Chapter 11. Water Replacement Under Federal and State Statutes: You Break, You Buy It!

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1 CITE AS 27 Energy & Min. L. Inst. ch. 11 (2007) Chapter 11 Water Replacement Under Federal and State Statutes: You Break, You Buy It! Timothy W. Gresham 1 Penn Stuart & Eskridge Abingdon, Virginia Synopsis Introduction Nature and Treatment of Groundwater Common Law Liability for Damage to Water Supplies [1] Absolute Ownership or English Rule [2] Reasonable Use or American Rule [3] Restatement (Second) of Torts [4] Correlative Rights or California Rule [5] Nuisance and Trespass Coal Mining Statutory and Regulatory Developments [1] Surface Mining Control and Reclamation Act of 1977 (SMCRA) [2] The Energy Policy Act of [a] 30 U.S.C. Section 1309a [b] Regulations Implementing Section 1309a [3] State Programs [a] Alabama [b] Kentucky [c] Maryland [d] Ohio [e] Pennsylvania [f] Virginia [g] West Virginia Shareholder, Penn, Stuart & Eskridge; B.A. 1976, Morehead State University; J.D. 1979, University of Tennessee; past president , Energy & Mineral Law Foundation. The author expresses his thanks to Patrick Baker, third year student at Appalachian School of Law and 2006 recipient of EMLF and James H. Davis, III scholarships, for his assistance with this chapter.

2 11.01 ENERGY & MINERAL LAW INSTITUTE Other Mining [1] Maryland [2] Ohio [3] Pennsylvania [4] West Virginia Oil and Gas Operations [1] Kentucky [2] Ohio [3] Pennsylvania Coalbed Methane Operations [1] Kentucky [2] Virginia [3] West Virginia Good Samaritan Statutes Other Statutory Remedies [1] SMCRA Citizens Suits [a] Actions to Compel Agency Action [b] Actions to Compel Compliance [c] Statutory Damage Claims Noncoal Mining Statutory Remedies Conclusion Introduction. Mineral extraction activities, especially mining, can have severe impacts on groundwater resources and private water supplies. Initially, the common law rules developed to deal with these impacts were much less protective of the subterranean water than were those rules developed to deal with surface waters. The lack of knowledge and inability to predict or determine groundwater movement or behavior drove these initial decisions. While landowners could recover compensation for the damage to the water resources and in certain circumstances even enjoin the activity causing the damage, the common law did not require replacement of the water supply. Beginning with the Surface Mining Control and Reclamation Act of 1977, 2 the federal government and several states have passed statutes requiring replacement of water supplies damaged or contaminated by mineral 2 Pub. L. No (1977), 20 U.S.C. 1201, et seq. 374

3 WATER REPLACEMENT extraction activities. This chapter will provide an overview of many of those statutes, discussing their requirements and limitations. The first part of this chapter will discuss how the courts have traditionally defined groundwater and the common law rules developed to deal with impacts on or to groundwater and water supplies. Next, the chapter discusses the evolution of the water replacement provisions of the Surface Mining Control and Reclamation Act of 1977 (SMCRA) 3 and the state laws enacted in accordance with SMCRA. After that we will discuss other replacement provisions in state statutes covering other mining and oil and gas operations. Finally, the chapter will discuss some other statutory remedies that do not necessarily require replacement, but can mandate an agency or operator to take action or provide monetary damages as an adjunct to replacement Nature and Treatment of Groundwater. Since the adoption of English common law by the United States, a delicate and unsettled relationship has existed between a landowner s right to use and enjoy his property, while not unreasonably interfering with adjoining property. 4 The courts treatment of underground or subterranean waters is one leg of this delicate balancing act. Traditionally, the cases have divided subterranean waters into two principal categories: 5 waters that flow in well-defined and ascertainable channels or courses 6 and waters which ooze, filter, seep, or percolate through the earth, or which flow in undefined, unascertainable or unknown channels, generally referred to as percolating waters. 7 Underground waters that flow in well-defined, ascertainable courses or channels are governed by the rules of law governing riparian surface streams. 8 3 P.L (1977), 20 U.S.C. 1201, et seq. 4 See generally, Maxwell P. Barrett, The Theory of Nuisance as an Impediment to Mining Operations, E. Min. L. Inst. ch. 14 (1993). 5 See C & W Coal Corp. v. Salyer, 104 S.E.2d 50 (Va. 1958); Clinchfield Coal Corp. v. Compton, 139 S.E. 308, (Va. 1927). 6 Finley v. Teeter Stone, Inc., 248 A.2d 106, 109 (Md. 1968). 7 Compton, 139 S.E. at Sycamore Coal Co. v. Stanley, 166 S.W.2d 293, 294 (Ky. 1942). 375

4 11.02 ENERGY & MINERAL LAW INSTITUTE However, the courts have developed several distinct legal theories or rules governing the right to extract and use or interfere with percolating waters. 9 The first rule or theory developed is the Absolute Ownership or English rule. 10 The second is the Reasonable Use or American rule. 11 Third, some states have adopted the Restatement s treatment of Reasonable Use. 12 The fourth theory is Correlative Rights or the California rule. 13 Finally, some states apply nuisance law principles to the landowner s use of or impact on underground water on his land that adversely affects the water resources or land of another. 14 For subterranean waters [t]o be classified as an underground stream, the water must flow in a definite and fixed channel whose existence and location is either known or may be ascertained from indications on the surface of the land or by other means without subsurface excavations to determine such existence and location. 15 Unless the plaintiff can prove that underground water flows in a well-defined channel, the courts presume the waters are percolating waters. 16 Rebutting the presumption is not easy, as in most cases the course must be proven from surface indicators See generally, Joseph W. Dellapenna, Groundwater Law for Mineral Lawyers, 13 E. Min. L. Inst., Ch. 3 (1992). 10 Finley, 248 A.2d at 110 (citing Acton v. Blundell, 152 Eng. Rep (1843)). 11 Sycamore Coal Co. v. Stanley, 166 S.W.2d 293, 294 (Ky. 1942). 12 Restatement (Second) of Torts 858; Cline v. Am. Aggregates Corp., 474 N.E.2d 324 (Ohio 1984)(replacing the absolute ownership rule with the Restatement rule as the common law in Ohio). 13 O Leary v. Herbert, 55 P.2d 834, 838 (Cal. 1936). 14 See Restatement (Second) of Torts 822 (1979); Henderson v. Wade Sand & Gravel Co., 388 So. 2d 900 (Ala. 1980); Labruzzo v. Atlantic Dredging & Constr. Co., 54 So. 2d 673 (Fla. 1951). 15 Finley, 248 A.2d at Compton, 139 S.E. at 312; Clarke County v. Miss. Lumber Co., 31 So. 905, 906 (Miss. 1902). 17 Id.; Commonwealth v. Sebastian, 345 S.W.2d 46 (Ky. 1961)(what proof is needed to show an underground stream.) For more regarding groundwater law, see generally, Dellapenna, supra note

5 WATER REPLACEMENT Common Law Liability for Damage to Water Supplies. [1] Absolute Ownership or English Rule. The absolute ownership or English rule, first announced in Acton v. Blundell, 18 asserts that percolating water is regarded as part of the freehold estate and the owner of the freehold owns all the percolating waters beneath the surface of the land, as he would own the rock, sand, gravel, and minerals beneath the surface and the air and sky above the surface, applying the maxim cujus est solum, ejust est usque ad coelum et ad inferos. 19 The owner has the absolute right to intercept underground percolating water before it leaves his premises and make whatever use of it he pleases, at least in the absence of malice 20 or any type of contractual or statutory restriction, 21 regardless of the effect or interruption on the neighboring land. 22 While widely criticized and replaced by the majority of states, the doctrine still survives, 23 Still, some jurisdictions have neither abandoned the English rule nor adopted the Reasonable Use rule. 24 [2] Reasonable Use or American Rule. Early on American courts challenged the soundness of the English rule, as it ignores sound legal principles such as sic utere tuo at alienum non laedas. 25 Thus, most jurisdictions have rejected the English rule and many have adopted the Reasonable Use or American rule. According to this rule a landowner has a right to use percolating waters, but such use 18 Acton v. Blundell, 152 Eng. Rep. 1223, 1235 (1843). 19 Finley, 248 A.2d at 110 (citing Acton, 152 Eng. Rep. at 1235). 20 See Sycamore Coal Co. v. Stanley, 166 S.W.2d 293, 294 (Ky. 1942); Miller v. Black Rock Springs Imp. Co. 40 S.E. 27, 30 (Va. 1901). 21 See Wiggins v. Brazil Coal and Clay Corp., 452 N.E.2d 958 (Ind. 1983). 22 Finley, 248 A.2d at See Wiggins, 452 N.E.2d at 958; Maddocks v. Giles, 728, A.2d 150 (Me. 1999) and Sipriano v. Great Spring Waters of Am., Inc., 1 S.W.3d 75 (Tex. 1999). 24 See Compton, 139 S.E. at 313; Finley, 248 A.2d at 113. Both courts held they did not need to specifically adopt either rule, as under either rule, plaintiffs could not recover. 25 Use your property in such a manner as not to injure that of another. Black s Law Dictionary 1551 (4th ed. 1951). See Bassett v. Salisbury Mfg. Co., 43 N.H. 569 (1862). 377

6 11.03 ENERGY & MINERAL LAW INSTITUTE is limited to a reasonable and beneficial use of those waters. 26 Furthermore, the landowner has no right whether through malice or indifference to waste water if it injures a neighboring landowner. 27 As applied to mining operations, most cases hold that impacts on percolating waters, if part of the natural, legitimate and normal course of operations, is not actionable, as the impact is damnum absque injuria. 28 However, some jurisdictions will not apply the rule where the use or withdrawal of the water is not beneficial, but merely incidental to the land. 29 [3] Restatement (Second) of Torts. Some courts have supplanted these common law doctrines with the Restatement (Second) of Torts 858 (1979). 30 The Restatement rule still allows the landowner to withdraw or use water from the land for a beneficial purpose free from liability. 31 However, the landowner is subject to liability 26 Stanley, 166 S.W.2d at Id. 28 Finley, 248 A.2d at 115; Bayer v. Nello L. Teer Co., 124 S.E.2d 552, 559 (N.C. 1962); Couch v. Clinchfield Coal Corp., 139 S.E. 314 (Va. 1927). 29 Henderson v. Wade Sand & Gravel, 388 So. 2d 900 (Ala. 1980)(pumping of water from a quarry that resulted in subsidence of neighbor s land was actionable); but see, Finley, where court rejected arguments that withdrawal of water violates rule of subjacent support, as that is the right of support for the surface by underlying land. Finley, 248 A.2d at Cline, 474 N.E. 2d Restatement Second of Torts 858(1)(1979) provides: A proprietor of land or his grantee who withdraws ground water from the land and uses it for a beneficial purpose is not subject to liability for interference with the use of water by another, unless (a) the withdrawal of ground water unreasonably causes harm to a proprietor of neighboring land through lowering the water table or reducing artesian pressure, (b) the withdrawal of ground water exceeds the proprietor s reasonable share of the annual supply or total store of ground water, or (c) the withdrawal of the ground water has a direct and substantial effect upon the watercourse or lake and unreasonably causes harm to a person entitled to the use of its water. See State v. Michels Pipeline Constr., Inc., 217 N.W.2d 339 (Wis. 1974). 378

7 WATER REPLACEMENT if, inter alia, he unreasonably causes harm to a neighboring landowner 32 or withdraws ground water exceeding a landowner s reasonable share of the annual supply or store. 33 Some states have adopted a reasonable use balancing test founded on the Restatement principles. 34 [4] Correlative Rights or California Rule. Some states follow the California rule 35 or the correlative rights rule. 36 The rule states that the rights of all landowners over a common basin, saturated strata, or underground reservoir, are coequal or correlative, and... one landowner cannot extract more than his share of the water, even for use on his own lands, where the rights of others are injured thereby. 37 While this appears to require some balancing of interests and uses, one court has held that it is not a true balancing rule. 38 [5] Nuisance and Trespass. Some courts apply nuisance and trespass principles to claims for diminution, interruption or contamination of water supplies. In Henderson v. Wade Sand & Gravel Co., 39 the plaintiff brought suit against a quarry operator for diverting ground water resulting in subsidence of the plaintiff s property. 40 In denying the claim, the lower court applied the American 32 Id. at 858(1)(a). 33 Id. at 858(1)(b). 34 Maerz v. United States Steel Corp., 323 N.W.2d 524, 530 (Mich. Ct. App. 1982), as modified by Michigan Citizens for Water Conservation v. Nestle Waters N. Am., Inc., 709 N.W.2d 174 (Mich. Ct. App. 2005). The balancing test adopted by Michigan is actually more in line with the California rule discussed infra. 35 O Leary v. Herbert, 55 P.2d at 838; City Mill Co. v. Honolulu, 30 Haw. 912 (Haw. 1929). 36 Over the years courts have referred to the reasonable use or American rule as the correlative rights rule. See Michigan Citizens, 709 N.W.2d at 200, n.39; Barclay v. Abraham, 96 N.W. 1080, 1083 (Iowa 1903). 37 O Leary, 55 P.2d at Michigan Citizens, 709 N.W.2d at 200, n Henderson v. Wade Sand & Gravel Co., 388 So. 2d 900 (Ala. 1980). 40 Id. 379

8 11.04 ENERGY & MINERAL LAW INSTITUTE rule and earlier Alabama cases. 41 Reexamining those holdings, the court held where a plaintiff s use of groundwater, whether it be for consumption or, as here, for support, is interfered with by defendant s diversion of that water, incidental to some use of his own land, the rules of liability developed by the law of nuisance will apply. 42 In a later case the Alabama Supreme Court distinguished Henderson, where the defendant s use of the water was beneficial, not merely incidental, to its property. 43 Although the initial activity of the defendant might not give rise to liability for damage to water supply, the continuation of such activity, after receiving knowledge of the underground source and the defendant s effect on the source, can give rise to liability as an intentional invasion of plaintiff s water rights. 44 Generally, the contamination of underground or subterranean waters is actionable as a nuisance or trespass Coal Mining Statutory and Regulatory Developments. Even under the absolute ownership rule, the liability of parties for interrupting or diminishing percolating subterranean water can be altered by contract or statute. 46 [1] Surface Mining Control and Reclamation Act of 1977 (SMCRA). 47 In enacting SMCRA, Congress, apparently disillusioned by the ineffectiveness of the common law to remedy the effects coal mining can have on water resources, included Section That section provides as follows: 41 See Sloss-Sheffield Steel and Iron Co. v. Wilkes, 165 So. 764 (1936) and Sloss-Sheffield Steel and Iron Co. v. Wilkes, 236 Ala. 173, 181 So. 276 (1938). 42 Henderson, 388 So.2d at Adams v. Lang, 553 So. 2d 89 (Ala. 1989). 44 Labruzzo v. Atlantic Dredging & Constr. Co., 54 So. 2d 673 (Fla. 1951). 45 Swift & Co. v. The Peoples Coal & Oil Co., 186 A. 629 (Conn. 1936); Berry v. Shell Petroleum Co., 33 P.2d 953 (Kan. 1934). 46 See Wiggins v. Brazil Coal and Clay Corp., 452 N.E.2d 958 (Ind. 1983). 47 Pub. L (1977), 20 U.S.C. 1201, et seq , Pub. L (1977), 30 U.S.C (2000). 380

9 WATER REPLACEMENT (a) Nothing in this Act 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 contamination, diminution, or interruption proximately resulting from such surface coal mine operation. 49 The 1979 regulations implementing Section 1307(b) required water supply replacement by both surface and underground mining operations. 50 Those regulations, among others, were challenged by the coal mining industry and citizen groups. The National Coal Association (NCA) and other challengers objected to Section s requirement that underground coal mine operators replace water supplies, arguing Section 1307(b) only authorized water supply replacement resulting from surface mine operations. 51 U.S. District Judge Flannery agreed, relying on the statutory language that referred to surface coal mines, but not underground coal mines. 52 The court remanded the regulation to the Office of Surface Mining Reclamation and Enforcement (the OSM) 53 for further consideration. In 1983, the OSM under Secretary James Watt promulgated new regulations. Again, both industry and citizen groups challenged the regulations. Among other challenges, the citizen groups asserted the new hydrology 49 Id C.F.R and (1979). All references to the regulations will be to Title 30 of the Code of Federal Regulations, unless otherwise noted. 51 Permanent Surface Mining Regulation Litigation, C.A. No , 19 E.R.C. 1477, 1495 (May 16, 1980)(hereinafter PSMRL I (Round II) ). 52 Id. 53 The Secretary of the Interior acts through the OSM to administer SMCRA and to promulgate rules and regulations. 30 U.S.C. 1211(c)(2000). 381

10 11.04 ENERGY & MINERAL LAW INSTITUTE regulations 54 were inadequate as they did not require underground operators to identify and replace water supplies that may be affected by underground mining. 55 In their challenge, the citizen groups asserted Section 508(a)(13) 56 requires all operators to provide information concerning the measures they will take to protect the quantity of water in both surface and ground water systems, on- and offsite, or to provide alternate supplies where protection cannot be assured. 57 Continuing, the groups asserted since Section 508(a)(13) applies to both surface and underground mines, the OSM must require underground operators to provide the information, including the provision of alternate sources of water. Therefore, all operators must replace damaged water supplies. 58 The OSM responded that it need not promulgate any regulation to require information regarding alternate water sources from underground operators, as no legal requirement existed that underground operators replace water supplies. 59 Judge Flannery, in rejecting the citizen groups challenge, stood by his original determination that Section 717(b)[30 U.S.C. Section 1307(b)] does not require water replacement by underground operators. 60 He held Section 508(a)(13) is not a substantive provision, but merely required a description of steps to be taken to implement actual performance standards in the Act. 61 On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the holdings that Section 717(b) and Section 508(a)(13) did not require underground coal mine operators to replace water supplies damaged by underground mining. 62 However, the court expressed concern over the confusing terminology used by the drafters of the SMCRA, C.F.R (1979). 55 Permanent Surface Mining Regulation Litigation, 620 F. Supp. 1519, 1532 (D.C. 1985)(hereinafter PSMRL II (Round III) ) U.S.C. 1258(a)(13)(2000) U.S.C. 1258(a)(13)(C)(2000). 58 PSMRL II (Round III) supra note 55, 620 F. Supp. at Id. 60 PSMRL II (Round III) supra note 55, 620 F. Supp. at Id. at Nat l Wildlife Fed n v. Hodel, 839 F. 2d. 694 (D.C. Cir. 1988). 63 Id. at

11 WATER REPLACEMENT noting at some points the statute references surface coal mining operation, while at other times, it references operators of surface coal mines. 64 Based on its review of SMCRA as a whole and SMCRA s legislative history, the court held Congress explicitly recognized the difference between surface and underground mines; that it deliberately chose to apply some environmental safeguards to one and not the other; and that water replacement is a provision it explicitly required only of surface mine operators. 65 Concerning the argument that Section 508(a)(13) required water supply replacement, the court agreed that section 508 is essentially an informationgathering provision and implies no independent performance standard. 66 Finally, on this issue, the court stated Section 508(a)(13)(C) s requirement that both surface and underground operators provide information concerning alternate sources of water may authorize the Secretary to act on that information, but does not compel the Secretary to require water supply replacement by underground mine operators. 67 In PMSRL II (Round III), the parties also litigated the meaning and purpose of Section 717(a). 68 Industry challenged Section (h) s requirement that surface coal mine operators replace water supplies to the extent it required operators with senior water rights to replace the water supplies of those with junior water rights. Industry argued this violated Section 717(a). 69 In responding to that argument, the OSM interpreted Section (h) as not requiring replacement of water supplies, if the surface mine operator legitimately uses or consumes the water supply pursuant to a senior water right determined under state law. 70 Accepting that interpretation, the industry parties withdrew their challenge. 64 Id. 65 Id. at Id. at Id U.S.C. 1307(a)(2000). 69 PSMRL II (Round III) supra note 55, 620 F. Supp. at Id. 383

12 11.04 ENERGY & MINERAL LAW INSTITUTE However, the citizen group parties challenged that interpretation of Section 717(a) by the OSM. In their view, Section 717(a) was merely a savings clause, preserving the rights and remedies of those injured by mining activities; it did not protect any rights of operators. The district court rejected the argument. 71 The court of appeals also considered the issue in National Wildlife Federation. v. Hodel. 72 While the court agreed with the National Wildlife Federation (NWF) that Section 717(a) was a savings clause, the court disagreed with the NWF s identification of what the provision saved. 73 The court affirmed the district court s holdings that 717(a) merely preserves for each party the rights state law allows 74 and that nothing in Section 717(a) excluded mine operators from its protection or excluded operators of surface coal mines from the term any person. 75 Until 1992, SMCRA and its regulations only required water replacement by operators of surface mines that proximately caused the diminution, contamination, or interruption of a landowner s water supply used for domestic, agricultural, industrial, or other legitimate use. 76 Based on the OSM s interpretation, the surface mining activity, which caused the contamination, diminution, or interruption of the water supply, could not be the surface mine operator s legitimate consumption or use of water under state law. 77 Therefore, an operator of a surface mine, whose legitimate use of water diminishes or interrupts the percolation of water through his property, thus damaging a neighbor s water supply, is not required to replace or restore that water supply, if the operator would not be liable under state law. If the mine operator s use of the water was reasonable and occurred in a state that applies the English or American rules, 78 state law would likely impose no 71 Id. 72 National Wildlife Fed n v. Hodel, 839 F. 2d 694, 756 (1988). 73 Id. 74 Id. at 756 n Id. at U.S.C. 1307(b)(2000); 30 C.F.R (h)(2000). 77 National Wildlife Fed n v. Hodel, 839 F. 2d. at 756, n See 11.03[1] and [2], supra. 384

13 WATER REPLACEMENT liability and neither would SMCRA. 79 However, the determination of what is state law is up to the state. 80 [2] The Energy Policy Act of [a] 30 U.S.C. Section 1309a. On October 24, 1992, Congress, as part of the Energy Policy Act of 1992 (EPACT), enacted Section 720 of SMCRA. 82 Besides a provision requiring the repair of or compensation for material damage to residential structures and non-commercial buildings as a result of subsidence caused by underground coal mining operations, Section 1309a mandates operators of underground coal mine operations to replace certain water supplies damaged by such operations. 83 That section requires the operator to promptly replace any drinking, domestic, or residential water supply from a well or spring in existence prior to the application for a surface coal mining and reclamation permit, which has been affected by contamination, diminution, or interruption resulting from underground coal mining operations. 84 Additionally, Congress mandated that the Secretary of Interior promulgate regulations implementing the section within one year after October 24, For example, the operator of a preparation plant, who drills a well on its own property to extract percolating waters to use in the preparation process, would not be required under SMCRA to replace water supplies interrupted or diminished, if the operator would not be liable under common law for such interruption or diminution. 80 In Natural Res. Comm n v. Amax Coal Co., 638 N.E. 2d. 418 (Ind. 1994), the Indiana Supreme Court held Indiana s version of SMCRA did not establish what law a court must apply when deciding a water rights case related to coal mining and it did not expressly preserve state common law. Id. at 428. The court held that SMCRA s references to state law included the provisions of the Indiana SMCRA that required water supply replacement by surface coal mine operators and not just the common law founded on the absolute ownership rule. See Wiggins v. Brazil Coal & Clay Corp., 452 N.E. 2d. 958 (Ind. 1983) , Pub. L. No (October 24, 1992), Title XXV, 2504(a)(1) U.S.C. 1309a (2000) U.S.C. 1309a(a)(2)(2000). 84 Id U.S.C. 1309a(b)(2000). 385

14 11.04 ENERGY & MINERAL LAW INSTITUTE [b] Regulations Implementing Section 1309a. The regulations define drinking, domestic, or residential water supply as water received from a well or spring and any appurtenant delivery system that provides water for direct human consumption or household use. Wells and springs that serve only agricultural, commercial, or industrial enterprises are not included, except to the extent the water supply is used for direct human consumption or human sanitation or domestic use, 86 and replacement of water supply as with respect to protected water supplies contaminated, diminished, or interrupted by coal mining operations, provision of the water supply on both a temporary and permanent basis equivalent to pre-mining quantity and quality. Replacement includes provision of an equivalent water delivery system and payment of operation and maintenance costs in excess of customary and reasonable delivery costs for pre-mining water supplies. 87 Although the language of Section 1309a only applies to contamination, interruption, or diminution of water supplies impacted by underground mining operations, OSM made the definition of replacement of water supply applicable to both underground and surface mines. 88 Besides replacing or restoring the supply itself, the operator must also provide an equivalent water delivery system and pay any increased operation and maintenance costs of the temporary and permanent supplies. 89 In responding to comments, the OSM stated the provision of the delivery system and payment of increased costs are logical and reasonable aspects of the statutory requirement to replace the water supply. 90 The OSM provided some relief from actually providing an alternate supply in certain circumstances. If the affected water supply is not needed for the existing land use or to achieve the post mining land use, then the operator may satisfy the replacement requirement by demonstrating the existence Id Fed. Reg.16722, (Mar. 31, 1995) , definition of replacement of water supply (2006) Fed. Reg. at

15 WATER REPLACEMENT of a suitable supply that can be feasibly developed. The operator must have the written concurrence of the water supply owner. 91 The regulation also allows the operator to satisfy the ongoing payment of increased operation and maintenance costs of the replacement supply by a one-time payment equal to the present value of the increased operation and maintenance costs for a fixed period agreed to by the operator and water supply owner. 92 In the preamble to the final rule, OSM suggested 20 years would be a reasonable period to base the lump sum payment. 93 OSM also made it clear that the enactment of Section 1309a and the promulgation of the implementing regulations was not intended to and did not affect the rights of an operator to legitimately consume or use a water supply pursuant to state law. However, OSM stated its belief that Section 1307(a) applies only to the consumption or use of the water, not the destruction of or damage to the source of the water. 94 In the regulation requiring subsidence control plans, underground coal mine operators must provide a survey of the quantity and quality of all drinking, domestic and residential water supplies within the permit area and adjacent area that could be contaminated, diminished or interrupted by subsidence. 95 This survey can be very important, as it provides a baseline to determine whether underground mining has impacted water supplies and can provide a basis to determine whether the operator has provided an adequate replacement supply. The regulation also requires a description of the measures the operator will take to replace adversely affected protected water supplies 96 However, the regulation does not state how precise the description has to be , definition of replacement of water supply, subsection (b). 92 Id. at (a) Fed. Reg. at Id. at and (a)(3) (b)(8). 97 A statement that the operator will provide the landowner with a temporary water supply or documentation that the operator did not impact a water supply does not sufficiently describe how the operator will replace water supplies. Stoystown Borough Water Auth. v. 387

16 11.04 ENERGY & MINERAL LAW INSTITUTE Other regulations mirror Section 1309a(a)(2) s requirements that underground coal mine operators need only replace or restore water supplies from a well or spring that existed before the filing of the underground mine permit application and that replacement of water supplies only applies to impacts caused by underground mining occurring after October 24, The regulations also require adjustment of the performance bond during replacement. 99 Finally, in its rulemaking, the OSM provided for direct enforcement of the federal regulations in any state the OSM determined did not have the capability to immediately implement the requirements of the regulations, until such time as the state possessed that capability. 100 [3] State Programs Under the cooperative federalism of SMCRA, a state wishing to become the exclusive regulatory authority over surface coal mining operations within its boundaries may develop a state program, including a statute and regulations, for approval by the Secretary of the Interior. 101 State programs must have statutes in accordance with SMCRA and rules and regulations consistent with the federal regulations. 102 However, states may enact or promulgate more stringent requirements. 103 All primacy states have provisions for the replacement of water supplies adversely affected by surface and underground coal mining. Many states have virtually identical provisions to SMCRA. However, several states have unique provisions. Following are descriptions of some of those requirements. D.E.R., 729 A.2d 170, 174 (Pa. Commw. Ct. 1999). However, a statement that the operator will provide temporary water within 24 hours and provide a permanent supply by deepening an existing well, drilling a new well or connecting to a public water supply does sufficiently describe the measures. People United to Save Homes v. D.E.P., 789 A.2d 319, 331 (Pa. Commw. Ct. 2001) (j) (c)(5) U.S.C (2000) U.S.C. 1253(a)(1) and (7)(2000) U.S.C. 1255(b)(2000). 388

17 WATER REPLACEMENT [a] Alabama. Generally, the Alabama provisions regarding water replacement mirror the federal requirements. 104 However, Alabama s statute states the replacement remedies provided by the statute and implementing regulations shall be the sole and exclusive remedies available to the owner for such damage and its effects. 105 The statute then states that the provision does not apply to actions asserting intentional, willful, or wanton conduct where the trier of the fact finds such conduct existed. 106 It concludes by stating that conduct in substantial compliance with the applicable mining permits may not be deemed to be intentional, willful, or wanton. 107 [b] Kentucky. Kentucky requires operators of surface and underground coal mines to replace water supplies used for domestic, agricultural, industrial, or other legitimate uses and does not limit the replacement obligation of underground coal mine operators, as does the SMCRA. 108 If the affected water supply is for domestic uses, then the operator must provide emergency drinking water within 48 hours of receiving notice of the impact; a temporary water supply within two weeks of receiving notice; and a permanent water supply within two years of receiving notice. 109 If a water supply is other than a domestic supply, the timing of providing temporary and permanent supplies is established on a case-by-case basis. 110 The regulations requiring replacement of water supplies impacted by underground mining activities are the same, except they are limited to underground mining activities conducted after July 16, Ala. Code (e)(2), (2006). 105 Ala. Code (f)(2006). 106 Id. 107 Id. 108 Ky. Rev. Stat. Ann (2006) Ky. Admin. Reg. 16:060 8(1)(b)(2)(a)(2006) Ky. Admin. Reg. 16:060 8(1)(b)(2006) Ky. Admin. Reg. 18:060 12(1)(b)(2006). 389

18 11.04 ENERGY & MINERAL LAW INSTITUTE [c] Maryland. The Maryland program requires operators of both surface and underground mines to replace the water supply of a landowner used for domestic, agricultural, industrial, or other legitimate uses. 112 The statute establishes the Bituminous Coal Open Pit Mining Reclamation Fund and the Deep Mining Fund. 113 Some of the Funds may be used to replace water supplies affected by mining operations after the full release of all performance bonds applicable to that operation. 114 The agency may use the Funds to replace water supplies on active operations under certain conditions. The operator may request that the agency use the Funds to replace an affected water supply, if the operator agrees to reimburse the Fund. 115 The owner of an affected water supply may request the agency use the Funds, if the operator has failed to comply with the agency s order to provide a replacement supply. 116 However, the agency may use the Funds only if the owner of the supply agrees to reimburse the Fund. 117 Concerning reimbursement, the operator must reimburse the Fund if the agency s initial determination that the operator affected the water supply is affirmed after administrative and judicial review. 118 The property owner must reimburse the Fund if it is determined after final administrative and judicial review that the operator did not affect the water supply. 119 Finally, the operator may request reimbursement from the agency for the operator s direct costs in replacing the water supply if the operator ultimately shows it did not affect the water supply, but did replace the supply Md. Code Ann. Envir (b) and (b)(2006). 113 Md. Code Ann. Envir and (2006). 114 Md. Code Ann. Envir and (2006). 115 Md. Code Ann. Envir (c)(3) and (c)(3)(2006). 116 Md. Code Ann. Envir (d)(1) and (d)(1)(2006). 117 Md. Code Ann. Envir (d)(2) and (d)(2)(2006). 118 Md. Code Ann. Envir (f)(1) and (f)(1)(2006). 119 Md. Code Ann. Envir (f)(2) and (f)(2)(2006). 120 Md. Code Ann. Envir (f)(3) and (f)(3)(2006). 390

19 WATER REPLACEMENT [d] Ohio. Ohio makes no distinction between the replacement obligations of surface and underground mining operations. 121 Even before EPACT, Ohio required underground mines to replace water supplies adversely affected by their operations. 122 [e] Pennsylvania. The Office of Surface Mining (OSM) disapproved and superseded certain provisions of Pennsylvania s statute regarding the replacement of water supplies damaged by underground mining. 123 On May 13, 2005, OSM also disapproved several Pennsylvania regulations relating to water supply replacement. Those included the definition of de minimis cost increase ; provisions permitting the replacement supply to be of lesser quantity and quality or did not provide for temporary replacement of supplies; provisions allowing the operator to pass on increased operating maintenance costs to the landowner or supply user; provisions that did not require the operator to pay all increased operating and maintenance costs; and a provision allowing a waiver from the requirements of replacement beyond those allowed in the federal definition of replacement of water supply. 124 The superseded statutory provisions included a provision relieving a mine operator of liability for the replacement of a water supply if no claim for replacement was made within two years after the supply had been adversely affected. 125 Another superseded provision allowed the mine operator relief from liability for replacement, if the water supply had not been replaced within three years, by entering into a written agreement with the landowner and providing compensation based on diminution in fair market value or by purchasing the property at the fair market value immediately 121 Ohio Rev. Code Ann (A)(West 2006); Ohio Admin. Code 1501: (P)(2005). 122 Citizens Organized Against Long Wall Mining v. Div. of Reclamation, 535 N.E.2d 687 (Ohio Ct. App. 1987) C.F.R (a) and (a)(2004); 69 Fed. Reg (Dec. 9, 2004) Fed. Reg , (2005) Pa. Cons. Stat a(b)(2006). 391

20 11.04 ENERGY & MINERAL LAW INSTITUTE before the water supply was affected. 126 The third superseded statutory provision relating to water replacement allowed the landowner to have the regulatory agency review the operator s finding that it could not reasonably restore the affected water supply or that a permanent alternate source could not be reasonably provided. 127 Pennsylvania adopted regulations to comply with OSM s disapproval and superseding of these regulations and statutory provisions on October 22, The regulations applicable to water replacement included adding a definition of EPACT water supplies, deleting the definition of de minimis cost increase, and otherwise making Pennsylvania s program consistent with SMCRA. 129 Pennsylvania requires surface mine operators who affect a public or private water supply by contamination or diminution to restore or replace the supply. 130 The statute presumes the mine operator or owner is responsible without proof of fault, negligence or causation for all pollution, except bacteriological contamination, or diminution of public or private water supplies within one thousand (1,000) linear feet of the mining and affected areas. 131 An operator may rebut the presumption using five affirmative defenses: (i) the landowner or water supply company refused to allow the surface mining operator access to conduct a survey prior to commencing mining activities. (ii) the water supply is not within one thousand (1000) linear feet of the boundaries of the areas bonded and affected by coal mining operations, areas of overburden removal and storage and support areas, except for haul and access roads Pa. Cons. Stat b(g)(2006) Pa. Cons. Stat b(h)(2006) Pa. Bull Pa. Code 89.5, a(b), (e), (f), a(c) and (2005). As of the writing of this chapter, OSM had not acted on these program amendments Pa. Cons. Stat b(f)(1)(2006) Pa. Cons. Stat b(f)(2)(2006). 392

21 WATER REPLACEMENT (iii) the pollution or diminution existed prior to the surface mining activities, as determined by a survey conducted prior to commencing surface mining activities. (iv) the pollution or diminution occurred as a result of some cause other than the surface mining activities. (v) the landowner, water supply user or water supply company refused to allow the surface mining operator or owner access to determine the cause of pollution or diminution or to replace or restore the water supply. 132 Effective August 21, 1994, an operator of an underground mine that affects a public or private water supply shall replace the affected supply. 133 The replacement water supply may be deemed adequate, although it does not meet the pre-mining quality, if it meets the Pennsylvania Safe Drinking Water Act 134 or is comparable to the pre-mining supply, if that supply did not meet those standards. 135 The term water supply is much broader than the definition under SMCRA and includes sources used for domestic, commercial, industrial, or recreational purposes or for agricultural uses, among other uses. 136 In the regulations implementing this statutory provision, including those regulations promulgated on October 22, 2005, the definition of water supply tracks the statutory definition with the addition of the words in place on August 21, Additionally, as noted above, Pennsylvania added a definition of EPACT water supplies 138 virtually identical to the federal definition of drinking, domestic, or residential water supply. 139 Like the provisions for the replacement of water supplies by surface mine operators, the underground mining provisions presume an underground mine 132 Id Pa. Cons. Stat a(a)(1)(2006) Pa. Cons. Stat , et seq (2006) Pa. Cons. Stat a(a)(2)(2006) Pa. Cons. Stat (a)(a)(3)(2006) Pa. Code 89.5 (2005). 138 Id

22 11.04 ENERGY & MINERAL LAW INSTITUTE operator caused the damage to the water supply, if the supply is within an area above the mine determined by projecting a 35 degree angle from the vertical from the outside of any coal removal area. 140 The operator may rebut the presumption by proving the landowner denied the operator access to conduct surveys, both pre-mining and post-mining, regarding the water supply. 141 If the presumption does not apply or has been rebutted, the burden to affirmatively prove underground mining caused the damage is on the landowner, water user, or the regulatory agency. 142 Additionally, the mine operator may be relieved of liability for replacing a water supply by affirmatively proving the damage existed prior to the mining activity, as shown in a pre-mining survey; that the damage occurred more than three years after the mining activity; or the damage occurred as the result of some cause other than mining activity. 143 The regulations amplify and add to these affirmative defenses. For example, if the operator attempts to prove the damage existed before the mining, the operator must show the mining did not worsen any preexisting damage. 144 The revised regulations provide for remedies similar to the federal regulations for situations where the supply is not presently needed, 145 but it also provides for the payment of damages based on the difference in fair market value before and after the water supply damage or purchase of the property for its fair market value before the damage. 146 The proposed regulations provide different defenses if the damaged supply is other than an EPACT water supply. 147 Besides the three defenses available where the supply is an EPACT water supply, the operator may be relieved of liability by showing no claim for replacement has been made Pa. Cons. Stat b(c)(2006). 141 Id.; 25 Pa. Code (b) Pa. Cons. Stat b(d)(2006); 25 Pa. Code (c) Pa. Cons. Stat b(e)(2006) Pa. Code (a)(3)(iii)(2006) Pa. Code (a)(2)(2006) Pa. Code (a)(1)(2006) Pa. Code (b)(2006). 394

23 WATER REPLACEMENT within two years after the damage occurred. 148 It also provides for an agreement between the operator and landowner that does not require replacement or authorizes a lesser amount of compensation than provided in Section 5.3(a)(5) of the Bituminous Mine Subsidence and Land Conservation Act. 149 This is very similar to the provision included for EPACT supplies in Section (a)(2), 150 except in the case of an EPACT supply, the agency must determine that an adequate water supply could feasibly be developed. 151 [f] Virginia. Virginia s statute and regulations track the federal provisions very closely. However, in enacting its statute, the Virginia General Assembly directed the regulatory agency to issue guidelines regarding the replacement of water supplies without the necessity of formal promulgation of regulations. 152 Additionally, the statute requires operators of underground coal mines to record the daily progress of mining operations. If the agency orders water replacement and the operator has failed to keep or provide the maps, the agency s replacement order may only be overturned by clear and convincing evidence that the mining operation did not damage the water supply. Conversely, if the agency does not order water replacement at the conclusion of its investigation and the landowner or water supply user had denied the underground mine operator access to conduct a pre-mining survey, then the agency s determination that the operation did not damage the water supply may be overturned only with clear and convincing evidence that the operation did damage the water supply. 153 Like the federal regulations, Virginia requires, as part of the subsidence control plan, a pre-mining survey that includes the location and type of drinking, domestic and residential water supplies. 154 As promulgated, the only penalty the landowner suffers from refusing to allow the survey was the Pa. Code (b)(4)(2006) Pa. Cons. Stat c(a)(5)(2006) Pa. Code (a)(2)(2006). 151 Id. 152 Va. Code Ann B (2006). 153 Va. Code Ann D (2006) C.F.R (a) and 4 Va. Admin. Code (a)(2006). 395

24 11.04 ENERGY & MINERAL LAW INSTITUTE possibility the angle of draw presumption regarding subsidence damage would not apply. 155 However, after OSM suspended the angle of draw presumption from Section (c)(4), 156 due to National Mining Association v. Babbitt, 157 no adverse consequences existed to punish a landowner s denial of access. Therefore, in revising its regulation to be consistent with the federal regulations, Virginia proposed to replace the reference to 4 VAC Section (c)(4) with Virginia Code Section D. OSM approved the amendment. 158 [g] West Virginia The West Virginia statute allows the landowner to waive the water replacement requirement. 159 The regulations, however, appear to eviscerate the statutory language: a waiver of water supply replacement granted by a landowner as provided in subsection (b) of section 24 of the Act shall apply only to underground mining operations, provided that a waiver shall not exempt any operator from the responsibility of maintaining water quality. Provided, however, the requirement for replacement of an affected water supply that is needed for the land use in existence at the time of contamination, diminution, or interruption or where the affected water supply is necessary to achieve the post-mining land use shall not be waived. 160 The statute provides a rebuttable presumption that the mining operation caused damage to an underground water supply, if the agency determines that damage to the underground supply exists and a pre-blast survey was done, which showed no damage to the underground water supply before mining C.F.R (a)(3) and (c)(4) Fed. Reg (Dec. 22, 1999). 157 National Mining Ass n v. Babbitt, 172 F.3d 906 (D.C. Cir. 1999) Fed. Reg (Jan. 10, 2006). 159 W. Va. Code (a)(2005). 160 W. Va. Code R h. See also, Antco, Inc. v. Dodge Fuel Corp., 550 S.E.2d 622 (W. Va. 2001)(mine operator can waive protection of subsidence waiver by statements and undertakings made in application for mining permit). 396

25 WATER REPLACEMENT occurred. 161 This presumption does not apply to underground coal mining operations or the surface operations and impacts incident to an underground coal mine. 162 West Virginia re-enacted this provision on March 11, 2006 and the Governor signed the law on April 4, The presumption and its inapplicability to underground mining remained, although the subsection exempting underground mining from the presumption was renumbered. 163 The last paragraph of the re-enacted statute states: Notwithstanding the provisions of subsection (g) of this section, on and after the effective date of the amendment and re-enactment of this section during the regular legislative session of two thousand six, the provisions of this section shall apply to all mining operations for water replacement claims resulting from mining operations regardless of when the claim arose. 164 Originally, the schedule for emergency, temporary and permanent water replacement was in subsection (c), from which underground mines were exempt. 165 The revisions clearly exempt underground mines only from the presumption, not the duty to replace, subject to waiver. 166 The OSM approved this statutory change Other Mining. [1] Maryland. Maryland s statutes regulating non-coal surface mining require a mine owner to replace, at no cost to the landowner, a water supply that fails as a result of dewatering a mine pit. 168 If a permitee of a non-coal surface mining permit obtains a water appropriation permit to pump water out of a 161 W. Va. Code (c)(2005). 162 W. Va. Code (f)(2005). 163 See W. Va. Code (g)(2006). 164 W. Va. Code (h)(2006). 165 W. Va. Code (f)(2005). 166 W. Va. Code (b)(2006). But see W. Va. Code R h Fed. Reg (June 2, 2006). 168 Md. Code Ann. Envir (c)(1). 397