Thursday, September 5, 2013

Martin Whiteman v. Chesapeake Appalachia

Sep 4: In the U.S. Court of Appeals, Fourth Circuit, Case No. 12-1790. Appealed from the United States District Court for the Northern District of West Virginia, at Wheeling. The Appeals Court summarized, "The plaintiffs below, Martin and Lisa Whiteman (Whitemans), appeal from a final order of the United States District Court for the Northern District of West Virginia that granted summary judgment to the defendant, Chesapeake Appalachia, L.L.C. (Chesapeake), upon the Whitemans' claim for common law trespass. We find no error in the district court's decision and affirm for the reasons that follow."
    The Whitemans own the surface rights to approximately 101 acres in Wetzel County, West Virginia, pursuant to a general warranty deed dated March 2, 1992. See JA at 93-94. Chesapeake owns lease rights to minerals beneath the Whitemans' surface property. See JA at 608. The property rights of both the Whitemans and Chesapeake ultimately flow from two severance deeds that originally split the surface and mineral estates of the 101 acres relevant here. The two severance deeds effected severance by granting the respective surface estates to grantees while "reserving and excepting" the mineral estate to the grantor.
    The Whitemans live on and farm their 101 acres, primarily raising sheep and, relatedly, using part of the land to produce hay for the sheep. Conversely, Chesapeake operates three natural gas wells on approximately ten acres of the Whitemans' property that was formerly used for hay production. The Whitemans can no longer produce hay on those ten acres because Chesapeake's well operations and permanent drill waste disposal on the surface have rendered that portion of the Whitemans' property unusable for any suitable purpose.
    For each of their gas wells located on the Whitemans' surface property, Chesapeake obtained valid well work and pit waste discharge permits from the West Virginia Department of Environmental Protection (WVDEP). As part of the permitting process, Chesapeake gave the Whitemans notice of Chesapeake's intent to drill and dispose of drill waste in on-site waste pits. Chesapeake disposed of the drill cuttings in accord with the waste disposal method listed on their well work and pit waste discharge permit applications, namely by depositing the drill cuttings into open pits located near the wellheads on the Whitemans' surface property.
    The Appeals  Court indicates that the drill cuttings consist of earth, rock, and other debris necessarily removed from the ground when the drill bores the well, as well as drilling mud ranging from water-based fluid mixed with minerals to oil-based fluid with a composition similar to diesel fuel to synthetic oil-based fluid with a composition similar to food-grade mineral oil.
    In their complaint, the Whitemans asked for an injunction and damages based on claims arising from the drilling and operation by Chesapeake of three natural gas wells on surface property owned by the Whitemans. The complaint alleged claims under West Virginia common law only, namely nuisance, trespass, negligence, strict liability, recklessness or gross negligence, intentional infliction of emotional distress, and negligent infliction of emotional distress.
    The Appeals  Court concluded, ". . .the district court was correct to hold that creating drill waste pits was reasonably necessary for recovery of natural gas and did not impose a substantial burden on the Whitemans' surface property, that creation of the pits was consistent with Chesapeake's rights under its lease, was a practice common to natural gas wells in West Virginia, and consistent with requirements of applicable rules and regulations for the protection of the environment. Accordingly the decision of the district court is affirmed."
    Access the complete opinion (click here). [#Energy/NatGas, #Agriculture, #Land, #Haz, #CA4]

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