Energy and Environment Monitor

Our Long National Nightmare is Over (and We Can Finally Mine Some Coal)

May 19, 2019

By: Blair M. Gardner

“[O]ur long national nightmare is over.” [1]

On May 15 the Sixth Circuit Court of Appeals decided that a partial owner of the surface may grant the right to mine the coal beneath the severed surface estate notwithstanding the objections of the remaining surface owners. The Court concluded that the right to mine was correctly determined as a matter of Kentucky property law, that the state agency’s grant of the mining permit did not constitute an adjudication of “property rights” in violation of the federal Surface Mining and Control and Reclamation Act (SMCRA), and that the failure to disclose the existence of prior litigation was harmless error which did not invalidate the issued permit. In deciding the case, the Sixth Circuit ended litigation that began in 2014.

The Kentucky surface mining agency initially approved a mining permit for Premier Elkhorn Coal to mine a site in Pike County, Kentucky under a 2013 right of entry entered with Pike Letcher Land. Pike Letcher owned the surface as a co-tenant with M.L. Johnson Family Props., LLC. The agency’s approval spawned the first federal litigation over Elkhorn’s permit. Shortly after Elkhorn commenced mining, Johnson filed a citizen suit in federal district court under a SMCRA provision that authorizes a civil against the Interior Department to “compel compliance” with SMCRA. 30 U.S.C. § 1270(a). Johnson alleged that Elkhorn’s permit was invalid under SMCRA and moved for an injunction ordering Elkhorn to cease mining operations. M.L. Johnson Family Props., LLC v. Jewell, 27 F. Supp. 3d 767, 773 (E.D. Ky. 2014) (“Johnson I”), vacated as moot, No. 14-5867, Order, R. No. 29-2 (6th Cir. Oct. 31, 2014).

The district court agreed with Johnson. It held that the phrase “the surface owner” includes “all surface owners” who own a parcel as tenants in common. Id. at 771. Since Elkhorn had only the consent of Pike Letcher, and not Johnson, the court determined that the permit fell short of 30 CFR §778.15(b)(3) (A)’s requisites. Therefore, the court ordered the Secretary to conduct an inspection of Elkhorn’s mining operations and enjoined Elkhorn from surface mining while the inspection was pending. Following the district court’s order, the Secretary conducted an inspection. It found that Elkhorn’s permit was invalid and issued a cessation order prohibiting Elkhorn from continuing to surface mine. While Johnson I was pending and the Secretary was conducting its inspection, Elkhorn revised its permit application to establish its right to surface mine under subsection (C) of 30 CFR §778.15(b)(3), which directs “the regulatory authority” to determine “the surface-subsurface legal relationship ... in accordance with State law.” 30 U.S.C. § 1260(b)(6)(C). Elkhorn resubmitted its right of entry agreement with Pike Letcher along with its application. The state approved the revised application and the Interior Department rescinded its cessation order.

The Interior Department termination decision spawned the federal litigation decided by the Sixth Circuit. Johnson administratively challenged the termination decision in the Hearings Division of the Department of the Interior’s Office of Hearings and Appeals. On October 30, 2015, an ALJ upheld the termination decision. Johnson then administratively appealed the ALJ’s decision to the Interior Board of Land Appeals of the Office of Hearings and Appeals (“Appeals Board”). While that appeal was still pending, Johnson also sought review of the ALJ’s decision in federal court which held that the ALJ’s decision was not arbitrary or capricious or in violation of law. It granted summary judgment in favor of Interior, as well as Elkhorn, who had intervened as a defendant in the federal suit.

Johnson asserted the ALJ’s affirmance of the Secretary’s termination of the cessation order was arbitrary, capricious, or inconsistent with law for three main reasons: (1) the Secretary and the ALJ erroneously concluded that the Kentucky agency may issue surface mining permits in reliance on Kentucky’s cotenancy law3 ; (2) when the Kentucky agency issued Elkhorn’s revised permit over Johnson’s objections it unlawfully adjudicated a “property rights dispute” in violation of 30 U.S.C. § 1260(b)(6)(C); and (3) the Kentucky agency should have withheld Elkhorn’s permit under 30 U.S.C. § 1257(b)(9), because Elkhorn failed to disclose on its revised application the existence of Johnson’s still-pending lawsuit, Johnson I.

The Sixth Circuit affirmed the district court’s decision in favor of Elkhorn and the Interior Department and denied each basis for Jonson’s appeal. So after nearly six years since the company was first authorized to mine its coal, it will have the unqualified right to do so.

The case is M.L. Johnson Family Properties, LLC v. Bernhardt, Secretary of the Interior, No. 18-5520 (6th Cir. May 15, 2019).