Murray Energy Corp. v. Div. of Mineral Resources Mgt.

[Cite as Murray Energy Corp. v. Div. of Mineral Resources Mgt., 2013-Ohio-4162.]
STATE OF OHIO, BELMONT COUNTY

IN THE COURT OF APPEALS

SEVENTH DISTRICT

MURRAY ENERGY CORPORATION, ET )
AL., )
)
APPELLEES, )
) CASE NOS. 11-BE-37
V. ) 11-BE-38
)
DIVISION OF MINERAL RESOURCES ) OPINION
MANAGEMENT, )
)
APPELLANT, )
)
AND )
)
OXFORD OIL COMPANY, )
)
APPELLANT. )

CHARACTER OF PROCEEDINGS: Administrative Appeal from the
Reclamation Commission, Case No.
RC-11-006

JUDGMENT: Affirmed

JUDGES:

Hon. Gene Donofrio
Hon. Joseph J. Vukovich
Hon. Cheryl L. Waite

Dated: September 23, 2013
[Cite as Murray Energy Corp. v. Div. of Mineral Resources Mgt., 2013-Ohio-4162.]
APPEARANCES:

For Plaintiffs-Appellees Attorney Mark Stemm
Murray Energy Corporation, et al. Attorney Michael Wehrkamp
Porter, Wright, Morris & Arthur, LLP
41 S. High St.
Columbus, Ohio 43215

For Defendant-Appellant Attorney Molly Corey
Division of Mineral Resources Attorney Daniel Martin
Management Assistant Attorneys General
Environmental Enforcement Section
Ohio Department of Natural Resources
2045 Morse Road, Building D-2
Columbus, Ohio 43299

For Intervenor-Appellant Attorney Timothy McGranor
Oxford Oil Company Attorney John Keller
Vorys, Sater, Seymour and Pease, LLP
52 E. Gay St.
P.O. Box 1008
Columbus, Ohio 43216-1008
[Cite as Murray Energy Corp. v. Div. of Mineral Resources Mgt., 2013-Ohio-4162.]
DONOFRIO, J.

{¶1} This consolidated appeal involves two decisions of the Reclamation
Commission concerning a permit to drill an oil and gas well issued by the Chief of
appellant Ohio Department of Natural Resources, Division of Mineral Resources
Management (DMRM), to appellant Oxford Oil Company (Oxford). The site of the
proposed well is located on property appellee Murray Energy Corporation (Murray)
intends to mine for coal. The chief issued the permit with conditions and Murray
appealed that decision to the commission. Oxford filed a motion asking the
commission to dismiss Murray’s appeal on the procedural grounds that Murray
lacked standing and that its appeal was untimely. The commission first denied
Oxford’s motion to dismiss and then reversed the chief’s issuance of the permit.
Before this court, Oxford appeals the commission’s decision denying its motion to
dismiss Murray’s appeal of the issuance of the permit to the commission and the
DMRM appeals the commission’s decision reversing the chief’s issuance of the
permit.
{¶2} This case concerns property owned by Dale Russell in Goshen
Township, Belmont County, Ohio. Consolidated Land Company (CLC) has the coal
and mining rights to the property. Russell leased the oil and gas rights to Oxford, a
registered oil and gas operator in Ohio.
{¶3} Oxford submitted two oil and gas well permit applications to the chief of
the DMRM on February 10, 2011. (Application Nos. aPATT019352 and
aPATT019354.) The first application was for a vertical well, while the second
application was for Oxford to plug-back the vertical well and drill out horizontally.
Despite being drilled vertically and horizontally, the proposed well would penetrate
the Pittsburgh No. 8 coal seam at the same location and in the same manner leading
the chief to consolidate review of the two applications. Therefore, Oxford would
effectively be operating only one well, known as the proposed Russell No. 1 Well
(hereinafter referred to in the singular and/or as “the proposed well”).
{¶4} Goshen Township, the proposed site of Oxford’s oil and gas well, is
designated as a “coal bearing township” under R.C. 1561.06. Therefore, R.C.
1509.08 required that the chief notify the owner or lessee of any “affected mine”
 -2-

about the applications. Records showed that the Ohio Valley Coal Company (OVCC)
is actively mining the Pittsburgh No. 8 coal seam at the Powhatan No. 6 Mine
approximately four miles east of the proposed Russell No. 1 Well.
{¶5} CLC, mentioned earlier, serves as OVCC’s land holding company,
maintaining title to the coal and mining rights until shortly before OVCC actually
mines an area. CLC and OVCC are subsidiaries of Murray Energy Corporation
(Murray). The coal mined by OVCC is transferred to another Murray subsidiary,
American Energy Corporation (AEC), for sale to utilities that use it to generate
electricity.
{¶6} On February 14, 2011, the chief sent a letter to OVCC notifying it about
Oxford’s applications for the proposed well. In the letter, the chief also informed
OVCC of R.C. 1509.08’s requirement that it provide support establishing it has an
“affected mine,” and, if so, giving it the opportunity to object to the proposed well.
{¶7} On February 21, 2011, OVCC and CLC filed an objection to the
proposed well, citing four reasons: (1) they intend to mine the coal at the site of the
proposed well; (2) the proposed well would interfere with that mining; (3) they own
that coal along with an uninterrupted right of way access to it and through it; and (4)
Ohio public policy favors coal development when conflicts arise with oil and gas.
They also noted that they could not identify any alternative drilling sites within their
coal reserves.
{¶8} The chief determined that OVCC and CLC’s objection was unfounded
since conditions could be placed on the permit. In his May 13, 2011 letter decision,
 -3-

the chief acknowledged that OVCC has a permit to longwall mine1 the Pittsburgh No.
8 coal seam in Goshen Township and is actively mining in an area to the east of the
proposed well. However, the chief observed that there is not an active permit to mine
coal in the area beneath the site of the proposed well, there is no pending application
to mine coal from that property, and OVCC did not indicate when they intended to
mine the property. Specifically, the chief found that OVCC and CLC’s objection was
“not sufficiently well founded because conditions to the permit can reasonably be
expected to prevent a substantial risk that the oil and gas operation will result in
violation of RC Chapter 1509 that will present an imminent danger to public health or
safety or damage to the environment.”
{¶9} The chief indicated that a permit to drill the Russell No. 1 Well would be
issued to Oxford on the condition that Oxford, if it cannot establish superior property
rights in a court of competent jurisdiction, plug and abandon the well in accordance
with federal Mine Safety and Health Administration (MSHA) standards before
OVCC’s mining approached the well. OVCC and CLC, along with Murray and AEC
(hereinafter collectively referred to as Murray) requested that the chief informally
review his initial decision, pursuant to R.C. 1513.13(A)(3). Murray sought greater
detail and clarification of the conditions.
{¶10} The chief held a meeting with representatives from the DMRM, Murray,
and Oxford participating. Following that meeting and in a June 14, 2011 letter
decision, the chief stood by his initial decision to issue the permit. However, he
revised the conditions in an attempt to address Murray’s concerns.
{¶11} On June 29, 2011, Murray appealed the chief’s May 13, 2011 and June
14, 2011 letter decisions to the Reclamation Commission. Oxford moved to dismiss
Murray’s appeal on the basis that it was not timely filed within fifteen days of the

1. Generally, there are two types of coal mining – longwall mining and room and pillar mining. In
longwall mining a whole section of coal is taken from an area. In that underground section after the
coal is extracted there are no pillars left to hold up that empty section. The surface area of this land
subsides filling in the empty section of earth left from the coal extraction. Room and pillar mining
leaves pillars in these areas and does not cause as much settling of the surface area as occurs with
longwall mining. Room and pillar mining extracts only about 50% of the coal. Buckeye Forest Council
v. Div. of Mineral Res. Mgmt., 7th Dist. No. 01 BA 18, 2002-Ohio-3010, fn. 1.
 -4-

chief’s May 13, 2011 decision. The commission denied the motion on September 21,
2011. Oxford appealed that decision to this court in case number 12-BE-37.
{¶12} The commission heard Murray’s appeal of the chief’s May 13, 2011
and June 14, 2011 letter decisions with all parties presenting witnesses and
evidence. On October 6, 2011, the commission vacated the chief’s approval of the
applications to drill the proposed well. The commission concluded that the chief
lacked the statutory decision authority to impose the permit conditions, likening the
chief’s actions to an adjudication of a property rights dispute for which it was not a
tribunal of competent jurisdiction. The commission found that it would not reach the
issue of whether Murray owned an affected mine since the chief had exceeded his
authority. The commission remanded the matter to the chief to take actions
consistent with its decision. The DMRM appealed that decision to this court in case
number 12-BE-38. This court consolidated Oxford’s appeal (12-BE-37) and the
DMRM’s appeal (12-BE-38) in the interest of judicial economy. 11/29/2011 J.E.
STANDARD OF REVIEW
{¶13} The standard of review of a reclamation commission’s decision is
defined by statute. R.C. 1513.14(A) directs that the court of appeals “affirm the
decision of the commission unless the court determines that it is arbitrary, capricious,
or otherwise inconsistent with law, in which case the court shall vacate the decision
and remand to the commission for such further proceedings as it may direct.” As
such, this court’s standard of review from the decision of the Reclamation
Commission is “limited”. Pleasant City v. ODNR, Div. of Reclamation, 67 Ohio St.3d
312, 316 (1993); Buckeye Forest Council v. Division of Min. Res. Mgmt., 7th Dist.
No. 01 BA18, 2002-Ohio-3010, ¶ 7.
{¶14} In such cases, a reviewing court begins with the presumption that the
Commission’s action was valid. C. & T. Evangelinos v. Division of Min. Res. Mgmt.,
7th Dist. No. 03BE70, 2004-Ohio-7061, ¶ 18; Buckeye Forest, 7th Dist. No. 01 BA18
at ¶ 7, 16. We recognize that the legislature has delegated certain authority to the
Commission and that the Commission has accumulated substantial expertise.
Buckeye Forest, 7th Dist. No. 01 BA18 at ¶ 29, 31, 43, citing R.C. 1513.02. See also
 -5-

Tri-State Reclamation, LLC v. Division of Mines and Min. Res. Mgmt., 5th Dist. No.
04CA19, 2005-Ohio-6439 (deferring to agency interpretation of statutes). Thus,
deference must be given to the expertise of the Commission in determining whether
the mining application should be approved. See Pleasant City, 67 Ohio St.3d at 320.
STATUTORY FRAMEWORK
{¶15} Section 36, Article II of the Ohio Constitution provides that laws may be
passed “to provide for the regulation of methods of mining, weighing, measuring and
marketing coal, oil, gas and all other minerals.” Pursuant to this authority, and
pursuant to the police power of the state to control and conserve the natural
resources of Ohio, see e.g. State v. Martin, 168 Ohio St. 37, 40-41, 151 N.E.2d 7
(1958), the General Assembly has enacted a number of statutes regulating the
production of coal and oil and gas, including R.C. Chapter 1509, which deals only
with oil and gas production.
{¶16} R.C. 1509.05 provides in part that “[n]o person shall drill a new well * * *
without having a permit to do so issued by the chief of the division of mineral
resources management * * *.” R.C. 1509.08 addresses proposed wells in coal
bearing townships.
OXFORD’S APPEAL 12-BE-37
Affected Mine
{¶17} Since Oxford’s two assignments of error concern standing and
jurisdiction, its appeal will be addressed first. Oxford’s first assignment of error
states:

The Reclamation Commission erred in vacating the May 13,
2011 decision of the Chief of the Division of Mineral Resources
Management because Appellees do not own or lease an affected mine
and therefore lack standing to object to the permit.

{¶18} When the DMRM receives an application from an oil and gas operator
to drill a well in a “coal bearing township,” R.C. 1509.08 requires the chief to
immediately notify the owner or lessee of any “affected mine” about the application
 -6-

and include with that notification a map showing the location of the proposed well.
R.C. 1509.08 then allows the owner or lessee of the “affected mine” the opportunity
to object to the proposed siting of the well. If the owner or lessee of an “affected
mine” objects, the chief must then determine if the objection is sufficiently well
founded or not, and either disapprove or approve the permit accordingly.
{¶19} In this case, while acknowledging that Murray owns thousands of acres
of coal reserves in Belmont County, Oxford contends that it does not own an
“affected mine,” and, therefore, never had standing to object to its applications. Since
neither the Ohio Revised Code nor the Ohio Administrative Code defines “affected
mine,” Oxford cites the Ohio Supreme Court’s decision in Redman v. Ohio Dept. of
Indus. Relations, 75 Ohio St.3d 399, 662 N.E.2d 352 (1996), in support.
{¶20} In 1990, the Redman Oil Company (Redman) applied for two oil and
gas well permits to be located in a coal bearing township. The Ohio Division of Mines
(ODM) determined from the applications and the attached maps that the proposed
wells could affect mines owned by the Central Ohio Coal Company (COCCo) and
notified it about the applications. COCCo objected, maintaining that the proposed
wells would interfere with its existing plan for mining coal reserves. COCCo attached
an affidavit of its engineering superintendent in support along with maps offering
alternative well locations that would not interfere with its mining plans. ODM’s chief
determined COCCo’s objections to be well founded and disapproved the
applications. Redman appealed to the Mine Examining Board and, following an
evidentiary hearing, it affirmed the chief’s decision to disapprove the applications.
{¶21} Redman then appealed to the Franklin County Common Pleas Court
where the matter was referred to a referee who issued a report that recommended
upholding the board’s decision to disapprove the applications. The common pleas
court adopted the referee’s report as its own, Redman appealed, and the Tenth
District Court of Appeals affirmed. Redman v. Ohio Dept. of Indus. Relations, 10th
Dist. Nos. 93APE12-1670, 93APE12-1671, 1994 WL 485750 (Sept. 6, 1994). The
Ohio Supreme Court also affirmed on the narrower issue of whether the chief’s
“affected mine” and “well-founded” determinations under R.C. 1509.08 amounted to
 -7-

an unconstitutional delegation of legislative authority. Redman v. Ohio Dept. of
Indus. Relations, 75 Ohio St.3d 399, 662 N.E.2d 352 (1996).
{¶22} Redman had argued that because there was no presently active
excavation at the sites and there were no plans to begin excavation until at least
1994, the mines could not be considered “affected mines.” Redman, 10th Dist. Nos.
93APE12-1670, 93APE12-1671, 1994 WL 485750 at *9. In its decision, the Ohio
Supreme Court quoted and left undisturbed the common pleas court’s discussion of
“affected mine”:

“To construe ‘affected mine’ to mean only mines with active
extraction operations taking place, would be to jeopardize the economic
and efficient mining of coal. If [oil and gas] wells can be placed on land
which has already been analyzed, probed and planned [for coal
extraction], but before actual [coal] extraction takes place, then a
significant amount of coal could be lost * * * [and] all the planning and
operation would be wasted. Thus, it is only logical to read the R.C. §
4151.01(A) definition of mine as including the land in question.
“The Court is aware of [the] concerns that if ‘mine’ is construed
to mean land which will be mined in the future, the coal companies,
which own ‘thousands and thousands of acres of land in Ohio,’ may
oppose all requests for permits to drill oil and gas wells on this land,
even if no well-defined mining plans have been developed. To that end,
the Court clarifies the Report by holding that ‘mine,’ as the term applies
to ‘affected mine,’ means not only land where active extraction is taking
place, but also land which has had extensive, well-defined mining plans
developed and where future mining has been thoroughly planned for
and evolved to the point of realization.”

Redman, 75 Ohio St.3d at 402, 662 N.E.2d 352.
{¶23} In his May 13, 2011 and June 14, 2011 letter decisions, the chief did
not specifically address whether Murray owned an “affected mine” in the area of the
 -8-

proposed well. However, since the chief notified Murray of Oxford’s applications
pursuant to R.C. 1509.08, the chief necessarily determined by implication that
Murray owned an “affected mine.” In reviewing the chief’s decisions, the Reclamation
Commission quoted approvingly from Redman and stated that Murray’s mine “would
seem to qualify” as an “affected mine” and offered reasons in support. However,
despite acknowledging that identification of an “affected mine” in the area of the
proposed well is a “threshold determination” under R.C. 1509.08, it stopped short of
making a finding in that regard based on its later conclusion that the conditions the
chief placed on the permit exceeded his statutory authority.
{¶24} Oxford argues that Murray has no immediate plans under the site of the
proposed well as evidenced by the lack of a permit or an application for a permit to
mine there. Oxford cites testimony that Murray will not have active mine works near
the proposed well until 2022. Oxford also argues that Murray does not own all of the
coal in the vicinity of the proposed well, preventing it from being able to mine that
area as planned.
{¶25} Murray advances numerous arguments in response. Murray argues
that the “affected mine” term is relevant only in the narrow context of the chief’s
obligation under R.C. 1509.08 to immediately notify owners and lessees of mines
that may be affected by a proposed oil and gas well. Murray contends that the
“affected mine” term imposes no statutory requirement upon a mine owner who
objects to a permit application after receiving notification to prove that they have an
“affected mine.” In other words, Murray argues that, in practical terms, “[o]nce a mine
owner has learned of a drilling application from the Chief’s notification, the Chief’s
decision turns on the merits of the objections – not a determination in hindsight of
whether the Chief should have immediately notified the mine owner in the first place.”
(Murray’s Brief, p. 22.)
{¶26} The “affected mine” term first appears in R.C. 1509.08 where it states,
“If the application to drill * * * concerns a well that is or is to be located in a coal
bearing township, the chief immediately shall notify the owner or lessee of any
affected mine that the application has been filed and send to the owner or lessee two
 -9-

copies of the map accompanying the application setting forth the location of the
well.” (Emphasis added.) A review of this provision reveals that the “affected mine”
determination is indeed a threshold one with no burden upon the owner or lessee of
an affected mine to prove that it is the owner of an affected mine. The General
Assembly likely left this determination to the chief who by virtue of his regulatory
duties has the institutional knowledge as to whether a proposed oil and gas well
could potentially affect a nearby coal mining operation. That is not to say that such a
determination should necessarily escape administrative or judicial review. Although
not directly addressing the issue, the Redman decision certainly suggests otherwise.
Nonetheless, as a practical matter, when the chief’s more relevant and substantive
inquiry shifts to whether the mine owner’s objections are sufficiently well founded, if it
turns out that the mine owner who received notification does not own an “affected
mine,” they necessarily will be unable to put forth objections that the chief could find
sufficiently well founded.
{¶27} In this case, there was evidence to support the chief’s initial and implicit
determination that Murray owns an affected mine. There is active mining four miles
east of the proposed well that is moving in the direction of the site for the proposed
well. Murray has conducted field analyses to seek an extension of its permit into the
area of the proposed well and developed a mine projection map. Testimony
indicated that mining could reach the area of the proposed well as early as 2014.
Thus, although Murray is not currently mining the site of the proposed well nor yet
has a permit to do so, it has undertaken significant pre-permit application
preparations and made a substantial capital investment in furtherance of its plans to
establish its intent to mine that area in the future and qualify itself as the owner of an
“affected mine.”
{¶28} Accordingly, Oxford’s first assignment of error is without merit.
Timeliness of Appeal
{¶29} Oxford’s second assignment of error states:
 - 10 -

The Reclamation Commission erred in vacating the May 13,
2011 decision of the Chief of the Division of Mineral Resources
Management because the Murray Companies did not timely appeal the
decision within the mandatory 15-day period set by R.C. 1509.08.

{¶30} Typically, in cases not involving a coal bearing township, an affected
party has thirty days to appeal the chief’s decision to the reclamation commission:

Any person having an interest that is or may be adversely
affected by a * * * decision of the chief of the division of mineral
resources management * * * or by any modification, vacation, or
termination of such * * * decision, may appeal by filing a notice of
appeal with the reclamation commission for review of the * * * decision
within thirty days after the * * * decision is served upon the person or
within thirty days after its modification, vacation, or termination and by
filing a copy of the notice of appeal with the chief within three days after
filing the notice of appeal with the commission.

R.C. 1513.13.
{¶31} As indicated earlier, R.C. 1509.08 addresses how the chief is to
proceed if he receives an application for an oil and gas well to be sited in a coal
bearing township. In particular, R.C. 1509.08 creates an expedited review procedure
for cases involving a coal bearing township:

The owner or lessee may appeal the decision of the chief to the
reclamation commission under section 1513.13 of the Revised Code.
The appeal shall be filed within fifteen days, notwithstanding provisions
in divisions (A)(1) of section 1513.13 of the Revised Code, to the
contrary, from the date on which the owner or lessee receives the
notice. If the appeal is not filed within that time, the chief immediately
shall approve the application and issue the permit if the provisions of
 - 11 -

this chapter pertaining to the issuance of such a permit have been
complied with.

(Emphasis added.)
{¶32} However, in this case, the Reclamation Commission found that
Murray’s act of seeking an informal review of the chief’s May 13, 2011 decision tolled
the time for appeal. R.C. 1513.13(A)(3) specifically contemplates tolling if an affected
party seeks an informal review of the chief’s decision:

Any person authorized under this section to appeal to the
commission may request an informal review by the chief or the chief’s
designee by filing a written request with the chief within thirty days after
a notice, order, decision, modification, vacation, or termination is
served upon the person. Filing of the written request shall toll the time
for appeal before the commission, but shall not operate as a stay of
any order, notice of violation, or decision of the chief. The chief’s
determination of an informal review is appealable to the commission
under this section.

{¶33} Oxford argues that, by its express terms, R.C. 1513.13(A)(3)’s tolling
provision applies only to the 30-day period set by R.C. 1513.13(A)(3). Further,
Oxford notes that R.C. 1509.08 expressly states that the 30-day period set by R.C.
1513.13(A)(3) does not apply to R.C. 1509.08 expedited appeals: “The appeal shall
be filed within fifteen days, notwithstanding provisions in divisions (A)(1) of section
1513.13 of the Revised Code, to the contrary, from the date on which the owner or
lessee receives the notice.” (Emphasis added.) Therefore, Oxford concludes,
because this case involved a coal bearing township appeal, Murray’s appeal of the
chief’s May 13, 2011 letter decision was governed by R.C. 1509.08’s 15-day period
and R.C. 1513.13(A)(3)’s tolling provision did not apply.
{¶34} Murray argues that its appeal was timely since the chief’s June 14,
2011 decision modified and superseded the chief’s May 13, 2011 decision and
 - 12 -

Murray appealed the chief’s June 14, 2011 decision on June 29, 2011 – within the
15-day period set by R.C. 1509.08. In the alternative, Murray argues that R.C.
1513.13(A)(3)’s tolling provision applies to all decisions of the chief, including those
under R.C. 1509.08.
{¶35} As the Reclamation Commission correctly observed, R.C. 1509.08 is
silent as to whether R.C. 1513.13(A)(3)’s informal review procedures apply to
appeals initiated under R.C. 1509.08. Since R.C. 1509.08 does not specifically
preclude R.C. 1513.13(A)(3)’s informal review procedures, it is a reasonable
argument that its tolling provision could apply.
{¶36} However, Murray’s alternative argument under this assignment of error
offers a more judicially efficient means of resolving this issue and obviates the need
for statutory interpretation of R.C. 1509.08 and R.C. 1513.13(A)(3). It is undisputed
that Murray did not timely appeal the chief’s May 13, 2011 decision and, instead,
sought informal review. However, when the chief issued his June 14, 2011 decision
modifying the conditions, he effectively rendered his May 13, 2011 decision
interlocutory or non-final, and nonappealable. It is unquestioned that the chief’s June
14, 2011 decision was his final decision on Oxford’s application and Murray timely
appealed that decision.
{¶37} Accordingly, Oxford’s second assignment of error is without merit.
DMRM’S APPEAL 11-BE-38
Scope of Chief’s Authority to Impose Permit Conditions
{¶38} Turning now to the DMRM’s appeal of the Reclamation Commission’s
October 6, 2011 decision reversing the chief’s issuance of the permit with conditions,
the DMRM raises four assignments of error. The DMRM’s first and second
assignments of error each address the chief’s authority to impose conditions on the
issuance of an oil and gas well permit and whether those conditions would be
effectual or enforceable. Therefore, they will be addressed together. They state,
respectively:
 - 13 -

The Commission Erroneously Concluded that R.C. 1509.06
Does Not Authorize the Chief to Condition a Drilling Permit Upon the
Plugging of a Producing, Active Oil and Gas Well. (Order at 26-27).

The Commission Acted in a Manner Inconsistent with Law in
Determining that Condition 2(A), Which Allowed Oxford Oil to Prove
Superior Property Rights in Lieu of Plugging, Was an Improper
Adjudication of Property Rights. (Order at 20-22).

{¶39} In his June 14, 2011 letter decision, the chief issued the permit on the
condition that within six months of Murray mining the area, Oxford either establish
superior property rights in a court of competent jurisdiction or plug and abandon the
well in accordance with OAC 1501:9-11-08(A)(6) and MSHA requirements before
OVCC’s mining approached the well. The chief imposed the permit conditions in
reliance upon R.C. 1509.06. R.C. 1509.06 sets forth the procedures for applying for
an oil and gas well permit. In his June 14, 2011 letter decision, the chief stated,
“Conditions to the permit can reasonably be expected to prevent a substantial risk
that the oil and gas operation will result in violations of RC Chapter 1509 that will
present an imminent danger to public health or safety or damage to the
environment.” From this statement, it appears the chief relied on subdivision (F) of
R.C. 1509.06 in imposing the “produce superior property rights or plug” condition.
{¶41} R.C. 1509.06(F) addresses one particular situation in which conditions
may be placed on an oil and gas permit:

The chief shall issue an order denying a permit if the chief finds
that there is a substantial risk that the operation will result in violations
of this chapter or rules adopted under it that will present an imminent
danger to public health or safety or damage to the environment,
provided that where the chief finds that terms or conditions to the
permit can reasonably be expected to prevent such violations, the chief
shall issue the permit subject to those terms or conditions * * *.
 - 14 -

{¶42} Thus, under R.C. 1509.06(F), the chief can issue a permit subject to
conditions if: (1) he finds that there is a substantial risk that the operation will result in
violations of R.C. Chapter 1509 (Oil and Gas) or the rules adopted thereunder; (2)
those violations will present an imminent danger to public health or safety or damage
to the environment; and (3) those conditions can reasonably be expected to prevent
such violations.
{¶43} In his June 14, 2011 letter decision, the chief stated, “Conditions to the
permit can reasonably be expected to prevent a substantial risk that the oil and gas
operation will result in violations of RC Chapter 1509 that will present an imminent
danger to public health or safety or damage to the environment.” Beyond this unclear
statement, the chief made no specific finding that there was a substantial risk that
Oxford’s proposed well would result in violations of Ohio’s statutory oil and gas law.
{¶44} Rather, it appears that the chief created the conditions only in an
attempt to assuage Murray’s concerns with the well as expressed in its objections.
Mike McCormac, oil and gas permitting manager for DMRM, explained the true intent
behind the conditions:

The primary intent of these conditions is to put Oxford Oil on
notification that if we issue the permit and if they drill the well, that there
are requirements that they are going to have to comply with when they
plug the well. There actually will be another set of more detailed
conditions that would occur when the plugging permit was issued. So
this is basically -- as we’re trying to balance the interests between -- as
our statute requires, and as our mission statement requires, between
the coal mining in Ohio and the oil and gas activity in Ohio, and as
1509.08 kind of charges us to this.
So in this particular case, we put these conditions together to
allow oil and gas wells to be drilled, yet at the same time taking into
consideration the coal mining industry as well.

(Reclamation Hearing Tr. 493-494.)
 - 15 -

{¶45} In addition to the lack of any concern over possible violations of Ohio’s
statutory oil and gas law, there has also been no suggestion from any of the parties
involved herein that the proposed well would present an imminent danger to public
health or safety or damage to the environment. In sum, neither of the first two
threshold findings for imposition of permit conditions under R.C. 1509.06(F) existed
in this case, regardless of the content of those conditions. Therefore, the Review
Commission’s decision vacating the chief’s approval of the conditional permit on the
ground that the chief lacked an adequate statutory basis under R.C. 1509.06(F) to
impose such conditions was not arbitrary, capricious, or otherwise inconsistent with
law.
{¶46} Accordingly, the DMRM’s first and second assignments of error are
without merit.
Well Founded Objections
{¶47} The DMRM’s third assignment of error states:

There is No Evidence in the Record Supporting the
Commission’s Holding that the Chief Found Objections to the Well to
be “Well Founded” by Implication. (Order at 16-19).

{¶48} In both his May 13, 2011 and June 14, 2011 letter decisions, the chief
found Murray’s objections were not sufficiently well founded given that conditions
could be imposed to address its concerns. In reviewing those decisions, the
Reclamation Commission viewed that as finding Murray’s objections to be well
founded, but for the imposition of the permit conditions. The commission viewed the
chief’s role under R.C. 1509.08 as being limited to either finding the objections well
founded or not well founded. The commission viewed the conditions as
“complicating” the R.C. 1509.08 objection process.
{¶49} In this regard, the DMRM argues that the commission unlawfully
substituted its judgment for the chief’s. The DMRM cites to the chief’s discretion
under R.C. 1509.08 to determine whether an owner or lessee’s objections are
sufficiently well founded. In response, Murray agrees with the commission’s view of
 - 16 -

the chief’s determination on its objections. Murray argues that the record shows that
but for the permit conditions, its objections were sufficiently well founded.
{¶50} As explained under the DMRM’s first and second assignments of error,
it appears that the chief created the conditions only in an attempt to assuage
Murray’s concerns with the well as expressed in its objections. Consequently, the
Reclamation Commission viewing that as the chief finding Murray’s objections to be
well founded, but for the imposition of the permit conditions was not arbitrary,
capricious, or otherwise inconsistent with the law.
{¶51} Accordingly, the DMRM’s third assignment of error is without merit.
Expert Witness
{¶52} The DMRM’s fourth assignment of error states:

The Commission’s Refusal to Qualify Division Witness Craig
Corder as an “Expert in Mine Safety” Was an Abuse of Discretion
Resulting in Prejudice to the Division in Presenting Its Case. (Tr. at
1151:7 to 151.8).

{¶53} On the fifth day of the hearing before the Reclamation Commission, the
DMRM called its Mine Safety Program Manager, Craig Corder, to testify as an expert
witness. The commission, without explanation, declined to qualify Corder as an
expert in mine safety. Nonetheless, the commission did allow the DMRM to proffer
Corder’s opinion that it would be safe for Murray to mine through a plugged well. (Tr.
1239:16 – 1240:21.)
{¶54} The DMRM argues that the commission’s decision to not qualify Corder
as an expert in mine safety was arbitrary and capricious given Corder’s experience
and the commission’s qualifying four of Murray’s witnesses as expert witnesses,
each with experience similar to that of Corder. In response, Murray argues that the
DMRM was not prejudiced by the commission’s decision in this regard since it was
able to proffer Corder’s opinion and that opinion had no bearing on the chief’s
authority to impose the permit conditions.
 - 17 -

{¶55} In this instance, the Reclamation Commission did not abuse its
discretion in declining to qualify Corder as an expert in mine safety. Corder was
allowed to testify at length about his experience in mine safety and mining through
plugged wells. In other words, the DMRM was still able to put all of Corder’s
testimony before the commission for consideration. Given the nature of the
proceedings (i.e., that the commission is essentially judge and jury), the
commission’s decision not to qualify him as an expert was inconsequential. The
commission’s decision was not otherwise arbitrary or capricious in that it qualified
Murray’s witnesses as experts since Corder admittedly did not have experience in
longwall mining.
{¶56} Accordingly, the DMRM’s fourth assignment of error is without merit.
{¶57} The decision of the Reclamation Commission is affirmed.

Vukovich, J., concurs.

Waite, J., concurs.