WV Supreme Court Says Some Drilling Regulations Predate the Gas Boom and Need Updating

Julie Archer of WV-SORO

From Articles by David Beard, Morgantown Dominion Post, Sunday, November 25, 2012

The state Supreme Court suggested to the Legislature that this week it take a look at surface-owner rights — in particular, possibly granting owners the right to appeal Department of Environmental Protection (DEP) gas well permits.

State code pre-dates the horizontal drilling-hydraulic fracturing boom, the court said, and may need to be updated.  Some local legislators said it’s uncertain at this point how the whole body might respond to the idea.

The Supreme Court released an answer late Wednesday in the case of a Doddridge County surface owner, Matthew L. Hamblet, who wanted to appeal a WV DEP well work permit for his property. He filed his appeal in Doddridge Circuit Court, basing his case on a 2002 Supreme Court ruling. The WV DEP and EQT moved to dismiss the appeal. The court denied the dismissal motions, but asked the Supreme Court if the 2002 case — which applied to coal seam owners — also means state code allows surface owners to appeal DEP permits.

The 19-page Supreme Court answer said “no” several times, but it added this comment: “This Court urges the Legislature to re-examine this issue and consider whether surface owners should be afforded an administrative appeal under these circumstances.”

Interim legislative session now underway

Senate President Jeff Kessler, D-Marshall, said it was “interesting to see the open invitation” from the court to revisit the law. He would want to take a closer look at the issues with his attorneys in the coming weeks before the regular session begins in 2013. Noting the court’s comments that much of the code in this area is out of date, he said the Natural Gas Horizontal Well Control Act remains a work in progress. Since the act is still young, the Legislature may want to sit back a while longer and see how things play out.

The surface-owner rights the court refers to, damage compensation and violation of lease rights, are both after-the fact measures. In its brief, West Virginia Surface Owner’s Rights Organization (WV-SORO) argued that a right to appeal is more proactive, to protect owners from “erroneous effects on their interests.” In the Hamblet case, state requirements were disregarded, and the state waived the requirements “without any apparent reasoning.”

WV-SORO spokeswoman Julie Archer spoke with The Dominion Post and drafted an email response to the decision: “This is not the outcome we had hoped for in this case. We are disappointed that the Court did not affirm that surface owners have a constitutional right to appeal the state’s decision to issue drilling permits, and that they declined to address our argument regarding surface owners’ rights to an administrative hearing before the permit is issued. However, we appreciate that the court has urged the Legislature to re-visit the issue and to consider whether surface owners should be afforded an administrative appeal. We hope the Legislature will heed the Court’s recommendation.”

WV – Oil and Natural Gas Association Executive Director Corky DeMarco said the statute clearly grants mineral owners the right to produce their minerals in a responsible manner, and association members have had to deal with conflicts with surface owners. Asked about the court’s suggestion to the Legislature, DeMarco observed there are some contentious leases out there. He said previous legislatures have debated the issue on numerous occasions and he doesn’t see any value in debating it again. DeMarco added he was pleased that the justices chose to base their decision on code as it stands and not try to rewrite the code from the bench.

WV-SORO asked for two things: The right to a hearing before the permit is issued and the right to an appeal if the WV-DEP allegedly errs in granting one. The court didn’t address the first request. The Supreme Court studied the 2002 case, called “Lovejoy,” and state code, and determined that the protections in code for coal seam owners don’t apply to surface owners. Coal seam owners can appeal WV-DEP decisions; surface owners may only file comments on the proposal within 30 days.

The court noted WV-DEP’s and EQT’s assertions that surface owners have court recourse to seek compensation for damages. The court said that much of the code was written before the Marcellus and horizontal drilling/fracking boom, and as such, is out of date. Because of that, it urged the Legislature to revisit the appeals issue.