McEvoy v. Diversified Energy Co.

The federal district court for the Northern District of West Virginia granted preliminary approval of a settlement in a class action brought by landowners against companies that allegedly failed to plug and remediate inactive wells on the plaintiffs’ property. The plaintiffs made fraudulent transfer and trespass and negligence claims. The fraudulent transfer claims alleged that one set of defendants transferred thousands of wells to a second set of defendants for more than $600 million and that the liabilities for plugging and decommissioning the wells was $2–3 billion, rendering the acquirer insolvent. The plaintiffs’ original complaint included allegations regarding methane leaks from the wells contributing to climate change and also included a nuisance claim, but damages for methane leakage and for nuisance were subsequently disclaimed. The settlement requires the company that acquired the wells to plug 2,600 wells in six states. The settlement also requires the defendants to pay up to $6.5 million to be used for costs of notice, service awards, and any awarded attorneys’ fees and costs.

On June 1, 2023, the federal district court for the Northern District of West Virginia ruled that mineral owners and the West Virginia Department of Environmental Protection were not necessary and indispensable parties to landowners’ lawsuit seeking damages from companies that own gas wells for their failure to plug inactive wells. The court therefore denied the companies’ motion for judgment on the pleadings for failure to join required parties. On June 15, the plaintiffs filed a third amended complaint. They dropped a nuisance cause of action and clarified the damages they sought, including by disclaiming damages for methane leakage. The third amended complaint also dropped allegations that methane leakage causes significant environmental harm and is a significant financial liability.

Private landowners in West Virginia filed a class action complaint in the federal district court for the Northern District of West Virginia, contending that defendant companies’ failure to promptly plug abandoned gas wells caused injuries. The complaint alleged that one group of defendant companies (the “Diversified” companies) owned at least 2,168 abandoned wells, including more than 700 wells transferred by the second group of defendants (the “EQT” defendants) in 2018 and additional wells transferred by EQT in 2020. The complaint alleged that the “unlawful presence of these abandoned wells interferes with Plaintiffs’ use and enjoyment of their properties, lowers their property values, and poses health and environmental hazards.” The complaint also alleged that the wells “leak significant amounts of methane—a potent greenhouse gas—into the atmosphere and contribute to climate change.” The plaintiffs alleged causes of action for trespass, nuisance, and negligence and for avoidance and recovery of fraudulent transfer. They sought damages as well as the creation of funds to be used to plug and decommission class members’ wells.