Opinion
Cause No. IP99-0705-C-M/S
September 25, 2000
ORDER ON MOTION FOR SUMMARY JUDGMENT
This matter comes before the Court on Plaintiff Indiana Coal Council, Inc.'s ("ICC") motion for judicial review. Although Plaintiff has not formally filed a motion for summary judgment, both parties agree that there are no factual disputes and that the Court's decision will be based upon a review of the administrative record filed by Defendants Bruce Babbitt, Secretary of the United States Department of Interior, et al. Therefore, the Court is converting ICC's motion to a motion for summary judgment. The Court has fully considered the parties' arguments and, for the reasons discussed below, GRANTS in part and DENIES in part ICC's motion for summary judgment.
I. FACTUAL BACKGROUND A. THE SURFACE MINING CONTROL AND RECLAMATION ACT
Congress enacted the Surface Mining Control and Reclamation Act ("SMCRA" or the "Act"), 30 U.S.C. § 1201 et seq., in response to escalating environmental and social costs of coal extraction in the United States. Pennsylvania Coal Ass'n. v. Babbitt, 63 F.3d 231, 233 (3d Cir. 1995). The SMCRA proposed to, among other things, "establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations." 30 U.S.C. § 1202(a).
The SMCRA also established the Office of Surface Mining Reclamation and Enforcement ("OSM") as a subdivision of the Department of Interior. 30 U.S.C. § 1211(a). The SMCRA gives the Secretary, acting through the OSM, the authority to administer the programs for controlling surface coal mining operations set forth in the Act. 30 U.S.C. § 1211(c).
The Act also provides a procedure by which a state may "assume exclusive jurisdiction over the regulations of surface coal mining and reclamation operations" on non-Federal lands within the state. 30 U.S.C. § 1253(a). To do so, a state is required to submit to the Secretary a proposed program "which demonstrates that such State has the capability of carrying out the provisions of [the SMCRA] and meeting its purposes. . . ." 30 U.S.C. § 1253 (a).
The Secretary fully approved Indiana's state program. 30 C.F.R. § 914.10 (2000). The state program consists of a statute and regulations adopted by the Indiana Natural Resources Commission and administered and enforced by the Indiana Department of Natural Resources ("IDNR").
The Secretary has also promulgated regulations governing any amendments to an approved state program. A state that proposes any amendments to its laws or regulations that make up its approved program must submit them for approval to the OSM Director. 30 C.F.R. § 732.17(g) (2000). Upon receipt of a proposed amendment, the OSM is required to publish in the Federal Register a notice of receipt of the proposed amendment, a summary of the amendment, an invitation for public comments, and a notice of any public hearings or meetings to be held. 30 C.F.R. § 732.17(h) (2000). The OSM Director must review the proposed amendments with reference to the criteria set forth in 30 C.F.R. § 732.15 for the approval or disapproval of the state program. 30 C.F.R. § 732.17(h)(10) (2000). Specifically, that section provides that the amendment must be "in accordance with the provisions of the act and consistent with the requirements of the Chapter." 30 C.F.R. § 732.15(a) (2000). The terms "consistent with" and "in accordance with" mean: (a) With regard to the Act, the State laws and regulations are no less stringent than, meeting the minimum requirements of and include all applicable provisions of the Act, and (b) With regard to the Secretary's regulations, the State laws and regulations are no less effective than the Secretary's regulations in meeting the requirements of the Act. 30 C.F.R. § 730.5 (2000).
Under the SMCRA and the Indiana state program, surface coal mining and reclamation operations are required to have permits issued by the regulatory authority, which in Indiana is the IDNR. The permit applications, which contain detailed operations and reclamation plans, are subjected to an extensive public participation process. Once approved, the operations and reclamation plans become part of the permit.
The permits are valid for up to five years and carry the right of successive renewal so long as the mining operation continues. As mining progresses under a particular permit, differences may develop from the operations as projected in the approved operations and reclamation plans. The SMCRA addresses this situation as follows:
. . . . The regulatory authority shall establish guidelines for a determination of the scale or extent of a revision request for which all permit application information requirements and procedures, including notice and hearings, shall apply: Provided, That any revisions which propose significant alterations in the reclamation plan shall, at a minimum, be subject to notice and hearing requirements.30 U.S.C. § 1261(a)(2).
B. INDIANA'S PROPOSED AMENDMENTS AT ISSUE
In 1998 the Indiana General Assembly enacted House Enrolled Act 1074 ("HEA 1074"), which amended several statutory provisions of Indiana's program. Among other changes, the legislation amended provisions of the Indiana Code to include a definition of the term "permit revision," and to define significant and nonsignificant postmining land use changes.
In May 1998, Indiana sent the OSM a proposed amendment to its program consisting of the amendments enacted by the legislation. The OSM published receipt of the proposed amendment and opened the public comment period. 63 Fed. Reg. 29365 (1998). The public comment period closed on June 29, 1998.
In particular, Indiana sought to amend INDIANA CODE § 14-34-5-7(a) to define "permit revision" as "a change in mining or reclamation operations from the approved mining and reclamation plans that adversely affects the permittee's compliance with the State's statutes and regulations. Such permit revisions are subject to review and approval as provided in this subjection and subsections 8 through 8.4 of IC 14-34-5."
In addition, INDIANA CODE § 14-34-5-8.1(8) defined certain postmining land use changes as significant revisions requiring public notice and comment, including those situations where the land use was change to a residential land use; a commercial or industrial land use; a recreational land use; or developed water resources as defined in rules adopted by the commission under INDIANA CODE § 14-34-2-1 that meet the size criteria of 30 C.F.R. § 77.216(a). The IDNR also attempted to amend INDIANA CODE § 14-34-5-8.2(4) by classifying as "nonsignificant" permit revisions all changes of postmining land use not defined as "significant" in INDIANA CODE § 14-34-5-8.1(8). Those nonsignificant changes would not be subject to notice and hearing requirements.
After reviewing the proposed amendments, the OSM identified specific concerns that some of the proposals appeared less stringent than the requirements of the SMCRA. The OSM notified Indiana of these concerns in writing on September 15, 1998, and gave the IDNR an opportunity to submit additional information within 30 days.
The IDNR responded by letter on December 21, 1998, explaining its interpretation of the amendments. On March 16, 1999, the OSM published a final rule approving the proposed amendment in part, and disapproving other parts. 64 Fed. Reg. 12890 (1999). Specifically, the OSM found that the definition of "permit revision" was invalid for three reasons: (1) it would allow the permittee to make a change in mining and reclamation operations without notifying the regulatory authority and obtaining approval, violating 30 U.S.C. § 773.17(b); (2) it was inconsistent with the OSM's interpretation of a permit revision, as reflected in the preamble to a September 28, 1983 final rule; and (3) it would allow the permittee — as opposed to the regulatory authority — to determine whether a change in a permit revision that adversely affects his ability to comply with Indiana's laws and regulations, violating 30 U.S.C. § 1261 (a)(2).
The OSM disapproved the proposed definition of "insignificant" because it could result in significant alterations in a reclamation plan without public notice. As such, the OSM found that it was also inconsistent with and less stringent than 30 U.S.C. § 1261(a)(2).
The ICC claims that the OSM's determinations were arbitrary and capricious. It asks this Court to set aside the OSM's findings and remand this matter with directions to approve the amendments.
II. STANDARD OF REVIEW
The parties agree that 30 U.S.C. § 1276(a)(1) provides the applicable standard of review:
Any action subject to judicial review under this subsection shall be affirmed unless the court concludes that such action is arbitrary, capricious, or otherwise inconsistent with law.
In determining whether the OSM's actions were arbitrary, capricious, or otherwise inconsistent with law, the Court will presume agency actions to be valid if supported by a rational basis. Board of Trustees of Knox County Hosp. v. Shalala, 959 F. Supp. 1026, 1030 (S.D.Ind. 1997), aff'd. 135 F.3d 493 (7th Cir. 1998). Moreover, courts should defer to an agency's interpretation of legislation if that reading is based on a permissible construction of the statute. Estate of Whittle v. Commissioner of Internal Revenue, 994 F.2d 379, 381 (7th Cir. 1993). Similarly, the court must defer to the agency's interpretation of its regulations so long as the agency's interpretation is reasonable. Kelley v. Board of Trustees, University of Illinois, 35 F.3d 265, 271 (7th Cir. 1994), cert. denied, 513 U.S. 1128 (1995).
Courts should give an agency's interpretation controlling weight unless it is plainly erroneous or inconsistent with the regulation. Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994). As noted by the Supreme Court, "[t]his broad deference is all the more warranted when, as here, the regulation concerns `a complex and highly technical regulatory program,' in which the identification and classification of relevant `criteria necessarily require significant expertise and entail the exercise of judgment grounded in policy concerns.'" West Virginia Mining and Reclamation Ass'n. v. Babbitt, 970 F. Supp. 506, 514 (S.D. W.V. 1997) (involving SMCRA), citing Thomas Jefferson, 512 U.S. at 512. With these standards in mind, the Court will now review ICC's claims.
III. DISCUSSION A. INDIANA'S PROPOSED DEFINITION OF "PERMIT REVISION"
The ICC first asserts that the OSM's decision with respect to Indiana's proposed definition of "permit revision" was arbitrary and capricious. Again, Indiana attempted to define permit revision as a change in mining or reclamation operations from the approved mining and reclamation plans that adversely affects the permittee's compliance with the State's statutes and regulations. Such permit revisions are subject to review and approval as provided in this subsection and subsections 8 through 8.4 of IC 14-34-5.
The OSM found that the statute would create two categories of changes in mining and reclamation operations: those that affect the permittee's ability to comply with Indiana's statutes and regulations, and those that do not. According to the OSM, the effect of the state's proposed amendment would be that only those changes in the former category would be subject to regulatory review and approval. The OSM's position was that allowing other changes to be made without such review and approval suffered from three problems.
First, the OSM found the statute to be inconsistent with its regulation, which provides as follows:
The permittee shall conduct all surface coal mining and reclamation operations only as described in the approved application, except to the extent that the regulatory authority otherwise directs in the permit. 30 C.F.R. § 773.17(b) (2000).
According to the OSM, this regulation requires that a permitee "conduct only those mining and reclamation operations detailed in the approved mining and reclamation plan." 64 Fed. Reg. at *12891.
The OSM concluded that because Indiana's definition of "permit revision" would allow a permittee to make a change in mining and reclamation operations without notifying the regulatory authority and/or obtaining its approval — and thus conduct mining and reclamation operations that deviate from the approved mining and reclamation plan — the amendment was clearly inconsistent with 30 C.F.R. § 773.17(b).
ICC counters that its definition of permit revision is not inconsistent with the regulation, and that the IDNR could simply provide on all permits issued that mining and reclamation will be conducted as described in the approved permit "except for changes that would not affect the permittee's ability to comply with Indiana's statute and regulations." Pl.'s Brief at 12. This would not solve the problem, however, because the permittee would still be allowed to perform surface coal mining and reclamation operations without having to revise the permit — so long as the changes did not adversely affect its ability to comply with Indiana's statute and regulations. To the extent a permittee was performing surface coal mining and reclamation operations other than those described in the approved application, the OSM found that it would be inconsistent with 30 C.F.R. § 773.17(b). The question before this Court is not whether the OSM's interpretation is the best possible interpretation of the regulation. The question is whether it is arbitrary, capricious, or otherwise inconsistent with law. 30 U.S.C. § 1276(a)(1). The Court believes that the OSM has reached a reasonable conclusion based upon the language of the regulation. Because the OSM's decision was not arbitrary and capricious, the ICC's motion for summary judgment is denied.
The OSM also found that Indiana's definition of "permit revision" would allow the permitee to determine whether a change is a permit revision that adversely affects his or her ability to comply with the state's laws and regulations. 64 Fed. Reg. at *12891. In other words, the regulatory authority would only become aware of a proposed change after a permittee has already evaluated and determined that a proposed change would adversely affect his or her compliance. The OSM found this procedure to be inconsistent with 30 U.S.C. § 1261(a)(2), which requires the regulatory authority — not the permittee — to determine the scale or extent of a revision request for which all permit application information requirements and procedures apply. 64 Fed. Reg. at *12891. Although the ICC responded that only the state's director his designee would be authorized to determine which changes were significant, the OSM determined that those individuals would be unable to determine whether a proposed change was significant if the permitee never submitted it for review.
The ICC claims this decision is arbitrary and capricious because IDNR inspectors would eventually examine the sites and institute enforcement action if they disagreed with a permittee's assessment, and that this procedure is at least as effective as the OSM's regulations in meeting the requirements of the Act. Pl.'s Brief at 17-18. The Court does not agree. The SMCRA specifically provides that the regulatory authority — not the permittees — shall establish guidelines for a determination of the scale and extent of a revision request for which all permit application requirements and procedures would apply. Indiana's proposed amendment would allow permittees to initially determine whether a revision needed to be submitted to the regulatory authority for approval. As a practical matter, this may be desirable for ICC's members. But it is not the procedure required by the Act. In any event, the Court cannot conclude that the OSM's determination that Indiana's procedure was inconsistent with the Act was arbitrary and capricious. ICC's motion is denied.
ICC also argued that the OSM's third reason was arbitrary and capricious. Because we have already found that the OSM's decision should be upheld based upon either of its first two reasons, however, we will not address the third reason.
B. INDIANA'S PROPOSED DEFINITION OF "NONSIGNIFICANT" PERMIT REVISIONS
The SMCRA requires that the reclamation plan submitted with each permit include certain items, including the use which is proposed to be made of the land following reclamation. 30 U.S.C. § 1258(a)(3).The Act further provides that the reclamation plan may be revised after review and approval by the regulatory authority, and that "any revisions which propose significant alterations to the reclamation plan shall, at a minimum, be subject to notice and hearing requirements." 30 U.S.C. § 1261 (emphasis added). Indiana submitted a proposed change to IC 14-34-5-8.1 that established guidelines for determining when a proposed revision would be significant, including examples of specific changes in postmining land use that fell under that category. The definition was nearly identical to Tennessee's approved definition.
See 30 C.F.R. § 942.774(c)(8) (2000). The OSM approved Indiana's amendment because it was consistent with and no less stringent than 30 U.S.C. § 1261(a)(2). It advised Indiana, however, that the list was not all inclusive, as there were many other changes not listed that could be considered significant revisions. 64 Fed. Reg. at *12892. The Act required that all significant revisions, at a minimum, must be subjected to notice and hearing requirements. 30 U.S.C. § 1261(a)(2).
Tennessee's approved state program provides that any proposed revision is significant if it "involves a change in the postmining land use to a residential, industrial/commercial, recreation or developed water resources land use, as defined in 30 C.F.R. § 701.5; except that a change to a developed water resource not meeting the size criteria of § 77.216(a) of this title need not be considered a significant revision." 30 C.F.R. § 942.774(c)(8).
Indiana also attempted to define "insignificant" revisions. In its February 1998 initial review of the proposed amendment, the OSM raised concerns that after defining significant revisions, the statute provided that "a revision is nonsignificant if it does not involve a significant change in land use." The OSM suggested that "guidance be provided for one or the other, but not both. That is the approach used by most other states. Generally, then if a revision doesn't meet the standards specified in the program, it is by default the other type of revision. As proposed by Indiana, if a revision doesn't fit into either the significant or nonsignificant definition, what is it?" The OSM noted that its comments were prepared quickly and were subject to additional comments.
By the time it submitted the amendments for approval in May 1998, Indiana had changed the language to state that nonsignificant revisions are those not enumerated in IC 14-34-5-8.1(8). In September 1998, the OSM notified Indiana that the proposed amendment still allowed many changes that could produce significant alterations to be approved without notice and hearing in violation of the SMCRA.
In response, IDNR explained that it interpreted the statute to mean that the state director would retain discretion to determine that land use changes other than those listed in IC 14-34-5-8.1(8) could be significant revisions. The OSM initially agreed that the state director retained discretion to determine whether a change was significant. The OSM concluded, however, that director discretion did not save the statute from being inconsistent with the Act, which required notice and hearings for any significant alterations in a reclamation plan. 64 Fed. Reg. at *12892. In its clarification issued two months later, the OSM retreated from its earlier position that the statute allowed for director discretion, noting that "we disapproved this proposed revision because we feel that it is clear on its face that the proposed change would remove such discretion." 64 Fed. Reg. at 28362.
In its final decision, the OSM did not approve this amendment because it would allow all other postmining land use changes other than those specifically identified in IC 14-34-5-8.1(8) to be approved without notice and hearing requirements. For example, the OSM found that Indiana's proposed amendment would allow many changes that could produce significant alterations in a reclamation plan, such as a change from cropland to forest, without any notice or hearing. According to the OSM, this was inconsistent with and less stringent than the Act. 64 Fed. Reg. at *12892.
The ICC claims that the OSM's decision was arbitrary and capricious because it offered conflicting reasons for its decision and because it gave no reason for distinguishing Indiana's definition from the nearly identical program it had previously approved for Tennessee. We will now address those arguments.
It does appear that the OSM may have changed its position with respect to whether or not the state director retained discretion under the proposed amendment. However, its ultimate conclusion — that the amendment was inconsistent with the Act because it would allow for certain significant changes to be made without notice or hearing — never changed. Thus, ICC's argument that the OSM changed its position with respect to director discretion does nothing to show that its ultimate decision was arbitrary and capricious. But that does not necessarily end the matter.
ICC also points out that the OSM had previously approved a nearly identical provision for Tennessee. The only difference in Tennessee's program is that it did not include a separate definition for "nonsignificant." This appears to be consistent with OSM's initial guidance to Indiana that "guidance be provided for one or the other, but not both. That is the approach used by most other states. Generally, then if a revision doesn't meet the standards specified in the program, it is by default the other type of revision." Following the OSM's guidance, Indiana did essentially the same thing by providing that if a change did not fall under the definition of "significant" it was "nonsignificant." In other words, if a change did not meet the standards for "significant," it was by default "nonsignificant." Accordingly, it appears that the Tennessee and Indiana statutes would dictate the same results with respect to classifying certain postmining land use changes as either significant or nonsignificant. And that is exactly ICC's point: the OSM had no rational basis for departing from its earlier approval of nearly identical language under the Tennessee program.
The Court realizes that administrative agencies are not bound by the doctrine of stare decisis. Pre-Fab Transit Co. v. U.S., 595 F.2d 384, 387 (7th Cir. 1979). In addition, "the restrictiveness of our review does not permit us to reverse [the agency's] action merely because the decision arguably may be inconsistent with prior [agency] decisions." Id. On the other hand, agencies do have a duty to explain departures from agency norms. "The Commission cannot disregard its own precedents but must reasonably explain an alteration of policy." Id. See also ANR Pipeline Co. v. Federal Energy Regulatory Comm'n., 71 F.3d 897, 901 (D.C. Cir. 1995) ("Indeed, where an agency departs from established precedent without a reasoned explanation, its decision will be vacated as arbitrary and capricious."), citing Pontchartrain Broadcasting Co. v. FCC, 15 F.3d 183, 185 (D.C. Cir. 1994) and Graphic Communications Int'l Union, Local 554 v. Salem-Gravure, 843 F.2d 1490, 1493 (D.C. Cir. 1988), cert. denied, 489 U.S. 1011 (1989). "An agency's view of what is in the public interest might change, either with or without a change in circumstances. But an agency changing its course must supply a reasoned analysis." Panhandle Eastern Pipeline Co. v. FERC, 196 F.3d 1273, 1275 (D.C. Cir. 1999), citing Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57 (1983).
The OSM has not attempted to explain its departure from its previous approval of Tennessee's nearly identical program. In fact, the OSM does not even address the matter in its brief. The only reference to the Tennessee program is in the May 1999 clarification of its ruling where it states that "Nor is it our intent to alter OSM's position as reflected in other regulatory actions relating to significant permit revisions, such as those for the Federal program in Tennessee." 64 Fed. Reg. at *28363. By disapproving Indiana's, however, the OSM has apparently altered its position as reflected in its previous actions. The question for this Court is not whether the OSM could properly abandon its earlier position under a set circumstances closely comparable to the one at issue — which it clearly had the authority to do — but whether it has sufficiently identified and articulated its reasons for doing so. There very well may be a good reason to differentiate between changes in land use in Tennessee and Indiana that would justify the OSM's departure from its previous ruling. But the OSM has not offered any.
Instead, the OSM's primary concern is that Indiana's statute would allow many changes that could produce significant alterations in a reclamation plan without notice and hearing requirements. The only example the OSM gives is a change from cropland to forest. Assuming such a change would be significant, it is not one of the changes listed in Tennessee's approved definition of "significant." Thus, by default, it would be "nonsignificant" under Tennessee's program, as well. The OSM provides no explanation for this inconsistency, and in fact reiterates that its ruling was not intended to alter its position with respect to the Tennessee program. Because the OSM has departed from its prior rulings and has failed to give any explanation for its action, the Court finds that its ruling was arbitrary and capricious.
The Court was looking for an explanation as to how preventing a change from cropland to forest somehow related to or furthered any of the purposes of the Act enumerated in 30 U.S.C. § 1202. The OSM provided no explanation.
ICC's motion is granted and this issue shall be remanded to the OSM for further consideration.
IV. CONCLUSION
The Court concludes that the OSM's decision with respect to Indiana's definition of "permit revision" was not arbitrary, capricious, or otherwise inconsistent with the law. Accordingly, the Court DENIES ICC's motion on that issue and affirms the OSM's decision. With respect to Indiana's proposed amendment defining "nonsignificant" permit revisions, however, the Court finds that the OSM has not articulated a rational reason for departing from its prior ruling on a nearly identical program in Tennessee.
The Court thus finds that the OSM's decision on that issue was arbitrary and capricious and GRANTS ICC's motion on that claim. The Court thus remands this matter to the OSM for further consideration.