West Virginia's legal system continues to struggle with surface rights issues, with the state's Supreme Court of Appeals finding recently that the term "surface" means just what it says and does not include underground resources.
In a decision written by Justice Menis Ketchum, the state's highest court reversed the Circuit Court of Preston County's conclusion that a deed conveying "the surface only" also conveyed an interest in all oil and natural gas under the tract of land. When used as a term of conveyance, the word surface "is not presumptively ambiguous and does have a definite and certain meaning," the decision stated.
The case "has great significance to the interpretation of many land titles in West Virginia," according to Ketchum's 49-page decision.
The case, Faith United Methodist Church and Cemetery of Terra Alta, West Virginia et al vs. Marvin D. Morgan (No. 12-0080), revolved around the interpretation of a 1907 deed for a 225-acre tract in Preston County, WV. The deed, signed by two siblings, conveyed interest in "the surface only" of a portion of the tract. A coal severance deed had previously been recorded; no deed specifying any other minerals, including oil or gas, was ever recorded, according to the court.
In 2011 the circuit court, relying on a Supreme Court of Appeals decision from 1923, declared that the term "'the surface only' was ambiguous on its face and subject to modern-day interpretation," Ketchum wrote. The higher court in its decision overruled a portion of that previous decision, saying it did not believe it was "sound law," and reversed the circuit court decision.
The previous case, Ramage v. South Penn Oil Co., violated two fundamental public policies, according to the court: it made the drafting of deeds, wills and other instruments of conveyance "much more complex," and it required courts to "go beyond a deed in interpreting the word 'surface'..." Ramage "injected uncertainty and confusion into our law of land titles," Ketchum wrote. "The decision was soundly criticized by two dissenting members of the court when the decision was issued. Its reasoning has been thoroughly dissected in three law review articles." In addition, the Ramage decision has never been applied by the Supreme Court of Appeals and has been rejected by other jurisdictions, he said.
The definition of "surface" has been clarified in West Virginia's courts and legislature repeatedly since the 1800s. With the overruling of Ramage, the court now holds "that the word 'surface,' when used as an instrument of conveyance, generally means the exposed area of land, improvements on the land, and any part of the underground actually used by a surface owner as an adjunct to surface use (for example, medium for the roots of growing plants, groundwater, water wells, roads, basements, or construction footings)."
Last month, a district court judge reconsidered her decision to pass a key surface rights case on to the Supreme Court of Appeals, instead ordering both parties in the case Cain v. XTO Energy Inc. et al., (No. 1:11-CV-111) to submit proposed discovery plans (see Shale Daily, May 29; April 4). At issue is whether XTO, an Exxon Mobil Corp. subsidiary, may drill horizontal wells on 105 surface acres in Marion County, WV. XTO also plans to build oil and natural gas pipelines across the property. Court records show that a July 3 deadline has been set for rebuttal expert disclosure and a completion of discovery deadline of Oct. 31.
Last year, the West Virginia Supreme Court of Appeals ruled that state law doesn't give landowners the right to seek judicial review of well permits issued by the Department of Environmental Protection (see Shale Daily, Nov. 29, 2012). The arguments of Matthew Hamblet, a resident of Doddridge County, "are premised upon the notion that surface owners have an unrestricted right to enjoyment of their property," according to the ruling. "A surface owner's rights, however, are subject to the mineral owner's rights."