[DECISION OF ALJ WAS AFFIRMED BY THE GREENE CIRCUIT COURT AND IS SET FORTH BELOW FOLLOWING ADMINISTRATIVE DECISION. PEABODY SOUGHT APPEAL IN CAUSE NUMBER 28AO5-9203-CV-00072. ON NOVEMBER 10, 1992, COURT OF APPEALS AFFIRMED TRIAL COURT (606 N.E.2d 1306).]
Summary judgment is granted in favor of the department of natural resources. In order to receive the permit modification sought by Peabody Coal Company on November 13, 1990 for the Hawthorne Mine (Permit #S-00010-6), the company must demonstrate that the best available materials will be used.
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 "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 [D]epartment for any administrative review proceeding under this article [IC 13-4.11], except for proceedings concerning the approval or disapproval of a permit application or permit review under IC 13-4.1-4-5 and proceedings for suspension or revocation of a permit under IC 13-4.1-11-6.11 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 an order by the Department concerning soil replacement (and not an exception to the placement of ultimate authority in an administrative law judge as set forth under IC 13-4.1-4-5 or IC 13-4.1-11-6).
5. Peabody Coal Company ("Peabody") filed its request for administrative review on March 11, 1991.
6. The request for administrative review by Peabody was timely and initiated a proceeding which is subject to the administrative adjudication act. Also applicable is 310 IAC 0.6, a rule article adopted to assist in the implementation of the AAA before the Department.
7. On April 16, 1991, Peabody filed its "Motion for Summary Judgment". A schedule for briefing with respect to this motion was established during a prehearing conference. As a result, the Department filed on June 21, 1991 the. "Respondent's Cross Motion for Summary Judgment and Reply to Claimant's Motion". Other pertinent pleadings were also filed by both parties; and briefing was completed with the filing by Peabody on July 2, 1991 of the "Claimant's Reply Brief and Response to Cross Motion for Summary Judgment". At the request of the administrative law judge on July 19, 1991, the briefing was later supplemented by the parties.
8. The supporting affidavits and other evidence permitted under IC 4-21.5-3-23 demonstrate that there is not a genuine issue in dispute. Summary judgment should be granted as set forth supra.
9. Peabody conducts surface coal mining and reclamation operations at a site in Sullivan County, Indiana. The operations are known as the "Hawthorn Mine" and have been authorized by the Department under IC 13-4.1 and 310 IAC 12 within permit S-00010-6 (the "Permit").
10. contained within the permit are specifications to govern topsoil replacement following the completion of mining operations.
11. "Topsoil" is the uppermost mineral layer and is the part of the soil in which the organic matter is most abundant and where the leaching of soluble or suspended particles is typically the greatest. 310 IAC 12-0.5-8 and 310 IAC 120.5-133.
12. Portions of the Hawthorn Mine suffered surface mining disturbance which caused the loss of topsoil before activities were commenced
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under the permit. For these portions of the mine, the permit requires that the "best available materials ... will be used..., consisting of a mixture of non-toxic shale and unconsolidated material. The standards of 310 IAC 12-5-64(c)(1)' will be met on previously disturbed areas that are disturbed as part of this mining operation. The best available material will be capable of supporting a vegetation adequate to control erosion." Part II.F (6) of the permit (attached to the April 10, 1991 "Affidavit of Joe Ellis").
13. 310 IAC 12-5-64(c)(1) provides as follows:
(1) For previously mined areas that were not reclaimed to the requirements of 310 IAC 12-5-1 through 310 IAC 12-5-158, at a minimum the ground cover of living plants shall not be less than can be supported by the best available topsoil or other suitable material in the reaffected area, shall not be less than the cover existing before redisturbance, and shall be adequate to control erosion.
14. Presented in this proceeding is a denial by the Department of a request by Peabody to relocate, within the permit, 105 acres for reclamation, where due to previous mining activities which did not conform to the reclamation standards of IC 13-4.1 and 310 IAC 12, no topsoil is present.
15. The parties agree as follows:
(1) These 105 acres must be reclaimed using the "best available materials" in place of topsoil.
(2) The relocation request was rejected because the Department is not presently satisfied that the "best available materials" proposed to be used by Peabody are, in fact, the best available materials. (3) Peabody proposes to use the same materials in the proposed relocation as have been approved in the permit.
16. The parties do not agree concerning what are the "best available materials" for placement on the 105 acres of non-topsoil replacement area to be relocated under the Peabody proposal. Peabody urges that the best available materials are those described in the permit: non-toxic shale and unconsolidated materials. The Department urges in a letter from Michael Sponsler, Department's division of reclamation, that the best available materials are "alluvial (bottomland "C" horizon) material from the Wilbur (Ww) and Wakeland (Wa) soils. Another source would be the upland loess material from the Alford (AfB2), AvA (AIB2) and Cincinnati (CnB2)." Exhibit A attached to August 3, 1990, "Affidavit of Michael Sponsler".
17. The issue in this proceeding is not, however, which are the best available materials but rather whether Peabody or the Department has the burden of proof with respect to what are the best available materials under the proposed permit revision.
18. The proposed permit revision is controlled by IC 13-4.1-5-5(b) which states as follows: (b) The director (of the Department] may not approve an application for a permit revision unless the director finds that reclamation as required by this article can be accomplished under the revised reclamation plan and the provisions of IC 13-4.1-4 are complied with.
19. The AAA provides with respect to burden of proof in IC 4-21.5-3-14(c) in pertinent part as follows: (c) At each stage of the proceeding, the ... person requesting that an agency take action has the burden of persuasion and the burden of going forward with the proof of the request...
20. For a permit revision controlled by IC 13-4.1-5-5(b), the Department must determine that IC 13-4.1-4 is satisfied before the revision can be granted. Notable, IC 13-4.1-4-3 requires the permittee to establish that reclamation as required by IC 13-4.1 can be accomplished under the reclamation plan. Included within this mandate is compliance with rules duly adopted under IC 13-4.1, including 310 IAC 12-5-64(c)(1).[FOOTNOTE i/]
21. To achieve a permit revision controlled by IC 13-4.1-5-5(b), the permittee has the burden of persuasion and the burden of going forward because the permittee is requesting the Department to take action. Satisfaction of that burden is measured in terms of compliance with IC 13-4.1-4.
22. Peabody must carry the burden of proof in its quest of the permit revision at issue. In light of IC 13-4.1-5-5(b), that burden requires a showing of compliance with IC 13-4.1-4 (including those provisions governing the use of best available materials where topsoil is not present).
23. Peabody must demonstrate for approval of the revised permit that what the company intends to use as best available materials are, in fact, the best available materials.
24. Summary judgment should be granted in favor of the Department. In order to receive a permit revision, Peabody must demonstrate that the best available materials proposed to be utilized, in fact, the best available materials.
FOOTNOTE
i. The Department cites 310 IAC 12-5-12.1 concerning "topsoil" removal, substitution and supplementation. Peabody argues that this
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provision has no application to the site under consideration because the site was previously mined and contains no topsoil. Peabody's argument is persuasive. 310 IAC 12-5-12.1 has no application. Instead, 310 IAC 12-5-64(c)(1) applies.
GREENE CIRCUIT COURT JUDICIAL FINDINGS
1. This proceeding is an action for judicial review under IC 4-21.5, the Administrative Orders and Procedures Act (AOPA) brought by Peabody Coal Company (Peabody) to challenge a final administrative agency action of the Indiana Department of Natural Resources (DNR). The action complained of was the July 29, 1991, Final Order of the Administrative Law Judge (ALJ) upholding the DNR's determination that Peabody had not made the required demonstration to entitle it to revise its permit for its Hawthorn Mine (Surface Coal Mining Permit No. S-00010-6).
2. The DNR is an agency as the term is defined in IC 4-21.5-1-3 is applicable to an "agency action" of the DNR.
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 proceeding under this article (IC 13-4.11, except for proceedings concerning the approval or disapproval of a permit application or permit review 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 is codified at IC 13-4.1-2-1(c).
4. The administrative law judge was the "ultimate authority" for the DNR in this proceeding because at issue was an administrative review under IC 13-4.1 with respect to an order by the DNR concerning soil replacement (and not an exception to the placement of ultimate authority in an ALJ as set forth under IC 13-4.1-4-5 or IC 13-4.1-11-6).
5. Peabody conducts several surface coal mining and reclamation operations, one of which is the Hawthorn Mine in Sullivan County, Indiana, authorized by state mining permit S-00010-6 under IC 13-4.1 and 310 IAC 12.
6. All surface coal mining and reclamation operations are required to be permitted and regulated by the State pursuant to IC 13-4.1, the Indiana Surface Mining Control and Reclamation Act (ISMCRA) and its implementing rules set forth at 310 IAC 12. Among other things, this is to assure that mined land will be restored to conditions capable of supporting the uses which they were capable of supporting prior to any mining or to higher or better uses. IC 13-4.1-8-1(b)(2).
7. The DNR's Division of Reclamation administers the surface mining program, reviewing permit applications and monitoring operations to assure compliance with the statute, rules and state approved permit provisions. IC 13-4.1; 310 IAC 12.
8. Contained within the Hawthorn Mine surface mining permit No. S-00010-6 are specifications to govern topsoil replacement following the completion of mining operation. Portions of the Hawthorn Mine suffered surface mining disturbance which caused the loss of topsoil before activities were commenced under this particular permit. For these portions of the mine, the subject permit requires that the "best available materials ... will be used.... consisting of a mixture of non-toxic shale and unconsolidated material. The standards of 310 IAC 12-5-64(c)(1) will be met on previously disturbed areas that are disturbed as part of this mining operation. The best available material will be capable of supporting a vegetation adequate to control erosion." (Emphasis supplied.) Part II.F.(6) of the permit (attached to the April 10, 1991, Affidavit of Joe M. Ellis; ALJ Finding No. 12.)
9. Peabody, on November 13, 1990, submitted a permit revision application proposing to relocate a 105-acre area initially designated as an area for which alternative materials, instead of topsoil, might be used for reclamation purposes.
10. Michael Sponsler, Division of Reclamation Director, in his December 17, 1990, letter, informed Peabody (A) that the revision proposal was not in compliance with Department rules in that Peabody did not specify what material it considered the best available material at this site and (B) that technical review by staff had determined that certain materials available in the area were, in the agency's technical opinion, the best available materials with which to perform the required reclamation. The Division requested that Peabody specify what material the company proposed to use in the new location so that the agency could make a final determination upon the proposed request.
11. On January 4, 1991, Peabody responded by saying the existing permit allowed them to reclaim with "best available material," that the company was not proposing anything different (from what was already in the original permit] with respect to the nature of the material but simply where it was to be placed. Under the existing permit, an area of previously mined land will be reclaimed using best available material. Our [November 13, 1990] submittal simply proposed the relocation of that area within the permit area. We have not proposed any revision in the nature of material to be used. The existing permit terms would continue to govern the question. If you intend to disapprove the proposed relocation on the basis of questions concerning "best available material," we would request that you send us a final determination to that effect so that we can initiate administrative review. (Emphasis supplied.) No further information or material on this matter was submitted by Peabody to the Division of Reclamation.
12. Sponsler on February 28, 1991, made a final determination of "disapproval of the proposed location revision".
13. Peabody filed its request for administrative review by the DNR on March 11, 1991. Both parties filed Motions for Summary Judgment. The ALJ rendered his opinion in favor of the DNR on July 29, 1991.
14. The ALJ found that in order to receive the permit modification sought, Peabody had the burden of proof to demonstrate to the DNR what the best available materials for reclamation were at the revision location to demonstrate that the best available materials would be used for reclamation. ALJ Finding No. 12.
15. ALJ Finding No. 13 noted that 310 IAC 12-5-64(c)(1) provides that for areas such as the subject area, "at a minimum the ground cover of living plants shall not be less than can be supported by the best available area, shall not be less than the cover existing before redisturbance, and shall be adequate to control erosion."
16. The parties agree:
(1) The 105 acres must be reclaimed using the "best available materials" in place of topsoil.
(2) The relocation request was rejected because the DNR is not presently satisfied that the "best available materials" proposed to be used by Peabody are, in fact, the best available materials.
(3) Peabody proposes to use the same materials in the proposed relocation as have been approved in the permit. The parties disagree concerning what are the "best available materials" for placement on the 105 acres of non-topsoil replacement area to be relocated under the Peabody proposal. Peabody urges that the best available materials are those described in the permit: non-toxic shale and unconsolidated materials. The DNR urges in a letter from Michael Sponsler that the best available materials are "alluvial (bottomland 'IC" horizon) material from the Wilbur (Ww) and Wakeland (Wa) soils. Another source would be the upland loess material from the Alford (AfB2), AVA (AlB2) and Cincinnati (CnB2)." Exhibit A attached to August 3, 1990, "Affidavit of Michael Sponsler. ALJ Finding Nos. 15 and 16.
17. Peabody filed for judicial review on August 27, 1991.
18. Judicial review is confined to the record made before the agency. Indiana Alcoholic Beverage Commission v. Johnson (1973), Ind. App., 303 N.E.2d 64.
19. on judicial review the burden of demonstrating the invalidity of agency action is on the party to the judicial review proceeding asserting invalidity. IC 4-21.5-5-14.
20. IC 4-21.5-14(b) states that the validity of agency action is to be determined by the standards of review provided in that section. The reviewing court may only set aside an 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.
21. Peabody claims that the DNR's final order is arbitrary and capricious, in excess of statutory authority, not in accordance with law, and inconsistent with a prior agency decision.
22. In determining whether the DNR's actions were arbitrary and capricious, Peabody must show there was no reasonable basis for the Department's decision. The burden of proof is on the party claiming there is no reasonable basis for the agency's actions. Board of Trustees of Public Employees' Retirement Fund v. Baughman (1983), Ind. App., 450 N.E.2d 95.
23. The reviewing court shall defer to the administrative agency's technical expertise and, in this sense the arbitrary and capricious standard is narrow and restricted. Farmer's Union Central Exchange, Inc. v. F.E.R.C., 734 F.2d 1486 (D.C. Cir. 1984).
24. IC 13-4.1-5-5(b) indicates that the DNR Director cannot approve a revision unless the Director finds that "reclamation as required by this article can be accomplished under the revised reclamation plan, and the provisions of 13-4.1-4 are complied with." The Director must make this finding before he can approve a permit revision. The Director could not make such a finding in the case at bar; more information was required from Peabody which was not submitted.
25. It is Peabody's burden of proof to show compliance with 13-4.1-4 (including those provisions governing the use of best available materials where topsoil is not present). Peabody has the burden of proof to demonstrate, in order to attain approval of the revised permit, what the company intends to use for best available material. ISMCRA mandates, at IC 13-4.1-4-3 (a), that the "applicant has the burden of establishing that his application complies with all the requirements of this article. The director may not approve a permit or revision application unless the application affirmatively demonstrates and the director finds the application is complete, accurate, and in compliance with all ISMCRA statutory and regulatory requirements and that the applicant has demonstrated that ISMCRA reclamation can be accomplished under the reclamation plan submitted. Peabody did not make this demonstration to the satisfaction of the DNR. The DNR's determination, both the Division's, and the ALJ's upholding the Division, was not unreasonable.
25.a. The AOPA provides with respect to burden of proof in IC 4-21, 5-3 14(c): At each state of the proceeding, the ... person requesting that an agency take action has the burden of persuasion and the burden of going forward with the proof of the request... .
26. The reason given for the disapproval related directly to the particular site for which the revision was being requested.
27. The Divisions' technical determination was that particular materials in the proposed relocation area would constitute the best available materials to meet ISMCRA reclamation standards. Sponsler letter of December 17, 1990; ALJ Finding. Peabody did not respond to the Division's invitation to submit additional clarifying material to specify and exactly what material it considered best available and exactly what material it would use in the proposed revised location.
28. The Division stated a reasonable oasis in its initial decision: the Sponsler letter cited and interpreted legal requirements and the factual situation in the field, and stated the technical opinion of the agency with regard to what it considered the best available materials in the area. No further information or data was submitted by Peabody to the DNR. The agency's actions in denying the revision application and the ALJ's determination upholding that denial was not arbitrary or capricious nor contrary to statutory authority.
29. ISMCRA requires that pursuant to reclamation requirements land disturbed by mining must be resoiled and revegetated either with topsoil removed from the land as required by law or, where topsoil quantity is insufficient, other material best able to support vegetation. IC 13-4.1-8-1(b)(5) and (b)(6).
[sic] 32. 310 IAC 12-5-64(c)(1) requires that, with respect to land such as are here under discussion, the best available topsoil or the best available other material suitable to support ground cover and suitable to control erosion must be used. The permit calls for the standards of this rule to be met.
33. Permit provisions must be read to comport with law. The law requires that a surface coal mining operator: --Restore the topsoil or the best available subsoil which is best able to support vegetation. IC 13-4.1-8-1(6) --For previously mined areas (such as the one that is the subject of the case at bar] that were not reclaimed to the requirements of 310 IAC 12-5-1 through 31-12-5-158 [ISMCRA standards] at a minimum the ground cover of living plants shall not be less than can be supported by the best available topsoil or other suitable material in the reaffected areas, shall not be less than the cover existing before redisturbance, and shall be adequate to control erosion. 312 IAC 12-5-64(c)(1). The DNR's insistence on compliance with the requirements of ISMCRA (particularly IC 13-4.1-8-1(5) and (6) and 310 IAC 12-5-64(c)(1) does not refute, nor is it in conflict with, its previous approval in Part II.F (6) of the permit provisions with the legally-required environmental performance standards in connection with a particular site.
34. Peabody's proposed revision did not specify what materials it would use as best available materials at the site and did not respond to DNR inquiry, relying instead on the fact that the original initial permit gave as best available materials a generic, instead of a specific, designation of non-toxic shale and unconsolidated material. Part II.F.(6) of permit.
35. Peabody failed to meet its burden to demonstrate what would constitute "best available material" in the area with which to reclaim the relocated site.
36. Even after a surface mining permit is issued by the DNR, it is always subject to review to assure compliance with ISMCRA standards. IC 13-4.1-5-6. The operator is issued this permit subject to that statutory provision. 310 IAC 12-3-120 implements that provision and requires that a permit be reviewed annually or no less frequently than the middle of the permit term.
37. The agency's decision is not inconsistent with a prior agency decision (Squaw Creek v. DNR, Administrative Cause No. 86-128R) since:
A. in the case at bar the agency articulated a reasonable basis for its decision;
B. DNR did not disregard the facts of the situation;
C. a reasonable, honest, and law-abiding person, and one with technical expertise could have reached the same conclusion.
38. "There is no principle that requires perfect consistency in decisions made by administrative agencies during the course of its review of a particular problem. So long as it takes account of all relevant factors and its goal is reasonable . . . that agency's decision should be sustained based on the deferential standard required by the technical nature of the subject matter. Illinois Bell Telephone Co. v. F.C.C., 740 F.2d 465 (7th Cir. 1984).
39. The ALJ properly, validly, and lawfully upheld the Division's determination to deny the proposed permit revision for relocation.
JUDGMENT: It is THEREFORE ORDERED, ADJUDGED AND DECREED that the final decision of the DNR denying Peabody's revision application was neither arbitrary, capricious, nor in excess of statutory authority, nor contrary to law. The decision of the DNR Administrative Law Judge is affirmed. Costs are awarded to the DNR.
[GREENE CIRCUIT COURT CAUSE NUMBER 28COl-9110-CP-2451