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Coal Mine Voids: The Pitched Battle for Ownership of Virginia's Deep, Dark Depths

On April 16, 2015, the Virginia Supreme Court exercised its power under the Virginia Constitution, and its own Rule 5:40(a), to answer two certified questions posed by the United States District Court for the Eastern District of Virginia. See Bailey v. Spangler, 2015 Va. LEXIS 52, Record No. 141702 (April 16, 2015). The U.S. District Court’s questions related to the correct interpretation of Va. Code §55-154.2(A), and the legal implications of that interpretation. That statute, located among other Virginia laws enacted to address “clouds on title” to real property interests, is entitled, “Presumption regarding estate of owner of mineral rights.” In effect, the law deals with ownership of coal mine voids, that is, “those spaces or passageways created from the removal of coal hundreds of feet below the surface.” The text of Va. Code § 55-154.2(A) reads as follows:

Except as otherwise provided in the deed by which the owner of minerals derives title, the owner of minerals shall be presumed to be the owner of the shell, container chamber, passage, and space opened underground for the removal of the minerals, with full right to haul and transport minerals from other lands and to pass men, materials, equipment, water and air through such space. No injunction shall lie to prohibit the use of any such shell, container chamber, passage or space opened underground by the owner of minerals for the purposes herein described. The provisions of this subsection shall not affect contractual obligations and agreements entered into prior to July 1, 1981.

Why do coal mine voids generate such interest that laws and lawsuits might focus upon them? Well, as you might expect, the answer lies in their financial value. Coal mines typically track underground veins of coal. These veins often extend somewhat horizontally, well beyond a particular surface landowner’s property boundaries. As the coal mining company extracts coal along the vein, the open space left behind, in effect, becomes an open passageway. The passageway, or, “mine void,” may extend under the property of many surface landowners. If a surface landowner owns, and thus economically controls, the mine void under his or her land, then that landowner may charge the coal mining company a fee for the use of it.

In the case of Mavra Bailey v. Conrad Spangler, Director of the Virginia Department of Mines, Minerals and Energy, the surface landowner, Bailey, in 1983, acquired title to a parcel of property in Dickenson County, Virginia. That parcel derived from a larger tract, from which the underground mineral rights were severed in 1887, by deed conveying “all the coal, iron, petroleum oil and [gas] and other ores and minerals lying and being in… and under all that…tract of land” to the Virginia Coal and Coke Company. Notably, the surface landowner in 1887 did not convey, or otherwise address ownership of, mine voids resulting from extraction of coal underneath the land’s surface. Thus, Bailey sued Conrad Spangler (“Spangler”), the Director of Virginia’s Department of Mines, Minerals and Energy (“DMME”), when that department issued mining permits to the Dickenson-Russell Coal Company, LLC (“Dickenson-Russell”), which company modernly owns the mineral rights underneath Bailey’s land.

In the lawsuit, brought first in the City of Richmond Circuit Court, and later removed by Conrad to the U.S. District Court, Bailey sought declaratory relief. She alleged a “taking of her real property” by Spangler, in his capacity as DMME director. She asserted that by issuing the mining permits, Spangler enabled Dickenson-Russell to conduct mine operations in the void underneath her property, depriving her of just compensation for that space’s use. Among other specific relief, Bailey asked for a judicial declaration that Va. Code § 55-154.2 violated her due process rights under the U.S. Constitution, “both facially and as applied because it deprived her of her private property rights in the mine void underneath her property[.]” Spangler moved to dismiss Bailey’s lawsuit. He contended that Bailey did not own the mine void under her land, because the statute “divested her predecessors in title of ownership of the mind void before Bailey acquired her property in 1983.” The U.S. District Court summarized Spangler’s position to assert that “the coal owner became the actual owner of [the mine void] on July 1, 1981,” the original effective date of Va. Code § 55-154.2.

In certifying its questions to the Virginia Supreme Court, the U.S. District Court recognized that the governing legal principles for statutory interpretation may differ greatly between federal and state courts. As a result, the courts might reach quite different conclusions. In effect, the U.S. District Court sought the Virginia Supreme Court’s definitive interpretation of Va. Code § 55-154.2(A). That is, the interpretation that Virginia’s highest court would give to the statute if the litigants presented the same questions on appeal from a state trial court. Although couched in somewhat complex legal language, the U.S. District asked these questions: (1) Does the presumption of mine void ownership established by Va. Code § 55-154.2(A) apply to deeds executed prior to July 1, 1981?; and, (2) If the answer to the first question is “yes”, then, what, if any, ownership interest would Bailey possess in the mine voids underneath her property? Upon receiving answers to these questions, the U.S. District Court could proceed to adjudicate Bailey’s constitutional claims in the federal litigation.

To answer the first question, the Virginia Supreme Court (“the Court”) noted the underlying remedial purpose of Va. Code § 55-154.2. Indeed, the statute’s presumption of mine void ownership stemmed from the General Assembly’s intent to contravene the Court’s holding in Clayborn v. Camilla Red Ash Coal Co., 128 Va. 383, 390, 105 S.E. 117, 119 (1920). In addressing the U.S. District Court’s questions, the Court reviewed its Clayborn holding, which established that “a surface estate owner retains ownership of a mine void if the severance deed does not expressly convey the mine void to the mineral estate owner.” The Court then stated its goal in interpreting Va. Code § 55.154.2: to carry out the General Assembly’s intent “as expressed by the language used unless a literal interpretation of the language would result in an absurdity.”

Having explored the statute’s origin and purpose, the Court discussed the premise that absent “manifest” legislative intent to the contrary, Virginia law disfavors retroactive application of statutes. Instead, the general rule favors prospective application, so as to minimize potential interference with contracts and other legal relationships, including vested rights. Further, the Court cited Virginia precedent holding that it “is reasonable to conclude that the failure of to express an intention to make a statute retroactive evidences a lack of such intention.”

The Court proceeded to contrast the parties’ positions on the applicability to Bailey’s land of the mine void ownership presumption in Va. Code § 55-154.2(A). Bailey, on the one hand, relied upon the statute’s limiting language, stating that it “shall not affect contractual obligations and agreements entered into prior to July 1, 1981.” By characterizing a “deed” as a “contractual obligation or agreement,” she asserted that the statutory presumption should not apply to her property interests, as they derived from the 1887 severance deed. On the other hand, Spangler asserted that the plain meaning of the term “contractual obligations and agreements,” as used in the statute, did not include “deeds”. As a result, he contended, the statute’s limiting language did not relate to the 1887 severance deed at issue in the case, or, consequently, to any rights in mine void ownership created by the Court’s Clayborn decision. Spangler’s legal position thus concluded that the statute’s presumption of mine void ownership applied to defeat Bailey’s mine void ownership claim.

In a fascinating tack, the Court then ruled that the parties’ respective positions led to the same answer to the first certified question:

The Court need not parse the language of the statute because we are of the opinion that both interpretations reach the same result. If, as Bailey contends, a "deed" is a "contractual obligation" or "agreement" within the context of Code § 55-154.2, then the statute is explicitly nonretroactive. However, even assuming as Spangler contends, that a "deed" is not a "contractual obligation" or "agreement," there remains no manifest statement concerning the retroactive application of the statute to deeds.

Respecting Spangler’s position, the Court further held that it could not infer a legislative intent for retroactive application to deeds from the statute’s “express exemption of contractual obligations and agreements entered into” prior to July 1981. In the Court’s view, that language did not rise to the level of a manifest expression of legislative intent for retroactive application of the ownership presumption. Further, the Court remained “unpersuaded by the argument that exempting deeds executed prior to the statute’s enactment will unduly limit the statute’s application.” The Court noted that the General Assembly possessed the power to avoid such a result. It “could have expressly stated that the statute retroactively applies to deeds, if it had desired to do so.”

Thus, the Court held that, “the presumption of mine void ownership created by Code § 55-154.2 does not apply to deeds executed before July 1, 1981…The first certified question is answered in the negative.” Bailey’s position prevailed; the statutory presumption of Va. Code § 55-154.2 does not affect her right to claim ownership of the mine voids underneath her property, as derived from the 1887 severance deed and the Court’s 1920 decision in Clayborn. As to the second certified question, the Court deemed it moot, and so advised the U.S. District Court.

What are some broader principles at work here for Virginia law? The Court’s decision certainly demonstrates that real estate and mining law continue to evolve in the Commonwealth, both legislatively and judicially. In addition, by enacting Va. Code § 55-154.2, the General Assembly demonstrated a willingness to legislatively overrule the Court’s Clayborn decision respecting mine void ownership. As a result, the Bailey v. Spangler decision may well generate more legislation in this area of property law. Finally, landowners such as Bailey, with interests in mine voids deriving from severance deeds pre-dating Va. Code § 55-154.2, now enjoy a potentially lucrative economic benefit. Such surface owners surely will commence to harvest the financial fruits of the passageways within the deep, dark depths of Virginia!

Norman A. Thomas, PLLC

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Mr. Thomas serves appellate clients from throughout the Commonwealth of Virginia in Virginia's appellate tribunals, the State Corporation Commission, and the U.S. Court of Appeals for the Fourth Circuit. 

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