Surface Owner Rights Take A Hit
In the last days of its spring term, the Supreme Court issued opinions in two cases addressing important issues involving the rights of West Virginia surface owners. In the first case, surface owners sued a gas driller, Antero, alleging that its operations unreasonably burdened their surface rights. Andrews v. Antero Resources Corp., No. 17-0126. The second case raised the issue of whether language in an oil and gas lease authorized a driller, EQT, to engage in horizontal drilling operations. EQT Production Company v. Crowder, No. 17-0968. Unfortunately, the Court missed the mark in Andrews, but in Crowder it correctly interpreted the lease to give full and proper protection to the surface owners.
Let’s take a closer look.
The plaintiffs in Andrews lived in close proximity to Antero’s drilling site and were subject to a barrage of dust, fumes, and noise created by the drilling itself and the nonstop truck traffic. Experts testified that the operations were also causing air and water pollution. Together, the surface owners sued Antero for damages.
Antero defended by pointing to language in the original severance deeds that were signed in the early 1900’s. These deeds authorized the mineral owner to “drill, bore and operate” for oil and gas. Elsewhere, the deeds conveyed “the privilege of operating for and marketing” the oil and gas. Writing for the majority, Justice Jenkins noted that a conveyance of oil and gas carries with it the implied right to any surface use that is “fairly useful and necessary.” Thus, he concluded, Antero clearly could have drilled vertical wells on the surface--a drilling practice that has been known for over a century.
But the real question, of course, was not whether the parties contemplated vertical drilling, but whether they contemplated the more invasive and destructive practice of horizontal drilling. Justice Jenkins acknowledged a line of cases where old deeds were interpreted in light of the what the parties contemplated and where newer, more destructive technologies were found to be prohibited. But he limited the reach of those cases, finding that they only applied in situations where the parties had not contemplated any destruction of the surface. Here, he said, the drilling of vertical wells would have caused surface destruction and the plaintiffs had not proved that Antero’s horizontal drilling caused any greater destruction. Without any more analysis than that, Antero’s operations were left unrestrained and the plaintiffs were left without a legal remedy.
Justice Workman dissented, joined by Judge Klages who was sitting by assignment. Justice Workman believed that West Virginia case law, read as a whole, “establishes that mineral and surface estates must exercise their respective rights with due regard each for the other’s.” This, she said, was akin to the “accommodation doctrine” that was a part of Texas law: “Practically speaking, the accommodation doctrine requires the mineral owner to use available, non-interfering, and reasonable ways of producing the minerals which would permit the surface owner to continue his existing use of the surface.” In this case, the “central” issue was whether Antero’s “fracking operations should be subject to reasonable modification in order not to constitute an actionable nuisance” and, if not, “whether surface owners should be able to assert a cause of action for damages for nuisance.”
Thus, by the narrowest of margins, the Court held that turn-of-the-century deeds not only authorized horizontal drilling and all its accompanying disturbances, but also deprived surface owners of any enforceable rights.
Crowder, on the other hand, took a much narrower view of a mineral owner’s implied rights. Though not embracing Justice Workmen’s accommodation doctrine, Crowder at least recognized that it is the Court’s job to examine and weigh the burdens caused by oil and gas drilling operations and to provide appropriate relief.
The Crowder case grows out of a 1901 lease covering 350 acres of oil and gas. The lease authorized “mining and operating for oil and gas, and…laying pipelines and building tanks, stations and structures thereon, to take care of” any oil and gas products. In 2012, EQT made plans to drill wells on the surface owned by the plaintiffs and then to run them horizontally under adjoining properties. The plaintiffs objected and later sued EQT, alleging that its horizontal drilling operations were unauthorized under the lease and, therefore, constituted a trespass. The trial court agreed, and a jury awarded nearly $200,000 in damages. EQT appealed, arguing that it was entitled to make any use of the plaintiffs’ surface that was “reasonably necessary” to develop the oil and gas.
Justice Hutchison wrote for a 5-0 majority. Justice Hutchison recognized that a mineral owner’s implied rights under a deed or a lease are “limited only to uses of the surface that are demonstratively reasonably, necessary, and which can be exercised without substantial burden on the surface owner.” Where a dispute arises, “it is the duty of the Court to weigh whether the mineral owner has invaded the surface owner’s rights.” In fact, in a footnote Justice Hutchison concedes that the “right by the mineral owner to enter and use the surface is not unfettered and, in recent years, courts have emphasized that the right must be balanced against the rights of the surface owner.” But the Court stopped short of embracing any general rule of accommodation, opting instead to write a narrow syllabus prohibiting horizontal drilling in the absence of explicit lease language.
Honestly, it’s difficult to reconcile these two cases. If, as Crowder acknowledges, it is the Court’s job to weigh and balance the rights of the mineral owner against those of the surface owner, then why did Andrews refuse to do so? The record clearly showed that the plaintiff’s use and enjoyment of the surface was significantly impaired. That should have been enough to trigger the kind of accommodation analysis that Justice Workman outlined. Instead, the driller’s rights trumped those of the surface owners.
And that’s bad news for West Virginians!