[CITE: Peabody Coal Company v. DNR, 5 CADDNAR 224 (1992)]
[VOLUME 5, PAGE 224]
Cause #: 89-129R
Caption: Peabody Coal Company v. DNR
Administrative Law Judge: Rider
Attorneys: Joest; Earle
Date: June 23, 1992
ORDER:
[NOTE: JUDICIAL REVIEW WAS TAKEN BY THE DNR (77C0l-9207-CP-139). SULLIVAN CIRCUIT COURT REVERSED THE DECISION OF THE ALJ AS SET FORTH BELOW. TRIAL COURT DECISION UPHELD BY COURT OF APPEALS (629 N.E.2d 925). ON MAY 10, 1996 THE SUPREME COURT GRANTED TRANSFER AND AFFIRMED THE COURT OF APPEALS (664 N.E.2d 1171 (Ind. 1996)).]
Respondent Department of Natural Resources' motion for summary judgment is denied. Claimant Peabody Coal Company's motion for summary judgment is granted. Notice of Violation #N90710-S-00010 is hereby vacated.
FINDINGS OF FACT:
1. The 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 any "agency action" of the Department.
2. Surface coal mining and reclamation activities are governed in Indiana by IC 13-4.1 and 310 IAC 12 (collectively referred to as "Indiana SMCRA"). Indiana SMCRA is administered by the Department.
3. As defined in IC 4-21.5-1-15, "ultimate authority" means the individual or panel in whom the final authority of any agency is vested. Pursuant to IC 13-4.1-2-1(c), the administrative law judge is the "ultimate authority" for the Department in this proceedings
4. 310 IAC 0.6-1 has been adopted by the Natural Resources Commission to govern Department proceedings which are subject to the AAA.
5. Peabody holds surface coal mining and reclamation operations permit no. S-00010 for its Hawthorn Mine, Sullivan County, Indiana.
6. On July 10, 1989, James L. Harris, an authorized representative of the Director of the Department, conducted an inspection of Peabody's Hawthorn Mine.
7. As a result of his July 10, 1989 inspection, Mr. Harris issued Peabody Notice of Violation #90710-S-00010 (the "NOV").
8. On July 13, 1989, Peabody timely requested administrative review of the NOV under IC 13-4.1-11-8 and 310 IAC 12-6-9.
9. The NOV charges Peabody with "Failure to pass all disturbed area drainage through a siltation structure before leaving the permit area and to retain all sediment within the disturbed area."
10. The NOV cites the following as provisions violated: 310 IAC 12-5-17(a)(1); 310 IAC 12-5-20(b)(3); 310 IAC 12-3-4 Permit Condition; Part IV G(2)(a).
11. Mr. Harris' inspection report stated as follows with respect to the alleged violation: "As discussed with Forrest Crowe (PCC) and was [sic] mentioned in last months inspection report, additional drainage control measures are needed along the East perimeter North of impoundment 001A, to insure that this affected area drainage is passed thru [sic] a basin before discharging off the permit. Previously, this area was upgraded and drainage was controlled along this perimeter by the pit and by straw bales at drainage focal points. Recent final grading along this perimeter however was redirected drainage so that drainage is now uncontrolled and will flow across the undisturbed area and off the permitted area without passing thru [sic] a basin. This perimeter is now characterized by an unvegetated and graded spoil slope approximately 500 ft. in length which slopes towards the wooded east perimeter. No diversion exist [sic] along this perimeter and drainage can now flow eastward off the permitted area into the ditch along side Highway 159. Evidence of off site drainage flow exist [sic] along this wooded perimeter where a spoil derived sediment is deposited throughout this narrow (100 ft.) wooded strip up to and into the State Road ditch. NOV #90710-S-00010 (1 of 1) is hereby issued for failure to pass all disturbed area drainage through a siltation structure before leaving the permit area and to retain all sediment within the disturbed area. The action required will call for this affected area drainage to be passed thru [sic] a sediment basin before discharging off the permit. The compliance time will be set for
[VOLUME 5, PAGE 225]
August 14, 1989 at 8:00 A.M."
12. In Peabody Coal Company v. Department of Natural Resources, 4 Caddnar 58, (1988) the Director of the Department, then the ultimate authority for the Department for purposes of administrative review of NOVs, held that 310 IAC 12-5-17 is not violated by the failure to pass drainage through a siltation structure unless it is proved that an effluent limitation violation occurred or was likely to occur as result of the lack of sediment control.
13. There is no evidence of any violation of the applicable effluent limitations as result of the conditions described in the inspector's report. The report refers to evidence of "spoil-derived sediment" up to and in a road ditch on the permit perimeter. However, Peabody submitted an affidavit from its Manager of Environmental Affairs, Ron G. McAhron, a certified waste water treatment facility operator with 19 years experience in the field of water quality and pollution prevention. Mr. McAhron's affidavit stated that in his opinion it was not possible to infer an effluent limit violation from the presence of sediment deposits. Mr. McAhrons's affidavit was uncontradicted and the facts stated therein will be accepted as true for purposes of summary judgment. See Peabody Coal Company v. Department of Natural Resources, 4 Caddnar 13, 14.
14. In Peabody Coal Company v. Department of Natural Resources, 4 Caddnar 62, (1988), the Director held: "22. Standing alone, 310 IAC 12-5-20(b)(3) cannot be the sole basis upon which to base a violation without demonstrating that alternative or additional sediment control measures are necessary in order to prevent any disturbances to the hydrologic balances."
15. There is no evidence in the record of any disturbance of the hydrologic balance.
16. Part IV G(2) of Peabody's approved reclamation plan in permit S-00010 provides: "Sediment control will be provided for all disturbed area drainage in accordance with applicable regulations prior to discharge from the permit area." (Exhibit A to Respondent's Motion for Summary Judgment and Response to Claimant's Motion for Summary Judgment.) If applicable regulations were not violated, neither was this provision of Peabody's permit.
17. The Department argues that the two Peabody Coal Company cases cited above should be overruled, citing cases decided by federal administrative law judges of the United States department of interior under the federal Surface Mining Control and Reclamation Act of 1977, 30 U.S.C Section 1251, et seq. Such decisions are not a binding precedent in this proceeding, but may be persuasive, particularly where they construe identical or very similar statutory language or regulations. However, the federal decisions cited by the Department do not deal with identical or very similar language and are not persuasive authority in this proceeding.
18. In Foertsch v. Department of Natural Resources, 5 Caddnar 68, (1989), the Director reaffirmed the Peabody Coal Company case reported at 4 Caddnar 62 and declined to follow Delta Mining Corp. v. Office of Surface Mining, United States Department of Interior Office of Hearings and Appeals, Docket No. IN 0-9-P, the principal federal case relied on by the Department in this proceeding, noting that in Delta Mining an effluent violation had occurred.
19. There is no genuine issue as to any material fact. Peabody is entitled to judgment as a matter of law.
______________________________________________________________________
[NOTE: CADDNAR
citation does not apply to the entry below.]
SULLIVAN CIRCUIT COURT DECISION
(77C01-9207-CP-139)
FINDINGS OF FACT
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 pursuant to Ind. R. Tr. P. 52(A)(2) and Ind. Code Section 4-21.5-5-14:
1. Petitioner, Indiana 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 surface coal mining and reclamation pursuant to the Indiana Surface Mining Control and Reclamation Act ("ISMCRA"), Ind. code 134.1 and its implementing rules set forth at 310 IAC 12.
2. 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 Hawthorn mine, permit S-10 in Sullivan County, Indiana.
3. On July 10, 1989, an authorized representative of the DNR, a Reclamation Inspector, conducted an inspection of Peabody's Hawthorn Mine, Surface Mining Permit #S-10. As a result of this inspection, DNR issued to Peabody Notice of Violation ("NOV") #N90710-S-00010.
4. The Inspector had noted that drainage in a particular area on the mine site permit was uncontrolled before it left the permit. His Inspection Report which was contemporaneously with the NOV stated, in pertinent part: Previously, this area was ungraded and drainage was controlled along this perimeter by the pit and by straw bales at drainage focal points. Recent final grading along this perimeter however has redirected drainage so that drainage is now uncontrolled and will flow across the undisturbed area and off the permitted area without passing thru a basin. This perimeter is now characterized by an unvegetated and graded spoil slope approximately 500 ft. in length which slopes towards the wooded East perimeter. No diversion exists along this perimeter and drainage can now flow Eastward off the permitted area into the ditch along side Highway 159. Evidence of off-site drainage exists along this wooded perimeter where a spoil derived sediment is deposited throughout this narrow wooded strip up to and into the State Road ditch. NOV #N90710-S-00010 is hereby issued for failure to pass all disturbed area drainage through a siltation structure before leaving the permit area and to retain all sediment within the disturbed area.
5. The NOV charged Peabody with failure to pass all disturbed area drainage through a siltation structure before leaving the permit area and to retain all sediment within the disturbed area; it cited as violated 310 IAC 12-5-17(a)(1), 310 IAC 12-5-20(b)(3), 310 IAC 12-3-4 (permit condition), and the permit condition itself, Part IV. G(2)(a) of the permit.
6. 310 IAC 12-5-17(a)(1) requires that all drainage from a mined area be controlled through the use of a siltation structure or some alternative technique before the operator allows the drainage to exit the permit.
7. 310 IAC 12-5-20(b) sets out various sediment control methods which can be used, or may be necessary to be used, in order to control sediment before it leaves the permitted area.
8. 310 IAC 13-2-4 requires that all persons conduct surface coal mining and reclamation operations in compliance with the terms and conditions of their mining permits issued by the DNR under Ind. Code 13-4.1.
9. Peabody's permit for its Hawthorn Mine, Permit #S-10, at Part IV. G(2)(a) provides, in pertinent part, that: Sediment control will be provided for all disturbed area drainage in accordance with applicable regulations prior to discharge from the permit area.
10. On July 13, 1989, Peabody filed a timely request for administrative review of the NOV under Ind. Code 13-4.1-11-8 and Ind. Code 421.5-3. The case was assigned to Administrative Law Judge Time [sic] Rider (the "ALJ").
11. The DNR and Peabody stipulated the NOV and the accompanying Inspection Report into the agency record and filed cross-motions for summary judgment.
12. On June 23, 1992, the ALJ entered a final order denying the DNR's Motion for Summary Judgment and vacating the NOV.
13. On July 23, 1993, DNR filed a timely Petition for Judicial Review of the ALJ's Final Order and timely filed the agency record.
14. Ind. Code Section 4-21.5-5 governs judicial review of administrative agency decisions. Ind. Code Section 4-21.5-5-14(c) provides:
(d) The Court shall grant relief under Section 15 [Ind. Code Section
4-21.5-5-151 of this chapter only if it determines that a person seeking
judicial relief has been prejudiced by an agency action that is:
(1) Arbitrary, capricious, and 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.
15. An incorrect interpretation given to a statute by a final Administrative order is entitled to no weight. Indiana State Prison and State Employees' Appeals Com'n v. Van Ulzen (1991), Ind. App., 567 N.E.2d 1164.
16. In vacating the NOV the DNR had issued to Peabody, the ALJ followed prior DNR administrative decisions involving 310 IAC 12-517(a)(1) and 310 IAC 12-5-20(b)(3), the thrust of which was that unless it was demonstrated that environmental damage had occurred or was likely to occur, there was no violation.
a. In Peabody Coal Company v. Department of Natural Resources, 4 CADDNAR 58 (March 18, 1988), it was held that 310 IAC 12-5-17(a)(1) was not violated by the failure to pass drainage through a siltation structure unless it was proven that an effluent limitation violation occurred or was likely to occur as the result of lack of sediment control.
b. In Peabody Coal Company v. Department of Natural Resources, 4 CADDNAR 62 (March 30, 1988), it was held that 310 IAC 12-5-20(b)(3), "standing alone" could not be the basis for an NOV unless it was demonstrated that alternative sediment control measures were necessary in order to prevent a disturbance to the hydrologic balance.
17. Ind. Code Section 13-4.1-8-1(10)(B) is preventative in nature; it requires that surface coal mining and reclamation operations be conducted so as to prevent, to the extent possible using the best technology currently available, violations of the effluent limitations established under applicable state or federal law." It does not require proof of effluent violations before its mandate of prevention can be enforced. It was appropriately cited in the NOV as having been violated.
18. Ind. Code Section 13-4.1-8-1(10)(C) requires that siltation structures be constructed "prior to commencement of surface coal mining operations" and constructed as designed and approved in the reclamation plan. It mandates sediment control for surface mining operations.
19. 310 IAC 12-5-17(a)(1) requires that all surface drainage be controlled by some form of treatment before it leaves the permit area. This requirement does not exceed, nor is it inconsistent with, Ind. Code Section 13-4.1-8-1(10)(B) or (C); it, in fact, affords the protection required by those statutory provisions, and it properly and lawfully implements Ind. Code Section 13-4.1-8-1(10)(B) and (C) in that it requires the utilization of procedures to prevent, before they occur, violations of applicable effluent standards.
20. 310 IAC 12-5-17(a)(2) requires that in addition to preventing additional contributions of suspended solids to stream flow or runoff outside the permit area the permittee must meet appropriate effluent standards. Thus, the meeting of effluent requirements are an additional requirement to that of controlling drainage so as to prevent additional contributions of suspended solids outside the permit area.
21. While a regulation cannot be out of harmony with the enabling statute, 310 IAC 12-517(a)(1) was, and is, consistent and in harmony with Ind. Code Section 13-4.1-81(10)(B) even after that provision was amended in 1985. It is lawful and valid.
22. 310 IAC 12-5-20(b) sets forth acceptable sediment control measures to be carried out within and adjacent to the permit area; they include as an acceptable and obviously sometimes necessary measure the retaining of sediment within the area disturbed by mining (310 IAC 12-5-20(b)(3)). In the instant circumstances the Inspector determined that sediment had left the permit area, and therefore the NOV's citation of 310 IAC 12-5-20(b)(3) as having been violated was appropriate.
23. Where the state and rules direct that all surface water runoff from an area disturbed by mining must be passed through a sediment control structure or otherwise "treated" by menas [sic] of alternative sediment control measures before it can be allowed to exit the permit, a surface coal mine operator must comply with those mandates whether or not a water sample indicates a violation of effluent limitations set by law; in other words an operator has violated the law when he fails to "pass or treat" whether or not the drainage exceeds applicable effluent requirements.
24. Proof of the occurrence of the harm the statute or regulation was designed to protect against is not required to establish that a violation of that statute or regulation exists; the provision of ISMCRA are preventative in nature, and the harm is to be avoided if at all possible through the use of best technology currently available; it should not be allowed to occur.
25. Whether or not injury resulted from the violation of the statute or regulation is taken into account when the civil penalty imposed for the violation is calculated. 310 IAC 12-6-12 specifies points to be assigned for, among other things, the probability of the occurrence (whether none, unlikely, insignificant, significant, likely, or actually occurred) of the harm the regulation seeks to prevent and for the extent of potential or actual damage.
26. Peabody's permit condition Part IV.G.2(a) provides that to assure protection of the quality and quantity of surface and ground water within the permit and adjacent areas, "sediment control will be provided for all disturbed area drainage in accordance with applicable regulations prior to discharge from the permit area." R. at 53. There is no limiting language or exception to this requirement in the event a water sample would not indicate an effluent violation. Further, "applicable regulations" by which sediment control is to be provided is not confined to a requirement that effluent limitations be adhered to, but include, among other provisions for example, 310 IAC 12-5-16 (mining activities must be conducted to minimize changes in the area's hydrologic balance, minimize water pollution, and set forth acceptable practices to control and minimize water pollution), 310 IAC 125-21 (general requirements for siltation structures) and 310 IAC 12-5-22 (the utilization of discharge structures).
27. Ind. Code 13-4.1 is virtually identical to the federal Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. Sections 1201 et seq., from which it was copied in order that Indiana could be primary enforcer of environmental coal mine regulation within its own borders. 30 U.S.C. Section 1253.
28. The rules implementing Ind. Code 13-4.1 which are set forth at 310 IAC 12 are also either identical, or very similar, to SMCRA regulations at 30 C.F.R. Part 700 et seq.
29. One of the purposes of Indiana SMCRA is to "[I]mplement and enforce P. L. 95-87, the federal Surface Mining Control and Reclamation Act." Ind. Code 13-4.1-1-2(l).
30. Federal administrative case law has consistently interpreted equivalent sections of federal sediment control regulations [30 C.F.R. Sections 715.17(a) and 717.17(a); 30 C.F.R. Section 816.46(a)(3) and 30 C.F.R. Section 817.46(a)(2)] and upheld federal NOV's and civil penalty assessments in cases where mine operators had failed to establish sediment controls despite the fact that there was no proof of the occurrence of environmental damage. Delta Mining Corporation v. Office of Surface Mining, Docket No. IN 0-9-P (Dec. 18, 1980; Turner Brothers, Inc. v. Office of Surface Mining, 102 IBLA 299 (May 31, 1988); C & N Coal Co. Inc. v. Office of Surface Mining, 103 IBLA 48 (June 28, 1988).
31. The Indiana Court of Appeals has indicated that when a state and federal statute are very similar, the federal cases construing the federal act are "very significant" in interpreting the state act. United Steelworker of America, AFL-CIO v. Northern Indiana Public Service Company (1982), Ind. App., 436 N.E.2d 825.
32. While federal precedent is not binding on Indiana courts, it is extremely persuasive in cases like the case at bar where the state statute and rules are intentional copies of federal law.
33. It is appropriate to look to SMCRA and its implementing regulations, as well as to federal case law interpreting those regulations, when construing ISMCRA and its implementing rules. See, Department of Natural Resources v. Krantz Bros. Constr. (1991), Ind. App., 581 N.E.2d 935.
34. ISMCRA, like its federal counterpart, is preventative in nature as are the rules which implement it. It is meant to prevent or avoid damage to the environment before harm occurs. Thus, it is not necessary that the DNR wait for injury to happen before it can take action.
35. Ind. Code Section 13-4.1-8-1(10), requiring the protection of the
hydrology of an area from the adverse impacts of coal mining, is clearly a
provision which is intended to prevent or avoid damage before it occurs; a mine
operator is to: Minimize disturbance to the prevailing hydrologic balance at
the mine site and associated offsite areas and to the quality and quantity of
water . . . by: (A) avoiding acid or other toxic mine drainage by . . . (i) preventing or removing water from contact with
toxic-producing deposits . . . .
(B) conducting . . . operations so as to prevent . . .
violations of the effluent limitations . . . .
36. 310 IAC 12-5-17(a)(1) requires that all surface drainage be controlled and/or treated before leaving the permit area. This rule is clearly encompassed by the requirements of the enabling statute, Ind. Code Section 13-4.1-8-1(10), as amended in 1985, and does not exceed statutory authority.
37. Even though Indiana amended Ind. Code 13-4.1-81(10)(B) in 1985 so that it no longer was identical to the federal statute at 30 U.S.C. Section 1265 (b)(10)(B)(i), the amended state statute made even more clear its preventative purposes, as was recognized by the U. S. Department of the Interior's Office of Surface Mining when it approved the amended statute as being consistent with the federal provision. 50 Fed. Reg. 19929, 19930 (May 13, 1985).
38. The ALJ should have looked to and given great weight to the federal case law construing equivalent sections of the federal regulations; to ignore that law and rely on prior state administrative cases which itself ignored federal precedent and which misinterpreted state rules was arbitrary and capricious and contrary to law.
39. The DNR's current challenge is not barred by res judicata. One of the criterion set out by the Indiana Supreme Court in deciding whether administrative res judicata should apply is whether the administrative decisions were judicially reviewable. It was not until 1990, because of changes to Ind. Cod 4-21.5 and Ind. Code 13-4.1, that the DNR could petition for judicial review of an administrative decision adverse to it. Public Law 28-1990; Public Law 125-1991. Trial court's Findings in the procedural litigation in the instant case. Thus, the state administrative decisions relied on by the ALJ in the case at bar could not have been appealed; they were not judicially reviewable. Therefore, under the Indiana Supreme Court's test set forth in McClanahan v. Remington Freight Lines, Inc., (1988), 517 N.E.2d 390, res judicata does not apply in the instant case.
40. Legally incorrect administrative decisions cannot be shielded and barred from appropriate legal review.
41. The ALJ was incorrect in relying on erroneous interpretations of 310 IAC 12-5-17(a)(1) in Peabody v. Department of Natural Resources, 4 CADDNAR 58 (1988). In order to sustain a violation under 310 IAC 12-5-17(a) (1) there need be no evidence of any violation of applicable effluent limitations.
42. The ALJ was incorrect in relying on erroneous interpretations of 310 IAC 12-5-20(b)(3) in Peabody v. Department of Natural Resources, 4 CADDNAR 62 (1988) ; in order to sustain a violation under this provision there need be no showing of an actual disturbance to the hydrologic balance.
43. A demonstration that an effluent violation has occurred, or will occur; as the result of a coal mine operator's failure to establish sediment control or treatment for drainage, from a mine site before the drainage is permitted to exit the permit is not a necessary element to sustain a violation of 310 IAC 12-5-17(a) (1); a violation is established, however, where there will be surface drainage from areas disturbed in the course of surface coal mining and reclamation operations, that it will not pass through a siltation structure or series of siltation structures, or be treated by such methods as specified in 310 IAC 12-5-20(b), and that the drainage will leave the permit.
44. The statements in the Inspection Report (R. at 56) stipulated into the record by the parties that uncontrolled drainage would flow off the permit area without passing through sediment controls and that [mine] spoil-derived sediment had already been deposited both on and off-site indicates there has been drainage from the mine site which exited the permit without benefit of treatment or control; this evidence indicates a violation of 310 IAC 12-5-17(a)(1) and the permit condition, IV.G(2)(a), which required that sediment control be established for all disturbed area drainage (R. 53).
45. Because the evidence supports the issuance of the NOV, his decision was arbitrary, capricious, and contrary, to law and unsupported by the evidence.
46. Because the ALJ relied on legally incorrect interpretations of the law, his decision can be accorded no weight, and it cannot be upheld.
47. Because the ALJ ignored relevant federal
precedent where the provisions he was asked to construe were copied from federal
law, his decision was arbitrary and capricious and contrary to law; it cannot
be upheld.
WHEREFORE; it is hereby ORDERED, ADJUDGED, AND DECREED, that the Department of
Natural Resources' Motion for Summary Judgment is GRANTED. The decision of the
ALJ is reversed, and this cause is remanded to the ALJ for findings consistent
with this opinion.