Martin Whiteman v. Chesapeake Appalachia, LLC , 729 F.3d 381 ( 2013 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
_______________
No. 12-1790
_______________
MARTIN WHITEMAN; LISA WHITEMAN,
Plaintiffs - Appellants,
v.
CHESAPEAKE APPALACHIA, L.L.C.,
Defendant - Appellee.
_______________
Appeal from the United States District Court for the Northern
District of West Virginia, at Wheeling. Frederick P. Stamp,
Jr., Senior District Judge. (5:11-cv-00031-FPS)
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Argued: March 21, 2013 Decided: September 4, 2013
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Before TRAXLER, Chief Judge, SHEDD, Circuit Judge, and David A.
FABER, Senior United States District Judge for the Southern
District of West Virginia, sitting by designation.
_______________
Affirmed by published opinion. Senior Judge Faber wrote the
opinion, in which Chief Judge Traxler and Judge Shedd joined.
_______________
ARGUED: Joseph Mark Lovett, APPALACHIAN MOUNTAIN ADVOCATES,
Lewisburg, West Virginia, for Appellants. Timothy Minor Miller,
ROBINSON & MCELWEE, PLLC, Charleston, West Virginia, for
Appellee. ON BRIEF: Isak J. Howell, LAW OFFICE OF ISAK HOWELL,
Lewisburg, West Virginia, for Appellants. Joseph K. Merical,
ROBINSON & MCELWEE, PLLC, Charleston, West Virginia, for
Appellee.
_______________
FABER, Senior District Judge:
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.
I.
A.
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. Specifically, both deeds contain the following
language:
THERE IS RESERVED AND EXCEPTED unto the said Ellis O.
Miller, the grantor, all of his interest in and to the
oil and gas within and underlying the above-described
2
parcels as well as all of the coal not heretofore
conveyed, and all other minerals within and underlying
the above described property, with the necessary
rights and privileges appertaining thereto.
JA at 95, 99. Notably, the severance deeds neither reserve any
specific surface rights to the mineral estate owner nor mention
permanent waste disposal resulting from mineral extraction.
Today, 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. See JA at 22-23. Conversely,
Chesapeake operates three natural gas wells on approximately ten
acres of the Whitemans’ property that was formerly used for hay
production. JA at 22, 417. 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. 1 JA at 258, 264, 420.
Nevertheless, 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). JA at 227, 237,
241, 608. As part of the permitting process, Chesapeake gave
the Whitemans notice of Chesapeake’s intent to drill and dispose
1
Martin Whiteman specifically testified in his deposition
that any loss of use of his land for farming was limited to ten
acres. JA at 264.
3
of drill waste in on-site waste pits. See JA at 230, 244, 246.
Chesapeake attached its WVDEP application for well work and pit
waste discharge permits to the notice it gave the Whitemans. JA
at 232, 247. The permit application included spaces for
Chesapeake to describe anticipated pit waste as well as proposed
disposal methods. Id. On each permit application, Chesapeake
listed anticipated pit waste to include drill water, frac blow
back, and various formation cuttings. 2 Id. Chesapeake also
noted that it intended to dispose of pit waste by “land
application,” or in the case of the pits located on the
Whitemans’ property, by treating water, applying waste to the
land, and burying cuttings. Id.
After the permitting process was complete, Chesapeake began
drilling. While drilling on the Whitemans’ property, Chesapeake
used a water-based drilling fluid, known in the oil and gas
industry as “mud,” 3 to remove drill cuttings during the drilling
2
Drill cuttings consist of earth, rock, and other debris
necessarily removed from the ground when the drill bores the
well.
3
Drilling mud comes in many varieties, 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. Whatever
variety is used, however, mud engineers nevertheless apply
“additives” to the mud to ensure efficient and effective use of
the mud. JA at 573.
4
process. 4 See JA at 142, 592. Once removed from the wells’
boreholes, 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. 5 See JA at 608. At the conclusion
of the drilling process, Chesapeake removed the plastic liners
from the waste pits, mixed the drill waste with clean dirt, and
compacted and covered the pits. Sediment control barriers
surround the pits. See JA at 235.
The pit or “open” system of drill waste disposal was the
common method employed in West Virginia at the time the wells
were drilled on the Whitemans’ property, although alternative
disposal methods were used in other areas of the country. See
JA at 119-20, 322, 703. One such alternative is a “closed-loop”
system. The closed-loop system of drill waste disposal is a
relatively recent development in the oil and gas industry.
Under the closed-loop system, drill cuttings and other waste are
4
Mud is expensive and operators preserve and recycle as
much of it as possible; in some cases, operators will rent
drilling mud rather than purchase it. See JA at 115, 116, 572.
Consequently, only a small amount of mud remains mixed with
drill cuttings that have been removed from a well. JA at 572.
5
In return for valuable consideration, the Whitemans gave
Chesapeake a release for any damages caused by Well Number
625599. See JA at 276, 693. That well is not implicated in the
Whitemans’ lawsuit.
5
removed from the well site and placed in off-site landfills.
See JA at 116. Closed-loop systems have some advantages over
on-site disposal. They better preserve expensive drilling mud
for future drilling operations, eliminate the possibility of a
pit failure, and create a smaller drilling operation footprint
at a well site. See JA at 116, 120, 572. Nevertheless, closed-
loop systems are expensive and often cost $100,000 or more per
well than open systems, depending on the well location. See JA
at 120, 130. Chesapeake began using the closed-loop system in
some of its Oklahoma and Texas operations in 2004 and 2005, and,
in December 2009, began preparing to implement the system in
West Virginia. See JA at 112, 119.
The Whitemans have admitted that, at present, their
monetary damages are “trivial” and “not real significant.” JA
at 628. Indeed, the only expert testimony offered in the case
regarding the value of the Whitemans’ land opined that
Chesapeake’s drilling operations caused no diminution in value
thereto. See JA at 267. Rather, the core of the Whitemans’
prayer for relief is vindication of their right to exclude
others from their land and affirmative injunctive relief to
remove the waste pits in order to alleviate the Whitemans’ fears
of possible future liability that might stem from the waste
pits. See JA at 421, 628, 629.
6
B.
This civil action was filed originally in the Circuit Court
of Wetzel County, West Virginia, and removed to federal district
court on the basis of diversity of citizenship under 28 U.S.C. §
1332(a). The Whitemans are citizens and residents of West
Virginia; Chesapeake is an Oklahoma corporation with its
principal place of business in Oklahoma. JA at 21. The amount
in controversy exceeds $75,000. 6
6
We note that although the Whitemans have essentially
abandoned monetary damages as a remedy in this case, it is
generally held that whether the amount in controversy
requirement has been met is an issue determined “on the basis of
the facts and circumstances as of the time” the case is removed
to federal court from state court. 14AA CHARLES ALAN WRIGHT, ARTHUR
R. MILLER, AND EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3702.4,
p. 457-58 (4th ed. 2011). At that point, no question arose as
to whether the amount in controversy requirement had been met,
perhaps because of the numerous amount of claims the Whitemans
originally alleged against Chesapeake and the damages associated
therewith. Nevertheless, an affirmative injunction carries its
own price tag, and for purposes of determining whether that
amount satisfies the amount in controversy requirement, this
court “ascertain[s] the value of an injunction for amount in
controversy purposes by reference to the larger of two figures:
the injunction's worth to the plaintiff or its cost to the
defendant.” JTH Tax, Inc. v. Frashier, 624 F.3d 635, 639 (4th
Cir. 2010). Here, the Whitemans present no evidence supporting
the requested injunction’s value to them in dollar terms.
However, Chesapeake presented evidence that, for a traditional
12,000 cubic foot pit, measuring forty feet by fifty feet with a
six foot depth and a seventy percent fill ratio, removing such a
pit would cost, at a minimum, $50,000. JA at 605. The two pits
here have much larger dimensions than a “traditional” pit and,
therefore, removing them would easily cost Chesapeake more than
$75,000, based on Chesapeake’s undisputed testimony related to
pit removal costs. See JA at 250. Accordingly, the amount in
controversy requirement for subject matter jurisdiction in this
case is satisfied.
7
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. JA at 33. 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. JA at
25-32. Cross motions for summary judgment were filed. JA at
90, 211. By order entered on June 7, 2012, the district court
denied the Whitemans’ motion and granted Chesapeake’s motion on
the trespass claim only. JA at 760, 765. Thereafter, with the
court’s approval, the Whitemans voluntarily dismissed all their
other claims. JA at 770-71. A final order was entered on June
11, 2012, from which the Whitemans took a timely appeal to this
court pursuant to 28 U.S.C. § 1291. JA at 773. The only issue
on appeal is whether the district court erred when it granted
summary judgment in favor of Chesapeake upon the Whitemans’
claim for common law trespass.
II.
A.
In reviewing a grant of summary judgment, we apply de novo
the same standard that the district court was required to apply
for granting the motion for summary judgment. Ray Commc'ns,
8
Inc. v. Clear Channel Commc'ns, Inc., 673 F.3d 294, 297 n. 1
(4th Cir. 2012). Specifically, summary judgment is warranted
if, from the totality of the evidence, including pleadings,
depositions, answers to interrogatories, and affidavits, the
court believes no genuine issue of material fact exists for
trial and the moving party is entitled to judgment as a matter
of law. See Rule 56(c) of the Federal Rules of Civil Procedure;
Sylvia Dev. Corp. v. Calvert Cnty., Md., 48 F.3d 810, 817 (4th
Cir. 1995). When an appeal arises from a grant of summary
judgment, the reviewing court must view the evidence, and draw
all reasonable inferences therefrom, in the light most favorable
to the non-moving party. See Laing v. Fed. Exp. Corp., 703 F.3d
713, 714 (4th Cir. 2013). 7
7
This court has held that Rule 56 of the Federal Rules of
Civil Procedure does not allow a court to simply determine that
“the moving party has the winning legal argument.” Podberesky
v. Kirwan, 38 F.3d 147, 156 (4th Cir. 1994) (citing Charbonnages
de France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979)). Rather,
a court “must also ensure that there is no genuine issue as to
any material fact before a grant of summary judgment is proper.”
Id. This situation typically arises, as it does here, where the
parties file cross-motions for summary judgment. Nevertheless,
we believe, given the discovery conducted below, the joint
stipulations entered into, and the further development of the
record at the hearing on the motions for summary judgment, that
Chesapeake has satisfied its burden of showing the absence of
any genuine issues of material fact, and the Whitemans have
either failed or declined to rebut that showing. See Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
9
B.
The substantive legal issue before the court on appeal is
whether Chesapeake’s permanent disposal of drill waste upon the
Whitemans’ surface property is “reasonably necessary” for the
extraction of minerals. 8 Here, the only relevant substantive law
stems from West Virginia common law. Accordingly, we look to
that state’s law for a controlling principle. See Erie R. Co.
v. Tompkins, 304 U.S. 64, 78 (1938).
1.
As noted above, the district court below granted summary
judgment in favor of Chesapeake as to the Whitemans’ common law
trespass claim only. 9 In West Virginia, common law trespass is
8
After oral argument, and pursuant to Rule 28(j) of the
Federal Rules of Appellate Procedure, the Whitemans notified
this court of a decision from the United States District Court
for the Northern District of West Virginia. Specifically, in
the case Cain v. XTO Energy, Inc., Civil Action No. 1:11-cv-111
(N.D.W. Va. March 28, 2013), that court certified a question to
the West Virginia Supreme Court of Appeals essentially asking
whether horizontal drilling far below the surface, a drilling
method now popular in the oil and gas industry, meets the
“reasonable necessity” standard under West Virginia law. That
is not this case; it presents a broader question that only
marginally overlaps with the narrower one presented here and we
see no benefit to certification in this case. Accordingly, to
the extent the Whitemans moved this court to certify the
question in this case to the West Virginia Supreme Court of
Appeals, that motion is denied.
9
In the complaint, the Whitemans styled their common law
trespass claim as “Trespass (Including Willful and Bad Faith
Trespass).” For our purposes, treating that claim as simple
trespass of a continuing nature is sufficient and we proceed
10
“an entry on another man's ground without lawful authority, and
doing some damage, however inconsiderable, to his real
property.” Hark v. Mountain Fork Lumber Co., 127 W. Va. 586,
591-92, 34 S.E.2d 348, 352 (1945) (emphasis added). A
continuing trespass occurs, for example, when one person leaves
on the land of another, with a duty to remove it, “a structure,
chattel, or other thing.” RESTATEMENT (SECOND) OF TORTS § 160
(1965). Regarding remedies for actions in trespass, the general
rule in West Virginia is that “a mere trespass to real estate
will not be enjoined when the injury . . . is susceptible of
complete pecuniary compensation and for which the injured person
has an adequate legal remedy.” Wiles v. Wiles, 134 W. Va. 81,
91, 58 S.E.2d 601, 606 (1950). Nevertheless, in West Virginia,
“[a] court of equity has jurisdiction to enjoin a continuing
trespass.” Tate v. United Fuel Gas Co., 137 W. Va. 272, 278-79,
71 S.E.2d 65, 69-70 (1952). Notwithstanding the above, a claim
for trespass under West Virginia common law can only lie if
one’s entry upon the land of another—or one’s leaving a “thing”
upon the land of another—is “without lawful authority.” Hark,
34 S.E.2d at 352.
A common source of “lawful authority” one might have for
either entering upon another’s land or leaving something on
accordingly; Chesapeake’s alleged willfulness or bad faith is
irrelevant.
11
another’s land is a license. However, at its most basic, a
license is simply “permission, [usually] revocable, to commit
some act that would otherwise be unlawful,” including, but not
limited to, “an agreement . . . that it is lawful for the
licensee to enter the licensor’s land to do some act that would
otherwise be illegal.” Black's Law Dictionary (9th ed. 2009).
In West Virginia, however, a line of precedent informs a mineral
estate owner’s authority to enter upon the land of a surface
estate owner, without express license or otherwise, to extract
minerals, beginning with Marvin v. Brewster Iron Mining Co., 55
N.Y. 538, 1874 WL 11019 (1874), the seminal 1874 case that
introduced the concept of what has come to be known as
“reasonable necessity” and its application to severance deed
construction. 10 In other words, in West Virginia, a mineral
estate owner that enters upon a surface estate owner’s land does
10
We note that in West Virginia, assuming no dispute as to
material facts, “it is the duty of the court to determine
whether the use of the surface by the owner of the minerals has
exceeded the fairly necessary use thereof.” Adkins, 61 S.E.2d
at 636. Moreover, this court has previously held that the West
Virginia rule allocating the duty to determine “reasonable
necessity” to judge, not jury, binds a federal court sitting in
diversity. Justice v. Pennzoil Co., 598 F.2d 1339, 1343 (4th
Cir. 1979). Accordingly, when we review the lower court’s
determination of “reasonable necessity,” we review its
interpretation of West Virginia’s “state property law . . .
measured by concrete legal standards rooted in the common law.”
Id. at 1342; see also Depeterdy v. Cabot Oil & Gas Corp., Civil
Action No. 2:97-966, 1999 WL 33229744, at *2 (S.D.W. Va. Sept.
13, 1999) aff'd, 230 F.3d 1352 (4th Cir. 2000).
12
so without lawful authority only if, under the “reasonable
necessity” standard, the mineral estate owner “exceed[s] its
rights . . . thereby invading the rights” of the surface estate
owner. Adkins v. United Fuel Gas Co., 134 W. Va. 719, 723, 61
S.E.2d 633, 635 (1950).
2.
In Marvin, a surface estate owner sought, among other
things, to enjoin a mineral estate owner from mining underneath
the surface estate owner’s land. Marvin, 1874 WL 11019, at *2.
The surface estate owner complained that the mineral estate
owner had, among other things, deposited “ore and rubbish” (from
the mines) along the front and atop the surface estate owner’s
land. Id. at *3. The lower court in Marvin concluded, as a
matter of law, that although the mineral estate owner had a
right to enter the surface estate owner’s land to mine, the
mineral estate owner had “no right to deposit or keep upon [the
surface estate owner’s] lands any . . . refuse stuff or
rubbish.” Id. at *4. Accordingly, the lower court ordered that
the mineral estate owner be enjoined from further waste disposal
on the surface estate owner’s land and that the mineral estate
owner remove mine waste that the mineral estate owner had
already deposited on the surface. Id. at *5. The New York
Court of Appeals reversed the lower court as to this conclusion
of law, among others, and sent the case back for a new trial
13
because the Court of Appeals believed the lower court failed to
consider whether depositing mine waste on the surface was
“necessary to be done for the reasonably profitable enjoyment”
of the mineral estate owner’s property in the minerals. Id. at
*17. More specifically, the Court of Appeals held that a
mineral estate owner may not claim, as incident to the grant of
the mineral estate itself, “that which is convenient [but] only
that which is necessary, but may have that in a convenient way.”
Id. at *10. In other words, the court indicated that a grant of
minerals underlying a tract of land, absent a deed or lease
provision to the contrary, carries with it a right to use so
much of the surface as is fairly necessary to recover the
mineral and preserve the mineral holder’s “reasonably profitable
enjoyment” of the mineral. 11 Although the Marvin court went on
to state in dicta that it would be a rare case where a mine
owner could justify leaving mine waste on the surface
permanently, the court nevertheless conceded that what is
necessary is a fluid concept that must be determined on a case
by case basis. See id. at *9 (stating that “the facts of each
case” must determine what is necessary).
11
This has come to be called the “fairly necessary” or
“reasonably necessary” standard. We use the two phrases
interchangeably just as the West Virginia Supreme Court of
Appeals has for over 100 years.
14
If not earlier, the West Virginia Supreme Court of Appeals
cited Marvin with enthusiastic approval in both Porter v. Mack
Mfg. Co., 65 W. Va. 636, 64 S.E. 853 (1909) and Squires v.
Lafferty, 95 W. Va. 307, 121 S.E. 90 (1924), 12 thus officially
adopting the principle that ownership of a mineral estate
carries with it “an implied right to use the surface in such
manner and with such means as would be fairly necessary for the
enjoyment” of the mineral estate. Porter, 64 S.E. at 854; see
Squires, 121 S.E. at 91 (holding that the right to use the
surface “in a manner and with such means as would be fairly
necessary” to enjoy the mineral estate is incident to ownership
of the mineral estate itself). Unlike the instant case,
however, neither Porter nor Squires were trespass cases.
Rather, both were cases where a mineral estate owner sought an
injunction against the surface estate owner for obstructing
various aspects of the mineral estate owner’s mining operation.
In Porter, the mineral estate owner sought to mine clay and
other minerals and carry them off using a tram road he proposed
to build on the surface estate owner’s property, but the surface
estate owner obstructed. See Porter, 64 S.E. at 853. In
12
The court in Porter indicated that the Marvin principles
might be obvious legal underpinnings of West Virginia common law
when it noted that “[i]t seems hardly necessary in this mining
state to state these principles of law; but it may not be
without benefit to do so. They are old and settled principles.”
Porter, 64 S.E. at 854.
15
Squires, the mineral estate owner sought to drill test holes and
transport machinery and men over the surface estate owner’s
property, but the surface estate owner went so far as to lock
the mineral estate owner’s access gate and then assault the
mineral estate owner’s employee that forced passage. Squires,
121 S.E. at 90. In both cases, the West Virginia Supreme Court
of Appeals ruled in favor of the mineral estate owner, finding
the building of a tram road across the surface estate owner’s
property “fairly necessary” to enjoying the mineral estate in
Porter, and finding the drilling of test holes and transport of
machinery and men across the surface “fairly necessary” in
Squires. Notwithstanding their dissimilarity to this case,
Porter and Squires enshrine the overarching principle that,
incident to mineral estate ownership, a mineral estate owner in
West Virginia has a right to use the surface “in such manner and
with such means as would be fairly necessary” to enjoy the
mineral estate. Moreover, both Porter and Squires demonstrate
that the application of such a principle is necessarily fact-
intensive, just as the New York Court of Appeals said in Marvin.
See Marvin, 1874 WL 11019, at *9. The “fairly necessary”
standard from Porter and Squires has remained intact in West
Virginia property law and been applied to a multitude of factual
scenarios, including some more factually analogous to this case
than either Porter or Squires.
16
3.
In Adkins v. United Fuel Gas, a surface estate owner
brought a trespass claim against the mineral estate owner for
damages caused by the mineral estate owner’s gas drilling
operations on the surface owner’s land. 13 Adkins v. United Fuel
Gas Co., 134 W. Va. 719, 61 S.E.2d 633, 634 (1950).
Specifically, the mineral estate owner drilled a gas well near
the center of a fifty-acre tract, part of which the surface
owner used to grow alfalfa, corn, and vegetables. Id.Additionally, the mineral estate owner constructed a road and
pipelines through the surface owner’s corn and alfalfa fields to
provide access to the well. Id. Moreover, the mineral estate
owner cut one lengthy ditch to carry water and other refuse from
the gas well and cut another ditch to lay a gas pipe necessary
to operate the gas well. Id. Both ditches were cut through
13
An earlier case, Coffindaffer v. Hope Natural Gas Co., 74
W. Va. 107, 81 S.E. 966 (1914), also involved a surface estate
owner bringing a trespass claim against the mineral estate
owner. However, Coffindaffer is distinguishable from both
Adkins and this case in that the mineral estate owner there had
built a road upon the surface, abandoned any drilling activity
before it ever began, but nevertheless left the road on the
surface. Coffindaffer, 81 S.E. at 966. Although it recognized,
under the “fairly necessary” standard from Porter, that a
mineral estate owner generally has, "as a necessary incident to
the enjoyment" of the minerals, the right to use the surface to
explore for and produce oil and gas, including building a road
to haul drilling machinery, the Coffindaffer court nevertheless
held that where a mineral estate owner builds such a road and
abandons drilling before it begins, such a road cannot be fairly
necessary to enjoying the rights to the mineral estate. Id.
17
land the surface owner had used to grow crops. Id. As a result
of the mineral estate owner’s drilling and associated
activities, the surface was rendered unusable for crop
production. Id.
After it had completed drilling the gas well, the mineral
estate owner removed one gas pipe, drained the ditches and
covered them over, leaving the permanent gas pipe just under the
surface. Id. As to the “reasonable necessity” of the mineral
estate owner’s use of the surface, the court in Adkins held:
There was nothing done which was unnecessary or
unreasonable in the construction of the road to bring
machinery in to drill the defendant’s gas well.
Likewise the laying of the pipe line over the surface
of the land is not disclosed to have been unnecessary.
The construction of the open ditch for draining sand,
water and other refuse from the well during the
drilling thereof seems to have been an effort on the
part of defendant to prevent the spreading of such
sand, water and refuse over the adjacent surface of
plaintiff’s land, and, therefore, was a minimization
of damages.
Id. at 636. In other words, the court in Adkins did not change
the “reasonable necessity” standard. Rather, it simply applied
the standard, as it always had before, to a set of facts unique
to the case in Adkins.
Perhaps the most recent and comprehensive scrutiny of the
“reasonable necessity” doctrine, however, occurred in Buffalo
Mining Co. v. Martin, 165 W. Va. 10, 267 S.E.2d 721 (1980).
There, as in Porter and Squires, a mineral estate owner sought
18
to enjoin the surface owner from interfering with the mineral
estate owner’s mining operations. Specifically, the mineral
estate owner endeavored to construct a power line necessary to
ventilate a coal mine located under the surface owner’s
property. Buffalo Mining, 267 S.E.2d at 722. However, the
court in Buffalo Mining did not simply apply the “fairly
necessary” doctrine from Porter, Squires, Adkins, and others.
Rather, the court applied the following gloss to that doctrine:
[W]here implied as opposed to express rights are
sought, the test of what is reasonable and necessary
becomes more exacting, since the mineral owner is
seeking a right that he claims not by virtue of any
express language in the mineral severance deed, but by
necessary implication as a correlative to those rights
expressed in the deed. In order for such a claim 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.
Buffalo Mining, 267 S.E.2d at 725-26 (emphasis added).
Although Buffalo Mining involved a severance deed more
detailed than those presented here, its holding nevertheless
harmonized the “reasonable necessity” standard as it applies to
two divergent types of conflict between mineral estate owners
and surface estate owners. The first involves conflicts where
the mineral estate owner engages in activity that disturbs,
perhaps permanently and negatively, the surface. See Adkins v.
United Fuel Gas Co., 134 W. Va. 719, 723, 61 S.E.2d 633, 635
(1950) (cutting ditches through surface owner’s farmland,
19
permanently burying a gas pipeline used for gas drilling, and
spilling oil and oily water on surface owner’s crops); Squires
v. Lafferty, 95 W. Va. 307, 121 S.E. 90 (1924) (drilling test
holes on surface and transporting machinery and men across the
surface); Porter v. Mack Mfg. Co., 65 W. Va. 636, 64 S.E. 853(1909) (construction of tram road on surface to transport
minerals). The second involves conflicts where the mineral
estate owner engages in activity that “virtually destroy[s]” the
surface or is otherwise “totally incompatible with the rights of
the surface owner.” Buffalo Mining, 267 S.E.2d at 725; see
Brown v. Crozer Coal & Land Co., 144 W. Va. 296, 107 S.E.2d 777(1959) (refusing to construe a severance deed to allow “auger
mining,” which had resulted in slippage of the surface
sufficient to uproot trees, toss boulders, and divert streams);
W. Virginia-Pittsburgh Coal Co. v. Strong, 129 W. Va. 832, 837,
42 S.E.2d 46, 50 (1947) (refusing to construe a severance deed
to allow “strip mining” and reasoning that “if the owner of the
surface has a proprietary right to subjacent support . . . he
has at least an equal right to hold intact the thing to be
supported, i.e., the surface.”). Buffalo Mining’s articulation
of “reasonable necessity without substantial burden” generally
allows the first set of surface uses, when “reasonably
necessary,” as implicit to a grant of a mineral estate because
the surface generally incurs no “substantial burden.”
20
Conversely, the second set of surface uses will generally be
disallowed as implicit to a grant of a mineral estate; the
burden of such uses on the surface is generally so substantial
that an explicit deed provision will usually be required. 14
Before Buffalo Mining, the “reasonable necessity” doctrine
simply did not discern between a case where a mineral estate
owner drilled a hole into the surface and a case where a mineral
estate owner all but removed the surface. Indeed, the West
Virginia Supreme Court very recently noted that it has “often
been asked to address disputes between surface owners and
mineral owners,” and in some cases, it is “sometimes unclear if
a particular mineral . . . is a ‘mineral’ or part of the
‘surface.’” Faith United Methodist Church & Cemetery of Terra
Alta v. Morgan, 12-0080, 2013 WL 2920012, at *5 (W. Va. June 13,
2013). Perhaps more to the point, however, the court noted that
in some cases mineral extraction temporarily disturbs the
surface and in other cases mineral extraction destroys the
surface. See id. No matter the degree of disturbance, the
court added, “[a]s new minerals are discovered, and as better
14
See, e.g., Phillips v. Fox, 193 W. Va. 657, 665, 458
S.E.2d 327, 335 (1995) (holding that the right to surface mining
“will only be implied if it is demonstrated that, at the time
the deed was executed, surface mining was a known and accepted
common practice in the locality where the land is located; that
it is reasonably necessary for the extraction of the mineral;
and that it may be exercised without any substantial burden to
the surface owner.”).
21
techniques for harvesting those minerals become available, legal
conflicts between owners of the surface and of the minerals will
abound.” Ultimately, we believe Buffalo Mining sorts the minor
to moderate surface disturbance cases from the major surface
destruction cases when a mineral estate owner seeks to do either
pursuant to implied rights collateral to a grant of the mineral
estate itself.
III.
The court below acknowledged that the severance deeds in
question did not address the issue of use of the property
surface to store drill cuttings and other waste but nevertheless
found such right to be created by implication as a reasonably
necessary incident to creation of a gas well. The Whitemans
advance several arguments as to why the lower court’s conclusion
was erroneous. We address each separately.
A.
As a threshold matter, the Whitemans essentially argue that
Chesapeake had a burden to show its use of the surface was
reasonably necessary and did not impose a substantial burden
upon the surface, that Chesapeake “failed utterly to develop a
record” to support such a showing, and that the court below
erred in granting Chesapeake summary judgment as a result. See
Appellant Br. at 9, 20. The Whitemans apparently rely, in part,
on Buffalo Mining, and no other authority, to support this
22
argument. See id. at 21 (stating “Chesapeake is subject to
Buffalo Mining Company’s ‘exacting’ test in which it must show
both necessity and the absence of a substantial burden on the
surface.”). The Whitemans miss a fundamental distinction
between this case and Buffalo Mining concerning which party
would carry the initial burden of proof at trial. As with any
ordinary tort claim, the plaintiff must make an affirmative
showing of a prima facie case; the defendant need neither affirm
nor rebut anything. See Rhodes v. E.I. du Pont de Nemours &
Co., 636 F.3d 88, 94 (4th Cir. 2011) cert. denied, 132 S. Ct.
499, 181 L. Ed. 2d 347 (2011) (noting that common law trespass
“require[s] that a plaintiff establish that the defendant's
conduct produced some ‘injury’ to the plaintiff or to the
plaintiff's property.”) (citing Hark v. Mountain Fork Lumber
Co., 127 W.Va. 586, 34 S.E.2d 348 (1945)).
In Buffalo Mining, as noted above, the plaintiff was a
mineral estate owner seeking to enjoin the surface owner from
interfering with the mineral estate owner’s mining operations.
Buffalo Mining, 267 S.E.2d at 722. In other words, the mineral
estate owner claimed the surface estate owner was interfering
with the former’s incidental property rights associated with its
grant of the mineral estate. Accordingly, as the plaintiff, the
mineral estate owner in Buffalo Mining had the initial burden of
proving that the surface owner’s conduct “produced some injury”
23
to the mineral estate owner’s incidental property rights. See
Rhodes, 636 F.3d at 94. Here, as Chesapeake aptly recognizes,
it is the other way around; the Whitemans have sued Chesapeake
for trespass and, accordingly, the Whitemans would carry the
burden of making a prima facie trespass claim at trial. See
Appellee Br. at 13. Moreover, no West Virginia case has treated
a mineral estate owner’s claim to “reasonably necessary” use of
the surface to extract minerals as an affirmative defense.
Neither shall we.
Relatedly, the Whitemans argue that the court below failed
to analyze the burden that Chesapeake’s drilling operations
imposed on the surface. Appellant Br. at 38-39. Again, the
burden to prove unauthorized entry or use in trespass is on the
plaintiff. Nevertheless, the record below supports a finding
that the drill waste pits do not impose a substantial burden on
the Whitemans’ surface property. One of Chesapeake’s experts
opined that the drill waste pits have not affected the
Whitemans’ property value at all. JA at 267. The Whitemans
failed to rebut this expert opinion, offering none of their own
to evaluate the risk that the drill waste pits in this case
might slip or break. See Appellee Br. at 8. The only evidence
the Whitemans presented regarding potential future liability
arising from the drill waste pits was the subjective fear of
Lisa Whiteman. See JA at 421. Moreover, counsel for the
24
Whitemans at oral argument below remarked that any pecuniary
loss caused by the drill waste pits was minimal. See JA at 628.
Martin Whiteman himself stated that any injury to the Whitemans’
land that Chesapeake’s entire drilling operation might have
caused was limited to ten acres. JA at 264.
The Whitemans reply that no expert is needed to prove a
common law trespass claim. Appellant Reply Br. at 21. We
agree. However, sufficient evidence, at least a preponderance,
is needed to prove trespass. The Whitemans simply failed to
present sufficient evidence to show that Chesapeake’s drill
waste pits imposed a “substantial burden” on the surface.
Absent that showing, the Whitemans could only satisfy the
“unlawful authority” prong of common law trespass by proving
Chesapeake’s surface use was not “reasonably necessary” to their
gas drilling operation. The Whitemans failed in that regard as
well.
B.
Regarding “reasonable necessity,” the Whitemans first
contend that Chesapeake’s disposal of waste on-site was not
reasonably necessary to operate its wells because an alternative
method of disposal, the closed-loop system, was available. See
Appellant Br. 4, 20, 23, 25. We disagree. There simply is no
support for the Whitemans’ implication that “reasonable
25
necessity” amounts to “necessity,” otherwise the modifier
“reasonable” would be meaningless. 15
The two wells on the Whitemans’ property were drilled
between 2007 and 2009. At that time, the closed-loop system was
a relatively new method of drill waste disposal. Chesapeake had
begun to use the closed-loop system in Texas and Oklahoma
beginning in 2004 and 2005, but did not employ it in West
Virginia until December 2009. When the Whiteman wells were
drilled, the open pit system was the common and ordinary method
of disposal in West Virginia and was consistent with permitting
requirements in the state and approved by the WVDEP.
Nevertheless, the Whitemans apparently believe that comparing
drill waste disposal methods between Texas and Oklahoma gas
drilling operations on the one hand and West Virginia gas
drilling operations on the other hand ought to inform whether
Chesapeake’s drill waste disposal used on the Whitemans’ surface
was “reasonably necessary.” See, e.g., Appellant Br. at 24
(citing Chesapeake’s use of the closed-loop disposal system in
Dallas/Fort Worth as an example of why the open pit system is
purely optional). Such comparison amounts to false equivalency.
15
Chesapeake similarly attempts to precisely define
“reasonable necessity.” See Appellee Br. 17-18. Nevertheless,
no West Virginia law exists to support Chesapeake’s construction
of “reasonable necessity,” even if sound reasoning otherwise
supports it. Accordingly, we decline to adopt Chesapeake’s
definition of “reasonable necessity” as well.
26
Indeed, even comparing drill waste disposal methods within all
of West Virginia would likely not comport with what a
“reasonable necessity” inquiry requires. As noted earlier, we
trace the genealogy of West Virginia’s “reasonable necessity”
standard at least as far back as Marvin v. Brewster Iron Mining
Co., 55 N.Y. 538, 1874 WL 11019 (1874). There, the New York
Court of Appeals clearly stated that determining the scope of a
mineral estate owner’s implicit surface use rights is a
factually intensive process and each case should be evaluated
accordingly in light of the fact that what is “necessary” is a
fluid concept. See Marvin, 1874 WL 11019, at *9. No West
Virginia case law has changed the fact-based nature of the
analysis. Accordingly, the Whitemans wrongly fault Chesapeake
for employing its own case-by-case determination regarding drill
waste disposal methods when this court is compelled to do the
same to adequately determine whether Chesapeake’s surface use
was “reasonably necessary” for mineral extraction. See
Appellant Br. at 24 (noting that when Chesapeake decided whether
to use an open pit or closed-loop system of drill waste
disposal, it “simply performed a ‘case-by-case’ analysis.”)
(citing Chesapeake representative Mark Bottrell’s deposition
testimony at JA 127). 16
16
We note that Bottrell’s deposition testimony regarding
Chesapeake’s decision-making process as to whether to use open
27
Third, the Whitemans argue that the trial court confused
the requisite “reasonably necessary” standard with a
“reasonableness” standard, thereby applying a less rigorous rule
than the law requires. See Appellant Br. at 9, 18. We need
only refer to the specific language of the trial court’s opinion
to conclude that this argument of the Whitmans is misplaced.
The trial court articulated the correct standard as follows:
Thus, in determining whether the language of the
severance deed and leases creates an implied right to
construct drill cuttings pits, this Court must return
to the question of whether that right is reasonably
necessary for the extraction of the mineral and
whether the pits substantially burden the surface.
JA at 754.
Fourth, the Whitemans contend that the district court
relied on irrelevant state regulations and statutes. See
Appellant Br. at 9, 28-30. While the Whitemans are correct in
their assertion that West Virginia’s regulatory scheme does not
create a right of the lessor to commit a trespass if the
specific use is not granted or implied in a lease, they
or closed drill waste disposal is more sophisticated than the
Whitemans suggest. See Appellant Br. at 24 (claiming
Chesapeake’s decisions to use pits in certain areas in Texas
were based “purely [on] the proximity of a person’s
residence.”). Among other things, Bottrell listed well depth,
drilling method, surface topography, potential impact on
livestock, potential for pit failure or “slippage,” and site
distance to landfill as factors Chesapeake considers before
deciding which waste disposal method to use at any given gas
well site. See JA at 120, 122, 123, 128, 605.
28
misinterpret the lower court’s reliance thereon. The court
below simply referred to the statutes and regulations in order
to “inform this Court of the practices of the oil and gas
industry in West Virginia.” JA at 754. Moreover, the court
below expressly acknowledged that a permit granted by a state
agency pursuant to a regulatory scheme cannot immunize the
permit holder from civil tort liability for actions arising out
of use of the permit. Id. Accordingly, the lower court’s
reliance on various West Virginia statutes and regulations, and
the manner in which it so relied, was not an improper way to
adduce some evidence of reasonable necessity. 17
Finally, the Whitemans claim the court below quoted and
emphasized a 2008 mineral lease between the Whitemans and
17
While decided under a slightly different legal standard
than the one we apply here, the United States District court for
the District of North Dakota recently addressed the same issue
in a case whose facts are remarkably similar to those of the
case at bar. In that case, Kartch v. EOG Resources, Inc., 2012
WL 661978 (D. N.D. 2012), the surface estate owner contended
that drill pit waste left on the surface by the mineral estate
owner amounted to trespass. The surface estate owner argued
that availability of a closed loop system for deposit of waste
off the surface property rendered unnecessary the use of
permanent on-site waste storage. The court disagreed and held
that, at the time the well was drilled, reserve pits were
commonly used in North Dakota. The availability of an
alternative, said the court, did not make storage of waste on
the land unreasonable. The court also noted that the North
Dakota Industrial Commission had issued a permit for the surface
waste disposal under appropriate regulations. Compliance with a
state regulatory scheme, as in the case here, was deemed to be
evidence of reasonableness.
29
Chesapeake that is not relevant to this case. That lease
covered a separate one-acre tract from the ten acres involved
here and gave Chesapeake “such exclusive rights as may be
necessary or convenient” in its gas production activities.
While the court below did refer to that lease in its opinion,
the court also made clear that the one-acre lease, including its
expansive language, is not relevant to the present case. The
standard applied by the trial court, as noted above, was one of
reasonable necessity; convenience did not enter into the court’s
calculation.
IV.
For all these reasons we conclude 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.
30