Energy and Environment Monitor

West Virginia County Court Rules That Mine Operator Is Not Required To Prevent Subsidence Damage To Commercial Gas Lines Where Operator Has The Right To Subside But Has Duty To Compensate For Damages

September 7, 2016

By: Chris M. Hunter

By Order of August 5, 2016, the Circuit Court of Marshall County, WV ruled that West Virginia’s surface mining rules do not require underground mine operators to take steps—or pay pipeline operators to take steps—in advance of mining to prevent damage to overlying pipelines where the miner has the common law right to subside the surface. Link to Order  The Court also held, however, that state law requires mine operators to compensate owners of commercial structures for subsidence damage, even where the miner possesses the right to subside without liability via severance deed waiver.

Pipeline operators had earlier appealed to the State Surface Mine Board the terms of surface mining permits issued to mine operators where those permits authorized the use of full extraction longwall mining techniques. The pipeline operators sought the imposition of two conditions on the surface mining permits. First, they argued that the State surface mining laws required mine operators to take, or pay the pipeline operators to undertake, pre-mining mitigation measures (such as uncovering or moving the lines) to prevent damage to their pipelines.  Second, they contended that mine permittees were obligated to pay for any post-mining damages to the lines.  The permits as issued by the West Virginia Department of Environmental Protection (“WVDEP”) contained neither condition.

West Virginia’s surface mining rules require underground mine operators to “[e]ither correct material damage resulting from subsidence caused to any structures or facilities by repairing the damage or compensate the owner of such structures or facilities in the full amount of the diminution in value resulting from the subsidence.” W.Va. Code St. R. § 38-2-16.2.c.2.  The rules also require subsidence control plans submitted with surface mine permit applications to indicate what measures will be taken to minimize material damage to surface structures.   W.Va. Code St. R. § 38-2-3.12.d.2.  Such mitigation measures can include mining without interruption, which the mine permittees intended to do.

The applicable West Virginia rules became effective in 1996. See W.Va. Code St. R. § 38-2-16.2.c.2.  They were adopted in response to a since-changed federal mandate that state surface mining programs include protection or compensation plans for subsidence-induced damages to both commercial and residential structures regardless of common law deed waivers of the right to subjacent support.  When a later adopted federal surface mining rule clarified that the federal Surface Mining program required compensation only for residential, but not commercial, structures, West Virginia never revised its program. See, e.g., 30 C.F.R. §§ 784.20(b)(7) & 817.121(c)(2) & (3) (adopted at 60 Fed. Reg. 16722 (Mar. 31, 1995)).

In 1994, however, the West Virginia Legislature limited WVDEP’s authority to adopt rules that are more stringent than their federal counterparts. It enacted a statute requiring WVDEP to issue written findings of specific need for “legislative rules promulgated by the director which become effective on or after [July 1, 1994]” that are more restrictive than their federal counterparts. W.Va. Code § 22-1-3a.  Given its applicability to both residential and commercial structures, the mine operators reasoned that the 1996 version of § 38-2-16.2.c.2 is more restrictive than its federal counterpart.  Because WVDEP had not issued any findings of “need” when it approved those portions of the rule protecting commercial structures, the mine operators argued those portions of the rule were invalid.

Before the Surface Mine Board, the pipeline operators argued that the permits were defective because the mine operators failed to describe how they would prevent or minimize damage to overlying commercial pipelines. They also argued that WVDEP’s rules required mine operators to pay for any resulting damage even if the surface owners had waived that right.  The mine permittees countered that WVDEP’s rules required neither that they take steps to prevent or mitigate damage to commercial structures nor, where they had the deed rights to subside without liability, to pay for any resulting damage.  They argued that any construction of W.Va. Code St. R. § 38-2-16.2.c.2 to the contrary was prohibited because the rule was impermissibly more stringent than its federal counterpart and, therefore, invalid per W.Va. Code § 22-1-3a.  During the permitting process, WVDEP had taken the position that the parties’ respective common law rights controlled any dispute over responsibility for mitigation and repairs relating to subsidence damage. In the appeal before the SMB, however, WVDEP switched its position as to post-mining damages—arguing that West Virginia’s surface mining rules require coal operators to pay for damages to non-residential structures despite having the common law right to subside and despite the fact that parallel federal rules do not impose a similar obligation.

In its Final Order of January 26, 2009, the SMB adopted WVDEP’s position that W.Va. Code St. R. §§ 38-2-3.12.a.6 & -3.12.d.2 required subsidence control plans and permits to describe the measures to be taken to either mitigate subsidence damages to pipelines prior to mining or to remedy subsidence damage, but did not require mine operators to describe both.  The SMB did not require the permittees to take pre-mining mitigation measures (or to pay the pipelines to do so) but did rule that W.Va. Code St. R. § 38-2-16.2.c.2 requires mine operators to repair or compensate for post-mining subsidence damages regardless of their common-law property rights. Both sides appealed the SMB’s order to Marshall County Circuit Court.

The Circuit Court affirmed the SMB on both issues. First, the Court ruled that the plain language of West Virginia’s surface mining rules require subsidence control plans in permits to describe the measures to be taken to either mitigate subsidence damages to pipelines prior to mining or to remedy subsidence damage, but do not require both.  Final Order, ¶12. 

Next, the Court considered the mine operator’s argument that it was under no duty to compensate the gas companies for damage to commercial gas lines because the WVDEP rule on which that duty rested was impermissibly more stringent than its federal counterpart. The Court rejected this argument. It sided with the pipeline operator’s contention that the West Virginia rule cannot be more stringent than federal law because the applicable federal regulation (30 C.F.R. § 817.121(c)) required repair only “to the extent required under state law.”  This recognition of state law in the federal rule, reasoned the Court, meant that the federal program contemplates that state law can impose requirements not mandated by the federal program without being considered “more stringent” than the federal program. Final Order, ¶19 (“W.Va. Code § 22-1-3a is not applicable as 30 C.F.R. § 817.121(c)(3) specifically defers to State law to provide the requirements by which [mine operators] must comply.”).

This article was authored by Chris M. Hunter, Jackson Kelly, PLLC.