FLASHBACK 2007: GARRISON TAWNEY WOULD BE PROUD - $405 Million Award To Royalty Owners Should "Send Clear Message"


By Bob Weaver 2007

The late Garrison Tawney of Roane County would be proud, after royalty owners won against producers in overtime Saturday night in Spencer.

Jurors said Columbia Natural Resources LLC and two other associated companies must pay about 8,000 plaintiffs $405 million.

The Roane County jury found that Columbia Natural Resources cheated royalty owners by $134.3 million and should be paid $271 million more in punitive damages.

The suit originated in Roane County after Tawney, a royalty owner, "went to war over being cheated."

Tawney, who died in 2003, told the Herald "I knew they were cheating me." His deposition was read before the court during the trial.

Attorneys for the plaintiffs said the suit should be a clear message to producers that changing the rules and cheating does not pay-off.

"It makes it clear that companies who have a special relationship with royalty owners that they have to treat them fairly," said Charleston lawyer Mike Carey.

The verdict still has to be finalized by Roane County Circuit Court Judge Tom Evans III. Evans could set it aside or change the award amount.

The companies attorneys say the decision is unfair and could cripple West Virginia's energy industry.

It "has the potential to negatively affect everyone involved in natural gas production in West Virginia," said Karl Brack, a spokesman for NiSource Inc., which was named as a co-defendant because Columbia Natural Resources had been an associate.

NiSource said the decision would be appealed, calling it excessive.

Chesapeake Energy said in a press release, "the verdict would have far-reaching negative implications for all gas producers in West Virginia and reinforce the hostile legal environment all businesses face in West Virginia."

The suit said the owners leased gas-rich land from the plaintiffs in order to drill, but then failed to pay the owners market rates for the gas, based on contracts.

The suit said the producers cheated royalty owners by deducting post-production and processing costs, by making volume deductions and by not paying for gas that its lines lost, according to attorney Carey.

The class action suit was filed three years ago on behalf of all the West Virginia gas-royalty owners who leased land to Columbia Natural Resources.

It was the first class-action suit filed in Roane County.