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SMCRA Roundup

Summer 2003

Co-Authors: Tim Means and J. Michael Klise.

It has been a long time since we updated our readers on regulatory litigation developments of general interest under the Surface Mining Control and Reclamation Act ("SMCRA"). Too long, given that some of these cases and issues have not been well-covered by the trade press - unlike the mountaintop mining, valley fills/stream buffer zones, section 404 permits litigation and rulemakings you read about almost everyday. So, here's a quick overview of what has been going on and where the other major regulatory cases stand.

Valid Existing Rights ("VER")

The National Mining Association ("NMA") challenge to the Office of Surface Mining Reclamation and Enforcement ("OSM") rulemaking defining VER has been pending since February 2000. NMA moved for summary judgment that the rule was unlawful, and OSM and the environmental intervenors cross-moved. That was in August-December 2000. Federal District Judge Richard Roberts seems to be following in the footsteps of the late Honorable Aubrey Robinson, who took 5 years after summary judgment briefing was completed to rule, rejecting every NMA and every environmentalist challenge and upholding OSM's 1988-89 ownership and control rules lock, stock, and barrel (on appeal he was reversed, of course, and all of the rules vacated, per NMA's challenges). In the meantime, OSM's extraordinarily narrow definition of SMCRA's "valid existing rights" definition is in place. The Citizens Coal Council and a number of other anti-mining groups (collectively "CCC") have intervened in support of the OSM rule, to nobody's surprise, since the rule, as OSM explained in the Federal Register rulemaking preamble, was designed to implement congressional intent (as divined by OSM) that no further mining operations ever be permitted in areas deemed unsuitable for surface coal mining operations under SMCRA § 522(e). In other words, the rule is intended to define the VER exemption as what mathematicians call a "null set" - no one will be able to qualify.

Subsidence in § 522(e) Areas

In a related case, filed just about the same time NMA challenged the VER rule, the CCC challenged OSM's rule (issued the same day as the VER rule) interpreting SMCRA § 522(e) as not prohibiting subsidence from underground mining in those areas classified in SMCRA as unsuitable for surface coal mining operations. The slowness of Judge Roberts to rule in the VER case is nicely highlighted by the fact that, before Roberts has issued any decision, Federal District Judge James Robertson had already issued his more timely decision in the subsidence § 522(e) case, invalidating the OSM rule as inconsistent with SMCRA, and had already been reversed by the U.S. Court of Appeals for the D.C. Circuit. Judge Robertson had ruled in the spring of 2002 that including subsidence within the definition of "surface coal mining operations" was (if you add three commas to the statute) "the more natural reading" of SMCRA. After the district judge granted NMA's motion to stay that ruling pending appeal, the D.C. Circuit took up the case and rejected the district court's statutory interpretation, finding that the statute is ambiguous, and that the district erred by failing to defer to OSM's reasonable interpretation of it. In its June 3, 2003 decision, the Court of Appeals unanimously (3-0) upheld OSM's rule, allowing underground mining to continue under occupied dwellings, roads, parks, and other areas unsuitable for surface coal mining operations. Most recently, however, the CCC filed a petition for rehearing by the panel and by the court en banc. That petition, which prevents the mandate of the Court from issuing until it is resolved, was filed on July 18. It claims that the Court erred in multiple respects in upholding the agency's rule and allowing subsidence from underground mining to occur in SMCRA's "protected areas." There is no set deadline for a ruling on the petition, which usually takes a number of weeks to be circulated among the judges for their determination whether they believe rehearing is warranted.

Attorney Fees in Ownership and Control Challenges

The Interior Board of Land Appeals recently rejected OSM's arguments that anyone associated with the coal industry is disqualified from recovering from OSM their attorney fees under SMCRA § 525(e) and 43 C.F.R. § 4.1294(b) when they successfully challenge (in whole or in part) any OSM decision under SMCRA. In Angus E. Peyton, the IBLA upheld the decision of its ALJ awarding Peyton full recovery for his attorney fees and costs in successfully challenging OSM's decision that Peyton, as a former outside director and minority shareholder of a bankrupt coal mine operator, had been a controller of that company and listed as such on the Applicant/Violator System. OSM had vigorously contended that Peyton, because he had been a director of a coal company, was not entitled to recover under the Interior Department's rules, which allow such fees to be awarded to "any person, other than a permittee or its representative," who prevails in such a challenge to an OSM decision or other action. The Board also rejected OSM's challenge to Peyton's use of Washington, D.C. lawyers (C&M, of course) even though he lived in West Virginia and the mines in question were located there, and it recognized C&M's "significant expertise" in the area of SMCRA-law in general and the AVS in specific, as well as noting that the fees charged for the litigation were reasonable.

We note that this decision has potentially broad application. There is virtually no limit on the type of OSM decision or action for which attorney fees are available, so long as there is "an order issued … as a result of any administrative proceeding under [SMCRA]" in which a person is successful in whole or in part. Coupled with the IBLA's 1999 Skyline decision in which an applicant for a permit was held entitled to its attorney fees in connection with its successful challenge to OSM's refusal to approve the permit, Peyton confirms that the exclusion from attorney fee award eligibility for claims by "a permittee or its representative" will be read narrowly, and that there is a substantial universe of proceedings in which "coal operators and persons associated with coal operators" are eligible for attorney fee awards.

December 2000 Ownership and Control Rules

Speaking of the ownership and control rules that govern permit blocking under the AVS, settlement negotiations continue between OSM and NMA in NMA's challenge to OSM's controversial revisions to the ownership and control rules, which were promulgated in the closing days of the Clinton Administration. The litigation has been stayed since August 2001 as the parties have discussed the settlement of some two dozen issues raised by NMA in its challenge to those regulations. Since that time, the parties have filed with the district court notices reporting that the parties have resolved successfully many of those issues, regarding how permit blocking, AVS listings of owners and controllers, permit suspensions, and permit rescissions are done, and how they are challenged, as well as related matters. The negotiations appear to be drawing to a close, and when the settlement is completed, OSM will be launching a new rulemaking to propose changes and clarifications in the existing regulations. The next status report is due to be filed with Federal District Judge Colleen Kollar-Kotelly on August 18, 2003.

Permitting and Bonding for Acid Mine Drainage

These issues continue to remain pending before the state and federal regulatory authorities. Everything is largely "on hold" since OSM issued its advance notice of proposed rulemaking last year, as all parties wait to see what kind of proposals may emerge from OSM's review. Look for an update in our next issue, but please let us know if you have questions in the meantime.

Thomas (Tim) C. Means
Retired Partner – Washington, D.C.
Email: tmeans@crowellretiredpartners.com