Bay v. Anadarko E&P Company LP

          OPINION AND ORDER DIRECTING BRIEFING

          Marcia S. Krieger, Senior United States District Judge

         THIS MATTER comes before the Court pursuant to the instructions of the 10^th Circuit Court of Appeals in Bay v. Anadarko E&P Onshore, LLC, 912 F.3d 1249 (10^th Cir. 2018). That order vacated the judgment entered by this Court in favor of the Defendants and remanded the matter for further proceedings consistent with the court's opinion.

         The Court assumes the reader's familiarity with the proceedings to date and the 10^th Circuit's opinion, and the Court will not further summarize them. The Court is given pause by the 10^th Circuit's discussion of the “material interference” standard, which requires the Bays to establish that the Defendants' use of the surface estate “completely precludes or substantially impairs” the Bays' ability to make use of the parcel as a whole. 912 F.3d at 1262. The surface owner must show that “surface use [is] infeasible or nearly impossible under the circumstances” created by the exploitation of the mineral estate. Id. at 1261. It is not sufficient for a surface owner to simply demonstrate that “inconvenience and some unquantified amount of additional expense” results from the exploitation of the mineral estate; rather, the surface owner must show that it “has no reasonable alternative method to maintain the existing use” of the surrounding property once mineral exploitation begins. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 252 (Tx. 2013), cited with approval in Bay, 912 F.3d at 1262. Noting that this standard presents a “high bar, ” the 10^th Circuit expressed some doubt as to whether the evidence that the Bays had adduced at trial would be sufficient to satisfy it, but it declined to reach that question because it had not been raised on appeal.

         The 10^th Circuit's observation presents a potential question of legal sufficiency, similar to a mid-trial motion for judgment as a matter of law pursuant to Fed.R.Civ.P. 50 that would, if resolved in favor of the Defendants, ameliorate the need for a re-trial. As such, the Court believes that it is appropriate to address the issue on the record created at the September 2017 trial in this case.^[1]

         Marvin Bay testified about farming two plots of land, the North Farm and the South Farm, both located in Eaton, Colorado. The Bays grow sugar beets, alfalfa, corn, wheat, and beans on the parcels in question. The Bays' claims here concern gas wells that Noble Energy, the Defendants' subcontractor, drilled on the Bays' property - two on the South Farm and three on the North Farm - beginning in or around 2006. The drilling and operation of the five challenged wells has not prevented the Bays from continuing agricultural uses on both parcels, and indeed, it appears that the farms remained operational through the time of trial in 2017. In explaining how the five wells in question^[2] affected his farming operations, Mr. Bay identified several categories of concerns.

         First, he described some degree of inconvenience that resulted from farming operations being conducted in the vicinity of the wells in question. Mr. Bay explained that when he is using farm equipment and approaches one of the well locations, “I have to stop, lift up my equipment, back up, go around the well where I can't cut any crops . . . [and] start on the other side.” Mr. Bay explained that the resultant “gap” - that is, the area he is unable to farm around the well site because he had to lift his equipment - becomes “a good place for weeds to grow.”

         Second, he described “compaction, ” that is, a compacting of soil that results from oil and gas operations. Mr. Bay explained that compacted soil “will not grow very good crops, ” but that “as you keep farming [it], eventually it gets better and better.” Mr. Bay's testimony seemed to suggest that compaction had occurred along fence lines that Noble Energy had constructed to section off its production activities, such that crops near those fence lines were less healthy than crops elsewhere on the property. Later, Mr. Bay also described a situation in which a production vehicle was driven on thawed land, resulting in compacted “wheel tracks” going out that particular well location. Mr. Bay estimated that it took five years before the affected soil could be brought back up to grade level so that it could be properly irrigated.

         Third, Mr. Bay described a circumstance in which a developer - Mr. Bay's testimony was not particularly specific as to who, when, and where - failed to completely restore a mud pit, leaving a situation where a portion of the property was “real sticky.” Mr. Bay stated that one of his center pivot sprinklers traveling over that area “would sink into that” former pit area and could not be moved. Mr. Bay stated that he tried to dig the sprinkler out but was unable to, and that as a result, he would have to “go in there with a tractor and pull the sprinkler out of the hole.” Doing so would causing him to “knock[ ] all the corn down” in the area around that sprinkler.

         Fourth, Mr. Bay complained that soil conditions over flow lines installed by Noble were “very soft, ” such that, again, irrigation equipment would sink into the soil and have to be pulled out. Mr. Bay stated that “we had to pull it out several times, ” and that, eventually, he decided to “put rocks and sand in the bottom of the sprinkler track.” He testified that even this solution was suboptimal, because if “you knock some of the rocks out, now you've got these rocks out in your field.”

         Fifth, Mr. Bay indicated that Noble is “supposed to keep the weeds out” on those portions of property it occupies. He acknowledged that Noble “send[s] out somebody to spray weeds” about once a year, but that “we've got a tremendous bunch of weeds” around the well locations.

         Sixth, Mr. Bay stated that the South Farm is on hillier property and that “water can get in the . . . trenches where they put down the flow lines and run down those and erode the hillside out some.”

         Seventh, Mr. Bay testified, somewhat unclearly, that “it wastes some water on the center pivot . . . it gets in the wrong rows and it runs off the field because of the flow lines.”

         Eighth, Mr. Bay complained that Noble employees driving down access roads to get to the wells “knock[ ] out the crop in about a 15-foot wide strip going out to the wells.”

         Ninth, Mr. Bay explained that the construction of the wells entailed “lights all time of the night” as well as noises from vehicles driving out to the well sites and as a result of other well operations. Mr. Bay also testified that, during the course of well drilling, there was a “tremendous amount of diesel” exhaust fumes that was “not a pleasant thing.” These were problems associated particularly with one well that were located close to the Bays' residence on the North Farm. Mr. Bay also testified ...