MULTIMINERAL DEVELOPMENT CONFLICTS—COALBED METHANE IN THE BALANCE

• Jurisdiction: United States

Coalbed Gas Development
(Apr 1992)
CHAPTER 4B
MULTIMINERAL DEVELOPMENT CONFLICTS—COALBED METHANE IN THE BALANCE
Conrad P. Armbrecht
Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves
Mobile, Alabama

TABLE OF CONTENTS

SYNOPSIS

I. Introduction

II. The Common Law Approach to Multimineral Development Conflicts

III. Historical Background and Physical Properties—Coalbed Methane

IV. Methane Extraction and Removal

V. Conclusion

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I. Introduction.

Although the existence of methane in coal has long been known to coal miners and others and although coal miners have traditionally extracted this methane in connection with their mining operations, disputes respecting the ownership and extraction of coalbed methane are a fairly recent phenomena. The purpose of this paper is to briefly discuss the traditional common law principles applicable in resolving multimineral development conflicts and, then, to discuss the historical background of coalbed methane removal, the physical properties of coalbed methane, and the methods currently being used to extract coalbed methane. As will be seen, when traditional common law principles are applied in light of the historical background and physical characteristics of coalbed methane and in light of the methods normally used to extract coalbed methane, disputes respecting coalbed methane boil down to disputes over ownership rather than disputes over access rights; and it should come as no surprise that all of the cases dealing with those disputes have, to date, ruled in favor of the coal owner on the ownership issue.¹

Before turning to the issues at hand, however, I would like to make a few preliminary comments concerning the discussion that follows.

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First, because this is one of two papers to be presented on this subject at this Special Institute, I will not discuss specific statutory and regulatory solutions to multimineral development conflicts that have been adopted in certain states and by the Federal Government. Three recent articles addressing that subject are cited below.² An abridged version of one of those articles will be presented by Phillip William Lear at this Institute. Such solutions can, of course, be helpful, and the decision-making process by which statutes and regulations are adopted is often more suitable for addressing public policy concerns than the judicial process. However, such solutions are frequently limited in scope, sometimes disjointed, and, as noted by one commentator, often "raise as many questions as they supply answers."³ Thus, even where statutory or regulatory solutions do exist, an understanding of the common law principles in this area of the law is necessary to fill in the gaps and to determine whether particular statutes or regulations meet constitutional muster.⁴

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Second, because my background in disputes over coalbed methane has been in the Black Warrior Basin area of Alabama, I have relied heavily on experiences in that area in preparing this paper.

Finally, although I have read numerous legal and technical articles dealing with coalbed methane, I have also gained a good deal of technical and historical information relating to that substance from conversations with, and depositions of, experts in the fields of coal mining and coalbed methane extraction. Because some of the information contained in this paper was obtained from those conversations and depositions, there is not always a citation of authority for a statement that is obviously of a technical or historical nature. I would, however, like to point out that an engineer, with a background in coalbed methane extraction activities, reviewed a draft of this paper, and, therefore, the accuracy of those statements is not solely dependent upon my recollection of what was said.

II. The Common Law Approach to Multimineral Development Conflicts.

The first thing to note about the body of common law dealing with conflicts of multimineral development is that it is surprisingly small. Although several articles have been written on the subject⁵ , case law is fairly sparse. One of the oldest, and

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probably most cited,⁶ cases on the subject is the Pennsylvania case of Chartiers Block Coal Co. vs. Mellon⁷ . In that case, the Pennsylvania Supreme Court held that a coal owner, who had acquired title to the coal prior to the granting of an oil and gas lease, could not enjoin the oil and gas lessee from drilling through the coal. The court noted that, if the oil and gas owner were denied access to his oil and gas, he would, in effect, be completely deprived of his oil and gas rights. This, the court noted, would not only affect the oil and gas owner in question but also society as a whole because "[c]oal, oil, gas, and iron are absolutely essential to our common comfort and prosperity. To place them beyond the reach of the public would be a great public wrong."⁸

In response to the coal owner's argument that the drilling of gas wells would damage his coal, the court said that the coal owner would have an adequate remedy at law for any such injuries. Unfortunately, the court set out no standards for determining under what circumstances the oil and gas owner would be liable for damages or for determining how damages should be measured.

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Although cases dealing with conflicts of multimineral development are arguably distinguishable from cases dealing with conflicts between surface and mineral owners, the differences are more of degree than kind, and the principles of law governing both are basically the same. An early Alabama case dealing with a conflict between a surface owner and a mineral owner is illustrative of this and also provides clearer reasoning to support the holding in Chartiers than was given by the Pennsylvania court. In Williams v. Gibson⁹ , the surface owner had filed an ejectment action against the mineral owner who, in connection with conducting coal mining under the property, had erected on the surface "five two-story frame miners' houses, four log cabins for the occupancy of employees, an air-shaft for conveying smoke from and ventilating the mines, a powder-house for keeping powder used for blasting, a blacksmith's shop, and a storehouse for furnishing the miners with supplies."¹⁰ The court described the suit as "a controversy between the superjacent and subjacent owners of land"¹¹ . This description would, of course, also apply to controversies involving concurrent development of separately owned minerals located at different depths (such as the controversy involved in Chartiers).

In discussing the relative rights of the parties with respect to the land, the Williams court stated that a conveyance of the minerals carries with it "by necessary implication" the right to

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extract the minerals "unless the language of the grant itself repels this construction."¹² The court said that this conclusion was required by "the familiar maxim that 'when anything is granted, all the means of obtaining it, and all the fruits and effects of it, are also granted.' [cites omitted.]"¹³

In further elaborating on the implied rights of the subjacent owner, the court in Williams held that, although the superjacent owner could not cut off the subjacent owner's access to the subjacent strata, there were limits on the access rights of the subjacent owner. The court said: "The owner of the minerals and mining rights [i.e., the subjacent owner] must use his own so not unreasonably to injure his neighbor, the owner of the surface or soil [i.e., the superjacent owner]."¹⁴ Additionally, the court limited the rights of the subjacent owner in the superjacent strata to those that were "reasonably necessary, in light of modern inventions and of the improvements in the arts and sciences...."¹⁵ Determining whether a specific activity was "reasonably necessary" was, according to the court, a question of fact to be

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decided by the factfinder (in this case, a jury).¹⁶ Concerning the standard to be applied by the factfinder in making this determination with respect to the activities at issue in the Williams case, the court said:

It may be that other suitable lands, conveniently situated, could be obtained at a reasonable price for the site of the miners' houses, the cabins, and the store; or the contrary may be true. It may be that the mine was so far distant from the market for supplies, and that prices in neighboring stores were so extravagant, as to render necessary the establishment of a supply store, both for the economy of time and money of the employees. It may be that such a store was a mere convenience, and not a necessity, within the meaning of the law, for this necessity cannot be deemed to exist if a similar privilege can be otherwise secured by reasonable trouble and expense. O'Rorke v. Smith, 23 Amer. Rep. 446, note; Tied. Real Prop. §§ 606, 609. These and other like considerations it would be proper for the jury to consider in solving the question of necessity, — a word of relative import, which may mean, on the one hand, less than imperative need, and, on the other, more than mere suitable convenience.¹⁷

As can be seen from the above, the principles applicable to disputes between surface owners and mineral owners are sufficiently broad to be equally applicable to disputes between owners of different minerals under the same property. Although disputes between competing mineral owners can become more critical when both want to develop their minerals at the same time, this is no different from the situation where a surface owner desires to build a skyscraper on his surface and the mineral owner wants to extract

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oil and gas or coal from under the same property. The same considerations should be applicable in either case. If it is "reasonably necessary, in the light of modern inventions and of the improvement in the arts and sciences," for the subjacent owner to make some...