Written by Chloe Marie – Research Specialist
Within the last month, the West Virginia Supreme Court has decided two
cases that impact the relationship between surface owners and mineral owners in
split-estate situations. In a prior article, we addressed EQT Production Co. v. Crowder, 2019 WL 2414728 (W.
Va. June 5, 2019), where the court ruled on the ability of a split-estate
mineral owner to use the surface estate for the development of adjacent
properties. In this article, we will address Andrews v. Antero Resources
Corp., 2019 WL 2494598 (W. Va. June 10, 2019), where the court ruled on the
related issue of a split-estate mineral owner’s right to access the minerals
through horizontal drilling from an adjacent parcel.
Case Summary: Robert L. Andrews, et al. v. Antero Resources
Corporation and Hall Drilling, LLC, Docket No. 17-0126
Antero Resources Corp. (Antero) is the owner of several horizontal
Marcellus shale wells located on six well pads in the Cherry Camp area of
Harrison County, West Virginia. Antero holds the rights to explore for or
exploit the underlying mineral estate through severance deeds dating back to
the early 1900s. A 1905 deed granted the mineral owner “the right to drill,
bore and operate for [oil and gas]” while a 1903 deed retained for the
mineral estate owner “all the oil and gas underlying the land herein conveyed together
with the privilege of operating for and marketing same.” Antero contracted
with Hall Drilling, LLC, for the construction of well pads and roads, well
drilling, and the operation of wells and gathering lines.
The plaintiff property owners – Robert and
Deborah Andrews, Rodney Ashcroft, and Greg McWilliams – are surface owners of
severed estates that are burdened by Antero’s mineral estate ownership. Five of the six well pads owned by Antero are
located within the close vicinity of the property owners’ properties, but the
wells are not located on them. The property owners filed a complaint in 2013
before the Circuit Court of Harrison County (docket 13-C-434-3) arguing that
“the activities of Antero and Hall in relation to their development of the
Marcellus shale have caused the Property Owners to lose the use and enjoyment
of their properties due to the annoyance, inconvenience, and discomfort caused
by excessive heavy equipment and truck traffic, diesel fumes and other
emissions from the trucks, gas, fumes and odors, vibrations, noise, lights, and
dust” and therefore alleged claims for “private temporary continuing abatable
nuisance and negligence” against the companies.
In November 2014, the court transferred the
property owners’ claims to the Mass Litigation Panel of West Virginia as their
case was assigned to the “Harrison County Cherry Camp Trial Group.” Antero and
Hall filed separate motions for summary judgment following discovery, and the
property owners later withdrew their negligence claims, recognizing that there was
no damage to property; however, their claims for nuisance remained pending.
On October 11, 2016, the Panel granted summary
judgment in favor of Antero and Hall after it found that there were no disputed
issues of material fact and that Antero and Hall had the implied rights to use
the property owners’ surface estates to develop the mineral estate underlying
them. The Panel “declined to apply principles of nuisance law, and instead
ruled on the summary judgment motions based upon Antero’s contractual and
property rights” and came to the conclusion that “the activities complained of
were reasonably necessary to the production of the mineral estate and did not
exceed the fairly necessary use thereof or invade the rights of the surface
owner[.]”
The property owners filed a motion to alter or
amend the Panel judgment pursuant to W. Va. R. Civ. P. 59(e), but the Panel
denied such request on January 11, 2017. Consequently, the property owners
filed an appeal with the Supreme Court of Appeals of West Virginia.
According to the property owners, “a mineral
owner does not have the right to extract natural gas using methods that were
uncontemplated when the operative severance deeds were executed, where those
uncontemplated methods are not necessary to the extraction of the minerals and
substantially burden the surface.” In this regard, the property owners relied
on a variety of cases where the court did not allow certain uses of surface
estates utilizing advanced technology where such advances could not have been
reasonably anticipated by the parties at the time the severance deeds were
executed. Antero and Hall countered that the severance deeds give Antero the
implied easement to use the property owners’ surface lands “to the extent
reasonable and necessary to develop its mineral household.”
The Supreme Court did not accept the property
owners’ interpretation of prior case law and determined that the property
owners did not correctly understand the significance of these cases. The court
noted that “in this line of cases, [this] Court considered various deeds that
did not expressly grant the mineral owner a right to destroy the surface, and
rejected methods of removing minerals that caused such destruction when they
did not exist at the time of the execution of the deed and could not possibly
have been within the contemplation of the parties to the severance deed.”
Interestingly, the court noted that the property
owners in the case at hand likely would have anticipated a burden on the
surface estate through vertical drilling, which was considered the traditional
drilling practice at the time the deeds were executed. Through the use of the
advanced technology – horizontal drilling – the potential burden on the surface
estate actually can be minimized. The court recognized that horizontal drilling
is the optimal means for developing the Marcellus shale “because it requires
fewer well than vertical drilling and thereby generally minimizes the
disruption to nearby surface estates.” Thus, the court agreed with the Panel’s
observation that “the burden on the surface estates created by horizontal
drilling that is taking place .42 mile to 1 mile away from the subject property
is not materially different from the burden that would be endured from the
placement of traditional vertical wells directly on Property Owners’ land,
along with the construction of an associated well pad, lease road, and pipeline
for each well, which is within Antero’s rights.”
Furthermore, the court explained that, in the
cases relied upon by the property owners, the use of the surface by the mineral
owner resulted in such destruction and loss of the surface that was entirely
incompatible with any use the surface owner might have expected as a future
surface use. The court also pointed out, in the case at hand, the property
owners did not establish any damage or destruction to their surface estates. Consequently,
the Supreme Court found that the property owners failed to prove any burdens on
their surface estates of having to deal with Antero’s off-site horizontal
drilling activities.
The Supreme Court then proceeded to address a
two-prong test laid out in Buffalo Mining Co. v. Martin, 165 W. Va. 10,
267 S.E.2d 721 (1980), to determine the balance of rights between the surface
owner and mineral owner in relation to implied uses of the surface estate.
First, the proposed activity must be reasonably necessary, and second, it must
not cause a substantial burden upon the surface owner. The court held that the property owners did
not satisfy the first prong because the property owners did not offer adequate
evidence “to establish … what is reasonable and necessary to develop the
underlying minerals, other than self-serving assertions that [Antero’s]
activities … are excessive.” As to the second prong regarding the burden upon
the surface owner, the court stated that “[t]he concept of what amounts to a
substantial burden to a surface owner does not lend itself to a precise
definition. Instead it requires an examination of uses of the surface that have
either been reserved by a severance deed or otherwise implied from the
circumstances presented, and further examination of how that use of the surface
is impacted by the mineral owner.” In this case, the court found that the
property owners did not demonstrate a substantial burden to their surface
estates, mainly due to the fact that the horizontal wells were not located on
their properties and caused no damages to their surface estates.
Consequently, on June 10, 2019, the West
Virginia Supreme Court of Appeals affirmed the Panel’s prior decision granting summary
judgment in favor of Antero and Hall.
References:
Additional Resources:
This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.
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