ELR Citation: ELR 21059
No(s). 83-0038(A)(R) (W.D. Va. Jul 23, 1985)

The court rules that an owner of coal reserves must pay reclamation fees mandated by the Surface Mining Control and Reclamation Act for mine operators, even though it does no mining itself, since it contracts with other firms for the mining of the coal, establishes the mining plan, and buys all the coal at prices fixed by contract. The court first considers whether the mining companies are agents of defendant under Virginia law. It rules that their work is done for defendant's benefit, and thus satisfies half of the agency test. The other half is also satisfied, rules the court, because defendant controls the work done by the mining companies. Defendant dictates the mining plans, performs engineering and site development work, and directs various mining operations. Day-to-day operation of the mines is left to the independent companies, but this is not dispositive of the agency issue. That defendant receives all the coal mined at prices fixed by contract further indicates that the companies are not independent contractors. As an alternative basis for its holding, the court rules that the factors identified by the Supreme Court in Parsons v. Smith for determining whether the owner of the coal or the company hired to mine it is entitled to claim the mineral depletion allowance further demonstrate that defendant should pay the reclamation fees. The Parsons factors demonstrate that defendant has the basis economic interest in the coal in place and therefore should pay reclamation fees. Finally, the court notes that state court decisions determining which entity should pay severance taxes in analogous circumstances support its holding.

Counsel for Plaintiff
Robert S. Moore
Office of the Solicitor
U.S. Department of the Interior, Knoxville TN 37902
(615) 673-4216

Morgan E. Scott, Ass't U.S. Attorney
Post Office Drawer H. Abingdon VA 24210
(703) 628-4161

Counsel for Defendant
Elsey A. Harris III
Mullins, Winston, Keuling-Stout, Thomason & Harris
The Law Bldg., P.O. Box 1200, Norton VA 24273
(703) 679-3110