District Court Dismisses Challenge to West Virginia Unitization Act

On March 20, the U.S. District Court for the Northern District of West Virginia dismissed Sonda v. West Virginia Oil and Gas Conservation Commission for lack of standing. The lawsuit was brought by mineral interest owners challenging the constitutionality of West Virginia Code § 22C-9-7a, which authorizes the unitization of nonconsenting interest owners’ mineral tracts in horizontal well units. The District Court’s initial opinion was reversed and remanded by the U.S. Court of Appeals for the Fourth Circuit on January 31, 2024, holding that the District Court erred in its abstention order.

In 2022, the mineral interest owners filed a lawsuit (Civil Action No. 5:22-CV-124) against the West Virginia Oil and Gas Conservation Commission in the District Court, claiming that West Virginia Code § 22C-9-7a violated their rights under provisions of the U.S. Constitution and the Constitution of West Virginia. The Commission filed a motion to dismiss, arguing that the mineral interest owners lacked standing and failed to state a claim upon which relief could be granted. Subsequently, the District Court dismissed all but two claims that were brought pursuant to the U.S. Constitution. The District Court abstained from ruling on the two claims, invoking the Pullman abstention doctrine and asserting that West Virginia constitutional law was “directly germane to the issues presented.” The District Court stayed the matter so that the mineral interest owners could present the state law issues in West Virginia state court. The Commission appealed. The Fourth Circuit reversed the District Court, determining that the District Court should have first considered the issue of standing and instructed it to do so on remand. Further, the Fourth Circuit held that the Pullman doctrine was inapplicable here.

On remand, the Commission renewed its motion to dismiss the mineral interest owners’ lawsuit, reiterating that the (1) mineral interest owners lacked standing, (2) Eleventh Amendment immunity bars all claims against the Commission, and (3) remaining counts failed to state a claim upon which relief could be granted. The District Court agreed that the mineral interest owners did not have standing to challenge the statute. In a supplemental briefing to the District Court, the Commission asserted that the mineral interest owners lacked standing to bring their claims because they failed to demonstrate (1) injury in fact and (2) traceability. The mineral interest owners’ amended complaint did not state how their mineral interests had been impacted by the statute, whether their units were established after the statute was enacted, or whether the units were created involuntarily.

Thus, because the amended complaint did not allege how, or that, the mineral interests had been impacted, there was no actual concrete or threatened injury to the interest owners. Further, the District Court recognized that the mineral interest owners failed to satisfy the traceability requirement because there was not a causal connection between the alleged injury and the actions of the Commission. The amended complaint did not allege that the statute was being enforced against the mineral interest owners, that the Commission was affecting their mineral interests, or that future enforcement by the Commission would be sufficiently imminent and substantial. Because the mineral interest owners lacked standing, the District Court reasoned that there was no need to address the Commission’s remaining arguments. Therefore, the District Court dismissed the mineral interest owners’ amended complaint without prejudice.

The energy and energy litigation attorneys at Steptoe & Johnson PLLC have experience in guiding energy professionals through such issues, including the filing of applications for horizontal well unitization. For assistance or questions about this alert, please contact the authors or a member of the Energy Team or the Energy Litigation Team.