B & M COAL v. OFFICE OF SURFACE MIN. RECLAMATION

• Decision Date: 04 February 1982
• Docket Number: No. IP 79-973-C.,IP 79-973-C.
• Citation: 531 F. Supp. 677
• Parties: B & M COAL CORPORATION v. OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT.
• Court: U.S. District Court — Southern District of Indiana

531 F. Supp. 677

B & M COAL CORPORATION v. OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT.

No. IP 79-973-C.

United States District Court, S. D. Indiana, Indianapolis Division.

February 4, 1982.

Halbert W. Kunz, of Kunz & Kunz, Indianapolis, Ind., for plaintiff.

Alfred T. Ghiorzi, Dept. of Justice, Land and Natural Resources Div., Shelley D. Hayes, Atty., Div. of Surface Mining, Dept. of the Interior, Washington, D. C., and Harold R. Bickham, Asst. U. S. Atty., Indianapolis, Ind., for the Government.

ORDER AND MEMORANDUM OF DECISION

STECKLER, Chief Judge.

This case is presently before the Court on the Office of Surface Mining Reclamation and Enforcement's (OSM) motion to dismiss B & M Coal Corporation's (B & M Coal) complaint for failure to state a claim, Fed. R.Civ.P. 12(b)(6), and the OSM's motion for summary judgment on its counterclaim, Fed.R.Civ.P. 56.

The OSM assessed B & M Coal three separate civil penalties for three alleged violations of its surface mining permits and of the Surface Mining Control and Reclamation Act of 1977 (Act), 30 U.S.C. § 1201 et seq. After an assessment conference, held pursuant to 30 C.F.R. § 723.17, B & M Coal petitioned the Department of the Interior's Office of Hearings and Appeals (Hearings Office) to review the proposed penalties in accordance with 30 C.F.R. § 723.18 and 43 C.F.R. § 4.1150. However, in contravention of 30 U.S.C. § 1268(c), 30 C.F.R. § 723.18(a) and 43 C.F.R. § 4.1152(b)(1), B & M Coal refused to pay the proposed penalties into an escrow account as a prerequisite to appealing the OSM's action to the Hearings Office which then dismissed B & M Coal's petition due to its refusal to prepay the penalties.¹ Subsequently, B & M Coal did not appeal administratively this dismissal; rather, it instituted the instant action claiming the requisite prepayment constitutes an unlawful taking of its property in violation of the Fifth Amendment's due process clause. The OSM counterclaimed seeking the assessed penalties totaling $2,900.

A. The Surface Mining Control and Reclamation Act of 1977.

The Act, 30 U.S.C. § 1201 et seq., is a comprehensive statute constructed to "establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations." Id. at § 1202(a). Congress created the OSM as the device through which the Secretary of the Interior (Secretary) exercises primary responsibility for administering and implementing the Act by promulgating regulations enforcing the Act's provisions. Id. at § 1211(c). The primary regulatory and enforcement provisions are codified at 30 U.S.C. §§ 1251-1279. Congress established a two-phased program for surface coal mining regulation consisting of an interim phase followed by a permanent phase. Id. at § 1251(a, b). The interim phase included the immediate federal promulgation and enforcement of certain environmental protection performance standards delineated in the Act which standards were complemented by continuing state regulation. Id. at § 1251(a). The Secretary published these interim regulations on December 13, 1977. 42 Fed.Reg. 62,639 (1977); 30 C.F.R. ch. VII, subch. B, pp. 322-390. During the permanent phase each state, seeking permanent authority over the surface coal mining operations on nonfederal land within the state's borders, must adopt a regulatory program containing the full panoply of federal performance standards. Responsibility for enforcing the permanent programs rests with either the state or federal government. 30 U.S.C. § 1251(b). Additionally, § 1251(b) dictates that the Secretary create regulations establishing a permanent regulatory program, encompassing all the performance standards mandated by the Act, for those states failing to submit an acceptable program. The Secretary published these permanent regulations on March 13, 1979. 44 Fed.Reg. 14,902 (1979); 30 C.F.R. ch. VII, subch. C, pp. 391-414.²

Through its complaint B & M Coal essentially raises two constitutional challenges to 30 U.S.C. § 1268(c), 30 C.F.R. § 723.18(a) and 43 C.F.R. § 4.1152(b)(1), (c). First, B & M Coal claims its Fifth Amendment right protecting against the taking of its property without due process of the law is violated by the requirement of these three sections that it pay the proposed penalties into an escrow account prior to a hearing on its petition to review the proposed penalties. Second, B & M Coal argues its Fifth Amendment due process right was violated by the OSM's original assessment of a proposed penalty without a hearing.

B. Undisputed Facts.

B & M Coal does not dispute the OSM's recitation of facts contained in its brief supporting its motions to dismiss and for summary judgment. On September 20, 1978, the OSM issued the initial notice of violations consisting of failures to remove the "B" horizon of soil prior to a blasting operation and to control surface runoffs on B & M Coal's permit area located in southern Indiana. Two weeks later the OSM proposed a penalty assessment of $2,000 for this initial violation. B & M Coal failed to pay the $2,000 and the OSM, by a letter dated March 2, 1979, demanded payment. A second notice, informing B & M Coal of three new infractions (mining within 100 feet of a road without a variance plus failures to maintain facilities to treat discharged water or to post perimeter markers), was issued on March 8, 1979. The OSM on March 12, 1979, posted its final notice for failing to meet effluent limitations for discharge from the disturbed area. On March 23, 1979, the OSM assessed a proposed penalty of $1,700 for the second violation and $3,200 was assessed as a proposed penalty for the third violation on April 27, 1979.

On April 2, 1979, B & M Coal requested, pursuant to 30 C.F.R. § 723.17, an assessment conference on all three violation notices. This conference was held on June 13, 1979, after which the OSM informed B & M Coal that the proposed penalties for the three notices were being reduced to $800, $1,300, and $800 respectively. On June 25, 1979, pursuant to 30 C.F.R. § 723.18 and 43 C.F.R. § 4.1150, B & M Coal petitioned the Hearings Division of the Interior Department's Hearings Office for an evidentiary hearing to review the proposed penalties. Also, B & M Coal filed an amended petition to review on September 13, 1979. Nevertheless, it refused to pay the proposed total $2,900 penalty into an escrow account prior to the requested hearing as required by 30 U.S.C. § 1268(c), 30 C.F.R. § 723.18(a) and 43 C.F.R. § 4.1152(b)(1). The OSM on September 19, 1979, moved to dismiss B & M Coal's review petition claiming it was not timely filed and, further, that B & M Coal had failed to prepay the proposed penalties totaling $2,900. B & M Coal unsuccessfully opposed this dismissal motion and on October 25, 1979, an administrative law judge in the Hearings Division of the Hearings Office dismissed B & M Coal's petition to review due to its refusal to prepay the proposed penalties. Subsequently, B & M Coal failed to appeal administratively this dismissal; rather, it commenced this action raising the previously stated constitutional challenges.

C. Jurisdiction.

The Court's jurisdiction to resolve the matters before it is premised upon 30 U.S.C. § 1276(a)(1) which provides, in pertinent part:

"Any action by the Secretary of the Interior promulgating rules or regulations including standards pursuant to 30 U.S.C. §§ 1251, 1265, 1266 and 1273 shall be subject to judicial review in the United States District Court for the District of Columbia Circuit. Any other action constituting rulemaking by the Secretary shall be subject to judicial review only by the United States District Court for the District in which the surface coal mining operation is located."

Sections 1251, 1265, 1266, and 1273 pertain to the promulgation of interim regulatory procedures, permit requirements plus the promulgation and implementation of the federal land program as pertinent to surface coal mining operations. B & M Coal does not challenge the Department's rulemaking; rather, it questions whether its procedural due process guarantees have been violated by the Secretary's application of the Act or the implementing regulations, 30 U.S.C. § 1268(c), 30 C.F.R. § 723.18(a) and 43 C.F.R. § 4.1152(b)(1). See generally, In re Surface Mining Regul. Litig., 456 F.Supp. 1301 (D.D.C.1978), aff'd in pt., rev'd in pt., supra, 627 F.2d at 1346. Consequently, B & M Coal's action entails "any other action constituting rulemaking by the Secretary which is subject to judicial review only by the United States District Court for the District in which the surface coal mining operation is located." 30 U.S.C. § 1276(a)(1). Because this lawsuit arose from a B & M Coal surface mining operation located in the Southern District of Indiana, this Court has jurisdiction to hear this complaint.

At the outset of ruling upon the OSM's motion to dismiss, the Court notes it must consider the record from the OSM and the Hearings Office which developed from B & M Coal's alleged violations. Because matters outside the pleadings are being considered, the OSM's motion to dismiss will be resolved in the same manner as its motion for summary judgment on its counterclaim. Fed.R.Civ.P. 56; Carter v. Stanton, 405 U.S. 669, 92 S.Ct. 1232, 31 L.Ed.2d 569 (1972), on remand, 350 F.Supp. 1337 (S.D.Ind.1972). Significantly, an action to enjoin enforcement or otherwise obtain review of an administrative order is well suited for utilizing the summary judgment mechanism because B & M Coal has no right to a trial de novo and is limited to a review of the record before the Department. Manufacturing Chemists Ass'n v. Costle, 455 F.Supp. 968 (W.D.La.1978). A review of the pleadings and record reveals there are no disputes as to genuine issues of any material facts. Instead, the parties contest the constitutionality of the Act and the implementing regulations. Therefore, if as a matter of law the Act and...