National Min. Ass'n v. U.S. Dept. of Interior, s. 97-5202

Citation177 F.3d 1
Decision Date28 May 1999
Docket NumberNos. 97-5202,s. 97-5202
PartiesNATIONAL MINING ASSOCIATION, Appellant v. UNITED STATES DEPARTMENT OF THE INTERIOR, et al., Appellees to 97-5204, 98-5248.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Appeals from the United States District Court for the District of Columbia (No. 88cv03464) (No. 89cv01167) (No. 89cv01751) (No. 97cv01418)

Thomas C. Means argued the cause for the appellant. John A. MacLeod, J. Michael Klise and Harold P. Quinn, Jr. were on brief for the appellant

Ellen D. Katz, Attorney, United States Department of Justice, argued the cause for the federal appellees. Lois J. Schiffer, Assistant Attorney General, and Martin W. Matzen, Attorney, United States Department of Justice, were on brief for the appellees. John T. Stahr, Attorney, United States Department of Justice, entered an appearance.

Glenn P. Sugameli argued the cause for appellee National Wildlife Federation, et al. Thomas J. FitzGerald was on brief for appellee Kentucky Resources Council, Inc.

Before: WALD, SILBERMAN and HENDERSON, Circuit Judges.

Opinion for the court filed by Circuit Judge KAREN LeCRAFT HENDERSON.

KAREN LeCRAFT HENDERSON, Circuit Judge:

Section 510(c) of the Surface Mining Control and Reclamation Act of 1977 (SMCRA) requires a surface mining permit applicant to file "a schedule listing any and all notices of violations of this chapter and any law, rule, or regulation of the United States, or of any department or agency in the United States pertaining to air or water environmental protection incurred by the applicant in connection with any surface coal mining operation during the three-year period prior to the date of application." 30 U.S.C. § 1260(c). The section further provides that "[w]here the schedule or other information available to the regulatory authority indicates that any surface coal mining operation owned or controlled by the applicant is currently in violation of this chapter or such other laws referred to this subsection [sic], the permit shall not be issued until the applicant submits proof that such violation has been corrected or is in the process of being corrected to the satisfaction of the regulatory authority, department, or agency which has jurisdiction over such violation." Id. To implement section 510(c) the Office of Surface Mining, Reclamation and Enforcement, United States Department of the Interior, (OSM) promulgated three final rules: the Ownership and Control Rule, 53 Fed.Reg. 38,868 (1988); the Permit Information Rule, 54 Fed.Reg. 8982 (1989); and the Permit Rescission Rule, 54 Fed.Reg. 18,438 (1989). In consolidated district court actions the National Mining Association (NMA) challenged all three final rules and the district court granted summary judgment to OSM in each action. See National Wildlife Fed'n v. Babbitt, Nos. 88cv3117, 88cv3464, 88cv3470, 1995 WL 704973 (D.D.C. filed Aug. 31, 1995); National Wildlife Fed'n v. Babbitt, Nos. 89cv1130, 89cv1167, 1995 WL 702504 (D.D.C. filed Aug. 31, 1995); National Wildlife Fed'n v. Babbitt, Nos. 89cv1751, 89cv1811, 41 ERC 1529 (D.D.C. filed Aug. 31, 1995). In NMA v. United States Dep't of Interior, 105 F.3d 691 (D.C.Cir.1997), (NMA I) this court reversed the district court, holding that the Ownership and Control Rule's broad construction of the statute--that OSM could block permits based on ongoing environmental violations by "upstream" owners or controllers of the permit applicant--"conflicts with the plain meaning of section 510(c)," 105 F.3d at 693, which authorizes denial of a permit based on violations only of "downstream" operations, that is, ones that are "owned or controlled by the applicant," 30 U.S.C. § 1260(c). We further concluded that, "because the permit-information rule and the permit-rescission rule are centered on the Ownership and Control Rule, they too must fall." 105 F.3d at 693. Finding the ownership and control defect so fundamental to OSM's permit blocking regime, the court vacated all three rules in toto, without reaching NMA's objections to other aspects of the rules.

In response to the decision in NMA I, OSM issued an Interim Final Rule, 62 Fed.Reg. 19,450 (1997), (IFR), which largely reenacts the provisions of the three vacated rules but without the offending "upstream" provisions. 1 NMA challenged the new IFR in the district court by moving for enforcement of the NMA I mandate in the consolidated actions and by filing a separate action, No. 97cv01418, to independently challenge the IFR. In each case NMA raised many of the objections we found it unnecessary to reach in NMA I. The district court denied the motions for enforcement, dismissed the consolidated actions and granted summary judgment in the newly filed IFR action, rejecting each of NMA's challenges. Reviewing the IFR de novo, as we must, see National Coal Ass'n v. Lujan, 979 F.2d 1548, 1553 (D.C.Cir.1992), we reverse the district court's summary judgment in No. 97cv01418, challenging the IFR. Because our review of that action disposes of the issues raised in Appeal Nos. 97-5202, 97-5203, 97-5204 (from the mandate enforcement denials in Nos. 88cv03464, et al.), we dismiss those appeals as moot. 2 We now address seriatim NMA's various objections to the IFR. 3

I. "Ownership and Control"

NMA asserts that the IFR reaches more broadly downstream than the statute permits in two respects.

First, NMA contends the IFR authorizes permit-blocking based on an applicant's ownership and control not only of a violating "operation," as the statute explicitly directs, but also of other entities that in turn own or control a violating operation. NMA is correct that the IFR authorizes permit blocking based on apparently limitless downstream violations. See 30 C.F.R. § 773.15(b)(1) ("Based on a review of all reasonably available information concerning violation notices involving either the applicant or any person owned or controlled by the applicant, ... the regulatory authority may not issue the permit if any surface coal mining and reclamation operation owned or controlled by the applicant is currently in violation....") (emphasis added); id. § 773.20 (authorizing regulatory agency to rescind permit "[w]hen the regulatory authority finds that the permit was improvidently issued" under 30 C.F.R. § 773.15(b)(1)). The statute itself, however, requires not that the violating operation be directly owned by the applicant but that it be either "owned or controlled by the applicant." 30 U.S.C. § 1260(c) (emphasis added). OSM has construed this language to include a downstream operation controlled, albeit not owned, by the applicant through ownership and control of intermediary entities. This view is consistent with, if not mandated by, the statutory language which, as noted, applies to any violating operations "controlled by the applicant," not only those directly owned by him. Accordingly, the agency's construction must be upheld. See National Coal Ass'n v. Lujan, 979 F.2d 1548, 1555 (D.C.Cir.1992) ("We must defer to [OSM's] interpretation of [SMCRA's] 'same penalties' provision unless the agency's reading is contrary to the statute's instruction, or is unreasonable.") (citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)).

Second, NMA asserts the IFR oversteps OSM's statutory authority insofar as it allows permit blocking based on a violation by an entity that the applicant formerly owned or controlled but does no longer. On this we agree. The statute expressly authorizes permit-blocking "when an operation owned or controlled by the applicant is currently in violation" of environmental laws. 30 U.S.C. § 1260(c). The legislative history indicates, as the statutory language suggests, that the Congress intended to authorize a permit block only when an applicant, through ownership or control, is in violation at the time of application. See S.Rep. No. 85-128 at 79 ("This subsection prohibits issuance of a mining permit if the application indicated the applicant to be in violation of the act or a wide range of other environmental requirements.") (emphasis added). For violations of an operation that the applicant "has controlled" but no longer does, and for which it therefore lacks power to effect abatement, the Congress authorized permit-blocking only if there is "a demonstrated pattern of willful violations of this chapter of such nature and duration with such resulting irreparable damage to the environment as to indicate an intent not to comply with the provisions of this chapter." 30 U.S.C. § 1260(c). Thus, to the extent the IFR authorizes permit-blocks based on past ownership and control without such a pattern, 4 it contravenes the statute and cannot be upheld.

NMA also challenges the IFR's rebuttable presumptions of ownership or control set forth in 30 C.F.R. § 773.5(b). IFR section 773.5(b) "presumes" ownership or control from certain relationships between the applicant and a downstream entity "unless a person can demonstrate that the person subject to the presumption does not in fact have the authority directly or indirectly to determine the manner in which the relevant surface coal mining operation is conducted." Under subsections (1) to (6) of section 773.5(b) the rebuttable presumption applies to a person who (1) is an officer or director of a company, (2) operates a surface coal mining operation, (3) controls the assets of an entity, (4) is general partner in a partnership, (5) owns 10 to 50 per cent of an entity or (6) owns or controls the coal to be mined (through lease, sublease or other contract) and has either the right to receive the coal after mining or the authority to determine the manner in which the surface coal mining operation is controlled. 5 NMA contends that the presumptions in subsections (1), (3), (4) and (5) are invalid. We agree as to subsections (1) and (5) but not as to subsection...

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