Indiana Dept. of Natural Resources v. Peabody Coal Co.

• Decision Date: 28 July 1995
• Docket Number: No. 87A05-9402-CV-53,87A05-9402-CV-53
• Citation: 654 N.E.2d 289
• Parties: INDIANA DEPARTMENT OF NATURAL RESOURCES, Appellant-Respondent, v. PEABODY COAL COMPANY, Appellee-Petitioner.
• Court: Indiana Appellate Court

Page 289

654 N.E.2d 289

INDIANA DEPARTMENT OF NATURAL RESOURCES, Appellant-Respondent, v. PEABODY COAL COMPANY, Appellee-Petitioner.

No. 87A05-9402-CV-53.

Court of Appeals of Indiana.

July 28, 1995.

Pamela Carter, Atty. Gen., Myra P. Spicker, Deputy Atty. Gen., Indianapolis, for appellant.

David R. Joest, Peabody Coal Co., Henderson, KY, for appellee.

OPINION

RUCKER, Judge.

The Department of Natural Resources issued a citation to Peabody Coal Company for alleged violations of certain provisions of the Indiana Surface Mining Control and Reclamation Act. An Administrative Law Judge affirmed the violations and on review the trial court set aside the decision. The DNR now appeals raising five issues which we consolidate and rephrase as follows:

1) Did the trial court err in determining the ALJ misconstrued 310 IAC 12-5-62 which by its terms applies to "regraded and topsoiled areas."

2) Did the trial court err in holding the ALJ's decision, which found Peabody in violation of 310 IAC 12-5-12.1 and 310 IAC 12-5-56.1, was arbitrary and capricious.

We affirm in part and reverse in part.

Peabody Coal Company (Peabody) conducts surface coal mining and reclamation operations at its Lynville mine in Warrick County, Indiana under a permit issued by the Department of Natural Resources (DNR). The permit was issued pursuant to the Indiana Surface Mining Control and Reclamation Act (the "Act") I.C. §§ 13-4.1-1-1 to 15-14. By terms of the Act and regulations promulgated thereunder, operators must salvage topsoil before mining and replace the topsoil after mining as part of the reclamation process. In some instances it is not possible to salvage and then replace topsoil because there is none present. This occurs where the area was mined before the salvaging and replacing of topsoil were required. These areas must be reclaimed using material other than topsoil. Part of the area at issue in this case had been previously mined. And under the terms of its permit, Peabody was reclaiming the area with the best available materials consisting of a "mixture of shale and unconsolidated material." Record at 15.

On March 31, 1992, a DNR inspector observed erosion at the Lynville mine in an area identified as the north/south final cut impoundment. Based upon her observations, the inspector issued a Notice of Violation (NOV) to Peabody for "[f]ailure to protect and stabilize replaced topsoil and approved topsoil substitutes to effectively control erosion." Record at 24. Peabody was cited for violating the terms of its permit as well as violating five specific regulatory provisions. Peabody then sought administrative review. An Administrative Law Judge (ALJ) determined that Peabody had not violated its permit, nor one of the regulatory provisions for which Peabody had been cited. However, the ALJ affirmed the violations of the following regulatory provisions: 310 IAC 12-5-62; 310 IAC 12-5-12.1(e)(1)(iii); 310 IAC 12-5-56.1(a); and Ind.Code § 13-4.1-8-1(4). Thereafter, Peabody sought judicial review. After conducting a hearing the trial court entered an order vacating the ALJ's decision. The trial court's order was supported by findings of fact and conclusions of law which dictated among other things: 1) 310 IAC 12-5-62 applies only to areas covered by topsoil and thus the ALJ improperly applied this regulation because shale and not topsoil was used in reclaiming the land; 2) the ALJ's decision construing 310 IAC 12-5-12.1(e) and 310 IAC 12-5-56.1 was arbitrary and capricious in that the decision contravened other ALJ decisions. The DNR now appeals.

Judicial review of an administrative decision is limited to determining whether the agency possessed jurisdiction over the subject matter, and whether the agency's decision was made pursuant to proper procedures, was based upon substantial evidence, was not arbitrary or capricious, and was not in violation of any constitutional, statutory or legal principle. State Bd. of Tax Comm'rs v. Jewell Grain Co., Inc. (1990), Ind., 556 N.E.2d 920, 921.

I.

The ALJ determined that Peabody violated 310 IAC 12-5-62 which provides in relevant part: "Revegetation: Mulching and Other Soil Stabilizing Practices. (a) Suitable mulch or other necessary soil stabilizing practices shall be used on all regraded and topsoiled areas...." (emphasis added). On review, the trial court held that the ALJ misconstrued this provision because Peabody used shale rather than topsoil to reclaim the area. Topsoil is specifically defined by the regulatory codes, see 310 IAC 12-0.5-133, and does not include shale. DNR does not contend the materials Peabody used to reclaim the area surrounding the final cut satisfy the statutory definition of topsoil. Rather, DNR argues that because 310 IAC 12-5-62 was adopted to facilitate restoration of vegetation to a mined area, the word "topsoil" applies to any medium in which vegetation will grow.

The rules applicable to construction of a statute apply as well to construction of an administrative regulation. Indiana Dep't of Pub. Welfare v. Payne (1993), Ind., 622 N.E.2d 461, 465, reh'g denied; Peabody Coal Co. v. IDNR (1994), Ind.App., 629 N.E.2d 925, 930, reh'g denied. Therefore just as we are bound by the definition of a word specifically defined by statute, we are also bound by the definitions in regulations regardless of other possible meanings attributed to the defined word. Tillman v. Snow (1991), Ind.App., 571 N.E.2d 578, 580. In this case, because "topsoil" is defined by regulation, we are bound by the definition and may not assign additional meanings to the term. See Peabody, 629 N.E.2d at 930; Tillman, 571 N.E.2d at 580. The trial court properly determined that 310 IAC 12-5-62 did not apply to the facts of this case.

DNR counters that notwithstanding the definition of the term "topsoil," Peabody nonetheless violated 310 IAC 12-5-62 because the area surrounding the final cut did contain some amount of topsoil which was eroding. Thus, according to DNR, mulching and soil stabilization was required in the affected areas. DNR's claim on this point amounts to an invitation for this court to reweigh the evidence. It is the role of the agency to act as fact finder in an administrative proceeding and as a reviewing court, we do not substitute our judgment on factual matters for that of the agency. Peabody Coal Co. v. IDNR (1994), Ind.App., 640 N.E.2d 435, reh'g denied; IDNR v. United Refuse Co. (1993), Ind., 615 N.E.2d 100, 104; I.C. § 4-21.5-3-27(b). We are bound by the facts as found by the administrative agency and may not reweigh the evidence or judge the credibility of witnesses. Public Service Co. of Indiana, Inc. v. Review Bd. (1983), Ind.App., 451 N.E.2d 371, 374. Administrative findings of fact will not be reversed unless it conclusively appears the evidence upon which the decision was made was devoid of probative value or so proportionately inadequate that the finding could not rest on a rational basis. Indiana Alcoholic Beverage Comm'n v. River Road Lounge (1992), Ind.App., 590 N.E.2d 656, 658, trans. denied.

The ALJ heard conflicting evidence concerning which areas around the final cut impoundment contained topsoil and whether Peabody had mulched these areas. Based upon this evidence, the ALJ found only that "[m]uch of the surface in this area is alternative material (mostly shale), not top soil." Record at 48. The ALJ did not find that topsoil composed part of the surface area which was eroding. The DNR does not contend nor does the record reveal that the evidence upon which the ALJ's decision was based was devoid of probative value or so proportionately inadequate that the finding could not rest on a rational basis. Rather, DNR relies upon on an additional fact not found by the ALJ, namely, that topsoil composed part of the surface area which was eroding. We decline the invitation to reweigh the evidence. There is no error here.

II.

DNR next contends the trial court erred in holding that Peabody was not in violation of Ind.Code § 13-4.1-8-1(4), 310 IAC 12-5-12.1 and 310 IAC 12-5-56.1. Contrary to DNR's contention the trial court did not hold that Peabody was not in violation of I.C. § 13-4.1-8-1(4). In fact the trial court made no specific finding concerning this statute. Also, as Peabody correctly points out, the trial court did not hold that Peabody was not in violation 310 IAC 12-5-12.1 and 310 IAC 12-5-56.1. Rather, the trial court determined only that the ALJ's order was arbitrary and capricious because the ALJ construed the two provisions in a manner inconsistent with prior DNR administrative decisions and did not explain or justify the inconsistency. DNR counters the trial court also indicated "[t]he Administrative Law Judge's decision is arbitrary and capricious insofar as it holds that [Peabody] violated 310 IAC 12-5-12.1 and 12-5-56.1." Record at 366. According to DNR it is unclear from this sentence whether the arbitrary and capricious language "simply referred to an alleged 'inconsistency' with previous ALJ decisions or whether this was a flat-out finding by the trial court of non-violation." Reply Brief of Appellant at 4. DNR reads too much into this single sentence which appears as the last sentence of the trial court's Conclusion of Law number six. That conclusion sets forth in some detail why the trial court believed the ALJ's decision was arbitrary and capricious, namely, inconsistency with prior DNR administrative decisions. The final sentence simply reaffirmed that point.

In any event, citing Community Care Centers, Inc. v. Indiana Dep't of Public Welfare, (1988) Ind.App., 523 N.E.2d 448, Peabody argues the trial court properly determined the ALJ's order was arbitrary and capricious. In that case the Indiana Department of Public Welfare denied a nursing home operator's request for an adjustment of the Medicaid rate base. Appealing from an adverse administrative ruling as well as an adverse trial court ruling, the nursing home operator...