Carbon County v. Union Reserve Coal Co., Inc – Case Brief Summary (Montana)

In Carbon County v. Union Reserve Coal Co., Inc., 271 Mont. 459, 898 P.2d 680 (1995), the Montana Court considered a dispute between the county and its gas lessee on one side, and the coal owner on the other.

The deed in question had conveyed "all coal and coal rights" but was silent as to gas. The county later granted a lease to a gas operator that specifically included the right to develop coalbed methane.

When the gas operator started to drill wells into the coal, the coal owner objected, and the county filed suit to quiet title to the coalbed methane.

After concluding that "methane gas is not a constituent part of coal," id., 271 Mont. at 471, 898 P.2d at 687, the Montana Court held that the county had not conveyed the coalbed methane to the coal owner:

"We hold that as the lessee of Carbon County, the owners of the gas estate, Florentine the gas developer has the right to drill for and to produce the coal seam methane gas at issue here. We also hold that Union Reserve the coal operator has a mutual, simultaneous right to extract and to capture such gas for safety purposes, incident to its actual coal mining operations" (Id., 271 Mont. at 474, 898 P.2d at 689.)

The court continued by saying:\

"We leave to the agreement of the parties or to some future case the issue of whether, and if so, to what extent, the gas estate owner or lessee is entitled to be compensated by the coal owner for gas extracted and captured incident to the coal owner's mining operations." Id.