Ohio Appellate Court Finds That Coal Mining Entities Are Liable to Pipeline Operator for Preventative Measures to Protect Against Subsidence Damages

Columbia Gas Transmission, LLC v. Ohio Valley Coal Co., 2019 BL 99544 (Ohio Ct. App. Mar. 21, 2019)

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Ralph C. Surman Jr.

Columbia Gas Transmission, LLC (“Columbia”) operated a high-pressure gas pipeline.  A portion of pipeline crossed land for which Ohio Valley Coal Company (“OVC”) and Consolidated Land Company (“Consolidated”) held interest rights in the underlying coal.  Columbia undertook measures to protect its pipeline from subsidence damage that OVC’s subterranean coal mining was certain to cause.  An Ohio appellate court held that OVC and Consolidated were liable to Columbia for those preventative measures.

OVC and Consolidated are affiliated entities; Consolidated owned the mineral rights appurtenant to certain land, and OVC leased tracts of land with the intent to perform long-wall coal mining.  OVC received long-wall mining permits from the Ohio Department of Natural Resources and announced its intention to perform such mining on the relevant land parcels.  Because such mining inevitably leads to surface subsidence, Columbia performed work to protect its pipeline from damage that would result from subsidence.  Columbia also performed work subsequent to the stabilization of the subsidence, including adding pipeline protections and reburying the pipeline.

Columbia sought to recover its costs for the work under the Ohio Revised Code, section 1513.15, which permits parties to recover from mining entities the costs of damages resulting from the entities’ practices.  OVC and Consolidated asserted that because the coal severance deeds through which Consolidated acquired its coal rights contained subsidence liability waivers, Columbia was not entitled to recovery.

The trial court held that Columbia’s pipeline qualified as a “structure” under Ohio law, and that therefore, the subsidence liability waivers were rendered unenforceable by relevant provisions of Ohio’s Surface Mining Control and Reclamation Act (the “SMCRA”).  So, OVC would be liable for “any actual damage” resulting from mining activity.  But the trial court also held that Columbia could not recover costs related to “pre-mining mitigation or prevention expenses.”  While Columbia could theoretically recover mine subsidence damages from OVC and Consolidated, it could not recover for costs incurred to prevent this damage.  The parties appealed these holdings.

The Ohio appellate court first upheld the trial court’s ruling that the subsidence liability waivers were unenforceable because the pipeline was a “structure or facility.”  The deeds containing the waivers, which Consolidated’s predecessor acquired in the early-20th century, allowed “the owner of mineral rights to extract the coal without liability to surface landowners for subsidence damage to land or structures.”  But the court noted that those waivers only are enforceable to the extent that “they do not conflict with subsequent legislation.”  So to determine whether the subsidence waiver conflicted with the SMCRA, the court needed to ascertain whether Columbia’s pipeline qualified as a “structure” or “facility.”

The court noted that the SMCRA and accompanying regulations provide broad protections.  It further noted that the plain meaning of the word “facility” would not restrict its use merely to homes or “occupiable improvements to land.”  The court agreed with the trial court that “a ‘facility’ is certainly broad enough to encompass a pipeline.”  Accordingly, the court held that the SMCRA invalidated the subsidence liability waivers, rendering them unenforceable.

Next, the court disagreed with the trial court and determined that Columbia may recover costs associated with its efforts to prevent or minimize damages resulting from subsidence.  The court felt there would be “an absurd result” if Columbia could not recover costs simply because it took preemptive action to minimize its damages.  The court also noted that Columbia had acted as a “responsible corporate citizen” not only by mitigating its damages, but also by considering the public interest in securing its pipeline.  Had Columbia simply waited and incurred costs, those repair costs would have exceeded the preventive costs, and, in the interim, the pipeline would have been susceptible to leaks or interruptions, endangering or inconveniencing the public.  Ultimately, the court believed that such costs of prevention should be borne by the mining entities.

To view the full text of the court’s decision, courtesy of Bloomberg Law, click here.