Bowles v. HOPKINS COUNTY COAL, LLC
2011 Ky. App. LEXIS 98
| Ky. Ct. App. | 2011Background
- 1924 deed conveyed all veins and beds of coal and underlying fire clay on 1060.99 acres to Dozier, reserving surface and all other minerals; restrictive covenant prohibited coal mining by stripping or open-pit methods and required surface reimbursements if surface taken.
- 1960 conveyance to Bable and Offutt of the surface interest in 997.52 acres excluded coal mining rights and reserved all other minerals; Appellants are successors to surface/mineral rights on 61.47 acres and other minerals on the rest.
- HCC acquired coal veins/beds (number 13 and 14 seams); heirs of Snarr/Davis and Potter own the CBM rights below the coal seams.
- 2005: Appellants alleged surface mining violated the covenant; OSM advised HCC gained surface rights by acquiring coal and surface, terminating covenant; Appellants sued in Hopkins County Circuit Court.
- Trial court (2007) held the restrictive covenant extinguished by merger of surface with coal rights; later proceedings (2009) held CBM owned by coal owners while within coal seams and subject to capture rules; 36-acre impoundment deemed not an unreasonable burden.
- May 2009 order allowed Appellants to produce CBM located in mined voids after mining completion for safety; appeal followed challenging covenant, impoundment, and CBM ownership.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of restrictive covenant after merger | Appellants contend covenant protects surface; intent survives merger. | Covenant extinguished by merger; surface protection no longer exists. | Covenant extinguished; no standing to enforce on 997.52 acres; moot on surface protection. |
| CBM ownership and right to capture | Appellants own CBM as they own other minerals; CBM within coal remains theirs. | Coal bed owners have rights to CBM within seams; CBM migrates under rule of capture. | CBM within coal seams belongs to coal owners; after mining, migrating CBM may be captured by mineral owners; current ruling affirmed. |
| Imnote: Impoundment effect on surface/mineral rights | Permanent impoundment harms Appellants' mineral rights use. | 36-acre impoundment not an unreasonable burden; record lacks contrary evidence. | Imparted 36-acre impoundment affirmed; no reversible error. |
| Standing to challenge restrictive covenant on surface | Appellants have standing as surface heirs. | Appellants lack standing where they hold no coal/surface interest in certain tracts. | Lack of standing on 997.52 acres; standing preserved on 61.47 acres for surface rights. |
Key Cases Cited
- Amoco Prod. Co. v. S. Ute Indian Tribe, 526 U.S. 865 (U.S. 1999) (CBM-like gas fugacity and ownership in context of mining)
- Continental Resources of Illinois, Inc. v. Illinois Methane, LLC, 364 Ill.App.3d 691 (Ill. App. Ct. 2006) (rule of capture applied to coalbed methane)
- Texas American Energy Corp. v. Citizens Fidelity Bank & Trust Co., 736 S.W.2d 25 (Ky. 1987) (oil and gas ownership via rule of capture; migration governs ownership)