M.L. Johnson Family Props., LLC v. Zinke, CIVIL NO. 7:16–CV–6–KKC

• Court: United States District Courts. 6th Circuit. United States District Court of Eastern District of Kentucky
• Writing for the Court: KAREN K. CALDWELL, CHIEF JUDGE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY
• Citation: 298 F.Supp.3d 1014
• Parties: M.L. JOHNSON FAMILY PROPERTIES, LLC, Plaintiff, v. Ryan ZINKE, Secretary of the Interior, Defendant, and Premier Elkhorn Coal LLC, Defendant–Intervenor.
• Docket Number: CIVIL NO. 7:16–CV–6–KKC
• Decision Date: 21 March 2018

298 F.Supp.3d 1014

M.L. JOHNSON FAMILY PROPERTIES, LLC, Plaintiff,
v.
Ryan ZINKE, Secretary of the Interior, Defendant,
and
Premier Elkhorn Coal LLC, Defendant–Intervenor.

CIVIL NO. 7:16–CV–6–KKC

United States District Court, E.D. Kentucky, Southern Division—Pikeville.

Signed March 21, 2018

298 F.Supp.3d 1016

Walton D. Morris, Jr. Pro Hac Vice Morris Law Office, P.C. Charlottesville, VA Bethany Nicole Baxter, Joe F. Childers, Joe F. Childers & Associates, Lexington, KY, Mary Varson Cromer, Appalachian Citizens' Law Center—Whitesburg, Whitesburg, KY, for Plaintiff

Rebecca Jane Jaffe, U.S. Department of Justice—7611 Environment & Natural Resources, Washington, DC, Thomas Lee Gentry, U.S. Attorney's Office, EDKY, Lexington, KY, Sarah Izfar, U.S. Department of Justice, ENRD, Washington, DC, for Defendant

Daniel H. Leff, Pro Hac Vice, Crowell & Moring, LLP—DC, Washington, DC, Charles J. Baird, David L. Baird, Baird & Baird, PSC, Pikeville, KY, for Defendant–Intervenor.

OPINION AND ORDER

KAREN K. CALDWELL, CHIEF JUDGE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY

A plot of land known as Tract 46 in Pike County, Kentucky has valuable coal and two owners who cannot agree on how it should be used. One cotenant, Pike–Letcher

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Land Company ("PLLC"), has conveyed the right to enter and surface mine coal to its affiliate Premier Elkhorn Coal LLC. The other cotenant, M.L. Johnson Family Properties, LLC, has not consented to mining. Over Johnson LLC's objection, Kentucky has granted Elkhorn a right of entry to surface mine Tract 46. Johnson LLC challenged that decision before the Secretary of the Interior and now seeks review of the administrative decision that permitted Elkhorn to commence mining operations. For the reasons discussed below, the Court affirms the Secretary's decision.

I. Statutory and Regulatory Framework

Coal companies must comply with certain minimum requirements before mining a surface estate. Those requirements are set forth in the Surface Mining Control and Reclamation Act of 1977 ("SMCRA"). 30 U.S.C. § 1201 et seq. SMCRA's regulatory requirements are primarily implemented through a permitting regime. 30 U.SC. § 1256(a) ("[N]o person shall engage in or carry out on lands within a State any surface coal mining operations unless such person has first obtained a permit issued by such State pursuant to an approved State program or by the Secretary pursuant to a Federal program ...."). As § 1256(a) suggests, regulatory power under SMCRA is not solely vested in the federal government. Instead, states which "wish[ ] to assume exclusive jurisdiction over the regulation of surface coal mining" are invited to submit to the Secretary a state program "which demonstrates that such State has the capability of carrying out the provisions of this chapter and meeting its purposes." 30 U.S.C. § 1253(a). This system of "cooperative federalism" sets SMCRA as a national floor for regulation of surface mining, but permits state's to develop more demanding regulatory regimes. Kentuckians for the Commonwealth v. U.S. Army Corps of Eng'rs , 746 F.3d 698 (6th Cir. 2014) (citing Hodel v. Va. Surface Mining & Reclamation Ass'n , 452 U.S. 264, 289, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981) ). Once a state submits and receives approval of its state program, SMCRA's grant of "exclusive jurisdiction" means that state law, not federal law, governs surface mining within the state. See Bragg v. W. Va. Coal Ass'n , 248 F.3d 275, 295 (4th Cir. 2001) ; see also In re Permanent Surface Min. Regulation Litig , 653 F.2d 514, 519 (D.C. Cir. 1981) (en banc) ("[I]t is with an approved state law and with state regulations consistent with the Secretary's that surface mine operators must comply. Administrative and judicial appeals of permit decisions are matters of state jurisdiction in which the Secretary plays no role.") (internal citations omitted).

SMCRA's grant of exclusive jurisdiction to state regulatory authorities contains an important exception. The Office of Surface Mining Reclamation and Enforcement ("OSMRE") retains authority to conduct a federal inspection of an existing mine if (i) there is reason to believe a permitee is in violation of a state program requirement or permit condition, (ii) OSMRE has provided notice of the suspected violation to the state, and (iii) the state fails to take corrective action or show good cause for the failure within ten days.¹ 30 U.S.C. § 1271(a)(1). If, after conducting an inspection, OSMRE determines that a permitee is in violation of a program requirement or permit condition, and that violation "creates an imminent danger to the health or safety of the public,

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or is causing, or can reasonably be expected to cause significant, imminent environmental harm to land, air, or water resources," the Secretary must "immediately order a cessation of surface coal mining" operations. Id. § 1271(a)(2).² A cessation order may only remain in effect until OSMRE "determines that the condition, practice, or violation has been abated, or until modified, vacated, or terminated by [OSMRE]." Id. ; see 30 C.F.R. § 843.11(f).

Kentucky received the Secretary's approval of its state program in May 1982 and the Kentucky Department of Natural Resources and Environmental Protection was deemed the Commonwealth's regulatory authority for surface coal mining. 30 C.F.R. § 917.10 ; see generally Ky. Rev. Stat. Ch. 350; 405 Ky. Admin. Reg. Ch. 1–30. Kentucky's permitting requirements largely mirror those set forth in the federal statute and implementing regulations. See Ky. Rev. Stat. 350.060 ; 405 Ky. Admin. Regs. 8:001 et seq. Having had its state program approved, changes to Kentucky law or regulations that "affect the implementation, administration, or enforcement of the approved State program" cannot "take effect for purposes of a State program until approved as an amendment" by the Secretary. 30 C.F.R. § 732.17(b), (g).

SMCRA sets forth the minimum national requirements for establishing a valid right of entry in order to receive surface mining permit approval:

No permit or revision application shall be approved unless the application affirmatively demonstrates ... that—

(6) in cases where the private mineral estate has been severed from the private surface estate, the applicant has submitted to the regulatory authority—

(A) the written consent of the surface owner to the extraction of coal by surface mining methods; or

(B) a conveyance that expressly grants or reserves the right to extract the coal by surface mining methods; or

(C) if the conveyance does not expressly grant the right to extract coal by surface mining methods, the surface-subsurface legal relationship shall be determined in accordance with State law: Provided , That nothing in this chapter shall be construed to authorize the regulatory authority to adjudicate property rights disputes.

30 U.S.C. § 1260(b)(6)(A)-(C). SMCRA's implementing regulation is substantively identical to the statutory language, but is restated to require the applicant to submit documentation that establishes a right to entry under each provision. 30 C.F.R. § 778.15.³ Kentucky's analogous regulation is also restated in terms of the documentation requirements for an application. 405 Ky. Admin. Regs. 8:030 Sec. 4(1)-(3) (2014).⁴ Most pertinent, subsection (C) requires

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the following documentation for severed estates:

If the conveyance does not expressly grant the right to extract the coal by surface mining methods, a copy of the original instrument of severance upon which the applicant bases his right to extract coal by surface mining methods and documentation that under applicable state law, the applicant has the legal authority to extract the coal by those methods.

405 Ky. Admin. Regs. 8:030 Sec. 4(2)(c). The burden to establish compliance with these right of entry provisions falls squarely on the permit applicant. 30 U.S.C. § 1260(a) ("The applicant for a permit, or revision of a permit, shall have the burden of establishing that his application is in compliance with all the requirements of the applicable State or Federal program.").

II. Factual and Procedural Background

The mineral and surface estates of Tract 46 in Pike County, Kentucky have been severed since the early 1900s. The mineral estate is owned by PLLC. The surface estate, which consists of approximately 450 acres, was previously owned by M.L. Johnson, who left an undivided interest to each of his eight heirs. Two of the heirs conveyed their interests to PLLC, while five transferred theirs to Johnson LLC. By fall 2014, the surface estate was owned collectively by Johnson LLC (62.5%), PLLC (25%), and the eighth heir (12.5%) as tenants in common.⁵ PLLC entered into an Original Right of Entry Agreement in 1995, and an Amended Right of Entry Agreement in 2013 with its affiliate Elkhorn, granting it the right to enter and conduct surface mining operations. Johnson LLC has not consented to surface mining on Tract 46.

The Kentucky Cabinet first issued Elkhorn a permit for surface mining operations on Tract 46 in 2003. Elkhorn subsequently sought approval of Amendment #...