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Court News Ohio

Contract Does Not Prohibit Strip-Mining on ODNR Land

The holders of the mineral rights under more than 600 acres owned by the state in southeastern Ohio have the right to strip-mine for coal, the Ohio Supreme Court ruled today.

In a 6-1 decision, Justice Paul E. Pfeifer concluded that the contract between the Ohio Department of Natural Resources (ODNR) and the mineral rights holders did not exclude strip-mining as a method to extract coal from about 10 percent of the Jefferson County property.

The case will be sent back to the trial court to determine the extent of strip-mining that is reasonable, as required by the contract. The decision reversed the judgment of the Seventh District Court of Appeals.

Ronald Snyder and Steven Neeley acquired the mineral rights to the 651-acre property, which is part of the 4,100-acre Brush Creek Wildlife Area owned by ODNR. After discovering that about 65 acres of their land contains more than $2 million worth of coal, Snyder let ODNR know that they wanted to surface-mine the mineral. ODNR refused, and Snyder and Neeley filed a complaint.

The trial court, however, granted summary judgment to ODNR. On appeal, the Seventh District affirmed.

In today’s opinion, Justice Pfeifer explained that when ownership of property is split, the surface owner and the mineral rights holder each have rights subject to the other. The surface owner cannot claim that no minerals can be mined, while the holder of the mineral interests cannot expect unlimited access to the minerals, he wrote.

He noted that the two cases discussed at length during the court’s oral arguments and in the parties’ briefs – Skivolocki v. E. Ohio Gas Co. (1974) and Graham v. Drydock Coal Co. (1996) – both dealt with contract language about deep-mining techniques. The decisions in those cases were tied to the contracts at issue there, he reasoned. Because the contract in this case has no deep-mining language, he concluded that the holdings in Skivolocki and Graham do not apply to this dispute.

According to this contract, the mineral interest owner holds “all mineral rights, including rights of ingress and egress and reasonable surface right privileges.”

“We are disinclined to believe that strip-mining is always inconsistent with the surface owner’s rights,” Justice Pfeifer wrote. “All mining, whether deep-mining or strip-mining, damages the surface interest, and strip-mining is not inherently more detrimental to the owner of the surface interest ….  … If all mining disturbs the surface, there is no reason to believe that strip-mining is worse for the surface owner. Strip-mining is inconsistent with surface rights, but so is deep mining, and in any event, the surface owner is not sovereign. Of course, neither is the owner of the mineral rights.”

“Strip-mining was well known in Jefferson County when the contract was signed,” he added. “In fact, some areas of the property at issue were strip-mined before the ODNR acquired it. Thus, there is reason to believe that the signatories to the original contract understood that ‘reasonable surface right privileges’ included the right to strip-mine, and there is no reason to believe that the signatories intended to exclude strip-mining.”

Joining the majority were Chief Justice Maureen O’Connor and Justices Judith Ann Lanzinger, Sharon L. Kennedy, Judith L. French, and William M. O’Neill. Justice Terrence O’Donnell dissented.

“In Skivolocki, we considered whether strip mining is a reasonably necessary use of the surface to reach the minerals and concluded that ‘the right to strip mine is not incident to ownership of a mineral estate,’ because ‘strip mining is totally incompatible with the enjoyment of a surface estate,’ and ‘the right to ‘use’ the surface cannot be reasonably construed as the right to destroy it,’” Justice O’Donnell wrote. “Thus, one’s ownership of coal does not imply the right to remove it by strip mining, even if other methods are not economically feasible, and the owner of the mineral interest bears the ‘heavy burden’ to demonstrate that the conveyance grants the right to strip mine.”

Justice O’Donnell added that the Graham ruling and decisions in other coal-producing states have held that mineral rights owners may not extract minerals in a way that destroys the surface land unless that right is unequivocally stated in the deed.

“[T]he reservation of ‘reasonable surface right privileges’ does not clearly and unambiguously release Ronald Snyder and Steven Neeley from their duty not to injure the surface estate, nor does it satisfy their ‘heavy burden’ to establish their right to engage in strip mining in a state wildlife area,” he concluded.

2012-1723. Snyder v. Ohio Dept. of Natural Resources, Slip Opinion No. 2014-Ohio-3942.

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