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Andrews v. Antero Resources Corp.

Supreme Court of Appeals of West Virginia

June 10, 2019

Robert L. ANDREWS, et al., Plaintiffs Below, Petitioners
v.
ANTERO RESOURCES CORPORATION and Hall Drilling, LLC, Defendants Below, Respondents

         Submitted: January 15, 2019

          Syllabus

         1. "In order for a claim for an implied easement for surface rights in connection with mining activities to be successful, it must be demonstrated not only that the right is reasonably necessary for the extraction of the mineral, but also that the right can be exercised without any substantial burden to the surface owner." Syllabus point 3, Buffalo Mining Co. v. Martin, 165 W.Va. 10, 267 S.E.2d 721 (1980).

         2. "If the moving party makes a properly supported motion for summary judgment and can show by affirmative evidence that there is no genuine issue of a material fact, the burden of production shifts to the nonmoving party who must either (1) rehabilitate the evidence attacked by the moving party, (2) produce additional evidence showing the existence of a genuine issue for trial, or (3) submit an affidavit explaining why further discovery is necessary as provided in Rule 56(f) of the West Virginia Rules of Civil Procedure." Syllabus point 3, Williams v. Precision Coil, Inc., 194 W.Va. 52, 459 S.E.2d 329 (1995).

Page 859

          Appeal from the Mass. Litigation Panel, Circuit Court of Ohio County, The Honorable Alan D. Moats, Lead Presiding Judge, In Re: Marcellus Shale Litigation, Civil Action No. 14-C-3000

         Anthony J. Majestro, Powell & Majestro, PLLC, James C. Peterson, Aaron L. Harrah, Hill, Peterson, Carper, Bee & Deitzler, PLLC, Charleston, West Virginia Attorneys for the Petitioners

         W. Henry Lawrence, Richard M. Yurko, Lauren K. Turner, Amber M. Moore, Jason W. Turner, Steptoe & Johnson PLLC, Bridgeport, West Virginia, Ancil G. Ramey, Steptoe & Johnson PLLC, Huntington, West Virginia, Donald C. Sinclair II, Steptoe & Johnson PLLC, Wheeling, West Virginia Attorneys for Respondent, Antero Resources Corporation

         Christopher L. Hamb, Craig S. Beeson, Robinson & McElwee, PLLC, Charleston, West Virginia, Stephen F. Gandee, Clarksburg, West Virginia Attorneys for Respondent, Hall Drilling, LLC

         William M. Herlihy, Spilman Thomas & Battle, PLLC, Charleston, West Virginia, Matthew P. Heiskell, Spilman Thomas & Battle, PLLC, Morgantown, West Virginia Attorneys for Amici Curiae, West Virginia Oil & Natural Gas Ass’n, and The Independent Oil & Gas Ass’n of West Virginia, Inc.

         Louis S. Southworth, Albert F. Sebok, Candice M. Harlow, Jackson Kelly PLLC, Charleston, West Virginia Attorneys for Amici Curiae, West Virginia Chamber of Commerce, et al.

          OPINION

         Jenkins, Justice:

Page 860

          [241 W.Va. 798] This appeal from the Mass. Litigation Panel ("MLP") pertains to ongoing Marcellus shale litigation and arises from claims asserted by surface owners of several tracts of land. These surface owners contend that their use and enjoyment of their land is being improperly and substantially burdened by horizontal wells being used to develop the Marcellus shale underlying their properties,[1] even though the wells are not physically located on any of their properties. The MLP resolved the claims based upon property rights arising from relevant severance deeds, and granted summary judgment in favor of the defendants below, who are the leaseholder of the gas and oil estates and the company who is conducting the drilling. In granting summary judgment, the MLP concluded that the effects on the surface owners resulting from the horizontal drilling were within the implied rights to use the surface granted by virtue of the severance deeds, and did not impose a substantial burden on the surface owners. Thus, to overcome summary judgment on this issue, the surface owners were required to establish the existence of a genuine issue of material fact as to whether the effects on their surface estates were reasonably necessary to develop the mineral estate, or whether such effects substantially burdened the owners of the relevant surface estates. Having considered the briefs submitted by the parties and by Amici Curiae,[2] the appellate record, the oral arguments presented, and the relevant law, we find no genuine issues of material fact were established in this particular case, and we, therefore, affirm the order of the MLP.

          I.

          FACTUAL AND PROCEDURAL HISTORY

         Antero Resources Corporation and Antero Resources Bluestone, LLC (collectively "Antero"), Respondents herein, are engaged in the development of the Marcellus shale in West Virginia and own numerous horizontal Marcellus shale wells located in Doddridge, Harrison, and Ritchie Counties.[3] Antero contracted with Hall Drilling, LLC ("Hall"), also a Respondent, for the construction of well pads and roads, well drilling, and the operation of wells and gathering lines. Relevant to the instant litigation, Antero has leasehold rights to develop oil and gas underlying various properties in Harrison County, including surface properties that are resided on and/or owned by the Petitioners herein[4] (collectively "Property Owners").

Page 861

          [241 W.Va. 799] Antero’s leasehold rights to develop the subject oil and gas located in Harrison County derive from severance deeds, executed in the early 1900s, that retained mineral rights underlying the properties. The properties belonging to Robert and Deborah Andrews,[5] Rodney Ashcraft, and Greg McWilliams are each subject to a severance deed executed in 1905 that reserves mineral rights including,

the right to drill, bore and operate for [oil and gas] at any time, also the right to use water from said land for the purpose of said drilling, boring and operating, and the right at any time to remove all necessary machinery used for the last named purposes, upon or off said land[.]

          These properties also are the subject of a mineral lease that was executed in 1984, referred to by the parties as "the Moran Lease." The express rights granted to Antero in the Moran Lease include:

[E]xclusive possession and use for the purposes of exploring and operating for, producing, and marketing oil, gas, natural gasoline, casing-head gas, condensate, related hydrocarbons, and all products produced therewith or therefrom by methods now known or hereafter discovered, of injecting, storing, and withdrawing any kind of gas regardless of the source, of protecting stored gas, of injecting gas, air, water, and other fluids into sands and formations for the purpose of recovering and producing said minerals or for the purpose of disposing of waste fluids ... [along with] all other rights and privileges necessary, incident to, and convenient for the economical operation of said land alone and conjointly with other lands for the production and transportation of said minerals[.]

          The severance deed pertaining to the remaining property subject to this appeal, the property owned by Robert Siders, was executed in 1903. It reserved rights to "all the oil and gas underlying the land herein conveyed together with the privilege of operating for and Marketing same." A 2001 mineral lease relevant to the Siders’ property, referred to by the parties as "the Bland Lease," granted rights to Antero that included

exploring and operating for, producing and marketing oil and gas, natural gasoline, casing head gas, condensate, related hydrocarbons, and all other related products, including the building of roads, laying pipelines and installing equipment thereon to take care of such products ... [along with] the privilege of using sufficient water and gas from said premises to run all machinery necessary for drilling and operating thereon, and all rights of way necessary to develop the premises or remove equipment, and related items[.]

         Relevant to this appeal, Antero operates six well pads to facilitate its horizontal drilling in the Cherry Camp area of Harrison County.[6] Horizontal drilling allows for the development of multiple wells from each surface well pad.[7] Reportedly, five of the six well pads at issue are located within a range of between .42 mile and 1 mile from Property Owners’ properties. No well pads are located on any of Property Owners’ land. In addition to the construction of the well pads, and the drilling and operation of the horizontal wells,

Page 862

[241 W.Va. 800] the development of the Marcellus shale has also required the construction and/or operation of well roads, pipelines, and a compressor station.[8] The hydraulic fracturing of the horizontal wells also necessitates water and sand, which are delivered by trucks.[9]

          According to Property Owners, the activities of Antero and Hall in relation to their development of the Marcellus shale have caused 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.

         In 2013, Property Owners filed a complaint in the Circuit Court of Harrison County[10] alleging claims for "private temporary continuing abatable nuisance and negligence"[11] against Antero and Hall arising from their "natural gas exploration, extraction, transportation and associated activities in close proximity to [Property Owners’] properties."[12] By order entered on November 25, 2014, this Court transferred the claims to the MLP where they were designated as the "Harrison County Cherry Camp Trial Group."[13]

         Following discovery, Antero and Hall each filed motions for summary judgment. Thereafter, Property Owners filed their response in opposition to the motions for summary judgment. In their response, Property Owners voluntarily withdrew their negligence claim, and, during various hearings before the MLP, the Property Owners’ counsel repeatedly stated that no property damage claims were being asserted; [14] this left only Property Owners’ claim of nuisance to be resolved by summary judgment. However, the MLP, in its summary judgment order entered on October 11, 2016, declined to apply principles of nuisance law, and instead ruled on the summary judgment motions based upon Antero’s contractual and property rights. The MLP explained that,

[b]ecause the Court resolves summary judgment based upon Antero’s contractual and property rights, it does not address the issues to which common law private nuisance principles would be applied. The Court, therefore, reaches no conclusion regarding whether Antero’s actions or its employees’ or contractors’ actions would otherwise meet the legal definition of a nuisance.

(Quotations omitted).[15] The MLP also found that "Antero has leasehold rights to develop

Page 863

[241 W.Va. 801] the oil and gas underlying the properties that are the subject of [Property Owners’] complaint. Those development rights were retained by the oil and gas mineral owners in the severance deeds separating the surface estates from the mineral estates." Furthermore, the MLP concluded that "the noise, traffic, dust, lights and odors of which [Property Owners] complain are reasonable and necessarily incident to Antero’s development of the underlying minerals." Therefore, the MLP granted summary judgment to Antero and Hall. Property Owners then filed a motion, pursuant to Rule 59(e) of the West Virginia Rules of Civil Procedure,[16] to alter or amend the judgment, which the MLP denied by order entered on January 11, 2017. This appeal followed.

          II.

          STANDARD OF REVIEW

         We have previously held:

The standard of review applicable to an appeal from a motion to alter or amend a judgment, made pursuant to W.Va. R. Civ. P. 59(e), is the same standard that would apply to the underlying judgment upon which the motion is based and from which the appeal to this Court is filed.

Syl. pt. 1, Wickland v. Am. Travellers Life Ins. Co., 204 W.Va. 430, 513 S.E.2d 657 (1998). Because the judgment underlying the MLP’s Rule 59(e) ruling was the MLP’s award of summary judgment, this Court’s review is de novo . See Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994) ("A circuit court’s entry of summary judgment is reviewed de novo ."). Accordingly, we proceed with our plenary review of this appeal.

          III.

          DISCUSSION

          In granting summary judgment in favor of Antero and Hall, the MLP found that "Antero has leasehold rights to develop the oil and gas underlying the properties that are the subject of Plaintiffs’ complaint. Those development rights were retained by the oil and gas mineral owners in the severance deeds separating the surface estates from the mineral estates." In view of Antero’s leasehold rights and the original severance deeds, the MLP concluded that,

[b]ased on its review of the record, the Court concludes there are no disputed issues of material fact and Defendants Antero and Hall are entitled to summary judgment as a matter of law. Antero, as the owner of the mineral estate, and its contractors have the right to use the Plaintiffs’ surface estates for the production of its mineral rights. The Court further concludes that Antero and its contractors have the legal right to develop the mineral estate. The Court finds that the activities complained of were reasonably necessary to the production of the mineral estate and did not exceed the fairly necessary use

Page 864

[241 W.Va. 802] thereof or invade the rights of the surface owner[.]

         Property Owners contend that the MLP applied the wrong legal standard and ignored established rights belonging to surface owners under West Virginia law. Specifically, they contend that 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. According to Property Owners, the MLP impliedly and mistakenly relied on Quintain Development, LLC v. Columbia Natural Resources, Inc., 210 W.Va. 128, 556 S.E.2d 95 (2001),[17] to conclude that the severance deeds constituted an easement and Antero’s actions could not constitute a nuisance because their actions did not exceed the scope of the easement.[18]

          Antero and Hall respond that the MLP applied the correct legal standards as to the rights of mineral owners vis-à-vis surface owners under West Virginia law, and correctly concluded that Antero holds an implied easement to use Property Owners’ surface estates to the extent reasonable and necessary to develop its mineral leasehold.

          Both of the severance deeds at issue granted to the mineral owner the right to produce oil and gas. The 1905 deed granted the mineral owner "the right to drill, bore and operate for [oil and gas]," while the 1903 deed retained for the mineral estate "all the oil and gas underlying the land herein conveyed together with the privilege of operating for and marketing same. " (Emphasis added). These express provisions clearly demonstrate a basic intention by the parties to the deeds that oil and gas would be extracted from the mineral estate. On this point there is no dispute.[19] In general, where a deed severs the mineral and surface estates and plainly allows for the extraction of the mineral estate, certain uses of the surface by the mineral owner are necessarily implied. As early as 1909, this Court held that "[t]he owner of the surface cannot obstruct the mineral owner from a use of the surface [that is] fairly useful and necessary ." Syl. pt. 1, in part, Porter v. Mack Mfg. Co., 65 W.Va. 636, 64 S.E. 853 (1909) (emphasis added). In reaching this holding, the Porter Court reasoned that, even

[i]f the deed [in question] had not reserved the right to mine and remove the minerals, there would have been an implied right to use the surface in such manner and with such means as would be fairly necessary for the enjoyment of their estates in the minerals . Without this right, what account would be the minerals which they reserved?

Id. at 638, 64 S.E. at 854 (emphasis added). See also Phillips v. Fox, 193 W.Va. 657, 662, 458 S.E.2d 327, 332 (1995) ("It is well-settled that ownership of a mineral estate includes the right to enter upon and use the superjacent surface by such manner and means as is fairly reasonable and necessary to reach and remove the minerals."); Syl. pt. 1, Squires v. Lafferty, 95 W.Va. 307, 121 S.E. 90 (1924) ("The owner of the mineral underlying land

Page 865

[241 W.Va. 803] possesses, as incident to this ownership, the right to use the surface in such manner and with such means as would be fairly necessary for the enjoyment of the mineral estate."). See generally 1A Rev. Nancy Saint-Paul, Summers Oil & Gas � 8:4 at 256 (3d ed. 2015) ("If in the grant or reservation of a separate interest in oil and gas the grantor does not expressly grant or retain the rights necessary for the production and operation of the land for oil and gas purposes, these rights, such as easement and water rights, are held to be created by implication ." (emphasis added) (footnote omitted)). Thus, insofar as vertical wells would have been the normal method of extracting oil and gas contemplated by the parties at the time the relevant severance deeds were executed, it clearly would be a fairly necessary method for Antero to enjoy the mineral estate it has leased. In other words, Antero and Hall would certainly be within their rights to enter Property Owners’ land and drill vertical wells.

          However, the instant matter takes the query farther. While the foregoing cases make clear that a mineral owner necessarily has the implied right to "use the surface in such manner and with such means as would be fairly necessary for the enjoyment of their estates in the minerals," Porter, 65 W.Va. at 638, 64 S.E. at 854, they do not address whether changes in mining methods driven by technological advancements that, according to Property Owners, place a greater burden on their surface estates even in the absence of physical wells being drilled thereupon, would be "fairly necessary for the enjoyment of" the mineral estate. Id. [20]

         Property Owners urge that this dispute is resolved by a line of cases wherein this Court rejected certain uses of surface estates utilizing advances in technology finding, inter alia, that such methods were not within the contemplation of the parties at the time the severance deeds were executed. However, Property Owners misunderstand the significance of these cases. Notably, in this line of cases, the 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.[21]

Page 866

          [241 W.Va. 804] The Court addressed this concept in West Virginia-Pittsburgh Coal Co. v. Strong, 129 W.Va. 832, 42 S.E.2d 46 (1947). In Strong, the mineral owner sought to strip mine an eight-acre area of the surface estate. The mineral estate had been severed in a 1904 deed that also granted

"the right to enter upon and under said land with employees, animals and machinery at convenient point and points, and to mine, dig, excavate and remove all said coal, and to remove and convey from, upon, under and through, said land all said coal and the coal from other land and lands and to make and maintain on said land all necessary and convenient structures, roads, ways, and tramways, railroads, switches, excavations, air-shafts, drains and openings, for such mining, removal and conveying of all coal aforesaid, with the exclusive use of all such rights of way and privileges aforesaid, including right to deposit mine refuse on said land and waiving all claims for injury or damage done by such mining and removal of coal aforesaid and use of such privileges.
"All of the surface of the said land occupied or used by the said parties of the second part, or their assigns, above the level of the Pittsburg #8 vein of coal, for their operations herein shall be paid for before the same shall be so used, or occupied, at the rate of One Hundred Dollars per acre, and said party of the first part, his heirs or assigns shall execute and deliver a deed therefor, in fee simple, free from liens and incumbrances [sic], when said surface shall be taken and paid for."

Id. at 833-34, 42 S.E.2d at 48 (quoting deed). In concluding that the parties to the 1904 deed did not grant the right to remove the coal by the process of strip mining, the Court based its decision in significant part on evidence that the surface owner did not express any intent that the surface be destroyed.

         This Court further developed this area of the law by creating a distinction between injuries or necessary or convenient burdens upon the surface as opposed to its destruction when considering what was within the contemplation of the parties at the time they executed a severance deed. In Oresta v. Romano Bros., 137 W.Va. 633, 73 S.E.2d 622 (1952), the Court pointed out that

there is a pronounced practical distinction between an injury to, or the imposition of a necessary or convenient burden upon, the surface of land containing coal in or underneath the surface, each of which may be caused by the mining and the removal of such coal through and by means of excavations, tunnels, and passageways beneath the surface, or through and by means of shafts, borings, slopes, or entries which extend from an opening on the surface in and to the underlying coal and are located throughout their entire course and extent under the surface, and the destruction, the removal, or the relocation in the mining and the removal of coal, of the overlying surface which necessarily results in substantial measure from the use of the presently recognized strip mining method . See discussion of different types of coal mining rights in Tokas v. J. J. Arnold Company, 122 W.Va. 613, 11 S.E.2d 759');">11 S.E.2d 759 [ (1940) ]. In the first mentioned situation, the surface, even when broken or caused to subside, is damaged, rather than destroyed; but in the second the surface affected is completely disturbed and is either destroyed or moved to a place other than that of its original location. In view of this real and substantial distinction between an injury to, or a burden upon, the surface, in substantially its original location, and the removal of

Page 867

[241 W.Va. 805] the surface from that location, it is manifest that mining rights which at the time of their creation are intended to limit, regulate and govern operations and methods which are carried out or engaged in chiefly in the coal and beneath the surface, do not apply to, cover, or permit the removal or the relocation of ...

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