CADDNAR

[CITE: Musgrave (fee petition) v. Squaw Creek Coal, 13 CADDNAR 291 (2014)]

 

[VOLUME 13, PAGE 291]

 

 

Cause #: 14-083R

Caption: Musgrave (fee petition) v. Squaw Creek Coal

Administrative Law Judge: Jensen

Attorneys: Racher, Jackson (Musgrave); Griggs, Gillay (Squaw Creek)

Date: October 8, 2014

 

 

[See Editor’s note at end of this document regarding change in the decision’s original format.]

 

 

FINAL ORDER

 

30. “Bil Musgrave’s Fee Petition Pursuant to Ind. Code § 14-34-15-10 and 312 IAC 3-1-13” is hereby dismissed.

 

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH

 

Historical, Jurisdictional, and Procedural Summary:

 

1.     The instant proceeding is an outgrowth of extensive litigation between the parties that commenced with Bil Musgrave’s (“Musgrave”) filing of a petition for administrative review in February 2008 challenging the Department of Natural Resources’ (“Department”) approval of Squaw Creek Coal Company’s (“SCCC”) application for bond release.  The Natural Resources Commission (“Commission”) issued its final order on December 28, 2009 finding that a portion of the Department’s approval of SCCC’s bond release application was in error.  Musgrave v. Squaw Creek Coal Co. and DNR, 12 CADDNAR 192, (2009). However, the Commission’s final order was reversed on judicial review and the reversal was upheld by the Indiana Court of Appeals on March 12, 2012.  Musgrave v. Squaw Creek Coal Co. et. al., 964 N.E.2d 891, (Ind. Ct. App. 2012).  That proceeding, including consideration on judicial review and appeal will hereinafter be referred to as “the Underlying Proceeding”.

 

2.     A final order consistent with the directives of the Indiana Court of Appeals was entered by the Commission on February 13, 2014. Musgrave v. Squaw Creek & DNR (Remand), 13 CADDNAR 95 (2013).

 

3.     Following the Commission’s issuance of its final order on December 28, 2009, Musgrave filed a petition for the recovery of fees associated with the Underlying Proceeding. (“Musgrave’s First Fee Petition”)  However, following the reversal of that Commission final order, Musgrave dismissed that petition for fees.  

 

4.     After the Commission issued its final order compliant with the Court of Appeals reversal, on March 15, 2014, SCCC timely filed its petition for the recovery fees.  The Commission issued a final order dismissing SCCC’s petition on April 29, 2014.  Squaw Creek Coal v. Musgrave, 13 CADDNAR 253 (2014).

 

5.     The instant proceeding considers “Bil Musgrave’s Fee Petition Pursuant to Ind. Code § 14-34-15-10 and 312 IAC 3-1-13” filed with the Department on May 30, 2014 by counsel, Peter M. Racher and Shelley M. Jackson.  (“Musgrave’s Second Fee Petition”)  Musgrave’s Second Fee Petition seeks to recover fees associated with Musgrave’s successful defense against SCCC’s petition for fees that was dismissed on April 29, 2014.

 

6.     Following receipt of SCCC’s opposition to Musgrave’s Second Fee Petition the matter was referred to the Commission pursuant to 312 IAC 3-1-13(g) by the Department Director, Cameron F. Clark, on June 6, 2014 to conduct a proceeding governed by Indiana Code §§ 4-21.5.

 

7.     A prehearing conference was conducted on July 1, 2014 at which time SCCC’s counsel, E. Sean Griggs, stated the intention to file a formal motion to dismiss Musgrave’s petition.  A schedule for filing such motion and contemporaneous pleadings was established.

 

8.     Ind. Code § 14-34-15-10 states,

 

Sec. 10. Whenever an order is issued:

(1) under this chapter or under IC 13-4.1-11 (before its repeal); or

(2) as a result of an administrative proceeding under this article or under IC 13-4.1 (before its repeal) instituted at the request of a person;

the court, resulting from judicial review, or the commission may assess against either party to the proceeding an amount of money, determined by the commission, equal to the aggregate amount of all costs and expenses, including attorney's fees, reasonably incurred by the person for or in connection with the person's participation in the proceedings, including any judicial review of agency actions.

 

9.     As relevant to this proceeding 312 IAC 3-1-13, specifies that

 

Sec. 13. (a) This section governs an award of costs and expenses reasonably incurred, including attorney fees, under IC 14-22-26-5, IC 14-24-11-5, IC 14-34-15-10, or IC 14-37-13-7.

….

(d) Appropriate costs and expenses, including attorney fees, may be awarded under IC 14-34-15-10 only as follows:

(1) To any person from the permittee if the person initiates or participates in an administrative proceeding reviewing enforcement and a finding is made by the administrative law judge or commission that:

(A) a violation of IC 14-34, a rule adopted under IC 14-34, or a permit issued under IC 14-34 has occurred or that an imminent hazard existed; and

(B) the person made a substantial contribution to the full and fair determination of the issues.

 

10.  Ind. Code § 14-34-15-10 and 312 IAC 3-1-13 places within the jurisdiction of the Commission the authority to assess appropriate fees against either party to a proceeding under appropriate circumstances.

 

11.  It is determined that the Commission possesses jurisdiction over the parties and the subject matter of this proceeding.

 

12.  The Administrative Law Judge serves as the ultimate authority for this proceeding.  Ind. Code § 4-21.5-1-15, Squaw Creek Coal Company v. Musgrave, 13 CADDNAR 253, 2014.

 

13.  On July 31, 2014, SCCC timely filed its “Motion to Dismiss Musgrave’s Second Fee Petition”. 

 

14.  On August 29, 2014, “Musgrave’s Response Opposing Squaw Creek’s Motion to Dismiss and Motion for Summary Judgment on Recovery of Fees” was filed.  Musgrave’s response brief was timely filed.  However, because the parties had agreed during the prehearing conference that matters beyond SCCC’s motion to dismiss would be deferred, upon motion of SCCC; Musgrave’s motion for summary judgment was stricken.  See “Order Granting Squaw Creek Coal Company’s ‘Motion to Strike Musgrave’s Motion for Summary Judgment’ and Extension of Time to File Reply”  

 

15.  On September 15, 2014, SCCC filed a timely “Reply Brief on Motion to Dismiss.”

 

[VOLUME 13, PAGE 292]

 

Findings of Fact and Conclusions of Law:

 

16.  Following the dismissal of SCCC’s petition for fees, Musgrave initiated the instant proceeding alleging, in part, as follows[1]:

 

11.  The phase of litigation for which Musgrave seeks and award in this Fee Petition is in connection with his successful defense against SCCC’s Fee Petition.  SCCC’s Fee Petition sought an award of $327,299.24 against Musgrave, a private citizen, in connection with Musgrave’s prosecution of his claim and defense of his

initial victory in the Appeal Phase.  SCCC’s Fee Petition violated I-SMCRA’s fee shifting provisions by attempting to establish a scenario in which a permittee could recover fees and expenses from a private citizen in the absence of bad faith.  SCCC’s Fee Petition also included a vast array of allegations directed toward Musgrave personally.

…

21.  Musgrave’s Fee Petition meets all requirements necessary for recovery under 312 IAC 3-1-13.

 

22.  Musgrave is a person, and SCCC is a permittee.  Musgrave initiated the bond release appeal giving rise to all phases of this litigation.  The Appeal Phase of the litigation reviewed DNR’s decision releasing the Phase I, Phase II, and Phase III reclamation bonds associated with SCCC’s S-008 permit, and the Final Order Reviewed the entirety of this litigation.  Musgrave participated in all administrative proceedings and at all levels in this litigation, including during the Appeal Phase, the First Fee Petition, and SCCC’s Fee Petition.

 

23.  Rule 312 IAC 3-1-13(d)(1)(A) requires a finding that ‘a violation of IC 14-34, a rule adopted under IC 14-34, or a permit issued under IC 14-34 has occurred or that an imminent hazard existed[.]”  At least two independent findings of a violation have occurred in this litigation.

 

24.  First, Judge Jensen’s December 28, 2009 order held that DNR ‘failed to properly evaluate SCCS’s Phase III bond release application in terms of the entirety of Indiana Code 14-34 et seq. and 312 IAC 25 et seq. as required by 312 IAC 25-5-16 and Indiana Cod 14-34-6-9.’  While the December 28, 2009 order was eventually reversed on judicial review, a finding was made in this litigation that the DNR’s Phase III bond release violated the provisions of applicable rules and statutes contemplated by 312 IAC 3-1-13(d)(1)(A).

 

25.  Second, Judge Jensen’s April 29, 2014 Final Order held that SCCC’s proposed mechanism for recovery of a fee award against Musgrave violated the provisions of 312 IAC 3-1-13(d)(4), a rule promulgated under the authority of Ind. Code 14-34 et seq. There are therefore two fully independent ways in which Musgrave’s Fee Petition satisfies the requirements of 312 IAC 3-1-13(d)(1)(A). 

 

26.  Rule 312 IAC 3-1-13(d)(1)(B) requires that ‘the person made a substantial contribution to the full and fair determination of the issues.’  As discussed above and as reflected in the record of proceedings, Musgrave initiated or participated in each and every phase of this litigation, including the Appeal Phase, the First Fee Petition, and the SCCC Fee Petition.  There is no question that he made a substantial contribution to the outcome at every stage.

Bil Musgrave’s Fee Petition Pursuant to Ind. Code § 14-34-15-10 and 312 IAC 3-1-13.

 

17.  In opposition to Musgrave’s current effort to recover fees, SCCC maintains that Musgrave’s petition for fees is not authorized by 312 IAC 3-1-13(d)(1) because the event upon which Musgrave’s present effort to recover fees is based is not “an administrative proceeding reviewing enforcement” and there has been no finding that SCCC committed a violation of Ind. Code §§ 14-34, a rule adopted under Ind. Code §§ 14-34, or a permit issued under Ind. Code §§ 14-34, as required.  SCCC also maintains that an award of fees to Musgrave under the circumstances presented here would be both an inappropriate exercise of discretion and an action beyond the Commission’s statutory authority that would create a potentially endless “circular process” having “no logical endpoint”.  Motion to Dismiss Musgrave’s Second Fee Petition.

 

18.  A simple review of 312 IAC 3-1-13(d)(1)(A) dictates that Musgrave’s efforts to recover fees associated with his successful defense against SCCC’s fee petition must fail.

 

19.  As SCCC points out 312 IAC 3-1-13(d)(1) expressly states that “a person”, in this case Musgrave, may be awarded appropriate costs and expenses from a “permittee”, in this instance SCCC, if Musgrave “initiates or participates in an administrative proceeding reviewing enforcement.” Emphasis added.

 

20.  Without question the Underlying Proceeding constituted an “administrative proceeding reviewing enforcement”.  For this reason Musgrave’s First Fee Petition, which sought to recover fees directly related to that administrative proceeding, was compliant with 312 IAC 3-1-13(d)(1).  However, Musgrave’s contention that the instant proceeding, Musgrave’s Second Fee Petition, which seeks to recover fees associated solely with Musgrave’s successful defense against SCCC’s fee petition, somehow relates back to the Underlying Proceeding thereby rendering it an “administrative proceeding reviewing enforcement” is a stretch. 

 

21.  First, it is observed that a petition for the recovery of litigation expenses must be submitted to the Department “director within thirty (30) days after the party receives notice of the final agency action.”  312 IAC 3-1-13(g).  The time for acting to recover fees associated with the Underlying Proceeding expired 30 days after December 28, 2009. 

 

22.  Second, SCCC’s petition to recover fees, while related to the Underlying Proceeding, constitutes a separate and distinct proceeding.  See “Order Denying Parties’ Respective Dispositive Motions”, Findings 13-21, Musgrave v. DNR and SCCC, Administrative Cause Number 10-027R.

 

23.  It is concluded that Musgrave’s Second Fee Petition must be supported solely by his participation in defending against SCCC’s petition for fees.

 

24.  SCCC’s petition for fees, and thus Musgrave’s defense against the petition does not constitute an “administrative proceeding reviewing enforcement” as required by 312 IAC 3-1-13(d)(1).

 

25.  The fact that Musgrave’s present petition is not associated with his participation in an “administrative proceeding reviewing enforcement” is, alone, a sufficient basis for a determination that Musgrave’s present petition must fail under Ind. Code §§ 14-34 and 312 IAC 3-1-13(d).

 

[VOLUME 13, PAGE 293]

 

26.  Assuming for argument only that Musgrave were correct in his allegation that his present petition for fees relates back to the Underlying Proceeding such that his defense of SCCC’s petition for fees did constitute an “administrative proceeding reviewing enforcement” as required by 312 IAC 3-1-13(d)(1), application of 312 IAC 3-1-13(d)(1)(A) would require further that the administrative law judge or Commission make a finding that “a violation of IC 14-34, a rule adopted under IC 14-34, or a permit issued under IC 14-34 has occurred or that an imminent hazard existed” with respect to the outcome of the Underlying Proceeding.  It is acknowledged that the Commission initially determined in the Underlying Proceeding that a violation of Ind. Code §§ 14-34 had occurred; however, the reversal of the Commission’s final order on judicial review, which reversal was upheld by the Indiana Court of Appeals, resulted in the Commission’s later issuance of a final order compliant with that reversal.  The Commission’s later issued final order following remand by the Indiana Court of Appeals served to negated the initial determination that a violation of Ind. Code §§ 14-34 had occurred.  For this reason, Musgrave’s present petition would fail in any event for failure to meet the requirements of 312 IAC 3-1-13(d)(1)(A). 

 

27.  Additionally though, contrary to Musgrave’s contention it is further concluded that the final order denying SCCC’s petition for fees cannot be construed as a determination that SCCC committed a violation of Ind. Code §§ 14-34 or a related rule. 

 

28.  The litigation that ensued over SCCC’s petition for fees, which addressed differing interpretations of statute and other legal authority, does not constitute a violation supportive of Musgrave’s Second Petition for Fees under either Ind. Code §§ 14-34 and 312 IAC 3-1-13 or under Ind. Code § 35-42-1-1.  Instead, such litigation presented valid legal issues representative of “zealous advocacy” supporting of the evolution of the law in a manner similar to Musgrave’s litigation of the Underlying Proceeding.  See discussion in Squaw Creek Coal Company v. Musgrave, 13 CADDNAR 253, 2014.

 

29.  It is concluded that Musgrave’s Second Fee Petition fails to meet the requirements established under Ind. Code § 14-34-15-10 and 312 IAC 3-1-13(d) and an award of fees is likewise not justified under Ind. Code § 35-42-1-1.

 

 

[EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Order has been modified to correspond with CADDNAR format.  The Final Order, Paragraph 30, has been relocated to the “Final Order” section at the beginning of this document.]