Liabilities of Non-Permit Holders Under the Surface Mining Control and Reclamation Act

Chapter 8 Cite as 16 E. Min. L. Inst. ch. 8 (1997) Liabilities of Non-Permit Holders Under the Surface Mining Control and Reclamation Act Joseph J. Zaluski Lesly A.R. Davis 1 Wyatt, Tarrant & Combs Frankfort, Kentucky Synopsis 8.01. Introduction to the Surface Mining Control and Reclamation Act.... 246 8.02. SMCRA s Legislative History and Purpose.... 246 8.03. SMCRA s Mandates for the Coal Industry.... 248 [1] Overview.... 248 [2] State Primacy.... 250 [3] Noncompliance and Sanctions... 251 [a] Notices of Violation.... 252 [b] Cessation Orders.... 252 [c] Civil Penalties.... 253 [d] Criminal Penalties.... 254 [e] Corporate Violations.... 254 [f] Injunctive Relief.... 255 8.04. Non-Permit Holder Liability Under SMCRA.... 256 [1] Direct Liability for Remediation... 256 [a] Reclamation... 256 [b] Civil, Criminal and Individual Penalties.... 264 [c] Abandoned Mine Land Fees.... 268 [2] Indirect Liability the Federal Applicant Violator System... 276 [a] Statutory and Regulatory Authority... 277 [b] Ownership and Control Case Analysis CONSOL, Inc.... 280 [c] Ownership and Control Case Analysis Coteau Properties Company.... 285 8.05. Conclusion.... 289 1 The authors are indebted to Julie O. McClellan for her assistance.

8.01 EASTERN MINERAL LAW INSTITUTE 8.01. Introduction to the Surface Mining Control and Reclamation Act. The Surface Mining Control and Reclamation Act of 1977 (SMCRA or Act), 2 was implemented by Congress to protect society and the environment from the adverse effects of surface coal mining operations. 3 SMCRA represents a comprehensive federal scheme for controlling surface coal mining and the surface effects of underground mining through permitting, performance and reclamation requirements. To accomplish its goal of protecting the health and safety of the public and of the environment, SMCRA imposes broad-based conditions upon surface and underground coal mining permittees. Pursuant to SMCRA, federal and state regulatory authorities may also impose conditions, and upon violation thereof, liability, upon non-permit holders. This chapter focuses on the liability imposed upon non-permit holders under SMCRA and the state counterparts thereto. 8.02. SMCRA s Legislative History and Purpose. Prior to the enaction of SMCRA in 1977, coal mining and reclamation operations were regulated by individual states. 4 The comprehensiveness and effectiveness of these regulations varied by state. 5 Non-uniform state regulations among coal producing states and a recognition of the environmental and social costs of surface coal mining fueled the passage of federal surface mining legislation. Enaction of a federal surface coal mining act was a legislative milestone. Prior to the passage of SMCRA, Congress failed to produce a comprehensive national coal mining act. After six years of activity, including seven congressional bills, three House and Senate conference reports and two presidential vetoes, President Carter signed SMCRA into law on August 3, 1977. 6 2 Surface Mining Control and Reclamation Act of 1977, Pub. L. No. 95087, 91 Stat. 447 (codified at 30 U.S.C. 1201-1328(1988)). 3 SMCRA 102(a), 30 U.S.C. 1202(a). 4 D. Hunt, 2 Coal Law and Regulation 40.01[1] (1985). 5 Id. 6 Id. at 40.03 (citing S. Rep. No. 128, 95th Cong., 1st Sess. 50 (1977)). 246

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.02 SMCRA represents the first federal legislation to control the impacts of surface mining. The purpose of the Act is to establish an effective nationwide program involving both federal and state regulatory authorities aimed at controlling the adverse effects of surface mining. 7 SMCRA s goals include (1) assuring the rights of surface landowners and others with a legal interest in the land or appurtenances; 8 (2) assuring that surface mining operations are not conducted where reclamation is not feasible; 9 (3) assuring that surface coal mining operations are conducted so as to protect the environment; 10 (4) assuring contemporaneous reclamation; 11 (5) assuring that an adequate coal supply is maintained while protecting the environment; 12 and (6) promoting reclamation of abandoned mine lands. 13 Other goals of SMCRA include assisting states in developing and implementing a program to achieve the purposes of the Act, 14 assuring public participation under the Act, 15 providing for data development and analysis to establish regulation of surface mining operations for other minerals, 16 encouraging full utilization of coal resources through development of underground extraction technologies, 17 and promoting mineral research. 18 SMCRA authorizes exercise of full federal constitutional powers to ensure the protection of the public interest through the control of surface coal mining operations. 19 7 1977 U.S. Code Cong. & Admin. News, 595. 8 SMCRA 102(b), 30 U.S.C. 1202(b). 9 SMCRA 102(c), 30 U.S.C. 1202(c). 10 SMCRA 102(d), 30 U.S.C. 1202 (d). 11 SMCRA 102(e), 30 U.S.C. 1202(e). 12 SMCRA 102(f), 30 U.S.C. 1202(f). 13 SMCRA 102(h), 30 U.S.C. 1202 (h). 14 SMCRA 102(g), 30 U.S.C. 1202 (g). 15 SMCRA 102(i), 30 U.S.C. 1202 (i). 16 SMCRA 102(j), 30 U.S.C. 1202(j). 17 SMCRA 102(k), 30 U.S.C. 1202(k). 18 SMCRA 102(l), 30 U.S.C. 1202(l). 19 SMCRA 102(m), 30 U.S.C. 1202(m). 247

8.03 EASTERN MINERAL LAW INSTITUTE 8.03. SMCRA s Mandates for the Coal Industry. [1] Overview. SMCRA mandates that each person seeking to engage in a surface coal mining and reclamation operation obtain a permit issued by the appropriate regulatory agency. 20 The Act specifies various information which must be included in a surface coal mining permit application. 21 A permit application must include general information related to the permit applicant as well as certain financial and legal information. 22 Permit applications must also include a description of areas that may be impacted by mining activities, 23 as well as a mining operation and reclamation plan. 24 SMCRA also mandates that a permit applicant file a performance bond with the regulatory authority before permit issuance. 25 The bond must be payable to the United States or to the appropriate state and is conditioned upon faithful performance of all requirements of the Act and the permit. 26 The amount of the bond must be sufficient to assure completion of the permittee s reclamation plan. 27 SMCRA establishes uniform standards for the performance of reclamation. These performance standards are applicable to persons conducting coal exploration or surface coal mining and reclamation operations. The purpose of such standards is to ensure that surface coal mining and reclamation operations, as well as coal exploration, are conducted in an environmentally sound manner, bearing in mind the 20 SMCRA 506(a), 30 U.S.C. 1256(a). The appropriate regulatory agency is either the state regulatory agency for those states which have assumed primacy under the Act, or the Secretary of the Interior when a permit program is administered by the federal Office of Surface Mining Reclamation and Enforcement (OSM). Id. See text, infra, 8.03(2) for a discussion of states assuming primacy. 21 SMCRA 507, 508, 30 U.S.C. at 1257, 1258. 22 SMCRA 507(a),(b), 30 U.S.C. 1257(a)(b). 23 SMCRA 507, 508, 30 U.S.C. 1257, 1258. 24 Id. 25 SMCRA 509, 30 U.S.C. 1259(a). 26 Id. 27 Id. 248

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.03 nation s need for coal. Performance standards are divided into several categories, including standards for surface mining activities, 28 underground mining activities, 29 coal exploration operations, 30 auger mining, 31 operations on prime farmland, 32 mountain top removal operations, 33 coal preparation plants not located within the permit area of a mine, 34 and in situ processing. 35 SMCRA further requires that all operators of coal mining operations subject to the Act pay reclamation fees to the Secretary of the Interior. 36 These fees, often referred to as abandoned mine lands (AML) fees, are based on the amount of coal produced. Upon submission of the fee, coal operators must also submit a statement of the amount of coal produced, detailing the method of coal removal and the type of coal removed. 37 The requirements of SMCRA are mandatory. A permittee who fulfills the legal requirements of the Act may file an application with the appropriate regulatory authority for phased releases of a performance bond after reclamation has been completed on the bond area. 38 Releases are based on completion of a three phase reclamation process. 39 Upon completion of each phase of reclamation, the release of a certain percentage of an original bond is granted. 40 28 30 C.F.R. Pt. 816. 29 30 C.F.R. Pt. 817. 30 30 C.F.R. Pt. 815. 31 30 C.F.R. Pt. 819 32 30 C.F.R. Pt. 823. 33 30 C.F.R. Pt. 825. 34 30 C.F.R. Pt. 827. 35 30 C.F.R. Pt. 828. 36 SMCRA 402(a), 30 U.S.C. 1232(a). 37 Id. 38 SMCRA 519, 30 U.S.C. 1269. 39 SMCRA 519, 30 U.S.C. 1269. 40 SMCRA 519(c), 30 U.S.C. 1269(c). 249

8.03 EASTERN MINERAL LAW INSTITUTE [2] State Primacy. In accordance with SMCRA, states may assume primary responsibility for regulating surface coal mining activities within their borders by applying to the Secretary of the Interior for permanent program approval. 41 These states are known as primacy states. States can gain primacy by submitting and obtaining federal program approval. 42 State regulatory programs must be consistent with and in accordance with SMCRA s requirements. 43 In states not adopting permanent regulatory programs, coal mining activities falling under the auspices of SMCRA are regulated by a federal program administered by the Secretary of the Interior through OSM. 44 Tennessee is currently the only coal producing state with exclusive federal regulation and enforcement. 45 OSM also assumes exclusive regulatory authority over mining operations on lands owned by the federal government. Although primacy states assume jurisdiction over surface coal mining and reclamation operations within their borders, it is OSM s responsibility 41 SMCRA 503, 30 U.S.C. 1253. 42 SMCRA 504(e), 30 U.S.C. 1254(e). Twenty-three states currently have primacy: Alabama, Alaska, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Missouri, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Virginia, West Virginia, and Wyoming. 43 SMCRA 503(a), 30 U.S.C. 1253(a). All primacy states have a Memorandum of Understanding (MOU) on file with OSM detailing each state s responsibility for enforcing SMCRA. In the major coal mining states east of the Mississippi, state statutory and regulatory directives relating to implementation of SMCRA are as follows: (1) Kentucky - Ky. Rev. Stat. Ann. Chapter 350; (2) Pennsylvania - 52 Pa. Stat. Ann. Chapter 6 (Pennsylvania Surface Mining Conservation and Reclamation Act); 35 Pa. Stat. Ann. Chapter 5 (Clean Streams Law); 52 Pa. Stat. Ann. Chapter 6 (Bituminous Mine Subsidence and Land Conservation Act); (3) West Virginia - W. Va. Code Chapter 22A, Article 3; (4) Ohio - Ohio Rev. Code Title 15, Chapters 1513 and 1514; (5) Virginia - Code of Virginia, Title 45.1, Chapter 17; (6) Indiana - Indiana Code, Title 13, Article 4.1 (Indiana Surface Coal Mining and Reclamation Act), Indiana Statutes, Title 14, Article 4 (Indiana Strip Mining Acts); and (7) Alabama Code of Alabama, Title 9, Chapter 16, Article 3 (Alabama Surface Mining Control and Reclamation Act). 44 SMCRA 504(a),(b), 30 U.S.C. 1253(a),(b), 30 U.S.C. 1254(a), (b). 45 On April 18, 1984, OSM assumed direct federal enforcement of the Tennessee state regulatory program. 49 Fed. Reg. 15,496 (1984). 250

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.03 to monitor statutory and regulatory compliance in primacy states. OSM fulfills this responsibility through mine site inspections to evaluate the administration of approved state programs. OSM has authority to conduct inspections of any surface coal mining and reclamation operations as are necessary to evaluate the administration of approved state programs.... 46 By virtue of its oversight authority, OSM may compel compliance with the Act in primacy states through the issuance of federal notices of violation, 47 cessation orders, 48 and the imposition of federal civil penalties. 49 OSM also has broad powers to suspend, revoke and withhold permits, conduct hearings, and issue subpoenas for failure to abide by SMCRA and the regulations promulgated pursuant thereto. [3] Noncompliance and Sanctions. Those holding surface or underground coal mining permits might fail to comply with all of the legal requirements of the Act by failing to reclaim the permit or affected areas 50 under SMCRA, failing to abate cited violations, failing to pay civil penalties, failing to pay AML fees, or abandoning a site. Upon non-compliance, OSM, or the appropriate state regulatory authority, may take enforcement action. 46 SMCRA 517(a), 30 U.S.C. 1267(a). 47 SMCRA 521(a)(1), 30 U.S.C. 1271(a)(1). In National Coal Ass n v. Uram, 1994 WL 736422 (D.D.C. 1994), the United States District Court considered a challenge to federal rules giving OSM the right to issue federal notices of violation under 30 C.F.R. 843.12(a)(2) in states with primacy. The court upheld the Secretary of the Interior s right to issue federal notices of violation in primacy states. 48 SMCRA 521, 30 U.S.C. 1271(a)(2). 49 SMCRA 518(a), 30 U.S.C. 1268(a). See Southern Ohio Coal Co. v. Office of Surface Mining, 20 F.3d 1418 (6th Cir. 1994), cert. denied, 115 S.Ct. 316, 130 L. Ed. 2d 278 (1994), rev g 831 F. Supp 1322 (S.D. Ohio 1993) in which the court of appeals reversed a decision of an Ohio district court and held that even in primacy states, OSM and the U.S. Environmental Protection Agency retain independent enforcement authority under SMCRA and the Clean Water Act. The court found that OSM was obligated to issue a cessation order and take further action under 521(a)(2) of SMCRA, 30 U.S.C. 1271(a)(2). This was true despite the fact that the approved state agency had already assumed jurisdiction. 50 30 C.F.R. 701.5 defines affected area as any land or water surface area which is used to facilitate, or is physically altered by, surface coal mining and reclamation operations, and proceeds to enumerate particular areas included within the definition. 251

8.03 EASTERN MINERAL LAW INSTITUTE SMCRA includes a number of enforcement mechanisms to compel compliance with the Act. These enforcement methods are increasingly used to impose liability upon both permit and non-permit holders. A general discussion of these enforcement techniques is therefore warranted. a] Notices of Violation. Notices of Violation are commonly employed by regulatory authorities 51 to compel compliance with SMCRA. 52 Notices of Violation are generally issued when a federal inspection, or in a state with primacy, a state inspection, reveals that a permittee is in violation of the Act or a permit condition required by the Act. 53 The purpose of a Notice of Violation is to advise a permittee of a violation and provide a timeframe for abatement. 54 Notices of Violation must set forth the nature of violations and remedial actions required, the period of time established for abatement, and provide a reasonable description of the portion of the surface coal mining reclamation operation to which the notice applies. 55 Abatement deadlines may be extended more than the 90 days provided by statute upon application for an extension by the permittee. 56 Notices of Violation must be in writing and must be signed by authorized representatives of the regulatory agency issuing the same. 57 [b] Cessation Orders. SMCRA provides for the issuance of two types of Cessation Orders. The first is commonly referred to as an imminent danger cessation order and may be issued upon a finding that a condition, practice or violation of the Act exists which... creates an imminent danger to the health or safety 51 Notices of Violation are also referred to by certain state regulatory authorities as Notices of Non-Compliance and Orders for Remedial Measures. 52 SMCRA 521(a)(3), 30 U.S.C. 1271(a)(3). 53 Id. 54 Id. 55 SMCRA 521(a)(5), 30 U.S.C. 1271(a)(5). 56 SMCRA 521(a)(3), 30 U.S.C. 1271(a)(3). 57 SMCRA 521(a)(5), 30 U.S.C. 1271(a)(5). 252

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.03 of the public, or is causing, or can reasonably be expected to cause significant, imminent environmental harm to land, air or water resources.... 58 Issuance of a cessation order requires immediate cessation of surface coal mining reclamation operations or the portion thereof relevant to the condition, practice or violation. 59 An imminent danger cessation order remains in effect until the regulatory authority determines that the condition, practice or violation has been abated or until the cessation order is modified, vacated or terminated. 60 The regulatory authority may also, in addition to requiring cessation of surface coal mining reclamation operations, require the operator to take whatever steps deemed necessary to abate the imminent danger or the significant environmental harm. 61 A cessation order may also be issued if a Notice of Violation is not abated within the timeframe required by the regulatory authority. 62 A failure to abate cessation order must be in writing and may also immediately order a cessation of surface coal mining reclamation operations or the portion thereof relevant to the violation until such time that a violation is abated. 63 A failure to abate cessation order remains in effect until the regulatory authority determines that the violation has been abated or until such violation is modified, vacated or terminated. 64 A penalty of $750 per day for each day that a violation remains unabated up to a maximum of 30 days may be issued for both imminent danger and failure to abate cessation orders. 65 [c] Civil Penalties. SMCRA authorizes the Secretary of the Interior to impose civil penalties against any permittee who violates a statute, regulation or permit 58 SMCRA 521(a)(2), 30 U.S.C. 1271(a)(2). 59 Id. 60 Id. 61 Id. 62 SMCRA 521(a)(3), 30 U.S.C. 1271(a)(3). 63 Id. 64 Id. 65 SMCRA 518(h), 30 U.S.C. 1268(h). 253

8.03 EASTERN MINERAL LAW INSTITUTE condition. 66 The object of civil penalties is to deter violations of the Act and to ensure maximum compliance with the Act on the part of the coal mining industry. 67 The Act requires that a penalty be assessed for the violation of any statute, regulation or permit condition when such violation results in the issuance of a cessation order. 68 In addition, regulations provide that civil penalties must be assessed for each Notice of Violation if the violation is assigned 31 points or more, while penalties are discretionary when assigned 30 points or less. 69 A permittee s history of previous violations, the seriousness of a violation, negligence, and good faith are considered in the penalty point calculation. 70 [d] Criminal Penalties. Although civil sanctions are a primary means of enforcement under SMCRA, the Act also provides for criminal sanctions. 71 The Act authorizes the Secretary of the Interior to impose criminal sanctions against any person who willfully and knowingly violates the statute, regulations promulgated pursuant thereto, or any permit conditions. 72 The Act also authorizes criminal penalties for knowing and willful refusal to comply with a cessation order or final order of the Secretary. 73 Upon conviction, a person may be punished by a fine of not more than $10,000 or by imprisonment for not more than one year, or both. 74 [e] Corporate Violations. The Act also includes a specific provision regarding corporate violations. 75 Under the Act, any director, officer, or agent of such 66 SMCRA 518(h), 30 U.S.C. 1268(a). 67 30 C.F.R. 845.2. 68 SMCRA 518(h), 30 U.S.C. 1268(a). 69 Id. 70 Id. 71 SMCRA 518(e), 30 U.S.C. 1268 (e). 72 Id. 73 Id. 74 Id. 75 SMCRA 518(f), 30 U.S.C. 1268 (f). 254

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.03 corporation who willfully and knowingly authorized, ordered, or carried out a violation of the Act may be subject to civil penalties, fines or imprisonment. 76 This provision of SMCRA is often said to impose individual liability upon violators. SMCRA also imposes criminal penalties upon those who knowingly make false statements, representations or certifications, or who knowingly fail to make any statement, representation, or certification in any application, record, report, plan, or other document filed or required to be maintained under the Act. 77 False statements are punishable by a fine of up to $10,000 or by imprisonment for not more than one year, or both. 78 SMCRA also imposes penalties against any persons who willfully resist, prevent, impede, or interfere with the Secretary or any of his or her agents in the performance of their duties pursuant to the Act. 79 Such interference is punishable by a fine of not more than $5,000 or imprisonment for up to one year. 80 [f] Injunctive Relief. The Secretary of the Interior is authorized under SMCRA to institute a civil action for relief, including injunctive relief, under six circumstances. 81 Civil action is authorized when a permittee or his agent (1) violates or fails and refuses to comply with any order or decision issued by the Secretary under the Act; (2) interferes with, hinders or delays the Secretary or his representatives when carrying out provisions of the Act; (3) refuses to admit authorized representatives onto a mine site; (4) refuses to permit mine inspections by authorized representatives; (5) refuses to furnish requested information or reports; or (6) refuses to permit access to and copying of records deemed necessary to carryout provisions of the Act. 82 76 Id. 77 SMCRA 518(g), 30 U.S.C. 1268(g). 78 Id. 79 SMCRA 704, 30 U.S.C. 1294. 80 Id. 81 SMCRA 521(c), 30 U.S.C. 1271(c). 82 Id. 255

8.04 EASTERN MINERAL LAW INSTITUTE Such civil action must be initiated in the district court of the United States for the district in which the surface coal mining and reclamation operation is located or where the permittee has its principle office. 83 Similar to the provisions of SMCRA imposing civil penalties upon corporate directors, officers or agents, this section also imposes individual liability upon agents of a permittee. 84 8.04. Non-Permit Holder Liability Under SMCRA. [1] Direct Liability. [a] Reclamation. Congress implemented SMCRA to protect the environment from the adverse effects of surface coal mining operations. 85 Rather than prohibit surface coal mining, the Act seeks to regulate the detrimental impacts of surface coal mining. 86 To accomplish its goals, the Act recognizes that surface coal mining is a temporary use of land and thus establishes standards for reclamation of lands affected by surface coal mining operations and the surface effects of underground coal mining operations. Generally, the Act mandates that each person who seeks to engage in surface coal mining operations acquire a permit from the applicable regulatory authority. 87 The permitting process requires that a permit applicant provide information including legal, financial, compliance, technical and natural resources information to the applicable regulatory authority for review. As part of the permitting process, an applicant must also submit a reclamation plan for a proposed permit area. 88 The reclamation plan must demonstrate how a surface coal mining permittee will comply with applicable performance and reclamation standards. 89 The reclamation plan 83 Id. 84 SMCRA 521(c), 30 U.S.C. 1271(c); SMCRA 518(f), 30 U.S.C. 1268(f). 85 SMCRA 102(a),(d), 30 U.S.C. 1202(a), (d). 86 See, e.g., H.R. Rep. No. 1462, 92nd Cong., 2d Sess. 19-21 (1972); See also Hodel v. Virginia Surface Mining and Reclamation Ass n, 452 U.S. 264 (1981). 87 SMCRA 506, 30 U.S.C. 1256. 88 SMCRA 507(d), 30 U.S.C. 1257(d). 89 The Act defines the term permittee as a person holding a permit. SMCRA 701(18), 30 U.S.C. 1291(18). 256

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.04 assures that a permit applicant will conduct surface coal mining operations in accordance with the requirements of the Act and the regulations promulgated pursuant thereto. Although SMCRA contains comprehensive regulations governing permitting requirements and detailed environmental performance standards, the Act in and of itself cannot assure compliance. Frequently, surface coal mining permittees fail to abide by SMCRA s reclamation requirements. In these circumstances, the applicable regulatory authority may compel compliance by the permittee through the many enforcement mechanisms available under the Act, including the threat or imposition of civil and criminal penalties, 90 issuance of a violation, 91 issuance of a cessation order, 92 or obtaining injunctive relief. 93 The regulatory authority may also choose to compel a non-permit holder to comply with the Act. Such an action may be taken independent of, or simultaneous with, enforcement action taken against a permittee. Various enforcement mechanisms are available to a regulatory authority seeking non-permit holder compliance with the Act, one of the most effective of which is injunctive relief requiring the performance of remedial measures or reclamation under the Act. 94 In the 1982 decision United States v. Dix Fork Coal Co., 95 for example, the court examined the imposition of affirmative remedial obligations upon a non-permit holder agent under section 521(c) of SMCRA. 96 In the course of mining, Dix Fork Coal Company created an imminent and hazardous danger to the health and safety of the public. 97 OSM issued a cessation order and notice of violation to the mining company which ceased mining operations, but had failed to perform remedial reclamation. 98 The 90 SMCRA 518(a), 30 U.S.C. 1268(a), SMCRA 518(e), 30 U.S.C. 1268(e). 91 SMCRA 521(a)(3), 30 U.S.C. 1271(a)(3). 92 SMCRA 521(a)(2), (3), 30 U.S.C. 1271(a)(2), (3). 93 SMCRA 521(c), 30 U.S.C. 1271(c). 94 SMCRA, 521(c), 30 U.S.C. 1271(c). 95 United States v. Dix Fork Coal Co., 692 F.2d 436 (6th Cir. 1982). 96 30 U.S.C. 1271(c). 97 Id. at 438. 98 Id. 257

8.04 EASTERN MINERAL LAW INSTITUTE Secretary of the Interior then initiated an action in district court seeking compliance, pursuant to 30 U.S.C. 1271(c). The mining company and its corporate agent, Wilford Niece, were ordered to undertake reclamation from which an appeal ensued. 99 One of the issues on appeal was whether the district court could impose affirmative remedial obligations upon a permittee s agent. In affirming the district court s decision, the Court of Appeals for the Sixth Circuit noted that 30 U.S.C. 1271(c) authorizes the Secretary to institute a civil action for relief, including a permanent or temporary injunction, restraining order, or any other appropriate order, whenever a permittee or its agent violates or fails or refuses to comply with any order or decision issued by the Secretary. 100 The court construed the statute to allow issuance of an appropriate order against both a permittee and its agent. 101 The court then determined that an agency relationship existed between the permittee, Dix Fork Coal Company, and Mr. Niece, exposing him to an appropriate order under the statute. 102 In doing so, the court recognized that neither the Act nor regulations promulgated pursuant thereto provide for a definition of the term agent. 103 Common law definitions of the term agent were rejected by the court as being not probative and incongruent with the statutory framework underlying th[e] action. 104 Instead, the court transplanted a definition of the term agent from the Coal Mine Safety and Health Act (MSHA), 105 a legislative enactment with a parallel statutory framework. 106 The court noted that under MSHA, the term agent refers to, any person charged with responsibility for the operation of all or a part of a coal mine or the supervision of the miners in a coal mine. 107 Finding the 99 Id. 100 Id. at 439 (citing 30 U.S.C. 1271(c)). 101 Id. 102 Id. at 439-440. 103 Id. at 439. 104 Id. 105 30 U.S.C. 801 et seq. 106 United States v. Dix Fork Coal Co., 692 F.2d 436, 440 (6th Cir. 1982). 107 Id. (citing 30 U.S.C. 802(e)). 258

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.04 MSHA definition appropriate to apply to the facts before it, the court concluded that a section 1271(c) agent likewise included a person, charged with the responsibility for protecting society and the environment from the adverse effects of the surface coal mining operation and charged with effectuating compliance with environmental performance standards during the course of a permittee s mining operation. 108 The court then concluded that Mr. Niece was an agent under 1271(c) and subject to an appropriate order compelling reclamation. 109 In support of its findings, the court noted that Mr. Niece was a spokesman for and adviser to the corporation. He operated the company which owned the equipment used at the site, was guarantor on a bank promissory note for the mining company, and was to receive coal that was faced up in return for use of his equipment. Mr. Niece also acted as Dix Fork s spokesman with OSM and as an advisor in all matters concerning compliance with the Act. 110 In characterizing Mr. Niece as an agent, the court noted that due to his decisions which contributed substantially to the environmental hazards, the intervening corporate structure of the Dix Fork Mining Company was insufficient to shield Mr. Niece from his affirmative remedial obligations. 111 The fact that Dix Fork Mining Company possessed no assets or equipment made liability particularly appropriate as to Mr. Niece. 112 According to the court, [r]efusal of the federal forum to implement affirmative obligations on [Mr.] Niece as an agent would permit circumvention of the Act through the establishment of a sham corporation. 113 Dix Fork was the precise situation Congress attempted to foreclose through enactment of the broad relief available to the courts against non-permit agents under 30 U.S.C. 1271(c). 114 The Court of Appeals for the Sixth Circuit again demonstrated its willingness to impose liability upon a non-permit holder under 30 U.S.C. 108 Id. at 440. 109 Id. 110 Id. at 439. 111 Id. at 441. 112 Id. 113 Id. 114 Id. 259

8.04 EASTERN MINERAL LAW INSTITUTE 1271(c) in United States v. Peery. 115 In Peery, notices of violation and cessation orders were issued to Resource Processors, Inc., a mining company, for violations of the Act. 116 When the violations were not remedied, the United States obtained an injunction requiring the permittee mining company and its president-agent to reclaim the land. As in Dix Fork, the court, applying the MSHA definition for the term agent, charged the mining company s president with responsibility for compliance under the Act. 117 The evidence reflected that the coal company s president signed all applications for mining permits and designated himself as the corporate representative. 118 He also personally obtained performance bonds for the mining company, acknowledged that he had read the Act s reclamation requirements, and agreed to comply with the same. 119 He further listed himself as the contact person at the site, signed the mining company s reclamation plan, and met with government representatives regarding reclamation. 120 Under these circumstances, the corporate president squarely fell within the definition of an agent for purposes of non-permit liability holder under 30 U.S.C. 1271(c). One year later, in United States v. Aiken, 121 the Court of Appeals for the Sixth Circuit held that an injunction issued against a non-permit holder agent under 30 U.S.C. 1271(c) did not dissolve upon the death of the agent. In Aiken, the United States brought an action against the sole shareholder and director of Aiken Mining Company, Mr. L.D. Aiken, to compel reclamation. 122 The district court entered a default judgment in favor of the United States and granted a permanent injunction ordering Mr. Aiken to correct outstanding violations. 123 Upon Aiken s death, his 115 United States v. Peery, 862 F.2d 567 (6th Cir. 1988). 116 Id. at 568. 117 Id. at 569. 118 Id. 119 Id. 120 Id. 121 United States v. Aiken, 867 F.2d 965 (6th Cir. 1989). 122 Id. at 967. 123 Id. 260

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.04 widow and executrix of his estate, who had been substituted as parties, filed for relief from the judgment. 124 The Court of Appeals for the Sixth Circuit upheld the decision of the district court rejecting the argument that the government improperly sued Mr. Aiken in his individual capacity. 125 As in Dix Fork and Peery, the court found Mr. Aiken to be an agent of the Aiken Mining Company pursuant to 30 U.S.C. 1271(c). 126 The Sixth Circuit also rejected the contention that liability should only be imposed upon an agent under the statute when both the permittee and agent were sued. 127 According to the court, the use of the disjunctive or in 30 U.S.C. 1271(c) suggests that suing the permittee is not a prerequisite to suing the agent for liability under the statute. Agent liability under 30 U.S.C. 1271(c) has also been extended to include general partners of the operator of a surface coal mine. In United States v. Hubler, 128 the district court found general partners of the operator of a surface coal mine jointly and severally liable for wrongful mining performed by the operator. 129 According to the court, the general partners were clearly agents of the partnership, as defined in Dix Fork. 130 The general partners owned the coal mining business, conducted its day-today business activities, and were responsible for insuring that the business complied with applicable surface mining laws and regulations. 131 The fact that the individual partners were not listed on the notice of violation nor on the cessation order was irrelevant to the court. 132 Pursuant to 30 124 Id. 125 Id. 126 Id. at 968. 127 Id. 128 United States v. Hubler, 117 B.R. 160, aff d, 928 F.2d 1131 (3d Cir. 1991). 129 The district court rejected the general partners argument that their reclamation obligations under a federal cessation order constituted dischargeable claims under the United States Bankruptcy Code. Id. at 165. 130 Id. at 165-166. 131 Id. at 166. 132 Id. at 165. 261

8.04 EASTERN MINERAL LAW INSTITUTE U.S.C. 1271(c), the non-permit holder general partners were enjoined to comply with the abatement obligations contained in the violations. 133 State courts have also imposed reclamation liability upon non-permit holder agents. In Rice v. Alabama Surface Mining Comm n, 134 officers of a permittee corporation were found personally liable for violations of Alabama s Surface Mining and Reclamation Act of 1981 (Alabama Act). In Rice, the Alabama Surface Mining Commission filed suit against two defendant corporations and two of the corporations officers contending that the defendants were in violation of 9-16 93(f) of the Alabama Act. 135 Failing to find Alabama case law construing 9-16-93(f), 136 the court looked to the substantially similar federal provision, 30 U.S.C. 1271(c), for guidance. Applying the analysis developed by the Court of Appeals for the Sixth Circuit in Dix Fork, the court found the non-permit holder officers to be agents as they had day-to-day involvement in the operations of the permittee companies and served as spokesmen for the corporate permittees. 137 As agents under Alabama law, the corporate officers were ordered to personally complete reclamation of the permitted sites. 138 133 Id. at 167. 134 Rice v. Alabama Surface Mining Comm n, 555 So. 2d 1079 (Ala. Civ. App. 1989). 135 Id. at 1080. 136 This section of the Alabama Act is similar to the federal provision 30 U.S.C. 1271(c) and provides in part as follows: (f) The regulatory authority may request the attorney general to institute a civil action for relief, including a permanent or temporary injunction, restraining order, or any other appropriate order in the circuit court for the county in which the surface coal mining and reclamation operation is located or in which the permittee thereof has his principal office, whenever such permittee or his agent (1) violates or fails or refuses to comply with any order or decision issued by the regulatory authority under this article.... Such court shall have jurisdiction to provide such relief as may be appropriate. Id. at 1080, (citing 9-16-93(f)), Ala. Code 1975. 137 Rice v. Alabama Surface Mining Comm n, 555 So. 2d 1079, 1081 (Ala. Civ. App. 1989). 138 Id. In Payne v. Commonwealth of Kentucky, Natural Resources and Environmental Protection Cabinet, 746 S.W.2d 90 (Ky. Ct. App. 1988), the court affirmed an order of the circuit court permanently enjoining a construction company and two individual subdivision developers to take action to reclaim property and abate an inherent danger caused by removal of coal incident to constructing a subdivision. In finding a state statutory 262

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.04 Although courts have uniformly imposed liability upon non-permit holder agents under 30 U.S.C. 1271(c), or state counterparts thereto, the court in Cordero Mining Co. v. VanDyke 139 imposed limitations on the statute s applicability by refusing to extend liability to individual landowners who refused to grant right of entry upon lands for reclamation purposes. In Cordero, various mining companies sought a court order allowing them entry onto landowners property to accomplish reclamation required by the Act. 140 In the same action, the Secretary of the Interior sought the same relief against the landowners as well as an injunction requiring the mining companies to reclaim. 141 The court found that it had jurisdiction over neither the mining companies claim, nor the Secretary s crossclaim against the landowners. 142 In doing so, the court rejected the Secretary s argument that 30 U.S.C. 1271(c) confers jurisdiction over the mining companies and that, in the exercise of fashioning appropriate relief under 30 U.S.C. 1271(c), the court likewise had jurisdiction to order the landowners to allow reclamation. 143 Although noting that the Secretary s argument was innovative and intriguing, the court rejected the Secretary s contention that 30 U.S.C. 1271(c) should be interpreted as providing jurisdiction over entities other than the permittee or its agent. 144 According to the court: The statute explicitly permits an action against only the permittee or his agent. To allow the clause providing for basis pursuant to KRS 350.465(3)(d) for issuance of a mandatory injunction compelling all of the defendants to perform reclamation, the court looked to 30 U.S.C. 1271(c) for guidance: In United States v. Dix Fork Coal, 692 F.2d 436 (6th Cir. 1982), the court held that imposing affirmative remedial obligations is appropriate and authorized by statute.... This is a clear case of compelling reclamation or remedial measures. That reasoning applies to the case sub dice. Id. at 92. 139 Cordero Mining Co. v. VanDyke, 690 F. Supp. 1497 (W.D. Va. 1988). 140 Id. at 1499. 141 Id. 142 Id. at 1502. 143 Id. at 1500. 144 Id. 263

8.04 EASTERN MINERAL LAW INSTITUTE appropriate relief to extend jurisdiction over other entities would render the previous clause redundant and useless. The remedy provision would swallow up the permittee or his agent language. Although Congress could easily have drafted this section to provide jurisdiction over the defendants, it did not do so. Accordingly, the court believes that 1271(c) allows the Secretary to maintain the counterclaim against the plaintiffs, but does not allow the court to assume jurisdiction over the defendants on the counterclaim in order to provide an appropriate remedy. 145 Pursuant to 30 U.S.C. 1271(c), courts are willing to issue injunctive relief against permittees and non-permit holder agents to compel reclamation. Courts broadly interpret the statute and impose liability upon agents, directors, officers, spokespersons and other individuals. As evidenced by Cordero, however, at least one court has been reluctant to extend agent liability to include those innocently tied to an offending operation, such as mere property owners. [b] Civil, Criminal and Individual Penalties. SMCRA establishes direct enforcement mechanisms, including issuance of notices of violation or cessation orders 146 and civil penalties, 147 against coal mining permittees. These enforcement techniques are designed to compel compliance with the Act and to effectuate reclamation of lands impacted by surface coal and underground coal mining operations. The Act also provides for sanctions against nonpermit holders who, while not having actually caused a violation through on-ground activity, may have knowingly or willfully allowed commission of the violation. The enforcement mechanisms provided for in SMCRA ensure that these non-permit holders are held responsible for their indirect acts in violation of SMCRA. The penalty provisions of SMCRA provide for non-permit holder liability in a number of instances. Persons who willfully and knowingly 145 Id. 146 SMCRA 521(a)(1), 30 U.S.C. 1271(a)(1)(3). 147 SMCRA 518(a), 30 U.S.C. 1268 (a). 264

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.04 violate a permit condition, the federal or applicable state program, or who fail or refuse to comply with an order issued under the Act, may be punished by a fine of not more than $10,000 or by imprisonment for not more than one year, or both. 148 Likewise, directors, officers or agents of corporations who willfully and knowingly authorize, order or carry out violations of the Act may be subject to civil penalties, fines or imprisonment. 149 Criminal penalties are also imposed upon those who make false statements, 150 and upon persons who willfully resist, prevent, impede, or interfere with the duties of the Secretary or any of his agents under the Act. 151 In National Coal Association v. Lujan, 152 the National Coal Association and the American Mining Congress sought judicial review of regulations issued by the Secretary of the Interior under SMCRA. 153 The focus of the challenge involved the validity of regulations implementing 30 U.S.C. 1268(f), which provides for the assessment of individual civil penalties against non-permit holder officers, directors and agents of corporate mine operators. 154 In resolving the dispute, the court of appeals examined the relationship between two of SMCRA s civil penalty provisions, those providing for direct enforcement against coal mining permittees, 155 and those alternative 148 SMCRA 518(e), 30 U.S.C. 1268(e). 149 SMCRA 518(f), 30 U.S.C. 1268(f); see Save Our Cumberland Mountains, Inc. v. Lujan, 963 F.2d 1541 (D.C. Cir. 1992), cert. denied, 122 L. Ed.2d 655, 1135 at 1257, for a historical analysis of SMCRA s regulatory scheme, including a discussion of appropriate alternative enforcement measures which may be taken in regard to an unabated violation including criminal prosecution, proceedings to hold corporate officers or agents personally liable for civil penalties, proceedings to suspend or revoke an operator s permit, and proceedings for injunctive relief. 150 SMCRA 518(g), 30 U.S.C. 1268(g). 151 SMCRA 704, 30 U.S.C. 1294. 152 National Coal Ass n v. Lujan, 979 F.2d 1548 (D.C.C. Cir. 1992). 153 Id. at 1549. 154 Id. 155 See SMCRA 518(a), 30 U.S.C. 1268(a), providing in part that: [A]ny permittee who violates any permit condition or who violates any other provision of the subchapter, may be assessed a civil penalty by the Secretary. 265

8.04 EASTERN MINERAL LAW INSTITUTE enforcement mechanisms aimed at the assessment of civil penalties upon individual representatives of corporate permittees. 156 In upholding the validity of the regulations and the imposition of civil penalties upon non-permit holder individual representatives of corporate permittees, the court examined the purpose of the individual civil penalty provisions under the Act. According to the court, the purpose of the Act s individual civil penalty provisions is to compel permittee compliance by giving those who act for the corporation strong cause to adhere to the law and to abate violations promptly. 157 The Secretary expected that a corporate official would opt to order the corporate permittee to abate the violation rather than face stiff individual penalties. 158 Finding the individual civil penalty regulations neither arbitrary, capricious, nor otherwise inconsistent with law, the court upheld the regulations in a startling blow to the coal industry. 159 Likewise, in a defeat to the state of Pennsylvania s coal industry, the Court of Appeals for the Third Circuit reversed a district court decision blocking the promulgation of amendments to Pennsylvania s mining regulatory program. In the recent decision, Pennsylvania Coal Ass n v. Babbitt, 160 the coal association challenged two amendments (the civil... Such penalty shall not exceed $5,000 for each violation. Each day of continuing violation may be deemed a separate violation for purposes of penalty assessments. In determining the amount of the penalty, consideration shall be given to the permittee s history of previous violations at the particular surface coal mining operation; the seriousness of the violation, including any irreparable harm to the environment and any hazard to the health or safety of the public; whether the permittee was negligent; and the demonstrated good faith of the permittee charged in attempting to achieve rapid compliance after notification of the violation. 156 See SMCRA 518(f), 30 U.S.C. 1268(f), providing in part that Whenever a corporate permittee violates a condition of a [federal] permit... any director, officer, or agent of such corporation who willfully and knowingly authorized, ordered, or carried out such violation... shall be subject to the same civil penalties, fines and imprisonment that may be imposed upon a person under subsections (a) and (e) [criminal penalties] of this section. 157 Id. at 1552. 158 Id. (quoting 53 Fed. Reg. at 3672 (1988)). 159 Id. at 1557. 160 Pennsylvania Coal Ass n v. Babbitt, 63 F.3d 231 (3d Cir. 1995). 266

LIABILITIES OF NON-PERMIT HOLDERS UNDER SMCRA 8.04 liability amendments ) which altered Pennsylvania s standard for the imposition of civil penalties on corporate non-permit holder officers for violations of Pennsylvania s analogue to SMCRA. 161 The civil liability amendments sought to impose individual civil penalties against nonpermittee corporate officers who... participate in a violation or whose misconduct or intentional neglect causes or allows a violation. 162 According to the related amendment, to participate means [t]o take part in an action or to instruct another person or entity to conduct or not to conduct an activity. 163 The amendments eliminated language from Pennsylvania s regulations specifying that civil penalties may only be assessed against non-permit holder corporate directors, officers or agents who willfully and knowingly authorize, order or carry out violations, failures or refusals. 164 In reversing the district court and upholding the amendments, the court held that Pennsylvania could impose individual civil penalties on non-permit holder officers without the culpability requirement found under SMCRA. 165 The Court of Appeals for the Third Circuit found that Pennsylvania could enact more stringent environmental controls than contained in the federal Act, with federal regulations serving as a floor, not a ceiling, for state regulatory programs. 166 Significantly, by changing the culpability standard as to the assessment of civil penalties for corporate officers from one of specific intent to general intent, the court expanded the parameters of non-permit holder liability in Pennsylvania. Following Pennsylvania s lead, other states might, barring a state statutory or constitutional prohibition, likewise adopt a more stringent standard of individual non-permit holder liability than those applied under the Act. 161 Id. at 235. 162 Id. at 236 (quoting 25 Pa. Code 86.195 (a)(as amended 1993)). 163 Id. (quoting 25 Pa. Code 86.1 (as amended 1993)). 164 Id. 165 Id. at 239. 166 Id. 267

8.04 EASTERN MINERAL LAW INSTITUTE [c] Abandoned Mine Land Fees. Title IV of SMCRA creates a fund for the restoration of the environment impacted by the adverse effects of past coal mining practices. 167 The purpose of the abandoned mine lands program is to reclaim lands adversely impacted by pre-act coal mining operations. 168 The Act at 30 U.S.C. 1232(a), requires all coal mining operators to pay reclamation fees into the trust fund to reclaim the pre-act impacts of coal mining. According to the Act: All operators of coal mining operations subject to the provisions of this Act shall pay to the Secretary of the Interior, for deposit in the fund, a reclamation fee of 35 cents per ton of coal produced by surface coal mining and 15 cents per ton of coal produced by underground mining or 10 per centum of the value of the coal at the mine, as determined by the Secretary, whichever is less, except that the reclamation fee for lignite coal shall be at a rate of two per centum of the value of the coal at the mine, or 10 cents per ton, whichever is less. 169 The Act defines an operator as... any person, partnership, or corporation engaged in coal mining who removes or intends to remove more than 250 tons of coal from the earth by coal mining within 12 consecutive calendar months in any one location. 170 Reclamation fees not properly or promptly paid by coal mine operators are recoverable from such operations in... any court of competent jurisdiction in any action at law to compel payment of debts. 171 The correct interpretation of the term operator and liability for reclamation fees has been the subject of controversy and debate. The definition of the term operator may include, depending on the circumstances, both permit holders and non-permit holders. 172 167 See SMCRA 401, 403(3), 30 U.S.C. 1231, 1233(3). 168 SMCRA 102(h), 30 U.S.C. 1202(h). 169 30 U.S.C. 1232 (a); See also 30 C.F.R. 870.12(a)(1992). 170 SMCRA 701(13), 30 U.S.C. 1291(13). 171 SMCRA 402(e), 30 U.S.C. 1232 (e). 172 Such a characterization, however, is not dispositive for purposes of this article, as 268