CHICAGO (CN) – The 7th Circuit upheld a ruling that blocks a mining company from strip mining 62 acres of farmland in Sullivan County, Ind. An untouched island in strip-mined country, the land sits atop an estimated $50 million of coal.
Affiliates of Peabody Energy Corp. had appealed a decision by U.S. District Judge William Lawrence, who ruled that a 1903 deed did not give Peabody the right to strip mine the land.
The deed, executed by Peabody’s predecessors and area landowners, grants Peabody “all the coals, clays, minerals, and mineral substances underlying” the land, “together with the right to mine and remove said coals … without further payment of any nature whatsoever.”
Peabody said the deed gave it the right to strip mine the land without compensating landowners and the option to buy full title to the land for $30 an acre.
Though the deed allows underground mining, Peabody argued that strip mining was necessary to remove all the coal, because the thin, layered nature of the coal seams made shaft mining less effective. The mining company expected to extract about 1.2 million tons of coal from strip mining the 62 acres, which it claimed would open up another 2.5 million tons of coal in the surrounding land.
Judge Lawrence noted ambiguity in the deed between the right to mine “all the coals” and the deed’s restrictions on Peabody’s use of surface land. He allowed outside evidence, including the area’s mining history, to help him decide if the deed conveyed the right to strip mine the land.
He ruled that it did not, and the federal appeals court agreed.
“His conclusion that the deed is ambiguous and the infeasibility of strip mining at the time it was granted allows the ambiguity to be resolved in favor of the surface owner is consistent with the case law,” Judge Richard Posner wrote.
Historical evidence showed that strip mining was not introduced to Sullivan County until 1918 and was not a common practice until the 1920s. So when the deed was executed in 1903, the parties could not have been talking about using strip-mining methods to extract coal, Posner said.
He quoted portions of the deed that “seem to confine the coal company’s use of the surface to structures and activity relating to underground mining.”