Columbia Gas Transm., L.L.C. v. Ohio Valley Coal Co. (Slip Opinion)

C
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Columbia Gas Transm., L.L.C. v. Ohio Valley Coal Co., Slip Opinion No. 2020-Ohio-6787.]




                                        NOTICE
     This slip opinion is subject to formal revision before it is published in an
     advance sheet of the Ohio Official Reports. Readers are requested to
     promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
     South Front Street, Columbus, Ohio 43215, of any typographical or other
     formal errors in the opinion, in order that corrections may be made before
     the opinion is published.



                         SLIP OPINION NO. 2020-OHIO-6787
COLUMBIA GAS TRANSMISSION, L.L.C., APPELLEE, v. OHIO VALLEY COAL CO.
                                 ET AL., APPELLANTS.

  [Until this opinion appears in the Ohio Official Reports advance sheets, it
    may be cited as Columbia Gas Transm., L.L.C. v. Ohio Valley Coal Co.,
                         Slip Opinion No. 2020-Ohio-6787.]
Administrative agency exceeded scope of its authority by adopting rule that
        requires mining operators to pay for damage to surface structures without
        regard to operator’s having obtained surface-damage-liability waivers
        through coal-severance deeds—Former Ohio Adm.Code 1501:13-12-03(F)
        is invalid to the extent it exceeds federal law.
  (No. 2019-0838—Submitted August 4, 2020—Decided December 22, 2020.)
              APPEAL from the Court of Appeals for Franklin County
                           No. 17AP-413, 2019-Ohio-1004.
                                 __________________
        DEWINE, J.
                            SUPREME COURT OF OHIO




       ¶ 1 This case involves a dispute between a coal-mining company and the
owner of a natural-gas pipeline over whether the pipeline owner may recover for
damage caused to the pipeline as a result of mining. The mining company holds its
interest in the coal underneath the lands through property deeds that severed the
mineral interest from the surface estate. These deeds include provisions waiving
liability for damage to the surface of the land caused by mining activities. The
pipeline owner says that these surface-damage-liability waivers have been rendered
invalid by a regulation written by an administrative agency requiring mining
operators to pay for damage to surface structures as a result of subsidence from
mining. We must decide who is correct.
       ¶ 2 We conclude that the deed waivers are valid and enforceable. An
administrative agency possesses only the authority that has been delegated to it by
the legislature. And here, the General Assembly never gave the agency the
authority to write a rule that would extinguish existing property rights beyond that
which was mandated by federal law. Because the agency lacked statutory authority
to adopt an administrative regulation invalidating the mining company’s property
interest, the deed waivers are valid. As a result, we reverse the judgment of the
court of appeals and, on those grounds, reinstate the judgment of the trial court in
favor of the mining company.
      I. The lower courts hold that the deed waivers are unenforceable
       ¶ 3 Consolidated Land Company and Ohio Valley Coal Company
(collectively, “Ohio Valley Coal”) own the rights to coal reserves under certain
tracts of land in Belmont County. The coal reserves lie beneath a natural-gas
pipeline owned and operated by Columbia Gas Transmission, L.L.C.
       ¶ 4 Ohio Valley Coal’s mineral interests stem from early-20th-century
deeds severing the coal estate from the surface estate. The coal-severance deeds
granted Ohio Valley Coal’s predecessors the right to mine without supporting the
surface and contained an express waiver of claims for damage caused to the surface




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                                 January Term, 2020




estate. Columbia Gas subsequently acquired surface rights-of-way to run its
pipeline across the land above the coal reserves.
        ¶ 5 In 2010 and 2012, Ohio Valley Coal obtained permits to mine the land
underneath Columbia Gas’s pipeline. Before the mining began, Columbia Gas took
measures to protect its pipeline from subsidence that was expected to occur as a
result of the mining.     The mining permits specified that Columbia Gas was
responsible for protecting its pipeline from damage that might result from
subsidence and required Ohio Valley Coal to ensure that Columbia Gas had taken
steps to mitigate damage to the pipeline before the mining operation approached
the pipeline.
        ¶ 6 In 2012, Columbia Gas brought this action against Ohio Valley Coal
pursuant to R.C. 1513.15(H), which authorizes an action for damages by “[a]ny
person who is injured in person or property through the violation by any [coal
mining] operator of any rule, requirement, order, or permit” adopted or issued under
R.C. Chapter 1513. Columbia Gas sought compensation for the expenses it
incurred for the measures it had taken to prevent damage to the pipeline as well as
for alleged postmining damage to the pipeline. Ohio Valley Coal contended that
the surface-damage-liability waivers contained in the coal-severance deeds
protected it from any liability for damage. Both parties sought a declaratory
judgment regarding the priority of the competing property rights and the validity
and enforceability of the deed waivers.
        ¶ 7 The trial court found that the coal-severance deeds predated the
surface rights-of-way obtained for construction of the pipeline. The court therefore
concluded that under the deeds containing the surface-damage-liability waivers,
Ohio Valley Coal possessed superior property rights, resulting in its “virtually
unfettered right to mine the coal in the areas critical to this case.” The trial court’s
determinations as to the priority of the property interests and scope of the deed
waivers are not disputed in this appeal.




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                             SUPREME COURT OF OHIO




       ¶ 8 Although the trial court found that Ohio Valley Coal possessed
superior property rights, it determined that the surface-damage-liability waivers had
been invalidated by an administrative regulation adopted by the Ohio Department
of Natural Resources (“ODNR”) that required mining operators to pay for damage
to surface structures. The regulation was adopted pursuant to Ohio’s Surface
Mining Control and Reclamation Act (“SMCRA”), codified in R.C. Chapter 1513.
The version of the rule in effect during the mining operation and throughout the
trial-court litigation provided that the mining operator “shall correct material
damage caused to any structures or facilities by repairing the damage or shall
compensate the owner of such structures or facilities in the full amount of the
diminution in value resulting from subsidence.” Former Ohio Adm.Code 1501:13-
12-03(F), 2010-2011 Ohio Monthly Record 2-1427, effective Oct. 28, 2010.
       ¶ 9 Thus, the trial court concluded that Ohio Valley Coal could be held
liable for damages under the administrative regulation. But because the rule
required mining operators to pay only for damage “resulting from subsidence” from
mining, the trial court concluded that Columbia Gas was not entitled to recover the
costs of the preventive measures it had taken to protect the pipeline. The trial court
found that Columbia Gas had not established that the pipeline had sustained damage
as a result of subsidence. The trial court therefore denied Columbia Gas’s claim
for relief and entered judgment in favor of Ohio Valley Coal.
       ¶ 10 Columbia Gas appealed the trial court’s damages determination and
Ohio Valley Coal cross-appealed the trial court’s determination that the Ohio
SMCRA had nullified its surface-damage-liability waivers. The Tenth District
Court of Appeals agreed with the trial court’s conclusion that the administrative
regulation had rendered the deed waivers unenforceable. 2019-Ohio-1004, 

126 N.E.3d 1203

, ¶ 33. But it held that Columbia Gas could seek an award of damages
for its preventive measures.

Id. at ¶ 39.

Although Columbia Gas sought damages
pursuant to statute and had not alleged any tortious conduct on the part of Ohio




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                               January Term, 2020




Valley Coal, the Tenth District applied a tort concept—the doctrine of avoidable
consequences—to conclude that Columbia Gas could be compensated for efforts it
took to mitigate damages.

Id. at ¶ 35-36.

It therefore reversed the judgment of the
trial court on the damages issue and remanded the matter for a determination of
damages.

Id. at ¶ 42.

       ¶ 11 We accepted Ohio Valley Coal’s appeal, which sets forth three
propositions of law: (1) “Ohio law does not permit reimbursement for preventive
measures as damages before any tort has occurred”; (2) “When a regulation
provides a specific remedy for a violation of its terms, no plaintiff may recover
damages not provided for in the regulation or enabling statute”; and (3) “Ohio
SMCRA does not abrogate the validity of surface damage waivers as to commercial
structures.” See 

156 Ohio St. 3d 1497

, 2019-Ohio-3505, 

130 N.E.3d 292

. Thus,
this appeal presents two overarching questions: Did the Ohio SMCRA abrogate the
validity of surface-damage-liability waivers with respect to commercial structures?
And, if so, does the administrative regulation authorize an award of damages for
preventive measures?
       ¶ 12 We begin by taking up the first question, which is advanced in the
third proposition of law, and our resolution of that issue decides this case.
Columbia Gas asserts that the administrative regulation “completely supplanted
Ohio’s common law” by nullifying the continued enforceability of surface-damage
waivers in property deeds and as a result, Ohio Valley Coal must pay for damage it
caused to Columbia Gas’s pipeline and for the costs of preventive measures. Ohio
Valley Coal counters that if the rule is read to abolish common-law property rights
with respect to all surface-damage claims, it would go well beyond the scope of the
authority granted to ODNR by the General Assembly.
       ¶ 13 To determine the effect of the rule on the deed waivers, it is helpful
to understand the regulatory framework under which the rule was adopted. We




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                             SUPREME COURT OF OHIO




therefore begin with an overview of the state and federal Surface Mining Control
and Reclamation Acts.
             II. Ohio enacts SMCRA to comply with federal standards
       ¶ 14 The federal SMCRA was passed in 1977 and is the main federal law
regulating coal mining in the United States. 30 U.S.C. 1201 et seq. The federal act
instituted programs for regulating active coal mines and reclaiming abandoned
mines and lands adversely affected by mining. 30 U.S.C. 1202. Ohio implemented
its own scheme, codified in R.C. Chapter 1513, to comply with the federal
standards.
       ¶ 15 The General Assembly granted ODNR authority to implement coal-
mining regulations through R.C. 1513.02. Relevant here, the ODNR is directed to
“[a]dopt, amend, and rescind rules” to “administer and enforce” R.C. Chapter 1513
and “[t]o meet the requirements of” the federal SMCRA. R.C. 1513.02(A)(1).
Acting under the authority of these directives, ODNR promulgated rules in Ohio
Adm.Code 1501:13.
    A. The original version of the regulation upheld existing property rights
       ¶ 16 The Ohio regulation at issue in this case was adopted in 1983. Under
federal law at that time, state-law property rights remained enforceable with respect
to damage to structures or facilities. The federal regulations provided that a mining
operator needed to repair or provide compensation for damage to structures only
“[t]o the extent required under State law.” Former 30 C.F.R. 817.121(c)(2), 48
Fed.Reg. 24638, 24652 (1983); Natl. Wildlife Fedn. v. Lujan, 

928 F.2d 453

, 456
(D.C.Cir.1991). Thus, as long as a liability waiver was valid under state law, the
waiver would be given effect as to damage to structures. The federal provision left
it up to the states to decide whether mining operators should be required to pay for
damage caused to structures by subsidence irrespective of other contractual and
property rights.




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                                     January Term, 2020




          ¶ 17 As adopted in 1983, the Ohio regulation required a mining operator
to “correct material damage caused to any structures or facilities by repairing the
damage or compensate the owner of such structures or facilities in the full amount
of the diminution in value resulting from subsidence.” (Emphasis added.) Former
Ohio Adm.Code 1501:13-12-03(D)(2) (1983), 1983-1984 Ohio Monthly Record
443, effective Nov. 23, 1983. But Ohio’s rule recognized existing contractual and
property rights: if the mining operator had been relieved of liability “by property
conveyance or agreement with the owner of the structure or facility or his
predecessor in title,” then the operator was exempt from paying for damage to
structures under the regulation.1 Former Ohio Adm.Code 1501:13-12-03(D)(2)(b)
(1983).
            B. ODNR expanded the regulation to abolish property rights
          ¶ 18 This changed in 1989, when ODNR expanded the provision to
eliminate existing common-law property and contractual rights. The 1989 rule
continued to require that mining operators correct or compensate for “material
damage caused to any structures or facilities.” Former Ohio Adm.Code 1501:13-
12-03(F), 1989-1990 Ohio Monthly Record 90, effective Aug. 19, 1989. But
ODNR removed the provision exempting the operator from the rule if it had been
relieved of liability for damage to structures under the terms of a deed. Thus, under
the regulation following the 1989 amendments, mining operators were required to
repair or pay for damage caused to any structures or facilities.2

1. Since 1983, Ohio’s regulation has prohibited underground mining under certain structures,
including public buildings, churches, schools, and hospitals. See Ohio Adm.Code 1501:13-12-
03(J), formerly at Ohio Adm.Code 1501:13-12-03(E) (1983). The analysis in this opinion does not
apply to these exempted structures.

2. Under the 1989 rule, the mining operator and the owner of structures were permitted to enter into
an agreement before mining began addressing repair and compensation for damage. Former Ohio
Adm.Code 1501:13-12-03(E) (1989). But this exception did not address rights obtained through
property transfers, and as the trial court found in this case, Ohio Valley Coal and Columbia Gas did
not themselves enter into an agreement prior to mining.




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                            SUPREME COURT OF OHIO




C. Amendments to the federal regulations require operators to pay for damage
       caused to certain structures—not including commercial pipelines
       ¶ 19 The federal regulations were amended in 1995 to require mining
operators to “promptly repair, or compensate the owner for, material damage
resulting from subsidence caused to any non-commercial building or occupied
residential dwelling or structure related thereto.” (Emphasis added.) 30 C.F.R.
817.121(c)(2), 60 Fed.Reg. 16722, 16749-16750 (1995). The federal regulations
continued to defer to state law with respect to compensation for damage to other
structures. 30 C.F.R. 817.121(c)(3), 60 Fed.Reg. at 16750. Thus, while the federal
regulations instituted protections for certain noncommercial structures, they still
did not require compensation for damage caused to commercial pipelines.
       ¶ 20 Despite the changes to the federal provision, the broad “any
structures or facilities” language was retained in the 2010 version of Ohio
Adm.Code 1501:13-12-03(F). Then in 2018, after the trial-court proceedings in
this case had concluded, ODNR removed the “any structures or facilities” language
and replaced it with language mandating that the mining operator pay for
subsidence damage to “any non-commercial building or occupied residential
dwelling and structures related thereto.”     Ohio Adm.Code 1501:13-12-03(F)
(2018). Consequently, the Ohio regulation now limits a mining operator’s liability
for damage to structures to the requirements under federal law, and the operator’s
property rights otherwise remain intact. But because the current version of the
regulation was adopted after the mining and the trial-court proceedings in this case
had concluded, the lower courts determined Ohio Valley Coal’s liability under the
2010 version of the rule.
       ¶ 21 To recap, in 1989, at a time when federal regulations left state-law
property rights intact with respect to liability waivers for damage to structures,
ODNR adopted a provision abolishing those rights. And although the federal
regulations were subsequently amended to limit the enforceability of liability




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                                January Term, 2020




waivers with respect to noncommercial and residential structures, ODNR
nevertheless retained the comprehensive requirement that mining operators pay for
damage to “any structures or facilities” in the 2010 version of the Ohio rule. This
leads to the central question in this case: Did ODNR have authority to adopt
regulations rendering preexisting property rights void? The short answer is no.
   III. The requirement of former Ohio Adm.Code 1501:13-12-03(F) that
  mining operators pay for damage to commercial structures exceeded the
                           scope of the enabling statute
       ¶ 22 The Tenth District Court of Appeals concluded that former Ohio
Adm.Code 1501:13-12-03(F) (2010) abrogated the surface-damage-liability
waivers and required mining operators to repair or compensate for subsidence
damage to pipelines. In so holding, the Tenth District noted that states were free to
go beyond the minimum federal requirements and provide greater protections for
surface structures. 2019-Ohio-1004, 

126 N.E.3d 1203

, at ¶ 26. That is true, but the
court glossed over the matter of who gets to decide whether the state is going to
abrogate common-law property rights. It is the General Assembly—not ODNR—
that gets to set such policies. See McFee v. Nursing Care Mgmt. of Am., Inc., 

126 Ohio St. 3d 183

, 2010-Ohio-2744, 

931 N.E.2d 1069

, ¶ 25, quoting D.A.B.E., Inc. v.
Toledo-Lucas Cty. Bd. of Health, 

96 Ohio St. 3d 250

, 2002-Ohio-4172, 

773 N.E.2d 536

, ¶ 41 (“The General Assembly sets public policy, and administrative agencies,
when granted rulemaking power, ‘develop and administer’ those policies”).
       ¶ 23 Administrative agencies possess only such power as has been
delegated to them. D.A.B.E. at ¶ 38. When an agency goes beyond the authority
that has been delegated to it, it usurps the legislative role of establishing public
policy and thereby generates separation-of-powers concerns. McFee at ¶ 24;
D.A.B.E. at ¶ 41. “An agency exceeds its grant of authority when it creates rules
that reflect a public policy not expressed in the governing statute.” McFee at ¶ 25,
citing D.A.B.E. at ¶ 41.




                                         9
                             SUPREME COURT OF OHIO




       ¶ 24 Thus, we must look to R.C. 1513.02 to determine whether ODNR
had the authority to adopt regulations that abrogate Ohio Valley Coal’s property
rights in the liability waivers contained in the coal-severance deeds. That statute
authorized ODNR to establish regulations “to meet” federal requirements. R.C.
1513.02(A)(1). From 1983 to 1995, there were no federal requirements regarding
a mining operator’s obligation to repair or compensate for damage to structures
caused by subsidence from underground mining. Yet during that time, ODNR
adopted a rule requiring mining operators to pay for subsidence damage to “any
structures or facilities”—purporting to render invalid subsurface owners’ property
interest in deed liability waivers. Former Ohio Adm.Code 1501:13-12-03 (1989).
And while the federal regulation was changed in 1995 to require that mining
operators pay for damage caused to “any non-commercial building or occupied
residential dwelling or structure related thereto,” 30 C.F.R. 817.121(c)(2), 60
Fed.Reg. at 16749-16750, ODNR retained the broad “any structures or facilities”
language when it adopted the 2010 version of the Ohio rule. Ohio Adm.Code
1501:13-12-03(F) (2010). It is clear, then, that ODNR went beyond its charge to
enact regulations “to meet” the federal requirements.
       ¶ 25 One might argue that in authorizing the agency “to meet” federal
requirements, the legislature meant to allow the agency to provide greater
protections for surface property owners than those mandated under federal law.
And while such an argument might have some appeal in another context, it has little
force here.   We are dealing with an administrative regulation that abrogates
common-law property rights. And it is well settled that we will not presume the
legislature “ ‘to have intended to abrogate a settled rule of the common law unless
the language used in a statute clearly supports such intention.’ ” Williams v. Spitzer
Autoworld Canton, L.L.C., 

122 Ohio St. 3d 546

, 2009-Ohio-3554, 

913 N.E.2d 410

,
¶ 17, quoting State ex rel. Hunt v. Fronizer, 

77 Ohio St. 7

, 16, 

82 N.E. 518

(1907).




                                         10
                                January Term, 2020




There is simply no language in the enabling statute, R.C. 1513.02, remotely
suggesting an intent to revoke existing property rights.
          ¶ 26 Because the General Assembly did not establish a policy of
abolishing longstanding property rights, ODNR exceeded the scope of its authority
by adopting a rule that requires mining operators to pay for damage to surface
structures without regard to the operator’s having obtained surface-damage-liability
waivers through coal-severance deeds.         We therefore hold that former Ohio
Adm.Code 1501:13-12-03(F) (2010) is invalid to the extent that it exceeds federal
law to nullify liability waivers as to damage to commercial structures. Our
resolution of this proposition of law renders the remaining propositions of law
moot.
                                  IV. Conclusion
          ¶ 27 The administrative agency lacked authority under Ohio’s SMCRA
to enact a regulation that requires a mining operator to pay damages irrespective of
common-law property rights, to the extent that such rights have not been limited by
federal law. Thus, the surface-damage-liability waivers contained in the coal-
severance deeds remain valid and enforceable with respect to damage caused to
commercial pipelines as a result of subsidence from mining. As a result, Columbia
Gas is not entitled to recover from Ohio Valley Coal for damage to its pipeline
caused by mining and there is no need to remand this case for any further
determination on the issue of damages. We therefore reverse the judgment of the
court of appeals and reinstate the judgment of the trial court in favor of Ohio Valley
Coal.
                                                              Judgment accordingly.
          O’CONNOR, C.J., and KENNEDY, FISCHER, DONNELLY, and STEWART, JJ.,
concur.
          FRENCH, J., concurs in judgment only.
                                _________________




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                           SUPREME COURT OF OHIO




       McDonald Hopkins, L.L.C., Dan L. Makee, Richard W. Cline, and Joseph
M. Muska, for appellee.
       Dinsmore & Shohl, L.L.P., Douglas J. Feichtner, and Thomas M. Connor,
for appellants.
       Dave Yost, Attorney General, Benjamin M. Flowers, Solicitor General, and
Zachery P. Keller, Deputy Solicitor General, for amicus curiae, Ohio Attorney
General Dave Yost.
                             _________________




                                      12

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