Opening Brief Filed in Case Challenging Issuance of Mine Permits
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Wrong. The Kentucky Department for Surface Mining in the state Natural Resources and Environmental Protection Cabinet routinely issues permits allowing coal companies to strip mine land without the consent of all cotenants where the company owns or leases any fractional interest in that property, however small that interest might be.
On behalf of Billy and Sue Kirtley, KRC has filed an administrative challenge to the state issuance of mine permits in such cases. We believe that under Kentucky law, no cotenant has the right to authorize the destruction of land and removal of timber for surface coal mining without the consent of all cotenants.
Supporting KRC
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COMMONWEALTH OF KENTUCKY
NATURAL RESOURCES AND
ENVIRONMENTAL PROTECTION CABINET
FILE NO. PDH-25535-042
PERMIT NO. 889-0114
BILLY & SUE KIRTLEY PETITIONERS
V. PETITIONERS' MOTION FOR A RECOMMENDATION
OF SUMMARY DISPOSITION ON BEHALF OF PETITIONERS
NATURAL RESOURCES AND
ENVIRONMENTAL PROTECTION CABINET
and
RAPID ENERGY, INC. RESPONDENTS
* * * * *
Come the Petitioners, Billy and Sue Kirtley, by and through counsel, and respectfully move this tribunal for a recommendation of summary disposition on their behalf. In support of this motion, petitioners file this memorandum and assert that there are no material issues of fact in dispute and that, as a matter of law, Petitioners are entitled to a recommendation of summary disposition in their favor.
Introduction
Petitioners Billy and Sue Kirtley filed this administrative challenge to the decision of the Respondent Natural Resources and Environmental Protection Cabinet (Cabinet) to issue a surface coal mining permit 889-0114 to Rapid Energy, Inc. (Rapid Energy) to engage in surface coal mining and reclamation operations on lands owned by Petitioners, without the Petitioners' consent, over their objection, and without sufficient right-of-entry under state and federal law.
Stipulated Facts
These fact have been stipulated by the parties, and the documents to which these facts refer have been included as Joint Exhibits:
1. By letter dated September 10, 2001, Billy and Sue Kirtley registered an objection to an application of Rapid Energy, Inc. for issuance of a surface mining permit #889-0114. The letter included three deeds:
a. A September 15, 1976 deed from Tom McDonald conveying undivided fractional interests in certain lands and coal and other minerals to his children and grandchildren, including a 1/10 undivided fractional interest to Sue Kirtley.
b. An April 17, 1979 deed from Tom (T.M.), Jewell and Nancy McDonald conveying undivided fractional interests in certain lands and coal and other minerals to their children and grandchildren, including a 1/10 undivided fractional interest to Sue Kirtley;
c. An April 12, 1983 deed from Sue Kirtley to her husband Billy Kirtley conveying as a gift the 1/10 undivided interest in certain of the properties conveyed to her under the two deeds.
2. The letter also included a copy of a coal mining lease dated August 15, 2001 between Rapid Energy, Inc. as lessee, with numerous parties, including Billy and Sue (listed as Patsy) Kirtley as lessors. The signature lines for Billy Kirtley and Patsy Kirtley are blank, since neither Billy nor Sue Kirtley signed the lease, but other listed lessors did.
3. The August 15, 2001 lease describes two tracts Tract One, in which surface and coal interests are leased, and Tract Two, in which coal only is leased.
4. The September 10, 2001 objection letter objected to the permit issuance on the grounds that:
a. The permit application erroneously identified a portion of the area to be permitted as being owned by the "Tom McDonald Heirs" when the property is not owned collectively;
b. The application did not include a copy of the lease or deed;
c. That Billy and Sue Kirtley owned a 1/10 undivided interest as a tenant in common with others in various tracts of surface and
minerals described by the applicant with the Permit Application.
d. The Kirtleys disputed the right of Rapid Energy, Inc. to mine and make use of the surface and also objected to the specific post mining land use proposal and the specifics of the plan.
5. On September 18, 2001, the Division of Permits by letter notified Rapid Energy, Inc. of the receipt of the objection and requested documentation to support the claimed right of entry.
6. By telefax and letter dated October 10, 2001, on behalf of Rapid Energy, Inc., William R. (Rudy) Thomas submitted a September 21, 2001 letter responding to the September 18, 2001 letter from the Division of Permits. In the response, Rapid Energy, Inc. asserted that:
a. Rapid Energy, Inc. acknowledges that Billy Kirtley and Sue
Kirtley jointly own one-tenth (1/10) undivided interest in the property identified in Section 9.1 of the permit application as the property owned by the Tom McDonald heirs. Billy and Sue Kirtley are co-tenants with the remaining nine-tenths (9/10) interest owners which consists of thirty eight (38) other individuals.
b. Rapid Energy, Inc. has obtained a lease of the McDonald property from those thirty-eight (38) co-tenants who own the remaining nine-tenths (9/10) undivided interest in the McDonald property.
c. Rapid Energy, Inc. does not contest the fact that Billy and Sue Kirtley have not leased their one-tenth (1/10) interest to Rapid Energy, Inc.
d. Rapid Energy, Inc.'s claim of right of entry derived from the lease of the co-tenants owning the remaining nine-tenths (9/10) interest.
7. The September 21, 2001 letter further contained legal argument and authority for the proposition that Rapid Energy had the right to enter and mine based on the lease of the co-tenants owning the remaining nine-tenths (9/10) interest.
8. By letter dated October 1, 2001 Billy Kirtley informed Mr. Oldham, Division of Permits, that Sue Kirtley had by deed dated September 12, 2001, conveyed her interest in the coal and minerals described as Tract #1 in the April 12, 1979 deed that had been previously submitted with the permit objection by Billy and Sue Kirtley. The letter objected to the post mining land use of pastureland and to any permanent water impoundment, and outlined in broken and solid lines those areas within the permit area where Mr. Kirtley claimed ownership of an undivided interest in minerals and surface, and minerals only.
9. On October 29, 2001 by memorandum from Charles Oldham to Mark Smith, the Operations Support Section of the Division of Permits determined that:
The lease provided by the applicant, Rapid Energy, Inc.
from the owners of the 9/10 interest in the property to be
mined by this permit application is sufficient to establish
the applicant's right of entry.
10. On October 29, 2001 by memorandum from Charles Oldham to Mark Smith, the Operations Support Section of the Division of Permits determined that:
The lease provided by the applicant, Rapid Energy, Inc.
from the owners of the 9/10 interest in the property to be
mined by this permit application is sufficient to establish
the applicant's right of entry.
11. By letter dated November 5, 2001, the Division of Permits sent written notice to Billy and Sue Kirtley that a decision had been made regarding the right of entry objection, and providing the response that:
The lease provided by the applicant, Rapid Energy, Inc.
from the owners of the 9/10 interest in the property to be
mined by this permit application is sufficient to establish
the applicant's right of entry.
The letter also notified the Kirtleys that the permit had been issued for a surface coal remining operation for 201.60 acres in Muhlenberg County near Greenville, Kentucky.
12. As part of the issuance process for a permit application, certain written findings are required to be made. On November 5, 2001, written findings were made concerning the Rapid Energy Permit Application 889-0114, including a finding of right of entry based on a "copy of written consent of surface owner for extraction by surface mining methods[.]"
13. The Billy and Sue Kirtley timely filed an administrative appeal challenging the issuance of Permit 889-0114.
Statement of Applicable Law
The Surface Mining Control and Reclamation Act of 1977 (SMCRA) was enacted with the purpose of "assur[ing] that the rights of surface landowners and other persons with a legal interest in the land or appurtenances thereto are fully protected from [surface coal mining] operations[.]" In furtherance of that goal, 30 U.S.C. 1257 imposes requirements with respect to the contents of a permit application, and 30 U.S.C. 1260 imposes requirements on the applicant and the regulatory authority with respect to permit determinations.
The Commonwealth of Kentucky was granted primary regulatory authority over the implementation of the 1977 law through an approved "state program" on the basis of submittal of laws and regulations conforming, as required by 30 U.S.C. 1253(a)(1)-(7) to the 1977 Act and the regulations of the Secretary of Interior. The Kentucky General Assembly is obligated by both federal and state law to conform the implementation of that approved state program to the federal counterpart laws and regulations. 30 C.F.R. 733.11, KRS 350.465(2).
KRS 350.060 addresses the requirements for mining permits, and provides at subsection (3)(d) that the person "desiring a permit to engage in surface coal mining operations shall file an application which shall state . . . [t]he source of the applicant's legal right to mine the coal on the land affected by the permit[.]"
That same statute imposes an affirmative burden on the applicant to demonstrate, and on the Cabinet to find that the applicant possesses sufficient right under law to enter and mine, wherein it provides that no permit can be approved:
unless the application affirmatively demonstrates, and the cabinet finds in writing on the basis of the information set forth in the application or from information otherwise available, that the permit application is accurate and complete and that all the requirements of this chapter have been complied with.
KRS 350.060(2).
405 KAR 8:030 further amplifies what must be submitted by way of right of entry and right-to-mine information. At Section 4, the regulation requires
(1) Each application shall contain a description of the
documents upon which the applicant bases his or her legal right
to enter and begin surface mining activities in the permit area
and whether that right is the subject of pending litigation. The
description shall identify those documents by type and date of
execution, identify the specific lands to which the document
pertains, and explain the legal rights claimed by the applicant.
(2) If the private mineral estate to be mined has been severed
from the private surface estate, the application shall contain:
(a) a copy of the written consent of the surface owner for the
extraction of coal by surface mining methods; or
(b) a copy of the conveyance that expressly grants or reserves
the right to extract coal by surface mining methods; or
(c) If the conveyance does not expressly grant the right to
extract coal by surface mining methods, a copy of the original
instrument of severance upon which the applicant bases his
right to extract coal by surface mining methods and documentation that under applicable state law, the applicant has
the legal authority to extract the coal by those methods.
405 KAR 8:010 Section 14 contains the criteria for application approval or denial, and states that:
No application for a permit . . . shall be approved unless
the application affirmatively demonstrates and the cabinet
finds, in writing, on the basis of information set forth in the
application or from information otherwise available, that:
(1) The permit application is complete and accurate and in
compliance with all requirements of KRS Chapter 350 and 405 KAR Chapters 7 through 24;
* * *
(6) For operations involving the surface mining of coal where
the private mineral estate to be mined has been severed
from the private surface estate, the applicant has submitted to
the cabinet the documentation required under 405 KAR 8:030,
Section 4(2) . . . .
Summary of Argument
As tenants in common of an undivided fractional interest in the surface and minerals of lands that are included within the permit area of the Rapid Energy, Inc. Permit 889-0114 and which are proposed to be affected by surface disturbance and mining under that permit, the consent of Billy and Sue Kirtley to entry and the conducting of surface coal mining operations with attendant timber removal was required prior to issuance by the Department for Surface Mining Reclamation and Enforcement of Permit 889-0114 to Rapid Energy, Inc. The Cabinet erred as a matter of state law in determining that the lease provided by the applicant, Rapid Energy, Inc. from the owners of the 9/10 interest in the property to be mined by this permit application is sufficient to establish the applicants right of entry and right to conduct surface coal mining operations.
Additionally, the Cabinet erred in failing to provide adequate and sufficient findings of fact and conclusions of law to enable appropriate administrative and judicial review of the decision to approve the permit notwithstanding the presence of an objection concerning the right to enter and mine, and notwithstanding the lack of adequate consent and adequate right of entry and to mine under state law. It is axiomatic that an administrative agency must provide findings of fact sufficient to allow a reviewing court to determine the basis for the decision, yet no documentation and no analysis, other than a conclusory statement, is contained in the application or decision demonstrating affirmatively or sufficiently that mere ownership of an undivided fractional interest in property confers the right to a third party to whom such a fractional interest has been conveyed, to enter and strip mine the land notwithstanding the lack of consent of all undivided fractional interest owners, and notwithstanding an objection of a non-consenting undivided fractional interest holder.
Likewise, the Cabinet failed to make any finding with respect to the right of the permit applicant to conduct surface coal mining operations. The determination noted that the applicant had established a right to enter, not a right to enter and conduct mining activities.
Third, the Cabinet erred in failing to withhold issuance of the permit pending identification by the permit applicant of adequate and sufficient legal authority to enter and mine, and to provide documentation of a deed, lease or other document evidencing sufficient legal authority under state law to enter and surface mine. State and federal laws and regulations placed the burdens on the applicant and regulatory authority to affirmatively demonstrate and find, respectively, that the applicant has the requisite right to enter and mine. The Cabinet erred as a matter of both state and federal law in determining to issue the permit in the face of a legitimate controversy over whether the lease accorded sufficient right to mine.
Where there is a timely and sufficient objection, the Cabinet is obligated to withhold permit issuance pending resolution of the underlying dispute.
The decision of the Cabinet to knowingly issue a mining permit notwithstanding the lack of consent of all owners of undivided interests in the land to be mined, effects an unconstitutional deprivation of protections against arbitrary governmental action and constitutes a taking of the property of Petitioners Billy and Sue Kirtley in violation of the Kentucky and federal constitution, by conferring on the remote lessee of an undivided fractional interest owner the right to engage in activities that will disrupt the surface and destroy the mineral estate and will cause waste of the estate and ouster in derogation of the interests of the non-consenting joint property owners; and by depriving the Petitioners of a protection against such waste accorded under state and federal law.
Argument
I. The Cabinet erred as a matter of state law in determining that the lease provided by the applicant, Rapid Energy, Inc. from the owners of the 9/10 interest in the property to be mined by this permit application is sufficient to establish the applicants right of entry.
While the Cabinet provided no legal support or analysis for the conclusion that the lease by Rapid Energy Inc. of 9/10 fractional undivided interest in the subject properties was sufficient to establish a right of entry, any such right must arise under state law. Under applicable state law, the remaining 9/10 undivided interest holders cannot engage in or sanction through lease, the destruction of the property and removal of associated timber without the consent of the remaining tenants in common, and thus Rapid Energy, as lessee, cannot claim such a right.
We begin the September 21, 2001 letter from counsel for Rapid Energy, Inc. responding to the objection filed by the Petitioners. In that letter, the company cited the case of York et al. v. Warren Oil and Gas Company, 229 S.W. 114 (Ky. 1921) for the proposition that Rapid Energy, through the lease of an undivided interest in the jointly held real property, "ascends to the rights of the co-tenant Lessor with the other joint owners with the right to enter upon the joint property to explore for, mine, and market minerals with the obligation to account to he co-tenants for their portion of the minerals recovered." Rapid Energy claimed the "right as Lessee of the co-tenants to come upon the property for mining purposes as would any other co-tenant including Billy and Sue Kirtley." Joint Exhibit 4, pp. 1-2.
No one disputes that the lessor co-tenants could not convey or burden the interest of Billy and Sue Kirtley. For "one joint owner of land cannot, by his own unconsented[-]to agreement, burden the interest or title of his joint owner[,]" Clark v. Smith, 66 S.W.2d 93, 95 (Ky. 1933), and when he enters into any such transaction not consented to by his associates in interest. . it attaches only to his aliquot part ownership and is not obligatory on any of the others." Id., at 95. See: also ?Geary v. Taylor, 179 S.W. 426, 428 (Ky. 1915)("Where property is owned by several tenants in common, a lease by one or more of them is not valid as to those who do not join in the lease, but operates merely to make the lessee a tenant in common with the others.")
Any rights that the lessee acquires under a lease from a joint tenant "are subordinate to the rights of the other joint owners of the lands, who do not join them[,]" Potter v. Wallace, 215 S.W. 538, 542 (Ky. 1919), and the lessee acquires "no right which will prejudice the rights of the nonassenting cotenants." Id.
The question in controversy that determines whether the applicant's lease demonstrated sufficient right to enter and right-to-mine under state law, is whether a co-tenant has the right, without the consent of another co-tenant, to allow the surface coal mining and attendant destruction of standing timber and of the surface and minerals of jointly-held real property.
Petitioners believe that the answer is a resounding "no," and that area surface mining of the coal with attendant timber removal and destruction of the land surface, without the consent of all owners, is not authorized under Kentucky law and constitutes prohibited waste.
Under Kentucky law, a cotenant of real property may enter and use the commonly owned estate as if she or he were the sole owner, regardless of his or her percentage of interest. For "[t]he primary characteristic of a tenancy in common is unity of possession by two or more owners. Each cotenant, regardless of the size of his fractional share of the property, has a right to possess the whole." Martin v. Martin, 878 S.W.2d 30, 31 (Ky.App. 1994).
The right of possession is, however, subject to constraints that have in this instance been transgressed.
Kentucky courts have noted as a general proposition that one cotenant may lease his undivided interest in joint real property for "oil and other mineral" and that the lessee becomes "a cotenant in the mineral leased with the other joint owners" and may "enter upon the joint property and explore for, mine, and market minerals", subject to an obligation of accounting to the non-consenting cotenant. York v. Warren Oil and Gas Co., 229 S.W. 114, 115-6 (Ky. 1921). Taylor v. Bradford, 244 S.W.2d 482 (Ky. 1951) and its progeny hold that cotenants have the right to drill for gas on commonly-owned property without the consent of the other cotenants. Petroleum Exploration Corp. v. Hensley, 284 S.W.2d 828, 830 (Ky. 1955).
With one exception, the reported decisions involving leasing and development of mineral interests by a cotenant without the consent of other cotenants have involved oil and gas, and not the surface mining of coal and attendant destruction of the fabric of the land itself.
The case of Taylor v. Bradford, 244 S.W.2d 482 (Ky. 1951) presents at first blush a problem for Petitioners, since in that case the Court stated that "appellees had a right to mine the coal on their own land, both before and after appellant advised them of her joint interest." Id. at 484.
Taylor is distinguishable, however. The Taylor court was not faced with the question of whether the complete destruction of the land surface through surface mining and attendant timber removal, was consistent with the rights of the nonconsenting cotenant. There is no case that Petitioners have found where the Court has been asked to confront the question of whether a cotenant to destroy or cut all standing timber and to obliterate the surface of the estate through area surface coal mining, or to lease to another that right over the objection of another cotenant. There is no indication that the Appellant in Taylor objected to the mining or sought to enjoin the activity on the basis that it constituted waste or a constructive ouster. Instead, the complaining party conceded the right of Appellees to mine the property, Id., at 486, and sought only a royalty interest.
Taylor, decided in 1951, is distinguishable also as the product of an era in which mineral interests were favored over the correlative rights of the surface owner, See: Buchanon v. Watson, 290 S.W.2d 40 (Ky. 1956), and in which those mineral interests were expanded significantly beyond the rights actually conveyed by grantors to the mining companies. See: Ward v. Harding, 860 S.W.2d 280 (Ky. 1993). The inconsistency of surface mining with the rights of non-consenting surface landowners to use of the surface was noted by the Court:
With the advent of equipment capable of moving massive amounts of earth, the controversy took on a new dimension. As technology progressed, mineral owners and their successors in interest acquired the capability of removing previously inaccessible or economically unfeasible coal by means of strip mining or other mining methods which caused profound disturbance of the surface. The issue which then emerged was whether or to what extent, and with or without compensation for damages, the mineral owner was entitled to destroy the surface to extract the coal. This Court's decision in Buchanan v. Watson, Ky., 290 S.W.2d 40 (1956), soon provided the answer. Purporting to rely upon the doctrine of stare decisis, the Buchanan Court stripped the landowner of any right to restrict the mining method and rendered him a virtual tenant on his land.
Ward, supra, at 283.
In overruling Buchanan, the Ward Court made clear how the court would in a more temperate era view the proposition that a cotenant could destroy (or lease to another to destroy) the land surface, destroy or remove all vegetative cover including timber, and exert such an exclusive use of the land as attends area surface mining, and still remain true to the obligations that attach to a cotenant with respect to the rights of other cotenants.
To the extent that Taylor v. Bradford is viewed as standing for the proposition that a joint tenant may mine coal by surface methods even to the extent of materially destroying the land surface and removing all standing timber without liability as is expressly sanctioned under the lease to Rapid Energy, the Taylor decision should be viewed as an aberration in the law of cotenancy, as was the Buchanan decision in the law of deed construction. The State of Virginia, from which the Commonwealth devolved, squarely faced and rejected the premise that majority cotenants could lease land to be strip mined without the consent of all cotenants. In Chosar Corporation v. Owens, 370 S.E.2d 305 (Va. 1988) the Court was presented a strikingly similar fact situation, in which 85% of the owners of an undivided interest in a 61-acre tract of land executed a lease to mine. In answering whether the strip mining of coal without the consent of all cotenants constituted prohibited waste, the Court reviewed the common law and determined that "the extraction of coal from the Willis tract is a material and continuing destruction of the very substances of the mineral estate[,]" and that '[t]he consenting cotenants had no right to remove coal from the common property without the consent of Owens."
There is strong support in Kentucky law for the proposition that a cotenant cannot destroy the land surface and standing timber through surface coal mining or lease the right to do so without the consent of the other cotenants.
The York case on which Rapid Energy relied itself noted that the rights of Warren Oil and Gas Company were tempered by the rights of the cotenant York daughter:
While she and her lessee had the right to the surface for the
purpose of exploring for, mining, and marketing the oil and
gas, this use of the surface was not and could not be
exclusive, but subject always to the same right of the other
cotenant. Had the son, who owned the other one-half undivided
interest in the land, leased it to another company, both
companies would have enjoyed the privilege of entering upon
and using the surface of the lands while drilling for oil and gas
to the same extent as their grantors could have done, each respecting the prior location and improvements of the other,
and accounting to the cotenants for their respective interests in
the oil and gas produced. This is but an application of the well-
known rule governing cotenants of real property.
York, supra, at 116.
Explicit in that analysis is the assumption that the use or lease of the surface in a manner that would be exclusive would be inconsistent with the rights of the other cotenant. Exploration and development of oil and gas on a tract of land is not, as the York court recognized, exclusive of other uses to which the land could be put, such as agriculture. Area surface coal mining is such an exclusive use, in which site access is limited and controlled, the surface of the earth itself is upended, and the heavy industrial use of the land precludes other beneficial uses by another cotenant and constitutes a de facto exclusive use and occupation of the land inconsistent with the rights of cotenants and rising to the level of an ouster.
In this case, the cotenants who leased their interest have consented to activities by Rapid Energy that include:
the exclusive right to mine, extract and removal all coal
on or under the premises . . . and to conduct such mining
operations by the surface mining method . . . as Lessee
shall determine with the unrestricted right to remove and
destroy all or any part of the surface of the premises for
mining and/or reclamation operations of Lessee on the
premises and in conjunction with adjoining properties which
are being mined or reclaimed by the Lessee, all without
claim or liability for damages to the surface of the premises.
Joint Exhibit 1, p. 2. (Emphasis added).
Additionally, the lease grants Rapid Energy:
the right, without claim or liability for damages, to
raze or remove any improvements presently or hereafter
constructed on the premises, unless Lessee executes a
written waiver of such right prior to the date of which such
improvements are made or constructed on the premises.
Joint Exhibit 1, p. 3. (Emphasis added).
In addition, Rapid Energy is given a right of free access for exploration and prospecting.
Concerning timber, the lease reserves to the lessors the right to sell and/or remove all timber, growing crops or structures, but after giving sixty (60) days notice, the lease absolves the lessee of any responsibility "for the destruction or use of timber, growing crops or removal of or damage to structures or other improvements on the designated area of the premises." Id. at pp. 3-4.
Thus, by lease, the lessor-cotenants have authorized the complete destruction of the surface estate without claim or liability and the destruction of all structures, crops and timber without claim or liability.
Such an extreme "use" of land jointly held is beyond the authority of a co-tenant, and constitutes waste.
The authorization by cotenants to destroy without liability all standing timber as the first step to the removal of the land surface for area surface coal removal, is beyond the authority of a cotenant. It is well-settled that a cotenant does not have the authority to cut trees absent the consent of the cotenant.1 Emmons v. Evans, 198 S.W. 900 (1917); Burt & Brabb Lumber Co. v. Clay City Lumber Co., 64 S.W. 652 (Ky. 1901). As the court noted in that case, "[t]he common and statutory law both carefully protect owners of land in their right to preserve it as they may desire[.]" As with that case, the remedy if coal extraction and attendant timber destruction is desired by the leasing cotenants, is to partition the land. Id. at 653.
The lease submitted by the objectors, Billy and Sue Kirtley, made clear to the Cabinet that Rapid Energy, Inc. was asserting a right to remove all timber and other vegetation and to destroy the land surface as part of the mining activity. Such timber removal by a permit holder in the process of clearing the land for mining falls within the scope of the statutory and regulatory definition of "surface coal mining operations." 30 U.S.C. 1291(28)(A), (B); KRS 350.010.
In Nevels v. Kentucky Lumber Company, 56 S.W.969 (1900), the Court explained the basis for the requirement of cotenant consent for timber removal, and in so doing suggests that the Court, if presented the question, would view destruction of the surface of the land through area surface mining of coal as impermissible without the cotenant consent.
Joint tenants or tenants in common may, or course, join in a
conveyance of the common property, but, one co-tenant not
being permitted to do any act which will prejudice the rights
of another, a sale made by one will not devest (sic) another
of his interest in the common property, unless he had been duly
authorized to make such sale, or unless the sale was duly
ratified by the other tenants. But such a sale is not, as a general
rule, void; the purchaser's title attaching to such interest, and
only such, as the tenant of whom he purchased was possessed.
(citation omitted).
Id. at 969.
The Nevels Court continued, describing the Minnesota case of Shepard v. Pettit, in which a cotenant had cut logs without the consent of the other, and quoting with approval the principle that while a cotenant may engage in such beneficial use as is associated with normal husbandry:
But this right to retain, use, and appropriate the benefits of the
land extends only to the products of its proper use and employment, and not to anything which is part of the land
itself, and not severable in the proper use of it. He is undoubtedly liable for waste, or for destruction of what is of the realty, or for acts amounting to a destruction of part of the
realty, as the severance and removal of a mill or the fixed machinery. . . . Standing trees are ordinarily, at least, to be regarded, as between the co-tenants, as part of the real estate, and severing and removing them without consent of other co-tenants is a destruction to that extent of the realty. . . . It is clear that it is waste to cut and remove the timber off timbered land . . . .
Id.
Under the rule and the logic of Nevels, the lease cannot authorize the removal of the timber as part of the surface coal mining operation as it purports to, and thus the lessee has not demonstrated sufficient right to enter and conduct surface coal mining operations as required by law. So too, if the severance of a tree from the remainder of the realty is considered such destruction as to constitute waste, how must the law view the upending of the earth itself in support of the extraction of part of the corpus of the land.
The proposition that the opening of a new surface coal mine without the consent of cotenants constitutes prohibited waste is generally recognized in law. 78 Am Jur.2d Waste at Section 22:
It is a general rule that one in possession of premises
under a limited or temporary tenancy may, without
committing waste, continue to work mines or quarries
that were open when the tenancy began. The theory
behind the holding in those cases is that mining is a
mere mode of use and enjoyment, and to extract minerals
is merely to take the accruing profits of the land.
However, the rule in most jurisdictions is that the opening
and operation of new mines, except as reasonably necessary
for the repair and maintenance of the property, or unless the
right is expressly conferred, constitutes waste.
* * *
Thus, where a lessee had obtained the consent to mine
coal from the leased property from several, but not all, of the
cotenants in the property, the lessee's mining operations
constituted waste and the nonconsenting cotenants were
entitled to an injunction.
Id. at Section 23, p. 323.
Where, as is authorized by the lease, the mining activity constitutes a "material and continuing destruction" of the property such activity constitutes waste and may be enjoined. 20 Am. Jur. 2d Cotenancy and Joint Ownership, Section 99, p. 191.
Under the logic of Chosar and the other cases cited herein, this tribunal should determine that the lease from 9/10 undivided interest holders to Rapid Energy Inc., did not meet the burden of establishing a sufficient right to do those things authorized in the lease, including entry onto the land, destruction of the land surface, all standing timber and all structures, without liability, and removal of coal by surface mining methods.
II. The Cabinet erred in failing to provide adequate and sufficient findings of fact and conclusions of law to enable appropriate administrative and judicial review of the decision.
The Cabinet is obligated to find in writing that the permit application is complete and accurate and that all requirements, including a demonstration of the legal right to enter and conduct surface coal mining operations, have been met. The cabinet erred in failing to provide adequate and sufficient findings of fact and conclusions of law regarding the right-of-entry dispute to enable appropriate administrative and judicial review of the decision to approve the permit notwithstanding the presence of an objection concerning the right to enter and mine.
It is axiomatic that an administrative agency must provide findings of fact sufficient to allow a reviewing court to determine the basis for the decision. In order to establish a sufficient record to allow the reviewing court to determine whether the agency has acted in a manner consistent with statutory and constitutional requirements, it is required that the agency decision do more than merely recite the statutory findings and conclusions. As the Court stated in Louisville and Nashville Railroad Company v. Commonwealth, 314 S.W.2d 940, 943 (Ky. 1958), cited with approval in Pearl v. Marshall, 491 S.W.2d 837 (Ky. 1973), in rejecting an argument that the reviewing Court could supply reasons to support an agency order:
The opinion [of the Railroad Commission] furnishes us the
only findings and conclusions of the Commission upon which
its order was based. Appellees suggest that the opinion is not
significant, and maintains it is our duty to uphold the order
if we can find any reason to support it. However, it seems
obvious that our review would be without direction or
effectiveness unless we may examine the basic considerations
of the Commission in reaching its ultimate conclusion. For this
reason the opinion of the Commission is important to our
review.
If an agency does not clearly disclose the grounds upon which
its decision is based, a court will be usurped of its power of review over matters of law. (Citations omitted).
The same principle attaches to administrative review of the agency decision to issue the permit. In this instance, the Cabinet provided nothing other than the conclusory statement that "the lease . . . is sufficient to establish the applicant's right of entry." The Cabinet cited no precedent, no authority, no identified basis in state statutory or common law, to support the conclusion. Absent specific findings relative to the permit objection, it is impossible to determine on what basis the Cabinet found that mere ownership of an undivided fractional interest in property confers the right to a third party to whom such a fractional interest has been conveyed, to enter and strip mine the land and destroy the land surface and remove standing timber, notwithstanding the lack of consent of all undivided fractional interest owners, and notwithstanding an objection of a non-consenting undivided fractional interest holder.
The Hearing Officer and the parties are left to wonder whether the Cabinet reviewed the Nevels line of cases and how the agency squared the limitations imposed by those decisions, with the breadth of the rights conferred in the lease to remove or destroy timber. We are left to wonder whether the Cabinet consider the Chosar decision and general treatises concerning mining and waste, and how the Cabinet resolved the breadth of the rights to destroy the land surface, with Chosar and with the general principle that opening new mines without cotenant consent constituted waste.
The Cabinet determination, reflected in the single sentence in the November 5, 2001 letter to Billy and Sue Kirtley (Joint Exhibit 6) and in the October 29, 2001 Memorandum containing the final resolution by the Cabinet of the dispute, Joint Exhibit 5, did not make a finding concerning the right of Rapid Energy, Inc. to conduct surface coal mining operations. As a cotenant under lease, the "right of entry" of Rapid Energy, Inc. is not in real dispute in this case, since any cotenant may enter upon the land subject always to the rights of other cotenants. It is the whether Rapid Energy had the right to engage in "surface coal mining operations" including material destruction of the land surface and removal of timber as authorized in the lease, that was in dispute, and the Cabinet failed to make a required finding concerning this pivotal legal and factual issue.
For this reason, and because the Cabinet failed to provide sufficient legal and factual basis on which to review the agency's decision that sufficient rights to support issuance of a mining permit had been demonstrated, the case should be remanded with instructions to explain the bases upon which the Cabinet concluded that the "lease . . . is sufficient to establish the applicant's right of entry," and for findings and conclusions regarding whether the lease authorizes the applicant to engage in surface coal mining operations, including timber removal.
III. The Cabinet erred in failing to withhold issuance of the permit pending resolution of the underlying dispute.
The lease to Rapid Energy upon which the right to enter and mine rested, authorizes activities so clearly beyond the scope of the authority of the 9/10 interest owners to approve absent the consent of the remaining cotenants, that the Cabinet should have found the right to enter and mine documentation insufficient.
Failing that, in this case, where the objecting party provided evidence casting significant doubt on the claimed right of entry and right to mine, the Cabinet should have withheld permit issuance pending resolution by a court of the underlying legal question. Since the lease upon which the right to enter and mine was based plainly purported to authorize removal of timber in a manner that was beyond the ability of the 9/10 cotenant lessors to convey, and conferred a right to destroy the land surface without liability, a prima facie case could not be made by Rapid Energy of a right to enter and conduct surface coal mining operations.2 The submittal of the objection and associated documentation by the Kirtleys cast a reasonable doubt on the claim of sufficient right to enter and mine, and since the applicant bears the burden of demonstrating that the requisite right exists and the Cabinet must make an affirmative finding that the permit application information is complete and accurate, the appropriate and only lawful course of action is for the Cabinet to defer permit issuance pending judicial or other resolution of the sufficiency of the applicant's claimed rights. The Cabinet committed error first, in failing to defer the permit issuance pending resolution of the cotenancy matter in court, and second, in deciding to issue the permit absent the consent of Petitioners.
As stated above, the permit applicant is obligated to provide a description of the documents upon which the right to enter and mine is based, and in the case of severed private estates, to provide a copy of the conveyance demonstrating consent (express or under state law) or a separate statement of consent.
State and federal laws and regulations placed the burdens on the applicant and regulatory authority to affirmatively demonstrate and find, respectively, that the applicant has the requisite right to enter and mine. Where there is a timely and sufficient objection, the Cabinet is obligated to withhold permit issuance pending resolution of the underlying dispute, since in such an instance the Cabinet cannot, as between the parties, adjudicate the property dispute and with the applicant bearing the affirmative burden of demonstrating the right to enter and mine, in a disputed case the courts are the proper forum to resolve the controversy. The Cabinet erred as a matter of both state and federal law in determining to issue the permit in the face of a legitimate controversy over whether the lease accorded sufficient right to mine.
Conclusion
For the reasons stated above, Petitioners respectfully move for a recommendation of summary disposition in their favor and against Respondents Rapid Energy, Inc. and the Cabinet, and for any and all other relief to which Petitioners may appear entitled, including an award of costs and expenses (including attorney's fees).
Respectfully submitted,
______________________
Tom FitzGerald
P.O. Box 1070
Frankfort, KY 40602
(502) 875-2428
(502) 875-2845 (fax)
Certificate of Service
I hereby certify that a true and correct copy of the foregoing motion and memorandum in support of recommendation for summary disposition was filed by telefax with the Office of Administrative Hearings and that a hard copy was mailed to that office this 3rd day of May, 2002 and that this day a copy was sent by first class mail, postage prepaid, to:
William Thomas, Esq.
Corbin & Thomas
33 East Broadway
Madisonville, KY 42431
Tamara Patrick, Esq.
Office of Legal Services
5th Floor Capital Plaza Tower
Frankfort, KY 40601
____________________
Tom FitzGerald
1 "It is well settled, both by statute and by the adjudications of this court, that a tenant in common cannot lawfully sell timber from land jointly owned with others, without their consent." Winchester v. Watson, 183 S.W. 483, 487 (1916) (citations omitted).
2 The right that the applicant is required to demonstrate is not simply a right to mine it is a right to conduct surface coal mining and reclamation operations, which encompasses, among other aspects of the mining and reclamation process, removal of vegetation (including standing timber).
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