H. B. 2352


(By Delegates Kominar, Amores, Dalton, Givens, Pino, Stemple and White)


[Introduced January 22, 1999;

referred to the Committee on the Judiciary.]


A BILL to amend chapter twenty-two of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new article, designated article twenty-three, relating to the development of coal property by cotenants; establishing procedures for the development of coal properties owned by cotenants; setting forth definitions; requiring notice of intent to mine; providing for filing and publication of notice of intent to mine; establishing amount and procedure for payment of royalties to minority cotenants; providing for monthly accounting; and authorizing mining cessation orders in the event of default of royalty payments.

Be it enacted by the Legislature of West Virginia:
That chapter twenty-two of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article twenty-three, to read as follows:
ARTICLE 23.COTENANT COAL DEVELOPMENT ACT.
§22-23-1. Short title.
This article shall be known and may be cited as the "Cotenant Coal Development Act".
§22-23-2. Mining by majority coal cotenant.
In addition to the rights afforded under article twelve-a, chapter fifty-five of this code, a majority cotenant who is in compliance with the provisions of this article shall have the right to mine coal without being subject to claims by a minority cotenant for trespass or waste.
§22-23-3. Definitions.
For purposes of this article:
(a) "Commissioner" means the state tax commissioner or his or her designee.
(b) "Cotenant" means a tenant in common, a joint tenant, a coparcener and any other owner or lessee of an undivided fractional interest or share in a tract or parcel of land containing coal minerals, or in one or more seams or veins of coal, situate within this state.
(c) "Majority cotenant" means a cotenant owning or leasing a total of ninety percent or more of all undivided interests in a seam of coal located within a tract or parcel of land.
(d) "Minority cotenant" means a cotenant of an undivided fractional interest in a seam of coal located within a tract or parcel of land who is not a majority cotenant and has not leased those coal interests to a majority cotenant.
§22-23-4. Notice of intent to mine, filing and publication.
(a) A majority cotenant desiring to mine coal pursuant to the provisions of this article must file with the commissioner a notice of intent to mine specifying on a map with a scale of one-inch equals two thousand feet the exact location of the coal to be mined, the names and addresses, where known, of all cotenants, and evidence that all minority cotenants have been notified of the majority cotenant's intent to proceed to mine coal pursuant to the provisions of this article. A copy of such documents, except evidence of notifications to cotenants, shall also be filed in the office of the clerk of the county commission of each county in which the tract of coal is located.
(b) Any majority cotenant intending to mine coal pursuant to the provisions of this article must first notify all minority cotenants of record, if they can be reasonably ascertained and located, of the majority cotenant's intention to mine the jointly owned coal. The notice shall include a copy of this article and a copy of all documents required to be filed with the clerk of the county commission.
(c) If any minority cotenant cannot be reasonably ascertained or located, the majority cotenant shall publish a notice of intent to mine coal, together with the mining location map, once a week for two consecutive weeks in a newspaper of general circulation within the county or counties in which the tract of coal is located.
§22-23-5. Royalties for cotenants.
(a) Each minority cotenant shall be paid a monthly royalty based on proportional gross sales receipts. The royalty for coal mined during a fiscal year beginning on the first day of July and ending on the thirtieth day of June of the following calendar year shall be based on the greater of: (1) the highest royalty rate being paid to any undivided interest owner of coal in the same tract or parcel of coal property pursuant to a negotiated coal lease agreement; (2) the natural resource property valuation variable identified as the "tentative percentage royalty rate" and utilized by the commissioner for valuation of surface and underground coal for that same time period; or (3) the natural resource valuation variable identified as the "royalty rate calculation" per ton utilized by the commissioner for valuation of surface and underground coal for that same time period. For purposes of this calculation, coal mined by highwall mining methods shall be deemed to be surface coal, and coal mined by auger mining methods shall be deemed to be underground coal.
(b) Royalty payments shall be forwarded monthly to minority cotenants to their last known addresses. Where a minority cotenant's name or address is unknown, monthly royalty payments for that minority cotenant shall be paid to the commissioner who shall deposit these funds in escrow until they are claimed by persons who establish, to the satisfaction of the commissioner, their right to such funds. Funds unclaimed for ten years after deposit in escrow shall escheat to the state on the thirty-first day of December of the calendar year following the end of such ten-year period.
§22-23-6. Monthly accounting and cessation orders.
(a) Whenever mining has commenced pursuant to the provisions of this article, the majority cotenant shall make a monthly accounting to the commissioner setting forth all royalties that have been distributed to minority cotenants and remitting the balance of the royalties owed to the commissioner.
(b) Any person entitled to receive coal royalties pursuant to the provisions of this article may file a claim with the commissioner that royalties owed have not been received, and the commissioner shall conduct an inquiry with respect to the claim. If the commissioner determines, following a diligent inquiry, that coal is being mined on the identified tract of land, but is unable to determine whether the majority cotenant has paid all royalties due, then the commissioner shall give written notice to the majority cotenant granting a right to cure the default within thirty days of receipt of the written notice. If the commissioner determines the default is not cured within the thirty-day period, then the commissioner shall notify the chief administrative officer of the division of mines who may order the cessation of mining until the commissioner determines the royalties have been paid.

NOTE: The purpose of this bill is to create a method for majority cotenants of coal property to mine coal without having to obtain the permission of minority cotenants and without the necessity of a court proceeding. A copy of the mine location mine would have to be filed with the state tax commissioner and with the appropriate county clerk. Any minority cotenant who could "be reasonably ascertained and located" would have to be notified of the intent to mine and would be entitled to monthly royalty payments. Monthly accountings of royalty payments would also have to be filed with the tax commissioner.

This is a new a article; therefore, underlining and strike- throughs have been omitted.

This bill was recommended by the Joint Committee on the Judiciary for introduction and passage during the 1999 legislative session.