## Facts

- Shell Pipe Line Corporation operated the Capline Pipeline, an interstate oil pipeline running through southern Illinois.
- Old Ben Coal Company conducted underground coal extraction beneath lands crossed by the pipeline using longwall mining, a method expected to cause surface subsidence above mined panels.
- Shell anticipated that subsidence under or near the pipeline could rupture the line and cause major operational and environmental harm.
- To prevent anticipated subsidence damage, Shell implemented extensive engineering and protective measures associated with multiple longwall panels passing under the pipeline, at a cost exceeding $750,000.
- Shell sought to recover these preventive costs under Illinois mining subsidence regulations requiring an operator that “cause[s] subsidence damage” to indemnify for “all damages.”
- The Illinois Department of Mines and Minerals took the position that the regulations covered only actual, realized subsidence damage, not preemptive protective expenditures.
- After punitive damages were eliminated earlier, the parties filed cross-motions for summary judgment on Shell’s remaining statutory/regulatory indemnity claim.

## Issues

1. Whether Illinois subsidence-damage regulations requiring mine operators to “indemnify for all damages” resulting from subsidence allow recovery of reasonable preventive expenditures incurred to avoid foreseeable subsidence harm.
2. Whether the near-certainty of subsidence from longwall mining supports treating mitigation costs as compensable “damages” under the regulatory indemnity scheme.
3. Whether an agency’s narrow view limiting recovery to post-subsidence repair costs controls the court’s interpretation of the regulation.

## Decision

- Old Ben’s motion for summary judgment was denied.
- Shell’s motion for summary judgment was granted in substantial part, at least as to liability.
- The court held that the regulatory requirement to indemnify for “all damages” includes reasonable preventive measures taken to protect existing structures from foreseeable subsidence caused by the operator’s mining.

## Legal Principles

- A regulatory duty to “indemnify for all damages” from mining-induced subsidence may include reasonable, causally related preventive or mitigation expenditures, not only post-injury repair costs.
- When a mining method makes subsidence reasonably certain, preventive measures taken to avoid catastrophic harm can qualify as compensable damages within a protective subsidence scheme.
- Recoverability of preventive costs is limited by causation and reasonableness: expenditures must be prompted by the operator’s planned mining and be proportionate to the foreseeable risk.
- A court may decline to adopt an agency’s restrictive interpretation when the regulatory text and protective purpose support a broader reading.

## Conclusion

The court interpreted Illinois subsidence indemnity regulations to permit recovery of reasonable, mining-caused preventive costs, allowing a pipeline operator to obtain reimbursement for protective measures taken in response to the predictable subsidence effects of longwall mining.


Shell Pipe Line Corp. v. Old Ben Coal Co., 677 F. Supp. 572 (S.D. Ill. 1988)