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Steptoe & Johnson PLLC: W.Va. Supreme Court to Decide Rights of Surface Owners

By Bridget Furbee 

The Supreme Court of Appeals of West Virginia will decide a certified question sent by the Doddridge County Circuit Court. On September 25, 2012, oral argument was held before the Court in the case of James Martin, Director DEP and EQT Production Co. v. Matthew Hamblet.

The surface owner filed an "appeal" of the drilling permit issued to EQT Production Co. by the WV DEP for a horizontal Marcellus well. The DEP and EQT sought a dismissal of the circuit court "appeal" based on the fact that this right is not provided for in the statute. The Circuit Court disagreed, but sent the following question to the high Court:

"Does the West Virginia Supreme Court of Appeal's opinion in State ex. Rel. Lovejoy v. Callaghan, 576 S.E.2d 246 (2002), interpret the relevant statutes, when read in para material, to permit a surface owner to seek judicial review of the West Virginia Department of Environmental Protection, Office of Oil and Gas's issuance of a well work permit for a horizontal Marcellus well?"

The DEP states that surface owners have the right to file comments to such permit applications, which are reviewed by the applicant and the DEP (including as in this case site visits to the property), but such owners do not have the right to "appeal" the issuance of the permits. EQT agrees, and noted that surface owners have other rights, including injunctive relief, compensation for damages to property and water wells. They noted that these "delay tactics" could be widespread unless the Court clarifies. EQT advised that the permit was issued in 2010. Both parties argued that the Lovejoy decision should be overruled or at least clarified by the Court to be inapplicable to horizontal Marcellus well drilling permits since it involved "deep" wells that have different implications for the rights of surface owners.

McMahon, a lawyer representing the WV Surface Owner Rights' Organization (SORO), was granted the right to intervene in this case. SORO's position is that the permits directly affect surface owner's property rights and they should be granted the right to a hearing and an appeal of the permits based on constitutional due process rights. They also contend that an appeal should be granted because the state agency failed to follow its own rules. McMahon argued that the case of Snyder v. Callaghan, 284 S.E.2d 241 (W. Va. 1981) should control. Snyder was a case in which the Court granted surface owners who lived downstream of the proposed Stonewall Jackson Dam the right to a hearing before the state issued a permit.

The attorney for the surface owner argued that the statutes should make no distinction as to deep/shallow well permits. Hamblett's counsel acknowledged that this proposed appellate right would have to apply to all shallow well permits, not just horizontal Marcellus wells.

The Court is expected to hand down a decision later this year.

Bridget Furbee focuses her practice in the area of energy law. She is the former in-house counsel for a major Fortune 500 energy company and has extensive experience in major transactions as well as litigation in the oil and gas industries.

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