## Facts

- A class of surface owners (“Pruitt heirs”), represented by Jo D. Molinary as trustee, held more than a 99% undivided interest in the surface estate of a 50-acre tract in Lee County, Virginia.
- Powell Mountain Coal Company (Wax Coal) owned 100% of the mineral estate under an 1887 severance deed and a very small (about 0.14%) undivided interest in the surface estate, making it a surface cotenant with the class.
- The tract was primarily used by the surface owners for recreation; a small portion had been previously strip-mined by others and left unreclaimed except by natural processes.
- In February 1990, Wax Coal applied to Virginia’s Division of Mined Land Reclamation (DMLR) for a surface-mining permit authorizing, among other activities, auger mining on the tract.
- Virginia’s SMCRA-approved permitting program required an applicant to demonstrate a valid “right of entry,” including written consent from surface owners where surface and mineral estates were severed.
- Wax Coal’s permit application omitted some record surface owners and did not provide documentation establishing authority to conduct auger mining on the tract.
- DMLR initially issued the permit, later revoked it upon discovering deficiencies in the right-of-entry showing, and ordered reclamation.
- Wax Coal extracted coal and realized substantial economic returns from the auger mining.
- The plaintiffs pursued SMCRA citizen-suit damages, seeking nominal surface damages (to avoid duplicating any reclamation remedy) and monetary recovery reflecting Wax Coal’s economic gain from the unlawful mining.

## Issues

1. Whether Wax Coal acted “willfully, or with reckless disregard or gross negligence” under SMCRA § 520(f) by omitting surface owners and failing to document legal authority to auger mine in its permit application.
2. Whether SMCRA § 520(f) permits damages measured by the violator’s economic benefit (disgorgement/unjust enrichment), in addition to (or instead of) compensatory surface-damage damages, where reclamation may be ordered by regulators.
3. Whether Wax Coal’s small undivided surface interest as a cotenant satisfied Virginia’s right-of-entry requirements for permitting, or whether consent of other surface cotenants was required for auger mining.

## Decision

- Judgment was entered for the plaintiff class under SMCRA § 520(f).
- The jury found Wax Coal was willful, reckless, or grossly negligent in failing to list all surface owners and in failing to supply documentation of authority to auger mine, supporting damages liability under § 520(f).
- The court rejected Wax Coal’s position that its fractional surface interest alone provided adequate right of entry for auger mining without the other surface owners’ consent.
- The court awarded nominal damages for surface impact and substantial damages reflecting Wax Coal’s gains from coal extracted under the improperly obtained permit.

## Legal Principles

- SMCRA § 520(f) authorizes citizen-suit damages against a mining operator when violations of SMCRA-based requirements are willful, reckless, or grossly negligent.
- In an SMCRA-approved state program, right-of-entry and surface-owner-consent requirements incorporated into permitting may form the basis for federal damages liability when knowingly or grossly negligently violated.
- Under Virginia cotenancy principles, a surface cotenant generally may not unilaterally undertake a use that fundamentally alters or destroys the common estate; for operations such as auger mining, consent of the other surface cotenants (or other valid legal entitlement) is required to establish right of entry.
- Where regulatory authorities can require reclamation, damages under § 520(f) may be framed to avoid double recovery; the court may award nominal surface damages while awarding substantial damages measured by the operator’s economic benefit from the unlawful mining.

## Conclusion

The court held that Wax Coal’s misleading and legally insufficient right-of-entry showing in its permit application was willful, reckless, or grossly negligent under SMCRA § 520(f), and it awarded nominal surface damages plus a substantial monetary award tied to the economic benefit Wax Coal obtained from the coal mined under the improperly issued permit.


Molinary v. Powell Mountain Coal Co., 892 F. Supp. 136 (W.D. Va. 1995)