Natural gas producers in West Virginia no longer can drill on one person’s property to reach gas reserves under adjoining or neighboring tracts, the state Supreme Court said Wednesday in a much-anticipated ruling that gives additional leverage to residents struggling with the effects from the booming industry.
In a 5-0 ruling, the justices upheld a lower court ruling and jury verdict against EQT Corp., siding with two Doddridge County residents who had sued the state’s second-largest gas company.
Justice John Hutchison wrote that gas and other mineral companies must obtain permission from surface owners to use their land to reach reserves under other properties.
“The court will not imply a right to use a surface estate to conduct drilling or mining operations under neighboring lands,” Hutchison wrote. “The right must be expressly obtained, addressed, or reserved in the parties’ deeds, leases, or other writings.”
In the case, two people who live on a 300-acre farm in Doddridge County said EQT came onto their land to extract gas from underneath adjacent properties. The two people, Beth Crowder and David Wentz, warned EQT that the company would be trespassing. EQT entered the property anyway. Crowder and Wentz sued, and a local circuit judge ruled in their favor, and a jury two years ago awarded them nearly $200,000 in damages.
EQT appealed that decision to the West Virginia Supreme Court, and the justices heard oral arguments in the case in March.
“To us, the point was kind of obvious, and what’s disappointing is that it took all these years to get the Supreme Court ruling saying so,” said Dave McMahon, one of the lawyers for Crowder and Wentz, who came to the farm in 1975 but divorced in 2005 and now live in separate homes on the property.
On Wednesday, McMahon, a founder of the West Virginia Surface Owners Rights Organization, called Crowder and Wentz to share the news.
“The short answer is, we won. And we won big time,” McMahon told them by phone.
On the other end of the line in Doddridge County, Crowder and Wentz shouted and laughed.
“I think I’m feeling kind of numb,” Crowder said. “I’ve been used to being in limbo forever.”
Kristina Whiteaker, another lawyer for the surface owners, told them, “You guys really made some good law for the whole state.”
The case is one of two major gas property-rights and drilling cases heard this term. In a case heard by the Supreme Court in January, Harrison County residents said Antero Resources’ fracking was creating a nuisance. A ruling on that case hasn’t yet been issued.
These cases were featured last year in a series of articles in which the Gazette-Mail and the investigative journalism nonprofit ProPublica illustrated the effects of the Marcellus Shale natural gas boom. As companies tap into the sprawling Marcellus formation, their techniques have brought an influx of vibration, noise and traffic. Although bills have been introduced year after year that would mitigate the effects on residents, lawmakers repeatedly have refused to act.
As companies push to get that gas, the state has issued more and more permits — about 400 in 2008 to more than 700 in 2014.
Linda Robertson, a spokeswoman for EQT, said that the company was disappointed in the ruling, but didn't expect the decision to significantly impact operations in West Virginia, or in other states.
"EQT has always worked with landowners to prevent potential issues or disagreements, including through the use of surface agreements to compensate surface owners on the impact of our operations," she said.
In a statement, Charlie Burd, the executive director of the Independent Oil and Gas Association of West Virginia, said the industry group would have preferred a ruling that encouraged horizontal drilling, but planned to comply with it.
“IOGAWV members like to have good relationships with property owners,” Burd said.
Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, an industry trade association, said the group was analyzing the decision to determine its impact on operations in the state.
"West Virginia oil and gas producers pride themselves on driving growth in the state's economy and working with members of the communities in which they operate," Blankenship said.
At least one industry group, IOGA, had warned in a court brief that a ruling against EQT in the case would have “significant negative implications upon future and existing natural gas development in West Virginia.” EQT lawyers made similar warnings at trial.
Joshua Fershee, a West Virginia University law professor who has followed the case, said the court’s decision won’t stop gas drilling.
“They can still get the rights to do this,” Fershee said. “All they have to do is negotiate, and it might cost them more money.”
The cases against EQT and Antero came against the backdrop of longstanding property rights laws that say mineral owners may do whatever is “reasonably necessary” to extract natural gas from the ground, whether they own the affected land above it or not.
While the gas boom has brought jobs and tax revenue, residents and legal experts say the industry also has expanded what is “reasonable” and “necessary.”
Gas producers use hydraulic fracturing, which pumps huge amounts of water and chemicals underground to loosen up gas reserves, and drill extensive horizontal holes to suck in gas from much wider areas. They bring in fleets of heavy trucks and install tanks and pipelines.
Complicating it all is the fact that so much of the land in mineral-producing parts of West Virginia has split ownership.
Someone might own the surface land, while someone else owns the coal, oil or gas underneath. Gas is generally produced under leases, in which gas owners or their ancestors granted a production company the right to drill. But often, the leases are so old that the current owners didn’t sign them, and certainly the advanced types of gas-production techniques used today were not anticipated.
And at the heart of the case the court decided was the fact that, economically and technologically, gas production today is all about what industry officials call “laterals.” These horizontal holes are drilled out in all directions from the vertical hole. They can pull in natural gas from several miles away.
In concluding the court’s opinion Wednesday, Hutchison likewise said the justices didn’t aim to “challenge or constrain the drilling methods chosen by the oil and gas industry.
“The industry has shown that horizontal drilling and hydraulic fracturing techniques are evolving at a rapid pace and are an economical and efficient tool for producing hydrocarbons,” Hutchison wrote. “Our opinion only affirms a classical rule of property jurisprudence: it is trespassing to go on someone’s land without the right to do so.”
This story has been updated to reflect a comment from the Independent Oil and Gas Association, WVONGA and EQT.