DNR v. Peabody Coal Co.

• Decision Date: 16 November 2000
• Docket Number: No. 77A04-9909-CV-429.,77A04-9909-CV-429.
• Citation: 740 N.E.2d 129
• Parties: Indiana DEPARTMENT OF NATURAL RESOURCES, Appellant, v. PEABODY COAL COMPANY, Appellee.
• Court: Indiana Appellate Court

740 N.E.2d 129

Indiana DEPARTMENT OF NATURAL RESOURCES, Appellant, v. PEABODY COAL COMPANY, Appellee.

No. 77A04-9909-CV-429.

Court of Appeals of Indiana.

November 16, 2000.

Jeffrey A. Modisett, Daniel B. Dovenbarger, Attorney General's Office, Indianapolis, Indiana, Attorneys for Appellant.

G. Daniel Kelley, Jr., Dana G. Meier, Ice Miller, Indianapolis, Indiana, Attorneys for Appellee.

OPINION

SHARPNACK, Chief Judge

The Indiana Department of Natural Resources ("DNR") appeals the judgment of the trial court affirming a decision of the administrative law judge ("ALJ") in favor of Peabody Coal Company ("Peabody"). The DNR raises four issues, which we consolidate and restate as:

(1) whether the trial court erred in affirming the ALJ's decision that the DNR had applied an incorrect legal standard in requiring Peabody to replace more than topsoil for land reclamation; and

(2) whether the trial court erred in affirming the ALJ's decision that the DNR made inadequate findings to support its determination that Peabody was required to remove eighteen inches of soil, including both topsoil and subsoil, for land reclamation.

We affirm.

The relevant facts follow. The DNR is a state administrative agency with responsibility for the administration and enforcement of the Indiana Surface Mining Control and Reclamation Act ("SMCRA"),¹ a program for the regulation of surface coal mining. Peabody is a corporation that operates surface coal mining operations under SMCRA permits issued by the DNR. This case arises out of the refusal of the DNR to allow a revision to four of Peabody's surface mining permits so as to allow Peabody to remove and store for replacement eight to twelve inches of topsoil rather than eighteen inches of combined topsoil and subsoil as the permit required.

In 1990, it was the DNR's policy to require surface land miners to replace and redistribute a minimum of eighteen inches of soil, which could include both topsoil and subsoil, after mining on all non-prime farmland areas used as cropland. On October 12, 1990, Peabody filed a request for administrative review, under 310 Ind.Administrative Code 0.6-1-15, seeking to set aside the DNR's policy.² The ALJ determined that the most reasonable interpretation of 310 Ind.Administrative Code 12-5-12.1, the section of the SMCRA that bears most directly on topsoil and subsoil replacement for surface coal mining activities, was that subsoil is not generally required to be salvaged and replaced. However, under subsection (f), which acts as an exception to the general principle, the DNR could require subsoil to be salvaged and replaced only if the director found subsoil replacement to be necessary in a particular case. The ALJ concluded that without having formally promulgated a rule in accordance with Ind.Code § 4-22-2, the DNR could not uniformly require all miners to replace a minimum of eighteen inches of soil after mining regardless of whether eighteen inches of topsoil existed before mining.

While that case was pending review by the trial court, the DNR and Peabody agreed as to the permits at issue here to a condition requiring a soil replacement depth of eighteen inches, subject to judicial review by the trial court. Pursuant to the agreement, Peabody thereafter submitted permit revisions incorporating the eighteen inch minimum soil replacement depth with a reservation that if the eighteen inch policy was determined to be invalid by the trial court, it would submit another revision to seek removal of the language.

When the trial court affirmed the decision of the ALJ that the DNR could not impose a general minimum soil replacement depth of eighteen inches for all cropland without having formally promulgated such a rule,³ Peabody sought a revision to the permits at issue here to reduce the amount of soil it had to replace after mining. In essence, Peabody sought to remove and replace only the topsoil, which varied from eight to twelve inches, not the subsoil. After reviewing Peabody's revision applications, the DNR denied the applications in four separate, but virtually identical letters. In each of the four letters, the DNR wrote:

The applicant proposes to restore an average of 8 to 12 inches of topsoil on graded cast overburden for all nonprime farmland areas. Based upon the information available to the Director, the Director finds in this specific case, a soil replacement of 8 to 12 inches is inadequate to comply with the land capability restoration and revegetation requirements of 310 IAC 12-5. Therefore, the Director has made a special finding that it is appropriate with respect to this particular case to require a portion of the subsoil be removed and segregated, and redistributed in accordance with 310 IAC 12-5-12.1 since he finds such subsoil layers are necessary to comply with the land capability restoration and revegetation requirements of 310 IAC 12-5.

Record, pp. 903, 905, 913, 917.

Peabody petitioned for administrative review of the DNR's denial of its requests to reduce soil replacement depths. On April 14, 1998, the ALJ made the following findings, in pertinent part:

(15) As specified in IC XX-XX-XX-X(b)(3), one of the duties of an operator is to `[r]estore the land affected to a condition capable of supporting the uses that the land was capable of supporting before mining or higher or better uses.'

(16) The clear statutory purpose of Indiana SMCRA is to require an operator to reclaim land to as `good or better shape as it was prior to mining.' JH & L Coal Company, d/b/a Miller Mining v. Department of Natural Resources, 7 Caddnar 28 (1994). To that end, unless a site is restored to the same use as existed prior to mining, the site must be restored to a higher and better use. A corollary is that the approved postmining land use for a particular site is either the same as, or better than, the premining land use.

(17) The `special finding' made by the DNR for the subject permits requires a two-prong standard be met in order for an operator not to provide 18 inches as a standard soil replacement. Reference is made both to `land capability restoration' and to `revegetation' requirements.

(18) ... compliance with the revegetation requirements for the approved postmining land use is a cornerstone of Indiana SMCRA. Since the approved postmining land use is either the same as or better than the premining land use, compliance with the revegetation requirements assures an operator must reclaim the land to as good as or a better condition than existed prior to mining.

(19) In the Peabody cases, the approved postmining land use is cropland. Revegetation requirements must be measured within the context of cropland....

(20) No general `land capability' standard is set forth in 310 IAC 12-5-12.1(f), however, apart from the revegetation requirements in 310 IAC 12-5-59, 61, 62, 63, and 64.1. Soil replacement, land use, and revegetation are inextricable. Attainment of the approved postmining land use, as demonstrated by compliance with the revegetation requirements for that land use, insure that the land will be restored to a condition capable of supporting that use. 310 IAC 12-5-68 requires an operator reclaim either to the land use which existed prior to mining or to another approved `higher and better use.' Section 68 does not require an operator to establish `land capability' of the approved postmining land use, as well as a variety of other land uses. The `land capability' of the two-prong test sought to be established by the DNR in the `special finding' is not supported by Indiana SMCRA.

(21) The documentation listed by the DNR in support of each `special finding' is general and pervasive. Soil types are listed. Literature is listed. Nowhere does the DNR provide findings which are derived from specific postmining land uses. The broad sweep of these `special findings' precludes administrative review. The broad sweep of these `special findings' does not comport with the narrow, precise strokes anticipated by the regulatory structure and embodied most directly by 310 IAC 12-5-12.1(f).

(21) [sic] The DNR has the burden of going forward to show under 310 IAC 12-5-12.1(f) that the land to be reclaimed under the subject permits embodies those `limited circumstances' where additional soils from subsoil layers are needed to comply with the revegetation requirements of 310 IAC 12-5 for the approved postmining land use. The documentation in the record fails to meet the burden because it fails to provide the site specificity anticipated by 310 IAC 12-5-12 .1(f). The documentation in the record also fails to meet the burden because it applies a standard not set forth in 310 IAC 12-5-59, 61, 62, 63 or 64.1 for approved postmining land uses. The DNR's `special finding' exemplified by Permit S-246 is a template which could be applied to all non-prime farmland, resulting in universal application of the 18-inch soil replacement minimums. Public policy may support a universal 18 inch soil replacement minimum, but if so, it is a public policy properly embodied by rule or statute.

Record, pp. 980-981. The ALJ's final order is as follows:

Each of the permits at issue ... is remanded to the [DNR] so that it may determine whether portions of the subsoil should be removed and segregated, stockpiled and redistributed as subsoil in accordance with 310 IAC 12-5-12.1(d) and (e), where the portions are necessary to comply with the revegetation requirements of 310 IAC 12-5-59, 310 IAC 12-5-61, 310 IAC 12-5-62, 310 IAC 12-5-63, and 310 IAC 12-5-64.1. Any determination must be site specific and must include soil analysis by a qualified professional which demonstrates that soil replacement, in addition to existing topsoil, is needed to achieve the revegetation requirements of the approved postmining land use.

Record, p. 982.

The DNR appealed the decision of the ALJ, contending that the ALJ had erroneously placed the burden on the DNR to show that additional soils from...