Indiana Dept. of Natural Resources v. Krantz Bros. Const. Corp.

• Decision Date: 20 November 1991
• Docket Number: No. 87A04-9104-CV-126,87A04-9104-CV-126
• Parties: INDIANA DEPARTMENT OF NATURAL RESOURCES, and Indiana Natural Resources Commission, Appellants-Defendants, v. KRANTZ BROTHERS CONSTRUCTION CORP., Appellee-Plaintiff. 1 .
• Court: Indiana Appellate Court

Page 935

581 N.E.2d 935

INDIANA DEPARTMENT OF NATURAL RESOURCES, and Indiana Natural Resources Commission, Appellants-Defendants, v. KRANTZ BROTHERS CONSTRUCTION CORP., Appellee-Plaintiff.

No. 87A04-9104-CV-126 ¹.

Court of Appeals of Indiana First District.

Nov. 20, 1991.

Rehearing Denied Jan. 13, 1992.

Linley E. Pearson, Atty. Gen., Myra P. Spicker, Deputy Atty. Gen., Div. of Reclamation, Indianapolis, for appellants-defendants.

John Wissner, Scales, Wissner & Krantz, Boonville, for appellee-plaintiff.

BAKER, Judge.

In 1980, the State of Indiana, to avoid federal assertion of control over Indiana's surface coal mining industry and the environmental management of that industry, enacted the Indiana Surface Coal Mining and Reclamation Act (the Reclamation Act). ² Among the Reclamation Act's other requirements, coal mine operators must obtain permits to engage in surface coal mining and pay fees for the reclamation of land affected by their mining activities. There is an exemption from the permit and fee requirements, however, for "the extraction of coal incidental to the extraction of other minerals where coal does not exceed sixteen and two-thirds percent (16 2/3%) of the tonnage of minerals removed for purposes of commercial use or sale." IND.CODE 13-4.1-1-3(12)(A) (emphasis added). This appeal calls on us to review that exemption, and the touchstone issue before us is whether the phrase "other minerals" includes topsoil. It does not.

HISTORICAL POSTURE

In 1977, after previous attempts in 1973 and 1975, Congress passed, and the President signed, the Surface Mining Control and Reclamation Act (SMCRA). ³ SMCRA is designed to provide a uniform nationwide The heart of SMCRA is the permit, inspection, enforcement, and penalty scheme it creates. 30 U.S.C.A. Secs. 1256-1271 establish detailed procedures and requirements for the acquisition and discharge of surface coal mining permits. Since its inception, however, SMCRA, like the Reclamation Act modeled upon it, has exempted from the definition of "surface coal mining operations," and therefore, from the permit and reclamation fee requirements, "the extraction of coal incidental to the extraction of other minerals where coal does not exceed 16 2/3 per centum of the tonnage of minerals removed for purposes of commercial use or sale." 30 U.S.C.A. Sec. 1291(28)(A).

                program for the reclamation of land affected by surface coal mining operations.  30 U.S.C.A. Sec. 1202.  Uniformity is to be achieved, however, not through direct United States Department of the Interior control of surface mining across the nation, but rather through Interior Department oversight authority over state programs which must be at least as stringent as the federal program.  30 U.S.C.A. Secs. 1253, 1271(d).  If a state fails to develop a program, or fails to develop an acceptable program after the Secretary of the Interior has rejected a proposed program, the state will not obtain permanent regulatory authority, and a federal plan will be imposed.  30 U.S.C.A. Sec. 1254;  Hodel v. Indiana (1981), 452 U.S. 314, 319-20, 101 S.Ct. 2376, 2381, 69 L.Ed.2d 40, 48. 4  Once a state has obtained permanent regulatory authority, it must labor diligently to enforce its approved program vigorously, or the Interior Department will take over enforcement duties.  30 U.S.C.A. Secs. 1254(b), 1271(b).  Indiana achieved permanent regulatory authority, known as "primacy," on July 29, 1982.  See 30 C.F.R. Sec. 914.10 (1991)
                

Into this picture Indiana inserted the Reclamation Act, which is largely a copy of SMCRA. Indeed, the permit exemption under IND.CODE 13-4.1-1-3(12)(A) is an almost verbatim repetition of the permit exemption under 30 U.S.C.A. Sec. 1291(28)(A). In enacting the Reclamation Act, our General Assembly made clear its unequivocal intent to avoid federal control of Indiana surface coal mining and land reclamation. ⁵ See IND.CODE 13-4.1-1-1(4); 13-4.1-1-2(1). Indeed, the first purpose of the Reclamation Act is to implement and enforce SMCRA. Id. Therefore, because our first goal in construing a statute is to give effect to the intent of the legislature, Matter of P.J. (1991), Ind.App., 575 N.E.2d 22, 27 (Baker, J., dissenting) (citing Spaulding v. International Bakers Services, Inc. (1990), Ind., 550 N.E.2d 307), we will look to SMCRA and the federal rules adopted under it as we analyze the Reclamation Act's exemption to the permit requirement.

FACTS

Plaintiff-appellee Krantz Brothers Construction Corp. (Krantz) is the lessee of a parcel of land in Warrick County. ⁶ Since 1986, Krantz has mined the property, removing subsoil, shale, and a large amount of topsoil. There is also a coal vein, though Krantz has not yet removed any coal. In March 1989, the defendant-appellant Indiana Department of Natural Resources (the DNR), through a field inspector, made an initial determination that Krantz needed a coal mining permit, and issued a cessation order requiring Krantz to stop work. Pursuant to the Administrative Adjudication Act (the AAA), ⁷ Krantz requested and received an administrative hearing before an administrative law judge (ALJ) within the DNR. The ALJ found Krantz had not mined any coal before the Krantz had repeatedly expressed an interest in mining the coal vein on the property, and to that end had been involved in the Small Operators' Assistance Program (SOAP) ⁸ before the cessation order was issued. Krantz left SOAP, however, because it decided it was entitled to the IND.CODE 13-4.1-1-3(12)(A) exemption. Accordingly, during protracted negotiations prior to the hearing before the ALJ, Krantz and the DNR discussed Krantz's eligibility for the exemption. The eligibility question was then placed before the ALJ, who found that Krantz had not presented sufficient evidence to qualify for the exemption.

cessation order was issued, and therefore dissolved the order.

The evidence before the ALJ reveals Krantz did not provide the DNR with information concerning whether any, or how much, of the mined topsoil and other materials had in fact been sold or used commercially. Moreover, Krantz presented no substantiating evidence to show the price received for any of those materials which might have been sold.

The Natural Resources Commission (the Commission) affirmed and adopted the ALJ's decision as a final agency determination. On August 21, 1990, Krantz timely filed its complaint for judicial review ⁹ in Warrick Circuit Court to contest the validity of the determination that Krantz had provided insufficient evidence to qualify for the exemption. ¹⁰ The court adopted Krantz's proposed findings of fact and conclusions of law, and reversed the Commission's final order to the extent the final order denied Krantz the exemption. The DNR and the Commission now appeal.

DISCUSSION AND DECISION

I Burden of Proof

The initial issue is whether Krantz or the DNR bears the burden of proof in resolving the question of Krantz's entitlement to the permit exemption. Krantz's proposed findings of fact and conclusions of law, adopted by the trial court, place the burden on the DNR to show why Krantz was not entitled to the permit exemption. This was error.

This case is before us on Krantz's complaint for judicial review of a final agency determination. In such a case, Krantz, as the party seeking agency action, bears the burden of proof in all stages of the agency proceeding. IND.CODE 4-21.5-3-14(c); Peabody Coal Co. v. Ralston (1991), Ind.App. 578 N.E.2d 751, 753. Moreover, Krantz, as a party seeking the benefit of an exemption to a general requirement, is confronted with the general rule that a party claiming an exemption must demonstrate it meets the terms of that exemption. See Storen v. Jasper County Farm Bur. Co-op Ass'n (1936), 103 Ind.App. 77, 79, 2 N.E.2d 432, 433 (if any exemption statute is ambiguous, it must be strictly construed against the party seeking the exemption). ¹¹ Krantz bore the burden of showing it was entitled to the exemption, and the trial court erred in requiring the DNR to show why Krantz should not receive the exemption.

II The Permit Exemption

The parties' confusion and difficulties with this case are understandable. The language of 30 U.S.C.A. Sec. 1291(28)(A) exempting from the permit requirement "the extraction of coal incidental to the extraction of other minerals where coal does not exceed 16 2/3 per centum of the tonnage of minerals removed for purposes of commercial use or sale" is largely undefined within SMCRA. Though this language requires a great deal of definition In May 1984, OSM published a set of proposed rules along with a set of guidelines for the implementation of the exemption during the comment and hearing period leading up to the promulgation of final rules. See Extraction of Coal Incidental to the Extraction of Other Minerals, 49 Fed.Reg 89, 19336 (1984). It was not until December 1989, however, that OSM settled on the final rules, which took effect in 1990. See Extraction of Coal Incidental to the Extraction of Other Minerals, 54 Fed.Reg. 243, 52092 (1989). ¹² During the interim, the DNR was left in a difficult position, operating under the known possibility of federal intervention with only a set of guidelines for assistance. In any event, the guidelines and the decisional law applying 30 U.S.C.A. Sec. 1291(28)(A) have always required the petitioner for the exemption to offer some probative evidence concerning the nature and disposition of the non-coal materials removed for commercial use or sale. See United States v. Beaird Coal Co., Inc. (11th Cir.1987), 825 F.2d 1471, cert. denied (1988), 484 U.S. 1009, 108 S.Ct. 706, 98 L.Ed.2d 656 (parties stipulated to operator's production figures and operator provided additional figures); S & G Excavating, Inc., supra, note 2 (operator provided production figures); ¹³ Alabama Surface Mining Reclamation Comm'n v. Cordova Clay Co., Inc. (1983), Ala.Civ.App., 434 So.2d 283 (parties stipulated production figures). ¹⁴

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