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Blurbs from the Bossman

Mineral Rights Lawsuit Spotlights Property Rights "Balancing Act"
by Scott Perry | 2008/10/10 |

A recent local news item provides the perfect illustration of why the proper evidencing and reporting of title to real estate interests is so important to our fundamental rights as well as to the regional and national economy.

Blurbs from the Bossman ::

A local businessman has filed suit against Allegheny County, PA, claiming that the county is denying him the right to remove about 700,000 tons of coal that he owns.  74-year-old Nello Fiore, of Whitehall, PA says that if the county won’t let him mine the coal, then they should pay him for the value of the coal, which lies beneath 92 wooded acres in the Sleepy Hollow section of the county’s South Park, located just south of Pittsburgh.  The high-quality coal, which sells for about $143 per ton locally, could be worth well over of $100 million, according to Attorney Thomas W. King, who represents Mr. Fiore.

Southwestern Pennsylvania, which lies in the heart of the Appalachian Basin, has often been referred to the “Saudi Arabia of Coal”.  In fact, coal mining has been a mainstay of our region’s economy since the dawn of the Industrial Age.  Because of this, Pennsylvania real estate law recognizes surface and subsurface interests separately.  Typically, when someone purchases a parcel of real estate in Pennsylvania, only the surface interest is conveyed unless the mineral or subsurface interest is specifically mentioned in the deed.  (See my previous blog entry, Searching Mineral Interests: Don’t Try This at Home.)

The county, to which the surface interest in the land was donated in the 1930s, considered a proposal to strip mine the coal at a community meeting this past June, which was attended by about 300 people, including Allegheny County Executive Dan Onorato.  Mr. Onorato nixed the plan after it was discovered that a 2001 County Parks Master Plan designates the area as “an important biological zone” which has also been recommended for designation as an Open Space Reserve.

Mr. Fiore’s lawsuit alleges that the county is acting unlawfully in preventing him from removing the coal, which he inherited from his brother, who purchased it from Consolidation Coal Co., the predecessor to Consol Energy.  According to Attorney King, the deed gives Mr. Fiore the right to mine the coal at any time, regardless of who owns the surface interest.  “If the county will continue to tell us we can’t mine the coal, Mr. Fiore, under the Pennsylvania Constitution has a right to be paid for it.”  Mr. Fiore and his attorney claim that to deny his mining rights amounts to the county exercising eminent domain over his coal, thus he is entitled to reimbursement.

The county says that it’s not preventing Mr. Fiore from mining his coal because he can still retrieve it by underground mining.  “He has access to his coal,” says Kevin Evanto, a spokesman for the County Executive’s office, “[the county] is just saying that we’re not willing to allow you to destroy 91 acres of park land to get at it.”  However, the lawsuit states that “the coal cannot be recovered by the deep-mining process.”  Attorney King says that Mr. Fiore has offered to include a post-mining reclamation plan for soccer and football practice fields and picnic facilities, as well as royalties to the county in excess of $1 million.

Several members of the County Council are on record as saying that they wouldn’t support the proposal, which would be subject to review by the state Department of Environmental Protection.  Local residents like Mary Franko have also expressed concern about what strip mining operations will do to their property values.  Some nearby homes are located as little as 1,000 feet away from the proposed mining area.  In an interview with a local television station, Ms. Franko said, “It's dangerous, dirty, and I don't know how they can possibly protect the perimeter when there's going to be blasting going on.  I'm afraid that this is going to devastate our township.  We're a small township.  Our property values will absolutely diminish”.

To be honest, I’m not really sure where I come down on this one.  Mr. Fiore certainly does seem to be on firm legal ground here, (no pun intended) and if I was in his position, I’d probably move to assert my rights as well.  On the other hand, if I was one of the residents of that area, I’m not sure I’d want someone coming in and “tearing up my back yard”, regardless of any promises to improve the area afterward.  One thing is for sure, the Court is going to have its work cut out for it in dealing with this issue.  Let’s just hope the abstractors who researched this thing knew what they were doing.




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nor shall private property be taken for public use, without just compensation

This will be a very interesting case.  I hope you will keep us posted on it. 

The issue will most likely be whether a "taking" has occurred under the 5th Amendment, made applicable to the states through the 14th Amendment, as well as similar protections most likely afforded by the Constitution of the State of Pennsylvania.  What constitutes a taking has been the subject of the majority of these types of cases... along with what is "just compensation."

The county may have a good point here.  While Mr. Fiore may own the mineral rights, I'm not so sure he has a right to interfere with the surface rights to get it out of the ground.  That would seem to be quite a hazard with splitting the surface rights and mineral rights.  Around these parts, we are usually dealing with natural gas or oil, both of which can be obtained much less obtrusively and many people are willing to allow drilling on their property if they are getting something in return.  Sometimes, the minerals under one parcel can be reached via another parcel.

If he is able to access the coal through underground mining, I'm not so sure a taking has occurred. This is just something that the holder of the mineral rights has to contend with when he doesn't own the surface rights.  Quite a conundrum for someone with so much value in the minerals, especially right now with energy prices skyrocketing.

 
by Robert Franco | 2008/10/10 | log in or register to post a reply

Thanks for commenting..

Depending upon the language in the deed, Mr. Fiore may, in fact, have the right of entry upon the surface of the land in order to extract any minerals thereunder.  Most of the coal deeds I've seen have such clauses, which often include waivers of liability for surface damage.  In fact there was a news item a few years back about property owners in Cambria county who were angry that they couldn't legally deny access to their private property by energy companies who had bought the rights to the coal bed methane under the surface of their land.  

It may be that the coal that Mr. Fiore is after is too close to the surface to be safely retrieved by underground mining.  I agree, though, it's probably going to come down to what constitutes a "taking" and "just compensation" under the federal Constitution as well as that of the Commonwealth.

 
by Scott Perry | 2008/10/10 | log in or register to post a reply

Mr. Fiore apparently not getting his way, obscure deed or not

I am not at all legal, but I believe an update to this case can be read in the Pittsburgh Legal Journal vol 158 no 9, page 147 (www.acba.org/ACBA/Publications/PLJ-Opinions/2010/9-PLJ_Opinions042310.pdf).

If I understand, in Dec 2009 the Commonwealth Court of Pennsylvania concluded Mr. Fiore was not entitled to strip mine this property.

However, knowing this ruling would doubtfully apply in any way to my little home, and now seeing it is likely beyond me to figure out who holds what rights there (support, mineral, oil, gas), I am sure I will lose a little sleep. But, at least, I'll have many an entertaining conversation as the Marcellus Shale game continues within the city limits (www.ucsur.pitt.edu/thepub.php).

What legal trickery us normal folks are unknowingly submitted to.

 
by Cris Mooney | 2010/08/21 | log in or register to post a reply

Appreciate the Heads-up, Cris!

Thanks for commenting and for the links.  I'll have to read the opinion in more detail when time permits.

A mineral rights attorney would be able to tell you what rights, if any, you have in the minerals or oil/gas under your property.  Now more than ever, it's important that people educate themselves regarding this issue, because it's going to have a profound effect on our local economy going forward.

 
by Scott Perry | 2010/08/31 | log in or register to post a reply
Blurbs from the Bossman

 

Thoughts, Observations
and Ruminations of an Independent Title Examiner Living & Working in the "Steel Buckle of the Rust Belt."

 

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