MANAGEMENT OF WATER AND WATER QUALITY IN COAL MINING: A LEGAL PERSPECTIVE

• Jurisdiction: United States

Water Quality & Wetlands Regulation and Managment in the Development of Natural Resources
(Jan 2002)
CHAPTER 9A
MANAGEMENT OF WATER AND WATER QUALITY IN COAL MINING: A LEGAL PERSPECTIVE
Brian R. Bjella
Fleck, Mather & Strutz, Ltd.
Bismarck, North Dakota

I. INTRODUCTION

With the passage of the federal Surface Mining Control and Reclamation Act¹ ("SMCRA") in 1977 life changed dramatically for coal mine operators. Prior thereto the regulation of coal mines had been solely the province of the states. Now, everything from securing permits to mine to the reclamation of mined lands is controlled by federal law.

Congress sought to impose a nationwide system of coal mining regulation, with the states only re-achieving "primacy" to regulate mining after having state programs approved by the federal Office of Surface Mining and Reclamation Enforcement ("OSM"). Otherwise, OSM retained the regulatory role. In addition, OSM always maintains "oversight" authority should it believe a state is not properly enforcing the law even if a state program has been approved. Both state and OSM inspectors are employed to ensure that mine operators are complying with the regulations and specific permit requirements. Operators found to be in noncompliance are issued a "notice of violation" ("NOV"), which can lead to a monetary fine or even a cessation order stopping production.

The coal producing states with an OSM approved program have adopted their own version of SMCRA and corresponding regulations. Water is one of the primary subjects of SMCRA regulation. As you will see, this has resulted in a situation where water rights and water quality/quantity issues have been combined under a unique statutory scheme.

II. REQUIREMENT OF WATER SUPPLY REPLACEMENT, A NEW LEGAL REMEDY

SMCRA mandates that surface coal mine operators replace the water supply of landowners whose supply is affected by mining operations when it provides as follows:

(a) Nothing in this chapter shall be construed as affecting in any way the right of any person to enforce or] protect, under applicable law, his interest in water resources affected by a surface coal mining operation.

(b) The operator of a surface coal mine shall replace the water supply of an owner of interest in real property who obtains all or part of his supply of water for domestic, agricultural, industrial, or other legitimate use from an underground or surface source where such supply has been affected by

[Page 9A-2]

contamination, diminution, or interruption proximately resulting from such surface coal mine operation.²

This provision created a new remedy for landowners whose water supply is affected by coal mining operations. That is, the right to a replacement water source.³

This statute was the subject of one of the many challenges brought against SMCRA or the regulations promulgated thereunder, either by environmental groups or the coal mining industry. At issue was whether the statute required the replacement of a water supply to the extent a coal mining operator legitimately uses a water supply under a senior water right granted under applicable state law. An environmental group argued that part (a) should not apply to mine operators at all and that there should be no exemption for a miner's senior water rights. However, the court disagreed finding that Congress was very explicit in its statement of non-interference with state water law, and deference to such law. The most reasonable interpretation of the language is that whatever water rights state law affords mine operators are preserved along with the rights of others. Thus, the statute creates an additional remedy against illegitimate water uses but does not deprive anyone, including mine operators, of whatever rights to the use of water they previously had.⁴

The court indicated that by implying a water replacement not subject to the allocation of water rights under state law would change state law. For example, if a junior water user can insist that a senior water user replace its water supply, regardless of whether state law allowed the senior user to consume that water, then the senior user had lost some state water law rights.⁵ In SMCRA Congress expressed a concern for preserving existing property rights and not interfering with state determination of such rights.⁶ It is interesting to see how the law has evolved, particularly since the decision of the Court of Appeals in National Wildlife Federation. Later case law seems to indicate that with the adoption of a state SMCRA with identical or very similar language, there was a substantive change in state water laws.

This duty to replace water supply arises even though the effect upon the water supply may have resulted from a reasonable use of the property in full compliance with state law. The affecting of a water supply is not a violation, only the failure to replace is. This is a change in the common law in many jurisdictions where previously the mine operator may have had the right to diminish or deplete a private water supply. While traditional common law remedies are preserved, SMCRA has provided another powerful remedy, being the absolute right to a replacement source.⁷ However, there is still a requirement to prove the mining activity was the "proximate cause" of the diminution or contamination. The neighboring landowner must establish causation, which is not always easily proven.

[Page 9A-3]

Congress determined that the common law was inadequate to protect adjacent water supplies from the affect of coal mining operations.⁸ As a result, SMCRA may shorten the time within which such water disputes are resolved.⁹

The Supreme Court of Indiana had occasion to hear a case brought by mining companies asserting that a state regulatory agency did not have the authority to interfere with its rights to the use of groundwater located beneath their land as defined by state common law.¹⁰ Prior to the passage of the state SMCRA, Indiana law provided that groundwater is part of the land in which it is present and belongs to the owner of the land; and it may be put to use to the fullest extent on that land as long as the exercise of the right does not cause injury gratuitously or maliciously to nearby lands and their owners. The mining companies felt they were protected by a provision in state SMCRA that nothing shall be construed as affecting the right of a person to enforce or protect under applicable law the person's interest in water resources. A specific challenge was to restrictions placed upon the mining companies when pumping groundwater from the property in which they had water rights. The court noted that one of the requirements now placed upon mining companies is to replace water supplies; of owners whose supply of water is affected in quality or quantity by coal mining operations.¹¹

The coal mining companies contended that the state regulatory agency did not have the authority to interfere with the right to the use of groundwater located beneath their land because prior interpretations of federal SMCRA require deference to state law. However, the court disagreed, noting that the state SMCRA does not state what the applicable law is when deciding a water rights case. The position of the mining companies that both state and federal SMCRA expressly preserve whatever water rights that state common law provides to surface coal mining operators was deemed a fallacy by the court. Rather, SMCRA expressly preserves a person's right to enforce or protect an interest in water resources that exist under applicable law. However, in order to determine what rights exist, the court must then look to what the applicable law is.¹²

The court upheld the right of the state regulatory agency to condition coal mining operators rights to pump ground water from under their land. This does not eliminate Indiana's property rights to groundwater, but rather recognizes another restriction on the absolute use of groundwater. The right still exists, but the manner in which the state protects the right has changed.¹³ As a result, the court had no trouble in dismissing the mining companies' assertion that such a restriction would cause an unconstitutional taking of their property rights in the groundwater. To condition a permit regulating the withdrawal

[Page 9A-4]

of groundwater is a legitimate exercise of statutory authority under the police power to protect the health, safety and welfare of the general populous.¹⁴

Thus, the SMCRA requirement that a mine operator must replace a water supply diminished or contaminated by mining operations gives adjoining landowners a powerful new remedy. As noted by the Indiana Supreme Court, while mining companies may have retained certain rights under the state's water law, such rights have been restricted by SMCRA to further a public purpose of protecting harm to the environment and to others in groundwater.¹⁵

III. WATER REPLACEMENT ISSUES

While mining companies must provide a replacement water supply for those affected by mining operations, one of the questions that has arisen is how long does this commitment extend? At least one court has held that the obligation is permanent. A mining company had provided a replacement water supply first by a new well, and later added a water treatment system. However, the treatment system had substantially increased costs. The state regulatory agency ordered the mining company to pay for the increased operations and maintenance costs. The issue was whether the mining company was required to provide such costs on a permanent basis. The court deemed it inherently unfair to place such a burden upon the landowner who through no fault of her own suffered a loss of prior water supply.¹⁶ In this instance the court affirmed the regulatory authority's decision to require permanent replacement costs and maintenance costs, and also requiring a financing mechanism (letter of credit) to ensure adequate funds will be...