NOV N20813-S-111 is affirmed.
FINDINGS OF FACT
1. Great Lakes Coal Company ("Great Lakes") was issued surface coal mining permit S-111 (the "permit") by the department of natural resources (the "Department") under IC 13-4.1 and 310 IAC (collectively referred to as "ISMCRA") to engage in surface coal mining operations in Greene County, Indiana.
2. The permit was revoked by the natural resources commission (the "Commission") on November 24, 1986. At that time, reclamation had not been completed for areas disturbed under the permit.
3. Lafayette State Bank ("Lafayette") was the surety for Great Lakes with respect to the portion of the permit at issue in this proceeding.
4. On June 22, 1987, the Department entered an agreement with Lafayette for the performance of reclamation on areas disturbed by Great Lakes.
5. Pursuant to the 1987 agreement, Lafayette submitted a Plan of Reclamation (the "Plan") which established performance standards and timetables for completion by Lafayette of reclamation under the permit.
6. A dispute subsequently arose between the Department and Lafayette concerning progress toward reclamation under the Plan. The Department notified Lafayette of an intention to forfeit the performance bond posted for the permit.
7. On March 29, 1988, the Department and Lafayette settled the dispute described in Finding 6 by the entry of an Agreed Order.
8. Pursuant to the 1988 Agreed Order, Russell L. Feuerbach doing business as Landcraft ("Feuerbach") was designated to act for Lafayette as its agent and reclamation contractor. This order also established reclamation standards and timetables additional to those provided in the Plan.
9. On July 12, 1991, Phyllis Hart, an authorized representative of the director of the Department (the "Director"), ordered the removal of a sediment basin located near the southeast corner of the permit. A deadline of September 15, 1991 was subsequently established for the completion of basin removal and reclamation.
10. On September 19, 1991, Timothy Taylor, an authorized representative of the Director, notified Lafayette of an initial determination by the Department to forfeit the performance bond for the permit. The initial determination was based upon an averment that reclamation of the sediment basin was not completed as ordered on September 15, 1991.
11. Administrative review was taken against the 1991 initial determination by the Department to forfeit the performance bond. On March 8, 1992, a status conference was conducted in the review proceeding. During the status conference, Lafayette and Feuerbach orally agreed to complete reclamation of the sediment basin by May 15, 1992. The oral agreement was memorialized by a written Settlement Agreement entered among Lafayette, Feuerbach, and the Department on May 22, 1992.
12. On May 15, 1992, Hart established a 60 day abatement period for completion of reclamation pursuant to Paragraph 5 of the Settlement Agreement.
13. On August 12, 1992, Hart determined that reclamation of the sediment basin was not completed and set a final compliance deadline of 7:00 a.m. on August 13, 1992 for the completion of reclamation.
14. On August 13, 1992, Hart determined that reclamation of the sediment basin was not complete and subsequently issued notice of violation N20813-S-111 (the "NOV").
15. On September 15, 1992, Feuerbach made against the Department a timely
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request for administrative review of the NOV. The request for review initiated this proceeding which is governed by IC 4-21.5 and 310 IAC 0.6-1.
16. The Department is an "agency" within the meaning of IC 4-21.5-1-3. Pursuant to IC 13-4.1-2-1(c), the Administrative Law Judge is the "ultimate authority" for the Department for administrative reviews of notices of violation issued under ISMCRA. The Administrative Law Judge has jurisdiction over the parties and over the subject matter of this proceeding.
17. Where a surface coal mining permit is revoked, a surety for the operator may perform reclamation instead of suffering a bond forfeiture. DNR v. 3 States Trucking and Am. Drug., 1 Caddnar 29 [sic (1992)] (1982).
18. Ordinarily, upon a breach of responsibility by a principal, a surety is liable only for the limit of its bond and can invoke any defense open to it as surety. If a surety elects to step into the place of the principal and perform the principal's obligations, however, the surety is "itself subject to the principals liabilities." Caron v. Andrew, 284 P.2d 544 (Cal. 1955).
19. According to general surety principles, Lafayette became responsible for the obligations of Great Lakes when it commenced reclamation activities on the area affected by the permit.
20. The issuance of notices of violation are governed by IC 13-4.1-11-4, which provides for their issuance by the Department against a "permittee".
21. A "permittee" is a "person or his agent holding a permit issued under this article (IC 13-4-11) to conduct a surface coal mining operation." IC 13-4.1-1-3(8).
22. Where a surety elects to conduct reclamation activities on behalf of the operator of a surface coal mine, the surety acts as agent for the operator. Generally, United States v. Dix Fork Coal Co., et al., 692 F.2d 436 (1982).
23. Lafayette is a "permittee" under IC 13-4.1 and is liable as a permittee for the issuance of a notice of violation if it fails to perform reclamation as required by law.
24. Both general principles of surety law and ISMCRA provide the same result. A surety who elects to undertake the responsibilities of a principal must perform those responsibilities according to the standards applicable to the principal. A surety who undertakes the responsibilities of the surface coal miner must perform those responsibilities according to the standards applicable to the surface coal miner. A surety who commences reclamation has the same liability for a notice of violation as does the operator.[FOOTNOTE 1]
25. When Lafayette commenced reclamation activities as the surety for Great Lakes, Lafayette became eligible for the receipt of a notice of violation. Because Feuerbach is the reclamation contractor and agent acting on behalf of Lafayette, the acts and omissions of Feuerbach are chargeable to Lafayette.
26. The NOV cites Lafayette with violations of the Plan, the Settlement Agreement, and several provisions of 310 IAC 12.
27. The NOV cites Lafayette with a violation of 310 IAC 12-3-4 and Part IV of the Plan.
28. The performance standards and timetables established under the Plan and Agreed order supplement those set forth in the permit. Lafayette was required to comply with the Plan and the Agreed Order under 310 IAC 12-3-4.
29. Part IV(B) of the Plan requires topsoil replacement to be completed within 60 days of the commencement of redistribution. Average depths are required to be at least 18 inches over nonprime farm areas.
30. The approved post-mining land use for the sediment basin is pasture and hay.
31. Topsoil requirements were not satisfied within 60 days after topsoil placement was started, and topsoil was not replaced to an average depth of 18 inches.
32. Part IV(D)(4) requires the distribution of mulching over exposed topsoil areas pending the germination of distributed seed.
33. Paragraph 5 of the Agreed order requires Lafayette to lime, fertilize, seed, and mulch the entire area within two weeks of the redistribution of topsoil.
34. The application of mulch is an integral part of revegetation under the Plan and the Agreed Order.
35. Paragraph 5 of the Settlement Agreement required revegetation to be completed by the abatement deadline of August 13, 1992.
36. Mulch was not applied over the entire surface area.
37. Lafayette was also cited for a violation of 310 IAC 12-4-17 for failure to comply with the terms of the Settlement Agreement.
38. Paragraphs 1 and 5 of the Settlement Agreement required all backfilling, grading, soil replacement, and revegetation of the sediment basin to be completed by May 15, 1992.
39. Although some efforts were undertaken on behalf of Lafayette to complete reclamation, all backfilling, grading, soil replacement, and revegetation of the sediment basin was not completed by May 15, 1992.
40. Paragraph 5 of the Settlement Agreement
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required the Department to establish a 60 day abatement deadline to complete reclamation if Lafayette did not comply with the May 15, 1992 deadline.
41. August 12, 1992 was established as the abatement deadline for the completion of reclamation.
42. All backfilling, grading, soil replacement, and revegetation of the sediment basin was not completed by August 12, 1992.
43. An extension of the August 12, 1992 abatement deadline was granted until 7:00 a.m. on August 13, 1992.
44. On August 13, 1992, backfilling, grading, soil replacement, and revegetation of the sediment basin was yet incomplete.
45. Lafayette was also cited with a violation of 310 IAC 12-5-12.1(e)(iii) (sic., 310 IAC 12-5- 12.1(e)(1)(iii)] which requires that all topsoil materials be redistributed to protect the topsoil from wind and water erosion before and after seeding and planting.
46. Some topsoil areas were roughly graded in a way which did not permit efficient drainage of surface water. There were occasional erosion problems in the sediment basin which were not permanently corrected on August 13, 1992. As a result, topsoil materials were present which were not redistributed for protection from wind and water erosion before and after seeding and planting.
47. Lafayette was also cited for a violation of 310 IAC 12-5-56.1(a) and (b).
48. Although efforts had been undertaken on behalf of Lafayette to provide vegetative cover or protective straw mulch, portions of the exposed surface areas lacked adequate protection to effectively control erosion. One area of soil erosion disrupted the re-establishment of vegetative cover and was not properly stabilized. On August 13, 1992, this area had not been filled, regraded, or otherwise stabilized, topsoil had not been replaced, and the area had not been properly reseeded or replanted.
49. Lafayette was additionally cited with a violation of 310 IAC 12-5-55.1(a)(2), (a)(4), and (a)(5).
50. Another persistent problem in the sediment (sic) basing was ponding, which resulted from the presence of depressional low areas. Although ponding did not cover a large area, the presence of some ponding was demonstrated by the evidence. The ponding inhibited the growth of vegetative cover and obstructed achievement of the approved postmining land use.
51. Similar to topsoil erosion, ponding can be controlled by properly grading and blending topsoil for efficient and (sic) complaint drainage of surface water.
52. The sediment basin was not backfilled and graded to eliminate depressions and to support the approved postmining land use.
53. Lafayette was additionally cited with a violation of 310 IAC 12-5-59.
54. On August 13, 1992 permanent revegetation was not established. Temporary species were hand-broadcast over bare areas but were not incorporated, mulched, or otherwise protected to ensure seed germination. These revegetation methods were not consistently effective in stabilizing the soil surface from erosion.
55. Finally, Lafayette was cited with a violation of 310 IAC 12-5-53 for failure to conduct reclamation as contemporaneously as practicable.
56. Lafayette repeatedly missed deadlines for completing reclamation of the sediment basin area without demonstrating an adequate defense for missing those deadlines.
57. Lafayette did not perform reclamation efforts as contemporaneously as practicable with mining operations.[FOOTNOTE 2]
58. The Department has the burden of persuasion and the burden of going forward to establish, by a preponderance of the evidence, the elements of a notice of violation issued under ISMCRA. Peabody Coal Company v. Ralston, (1991 Ind. App.), 578 N.E.2d 751 and IC 4-21.5-3-14. Black's Law Dicitionary, 1979 ed., p. 392, citing Farmingdale Supermarket, Inc. v. U.S., D.C.N.J., 336 F. Supp. 534, 536.
59. In conducting administrative review under IC 13-4.1, the administrative law judge conducts a de novo hearing. Indiana Department of Natural Resources v. United Refuse Co., (1993 Ind.), 615 N.E.2d 100. In a de novo hearing, the substance of a dispute is considered "anew, the same as if it had not been heard before and as if no decision had been previously rendered."[FOOTNOTE 3]
60. The Department is obliged to prove, by a preponderance of the evidence, the elements of the NOV. In determining whether to uphold the NOV, all relevant evidence presented at hearing must be considered by the administrative law judge and the NOV evaluated as if not previously considered and as if no decision had previously been rendered with respect to it.
61. The preponderance of the evidence received at hearing supports issuance of the NOV. Although not every item set forth in the NOV was shown to be a grievous violation of environmental standards, and Lafayette made serious progress toward completing reclamation efforts, those efforts were never brought to a satisfactory conclusion.
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62. Issuance of the NOV should be affirmed.
FOOTNOTE
1. The question of potential surety responsibility for a notice of violation issued under ISMCRA was recently visited in Russell L. Feuerbach v. Department of Natural Resources, 6 Caddnar 120 (1993). The administrative law judge reflected that a surety who elects to undertake reclamation is liable for the receipt of a notice of violation, if reclamation is performed improperly. The administrative law judge ultimately determined that the notice of violation was actually directed to the principal, however, so the reasoning there concerning surety responsibility must be viewed as dictum. In any event, the prior decision and the present one are harmonious.
2. A surety who steps into the shoes of a principal to perform reclamation must initially be viewed in a different light than the principal concerning what is contemporaneous reclamation. A surety faces legal and logistical obstacles apart from those faced by a principal who is already present at the mine site. Once an agreement is entered between the surety and the Department to perform reclamation, however, the surety is bound to the terms of the agreement. The evidence demonstrated that Lafayette was not timely with all of the terms of its agreements with the Department to perform reclamation as a result, its reclamation efforts were not performed as contemporaneously as practicable
3. In its "Proposed Order & Findings of Fact", the Department suggests that the various elements of the NOV should be affirmed where a "factual basis exists" for the violation. This language appears similar to what is properly considered by a court on judicial review. See, particularly, IC 4-21.5-514(d)(5) which allows for a reversal where a decision by an ultimate authority is "unsupported by substantial evidence." The test for administrative review is a markedly different one, however, and requires a determination that the preponderance of the evidence favors the Department. The administrative law judge did not apply the standard suggested by the Department but instead independently weighed the evidence, de novo, and found that the preponderance of the evidence supported issuance of the NOV.