Progress with a snag

While running for governor, Terry McAuliffe promised to release a mother lode of methane gas royalties sitting in a state fund to Southwest Virginia residents who own the land where the gas was tapped.

The pledge focused on a decades-old dispute between residents and  energy companies that had obtained rights to extract coal from the properties. The mining releases methane gas trapped in underground seams. Methane was long regarded as an explosive gas that had to be vented from mines for safety. But in recent decades, it has been become a valuable energy source that is captured.

At issue has been who owns the methane rights: landowners and others who lay claim to the money or the energy companies? While legal and legislative fights raged, the General Assembly set up an escrow account for the royalties in 1990 that grew to about $29 million.

"As governor, I will make it a priority to ensure that the millions of dollars in gas royalties currently sitting in escrow are paid out to the landowners who are owed that money," McAuliffe wrote in an Oct. 30, 2013 op-ed in Politico.

So how's that going?

We reported last year that there had been significant progress after McAuliffe signed a law establishing that the gas belongs to the landowners unless the coal companies had proved otherwise. The law went into effect on July 1, 2015.

Attorney General Mark Herring, whose office was involved in negotiations with coal companies, landowners and the state, said at the time that most of the escrow money was expected to be paid out by the start of 2016.

But there's been a snag.

So far, close to $9.1 million has been paid out of the fund and roughly $20 million remains in the account, according to figures given to us this month by the Virginia Department of Mines, Minerals & Energy.

Tarah Kesterson, a spokeswoman for Department of Mines, Minerals and Energy, wrote in an email that "in most cases, we can't find the gas owner" to whom the money is owed.

She told us landowners aren't the only ones owed royalties. Sometimes the rightful gas owners are companies as well as people who once sold their land but continue to have a legitimate claim to the gas extracted from it. Other times, they are heirs to an estate.

Kesterson added that some royalty owners haven't submitted required tax forms to get their payments and about $20,000 in checks that have gone out remain uncashed.

The money is being paid out by the Virginia Gas and Oil Board, a seven-member panel appointed by the governor to mediate energy-related disputes. The board says it expects roughly $20 million total to flow to royalty owners.

Despite the slower than expected pace of disbursements, the Department of Mines, Minerals and Energy said in a Nov. 18 news release the amount paid out so far still "continues to break records."

Regarding the $20,000 in uncashed payments, the DMME says it will  post a list on its website where residents can check whether they've been sent a check. Any check that isn't cashed within three years goes back into the state treasury

The bottom line is that millions of dollars have flowed out of the escrow account to gas rights owners, but there's still a lot more to pay out. So for now, we're keeping our rating of "In the Works."