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National Mining Association v. Scarlett

May 4, 2006

NATIONAL MINING ASSOCIATION, PLAINTIFF
v.
LYNN SCARLETT, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Richard W. Roberts United States District Judge

MEMORANDUM OPINION

Plaintiff National Mining Association ("NMA") challenges as arbitrary, capricious, or otherwise inconsistent with the law the 1999 final rule of the Office of Surface Mining Reclamation and Enforcement ("OSM") and the Secretary of the Interior ("Secretary")*fn1 interpreting "valid existing rights" under the Surface Mining Control and Reclamation Act of 1977 ("SMCRA" or "the Act"), 30 U.S.C. §§ 1201 et seq., which prohibits new surface coal mining operations on specified lands subject to valid existing rights. NMA alleges that the final rule improperly limits the circumstances under which valid existing rights will be recognized, contrary to clear Congressional intent. NMA has moved for summary judgment, and the Secretary and OSM, and intervenor-defendants, have cross-moved for summary judgment. Because NMA has failed to show that the 1999 final rule is contrary to the clear intent of Congress, arbitrary, capricious, or otherwise inconsistent with the law, NMA's motion for summary judgment will be denied. Moreover, because the Secretary's interpretation of valid existing rights is a permissible construction of the statute and the agency reviewed all the relevant data in reaching its conclusion, defendants' and intervenor-defendants' motion for summary judgment will be granted.

BACKGROUND

The SMCRA was passed in 1977 as "a comprehensive statute designed to 'establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.'" Hodel v. Virginia Surface Mining and Reclamation Assoc., 452 U.S. 264, 268 (1981) ("VSMRA") (quoting 30 U.S.C. § 1202(a)). Congress sought to "strike a balance between protection of the environment and agricultural productivity and the Nation's need for coal as an essential source of energy." 30 U.S.C. § 1202(f). Section 522(e) of the Act prohibits new surface coal mining operations on certain lands directly declared by Congress to be unsuitable for mining.*fn2 30 U.S.C. § 1272(e)(1)-(5); see also Nat'l Wildlife Fed. v. Hodel, 839 F.2d 694, 749 (D.C. Cir. 1988). However, the prohibition of new mining operations on these lands is "subject to valid existing rights." Id. Congress failed to define or elaborate on the meaning of "valid existing rights" in the statutory language of the SMCRA or in its legislative history. See Nat'l Wildlife Fed. v. Hodel, 839 F.2d at 749. The meaning of valid existing rights in the SMCRA has been the subject of extensive litigation since the passage of the Act, and in 1999, OSM promulgated the latest iteration of regulations defining the phrase. See Valid Existing Rights, 64 Fed. Reg. 70766, 70766-838 (Dec. 17, 1999).

I. REGULATORY HISTORY

A. 1979 Regulation

OSM first promulgated a final rule defining valid existing rights for SMCRA § 522(e) in 1979. This first final rule provided that, except for haul roads, [valid existing rights] included only those property rights in existence on August 3, 1977, the owners of which either had obtained all necessary permits for the proposed surface coal mining operation on or before August 3, 1977 (the 'all permits' standard), or could demonstrate that the coal for which the exception was sought was both needed for and immediately adjacent to a surface coal mining operation in existence on August 3, 1977 (the 'needed for and adjacent to' standard).

64 Fed. Reg. at 70769-70 (citing 44 Fed. Reg. 14902, 15342 (Mar. 13, 1979)). Several plaintiffs challenged the adoption of the "all permits" standard defining valid existing rights, arguing, among other things, that the standard was contrary to Congressional intent to preserve state law property rights, that it constituted an unconstitutional taking, and that it was arbitrary and capricious. See In re Permanent Surface Mining Regulation Litigation, 14 Env't Rep. Cas. (BNA) 1083, 1090-91 (D.D.C. Feb. 26, 1980) ("PSMRL I"). The district court remanded the regulation back to OSM explaining that the "all permits" standard must also include individuals who had not yet obtained all permits but had made a good-faith attempt to do so. Id. at 1091. The PSMRL I court did not reach the question of Congressional intent explaining that the Secretary had conceded that Congress intended valid existing rights "to encompass property rights recognized as valid under state case law." Id. at 1090. The court also declined to reach the takings challenge to the "all permits" standard because the plaintiffs' claim was "hypothetical" and did not present the court with sufficient facts to decide the issue. Id. at 1091. On appeal, because the government informed the court it was reconsidering the 1979 rule, the D.C. Circuit remanded the case to the district court. In so doing, the D.C. Circuit explained that the district court judgment should not be considered final and that the issues and arguments raised should be considered during the planned regulatory revision process. 64 Fed. Reg. at 70770 (citing In re Permanent Surface Mining Regulation Litigation, No. 80-1810, Order of Remand (D.C. Cir. Feb. 1, 1983). (See Pl.'s Stmt. of Material Facts ¶ 16.) In 1980, OSM suspended the 1979 final rule and announced that in the interim period the agency would interpret valid existing rights to include a property rights holder who had obtained all permits or had made a good faith effort to obtain all permits. 64 Fed. Reg. at 70770. (See Pl.'s Stmt. of Material Facts ¶ 17.) This standard has come to be known as the "good faith/all permits" standard. Id.

B. 1983 Regulation and 1986 Suspension Notice

In 1983, OSM issued a final rule adopting a "takings" standard for valid existing rights. The rule provided that a valid existing right would exist for an area protected under section 522(e) of the Act on August 3, 1977, if the application of any of the prohibitions contained in that section to the property interest that existed on that date would effect a taking of the person's property which would entitle the person to just compensation under the Fifth and Fourteenth Amendments to the United States Constitution. (Pl.'s Stmt. of Material Facts ¶ 22) (quoting 30 C.F.R. § 761.5 (1983).) See 64 Fed. Reg. at 70770. In settling on this rule, OSM rejected all six rules, including a "good faith/all permits" standard, that it had proposed in 1982. 64 Fed. Reg. at 70770. (See Pl.'s Stmt. of Material Facts ¶ 20.) Several plaintiffs challenged the final rule arguing that the rule was so different from the various proposed rules that the agency was required to have an additional period for notice and comment. In re: Permanent Surface Mining Litigation, 22 Env't Rep. Cas. (BNA) 1557, 1558-59 (D.D.C. Mar. 1, 1985) ("PSMRL II"). The PSMRL II court agreed and remanded the rule to the agency. Id. at 1559, 1567. In a 1986 suspension notice, OSM rescinded the rule in order to comply with the court's order and reinstated the "good faith/all permits" standard. 64 Fed. Reg. at 70770. (See Pl.'s Stmt. of Material Facts ¶ 26.)

C. 1988 and 1991 Rulemaking and the Energy Policy Act of 1992

In 1988, OSM proposed, but later withdrew to allow further study, a rule defining valid existing rights as including the "good faith/all permits" standard and an "ownership and authority" standard under which valid existing rights could be established by demonstrating ownership of the coal and authority to mine it according to applicable state law. 64 Fed. Reg. 70770-71. (See Pl.'s Stmt. of Material Facts ¶ 27-34.) In 1990, OSM and the University of Kentucky College of Law cosponsored a symposium on the meaning of valid existing rights in § 522(e) of the SMCRA. 64 Fed. Reg. at 70771. See generally Symposium on Valid Existing Rights, 5 J. of Min. L. & Pol'y 381 (1990). "The participants [of the symposium] provided extensive analyses of takings jurisprudence and case law related to [valid existing rights], but they did not reach a consensus on how to determine [those rights]." 64 Fed. Reg. at 70771. Still seeking to comply with the court's order in PSMRL II, in 1991, OSM proposed to define valid existing rights as including the "takings" standard, the "good faith/all permits" standard, and the "needed for and adjacent to" standard. 64 Fed. Reg. at 70771. (See Pl.'s Stmt. of Material Facts ¶ 40.)

Before OSM promulgated a final rule, Congress enacted and the President signed the Energy Policy Act of 1992, directing the Secretary to interpret valid existing rights as set forth in the 1986 suspension notice that had adopted the "good faith/all permits" standard. See Pub. L. No. 102-486, 206 Stat. 2776 (1992). The Energy Policy Act of 1992 expired on October 23, 1993. However, the "good faith/all permits" standard continued as the regulatory standard for valid existing rights through October 1, 1995 because Congress placed moratoriums on publication of a new final rule on the definition of valid existing rights. See, e.g., Department of the Interior and Related Agencies Appropriations Act, Pub. L. No. 103-332, 108 Stat. 2499 (1995); see also 64 Fed. Reg. at 70771.

D. 1999 Regulation

In 1997, after evaluating the comments received on the 1991 proposed rule, OSM withdrew the rule and proposed a rule defining valid existing rights with the "good faith/all permits" standard. See Valid Existing Rights, 42 Fed. Reg. 4836 (Jan. 31, 1997). In December 1999, the agency promulgated a final rule by largely adopting its proposed rule. Under the rule, a person can establish valid existing rights by demonstrating a property right under applicable state law existing at the time the land came under protection of the SMCRA that vests the person with the right to conduct the intended type of surface coal mining intended, and (1) by having acquired or made a good-faith effort to acquire all necessary permits to conduct mining before the land came under protection of the act, or (2) demonstrating that the land is needed for and immediately adjacent to a surface coal mining operation. See 30 C.F.R. 761.5. The rule also recognizes valid existing rights for use or construction of roads on protected land under certain circumstances. Id.

II. THE RULEMAKING PROCESS FOR THE 1999 FINAL RULE

During the rulemaking process for the 1999 final rule, OSM considered several alternative definitions of valid existing rights, weighed the environmental impact of each alternative and considered the legislative history of SMCRA ยง 522(e), relevant litigation and case law, and comment letters before ...


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