Wyatt v. U.S.

• Decision Date: 19 November 2001
• Citation: 271 F.3d 1090
• Parties: (Fed. Cir. 2001) ANNE D. WYATT, EASTERN MINERALS INTERNATIONAL, INC., VAN BUREN MINERALS CORPORATION, MILTON J. BERNOS, JR., NANCY WYATT ZORN, MARY ANNE WYATT, WILSON W. WYATT, JR., and MARTIN P. DUFFY, Executor of Wilson Wyatt, Sr.'s Estate, Plaintiffs-Cross Appellants, v. UNITED STATES, Defendant-Appellant. 99-5054, -5059 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1090

271 F.3d 1090 (Fed. Cir. 2001)

ANNE D. WYATT, EASTERN MINERALS INTERNATIONAL, INC., VAN BUREN MINERALS CORPORATION, MILTON J. BERNOS, JR., NANCY WYATT ZORN, MARY ANNE WYATT, WILSON W. WYATT, JR., and MARTIN P. DUFFY, Executor of Wilson Wyatt, Sr.'s Estate Plaintiffs-Cross Appellants, v. UNITED STATES, Defendant-Appellant.

99-5054, -5059

United States Court of Appeals for the Federal Circuit

DECIDED: November 19, 2001

Appealed from: United States Court of Federal Claims, Judge Robert H. Hodges, Jr. [Copyrighted Material Omitted] Raymond D. Battocchi, Gabeler, Battocchi & Griggs LLC, of McLean, Virginia, argued for plaintiffs-cross appellants. With him on the brief were John R. Powell, and Vicky Ann Paisley. Of counsel on the brief was Walter H. Fleischer, of Washington, DC.

Jeffrey C. Dobbins, Attorney, Environment and Natural Resources Division, Department of Justice, of Washington, DC, argued for defendant-appellant. With him on the brief were Lois J. Schiffer, Assistant Attorney General; Marc A. Smith, and Andrew C. Mergen, Attorneys. Of counsel on the brief was Daniel W. Kilduff, Attorney, Office of the Solicitor, Department of the Interior, of Washington, DC.

Charles F. Lettow, Cleary, Gottlieb, Steen & Hamilton, of Washington, DC, for amicus curiae Cane Tennessee, Inc. Of counsel on the brief were Michael A. Mazzuchi, and Timothy A. Vogel.

Before NEWMAN, BRYSON, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

In this regulatory takings case, the United States appeals the October 6, 1996 and November 25, 1997 judgments of the United States Court of Federal Claims on the issue of liability. Plaintiff Van Buren Mineral Corporation ("Van Buren") cross-appeals the trial court's judgment that its claims are unripe. Plaintiffs Eastern Mineral International, Inc. ("EMI"), Wilson Wyatt, Sr., and Anne D. Wyatt ("the Wyatts") further cross-appeal the trial court's award of damages.¹

After dismissing a variety of the plaintiffs' claims as unripe, the trial court held that the federal government had effected a permanent regulatory taking of the property interests of EMI and the Wyatts. E. Minerals Int'l, Inc. v. United States, 36 Fed. Cl. 541, 552 (1996). The court further held the government liable for the takings, and awarded EMI $15,866,311 and the Wyatts $3,743,766, plus compound interest. E. Minerals Int'l, Inc. v. United States, 39 Fed. Cl. 621, 631 (1997). For the reasons discussed below, we reverse the judgment of the trial court on the issue of liability, and dismiss the cross-appeals as moot.

I. BACKGROUND

This case concerns the administration of the Surface Mining Control and Reclamation Act of 1977 ("SMCRA" or the "Act"), 30 U.S.C. 1201 et seq.. Concerned that "many surface mining operations result in disturbances of surface areas and adversely affect commerce and the public welfare," 30 U.S.C. 1201(b), Congress passed the Act to "establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations." 30 U.S.C 1202(a) (1994). The Act created the Office of Surface Mining Regulation and Enforcement ("OSM") within the Department of the Interior and authorized the Secretary of the Interior ("Secretary") to administer the Act by promulgating regulations and enforcing its provisions. 30 U.S.C. 1211(a), 1211(c) (1994); see also Hodel v. Virginia Surface Mining & Reclamation Ass'n, 452 U.S. 264, 268-69 (1981).

The Act regulates surface coal mining through a two-phase program designed to balance both federal and state interests. See Hodel, 452 U.S. at 289 (describing the Act as establishing "a program of cooperative federalism"). During the initial regulatory phase the federal government promulgates and enforces basic environmental protection standards. These standards include requirements for restoration of land, preservation of topsoil, and protection of the hydrological balance. 30 U.S.C. 1252(c), 1265(b) (1994). The federal standards are complemented by continuing state regulations. States can issue permits for surface mining, but only if the applicant complied with federal interim standards concerning the environmental impact of the proposed mine. Id. 1252(b).

The initial phase is followed by a permanent phase, during which each state adopts its own regulatory program to provide for compliance with the various federal performance standards. Id. 1253(a). The goal of the program is to allow states to tailor their permitting schemes to meet their own needs, within a general framework of federal oversight. If a state's program does not meet basic federal standards, the Secretary is required to step in with his own program for assuring compliance. Id. 1254(b). Under no circumstances may a person engage in surface coal mining without a permit from an appropriate regulatory agency. Id. 1256(a).

The property at issue in this case is located in Bledsoe and Van Buren Counties in southeastern Tennessee, adjacent to the Fall Creek Falls State Park. On December 12, 1975, Wilson Wyatt, Sr. and Anne D. Wyatt sold the property to Milton J. Bernos, Jr. Under the conditions of the sale, as amended, the Wyatts were to receive $4.3 million in installments and retain a 3.5% royalty interest in all coal extracted from the property.

In December 1978, Bernos canceled his contract with the Wyatts. By this time, Bernos had acquired a portion of the property, but the majority remained in the Wyatts' hands. In 1979, the Wyatts sold their remaining interest in the property to Cane Co., Ltd. (later Cane Tennessee, Inc.) ("Cane"). Once again, the Wyatts retained a 3.5% royalty interest in the minerals. Meanwhile, Bernos sold his interest in the property to Colten, Inc. ("Colten"). Colten then immediately entered into a lease with Van Buren, a company wholly owned by Bernos.

Thereafter, Cane granted an exclusive lease to mine the property to EMI, another company wholly owned by Bernos. Although the term of this lease was set to expire on February 28, 1991, EMI had the right to extend the lease term for four ten-year terms upon 180 days notice to Cane. EMI could not, however, exercise the right to extend the lease term after August 1990.

After signing the lease, EMI set out to secure the necessary permits to begin mining the property. On February 4, 1980, the Division of Surface Mining and Reclamation of the Tennessee Department of Conservation ("DSM") issued EMI a one-year permit under DSM's interim regulatory program. As required under the Act, DSM found that the proposed mine would not "adversely affect" the adjacent park. See id. 1272(e)(3). The permit granted EMI permission to disturb thirty-three acres on the property. With the permits in hand, EMI executed a box cut on the property to extract coal from the Sewannee coal seam, and also constructed various "improvements" to the land, including a sediment pond, a backfill area, and various roads. Adhering to the requirements of 30 U.S.C. 1272(e)(5), EMI located the box cut just over 300 feet from the property's boundary with the Fall Creek Falls State Park.

Four months after the permit expired, on June 18, 1981, EMI again applied for a permit from the DSM. On September 14, 1981, DSM granted EMI another one-year permit. After this permit expired, EMI filed another application with DSM for still another permit.² The DSM rejected this permit application on May 8 1984. It found that EMI had not adequately addressed the issues of noise, water quality and subsidence.³ On August 15, 1984, the Tennessee Surface Mining Board of Reclamation affirmed the rejection.

Later that year, OSM determined that Tennessee had not effectively implemented its SMCRA program. Pursuant to its authority under the Act, OSM revoked the state's authority, and assumed control of the Tennessee surface mining regulatory program. At the same time, under the regulations promulgated by the agency, the state retained joint reviewing authority.

OSM reviews permit applications in three stages. First, the agency reviews an application to determine if it is administratively complete. After the agency is satisfied that it has all the necessary information, it conducts a technical review to determine if the proposed mining operation meets all substantive legal requirements. Finally, OSM closes out the application, whereupon it addresses any final legal matters, such as the securing of any bonds.

In October of 1984, EMI applied for a new permit from OSM. In its application, EMI sought to disturb 26.3 acres of the Cane property and mine approximately 4,600 acres of coal. On December 31, 1984, OSM notified EMI that its application was administratively incomplete. After EMI acknowledged and corrected the deficiencies, OSM informed EMI that it would need the approval of the Tennessee DOC if OSM determined that the proposed mine would adversely affect the Fall Creek Falls Park, pursuant to 30 U.S.C. 1272(e)(3).

OSM then commenced its review of EMI's application. On May 30, 1985, OSM issued EMI a technical deficiency letter ("TDL") outlining various concerns about the proposed mine. Among these concerns were the effect of the mine on Cane Creek and the impact of the mine on the "scenic and solitude values of Falls Creek Falls State Park." On June 25, 1985, EMI responded to the TDL with a letter that included little of the information requested by OSM.

In August of 1985, the State of Tennessee exercised its joint-review authority, and objected to the permit application. The state believed that the mine would have adverse environmental impacts on the surrounding area. On December 12, 1985, OSM issued another TDL requiring specific information to satisfy the hydrologic and environmental impact requirements of the Act pursuant to 30 U.S.C. 1257. This TDL contained five pages of specific information necessary for OSM to approve the application. On January 15, 1986, in response to the deficiency letters, EMI sought financial assistance in...