[CITE: Gray Farms, Inc. v. Department of Natural Resources, 5 CADDNAR 182
(1990)]
[VOLUME 5, PAGE 182]
Cause #: 89-008R
Caption: Gray Farms, Inc. v.
Department of Natural Resources
Administrative Law Judge: Lucas
Attorneys: Williams; Posey
Date: July 1, 1990
ORDER
The
enhancement lien recorded against Gray Farms on November 29, 1988 in record
book 71, pages 278 to 302, as document 88-2055 with the Recorder of Pike
County, shall be removed by the Department.
FINDINGS OF FACT
A. ADMINISTRATIVE LAW JUDGE
IS THE DEPARTMENT'S ULTIMATE AUTHORITY.
1.
The Indiana department of natural resources (the "Department") is an
agency as the term is defined in IC 4-21.5-1-3. IC 4-21.5 (sometimes referred
to as the "administrative adjudication act" or the "AAA")
is applicable to an "agency action" of the Department.
2.
As defined in IC 4-21.5-1-15, "ultimate authority" means the
individual or panel in whom the final authority of an agency is vested.
3.
SECTION 2 of 1991 Senate Enrolled Act 154, which became effective July 1, 1991,
provides in pertinent part: "Notwithstanding IC 14-3-3-21(a), IC
14-3-3-25, and any other law, the administrative law judge is the ultimate
authority for the department for any administrative review proceedings under
this article [IC 13-4.1], except for proceedings concerning the approval or
disapproval of a permit application or permit renewal under IC 13-4.1-4-5 and
proceedings for suspension or revocation of a permit under IC
13-4.1-11-6." This enactment of the Indiana General Assembly is codified
at IC 13-4.1-2-1(c).
4.
The administrative law judge is the "ultimate authority" for the
Department in this proceeding, because at issue is an administrative review
under IC 13-4.1 with respect to the placement of a lien (and not an exception
to the ultimate authority of an administrative law judge under IC 13-4.1-4-5 or
IC 13-4.1-11-6).
B. APPLICATION OF ADMINISTRATIVE
ADJUDICATION ACT
5.
Gray Farms, Inc. ("Gray Farms") filed its request for administrative
review on January 24, 1989.
6.
The request for administrative review by Gray Farms was timely and initiated a
proceeding which is subject to the administrative adjudication act. Also
applicable is 310 IAC 0.6-1, a rule adopted to assist in the implementation of
the AAA before the Department.
7.
The substantive statutory provisions under consideration in this proceeding are
found in IC 13-4.1, an article which addresses surface coal mining and
reclamation.
8.
IC 13-4.1 is supplemented by rules codified at 310 IAC 12. IC 13-4.1 and 310
IAC 12 are collectively referred to as "Indiana
SMCRA".
9.
The scope of administrative review is determined primarily by the
administrative adjudication act. Included within the purview of the enactment
is the capacity to review both legal and factual issues.
10.
Although an agency does not have jurisdiction under the AAA to pass upon the constitutionality
of a statute itself [FOOTNOTE i], the AAA does provide a forum in which to consider
whether an agency applies a statute in a constitutional manner.[FOOTNOTE ii]
11.
The purposes of IC 13-4.1 are set forth in IC 13-4.1-1-2. Most notably for this
proceeding, subdivision (8) of the section specifies that a purpose of IC
13-4.1 is to do the following: " ... promote the reclamation of mined
areas left without adequate reclamation prior to August 3, 1977, and which
continue, in their unreclaimed condition, to
substantially degrade the quality of the environment, prevent or damage the
beneficial use of land or water resources, or endanger the health or safety of
the public."
12.
Chapter 15 of IC 13-4.1 is the chapter primarily concerned with mine lands left
without adequate reclamation prior to August 3, 1977. These properties are
sometimes called "abandoned mine lands". Chapter 15 is referenced as
the "Abandoned Mines Chapter".
13.
The Abandoned Mines Chapter addresses a number
[VOLUME 5, PAGE 183]
of issues relative to coal mine
lands left without adequate reclamation. Included are provisions relative to
federal funding for the restoration of abandoned mine lands, the establishment
of a special dedicated fund for that purpose, eligibility for federal funding,
expenditure priorities, entry by the Department's director (the
"Director") upon lands adversely affected by past coal mining
practices, acquisitions of lands adversely affected by past coal mining
practices, title and sale of those lands, liens on privately owned lands where
a significant increase in property value has resulted from restoration efforts,
hazard abatement, and the construction by the Director of plants to control
water pollution resulting from mine drainage.
14.
More particularly, liens are governed by IC 13-4.1-15-12. Subsection (a) of
that section states:
"Within
six (6) months after the completion of projects to restore, reclaim, abate,
control, or prevent adverse effects of past coal mining practices on privately
owned land, the [D]irector shall itemize the moneys
expended and may file a statement thereof with the county recorder in the
county in which the land lies together with a notarized appraisal by an
independent appraiser of the value of the land before the restoration,
reclamation, abatement, control, or prevention of adverse effects of past coal
mining practices if the moneys so expended shall result in a significant
increase in property value. That statement shall constitute a lien upon the
land. The lien may not exceed the amount determined by the appraisal to be the
increase in the market value of the land as a result of the restoration,
reclamation, abatement, control, or prevention of the adverse effects of past
coal mining practices. No lien shall be filed against the property of any
person, in accordance with this subsection, who owned the surface prior to May
2, 1977, and who neither consented to, participated in, nor
exercised control over the mining operation which necessitated the reclamation
performed under this chapter." A lien under section 12 is here
referenced as an "enhancement lien".
15.
The Department filed an enhancement lien, asserting the authority of IC
13-4.1-15-12, in the amount of $60,000 against property owned by Gray Farms in
Pike county, Indiana (the "subject
property"). This enhancement lien was recorded on November 29, 1988 in
record book 71, pages 278 to 302, as document 88-2055 with the Recorder of Pike
County (the "subject lien").
16.
A "determination of tax due or other liability" by a state agency is
an event for which administrative review is available under the administrative
adjudication act pursuant to IC 4-21.5-35(a)(4).
17.
An enhancement lien is in the nature of a "tax due or other
liability" for which administrative review is available within the AAA and
to which IC 4-21.5-3-5 applies.
18.
Stated in general terms, Gray Farms presents six grounds upon which it contends
the imposition of the subject lien against the subject property is unlawful:
(1)
The alleged $60,000 increase in the market value of the property, as determined
by the appraisal of C. David Mathews, was excessive.
(2)
IC 13-4.1-15-12(a) is unconstitutional in substance or application because what
constitutes a "significant increase in property value" is not
defined.
(3)
The application of the subject lien through IC 13-4.1-15 is unconstitutional
because Gray Farms did not receive advance notice and due process with respect
to the lien assessment.
(4)
Attachment of the lien by the Department against the entire 3,037 acres owned
by Gray Farms is unlawful because abandoned mine land work was performed only
upon approximately 400 acres.
(5)
The Department has violated equal protection through past practices because
other landowners have received the benefits of abandoned mine lands work on
substantial acreage without receiving an enhancement lien.
(6)
The subject lien has been improperly asserted because IC 13-4.1-15-12 states that
no enhancement lien can be filed against land on which surface coal mining
operations took place after May 2, 1977; and surface coal mining operations
have, in fact, taken place on some of the acreage included within the subject
property subsequent to that date.
19.
Most of the issues identified in Finding 18 are within the competence of the
administrative law judge and are subject to administrative review and judicial
review pursuant to IC 4-21.5. The notable exception is that the administrative
law judge is without competence to determine the constitutionality of the
disputed sections of IC 13-4.1-15.
20.
Not only does the administrative law judge have administrative competence,
pursuant to IC 13-4.1-15-12(b) it has exclusive jurisdiction to determine the
amount of an "increase in market value" of the
[VOLUME 5, PAGE 184]
subject property, as the increase
bears upon the issuance of an enhancement lien. This statutory subsection is
applicable to issue (1) in Finding 18.
21.
The question of the extent of administrative jurisdiction, when a proceeding
includes issues that are beyond administrative competence, is governed in
Indiana by the "doctrine of primary jurisdiction". The doctrine
essentially holds that when any part of the proceeding is within the exclusive
jurisdiction of an agency, the whole proceeding must first be heard by the
agency.[FOOTNOTE iii]
22.
Since the administrative law judge has exclusive jurisdiction to determine any
increase in value of the subject property, as the increase bears upon the
issuance of an enhancement lien, the doctrine of primary jurisdiction requires
that the whole proceeding must first be heard by the administrative law judge.
For this reason, each of the six issues identified in Finding 15 may, and to support
administrative and judicial efficiency should, properly be heard and determined
by the administrative law judge.[FOOTNOTE iv]
23.
The administrative adjudication act applies to require administrative review of
each of the six issues identified in Finding 15.
C. WHETHER THE ALLEGED $60,000 INCREASE
IN MARKET VALUE OF THE SUBJECT PROPERTY, AS DETERMINED BY THE APPRAISAL OF C.
DAVID MATTHEWS, WAS EXCESSIVE.
24.
C. David Matthews, a qualified independent real estate appraiser, was
contracted by the Department pursuant to IC 13-4.1-1512(a) to provide
evaluations of the property before and after completion of the abandoned mine
lands restoration project.
25.
In conducting the appraisal of the subject property, Matthews followed the
normal valuation process. He and an associate inspected and photographed the
subject property. Comparable sales data and market analyses were used.
26.
In accordance with his appraisal contract with the Department, Matthews valued
the subject property after the abandoned mine lands restoration project based
on the "assumption" that the restoration "effort was
completed."[FOOTNOTE v]
27.
Matthews conducted his final inspection for the appraisal on April 22, 1988. At
that time, portions of the abandoned mine lands restoration effort on the
subject property were completed, but other portions were not completed.[FOOTNOTE vi]
28.
When the hearing was conducted on May 14, 1990, there were still areas of the
abandoned mine lands restoration project where erosion was occurring and where revegetation with grasses was yet unsuccessful. In its
effort to establish a grass cover, the Department had entered maintenance
projects.[FOOTNOTE vii]
29.
A sample taken from one location within the abandoned mine lands restoration
project indicated water continues to be acidic and may not be significantly
improved from the quality which existed before the project.[FOOTNOTE viii] An accumulation of iron oxide is visible within and
along the banks of the lake.[FOOTNOTE
ix] Iron deposits are also
demonstrated along the banks of a ditch lined with rip rap.[FOOTNOTE x]
30.
The Department contends the project was complete for purposes of filing the
enhancement lien against the subject property. "The project was complete
because the primary contract had been performed ... The important factor is
that the main contract, (project), to restore, abate, control, and prevent
adverse effects of past coal mining practices was completed." Claimant's
(sic. Respondent's] Post-Hearing Brief at page 2.
31.
The Department's reasoning is fatally flawed because it equates restoration
project completion with the completion of the contract for the primary
restoration project. As a consequence of this false equation, an appraisal was acquired,
not based upon the actual condition of the subject property following
completion of the primary restoration project contract, but rather based on a
restoration goal which has not yet been achieved.
32.
If an enhancement lien is to be founded on successfully completed restoration,
the Matthews appraisal and resulting enhancement lien
are premature. The evidence does not support the proposition that restoration
of the subject property has been completed.
33.
If an enhancement lien is to be founded on whatever improvements have benefited
property following the completion of the contract for a primary restoration
project, the Matthews appraisal applies assumptions which are nonfactual.
34.
IC 13-4.1-15 would apparently allow the determination of an enhancement lien
based upon an imperfect or incomplete restoration effort, but the statute does
not contemplate an increased valuation measured by parameters of success which
have not and may never occur.
35.
Because the Matthews appraisal applies assumptions which do not reflect the
current factual condition of the subject property, its determination of the
increase in market value to the subject property resulting from the restoration
project is inappropriate and must be set aside.
[VOLUME 5, PAGE 185]
D. WHETHER IC 13-4.1-15-12(a) IS
UNCONSTITUTIONAL IN SUBSTANCE OR APPLICATION BECAUSE WHAT CONSTITUTES A
"SIGNIFICANT INCREASE IN PROPERTY VALUE" IS NOT DEFINED.
36. IC 13-4.1-15-12(a) authorizes the imposition of an enhancement lien where a
completed abandoned mine lands restoration project results in a
"significant increase in property value" to the restored realty.
37.
What constitutes a "significant increase in property value" is not
defined in IC 13-4.1.
38.
What constitutes a "significant increase in property value" is not
defined by an Indiana rule.[FOOTNOTE xi]
39.
Nothing in SMCRA delineates any standards for determining what constitutes a
"significant increase in property value".
40.
The meaning of the term "significant" is not, however, so mysterious
as to deny constitutional legal application resulting from vagueness.
Generally, "significant" refers to that which is "full of
import" and substantial. McLeod v. Great Northern Paper Company, 268
A.2d 488, 491 (1970 Me).
41.
Where a statute is silent as to the meaning of a key phrase, there may be found
a deference by the legislature to an administrative interpretation. Continental Training
Services, Inc. v. Cavazos, 893 F.2d 877 (7th 1990).
42.
Broad discretion is provided to the Commission to adopt rules to construe what
constitutes a "significant increase in property value". IC 4-21.5-2-1
and IC 14-3-3-21.[FOOTNOTE xii]
43.
Within the general parameters of what is "significant", and applying
standard methodologies for the valuation of property, the Department through
the natural resources commission might adopt standards for what constitutes a
"significant increase in property value" by rule, or, conceivably by
another mechanism which provides adequate public notification. Properly
implemented, this mechanism would cause "significant increase in property
value" to pass constitutional muster.
44.
IC 13-4.1-15-12(a) is not unconstitutional on its face.
45.
There was, however, no evidence offered that the commission has ever adopted a
rule nor embraced a nonrule policy document, written
guideline, or published standard of any kind in seeking to establish what is a "significant increase in property value".
Indeed, there was no evidence that the commission has been invited by the division
of reclamation of the Department to interpret the phrase.[FOOTNOTE xiii]
46.
Testimony elicited at hearing demonstrates that Ray Brumfiel,
realty supervisor of the Department's abandoned mine lands restoration program,
utilized a "draft" document of the federal office of surface mining
reclamation enforcement to determine that a "significant increase in
property value" had occurred to the subject property. He also testified
that this "draft" document "was never implemented" and a
final document was never approved. He was unable to state whether the document
was ever published or even if it is considered by the Department to be a public
record.[FOOTNOTE xiv]
47.
With respect to this proceeding and to the property, IC 13-4.1-15-12(a) has been
applied in a manner which lacks discernible standards.
48.
What constitutes a "significant increase in property value" to the
subject property has been applied without reference to discernible standards.
49.
The application of IC 13-4.1-15-12(a) to the facts of this proceeding must be
found to be void for vagueness.
E. WHETHER THE APPLICATION OF THE
SUBJECT LIEN THROUGH IC 13-4.1-15 IS UNCONSTITUTIONAL BECAUSE GRAY FARMS DID
NOT RECEIVE ADVANCE NOTICE AND DUE PROCESS WITH RESPECT TO THE LIEN ASSESSMENT.
50.
IC 13-4.1-15-12 provides, in part, that six months after the completion of a
restoration project, the Director "shall itemize the moneys expended and
may file a statement thereof with the county recorder in the county in which
the land lies together with a notarized appraisal by an independent appraiser
of the value of the land before the restoration... if the moneys so expended
shall result in a significant increase in property value. This statement shall
constitute a lien upon the land... and shall have priority as a lien second
only to the lien of real estate taxes imposed upon said land."
51.
The statutory requirements for notice of a determination to place an
enhancement lien are not clearly described in Indiana SMCRA.[FOOTNOTE xv]
52.
An enhancement lien is, however, in the nature of a "tax due or other
liability" for which administrative review is available under the AAA and
to which IC 4-21.5-3-5 applies.
53.
IC 4-21.5-3-5 and the administrative adjudication act do provide notice requirements
to be applied before an order is effective. Notably, subsection 5(c) specifies
that the notice must include the following:
(1)
A brief description of the order.
(2)
A brief explanation of the available procedures and the time limit for seeking
administrative review...
(3)
A brief explanation of how the person may obtain notices of any prehearing
[VOLUME 5, PAGE 186]
conferences, preliminary hearings,
hearings, stays, and any order disposing of the proceedings without intervening
in the proceeding, if a petition is granted....
(4)
Any other information required by law.
54.
An order issued under IC 4-21.5-3-5 does not become effective until 15 days
after service (18 days where served by mail) of the notice. IC
4-21.5-3-5(f) and IC 4-21.5-32(e).
55.
IC 4-21.5-3-5(f) provides the recipient of a proposed order with the ability to
cause its effectiveness to be automatically stayed for an additional 15 days
upon the filing of a petition for administrative review and for a stay. In
addition, discretion rests with an administrative law judge to grant an
additional stay of effectiveness with an indefinite duration during the
pendency of review.
56.
A proposed order to issue an enhancement lien must be served under IC
4-21.5-3-5 upon the landowner whose property would be affected. Before the lien
can be recorded, the period for seeking review must pass or there must be a
completed proceeding under the administrative adjudication act.
57. Properly
implemented, the notice requirements of IC 4-21.5-3-5 and the administrative
adjudication act provide advance notice and due process to the recipient of a
proposed order for an enhancement lien.
58.
Notice was provided by the Department to Gray Farms by certified mail on
October 31, 1988 that an enhancement lien was being recorded against the
property and that Gray Farms had an opportunity to prepay the $60,000
assessment to be secured by the lien.[FOOTNOTE xvi]
59.
The October 31 notice did not set forth the available procedures or the time
limit for Gray Farms to seek administrative review.
60.
The October 31 notice does not conform to the minimum requirements of IC
4-21.5-3-5(c).
61.
The Department has not provided the notice required by IC 4-21.5-3-5(c) for
issuing an order for a determination of tax due or other liability.
62.
The statutory prerequisites for a Department order to record an enhancement
lien against the subject property have not been met. For this reason, the lien
itself must be set aside.
F. WHETHER ATTACHMENT OF THE LIEN BY THE
DEPARTMENT AGAINST THE ENTIRE 2,885 ACRES OWNED BY GRAY FARMS IS UNLAWFUL
BECAUSE ABANDONED MINE LAND WORK WAS PERFORMED ONLY UPON APPROXIMATELY 400
ACRES.
63.
The enhancement lien recorded against the subject property encompasses
approximately 2,885 acres owned by Gray Farms. Approximately 430 of those acres
were directly disturbed by the abandoned mine lines restoration project.[FOOTNOTE xvii]
64.
Although no standards have been adopted by the Department for determining what
is the proper geographic scope of an enhancement lien, Brumfiel
testified that he used, common practice" in placing "the lien against
the deed description rather than going out and... surveying an actual jagged
line in the middle of the property, the subject property."[FOOTNOTE xviii]
65.
In determining what property may be encumbered by an enhancement lien, the
purposes of the state in applying the lien must be considered. See, generally, State v. Bucchieri,
176 Conn. 339, 407 A.2d 990 (1978).
66.
An enhancement lien is intended to avoid unjust enrichment to a landowner
resulting from the expenditure of public moneys in conducting a restoration
project. The enhancement lien also provides an opportunity to the state for the
reimbursement of at least some of the amounts expended on the project.
67.
The purposes for applying an enhancement lien may not be fully achieved by
restricting the lien to the property where work has occurred, if a consequence
of the work is to benefit adjacent property held in the same ownership.
68.
Application by the Department of the enhancement lien against the subject
property would not be voided (if the lien were otherwise valid) merely because
it encompasses areas owned by Gray Farms outside but adjacent to the area where
restoration work was performed.
G. WHETHER THE DEPARTMENT HAS VIOLATED
EQUAL PROTECTION THROUGH PAST PRACTICES BECAUSE OTHER LANDOWNERS HAVE RECEIVED
THE BENEFITS OF ABANDONED MINE LANDS WORK ON SUBSTANTIAL ACREAGE WITHOUT
RECEIVING AN ENHANCEMENT LIEN
69.
In urging that Gray Farms has been harmed because an enhancement lien has been
sought against the subject property, but not against similarly situated
properties, the claimant is seemingly contending that there has been what might
be analogized to "selective enforcement".
70.
Gray Farms has cited no authority for the proposition that an action by a
governmental entity to seek a lien against one landowner, but not against
another similarly situated, is legally actionable.
71.
To the contrary, an agency charged with a regulatory function ordinarily has
the discretionary power to take enforcement action against one violator to the
exclusion of other violators. This power is limited to assure that the agency's
[VOLUME 5, PAGE 187]
action is not punitive or intended
to arbitrarily destroy one of many violators in the market. Johnson Products Co. v. F.T.C., 549 F.2d
35 (7th Cir. 1977).
72.
Although the placement of an enhancement lien is not an enforcement action, the
doctrine stated in Johnson Products Co.. is
analogous. The facts of this proceeding do not support a finding that the
placement of the enhancement lien against the subject property was either
punitive or intended to destroy Gray Farms.
73.
The enhancement lien would not be voided on the basis that the Department has
violated equal protection by placing an enhancement lien against Gray Farms and
not against other landowners similarly situated.
H. WHETHER THE SUBJECT LIEN HAS BEEN
IMPROPERLY ASSERTED BECAUSE IC 13-4.1-15-12 STATES THAT NO ENHANCEMENT LIEN CAN
BE FILED AGAINST LAND ON WHICH SURFACE COAL MINING OPERATIONS TOOK PLACE AFTER
MAY 2, 1977 (AND SURFACE COAL MINING OPERATIONS HAVE, IN FACT, TAKEN PLACE ON
SOME OF THE ACREAGE INCLUDED WITHIN THE SUBJECT PROPERTY SUBSEQUENT TO THAT
DATE).
74.
Gray Farms contended in its Brief in Support of motion for Summary Judgment,
filed on March 5, 1990, that IC 13-4.1-15-2 also controls the application of
Chapter 15, including the provisions of IC 13-4.1-15-12 which address
enhancement liens.
75.
IC 13-4.1-15-2 states as follows: Lands and water eligible for reclamation or
drainage abatement expenditures under... [Chapter 15] are those which were
mined for coal or which were affected by that mining, wastebanks,
coal processing, or other coal mining processes, and abandoned or left in an
inadequate reclamation status prior to August 3, 1977, and for which there is
no continuing reclamation responsibility under state or federal law.
76.
The parties do not dispute that coal mining took place on the subject property
before August 3, 1977. In addition, portions of the subject property were mined
after August 3, 1977.
77.
Property which is mined after August 3, 1977 can be made ineligible for
abatement expenditures under Chapter 15.
78.
Gray Farms contends that the "lands and water" against which an
enhancement lien may be entered are only those "eligible for reclamation
... abatement expenditures" under chapter 15. A land or water which is
ineligible for abatement expenditures is ineligible to support an enhancement
lien under section 12.
79.
The Department responds that IC 13-4.1-15-2 is irrelevant, that IC 13-4.1-15-12
is the exclusive section pertaining to enhancement liens, and section 12
contains no restriction that lands be eligible for an
abatement expenditure under IC 13-4.1-15-2 before they may be subject to
an enhancement lien under IC 13-4.1-15-12.
80.
The disparate interpretations made by Gray Farms and by the Department are
properly issues for summary judgment under IC 4-21.5-3-23. They are legal
issues which must be resolved according to precedents relative to liens,
generally, and under broad principles of statutory construction.
81.
An enhancement lien under IC 13-4.1-15-12 may properly be analogized to a
mechanic's lien. Both are statutory creatures and exist only by virtue of a
claimant's compliance with the enabling statutes.
82.
The provisions of a mechanic's lien statute relating to the creating,
existence, or persons entitled to the lien have been strictly construed by the
courts. Puritan
Engineering Corporation v. Robinson, Trustee, et al., 207 Ind. 58, 191 N.E.
141 (1934).
83.
The provisions of the enhancement lien statue relating to the creation,
existence, or persons entitled to the lien should also be strictly construed.
84.
Principles of statutory construction must be applied to determine whether IC
13-4.1-15-2 is relevant to the application of IC 13-4.1-15-12 and to the
application of Chapter 15 generally.
85. An
axiomatic principle of statutory construction is that where a single section of
a statute is construed, the section must be construed with due regard for other
sections of the same act in order to implement the legislative intent. Detterline v. Bonaventura, 465
N.E.2d 215 (1984 Ind. App.).
86.
When called upon to interpret statutory words or phrases, there must properly
be reference to the statute and act as a whole and not an isolated word or
phrase. In re Estate of
Souder, 421 N.E.2d 12 (Ind. App. 1981).
87.
The construction required here is that of a single chapter (the Abandoned Mines
Chapter), within a larger article (IC 13-4.1), which was initially enacted in
the Acts of 1980, Public Law 101.
88.
The purpose of IC 13-4.1 which is sought to be implemented by the Abandoned
Mines Chapter is primarily the purpose set forth in IC 13-4.11-2(8): to
"[p]romote the reclamation of mined areas left
without adequate reclamation prior to August 3, 1977."
89.
IC 13-4.1-15-2 is harmonious with IC 13-4.1-1-2(8) and must be read together
with IC 13-4.1-15-12 to implement the
[VOLUME 5, PAGE 188]
legislative intent. The scheme of the
Abandoned Mines Chapter is to promote the reclamation of mined areas left
without adequate reclamation prior to August 3, 1977, as opposed to inadequate
reclamation activities which occurred after that date.
90.
In 1987, the Indiana General Assembly enacted an amendment to IC 13-4.1 to
address lands which were coal mined and abandoned after August 3, 1977. This
enactment created a dedicated fund distinct from the dedicated fund which had
been established in 1980 within Chapter 15 for lands mined prior to August 3,
1977. The dedicated fund created in 1987 "may be used to effect the
restoration of lands on which there has been surface mining activity after
August 3, 1977." P.L. 165-1987, SEC. 3.
91.
The dedicated fund established in 1987 for lands on which there was surface
mining activity after August 3, 1977 was placed, not within Chapter 15, but
rather within Chapter 6 of IC 13-4.1. IC 13-4.1-6-8.
92.
The placement in 1987 of a dedicated fund outside Chapter 15, to address lands
coal mined after August 3, 1977, also illustrates a legislative intent that
Chapter 15 be directed to sites coal mined before August 3, 1977.
93. Surface
coal mining at a site after August 3, 1977 does not qualify a site for the
placement of an enhancement lien under IC 134.1-15-12 following a restoration
activity under IC 13-4.1-6-8.
94.
On the other hand, where surface coal mining activities occurred on a site
before August 3, 1977 which would qualify under Chapter 15 for an enhancement
lien under IC 13-4.1-15-12, the Department is not required to establish the
absence of mining activities after August 3, 1977 as a condition precedent to
the issuance of the enhancement lien. Section 12 does not establish that the
Director must prove the absence of mining after August 3, 1977 in order to
record an enhancement lien.
95.
Although the occurrence of mining after August 3, 1977 could, following a proper
factual showing, extinguish an enhancement lien, the occurrence constitutes a
matter of legal avoidance. A landowner must present the issue as an affirmative
defense. This result is also appropriate as a practical matter because:
(1) proving a negative (the absence of subsequent mining) is an
unwieldy requirement for the regulatory authority; and
(2) the landowner is ordinarily in a superior position to the
Department to know whether and what land was mined subsequent to 1977.
96. In
determining whether to void responsibility for a lien, principles of equity
apply. To hold otherwise would seriously compromise the intent of IC
13-4.1-15-12 and could result in a landowner's unjust enrichment. A landowner
who participates in unlawful mining activates after August 3, 1977, or who
suffers their conduct without informing the regulatory authority, could receive
the benefit from land or water restorations under the Abandoned Mines Chapter
without suffering the burden of an enhancement lien. This unjust enrichment is
a major element of what IC 134.1-15-12 is intended to prevent.
97.
Even if portions of a site restored under chapter 15 are coal mined after
August 3, 1977 and become ineligible for reclamation or drainage abatement
expenditures, there is no reason why the entirety of the site should become
immune from an enhancement lien. If the issuance of the enhancement lien was
otherwise proper, only those portions actually mined after August 3, 1977 would
be effected. Again, to hold otherwise would result in the unjust enrichment to
a landowner which IC 13-4.1-15-12 is intended to prevent.
98.
IC 13-4.1-15 governs the restoration of coal mines abandoned before August 3,
1977 where lands or water were left in an inadequate reclamation status. The
Department may record a lien under IC 13-4.1-15-12 where restoration of a site
on privately-owned lands occurs, if the site was mined and abandoned before
August 3, 1977 and the filing requirements of section 12 are met.[FOOTNOTE xix]
99.
If mining activities occurred on a site after August 3, 1977, which were not
unlawfully conducted with the participation or acquiescence of a landowner, the
landowner might seek to avoid an enhancement lien for the portions of the site
on which post-1977 mining occurred.
100.
Surface coal mining occurred on roughly 28 acres of the subject property after
August 3, 1977. This mining activity was apparently conducted without being
properly permitted,[FOOTNOTE xx] but
Gray Farms neither participated nor knowingly acquiesced in those unlawful
mining activities.
101.
Even so, the evidence would not support the voidance of the enhancement lien
based upon the post-1977 mining of 28 acres of the subject property.
Considering the acreage affected by the abandoned mine lands project, this
28-acre disturbance is de minimus and possibly a
necessary consequence of the project.
102.
If the enhancement lien
[VOLUME 5, PAGE 189]
were otherwise valid, Gray Farms
would not have met its burden of persuasion that the company should avoid the
lien because a portion of the restored area was mined after 1977.
I. THE ENHANCEMENT LIEN RECORDED AGAINST
THE SUBJECT PROPERTY MUST BE REMOVED.
103.
The enhancement lien recorded by the Department against the subject property
must be removed. This conclusion of ultimate fact and law is necessitated by
each of the following reasons, standing together or alone, as set forth infra
with more particularity:
(1)
The Matthews appraisal was based upon an assumption that restoration of the
subject property was complete, an assumption not supported be the evidence.
(2)
The Department has not established discernible standards, by rule or otherwise,
for what constitutes a "significant increase in property value" to
warrant the recordation of an enhancement lien. As a result, IC 13-4.1-15-12(a)
is void for vagueness as applied to the facts of this proceeding.
(3)
An order for the imposition of an enhancement lien is in the nature of a
"tax due or other liability" within the administrative adjudication
act. Notice of the proposed order to issue the enhancement lien against the
subject property was not given under IC 4-21.5-3-5. This failure by the
Department to meet the minimum statutory notice requirements for an order under
the AAA is fatal to the recordation of the enhancement lien.
FOOTNOTES
i. Sunshine Promotions, Inc. v. Ridlen, 482 N.E.2d
1369 (Ind. App.1985).
ii. Drake v. Department of Natural
Resources, 453 N.E.2d 288 (Ind. App.1983).
iii. Shlens v. Egnatz,
508 N.E.2d 44, 46 (1987 Ind. App.). See also, Board of Commissioners of Clay County v. DNR, Northern Coal, 5 Caddnar 151, 152 (1990);
and Kuss v. DNR and Prudential Insurance, 5 Caddnar 51,
54 (1989).
iv. The Department argues in the Claimant's (sic.,
Respondent's] PostHearing Brief" that the agency
decision to file an enhancement lien against the property is not reviewable.
"[T]he Claimant cannot argue against the decision to file the lien as it
is a decision to issue a complaint, summons or similar accusation under IC
4-21.5-2-5(8) and thus specifically exempt from the AAA." Respondent's
Brief, Footnote 1, Page 2. The Department errs in three respects. First, the
interpretation by the Department would unduly constrict the broad legislative
mandate contained within the administrative adjudication act. The AAA
"creates minimum procedural rights and imposes minimum procedural
duties." IC 4-21.5-2-1. Also, the AAA
"applies to an agency, except to the extent that a statute clearly and
specifically provides otherwise." IC 4-21.5-2-3.
The interpretation sought by the Department would emasculate the AAA and deny
procedural rights in the absence of a legislative directive to do so. Second,
an "enhancement lien" is not accusatory and is not intended to
penalize the recipient. The design of an enhancement lien is to reimburse the
public for expenditures on private lands, which if unreimbursed, will result in
a windfall or unjust enrichment to the landowner. A notice of violation,
cessation order, penalty assessment, or "show cause" order may qualify
as a "complaint, summons or similar accusation", but an enhancement
lien does not. Third, IC 4-21.5-2-5(8) merely exempts from administrative
review the agency decision making process as to whether or not to proceed with
an enforcement action. The primary practical consequence of this subdivision is
that an agency decision not to take an enforcement action against one person
does not, in turn, give rise to a right of administrative review by another
person. Additionally, an agency action is not subject to administrative review
merely because the agency took an enforcement action against one person and
opted not to act under similar circumstances against another. The fallacy of
the Department's argument is highlighted by IC 4-21.5-3-8, the section which
controls most agency sanctions. Section 8 requires that an agency sanction be
initiated with the filing of a "complaint". The sanction does not
become effective until the completion of an administrative proceeding under the
AAA. If the Department's interpretation of IC 4-21.5-2-5(8) were accurate, the
recipient of a "complaint" filed according to IC 4-21.5-3-8 could not
obtain administrative review of the complaint. The Department's interpretation
would result in an absurdity and deny due process. A statute will not be
interpreted in a manner which does not fully implement the legislative design
or which results in an unconstitutional application. Willis v. State, 492 N.E.2d 45 (1986
Ind. App.).
v. Direct testimony of C. David Matthews, transcript of hearing record
("Record"), 223. Also, Matthews cross-
[VOLUME 5, PAGE 190]
examination, Record 264 and 265. See,
also, from the written appraisal by Matthews a cover letter dated September 29,
1987. "The before value (of the property] assumes no reclamation work has
been done and the after value assumes all reclamation work has been completed.
The reclamation work was not complete on the last date of the inspection."
Respondent's Exhibit J.
vi. Matthew testimony, Record 264, line 4.
vii. Testimony of Ray Brumfiel, Record 202 and 203.
Gordon Curtis also testified extensively to what could, with predilection by
the factfinder, be viewed as incomplete but
progressing revegetation efforts. Illustrative is
Record 542.
viii. Testimony of David Czarnowski, Record 438.
ix. Testimony of Gordon Curtis, Record 521.
x. Curtis testimony, Record 536.
xi. The Department stipulated at hearing that no rules have been adopted
concerning the application of enhancement liens. Record 152,
lines 13 and 14.
xii. A recent example of a conscious decision by the Indiana general assembly
to direct the Department to define, by rule, the phrase significant
environmental harm" is found in Public Law 101-1990 which regulates the
lowering of lakes as a result of the activities of large water withdrawal
facilities. SECTION 13 of that law mandates that the Commission "adopt
rules under IC 4-22-2 before July 1, 1991, to determine what events constitute
a significant environmental harm under IC 13-2-2.6."
xiii. Illustrative is the testimony of Ray Brumfiel,
Record 154, lines 9 and 10. Question: "'Significant' is not defined
anywhere, is it?" Answer: "No, well, no, not really."
xiv. Testimony of Ray Brumfiel, Record 121, line 23
through 123, line 22. The draft document was entered into evidence, "not
for the truth of the matter asserted," and not "to state any truth of
rule, regulation or promulgated [promulgation] by the Federal government, but
only that it is the source of information that" Brumfiel
utilized. Record 124.
xv. When asked on cross-examination whether IC 13-4.1 was "vague on the
notice requirements," Brumfiel answered,
"Yes." Record 180, line 12.
xvi. Claimant's Exhibit 9 admitted through the testimony of Ray Brumfiel. Record 323 and 324.
xvii.Testimony of Ray Brumfiel. Record 184 and 185.
xviii. Record 185, lines 13 through 17.
xix. As discussed previously, notice of an initial determination to impose an
enhancement lien must also be provided according to the administrative
adjudication act. See, particularly, IC 4-21.5-3-5.
xx. Testimony of David Czarnowski. Record
370. See, also, testimony of Linus Stenftenagel. Record 307.