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Contract – Lease – Coal Operation – Wastewater

A Buchanan County Circuit Court grants partial summary judgment to plaintiff coal company and holds that Island Creek does not have authority under the subject lease to allow Consol to store wastewater from other mining operations on or in Yukon’s mines.

Plaintiff Yukon specifically asks this court to rule that defendant Consolidated had no legal right to dump or store wastewater from its Buchanan No. 1 Mine facility into areas where Yukon has coal and gas interests in the Beatrice Mine, the VP1 Mine and/or the VP3 Mine, including the drilling of tunnels or holes connecting the Beatrice Mine with the Buchanan No. 1 Mine and all other means of injection, pumping and storage by Consolidated. Yukon argues the Virginia Supreme Court and an arbitration panel have both ruled on this water dumping issue.

To determine the rights and authority of Island Creek and subsequently, Consol, to store water under these facts, the court must look to the language of the 1961 mining lease between Yukon and Island Creek. The 1961 lease between Yukon and Island Creek is virtually identical to the lease interpreted by the Virginia Supreme Court in Levisa Coal Co. v. Consolidation Coal Co., 276 Va. 44 (2008). The Levisa case involved the same issue presented here, that is, did Consol, through Island Creek’s permission, have the right to store excess water from its mining operation on the lessor’s property. The Levisa court further cites to “the long established view in American law holding that the owner of a mine … may allow the water therein to flow in natural channels and percolations into an adjoining mine, but he may not, in absence of an easement or license to do so, discharge [water] by means of artificial drains into such adjoining mine.”

The language of the lease controls the rights of the parties. This court is of the opinion that Island Creek did not stipulate for the right to dump wastewater in the lease. The language cited by Consol grants Island Creek no rights other than those incidental to its coal mining operations on the leased property, and no right to use Yukon’s mineral estate to support its mining operations on other lands never vested. For these reasons, Island Creek does not have the authority, under this lease, to allow Consol to store wastewater from other mining operations on or in Yukon’s mines.

Consol also claims its purchase of Plum Creek on Dec. 10, 2004, gave Consol a right of ownership to an undivided one-third interest in the coal estate and that, as a co-tenant, it has the right to store water on its own property. Consol further claims that, as a co-tenant, it has the right to consent and ratify water storage on the leased estate, including ratification of water storage relating back to 1993 when the water dumping began. In citing the case of Marcuse v. Broad-Grace Arcade Corp., 164 Va. 553 (1935), however, Consol omits from its argument the exception to the rule stated by the Marcuse court that ratification cannot occur when the rights of innocent third parties are affected. One co-tenant cannot waive the rights of another co-tenant. Consol cannot ratify its own wrongful conduct; only Yukon could make such a ratification.

Yukon Pocahontas Coal Co. v. Consolidation Coal Co. (Moore, J.) No. CL 04-91, March 3, 2010; Buchanan County Cir.Ct.; J. Scott Sexton, Benjamin A. Street, Everette G. Allen Jr., James R. Creekmore, Gregory N. Stillman, Cassandra C. Collins for the parties. VLW 010-8-102, 5 pp.

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