Coal company can’t dump waste water into mine

June 27, 2008

RE puzzle: When two parties own different rights to a piece of land

Consolidation Coal Co.’s Buchanan No. 1 mine is by far the largest in the state.

Big enough, in fact, that the mine accumulates so much water that pumping it directly into the Levisa Fork of the Big Sandy River would put more chloride and iron in the stream than it can safely absorb.

In recent years, the company has instead pumped the mine water into three abandoned mines.

However, the Supreme Court of Virginia ruled on June 6 in Levisa Coal Co. v. Consolidation Coal Co. that the company has no right to dispose of the water in the third mine, for which Levisa Coal Co. has the mineral lease. The reasoning of the opinion would appear to apply to the other two mines. Another entity, three limited liability partnerships known collectively as Big Vein, has the mineral lease for the first two mines, Beatrice and VP1.

Consolidation no longer is pumping water into the first two mines, and a suit seeking $3.25 billion in damages is pending in Buchanan County Circuit Court.

The case involving the third mine, known as VP3, is moving faster because Levisa sought a preliminary injunction to block Consolidation from pumping water into it. Levisa also asked the court to find that Consolidation had no right under a somewhat complex series of deeds and leases to dump the water into VP3.

The case highlights a tricky area of real estate law – when two parties own different rights to a piece of land. Here, as is somewhat common with property in Southwest Virginia, one party owns a parcel of land and another has the mineral rights to it. Sometimes easements to property, timber rights and even air rights can be implicated and need sorting out.

40-year-old lease

In 1968, Levisa granted Consolidation’s wholly owned subsidiary, Island Creek Coal Co., the right to remove coal from the mine, along with the right to “dump water and refuse on said premises” that Levisa “owns and has the right to lease.”

Although Island Creek stopped mining coal in 1998, the lease is still in effect. Levisa does not contend that Island Creek is in violation of the lease, but it asserts that recoverable deposits of coal and coal bed methane remain on the site.

Because the water pumped from Buchanan mine was rendering those deposits worthless, Levisa’s attorneys contended it is entitled to an injunction to stop the dumping. Consolidation countered that Island Creek had the right to allow it to pump water into VP3 and to convey that right to its parent.

Buchanan County Circuit Judge Keary R. Williams held a two-day hearing in November 2006 and rejected Levisa’s request for injunction. He also found that Consolidation had a right to dump the water into the mine.

The Supreme Court ruled that Williams was wrong on both counts. Island Creek’s lease from Levisa allowed it to dump water only from the property covered by the lease, Justice Lawrence L. Koontz Jr. wrote for a unanimous court. It did not allow the dumping of water from other property, Koontz said.

But Koontz said the record in the case was insufficient to decide whether Levisa Coal should get an injunction. The case goes back to Williams to consider that issue.

The judge should hear additional evidence on the issue of the damages that water in the VP3 Mine may cause to Levisa’s interests in the gaseous mineral estate, the court said.

And Consolidation Coal should get the chance to argue that a payment of money to Levisa Coal will be adequate, Koontz said.

Close it down?

J. Scott Sexton, a Roanoke attorney who represents Levisa Coal, said the litigation has been colored by concern that an injunction might require Consolidation to shut down the mine.

Sexton and Everette G. Allen Jr., a Richmond attorney who represents Consolidation, said the company is considering a treatment plant that would remove the chloride so that the mine water could be discharged into the Levisa Fork rather than stored in the mines.

Written by Alan Cooper  |  Filed Under Environmental 

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