CLARKSBURG, W. Va. (Legal Newsline) – A company leasing mineral rights to drill for oil and gas claims West Virginia's Flat-Rate Statute is unconstitutional.

EQT Production Co. filed a complaint on April 12 in the U.S. District Court for the Northern District of West Virginia Clarksburg Division against Austin Caperton, in his official capacity as secretary of the West Virginia Department of Environmental Protection, citing the U.S. Constitution and the Civil Rights Act.

According to the complaint, the plaintiff operates more than 5,000 wells in West Virginia and roughly 1,700 of them are subject to flat-rate leases.

"The Flat-Rate Statute infringes on EQT’s vested drilling rights under its flat-rate leases. Unless EQT accedes to the compensation scheme devised by the Legislature for payment to lessors—which supplants EQT’s privately negotiated flat-rate payments with a volume-based payment formula—the Flat-Rate Statute bars EQT from receiving permits to drill or rework any well on such a lease. The Flat-Rate Statute’s volume-based payment formula is calculated at a rate and by a method that have no connection to any identified public purpose," according to the suit. "The Flat-Rate Statute thus substantially impairs EQT’s vested drilling rights under its flat-rate leases and imposes unconstitutional conditions on EQT’s exercise of its property rights under those contracts."

The plaintiff seeks an order declaring the statute's permit-prohibition and at-the-wellhead royalty provisions are unconstitutional.

The plaintiff requests a trial by jury and seeks award of all special damages, pre- and post-judgment interest, attorney's fees, and such other and further relief as the court may deem proper. It is represented by Timothy M. Miller and Katrina N. Bowers of Babst Calland Clements and Zomnir PC in Charleston, West Virginia.

U.S. District Court for the Northern District of West Virginia, Clarksburg Division case number 1:18-cv-00072-IMK

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