The West Virginia Supreme Court has held that underground mine operators who possess the property rights to subside the surface without liability for damages do not have an obligation under the West Virginia Surface Coal Mining and Reclamation Act (“WVSMCRA”) to state in their permit applications what measures they will take to mitigate damage to commercial structures or to compensate surface owners for damage to commercial structures. See Texas Eastern Transmission, LP v. WVDEP & The Marshall County Coal Company, No. 16-0827. Additionally, the Court upheld the validity of contractually bargained-for rights, holding that neither WVSCMRA nor WVDEP’s rule have abrogated the common law where the legislature did not specifically express its intent to do so. We have previously written about this case here.
I. Proceedings Below
The case started as a challenge before the West Virginia Surface Mine Board by Texas Eastern Transmission, LP (“Texas Eastern”) to a surface mining permit now held Murray Energy’s Marshall County Coal Co. (“Marshall Coal”). The permit required the mine operator to provide advance notice of its intention to undermine pipelines but did not require the operator either to take steps in advance of mining to mitigate against pipeline damage (other than by mining using longwall techniques) or to repair or compensate for damage after the fact—because the operator had the property rights to subside without liability. In that permit challenge, Texas Eastern argued that pipelines are regarded as “protected structures” under the surface mining laws. As a result, it contended that the mine operator had to take or pay for steps to mitigate against damage (by, for example, uncovering the lines to allow them to flex in advance of mining) and had an obligation to pay for any resulting damage after the fact.
The West Virginia Department of Environmental Protection (“WVDEP”) argued before the Board that the mine operator did not have an obligation to take the pre-mining steps sought by Texas Eastern, but, in an about-face from the position it took in issuing the permit, did have an obligation to pay for any resulting damage notwithstanding the deed waiver. As to the latter point, WVDEP conceded that federal law did not require compensation for subsidence damages to commercial structures where the operator has the right to subside without liability, but that WVDEP had adopted additional regulatory protections for commercial structures. The SMB affirmed the position taken by WVDEP. Both the gas pipeline and mine operators appealed to the Circuit Court of Marshall County, which affirmed the SMB and WVDEP positions. Marshall Coal and Texas Eastern both appealed to the State Supreme Court, which heard oral arguments in September 2017.
II. The Court’s Decision
The Court’s analysis initially focused on Texas Eastern’s two primary arguments. First, Texas Eastern argued that Marshall Coal was required to explain in its permit application how it would comply with the Utility Protection Standard in the West Virginia surface mining rules. W.Va. Code St. R. § 38-2-14.17 (referred to as the “Utility Protection Standard”) requires that mining be conducted so as to minimize damage to pipelines passing over the permit area. The Court noted that the Utility Protection Standard is in a section of WVDEP’s rules titled “Performance Standards,” whereas the “Permit Application Requirements and Contents” are found in a different section. The Court reasoned that, because the performance standards did not contain express application requirements, they apply to the active operation of mining but do not dictate the technical requirements of the permit application.
The Court also addressed Texas Eastern’s argument that W.Va. Code St. R. § 38-2-3.32.a places the burden of establishing that the application is in compliance with all requirements of WVSMCRA and its implementing rules on the applicant. According to Texas Eastern, this meant that Marshall Coal was required to describe in its permit application how it would comply with each the performance standards, which compromise about 25 pages of the State Rules. The Court disagreed, holding that W.Va. Code St. R. § 38-2-3.32.a requires permit applicants to demonstrate compliance with WVSCMRA and the rules’ provisions governing the required contents of permit applications. The rules do not, however, require that applications provide a detailed summary of how an operator will comply with each and every State law performance standard.
Next, the Court turned to Texas Eastern’s argument that Marshall Coal’s subsidence control plan should have included a statement regarding the likelihood of damage to Texas Eastern’s overlying pipelines and a description of the measures Marshall Coal would take to minimize damage to the pipelines. With respect to gas pipelines, Marshall Coal’s permit application included the following narrative in its subsidence control plan:
Mining beneath gas pipelines will be handled per common law practices in accordance with West Virginia codes and regulations and severance deeds between the pipeline owner and [Marshall Coal].
The Court found that the rules did not prescribe any particular mitigation method for protecting gas lines. Insofar as Marshall Coal was not required to identify a specific type of mitigation action, it was up to WVDEP to determine the sufficiency of Marshall Coal’s proposed mitigation measures. WVDEP concluded that Marshall Coal’s proposed action was adequate, and the Court found no grounds to reverse that finding on appeal.
Finally, the Court addressed Marshall Coal’s argument that the Circuit Court erred by concluding that the surface mining rules require mine operators to repair or compensate for material damage to gas lines regardless of the parties’ respective common law property rights. W. Va. Code St. R. § 38-2-16.2.c.2 requires operators to either repair damage to structures or to compensate the owner of such structures for the resulting diminution in value. Texas Eastern, WVDEP, and the Department of Highways—in an amicus brief—all argued that the rule abrogated the common law and required Marshall Coal to repair or pay compensation for mine subsidence damage to pipelines regardless of its common law right to subside the surface without liability.
The Court noted that, although landowners have a right to subjacent support even after they convey their mineral interests, they are free to waive that right and grant a mineral owner the right to mine without liability for damage to the surface. The Court then examined the language of W. Va. Code St. R. § 38-2-16.2.c.2 and observed that it lacked “any indication of the impact a coal operator’s superior property rights has on its obligation to repair or compensate for subsidence damage where the coal operator has bargained for and obtained an express right to subside the surface without incurring liability.” Op., p. 28. The Court next reiterated the well-established rule that “[t]he common law is not to be construed as altered or changed by statute, unless legislative intent to do so be plainly manifested.” See p. 39, citing State v. Louk, 237 W.Va. 200, 786 S.E. 2d 219 (2016). Given that the rule was silent as to its impact on common law rights, “it simply cannot be interpreted to abrogate our common law as to subjacent support waivers.” Op., p. 30. Accordingly, the Court held “that W.Va. CSR § 38-2-16.2.c.2 does not abrogate West Virginia common law with respect to subjacent support waivers contained within coal severance deeds.” Op., p. 32.
III. Potential Future Ramifications
The Court’s ruling has no direct impact on the obligation of mine operators to repair or compensate for subsidence-related damages to residential properties as opposed to commercial properties. OSM and SMCRA require operators to repair or pay for damages to residential properties, and the Court recognized that the State mining program must be interpreted to be a stringent as the federal SMCRA program. Oddly, though, the opinion suggests that the rights of individuals and corporations are different under either the common law or the WVSCMRA. In its amicus brief, the WVDOH cited prior decisions of the Court that found surface owners were accorded certain remedial rights under the WVSCMRA, even where they have parted with the common law right of subjacent support. Even though there are logical grounds for distinguishing those cases, the Court brushed them aside as “unpersuasive” because they involved “private property owner’s rights (as opposed to those of corporations)….” This comment is unexplained. While the federal mining program imposes different remedial obligations for subsidence damages to “residential” and non-residential or commercial facilities, neither it nor the state program otherwise recognize differences in the protections afforded “individuals” and “corporations.” Whether the Court simply used the personal/corporate distinction as an alternative means of describing the residential/commercial distinctions in the programs is unclear.
Interestingly, the Court is currently scheduled to hear another case (Schoene v. McElroy) in January of 2018 that deals with the continued validity of an underground mine operator’s deed waiver to preclude common law claims related to subsidence damage from the surface owner. We have previously written about Schoene here. The difference between Texas Eastern and Schoene is that the plaintiffs in Schoene are non-corporate owners of a residential dwelling. If that were the only difference, it would seem that the Court might rule in favor of the surface owners based on dicta in Texas Eastern. However, the main issue in Schoene is not whether the mine operator must repair or compensate pursuant to § 38-2-16.2.c.2—the operator concedes that it must repair or compensate for subsidence damage to the surface—but whether WVSMCRA and its implementing rules effectively invalidated the operator’s deed waiver in its entirety, thereby reviving all of the surface owner’s common law claims for damages (as opposed to simply providing additional statutory protections). The Court’s decision in Texas Eastern suggests that it will uphold the validity of the operator’s deed waivers.
This article was authored by Chris M. Hunter, Jackson Kelly PLLC. For more information on the author, see here.