Molinary v. Powell Mountain Coal Co., Inc.

Several landowners (plaintiffs) had surface rights in a property to which Powell Mountain Coal Company, Inc., d/b/a Wax Coal (defendant), had the mineral rights. Wax Coal also had a negligible percentage interest in the surface rights to the property. State and federal regulations pursuant to the Surface Mining Control and Reclamation Act of 1977 (SMCRA) obligated permit applicants to obtain the written consent of surface owners in the case of severed estates. Wax Coal failed to obtain the landowners’ consent in its application for a permit to engage in auger mining. Wax Coal engaged in mining operations that resulted in profits worth hundreds of thousands of dollars. The landowners sued Wax Coal under the SMCRA for failing to get and submit surface-owner consent in the permit-application process. Wax Coal responded that because it had a surface right in the property (although a negligible percentage), it did not need to obtain consent. But this argument was contrary to state law regarding tenants in common, which required the consent of all cotenants to make a change to a property (even if the cotenant seeking to make the change owned 85 percent of the property). Thus, Wax Coal was not able to avoid liability, and the parties submitted the issue of damages to the court. Initially, the landowners sought damages for the surface-estate harm; however, such damages would have led to double recovery because the SMCRA authorized the government to order reclamation of the land. Accordingly, the landowners instead sought a nominal amount for the surface damage (a few hundred dollars) and the amount of benefit Wax Coal obtained from the mining operation (i.e., the hundreds of thousands of dollars’ worth of coal).