[JUDICIAL REVIEW WAS TAKEN TO THE WARRICK CIRCUIT COURT (87C0l-9308-MI-314) WITH A DECISION RENDERED ON JUNE 19, 1995, A COPY OF WHICH FOLLOWS ADMINISTRATIVE ENTRY. PEABODY APPEALED AND AN UNPLUBLISHED DECISION WAS RENDERED ON JULY 22, 1996 (87A02-9510-CV-588), WHICH FOLLOWS THE DECISION BY THE TRIAL COURT. THE COURT OF APPEALS REMANDED THE CASE TO THE ALJ WITH INSTRUCTIONS.]
For the reason that a significant segment of the division B-B has a steeper slope than the approved mining plan, notice of violation N20424-s-00216 is affirmed.
FINDINGS OF FACT
1. The Indiana Department of Natural Resources ("DNR") is an agency within the meaning of IC 4-21.5.
2. The DNR is the state agency responsible for regulating surface coal mining operations.
3. IC 4-21.5, IC 13-4.1, and 310 IAC 12 apply to these proceedings.
4. At all times relevant to these proceedings, Peabody Coal Company ("Peabody") held surface coal mine permit S-216 issued by the DNR which allowed Peabody to engage in the surface mining of coal at its Lynnville mine in Warrick County, Indiana.
5. On April 24, 1992, while conducting a mine inspection at the Lynnville Mine, a duly authorized representative of the DNR issued notice of violation N20424-S-216 ("NOV") to Peabody.
6. On May 11, 1992, Peabody filed a timely request for review of the NOV and a request for temporary relief.
7. The administrative law judge is the ultimate authority within the meaning of IC 4-21.5 with respect to this action.
8. Following a hearing, temporary relief was granted on June 17, 1992. See Peabody Coal Company v. Department of Natural Resources, (1992), 6 Caddnar 5. ("TR hearing")
9. In preparation for the final hearing on the merits, the parties agreed that, pursuant to IC 4-21.5-3-26(f), the administrative law judge should take official notice of all testimony, exhibits, briefs, and arguments which were made a part of the record during the temporary relief hearing.
10. The NOV in question was written for failure to construct and maintain diversion B-B ("ditch") as provided in the approved permit. More specifically, the side slopes of the ditch exceeded the 1.5:1 slope (34 degrees) which was specified in the approved design.
11. The ditch in question is a temporary ditch.
12. In the TR hearing, the administrative law judge found that the ditch substantially conformed to the design in the permit when taken as a whole over the full length of the ditch, approximately 3,000 feet.
13. The TR hearing left open the possibility that significant segments of the ditch may not comply, however.
14. In the first 1,000 feet, more or less, of the ditch segment north of county road 600N, the west side of the ditch is in compliance but the east side shows significant deviation from the approved plan. Slopes in some areas were in excess of 40%.
15. This segment, which is approximately 1/4 to 1/3 the length of the ditch, does not substantially comply with the approved design and thus is a violation of the mine's duty to conduct mining operations in accordance with the approved plan. See 310 IAC 12-3-4.
16. The ditch functions in the manner for which it was designed; that is, it conveys surface drainage away from the pit. Since it drains into an old pond left from other mining operations, there is no problem with sedimentation or off-site drainage.
17. The ditch is temporary and will be mined through. Further, it is constructed with consolidated materials, so erosion control is not essential from an environmental perceptive, unless the bank erodes next to the top soil stockpiles.
18. 310 IAC 12-5-24(e) cited in the NOV would appear only to apply to a ditch created in connection with the construction of an impoundment. That is not the case here as the impoundment was already present prior to this permit approval and the ditch was constructed for the purpose of preventing pit flooding.
19. Erosion in a temporary ditch not constructed in connection with
[VOLUME 6, PAGE 114]
the construction of an impoundment does not violate a duty created by 310 IAC 12-5-24(e).
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter comes before the Court for judicial review of an administrative agency action. The Court having considered the administrative agency record and briefs of the parties now enters the following findings, conclusions, and judgment pursuant to Ind. R. Tr. P. 52(A)(2) and Ind. Cod Section 4-21.5-5-14:
1. Respondent-Petitioner Department of Natural Resources ("DNR") is an administrative agency of the State of Indiana with responsibility for the administration and enforcement of a program for the regulation of the environmental aspects of surface coal mining and reclamation pursuant to the Indiana Surface Mining Control and Reclamation Act ("ISMCRA"), Ind. Code 13-4.1 and its implementing rules set forth at 310 IAC 12.
2. The DNR is an agency within the meaning of Ind. Code 4-21.5.
3. Petitioner-Respondent Peabody Coal Company ("Peabody") is a corporation which operates surface coal mining operations in the state of Indiana under ISMCRA permits issued by the DNR. Peabody operates the Lynville mine, Indiana Surface Mining Permit No. S-216, in Warrick County, Indiana.
4. This Court has jurisdiction of this action pursuant to Ind. Code 4-21.5 and Ind. Code 13-4.1.
5. On April 24, 1992, following inspections of Permit S-216, DNR mine Inspector Christine Gerace issued Notice of Violation ("NOV") #N204223-S-216 (Part 2 of 2) for "[F]ailure to construct and maintain diversion[FOOTNOTE 1] B-B as approved in the permit by the Director." NOV #N20424-S-216 (Part 2 of 2). The NOV cited the following as regulatory provisions violated:
a. 310 IAC 12-3-4 [requires that surface mining operations must be conducted in compliance with, among other things, conditions of the permit][FOOTNOTE 2];
b. 310 IAC 12-5-18(d) [requires that a diversion ditch and its "appurtenant structures" be "designed, located, constructed, maintained, and used to
(1) be stable;
(2) provide protection against flooding and resultant damage to life and property;
(3) prevent, to the extent possible using the best technology currently available, additional contributions of suspended solids to streamflow outside the permit area; and
(4) comply with all applicable local, state, and federal laws and regulations.";
c. 310 IAC 12-5-24(e) [requiring that embankments of impoundments and surrounding areas "disturbed or created by construction shall be graded, fertilized, seeded, and mulched under sections 59 through 65 of this rule. . ."].[FOOTNOTE 3] The NOV required, as remedial action, that Peabody "grade the slopes of the diversion to 1.5:1 as submitted under approved designs" and "seed and mulch side slopes of the diversion ditch to establish a protective vegetative cover." NOV #N20424-S-216, Part 2 of 2.
6. Peabody requested formal administrative review on the merits of the NOV as well as temporary relief from the action required. Ind. Code Section 4-21.5-3, the Administrative Orders and Procedures Act ("AOPA"), and Ind. Code Sections 13-4.1-11-8(a) and (e).
7. A temporary relief hearing was held on June 4, 1992.
8. Following the temporary relief hearing the ALJ issued a temporary order granting temporary relief to Peabody because Peabody's performance might possibly be considered to substantially comply with the DNR-approved slope design.
9. Pursuant to Ind. Code Section 13-4.1-11-8, a subsequent hearing on the merits was held on November 17, 1992. Following the final hearing on the merits and the filing of briefs, the ALJ issued his Report, Findings of Fact, and Final Order on July 8, 1993, affirming the NOV but in Findings 18 and 19 denying that 310 IAC 12-5-24(e) applied to the circumstances of the case.
10. The ALJ in affirming the NOV, determined inter alia, that:
In the first 1000 feet, more or less, of the ditch segment north of the county road 600N, the west side of the ditch is in compliance but the east side shows significant deviation from the approved plan. Slopes in some areas were in excess of 40% [sic]. ALJ Finding 14.
This segment, which is approximately 1/4 to 1/3 the length of the ditch, does not substantially comply with the approved design and thus is a violation of the mine's duty to conduct mining operations in accordance with the approved plan. See 310 IAC 12-3-4. ALJ Final Order Finding 15.
11. Consequently, the ALJ's Final Order held:
For the reason that a significant segment of the diversion B-B« has steeper slope than the approved mining plan, notice of violation N20424-S-216 is affirmed. ALJ Final Order.
12. In Findings 18 and 19, however, the ALJ denied that 310 IAC 12-5-24(e) applied to the instant circumstances, stating:
IAC 12-5-24(e) [sic] cited in the NOV would appear only to apply to a ditch created in connection with the construction of an impoundment. That is not the case here as the impoundment was already present prior to this permit approval and the ditch was constructed for the purpose of preventing pit flooding. ALJ Final Order Finding 18.
Erosion in a temporary ditch not constructed in connection with the construction of an impoundment does not violate a duty created by IAC 12-5-24(e) [sic]. ALJ Final Order Finding 19.
13. On August 3, 1993, DNR filed, in the Warrick Circuit Court, its verified petition for judicial review of the ALJ's determination that 310 IAC 12-5-24(e) did not apply to the circumstances of the case, and Peabody filed, in the Warrick Circuit Court, its verified petition for judicial review of the ALJ's Final Order affirming the NOV. These judicial review actions were consolidated by order entered August 18, 1993. Pursuant to the agreement of the parties, a single administrative agency record was filed.
14. DNR's petition seeks to have the Final Order of the ALJ upheld insofar as it affirmed the issuance of the NOV, but seeks a determination that the ALJ erred in holding that 310 IAC 12-5-24(d) does not apply to the structures which are the subject of the NOV.
15. Peabody seeks to have the ALJ Final Order affirming the NOV set aside, claiming the ALJ did not explain how he determined the ditch did not substantially comply with the approved design.
16. The ditch in question was part of a ditch and basin system diverting drainage away from the pit and included a series of sediment collection basins along the ditch; the drainage ultimately flowed into an old final cut impoundment. Ad. Hearing Tr.
17. With respect to the affirmance of the NOV grounded upon a violation of 310 IAC 12-3-4, i.e. a violation of the permit condition:
a. The original S-216 permit provided for a diversion ditch with side slopes of 2:1 or an angle of approximately 26 degrees. Peabody Coal Company v. Department of Natural Resources, Administrative Cause No. 92-112R, VI CADDNAR 57, ALJ Temporary Relief Decision, Finding 17.
b. However, a subsequent "incidental boundary revision" or "IBR," was approved by the DNR which allowed the subject diversion ditch to have side slopes of 1.5:1 or slightly less than 34 degrees. ALJ Temp. Rel. Finding 18.
c. During, and after, construction of the ditch, Inspector Gerace noted that the ditch and slopes were not constructed as approved, that the slopes were steeper than approved by the DNR. The Inspector measured the slopes at a number of places with a clinometer, an engineering instruments routinely utilized for such measurements. Temp. Relief Hearing Tr. 7-8. She noted her sightings in degrees on a map of the area. Numerical notations on Administrative Hearing Stipulated Exhibit III represent her readings
which indicate that the slopes exceeded the design specifications in a variety of areas most prominently on the east side of the ditch. Temp. Relief Tr. 11; DNR Post Hearing Brief, fourth page. She so informed Peabody representatives on several occasions that the side slopes were steeper than allowed under the IBR. ALJ Temp. Rel. Finding 19.
d. The evidence showed and the ALJ found that the east side of the ditch exceeded the approved 34 degrees over a length of 1/4 to 1/3 of the ditch. ALJ Final Order Findings 14 and 15.
e. 310 IAC 12-3-4 requires that mine operators comply with the conditions of their approved permits. Peabody was out of compliance with its approved permit condition in a number of places along the ditch in every place it exceeded 34 degrees.
f. There is no "substantial compliance" standard in ISMCRA. The provisions of ISMCRA (statute and implementing regulations) do not allow for a de minimis departure from statutory and regulatory requirements; such a strict liability standard is, however, tempered by the fact that civil penalty assessments resulting from NOVs take into account the extent and seriousness of the deviation from the requirements of the regulation. Ind. Code 13-4.1-12; 310 IAC 12-6-12. See, also, Indiana Department of Natural Resources v. Peabody Coal Company, Warrick Superior Court, Cause No. 87D01-9309-CP-184, Findings of Fact and Conclusions of Law 25 (a) and 21 (Peabody Coal Co. v. Indiana Department of Natural Resources, Cause No. 87A05-9503-CV-00090, pending in the Court of Appeals).
g. While the ALJ, in the Temporary Relief order, utilized the contracts doctrine of "substantial compliance" in addressing Peabody's performance, ISMCRA, as a regulatory statute derived from an necessarily modeled after the federal Surface Mining Control and Reclamation Act of 1977 ("SMCRA"), does not allow for simply "substantial" compliance. Ind. Code Sections 13-4.1-11-2 and 13-4.1-11-7; 310 IAC 12-6-5.[FOOTNOTE 5]
h. Peabody was out of compliance with the permit condition specifying that the side slopes of the diversion not exceed 1.5:1 or 34 degrees.
i. The NOV was validly and legally issued on the ground that Peabody did not comply with an approved permit condition and was in violation of 310 IAC 12-3-4.
j. Peabody's petition erroneously maintains that the Final Order of the ALJ is arbitrary and capricious and contrary to law because "the Administrative Law Judge did not make findings explaining how he determined the ditch did not substantially comply with the approved design." Peabody is incorrect because:
i. The Temporary Relief order left open the question of whether the ditch and its slopes actually "substantially" conformed to the approved design and how much deviation could be considered substantial compliance. ALJ Temp. Rel. Findings 37 and 38.
ii. The ALJ did, in fact, explain the holding of his Final Order in that he found that the Temporary relief hearing "left open" the possibility that significant segments of the ditch might not substantially comply with the permit condition. ALJ Final Order Finding 13. After reviewing the evidence indicating that "in the first 1000 feet, more or less, of the ditch segment north of county road 600 N, the west side of the ditch is in compliance but the east side shows significant deviation from the approved plan" in that slopes in some areas were in excess of 40% (Finding 14), he found:
This segment, which is approximately 1/4 to 1/3 the length of the ditch, does not substantially comply with the approved design and thus is a violation of the mine's duty to conduct mining operations in accordance with the approved plan. Sec. 310 IAC 12-3-4.
(Finding 15).
iii. "Substantial compliance" is not an ISMCRA standard; however, even if it were, common sense dictates that a deviation from approved design along 1/4 to 1/3 of the structure does not constitute "substantial compliance."
iv. Under either ISMCRA standards or "substantial compliance" standards, Peabody's performance did not comply with the DNR-approved design.
k. The agency action and the Final Order were based on ascertainable standards which are enunciated through ISMCRA itself, its regulations, and,
most specifically, in the Peabody S-216 permit.FOOTNOTE 6]
l. The ALJ, in his Final Order, found that the evidence indicating multiple significant non-compliance from the design required an affirmance of the NOV. In a judicial review, the courts do not address agency matters de novo or substitute their judgment of factual matters for that of the agency. Peabody Coal Company v. Indiana Department of Natural Resources (1994), Ind.App., 640 N.E.2d 435; Indiana Department of Natural Resources v. Krantz Brothers Construction Corp. (1991), Ind.App., 581 N.E.2d 935.
m. The ALJ affirming of the NOV, based upon a violation of 310 IAC 12-3-4, was neither arbitrary nor capricious nor contrary to law.
n. 310 IAC 12-5-18(d) requires that "a diversion and its appurtenant structures shall be designed, located, constructed, maintained, and used" to be, inter alia, stable and in compliance with local, state, and federal law and regulations.
o. Evidence showed that Peabody was also in violation of 310 IAC 12-5-18(d) in that evidence and testimony at the administrative hearings indicated that the diversion and its appurtenant structures (i.e. side slopes) were not, in fact, constructed and/or maintained as designed. Inspector Gerace's clinometer measurements of the slopes indicated that they were not constructed as designed and approved by DNR. Further, her unrefuted testimony indicated a problem with slope stability because of the presence of active, ongoing erosion. Ad.Hearing Tr.
18. The NOV was properly and legally issued based upon a violation of 310 IAC 12-5-24(e).
19. 310 IAC 12-5-24(e) provides, in pertinent part:
All embankments of temporary and permanent impoundments and surrounding areas and diversion ditches disturbed or created by construction shall be graded, fertilized, seeded, and mulched under sections 59 through 65 of this rule after the embankment is completed. . . . . [emphasis not included in CADDNAR].
20. The plain language of the regulation includes not only areas adjacent to impoundments (as this area was) but also refers specifically to "diversion ditches." The areas surrounding impoundments as well as related created diversion ditches, including their slopes, must be "graded, fertilized, seeded, and mulched under sections 59 through 65" following construction.
21. It is a basic principle of statutory construction that statutes (and regulations) be construed together and not in isolation. Kern v. Wolf (1993), 622 N.E.2d 201; Economy Oil Corp. v. Ind. Department of State Revenue (1974), Ind.App., 658 N.E.2d 215.
22. 310 IAC 12-5-59(a) makes clear that the diversion side slopes are required to be vegetated under 310 IAC 12-5-24(e); 12-5-59(a) states:
Each person who conducts surface mining activities shall establish, on all affected land except water areas and surface areas of road. . . a diverse, effective, and permanent vegetative cover. . . [Emphasis not included in CADDNAR].
23. The ISMCRA statute itself requires the establishment on all affected lands a diverse effective, and permanent vegetative cover. Ind. Cod Section 13-4.1-8-1(19).
24. "Affected area" is defined, inter alia, at 310 IAC 12-0.5-6, as:
". . .a land or water surface area which is used to facilitate, or is physically altered by, surface coal mining and reclamation operations. The 'affected area' includes each of the following:
(1) The disturbed area [see 310 IAC 12-0.5-36].
(2) An area upon which surface coal mining and reclamation operations are conducted.
(3) Adjacent land the use of which is incidental to surface coal mining and reclamation operations. . . .
25. Those parts of Diversion ditch B-B« and its appurtenant structures, including side slopes created as the result of the excavation of the ditch, which were neither surface areas of roads or water areas, were affected areas pursuant to 310 IAC 12-5-6 and were required to be vegetated pursuant to 310 IAC 12-5-59(a).
26. Pursuant to 310 IAC 12-5-24(e) areas surrounding impoundment embankments including those parts of diversion ditches "created by" construction are required to be "graded, fertilized, seeded, and mulched under sections 59 through 65 of this rule after the embankment is completed."
27. Diversion ditch B-B«, a system diverting drainage away from the pit, included a series of impoundments along the ditch. Diversion ditch B-B« was a structure associated and connected with nearby impoundments and was required to be treated as such. The constructed ditch and its created side slopes, falling within the meaning of 310 IAC 12-5-24(e) as both "diversion ditches" and as areas "surrounding" the impoundments, are required to be "graded, fertilized, seeded, and mulched."
28. The side slopes created by Peabody during the construction of the ditch are man-made and were required to be graded in accordance with the approved design and protected accordingly by seeding and mulching.
29. Legal provisions should be construed so as to ascertain and give effect to the intentions of the legislature as expressed in the statute, and, in so doing, the objectives and purposes of the statute in question must be considered as well as the effect and consequences of such interpretation. Kern v. Wolf (1993), Ind.App., 622 N.E.2d 201, rehearing denied, transfer denied.
30. The legislative intention is that all lands affected by surface coal mining operations be vegetated. Ind. Cod 13-4.1-8-1(19). Further, the legislature required that a surface mine operator "[S]tabilize and protect all surface areas, including spoil piles, affected by the surface coal mining and reclamation operation to effectively control erosion and attendant air and water pollution." Ind. Code 13-4.1-8-1(4).
31. The ALJ's implication in Final Order Finding 17 that 310 IAC 12-5-24(e) is inapplicable because the diversion is "temporary" is erroneous; 310 IAC 12-5-24(e) applies to both temporary and permanent impoundments, surrounding structures and diversion ditches.
32. The ALJ's implication in Finding 18 that the application of 310 IAC 12-5-24(e) is only appropriate where the ditch is concurrently constructed with an impoundment is misleading and erroneous.
a. 310 IAC 12-5-24(e) refers to "diversion ditches disturbed or created by construction" and does not require that the creation of the ditch be concurrent with the creation of the impoundment.
b. Even if 310 IAC 12-5-24(e) required that diversion ditches subject to this regulation be related to an impoundment, the ditch in question qualifies; it is part of a system of ditch and impoundment. The ditch is a related area (although nothing in the regulation itself specifically requires a "relationship").
33. The ALJ's Finding 19 that the presence of erosion in a temporary ditch not constructed in connection with the construction of an impoundment does not violate any duty created by 310 IAC 12-5-24(e) begs the question and is misleading.
a. The ditch existed in relation to the impoundment;
b. The erosion existed in the side slopes and was continuing to spread up the slope and could, potentially, reach and harm the stockpiled topsoil at the top of the slopes (Ad. Hearing Tr.):
c. The duty created by the regulation is the duty to vegetate lands affected by surface mining operations, most specifically bare slopes of a diversion ditch created by the mine operator; the mine operator by his actions has created the potential for erosion.
34. Findings 17, 18, and 19 are misleading and do not properly interpret the law. The ALJ erred in finding 310 IAC 12-5-24(e) inapplicable to the subject structures.
35. The ALJ's determination of the inapplicability of 310 12-5-24(e) is not harmless error because if allowed to stand it will interfere with the ability of the DNR to carry out the implementation and enforcement of certain parts of Indiana's approved (by the Department of the Interior) surface mining program and potentially jeopardize Indiana primacy under the federal law. The Court of Appeals has, on two occasions, warned that "Indiana must labor diligently" to "retain primacy and ward off the imposition of federal control in this area." Peabody v. Indiana Department of Natural Resources (1994), Ind.App., 625 N.E.2d
925; Indiana Department of Natural Resources v. Krantz Brothers Construction Corp. (1992), 581 N.E.2d 935, 937. 30 U.S.C. Sections 1254(b), 1271(b).
36. The evidence in this case supported the issuance of the NOV.
37. The NOV was properly, appropriately and lawfully issued.
38. 310 IAC 12-5-24(e) was properly, appropriately, and lawfully cited as one ground for the issuance of the NOV.
39. DNR is a party entitled under Ind. Code 4-21.5-5 to seek judicial review of certain of the ALJ's Findings. Peabody Coal Co. v. Indiana Department of Natural Resources (1994), 629 N.E.2d 925, rehearing denied, petition to transfer pending.
40. As petitioner challenging the NOV, Peabody has failed to demonstrate it is entitled to relief under Ind. Code Section 4-21.5-5.
41. As petitioner challenging the ALJ's Findings with respect to 310 IAC 12-5-24(e), the DNR has demonstrated it is entitled to relief under Ind. Code Section 4-21.5-5.
42. Findings which may be considered conclusions of law or conclusions of law [sic] which may be considered findings of fact are so deemed.
JUDGMENT
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED by the Court that Peabody's Petition for Judicial Review (Cause No. 87C01-9308-MI-314) be, and the same hereby is, denied and the Final Order of the ALJ affirming NOV #20424-S-216, with the exception of Findings 17, 18, and 19 is affirmed. The Court further holds 310 IAC 12-5-24(e) applicable in the instant case; DNR's Petition for Judicial Review (Cause No. 87C01-9308-MI-308) is granted. This cause is remanded to the ALJ for findings consistent with this opinion. [Dated June 15, 1995].
FOOTNOTES
1. "Diversion" is defined as " a channel, embankment, or other manmade structure constructed to divert water from one (1) area to another." 310 IAC 12-0.5-38.
2. The NOV references, as the permit condition violated, Permit Condition IV.I, revised under Incidental Boundary Revision ("IBR") #2, approving the subject diversion ditch design) allowing side slopes to be no steeper than 1.5:1 or 34 degrees.
3. Sections 59 through 65 require, on all lands affected by surface coal mining operations, the establishment of "a diverse, effective, and permanent vegetative cover." The only exceptions to this vegetation requirement are "water areas and surface areas of roads." 310 IAC 12-5-59.
4. Even if it did, the Inspector's measurements, which are not very different from Peabody's own measurements (testimony of Peabody employee James Spalding and Peabody brief at 15), indicate more than a [sic] de minimus deviation.
5. Peabody argues that DNR waived this argument by not seeking judicial review of the Temporary Relief order. However, courts are empowered to draw legal conclusions in the context of cases which are before them. PEABODY COAL COMPANY v. INDIANA DEPARTMENT OF NATURAL RESOURCES (1992), 606 N.E.2d 1306, 1308.
6. ...where standards are stated with sufficient precision in the statute itself, it is not necessary for the administrative agency to provide additional clarification and specificity so long as such standards give adequate warning to those having potential contact with the agency. CLARKSON v. DEPARTMENT OF INSURANCE (1981), Ind.App., 425 N.E.2d 203, 207.
_______________________________
COURT OF APPEALS DECISION
This case deals with the application of regulations controlling surface coal mining. The Peabody Coal Company appeals from the circuit court's judgment upholding a Notice of Violation [NOV] issued by the Department of Natural Resources pursuant to the Indiana Surface Mining Control and Reclamation Act [ISMCRA][FOOTNOTE 1]
We affirm in part, reverse in part, and remand to the ALJ for further findings consistent with this opinion.
The facts most favorable to the judgment are that, on April 24, 1992, the DNR issued an NOV to Peabody at the company's Lynnville-North Millersburg surface coal mining complex in Warrick County, Indiana. The NOV charged that Peabody violated 310 12-3-4 because it failed to construct and maintain a diversion ditch as approved in the permit issued by the Director of the DNR. 310 IAC 12-3-4 states:
All persons shall conduct surface coal mining and reclamation operations under permits issued under IC 13-4.1 and this article, and shall comply with the terms and conditions of IC 13-4.1, this article, and the permit.
The NOV further charged that Peabody had violated 310 IAC 12-5-18(d), which provides:
A diversion and its appurtenant structures shall be designed, located, constructed, maintained, and used to:
(1) be stable;
(2) provide protection against flooding and resultant damage to life and property;
(3) prevent, to the extent possible using the best technology currently available, additional contributions of suspended solids to streamflow outside the permit area; and
(4) comply with all applicable local, state, and federal laws and regulations.
The NOV also charged that Peabody had violated 310 IAC 12-5-24(e), which states:
All embankments of temporary and permanent impoundments and surrounding areas and diversion ditches disturbed or created by construction shall be graded, fertilized, seeded and mulched under sections 59 through 65 of this rule after the embankment where water is impounded may be riprapped or otherwise stabilized. Area in which the vegetation is not successful or where rills and gullies develop shall be repaired and revegetated under sections 57 and 59 through 65 of this rule.
Peabody requested administrative review of the NOV. Following a temporary relief hearing, the ALJ granted temporary relief to Peabody. The ALJ's findings of fact state in relevant part:
2. IC 4-21.5, IC 13-4.1, and 310 IAC 12 apply to these proceedings.
3. The DNR is the state agency responsible for the regulation of surface coal mining within the state.
. . . . . .
5. On April 24, 1992,. . . . the DNR issued [an NOV]... to the Peabody Lynnville Mine.
6. The NOV contained two part.
. . . .
9. The NOV was written for the failure of the mine to construct and maintain diversion B-B« in accordance with the plans in the permit.
10. The abatement action required . . . regrading the slopes of the ditch to 1.5:1 and seed[ing] and mulch[ing] the side slopes of the ditch to establish a protective vegetative cover.
. . . .
15. IC 13-4.1-11-8 sets forth the criteria governing temporary relief. . . :
a. A due process hearing must be held. . . .
b. The mine must show there is a substantial likelihood of prevailing on the merits. . . .
c. A grant of temporary relief will not have an adverse affect [sic] on health or safety or not cause significant, imminent environmental harm.
. . . . . .
18. [A revision to the permit allowed] ditch B-B« to have a side slope of 1.5:1 . . . [or] slightly less than 34 degrees.
19. During prior inspections, the inspector told Peabody employees the side slopes were too steep.
20. On April 24, 1992. . . the inspector used a clinometer to measure the side slopes at various points along the B-B« ditch.
21. ...[A] number of readings along the east side of the ditch [were] in excess of 40 degrees. A few readings on the west side of the ditch exceeded 35 degrees but . . . the inspector . . . did not consider the west side . . . to be out of compliance.
22. The purpose of the ditch. . . is to prevent water from entering the pit. It is a temporary diversion.
23. As of the date of the NOV, the top of the bank was seeded and mulched but not the side slopes.
24. The water in the ditch flows into an old final cut impoundment which acts as a sediment pond, thus there is no possibility of suspended solids flowing off-site.
25. No top soil or subsoil is at risk at this time. The sides of the bank are spoil material and consolidated material.
. . . . .
27. Peabody contends that the readings . . . throughout the overall length of the ditch (approximately 33200 feet) show an average slope of less than 34 degrees and therefore, the ditch generally complies with the design.
28. The DNR contends there are multiple readings on the east side in excess of 40 degrees and this shows non-compliance for portions of the ditch.
29. The evidence shows that the ditch carries out the purpose for which it was constructed.
. . . . . .
31. A cross section chosen at random that does not conform to the overall design does not mean the system was not constructed or maintained within the approved design.
32. Conversely, constructing a ditch in such a way that the first half mile of the ditch has side slopes of 25 degrees and the second half mile has side slopes of 40 degrees, an average of 32.5 degrees, would not conform to the design.
33. As in most construction cases, the doctrine of substantial performance finds an applicant.
34. Substantial performance generally means:
a. The structure is usable for the intended purpose.
b. The contractor did not willfully deviate from the plans and specifications, and
c. No harm will arise out of the failure to perform fully.
. . . . . .
37. Whether . . . there is an actual substantive violation depends on whether . . . the ditch as constructed substantially conforms to the approved design on all appropriate segments of the ditch.
38. What is an appropriate segment to be measured is a matter best decided after a hearing on the merits.
. . . . . .
Record at 256-259
After a final hearing was held, the ALJ entered findings of fact which state in relevant part:
8. [T]emporary relief was granted on June 17, 1992. ...
9. ...[T]he parties agreed that, pursuant to IC 4-21.5-3-26(f), the [ALJ] should take official notice of all testimony, exhibits, briefs, and arguments which were made a part of the record during the temporary relief hearing.
10. The NOV ... was written for failure to construct and maintain diversion B-B ("ditch") as provided in the approved permit. More specifically, the side slopes of the ditch exceeded the 1.5:1 slope (34 degrees) which was specified in the approved design.
11. The ditch ... is a temporary ditch.
12. ...[T]he [ALJ] found that the ditch substantially conformed to the design in the permit when taken as a whole over the full length of the ditch, approximately 3,000 feet.
13. The [temporary relief] hearing left open the possibility that significant segments of the ditch may not comply ....
14. In the first 1,000 feet, more or less, of the ditch segment north of county road 600N, the west side of the ditch is in compliance but the east side shows significant deviation from the approved plan. Slopes in some areas were in excess of 40% [sic, degrees].
15. This segment, which is approximately 1/4 to 1/3 the length of the ditch, does not substantially comply with the approved design and thus is a violation of the mine's duty to conduct mining operations in accordance with the approved plan. Sec. 310 IAC 12-3-4.
16. The ditch functions in the manner for which it was designed; that is, it conveys surface drainage away from the pit. Since it drains into an old pond left from other mining operations, there is no problem with sedimentation or off-site drainage.
17. The ditch is temporary and will be mined through. Further, it is constructed with consolidated materials, so erosion control is not essential from an environmental perceptive [sic], unless the bank erodes next to the top soil stockpiles.
18. [310] IAC 12-5-24(e) cited in the NOV would appear only to apply to a ditch created in connection with the construction of an impoundment. That is not the case here as the impoundment was already present prior to this permit approval and the ditch was constructed for the purpose of preventing pit flooding.
19. Erosion in a temporary ditch not constructed in connection with the construction of an impoundment does not violate a duty created by IAC 12-5-24(e).
Record at 229-230
Although the ALJ did not address the alleged violation of 310 IAC 12-5-18(d) and specifically found that 310 IAC 12-5-24(e) did not apply, he nonetheless entered a final order affirming the NOV on the basis of the violation of 310 IAC 12-3-4. That order states:
For the reason that a significant segment of the ditch has a steeper slope than the approved mining plan, [the NOV] is affirmed.
Record at 231.
Peabody thereafter filed a petition for judicial review, contesting the affirmation of the NOV. The DNR also filed a petition for judicial review with regard to the ALJ's findings concerning the applicability of 310 IAC 12-5-24(e) and specifically with regard to paragraphs seventeen through nineteen of the ALJ's findings. The petitions were consolidated for review.
On review, the circuit court affirmed the ALJ's final order insofar as it affirmed the NOV on the basis of a violation of 310 IAC 12-3-4. The court found, however, that, in determining whether 310 IAC 12-3-4 has been violated, one must use a "strict liability"[FOOTNOTE 2] standard rather than the "substantial compliance" standard used by the ALJ. The court found [FOOTNOTE 3], in pertinent part, that:
d. The evidence showed and the ALJ found that the east side of the ditch exceeded the approved 34 degrees over a length of 1/4 to 1/3 of the ditch. ALJ Final Order Findings 14 and 15.
e. 310 IAC 12-3-4 requires that mine operators comply with the conditions of their approved permits. Peabody was out of compliance with its approved permit condition in a number of places along the ditch in every place it exceeded 34 degrees.
f. There is no "substantial compliance" standard in ISMCRA. The provisions of ISMCRA (statute and implementing regulations) do not allow for a [sic] de minimus departure from statutory and regulatory requirements; such a strict liability standard is, however, tempered by the fact that civil penalty assessments resulting from NOVs take into account the extent and seriousness of the deviation from the requirements of the regulation....
g. While the ALJ, in the Temporary Relief order, utilized the contracts doctrine of "substantial compliance" in addressing Peabody's performance, ISMCRA, as a regulatory statute derived from and necessarily modeled after the federal Surface Mining Control and Reclamation Act of 1977 ("SMCRA"), does not allow for simply "substantial" compliance. ...
h. Peabody was out of compliance with the permit condition specifying that the side slopes of the diversion not exceed 1.5:1 or 34 degrees.
i. The NOV was validly and legally issued on the ground that Peabody did not comply with an approved permit condition and was in violation of 310 IAC 12-3-4.
Record at 214.[FOOTNOTE 4]
The circuit court also found that 310 IAC 12-5-24(e) applied and that "[t]he NOV was properly and legally issued based upon a violation of 310 IAC 12-5-24(e)." Record at 216.
The court further stated:
34. Findings 17, 18, and 19 [in the ALJ's final order] are misleading and do not properly interpret the law. The ALJ erred in finding 310 IAC 12-5-24(e) inapplicable to the subject structures.
35. The ALJ's determination of the inapplicability of 310 IAC 12-5-24(e) is not harmless error because if allowed to stand it will interfere with the ability of the DNR to carry out the implementation and enforcement of certain parts of Indiana's approved (by the Department of the Interior) surface mining program and potentially jeopardize Indiana primacy under the federal law. The Court of Appeals has, on two occasions, warned that "Indiana must labor diligently" to "retain primacy and ward off the imposition of federal control in this area." Peabody v. Indiana Department of Natural Resources (1994), Ind.App., 62[9] N.E.2d 925; Indiana Department of Natural Resources v. Krantz Brothers Construction Corp. (1992), 581 N.E.2d 935, 937. 30 U.S.C. Sections 1254(b), 1271(b)[.]
36. The evidence in this case supported the issuance of the NOV.
37. The NOV was properly, appropriately and lawfully issued.
38. 310 IAC 12-5-24(e) was properly, appropriately, and lawfully cited as one ground for the issuance of the NOV.
Record at 219.
In addition, although the ALJ did not discuss 310 IAC 12-5-18(d) in its final order, the circuit court determined that Peabody had violated that regulation as well. The court stated:
n. 310 IAC 12-5-18(d) requires that "a diversion and its appurtenant structures shall be designed, located, constructed, maintained, and used" to be inter alia, stable and in compliance with local, state, and federal laws and regulations.
o. Evidence showed that Peabody was also in violation of 310 IAC 12-5-18(d) in that evidence and testimony at the administrative hearings indicated that the diversion and its appurtenant structures (i.e. side slopes) were not, in fact, constructed and/or maintained as designed. Inspector Gerace's clinometer measurements of the slopes indicated that they were not constructed as designed and approved by DNR. Further, her unrefuted testimony indicated a problem with slope stability because of the presence of active, ongoing erosion. Ad. Hearing Tr.
Record at 216.
The circuit court's final order states in pertinent part:
IT IS THEREFORE ORDERED ... that Peabody's Petition for Judicial Review ... is ... denied and the Final Order of the ALJ affirming [the] NOV ..., with the exception of Findings 17, 18, and 19 is affirmed. The Court further holds 310 IAC 12-5-24(e) applicable in the instant case; DNR's Petition for Judicial Review ... is granted. This cause is remanded to the ALJ for findings consistent with this opinion.
Record at 221.
Peabody now appeals; raising several issues. In its brief on appeal, the DNR has raised a motion to strike one of Peabody's exhibits. We consolidate and restate the parties' issues:
I. Did the circuit court err in affirming the ALJ's final order because the final order was arbitrary and capricious or contrary to law?
II. Did the circuit court err in holding that ISMCRA requires strict rather than substantial compliance with approved design plans for diversion ditches?
III. Did the circuit court err in reversing the ALJ's holding that 310 IAC 12-5-24(e) applied only to diversion created in connection with the construction of a water impoundment?
IV. Did the circuit court err when it made findings of fact with regard to issues not reached by the ALJ?
V. Should this court strike an exhibit presented for the first time on appeal?
Judicial review of an administrative decision is limited to determining whether the agency possessed jurisdiction over the subject matter, and whether the agency's decision was made pursuant to proper procedures, was based upon substantial evidence, was not arbitrary or capricious, and was not in violation of any constitutional, statutory or legal principle. Department of Natural Resources v. Peabody Coal Co., 654 N.E.2d 289 (Ind.App. 1995). When reviewing administrative determinations, both trial and appellate courts are prohibited from reweighing the evidence or judging the credibility of witnesses and must accept the facts as found by the administrative body. Natural Resources Comm'n v. Sugar Creek Mobile Estates, W., 646 N.E.2d 61 (Ind.App. 1995), trans. denied. However, courts need not accord the same degree of deference to an agency's conclusions on a question of law. Id. Courts may not review administrative actions de novo. If a court finds error in administrative proceedings, it may only vacate the decision and remand the case to the agency for further consideration. Adkins v. Tell City, 625 N.E.2d 1298 (Ind.App. 1993).
First, Peabody claims that the ALJ's final order is arbitrary and capricious because it is inconsistent with the earlier order granting temporary relief and because that inconsistency is neither justified nor explained. Peabody specifically complains that the ALJ, in his order granting temporary relief, articulated a three-part test for determining whether Peabody's ditch substantially complied with its approved design plans, but then ignored the test in his final order affirming the NOV.
The action of an administrative agency is arbitrary and capricious only where there is no reasonable basis for that action. Board of Trustees of Public Employee's Retirement Fund of Indiana v. Baughman, 450 N.E.2d 95 (Ind.App. 1983). Our review of the record reveals that the three-part test to which Peabody refers is nothing more than a statement of what "substantial performance" generally means. In making this general statement, the ALJ did not bind himself to follow this "test" in making the final determination whether the ditch in question substantially complied with the plan. If anything, the ALJ set forth the test he would use in determining whether the ditch complied with the plan when he stated:
37. Whether ... there is an actual substantive violation depends on whether ... the ditch as constructed substantially conforms to the approved design on all appropriate segments of the ditch.
Record at 258.
The final order of the ALJ is not arbitrary and capricious on the ground that the ALJ failed to utilize a "test" for determining performance.
We also reject Peabody's claim that the final order of the ALJ is contrary to law because it does not include findings sufficiently specific to have enabled the reviewing court to determine what standard the ALJ applied to find that the ditch did not substantially conform to the approved design plans. Our review of paragraphs twelve through fifteen of the ALJ's final order reveals sufficient findings on the part of the ALJ to enable a reviewing court to determine the standard employed. The ALJ based his conclusion that the ditch was not in substantial compliance with the approved design upon the finding that the ditch deviated significantly from the approved plan in at least twenty-five percent to as much as thirty-three percent of its length. We conclude that this finding was sufficiently specific to have enabled the reviewing court to determine the standard employed. The ALJ's final order is not contrary to law.
The circuit court found that there is no "substantial compliance" standard in the ISMCRA, that the ISMCRA does not allow for a de minimis [sic] departure from the statutory and regulatory requirements, and that a "strict liability" standard applies. Peabody argues that the circuit court erred in so finding.
We need not reach this issue because the circuit court specifically found that "[u]nder either ISMCRA standards or 'substantial compliance' standards, Peabody's performance did not comply with the DNR-approved design." Record at 215. Using either the less stringent "substantial compliance" standard or the more stringent "strict liability" standard, the court determined that the ditch did not comply with the approved design plan. Accordingly, we decline to address this issue. However, we direct the ALJ on remand to specifically address the issue whether the ISCMRA [sic] requires that a "substantial compliance" or a "strict compliance" standard be used and to support that determination with specific references to supporting sections of the ISCMRA [sic] and to whatever other sources are used in making this determination.
19. 310 IAC 12-5-24(e) provides, in pertinent part:
All embankments of temporary and permanent impoundments and surrounding areas and diversion ditches disturbed or created by construction shall be graded, fertilized, seeded, and mulched under sections 59 through 65 of this rule after the embankment is completed... .
20. The plain language of the regulation includes not only areas adjacent to impoundments (as this area was) but also refers specifically to "diversion ditches." The areas surrounding impoundments as well as related created diversion ditches, including their slopes, must be "graded, fertilized, seeded, and mulched under sections 59 through 65" following construction.
21. It is basic principle of statutory construction that statutes (and regulations) be construed together and not in isolation. Kern v. Wolf (1993), 622 N.E.2d 201; Economy Oil Corp. v. Ind. Department State Revenue (1974), Ind.App., [321] N.E.2d 215.
22. 310 IAC 12-5-59(a) makes clear that the diversion side slopes are required to be vegetated under 310 IAC 12-5-24(e); 12-5-59(a) states: Each person who conducts surface mining activities shall establish, on all affected land except water areas and surface areas of roads... a diverse, effective, and permanent vegetative cover... .
23. The ISMCRA statute itself requires the establishment on all affected lands [of] a diverse effective, and permanent vegetative cover. Ind. Code Section 13-4.1-8-1(19).
24. "Affected area" is defined, inter alia, at 310 IAC 12-0.5-6, as:
"...a land or water surface area which is used to facilitate, or is physically altered by, surface coal mining and reclamation operations. The 'affected area' includes each of the following:
(1) The disturbed area [see 310 IAC 12-0.5-36].
(2) An area upon which surface coal mining and reclamation operations are conducted.
(3) Adjacent land the use of which is incidental to surface coal mining and reclamation operations... .
25. Those parts of Diversion ditch B-B« and its appurtenant structures, including side slopes created as the result of the excavation of the ditch, which were neither surface areas of roads or water areas, were affected areas pursuant to 310 IAC 12-5-6 and were required to be vegetated pursuant to 310 IAC 12-5-59(a).
26. Pursuant to 310 IAC 12-5-24(e) areas surrounding impoundment embankments including those parts of diversion ditches "created by" construction are required to be "graded, fertilized, seeded, and mulched under sections 59 through 65 of this rule after the embankment is completed."
27. Diversion ditch B-B, a system diverting drainage away from the pit, included a series of impoundments along the ditch. Diversion ditch B-B was a structure associated and connected with nearby impoundments and was required to be treated as such. The constructed ditch and its created side slopes, falling within the meaning of 310 IAC 12-5-24(e) as both "diversion ditches" and as areas "surrounding" the impoundments, are required to be "graded, fertilized, seeded, and mulched."
28. The side slopes created by Peabody during the construction of the ditch are man-made and were required to be graded in accordance with the approved design and protected accordingly by seeding and mulching.
29. Legal provisions should be construed so as to ascertain and give effect to the intentions of the legislature as expressed in the statute, and, in so doing, the objectives and purposes of the statute in question must be considered as well as the effect and consequences of such interpretation. Kern v. Wolf (1993), Ind.App., 622 N.E.2d 201, rehearing denied, transfer denied.
30. The legislative intention is that all lands affected by surface coal mining operations be vegetated. Ind. Code 13-4.1-8-1(19). Further, the legislature required that a surface mine operator "[S]tabilize and protect all surface areas, including spoil piles, affected by the surface coal mining and reclamation operation to effectively control erosion and attendant air and water pollution." Ind. Cod 13-4.1-8-1(4).
31. The ALJ's implication in Final Order Finding 17 that 310 IAC 12-5-24(e) is inapplicable because the diversion is "temporary" is erroneous; 310 IAC 12-5-24(e) applies to both temporary and permanent impoundments, surrounding structures and diversion ditches.
32. The ALJ's implication in Finding 18 that the application of 310 IAC 12-5-24(e) is only appropriate where the ditch is concurrently constructed with an impoundment is misleading and erroneous[.]
a. 310 IAC 12-5-24(e) refers to "diversion ditches disturbed or created by construction" and does not require that the creation of the ditch be concurrent with the creation of the impoundment.
b. Even if 310 IAC 12-5-24(e) required that diversion ditches subject to this regulation be related to an impoundment, the ditch in question qualifies; it is part of a system of ditch and impoundment. The ditch is a related area (although nothing in the regulation itself specifically [sic] requires a "relationship").
33. The ALJ's Finding 19 that the presence of erosion in a temporary ditch not constructed in connection with the construction of an impoundment does not violate any duty created by 310 IAC 12-5-24(e) begs the question and is misleading.
a. The ditch existed in relation to the impoundments;
b. the erosion existed in the side slopes and was continuing to spread up the slope and could, potentially, reach and harm the stockpiled topsoil at the top of the slopes (Ad. Hearing Tr.) [.]
c. The duty created by the regulation is the duty to vegetate lands affected by surface mining operations, most specifically bare slopes of a diversion ditch created by the mine operator; the mine operator by his actions has created the potential for erosion.
34. Findings 17, 18, and 19 are misleading and do not properly interpret the law. The ALJ erred in finding 310 IAC 12-5-24(e) inapplicable to the subject structures.
Record at 216-219[FOOTNOTE 5]
The DNR argues that the circuit court correctly construed the regulation and correctly found that it applied to the diversion ditch at issue in this case. The DNR argues that 310 IAC 12-5-59 requires that all surfaces affected by surface mining activities except water areas and road surfaces must be protected by vegetation in one way or another. It argues that the vegetative cover must be capable of stabilizing the soil surface from erosion and that soil stabilization is one reason for requiring a vegetative cover. It further argues that one purpose of the ISMCRA is to protect the public from adverse impacts of surface mining. With regard to the applicability of 310 IAC 12-5-24(e), the DNR argues that the regulation "re-emphasizes the necessity for the protection of constructed and reconstructed slopes for such purposes." DNR's Brief on Appeal at 26.
The DNR also argues that, while the regulation uses the term "embankments", it clearly refers to the side slopes of the ditch which were created as a result of the construction of the ditch. The DNR then argues that 310 IAC 12-5-24(e) requires that the "slopes" of "temporary and permanent impoundments", areas surrounding those impoundments, and "diversion ditches", be graded, fertilized, seeded, and mulched after the creation of the embankment. It argues that the plain language of the regulation includes areas adjacent to impoundments and that this ditch was an area adjacent to an impoundment. It further argues that the plain language of the statute specifically refers to "diversion ditches".
Peabody agrees with the DNR that 310 IAC 12-5-59 must be read in conjunction with 310 IAC 12-5-24(e), but argues that 310 IAC 12-5-59 does not support the circuit court's holding because it expressly excludes "water areas" from the general area of "affected land" that must be vegetated. It argues that "water areas' must include diversion, because it if did not, then it would not be necessary for 310 IAC 12-5-24(e) to specifically require that some diversion be vegetated. It argues that the trial court's reading of 310 IAC 12-5-59 would render 310 IAC 12-5-24(e) superfluous.
Peabody argues that 310 IAC 12-5-24(e) applies to some diversion ditches, but not the diversion ditch at issue in this case. It claims that the regulation does not apply to all diversion ditches because the term "diversion ditches" is modified by the phrase "disturbed or created by construction". It claims that the question then becomes "disturbed or created by the construction of what?". It claims that the reference must be to the construction of the embankment of the impoundment because the regulation requires that the grading, fertilizing, seeding, and mulching be done "after the embankment is completed". Peabody argues that the plain language of the regulation is in accordance with the ALJ's interpretation and that, accordingly, only those diversion created in connection with the creation of impoundments are subject to the regulation. Peabody is arguing, in essence, that because the impoundment (the old final cut pit where the water is eventually deposited) was not constructed in conjunction with the construction of the diversion ditch (because the old final cut pit was already in existence when the ditch was created), then 310 IAC 12-5-24(e) does not apply in this case.
In attempting to bolster its argument that 310 IAC 12-5-24(e) applies to only those diversion ditches constructed in conjunction with the construction of an impoundment, Peabody notes that the heading of the regulation is "Hydrologic balance; permanent and temporary impoundments" and argues that other regulatory sections deal specifically with diversions.
Peabody also takes issue with the DNR's definition of the term "embankment". Peabody argues that the term "embankments" does not refer to the side slopes created by the operator, as the DNR claims on appeal. Peabody argues that the term "embankment" is a term defined in the regulations and, therefore, that definition must control. The term "embankment" is defined in 310 IAC 12-0.5-40, which states: "'Embankment' means an artificial deposit of material that is raised above the natural surface of the land and used to contain, divert, or store water, support roads, or railway, or for other similar purposes."
Peabody argues that the DNR's inspector admitted at the temporary relief hearing that the side slopes of the B-B« diversion ditch would not be "embankments" as the term is defined in the regulation. Our review of the record of the temporary relief hearing reveals the following exchange during the cross-examination of the DNR inspector by Peabody's counsel:
Q[:] The side slopes of the B-B Ditch system would not be embankments in the sense of the term as it is defined in the regulation, would it?
A[:] No. It is in the sense that they are the slopes to the ditch.
Record at 333. We do not understand the inspector's answer to be a concession that the side slopes are not embankments as defined in the regulations.
Generally, rules applicable to the construction of statutes also apply to the construction of administrative rules and regulations. Peabody Coal Co. v. Indiana Dep't of Natural REsources, 629 N.E.2d 925 (Ind.App. 1994), aff'd, Docket Nos. 77S01-9605-CV-315, 77A01-9307-CV-233 (Ind., May 10, 1996). In construing an administrative regulation, the court begins with the language of the regulation itself. Id. Words in an administrative regulation are given their plain and ordinary meaning. Id. In interpreting a regulation, the court must look to the regulation as a whole and to its object and policy. Id. An interpretation by an administrative agency charged with the duty of enforcing the applicable statutes and regulations is entitled to great weight. However, an agency's interpretation that is erroneous is entitled to no weight. Id.
A reviewing court may look to titles and headings of a statute in construing the intent of the legislature. Kelly v. Ladywood Apartments, 622 N.E.2d 1044 (Ind.App. 1993), trans. denied. However, titles and headings cannot limit the plain meaning of the text or operate to take a significant portion of textual matter out of statute.
Genetech v. Eli Lilly and Co., 998 F.2d 931 (1993), cert. denied sub nom Regents of University of California v. Genetech, Inc., 114 S.Ct. 1126 (1994).
Applying these rules of statutory and regulatory construction to the facts of this case, we conclude that the diversion ditch at issue here is controlled by IAC 12-5-24(e) and that the embankments of the diversion ditch, which include its side slopes, must be graded, fertilized, seeded, and mulched.
We agree with the circuit court that the plain language of the regulation includes diversion ditches and reject the interpretation of 310 IAC 12-5-24(e) provided by the ALJ. We also conclude that a side slope of a diversion ditch falls within the definition of "embankment" found in the regulations. We therefore affirm the circuit court's findings with regard to that issue.
n. 310 IAC 12-5-18(d) requires that "a diversion and its appurtenant structures shall be designed, located, constructed, maintained, and used" to be inter alia, stable and in compliance with local, state, and federal laws and regulations.
o. Evidence showed that Peabody was also in violation of 310 IAC 12-5-18(d) in that evidence and testimony at the administrative hearings indicated that the diversion and its appurtenant structures (i.e. side slopes) were not, in fact, constructed and/or maintained as designed. Inspector Gerace's clinometer measurements of the slopes indicated that they were not constructed as designed and approved by DNR. Further, her unrefuted testimony indicated a problem with slope stability because of the presence of active, ongoing erosion. Ad. Hearing Tr.
Record at 216.
The ALJ did not discuss in the final order whether Peabody had violated 310 IAC 12-5-18(d) and made no finding with regard to that regulation even though it was cited by the DNR in the NOV. Accordingly, the circuit court should not have made an independent finding of a violation of this section. Rather, the court should have remanded this case to the ALJ to specifically address the alleged violation of 310 IAC 12-5-18(d) and to make factual findings with regard to the alleged violation.
Without commenting on the propriety of the circuit court's findings with regard to this issue, we reverse those findings and remand this case to the ALJ and direct the ALJ to specifically address this issue.
Peabody submitted the memorandum in support of its argument that the DNR does not, in practice, require strict compliance with approved design plans. Because this court has declined to address the issue whether strict or substantial compliance is required, this court has chosen not to review this exhibit and therefore need not rule on the motion to strike.
Judgment affirmed in part and reversed in part. This case is remanded to the ALJ for further proceedings consistent with this opinion.
FOOTNOTES
1. Formerly Ind. Code section 13-4.1, but recodified as Ind. Code section 14-34, effective July 1, 1995. The citations in the record and in this opinion are to the former code.
2. The circuit court uses the term "strict liability" when referring to this standard. In our view, "strict compliance" might be a more precise term for this standard.
3. We have retained throughout this opinion the emphasis supplied by the circuit court in it finding of fact.
4. The page containing some of these findings is missing from the lower court record. Peabody has supplied the entire document containing the circuit court's findings of fact and conclusions of law. The DNR acknowledges in its brief that this page is missing from the record. Because the DNR does not dispute the accuracy of the document supplied to this court by Peabody, we will assume that it is correct.
5. Again, a page of the lower court record is missing. We will assume that the copy of the circuit court's findings of fact and conclusions of law provided to this Court by Peabody is correct.