Arch Mineral Corp. v. Babbitt

Decision Date01 August 1995
Docket NumberCiv. A. No. 2:95-0032.
CourtU.S. District Court — Southern District of West Virginia
PartiesARCH MINERAL CORPORATION, Plaintiff, v. Bruce M. BABBITT, Secretary of the Interior United States Department of the Interior, et al., Defendants.


Christopher B. Power, Michael B. Victorson and Amy A. Davis, Robinson & McElwee, Charleston, WV, Blair M. Gardner, Senior Counsel, Arch Mineral Corp., St. Louis, MO, for plaintiff.

Rebecca A. Betts, United States Attorney, Charleston, WV, for defendant.


HADEN, Chief Judge.

Pending are the parties' cross motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The parties agree there are no genuine issues of material fact extant. They have submitted memoranda in support of their respective positions and the matter is mature for the Court's consideration.


Greendale Coals, Incorporated conducted coal mining operations beginning in 1983 on property in Clay and Nicholas Counties, West Virginia under three mining permits issued by the West Virginia Department of Environmental Protection ("WVDEP"). The Greendale operations were conducted pursuant to a September 6, 1983 lease between Greendale and the owner of the property, Clay-Nicholas Minerals Company, a wholly-owned subsidiary of Diamond Shamrock Coal.

Greendale also entered into a contract on September 6, 1983 with Diamond Shamrock Coal Sales Company, another wholly-owned subsidiary of Diamond Shamrock Coal. This contract, styled a "Coal Sales Agency Contract," was terminated by mutual consent of the parties on December 12, 1985.

Greendale incurred abandoned mine lands reclamation fees ("AML fees") totaling approximately fifty eight thousand dollars ($58,000) based on coal production between July 1984 and September 1985.

On September 6, 1986 OSM issued a notice of violation to Greendale. Greendale did not rectify the violation and, because of this, a cessation order was issued by OSM. The cessation order remained effective for the maximum period of thirty days and resulted in a penalty being assessed against Greendale in the maximum amount of twenty-two thousand five hundred dollars ($22,500.00). This penalty was never paid by Greendale.

OSM initiated a lawsuit against Greendale for the recovery of the AML fees. United States v. Greendale Coals, Inc., No. 2:86-1035 (S.D.W.Va.). Judgment for the government was entered on November 18, 1986, but there was no recovery due to Greendale's subsequent bankruptcy filing on February 27, 1987. In re Greendale Coals, Inc., Case No. 87-50038 (Bkr.Ct., S.D.W.Va.). On April 30, 1987, OSM filed a proof of claim for this civil penalty. On May 27, 1987, OSM filed a proof of claim for Greendale's delinquent AML fees. The bankruptcy case was dismissed on March 15, 1989 without a discharge.

OSM chose not to pursue Diamond Shamrock Coal for the AML fees under Section 402 of the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. § 1232, as the "operator" of the Greendale operation and never attempted to collect the delinquent AML fees or unpaid civil penalty from Diamond Shamrock Coal.

On April 17, 1987, Arch Mineral Corporation entered into a contract to purchase the outstanding stock of Diamond Shamrock Coal. At the time of the stock purchase, Diamond Shamrock Coal owned both Clay-Nicholas Minerals and Diamond Shamrock Coal Sales.

Arch provided written notification of its acquisition of Diamond Shamrock Coal to the WVDEP on July 7, 1987.1 OSM received actual notice of the acquisition on October 20, 1987, when Arch paid AML fees on coal previously mined by Diamond Shamrock Coal.

The operating subsidiaries of Diamond Shamrock Coal underwent rapid change following Arch's 1987 acquisition. One operation in Utah was sold to an unrelated third party. Another in Western Kentucky was closed. Two others remain in operation and are indirect subsidiaries of Arch. Diamond Shamrock Coal's name was changed to Arch Mineral Coal Company and it was dissolved on June 30, 1988.

On May 21, 1993 OSM notified Arch for the first time that it had been identified as a "presumed owner or controller" of the former Greendale operations. Prior to this notice, Arch had been given no billing or any other type of notice of OSM's claims against Greendale or of OSM's intent to enforce such claims against Arch.2

OSM alleges Arch is linked through ownership and control to Greendale's liabilities for delinquent AML fees and civil penalty, based on (a) Arch's contract to purchase Diamond Shamrock Coal and (b) OSM's determination that Diamond Shamrock Coal was a presumed owner or controller of Greendale under 30 C.F.R. § 773.5(b)(6).3

Based on Greendale's unpaid civil penalty and AML fees, OSM informed Arch that, unless Arch successfully rebuts the ownership and control link it asserts exists between Arch and Greendale, Arch will be placed on the OSM's computerized mine permit-blocking system (known as the "Applicant/Violator System" or "AVS") as permit-blocked because of the link to Greendale's undischarged debts. OSM informed Arch it can avoid becoming permit-blocked by paying the AML fees and penalties of Greendale.

Arch has attempted to persuade OSM no ownership and control link between Arch and Greendale should be made. To date, Arch's efforts have been unsuccessful. OSM has not issued a final decision whether Arch will be linked to Greendale on the AVS.

Arch filed its Complaint for Injunctive Relief and Declaratory Judgment on January 13, 1995, seeking a Temporary Restraining Order ("TRO") and continuing injunctive relief, pending the Court's consideration of Arch's challenge to what it believes to be an imminent decision from OSM to impose a nationwide mine permit-block on Arch. On January 19, 1995 the Court issued a TRO, to be effective until the Court had ruled on certain motions to be filed by the parties. The TRO was extended by an Agreed Order entered on January 30, 1995 and again extended by an Agreed Order entered on February 28, 1995. It remains in effect.

The parties agree there are no remaining issues of material fact and ask the Court to consider previously submitted memoranda as cross motions for summary judgment. Likewise, the parties rest on the memoranda submitted in support of and in opposition to Defendants' Motion to Dismiss and Plaintiff's Motion for a Preliminary Injunction. This opinion resolves the issues and the case.


Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper only:

"If the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law."

Fed.R.Civ.P. 56(c).

The Defendants assert: 1) the Complaint should be dismissed because there is no case or controversy; 2) Count II of the Complaint requesting a declaratory judgment based on the statute of limitations at 28 U.S.C. § 2415 should be dismissed for failure to state a claim upon which relief can be granted; 3) Count III should be dismissed because Plaintiff has failed to exhaust its administrative remedies; and, 4) this action should be dismissed for lack of subject matter jurisdiction.

Plaintiff seeks a declaratory judgment that: 1) OSM's claim for payment of Greendale's delinquent civil penalty is barred by 28 U.S.C. § 2462; 2) OSM may not threaten to link or actually link Arch to Greendale under its ownership and control rule because Arch did not own or control Diamond Shamrock Coal when Greendale's debts were incurred; and 3) OSM's action represents an impermissible retroactive application of its ownership and control rule to Arch.4

Should the Court grant declaratory relief, the Plaintiff further seeks a Permanent Injunction prohibiting the Defendants and their officers, agents, employees, and attorneys from making a determination Arch is related to Greendale as an owner or controller, permit-blocking Arch, its subsidiaries or affiliates based on Greendale's delinquent AML fees and civil penalty, or taking any other action to collect Greendale's delinquent AML fees and civil penalty from Arch.


The complaint seeks a declaration that the Defendants may not threaten to link or actually link Arch to Greendale, and therefore may not block any permit actions by Arch, its subsidiaries, or affiliates. Federal courts may issue declaratory judgments only in cases of actual controversy. Charter Fed. Sav. Bank v. Office of Thrift Supervision, 976 F.2d 203, 208 (4th Cir.1992) (citing 28 U.S.C. § 2201 (1988)), cert. denied, ___ U.S. ___, 113 S.Ct. 1643, 123 L.Ed.2d 265 (1993). Additionally, the case or controversy must be "ripe" for judicial review. In an administrative case, this means there must be "an administrative decision that has been formalized and its effects felt in a concrete way by the challenging parties." Id. (citing Pacific Gas & Elec. Co. v. State Energy Resources Conservation & Dev. Comm'n, 461 U.S. 190, 200, 103 S.Ct. 1713, 1720, 75 L.Ed.2d 752 (1983) and Abbott Lab. v. Gardner, 387 U.S. 136, 148-49, 87 S.Ct. 1507, 1515-16, 18 L.Ed.2d 681 (1967), overruled on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977)). The basic rationale for the ripeness limitation on judicial review is to:

"prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties."

Abbott, 387 U.S. at 148, 87 S.Ct. at 1515.

Abbott established a pragmatic two part test for determining ripeness. First, the Court must determine...

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