the West Virginia State Bar and be experienced in the transactional and commercial practices of coal leasing and production. The court shall determine a reasonable fee to be paid to the trustee and any guardian ad litem and may approve reimbursement of their reasonable and necessary costs. The fees and costs must be paid by the plaintiff or plaintiffs pursuant to section seven of this article.
(e) A trustee appointed pursuant to this article has a fiduciary duty to the joint owners. The trustee's duty of loyalty and duty of impartiality to the joint owners is the same as that set forth in the uniform prudent investor act at sections five and six, article six-c, chapter forty-four of this code. The standard of care applicable to the trustee's administration of a lease is the prudent investor rule as set forth in the uniform prudent investor act at section two, article six-c, chapter forty-four of this code.
(f) In the event of the death or resignation of the trustee, or the refusal or inability of the trustee to faithfully discharge his or her duties pursuant to this article, the court, upon its own motion or upon the motion of any party, shall appoint a successor trustee.
(g) The court shall take evidence and hear testimony as to the allegations and requested relief set forth in the petition and any responsive pleadings. The court shall consider the quality, quantity, geological conditions of and the prevailing market for, the subject coal, and any other factors considered relevant by the court, in determining whether the financial and nonfinancial terms and conditions of the proposed lease: (1) Are fair and reasonable for all the joint owners; (2) are commensurate with similar transactions for the same coal under similar circumstances; and (3) provide all the joint owners with at least fair market value for their coal.
(h) If, upon taking evidence and hearing testimony, the court finds that the requirements of subsection (f) of this section have been satisfied, the court shall enter an order approving the proposed coal lease and authorizing the trustee to execute, deliver or administer the lease. If the court determines that the requirements of subsection (f) have not been satisfied, the court may, upon the motion of any party, the trustee, or its own motion, instruct the trustee to continue negotiations with potential lessees based on the findings of the court, or dismiss the action.
(i) In any actions under this article, any party or the trustee may, as additional relief, request that the court determine and remove any cloud on the title to the coal or other real property related thereto, or any part thereof, or any estate, rights or interests therein, to determine questions of title with respect thereto, and confirm the title to the coal or the right to mine and remove the coal from any of the lands, pursuant to section two, article two, chapter fifty-one of this code.
§55-12B-6. Payment; binding effect of lease; subsequent proceedings; court supervision of trustee; continuation or termination of trust; enforcement of lease terms and conditions, actions arising under lease.

Subsequent to the execution and delivery of a coal lease pursuant to this article:
(a) All moneys due the joint owners under the lease must be paid by the lessee or lessees directly to the joint owners;
(b) The lease is binding on all joint owners and other persons named as parties to an action pursuant to this article, all persons not in being and all other persons with a present, contingent or future interest in the coal not duly recorded in the office of the county clerk of the county or counties where the coal tracts are situated, and of which interests the plaintiffs did not have actual notice at the time of filing their petition;
(c) The lease is binding upon the lessee or lessees; their agents, representatives, contractors, successors and assigns, in the same manner as if all the joint owners had personally executed and delivered the lease;
(d) Any joint owner or, with leave of the court, the trustee, may file a civil action to enforce any terms and conditions of a lease or any claim or cause of action arising thereunder;
(e) The court may, upon motion of any party, the trustee or its own motion, retain continuing jurisdiction to conduct such subsequent proceedings or to supervise the trustee and review his or her administration of the lease, as the court may determine in its discretion; and
(f) The court may continue or terminate the trust and the duties of the trustee and any lease so executed shall continue in full force and effect and be binding upon all the joint owners after the termination of the trust unless the lease has previously expired by its own terms.
§55-12B-7. Costs.
All court costs incident to the proceedings authorized under this article, and the fees and costs incurred by the trustee and any guardian ad litem, shall be paid by the plaintiff or plaintiffs on a pro rata basis based on each plaintiffs' ownership interest in the leased coal: Provided, That in this action, or any subsequent civil action, the plaintiffs may seek contribution and reimbursement of fees and costs from the defendants on a pro rata basis based on each party's ownership interest in the leased coal, but only to the extent that the defendants actually receive royalty income or other consideration under the coal lease.
§55-12B-8. Construction.
This article is remedial in nature and must be liberally construed to effectuate its purposes. Any lease executed and delivered pursuant to this article conveys good and marketable title to the lessee of the coal leasehold.


NOTE: The purpose of this bill is to establish a new article which provides a less complex, more expedient way for a party controlling the majority interest in a coal tract securing a coal lease to develop and recover the coal. Small tracts of coal can easily be by-passed where it is too expensive or the delay is too long to warrant the more complex provisions of §55-12A-1 et seq. designed for mineral interests owned by missing or unknown owners or abandoning owners. This new article provides for a court-appointed trustee who will recommend a coal lease and administer the lease to assure the proper distribution of coal royalties to defendant joint owners. Unknown owners will be represented by a guardian ad litem. The new procedure will promote and preserve the value of coal reserves in the state and maximize the recovery of coal through the orderly and efficient development of coal reserves for the benefit of the state and all joint owners in a fair and equitable manner.

This article is new; therefore, strike-throughs and underscoring have been omitted.
This Web site is maintained by the West Virginia Legislature's Office of Reference & Information.  |  Terms of Use  |   Web Administrator   |   © 2014 West Virginia Legislature ***