CADDNAR


[CITE: Black Beauty Coal Co. v. DNR, 9 CADDNAR 168 (2004)]

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Cause #: 03-024R
Caption: Black Beauty Coal Company v. DNR
Administrative Law Judge: Lucas
Attorneys: Sullivan; Boyko
Date: May 13, 2004

FINAL ORDER OF SUMMARY JUDGMENT

[NOTE: ON MARCH 9, 2005, THE MARION SUPERIOR COURT (CAUSE NUMBER 49F12-0409-PL-003003) AFFIRMED THE ALJ’S FINAL ORDER. THE SUPERIOR COURT’S "JUDGMENT" FOLLOWS AFTER THE ADMINISTRATIVE DECISION.]

Summary judgment is granted in favor of Black Beauty Coal Company, and Notice of Violation N21210-U-013 is vacated.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. On January 14, 2003, Black Beauty Coal Company ("Black Beauty") sought administrative review under IC 4-21.5 (sometimes referred to as the "Administrative Orders and Procedures Act" or "AOPA") from the Natural Resources Commission (the "Commission") of Notice of Violation N21210-U-013 (the "NOV") issued by the Division of Reclamation (the "Division") of the Department of Natural Resources (the "DNR").

2. The Commission has adopted rules at 312 IAC 3-1 to assist in its implementation of AOPA.

3. For consideration is a coal mining and reclamation activity, that is licensed by the DNR, and that is governed by IC 14-34 and 312 IAC 25 (collectively referred to as "ISMCRA").

4. The Administrative Law Judge is, under IC 4-21.5-1-15, the "ultimate authority" for the proceeding. IC 14-10-2-3 and IC 14-34-2-2.

5. The parties are Black Beauty and the Department.

6. The Administrative Law Judge has jurisdiction over the subject matter and over the person of the parties.

7. During a telephone status conference held on June 13, 2003, the parties agreed "that the facts are not in dispute, rather questions exist of a legal nature." They agreed upon a briefing schedule for summary judgment motions. Briefing has been completed, and the proceeding is ripe for final administrative adjudication by the Administrative Law Judge.

8. Summary judgment is appropriate where no genuine issue of material fact exists and where the moving party is entitled to judgment as a matter of law. Auto-Owners Insurance Co. v. United Farm Bureau Insurance Co., 560 N.E.2d 459 (Ind. App. 1990). Despite conflicting facts and inferences on some elements of a claim, summary judgment may be proper where there is no dispute or conflict regarding a fact that is dispositive of the litigation. Marsym Development Corp. v. Winchester Econ. Devel. Comm'n, 447 N.E.2d 1187 (Ind. App. 1983).

9. Summary judgment is applicable to this proceeding under IC 4-21.5-3-23 that provides in pertinent part:

(a) A party may, at any time after a matter is assigned to an administrative law judge, move for summary judgment in the party's favor as to all or any part of the issues in the proceeding. The motion must be supported with affidavits or other evidence permitted. . . and set forth specific facts showing that there is not a genuine issue in dispute.

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(b) . . . The [summary] judgment sought shall be rendered immediately if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits and testimony, if any, show that a genuine issue as to any material fact does not exist and that the moving party is entitled to a judgment as a matter of law. After the filing of a motion for summary judgment . . . .the requirements of subsection (f) apply.

. . . .

(f) If a motion for summary judgment is made and supported under this section, an adverse party may not rely upon the mere allegations or denials made in the adverse party's pleadings as a response to the motion.

10. The principles of summary judgment under AOPA should be applied to this proceeding based upon facts set forth in the following Findings.

11. In March 1992, Black Beauty opened the Air Quality Mine (the "mine") in Knox County, Indiana. Exhibit A[FOOTNOTE a] Before opening the mine, Black Beauty obtained a DNR permit under ISMCRA for operation of the mine.

12. On November 28, 1994, the DNR granted a nonsignificant revision to the permit that allowed Black Beauty to incorporate gob and slurry disposal to refuse area #3 of the mine. Exhibit B.

13. The permit required Black Beauty to monitor the refuse piles and to conduct testing for stability. The permit specifically required that in situ moisture and density testing be conducted. The test results were to be forwarded to DNR's inspector for the mine following the quarter in which the results were taken. Exhibit C.

14. Black Beauty conducted the requisite testing and forwarded the results as specified in the permit until November 1995. Exhibit A.

15. In 1995, Mark Yingling, the Manager of Reclamation, Farming and Regulatory Affairs for Black Beauty, submitted a request for a nonsignificant revision to the permit as follows:

Per our discussions and site inspections regarding the continued testing of the coarse and fine refuse over the last year, due to the consistency of the data, Black Beauty requested on September 20, 1995 that the quarterly monitoring be discontinued. Please note that only the tri-axle testing will be discontinued where compaction and moisture content monitoring will be continued on a quarterly basis in active areas. Exhibit D.

16. DNR Reclamation Specialist, Charles Weilbaker, approved the request on November 21, 1995. Exhibit E.

17. After approval of the nonsignificant revision, Black Beauty immediately discontinued density and moisture content testing. After the revision, Weilbaker continued to inspect the mine for compliance with ISMCRA and conditions of the permit. Weilbaker conducted monthly inspections from November 1995 to March 1999. Exhibit A.

18. During

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this time, Weilbaker continually inspected refuse pile #3 as part of his evaluations for the DNR. During this time, Weilbaker filed 41 inspection reports regarding the mine, many of which refer to the inspection of refuse piles. During these inspections, Weilbaker also continued to inspect and verify that other tests, still required by ISMCRA or by conditions of the permit, were conducted and filed. Exhibit F.

19. During this period, the federal Office of Surface Mining Reclamation and Enforcement ("OSM") inspected the mine twice. Exhibit G.

20. Neither the inspections by the DNR described in Finding 18, nor the inspections by OSM described in Finding 19, refer to a violation of ISMCRA or conditions in the permit for failure to conduct moisture and compaction tests.

21. From April 1999 until July 2001, DNR Inspector Brock Mayes conducted 26 monthly mine inspections. During this period, OSM inspected the mine twice. Exhibit H.

22. During his tenure, Mayes issued multiple notices of violation to Black Beauty, but none of them alleged a failure to conduct moisture or compaction testing. Exhibit I and Exhibit J.

23. On January 24, 2001, OSM conducted a mine site evaluation. After the evaluation, OSM issued three ten-day notices. The first alleged a "failure to conduct regular inspection of coal mine waste refuse piles #1 and #3 during the placement of coal mine waste materials." The narrative report explained the notice was issued to address Black Beauty's failure to inspect coal refuse piles #1 and #3 after July 20, 1995. Exhibit K.

24. DNR's Assistant Director of Inspection and Enforcement, Tim Taylor, submitted a response letter to OSM. With respect to the allegation that Black Beauty failed to conduct regular inspections, Taylor stated:

Part 1 of the [ten-day notice] alleges Failure to conduct regular inspections of coal mine refuse piles #1 and #3 during placement of coal mine waste; failure to maintain copies of inspection reports at the mine; and failure to provide the [Division] with copies of the reports. The [ten-day notice] suggests that the refuse piles have not been inspected during placement of the refuse material. That is not the case. Both refuse piles have been inspected during their initial critical construction stage as well as throughout the placement stage. They have been inspected by MSHA on an annual basis, they are inspected quarterly by a professional engineer for [Black Beauty]; and by [Division] inspectors during their monthly inspections. The piles are currently stable and at various levels of reclamation. During the initial critical construction phase some quarterly reporting was submitted to the [Division]. Exhibit L.

25. On March 15, 2001, Yingling forwarded inspection reports to Mayes for refuse piles #1 and #3. Yingling requested that the Division allow inspections to be terminated on pile #3 as it was essentially complete and reclaimed. Exhibit M.

26. On March 28, 2001, Taylor forwarded the certified copies of the inspection reports to OSM. Compaction and moisture tests were not included in the reports. Exhibit N.

27. On March 29, 2001, OSM stated that with this additional information, DNR's response to the ten-day notice was appropriate. Again, there was no reference to compaction or moisture testing on refuse pile #3. Exhibit O.

28. DNR Inspector, Todd Huff, began conducting monthly

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inspections at the mine in August 2001. Exhibit A. In his June 10, 2002 inspection report, Huff noted that "quarterly waste bank inspection reports have begun again for pile #3 as new disposal has resumed. Termination for the quarterly inspection of this reclaimed refuse area was previously approved on March 26, 2001 and now will be conducted again due to disposal." Exhibit P.

29. In December 2002, OSM performed a written mine site evaluation which stated in part:

Refuse piles #1 and #3 are both active again after previously having been considered inactive. Gob is occasionally disposed of there when it is too wet to be placed at refuse disposal area #4. Both refuse piles are being examined by the permittee quarterly and certified reports submitted to the [Division].

Refuse disposal at disposal area #3 was approved for the course refuse material to be disposed of at the perimeter of the site and fine refuse disposed of within the course material perimeter. Currently, the fine refuse is not disposed of at area #3, rather, the active disposal area contains only course refuse. According to the [Division] inspector, course refuse disposal at refuse disposal area #3 began again in April 2002. The refuse compaction monitoring plan for refuse pile #3 described at non-significant revision #26 says that field tests for in-situ moisture and density for both course and fine refuse will be done while refuse disposal is active and the results sent to the [Division]. Tri-axle laboratory testing of the refuse was previously approved to be discontinued. The permittee indicated in-situ testing is presently not being conducted at refuse pile #3. I did not attempt to determine when in-situ moisture and density testing ceased or whether it had ever been conducted. The [Division] has determined that the course refuse material be tested for in-situ moisture and density though fine refuse material is not being disposed of there. The [Division] will take enforcement action to address the failure to conduct that testing during the second and third quarters of 2002. [Emphasis supplied by the Administrative Law Judge] [Emphasis not included with this CADDNAR version.]

30. The Division then issued the NOV for "Failure to conduct coal processing waste disposal testing according to the approved plan." The alleged failure was said to violate 312 IAC 25-4-4, Condition of Permit, Part IV.L. Black Beauty was directed, by December 31, 2002, to "[c]onduct the applicable in-place laboratory density and moisture content sampling and refuse testing for Refuse Disposal Area #3 as approved and discussed in Part IV.L." In addition, Black Beauty was directed, by January 13, 2003, to "[s]ubmit the applicable in-place and laboratory density and moisture content refuse testing result information to the mine's IDOR inspector for the fourth quarter of 2002."

31. For consideration is whether, following approval of the nonsignificant revision to the permit on November 21, 1995, the requirement that Black Beauty monitor Refuse Disposal Area #3 carries a legal responsibility that Black Beauty perform in-place moisture and compaction testing.

32. Neither ISMCRA nor the permit contain a definition of "monitor" or "monitoring" that would govern the permit.

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33. Black Beauty urges that a dictionary definition should be applied to the term "monitor" and that the definition has a meaning different and distinct from testing. "The American Heritage Dictionary, Second College Edition, defines monitor as 'to keep watch over; supervise.'"

34. The Department counters that the permit "contains many mandatory terms and conditions" required by ISMCRA and should be given a "specialized and technical meaning" consistent with ISMCRA. The Department cites a definition from the "Glossary of Environmental Terms and Acronym List" published by the U.S. Environmental Protection Agency, Office of Communications and Public Affairs (A-107), December 1989, 19-K-1002, as being more appropriate than a dictionary definition:

Monitoring: Periodic or continuous surveillance or testing to determine the level of compliance with statutory requirements and/or pollutant levels in various media or in humans, animals, and other living things.

35. Application of the common dictionary definition to the term "monitor" is not necessarily compelling. A term applicable to surface coal mining and reclamation might have a specialized and technical meaning, but application of the EPA definition is not dispositive. The EPA and its definition have no special relationship to the regulation of surface coal mining and reclamation under ISMCRA.

36. Perhaps more importantly, the EPA definition anticipates that testing sometimes is and sometimes is not an element of monitoring. Within the EPA definition, "monitoring" may be "surveillance or testing". Emphasis supplied by Administrative Law Judge. A further illustration is in the administration of Superfund, a program under the supervision of EPA, where "monitoring" and "testing" are, in at least some circumstances, viewed as separate functions. "In a mini-version of the Superfund remedy..., the Administrator can do the monitoring or testing if others cannot or will not...." W. Rodgers, Jr., 4 "Environmental Law: Hazardous Wastes and Substances" section 7.23(c)(2), p. 283 (1992).

37. Under ISMCRA, "monitor" includes the concepts of watching over and supervising. In the absence of a definition in an

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applicable statute, rule, or license, however, whether "monitor" also includes "testing" is ambiguous.

38. Where a term of an environmental license is ambiguous, interpretation of the license is performed in the same manner in which a contract or other legal document would be interpreted. Natural Resources Defense Council v. Texaco, 20 F. Supp. 2d 700, 709, affirmed at 182 F.3d 904 (1998), citing Northwest Environmental Advocates v. City of Portland, 56 F.3d 979, 982 (9TH Cir. 1995).

39. Where the terms of an environmental license are ambiguous, the reviewer may look to extrinsic evidence to discern the license's meaning. Natural Resources Defense Council at 709 citing Russian River Watershed Protection Committee v. City of Santa Rosa, 142 F.3d 1136, 1141 (9TH Cir. 1998).

40. Where there is uncertainty in the language of a contract, the actions of the parties evidence their intention and understanding. "[I]n construing an uncertain or ambiguous provision of a contract, each party must be held to the construction which his own conduct has placed upon it, where such conduct inevitably operates as an admission against his interest." Lacy v. White, 288 N.E.2d 178, 183 (Ind. App. 1972), citing Heath v. West, 68 Ind. 548 (1879). Similarly, the meaning of a license depends upon the objective intent of the parties. "Quails v. Lake Berryessa Enterprises, Inc., 91 Cal. Rptr. 2d 143, 76 Cal. App. 4TH 1277 (1999).

41. Finding 13 through Finding 27 demonstrate the parties (and, for that matter, OSM) understood that monitoring did not, after the 1995 nonsignificant revision to the permit, include moisture and compaction testing.

42. There are no material facts in dispute. Consistent with law pertaining to the construction of license terms, and consistent with an ordinary definition of "monitor", the NOV must properly be vacated.

FOOTNOTE

a. "Exhibit A" refers to Exhibit A that was attached to Black Beauty's "Motion for Summary Judgment" filed on September 18, 2003. Subsequent references to an "Exhibit" followed by an upper case letter are also references to attachments to Black Beauty's "Motion for Summary Judgment".

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MARION SUPERIOR COURT (CAUSE NO 49F12-0409-PL-003003) FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT

This cause comes before the Court on the Petitioner’s Verified Petition for Judicial Review of the May 13, 2004 Final Order of Summary Judgment of the Administrative Law Judge, which granted Black Beauty Coal Company’s Motion for Summary Judgment. The issues having been heard before the Court, the Court now enters its Findings of Fact, Conclusions of Law, and Judgment.

FINDINGS OF FACT

1. The Petitioner is the Indiana Department of Natural Resources ("IDNR").

2. The Respondent is Black Beauty Coal Company ("Black Beauty"), the owner and operator of the Air Quality Mine in Knox County, Indiana.

3. Black Beauty opened its Air Quality Mine in March of 1992. Prior to the mine’s opening, Black Beauty was issued a permit for the operation of the mine by the IDNR.

4. The permit requirements included monitoring of refuse piles and tests for stability. Under the terms of the permit, Black Beauty was to conduct periodic triaxial testing, in-situ moisture testing, and density testing. Moisture and compaction testing was conducted in accordance with the permit requirements and continued while active disposal took place.

5. On November 9, 1995, Black Beauty sent IDNR a request for non-significant revision of the permit.

6. IDNR approved Black Beauty’s request for non-significant revision of its permit in a letter from Reclamation Specialist Charles N. Weilbaker dated November 21, 1995. The non-significant revision allowed the tri-axle testing be discontinued and that compaction and moisture content monitoring would continue on a quarterly basis.

7. Upon receiving the letter, Black Beauty ceased not only triaxial testing, but moisture content and compaction testing as well.

8. IDNR continued periodic inspections of the site. Between November of 1995 and November of 2002, Black Beauty was issued several Notices of Violation ("NOVs") by IDNR and three (3) ten-day notices by the United States Office of Surface Mining Reclamation and Enforcement ("OSM"). None of the NOVs or the ten-day notices involved moisture content or compaction testing, and all were terminated without further action. During this seven (7) year period, Black Beauty continued to monitor moisture and compaction without conducting testing.

9. In December of 2002, the IDNR issued a Notice of Violation, alleging that Black Beauty violated 312 IAC 25-4-4 when it failed "to conduct coal processing waste disposal testing according to the approved plan."

10. Black Beauty requested Administrative Review of the NOV with the Natural Resources Commission ("NRC") on or about January 13, 2003.

11. On September 18, 2003, Black Beauty filed a Motion for Summary Judgment with the NRC. Black Beauty claimed that following the non-significant revision of its permit, it was no longer required to perform moisture and compaction testing. Black Beauty argued that "monitoring" of moisture content and compaction did not require "testing" of these variables. Black Beauty cited the lapse of time between the permit revision and the issuance of the NOV as evidence that there was an understanding between Black Beauty and IDNR that moisture and compaction testing were no longer necessary.

12. The IDNR submitted its Response and Cross Motion for Summary Judgment on October 15, 2003. IDNR denied that the permit revision included a change in the moisture and compaction monitoring requirements.

13. On May 13, 2004 Administrative Law Judge Stephan [sic. Stephen] L. Lucas ("ALJ") issued his "Findings of Fact and Conclusions [of] Law of [sic] with Final Order of Summary Judgment." The ALJ granted Summary Judgment in favor of Black Beauty and ordered that the NOV be vacated.

14. Based on the record before the ALJ, he concluded that the term "monitoring" as used in the non-significant revision was ambiguous, and that because the term is ambiguous, the parties’ conduct is evidence of their intention and understanding of the permit’s meaning.

15. The ALJ concluded that the parties’ conduct demonstrates their understanding that monitoring did not, after the 1995 non-significant revision to the permit, include moisture and compaction testing.

16. On June 14, 2004, IDNR filed its Verified Petition for Judicial Review of the ALJ’s Final Order.

17. On September 16, 2004, IDNR filed its Motion for Summary Judgment.

18. On December 7, 2004, Black Beauty filed its Response and Cross Motion for Summary Judgment.

19. On January 6, 2005, IDNR filed its Reply to Black Beauty’s Motion for Summary Judgment.

20. On January 11, 2005, the Court heard arguments from the parties on IDNR’s Verified Petition Review and the parties’ cross Motions for Summary Judgment. The Court then ordered the parties to submit proposed findings of fact and conclusions of law to the Court by February 11, 2005.

21. To the extent any of these findings of fact are construed to be conclusions of law, they are hereby included as additional conclusions of law. To the extent that the conclusions of law are construed to be findings of fact, they are hereby included as additional findings of act.

CONCLUSIONS OF LAW

1. This case involves judicial review of an agency determination under the Administrative Orders and Procedures Act ("AOPA"). Ind. Code Section 4-21.5-5-1 et seq.

2. The Supreme Court set forth the standard of review under AOPA in LTV Steel Co. v. Griffin, 730 N.E.2d 1251, 1257 (Ind. 2000) A court may only set aside agency action that is: (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) contrary to constitutional right, power, privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (4) without observance of procedure required by law; or (5) unsupported by substantial evidence. Id.

3. An agency acts arbitrarily or capriciously when its actions constitute a willful or unreasonable action, without consideration and in disregard of the facts and circumstances of the case, or without some basis that would lead a reasonable and honest person to such action. Indiana Bd. of Pharmacy v. Crick, 433 N.E.2d 32, 39 (Ind.Ct.App. 1982). The Indiana Court of Appeals has held that "[a] decision is arbitrary and capricious when it is made without any consideration of the facts and lacks any basis that may lead a reasonable person to make the same decision made by the administrative agency." Indiana Department of Environmental Management v. Schnippel Construction, Inc., 778 N.E.2d 407, 412 (Ind.Ct.App 2002) [citing Roberts v. County of Allen, 773 N.E.2d 850, 853 (Ind.Ct.App. 2002)].

4. In judicial review of an agency decisions, an agency’s conclusions of law are not afforded the same deference as its findings of fact. LTV Steel Co. v. Griffin, 730 N.E.2d 1251, 1257 (Ind.2000); Indiana Dep't of Pub. Welfacre v. Payne, 662 N.E.2d 461, 465 (Ind. 1993); rehearing denied; Board of Trustees of the Pub. Employees' Retirement Fund of Ind. v. Miller, 519 N.E.2d 732, 733 (Ind. 1988).

5. Interpretation of permit terms is a matter of law. Natural Resources Defense Council, Inc. v. Texaco Refining & Marketing, Inc., 20 F.Supp.2d 700, 709 (D.Del., 1998); United States v. Weitzenhoff, 35 F.3d 1275, 1287 (9TH Cir. 1993); California Public Interest Research Group v. Shell Oil Co., 840 F.Supp. 712, 716 (N.D.CAL.1993); Student Public Interest Research Group v. AT & T Bell Laboratories, 617 F.Supp. 1190, 1205 (D.N.J.1985). Where the terms of the permit are ambiguous, the Court may look to extrinsic evidence to discern the permit’s meaning. Russian River Watershed Protection Comm. v. City of Santa Rosa, 142 F.3d 1141 (9TH Cir.1998).

6. The parties have different interpretations of what form of moisture and compaction "monitoring" was required following the non-significant permit revision.

7. The ALJ’s conclusions that the term "monitoring" was ambiguous and that the parties’ conduct demonstrates their understanding that monitoring did not after the 1995 non-significant revision include moisture and compaction testing, are not arbitrary, capricious or an abuse of discretion.

8. The burden of demonstrating the invalidity of agency action is on the party to the judicial review proceeding asserting invalidity. Ind. Code Section 4-21.5-5-14(a).

9. IDNR has not met its burden to show that any of the statutory requisites in Ind. Cod Section 4-21.5-5-14(d) for overturning an agency decision have been met.

10. For the reasons stated herein, IDNR has failed to meet its burden to demonstrate the ALJ’s decision should be overturned.

JUDGMENT

Based on the forgoing Findings of Fact, Conclusions of Law and legal precedent, the Final Order issued by the ALJ on May 13, 2004 is affirmed; IDNR’s Petition for Judicial Review and Motion for Summary Judgment are hereby denied; and Black Beauty’s Motion for Summary Judgment is hereby granted.

March 9, 2005
Michael D. Keele
Judge, Marion Superior Court
Civil Division, Room No. F12