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decided: October 18, 1982.


Appeal from the Order of the Commonwealth of Pennsylvania, Environmental Hearing Board in the case of Pennsylvania Mines Corporation v. Commonwealth of Pennsylvania, Department of Environmental Resources and Barry D. Einsig, Permittee, Docket No. 82-176-G.


Timothy E. Durant, with him John A. Ayres, Jr., for petitioner.

Richard DiSalle, with him Henry McC. Ingram, and R. Henry Moore, and Rose, Schmidt, Dixon & Hasley, for respondent, Pennsylvania Mines Corporation.

Justina M. Wasicek, with her Joseph T. Kosek, Jr., for respondent, Pennsylvania Department of Environmental Resources.

President Judge Crumlish, Jr. and Judges Williams, Jr., Craig, MacPhail and Doyle. Opinion by Judge Williams, Jr.

Author: Williams

[ 69 Pa. Commw. Page 353]

[EDIT ] This case comes before the Court on an appeal by Barry Einsig, the lessee of rights to drill for oil and gas, from a decision of the Environmental Hearing Board (Board) which revoked a permit to drill granted to Einsig by the Department of Environmental Resources (DER). The permit would have allowed Einsig to drill a well, at a specified location, through a coal mine owned by the Pennsylvania Mines Corporation (PMC).

I. Background

By deed dated September 26, 1973, Greenwich Collieries Company, a division of PMC, received "all coal and mining rights" to approximately 12,224 acres in Indiana County, Pennsylvania. The conveyance excepted and reserved to the grantor

[ 69 Pa. Commw. Page 354]

    the surface of said tract, oil and gas, and the right to drill through said coal for oil and gas without liability for coal required to be left unmined around said hole or well for its support and protection.

On January 6, 1982, Harmony Gas and Oil, by its president, Barry Einsig, entered into an oil and gas lease with one Norman Gardner, by which it acquired the rights to drill for oil and gas and to hold "all other rights and privileges necessary, incident to or convenient for the operation" of the said lease. The grant of a two-year term for one acre of land (the Gardner Site) is subject to the actual commencement of drilling activities by January 6, 1984.*fn1 The Gardner site is located over a portion of the PMC tract referred to, supra, known as the Upper Freeport Mining Area, which comprises twenty-nine hundred acres in Indiana County.

Prior to drilling, Einsig was required by law to obtain a permit from the Division of Oil and Gas of DER. See Section 201 of the Gas Operations Well-Drilling Petroleum and Coal Mining Act, Act of November 30, 1955, P.L. 765, as amended, 52 P.S. § 2201 (Act). Pursuant to the terms thereof, Einsig applied for the permit, and provided DER with the requisite information concerning the location of the proposed well and the names of the owner and/or lessee of the surface and "all known underlying coal seams." 52 P.S. § 2201(a). DER then contacted those entities, and PMC promptly registered its objections to the issuance of the permit. The protests were submitted in accordance with 52 P.S. § 2202(a),

[ 69 Pa. Commw. Page 355]

    which grants to any coal owner or operator the right to file objections to the application if he believes that "the well when drilled or the pillar of coal about the well*fn2 will . . . unduly interfere with or endanger" the mine (footnote added). PMC's vigorous disapproval was pointedly directed at the "offset" nature of the Gardner site well.

The tract at issue, the Upper Freeport Mining Area, had over one hundred wells on and through it when Einsig received a permit to drill a previous well, known as the Yeager well.*fn3 Both that well and the proposed Gardner site well are "offset" in that each is, or is proposed to be, drilled at a distance of less than 1,000 feet*fn4 from the nearest existing wells. PMC contends that it has not challenged the issuance

[ 69 Pa. Commw. Page 356]

    of permits for the 112 non-offset wells because it can mine around them in a manner that it considers to be feasible from both economic and safety perspectives, but that offset wells unduly interfere with and/or endanger the mine.

After a DER conference*fn5 attended by Einsig and representatives of PMC, Einsig relocated the proposed well in an attempt to accommodate some of PMC's objections.

It was noted at argument before this Court that PMC actually chose the site of the proposed well, as being that spot on Einsig's tract where it would least interfere with the recovery of coal. At that location, the pillar surrounding the well can be incorporated with a coal barrier PMC has to leave around a "sump"*fn6 which it intends to construct. The result will "minimize coal loss," in the words of PMC's Chief Mining Engineer.

Perceiving that the maximum accommodation possible under the circumstances*fn7 had been made by Einsig, DER issued the permit. PMC thereupon filed an appeal of that decision to the Board. After some procedural intricacies not relevant to our review of

[ 69 Pa. Commw. Page 357]

    this matter, the Board determined that the issuance of the permit constituted an abuse of discretion on the part of DER, and voided the permit.*fn8

II. Discussion

The Board adjudication contains sixty-nine findings of fact, twenty-one of which Einsig challenges under various legal theories in his Petition for Review. The Board's analysis of the law as applied to the findings centered upon the statutory language which directs DER to issue a permit for that location where the well can be safely drilled without "unduly interfering with or endangering" the mine, since the appeal taken by PMC was specifically addressed to the interpretation of that wording. PMC argued that the words, "unduly interfere with," should be analyzed in light of the economic impact of the well on the mine, asserting that if the existence of a well would make the recovery of the coal economically unfeasible to the coal miner, then the well would "unduly interfere with" the mine. It proposed that if the mine operator can demonstrate either safety or economic factors which satisfy what it perceives as the statutory standard, then DER should deny the permit to the well-driller.

[ 69 Pa. Commw. Page 358]

DER, which has maintained a relatively neutral position in this proceeding, offered a different characterization of its role in issuing permits under the Act. It construed the language of Section 203(f) of the Act, 52 P.S. § 2203(f)*fn9 as indicative of a legislative intent that DER remain neutral in an economic dispute between a well-driller and a coal operator. It interprets the wording of Section 203(f) as a directive that the statute not be used to affect any financial rights in such a dispute. It concludes that since the wording of Section 203(f) prohibited use of the Act to affect contract rights existing at the time of its passage, the Act should not be used at all to alter any contract rights from which damages would logically flow. DER maintains that it is not authorized to act in that judicial capacity required of the entity which makes a decision, in a situation governed by deed or contract, to restrict a person's recovery of those damages which flow from contract rights.

This Court has often noted that

     the construction of a statute by those charged with its execution and application is entitled to great weight and should not be disregarded or overturned except for cogent reasons, and unless

[ 69 Pa. Commw. Page 359]

    it is clear that such construction is erroneous.

Spicer v. Department of Public Welfare, 58 Pa. Commonwealth Ct. 558, 560, 428 A.2d 1008, 1009 (1981), quoting Longo Liquor License Case, 183 Pa. Superior Ct. 504, 508, 132 A.2d 899, 901 (1957). However, before we address the accuracy of DER's interpretation of the Act, we shall examine the adjudication itself.

The crux of the Board's decision was the formulation of a "test (which) reasonably embodies the Legislature's intent when it enacted 52 P.S. § 2202(b)." (Adjudication, p. 29). In that test the Board determined that if a well was ...

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