West Virginia Supreme Court rules in favor of landowners in legal dispute with EQT

Despite five years of legal battles in West Virginia courts, EQT Corp. said its drilling operations won’t be significantly affected by a court decision that both landowner advocates and oil and gas industry experts said would be a landmark ruling for shale gas development.

On Wednesday, the West Virginia Supreme Court ruled that Downtown-based EQT Corp. trespassed on the property of two Doddridge County landowners when it drilled nine horizontal wells from a pad placed on their land without their permission.

The landowners are Margot Beth Crowder and David Wentz, a once-married couple that bought some land in 1975, built a home there, then divorced in 2003 and continue to live in separate homes on the property.

As is common in large swaths of Pennsylvania, Ohio and West Virginia, their property is what’s called a split estate — the surface rights are owned by Ms. Crowder and Mr. Wentz, and the minerals below have a different owner, EQT.

The two estates were split in 1936. By law, the minerals trump the surface rights, which means in order to develop the coal or oil and gas below, a company can “burden the surface” in ways that are “reasonably necessary” to get the minerals out of the ground, even if the surface owners are against it.

No one in this years-long case has disputed that point. That is the law in West Virginia, just as it is in Pennsylvania.

But modern shale gas extraction involves horizontal wells that stretch for miles underground, traveling under several properties. EQT wasn’t just using their land — running hundreds of heavy-duty frack trucks through it, laying pipelines, installing condensate tanks — to get the minerals below, Ms. Crowder and Mr. Wentz argued.

It was doing all that to extract oil and gas from neighboring properties, too. That, they argued, is illegal.

In unanimous agreement, the state Supreme Court decision puts it plainly, “It is trespassing to go on someone’s land without the right to do so.”

If EQT wants to use Ms. Crowder’s and Mr. Wentz’s land to pull gas from shale layers under neighboring properties, it should reach an agreement with the landowners to do so, the court said.

Mike Laffin, a spokesman for EQT, said the company has been able to do that in many cases in West Virginia and doesn’t expect the ruling, which brings an end to EQT’s appeal of a 2016 lower court decision, to impede development there.

His prediction was more subdued than what was telegraphed in EQT’s briefs in the case and what industry groups have been warning about in legal appeals.

The Independent Oil & Gas Association of West Virginia warned the court that this decision “creates a material and substantial impediment to oil and gas development.”

An attorney for Pittsburghbased law firm Babst Calland wrote in a note in February that a ruling against EQT “will no doubt be a landmark decision that will result in increased litigation over existing operations and create additional hurdles and costs for all future oil and gas operations in the state.”

Dave McMahon, one of the lawyers for Ms. Crowder and Mr. Wentz and co-founder of the West Virginia Surface Owners’ Rights Organization, is hoping the decision goes viral.

“As I was reading it, my hand was shaking,” Mr. McMahon said. He was worried there would be some caveat, some limit on the decision. But he found none.

“I think it’ll be nationwide precedent,” he said.

For years, EQT has had a reputation for jumping into court with landowners, a litigious culture that CEO Rob McNally said is “definitely changing.”

“My first instinct is not to punch people in the nose,” he said in a recent interview before Wednesday’s decision.

Mr. Laffin, EQT’s spokesman, said on Thursday that it’s hard to say if the current management would have pursued this lawsuit the same way from the beginning.

“I can’t go back and say, ‘Oh, we wouldn’t have done that.’ But I can tell you that we’re aiming to be cooperative and work with landowners and residents of the communities even more.”

He offered as proof the February announcement of a $53 million settlement with West Virginia landowners who claimed for years the company was shorting them on royalty payments.