ORDER
[NOTE: ON OCTOBER 5, 1995, UNITED MINERALS TOOK JUDICIAL REVIEW IN THE WARRICK SUPERIOR COURT. ON OCTOBER 22, 1996, WARRICK SUPERIOR COURT ENTERED FINDINGS OF FACT; CONCLUSIONS OF LAW; ORDER AND JUDGMENT FINDING THAT ALJ DETERMINATION WAS CONTRARY TO LAW (WARRICK SUPERIOR COURT DECISION FOLLOWS ADMINISTRATIVE FINDINGS). DNR APPEALED. COURT OF APPEALS REVERSED SUPERIOR COURT JUDGMENT AND AFFIRMED ALJ DETERMINATION (SEE 686 N.E.2d 851).]
The order of the Department of Natural Resources dated February 16, 1993, requiring United Minerals, Inc. to modify surface coal mine permit S-247 is hereby affirmed.
FINDINGS OF FACT
1. The Indiana Department of Natural Resources ("DNR") is an agency within the meaning of IC 4-21.5.
2. IC 4-21.5, IC 13-4.1, and 310 IAC 12 apply to these proceedings.[FOOTNOTE 1]
3. The DNR is the state agency responsible for the regulation of surface coal mining in Indiana.
4. At all times relevant to these proceedings, United Minerals, Inc. ("UMI") held surface coal mine permit S-247 issued by the DNR which allowed the mining of coal at the Deer Ridge Mine in Warrick County, Indiana.
5. On March 9, 1993, UMI filed a timely appeal of a DNR order issued during a mid-term permit review of the S-247 permit.
6. The order of the DNR at issue is an order requiring UMI to modify its permit with regard to proof of productivity for pasture non-prime farmland.
7. Since the matter at issue in this case involves IC 13-4.1 and does not involve the grant, denial, or revocation of a permit, the administrative law judge is the ultimate authority within the meaning of IC 4-21.5.
8. Permit S-247 was issued on April 23, 1990. See Exhibit 2 attached to the summary judgment motion filed by UMI.
9. Both parties filed motions for summary judgment with attachments and exhibits.
10. Summary judgment may be granted pursuant to IC 4-21.5-2-23 if it appears there is no material dispute about the relevant facts.
11. The briefs of the parties show no dispute about the facts. All arguments presented involve the law, thus a decision based on summary judgment motions is appropriate.
12. Pursuant to IC 13-4.1-5-1, the S-247 permit is effective for five years.
13. IC 13-4.1-5-6 mandates a permit review by the agency and allows the agency to require reasonable revisions or modifications to the permit. The time of the permit review is to be set by rule.
14. 310 IAC 12-3-120 is the rule dealing with permit reviews. It provides that the agency ". . . will review each permit issued an outstanding. . . no less frequent [sic] than the middle of the permit term." Section (b) of the same rule provides that the agency may ". . . require reasonable revision or modification of the permit provisions to ensure compliance with the act. . . ."
15. During the course of a mid-term review of the S-274 permit, the DNR ordered UMI to revise Part IV, Sec. D(5) of the permit dealing with productivity.
16. The primary issue raised by UMI deals with the retroactive application of a rule.
17. When the S-274 permit was approved, the language of Part IV, Sec D(5) was adequate to satisfy applicable sections of IC 13-4.1 and 310 IAC 12. All that was required was a 90% ground cover in pasture areas.
18. During 1990, the DNR published a revised productivity rule and began the adoption process.
19. The rule amendments were approved by the Office of Surface Mining and the approval published on May 29, 1992 in the Federal Register. (See Exhibit C).
20. Included in the rule amendments, were 310 IAC 12-5-64.1, 12-5-64.1, and 12-5-64.3. Old rule 420 IAC 12-5-64 was repealed by the rule package.
21. The DNR published notice of the federal approval in the September 1992 issue of the Indiana Register. The new rules took effect on that date.
22. 310 IAC 12-5-64.1, 64.2, and 64.3 change the pasture land ground cover requirement to 100%, and set forth ways of showing the reclaimed land meets productivity standards.
23. UMI relies in part on the prior administrative decision Marigold Mining v. DNR, 6 Caddnar 75 (1992).
24. In Marigold, supra, the DNR had refused to grant a Phase III bond release petition because 310 IAC 12-5-64.1, 64.2, and 64.3 had been
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promulgated by the Natural Resources Commission but not yet approved by the Office of Surface Mining and thus the DNR was powerless to act.
25. The administrative law judge disagreed with the DNR's position and ruled that since Marigold had filed a bona fide request for bond release (in 1991), the DNR had a responsibility to evaluate that request in light of the existing rules and statutes governing Phase III bond release and the applicable portions of the permit.
26. Marigold, supra, does not involve the issue of retroactive application of rules since the rules in question were not yet in effect in that case.
27. The parties later discussed the effect (or lack thereof) of a decision in Marigold Mining, Inc. v. DNR (1994 Spencer Circuit Court Cause Number 74C01-9304-CP-087) in which Marigold Mining sought a declaratory judgment against the DNR. The trial court held that in connection with permit S-110 issued to Marigold Mining, Inc., (the same permit as Marigold, supra) the DNR could not enforce the new rules to the S-110 permit only for the reason that a final, nonreviewable administrative decision had been issued as to that permit and not timely appealed.
28. Clearly the trial court was concerned about the DNR conducting a collateral attack on a final decision with regard to that particular permit, which the DNR points out was first issued in 1983, and in 1992 was in the final stages of the reclamation process.
29. It should be noted that the administrative case involving Marigold Mining, supra, was a case where final bond release was requested prior to the final promulgation of the new rules. In the present case, the DNR has ordered UMI to change its permit after the effective date of the new rules.
30. A recent important case involving retroactive application of rules and statutes in permit cases is IDEM v. Chemical Waste Management of Indiana, Inc., (1992) 604 N.E.2d 1199. The Court of Appeals held that since Chemical Waste had filed its application for a hazardous waste disposal site prior to the passage of the "good character law", IC 13-7-102, IDEM could not apply the good character law to the permit application. The court clearly states that a long standing rule of statutory construction requires prospective application only in the absence of an express statement that it be given retroactive application.
31. In this matter, there is a statute, IC 13-4.1-5-6, which specifically mandates permit reviews and allows the agency to make reasonable modifications.
32. It is clear that the legislature contemplated the need over the five year life of a surface coal mining permit for a review of permits and revisions to bring them into conformance with state and federal law changes.
33. This amounts to a legislative declaration that rule changes can be imposed on existing permits.
34. "Retroactive" in the meaning of mining permits and Marigold, supra, means applying a newly enacted rule to an existing application for bond release, not to actions taken by the DNR to bring permits into conformance with changes in the law with the idea of applying the change to future applications for bond release.
35. The order to the DNR dated February 16, 1993 should be affirmed.
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FOOTNOTE
1. The 1995 Indiana Legislature recodified the DNR code sections into Title 14. Since all relevant activity here took place prior to recodification, all statutory references will be to Title 13-4.1.
FINDINGS OF FACT, CONCLUSIONS OF LAW, ORDER AND JUDGMENT WARRICK SUPERIOR COURT (87D02-9510-CP-139)
"UMI" - United Minerals, Inc.
"DNR" - Department of Natural Resources
FINDINGS OF FACT
1. DNR is an agency within the meaning of I.C. 4-21.5.
2. I.C. 4-21.5, I.C. 13-4.1 and 310 IAC 12 apply to this cause. The 1995 Indiana Legislature recodified the DNR code sections into title 14. However, because the proceedings below used statutory references to Title 13-4.1, the court shall use those references in this order.
3. DNR is the Indiana agency responsible to regulate surface coal mining in the State of Indiana.
4. On April 23, 1990, UMI was issued surface coal mine permit 2-247 by the DNR, allowing UMI to mine coal at the Deer Ridge Mine in Warrick County, Indiana.
5. On April 30, 1990, DNR published proposed new rules, including rules applicable to revegetation of non-prime farm ground after an operator ceases mining. These proposed rules became effective on September 1, 1992.
6. That after a mid-term review by DNR regarding UMI's permit S-247 for the Deer Ridge Mine, Field Supervisor Kevin C. Geier, by letter of February 16, 1993, notified UMI that it must modify the permit as to productivity for pasture, non-prime farm land areas, effectively imposing the September 1, 1992 regulations as to ground cover and productivity data requirements upon the permit and UMI, the permit holder.
7. On March 9, 1993, UMI filed a timely appeal of the DNR order issued during the mid-term permit review of the S-247 permit.
8. After proceedings before the Honorable William K. Teeguarden, Administrative Law Judge, Natural Resources Commission, the ALJ did on September 8, 1995, issue his report, findings of fact, and final order affirming the DNR's February 16, 1993 order requiring UMI to modify surface coal mine permit S-247 to comply with the September 1, 1992 regulations.
9. On October 5, 1995, UMI filed its verified petition for judicial review and, on October 23, 1995, petitioner UMI filed with the court the certified agency record pursuant to I.C. 4-21.5-5-13.
10. The facts are undisputed between the parties, and the dispute between them involves purely an interpretation of the law and DNR's legal authority to impose upon UMI the regulations regarding ground cover and productivity data which became effective on September 1, 1992, over two yeas after the S-247 permit was originally approved, but prior to the time of the mid-term review of the permit by DNR.
11. In the proceedings before ALJ Teeguarden, there existed no material dispute regarding the relevant facts, the ALJ determined a decision on summary judgment motions was appropriate, and this determination has not been challenged by the parties.
12. Pursuant to I.C. 13-4.1-5-1, UMI's S-247 permit was effective for 5 years following the date it was issued on April 23, 1990.
13. I.C. 13-4.1-5-6 mandates that DNR review outstanding permits and further provides that it may require reasonable revision or modification of the permit provisions during the term of the permit.
14. 310 IAC 12-3-120 is the agency rule that deals with permit reviews. That rule provides the agency will review each permit issued and outstanding no less frequently than the middle of the permit term, and section (b) provides that the agency may require reasonable revision or modification of the permit provisions to insure compliance with the act.
15. When the UMI S-247 permit was originally approved, Part IV, Section D(%) required a 90% ground cover in pasture areas as acceptable reclamation. On April 30, 1990, the DNR published a revised productivity rule to begin the rule's adoption process.
16. The rule amendments were approved by the federal Office of Surface Mining, and this approval was published on May 29, 1992 in the Federal Register. Included in the rule amendments was the repeal of old rule 310 IAC 12-5-64 regarding ground cover in pasture areas, the 90% rule, and the adoption of 310 IAC 12-5-64.1, 64.2, and 64.3, serving to impose a 100% ground cover requirement in pasture areas, and further imposing productivity data reporting requirements.
17. The DNR published notice of the federal Office of Surface Mining approval in the September, 1992 issue of the Indiana Register, such that the new rules became effective on September 1, 1992 pursuant to law.
18. Both parties have cited and argued what they refer to as Marigold Mining vs. DNR(1992), 6 Caddnar 75, "Marigold I", and Marigold Mining, Inc. vs. DNR (1994) Spencer Circuit Court, 74C01-9304-CP-87, hereafter "Marigold II", in which Administrative Law Judge Tim Rider and Spencer Circuit Court Judge Wayne Roell, respectively, found in cases involving a sister company of UMI that DNR's proposed enforcement of the September 1, 1992 regulations upon Marigold would not be permitted, in the administrative case because the operator had filed a request for bond release in 1991 and the DNR therefore had a responsibility to evaluate that request for bond release pursuant to the existing (old) rules and statutes governing final bond release and the permit involved; in the Spencer Circuit Court case, Marigold II, Judge Roll found the operator entitled to a declaratory judgment specifying the standard of reclamation for the permit in question to be governed by the regulations in effect at the time the permit was granted, finding the reclamation regulations effective September 1, 1992 not to be applied retrospectively or retroactively to the permit, and ordering that DNR should inspect for the final bond release without the operator being required to comply with the requirements of the September 1, 1992 regulations. In Marigold II, Judge Roll finally noted that the DNR had not appealed the ALJ's order in Marigold I, and found that DNR " must live with its decision not to appeal that decision."
19. The DNR asserts in this cause that its failure to appeal in the Marigold cases was through inadvertence, and not because it agreed with the results of the orders entered in those cases. The DNR further asserts that Marigold I and Marigold II are distinguishable from the instant case since those cases involved requests for final bond releases, either made prior to or on the effective date for the new regulations regulating ground cover and productivity data requirements, September 1, 1992, while the instant cause involves a mid-term review, and the law provides for reasonable revision or modification by the DNR as a part of this mid-term review.
20. UMI asserts that the attempted enforcement of the September 1, 1992 regulations upon UMI and the permit approved on April 23, 1990, constitutes retroactive application of the rules when UMI had substantially performed relying upon the old regulations, that imposing the new regulations upon UMI creates economic hardship and uncertainty in the permit process, including increased expenses for reclamation, increased bonding expenses because of the extended time that will be required for UMI to comply with the requirements of the new regulations, and that an operator must, from an economic standpoint, be able to rely upon the requirements of its approved permit in planning to mine an area, and in calculating the expenses and costs the operator will incur to reclaim an area once surface mining has been completed. UMI argues if DNR is able to impose new regulations which increase the reclamation and economic burdens upon an operator, subsequent to permit approval that contains known requirements for reclamation of affected areas, operators will have no way to plan or determine that mining of a specific area will or will not be economically feasible and profitable for an operator.
21. DNR counters with this argument with it own that mid-term review process and DNR's obligation to make reasonable revision and modification has always been permitted by I.C. 13-4.1-5-6 and 310 IAC 12-3-120, such that revising UMI's permit pursuant to the September 1, 1992 regulations to an existing permit, but is a permissible revision or modification of an existing permit, as foreseen and specifically authorized and contemplated by the Indiana legislature.
22. To this argument, UMI replies the purpose of mid-term permit revision or modification is to conform the to the true facts of the mining operation during the course of the mining, and not to permit the DNR to impose onerous, burdensome and costly new requirements upon the operator which were not included in the original permit approved for the operator's surface mining operations.
23. ALJ Teeguarden found that I.C. 13-4.1-5-6 specifically mandates permit reviews and allows the agency to make reasonable modifications; that the legislature contemplated the need over the 5 year life of the surface coal mining permit for review of permits and revisions to bring them into conformance with State and Federal law changes, and that this amounts to a legislative declaration that rule changes cam be imposed on existing permits.
24. ALJ Teeguarden found that "retroactive" means applying a newly enacted rule to an existing application for bond release, not to actions taken by the DNR to bring permits into conformance with changes in the law "with the idea of applying the change to future applications for bond release." The ALJ then affirmed the DNR February 16, 1993 order modifying UMI's permit S-247 to require UMI to comply with the September 1, 1992 regulations.
CONCLUSIONS OF LAW
1. Indiana law provides that a law shall be prospective only in the absence of an expressed statement that it be retroactive. Also, generally, applicants have a right to have their applications considered in accordance with the laws in effect when the application is made. Dept. of Env. Mgt. vs. Chemical Waste Mgt., 60 N.E.2d 1199 (Ind.App. 2 Dist. 1992).
2. Neither the petitioner or the respondent asserts any material factual disputes between the parties, and ALJ Teeguarden found none. The dispute between the parties in this cause is purely of law and is whether the DNR has the legal right to impose regulations increasing an operator's reclamation obligations as a part of the DNR's mid-term permit review when the regulations sought to be enforced upon the operator were not enacted at the time the operator's permit was approved, the permit including reclamation requirements for affected areas upon cessation of surface mining activities.
3. Absent an express indication otherwise, the law presumes the legislature intends statutes and amendments to apply prospectively, and not retroactively. Strong and compelling reasons must exist for retroactive application. Chestnut vs. Roof, 665 N.E.2d 7 (Ind.App. 1996).
4. Although I.C. 13-4.1-5-6 (Review of Outstanding Permits) provides the DNR may require reasonable revision or modification of permit provisions during the term of the permit, this statutory language does not evince an intent by the legislature to permit the DNR to enact and enforce substantially more onerous and costly regulations upon an operator than those regulations which existed at the time an operator's permit was approved by the DNR, the terms and requirements of which were incorporated into the permit approved for an operator's surface mining and reclamation plan for an affected area, and upon which the operator relied in determining whether or not it was feasible to conduct mining operations on a particular piece of real estate, considering the economic benefits and costs to the operator for a specific mining project.
5. To impose the September 1, 1992 regulations upon UMI and the permit approved on April 23, 1990 exceeds that statutory authority granted to DNR to "require reasonable revision or modification of the permit provisions during the term" of the permit, constitutes retroactive application of the regulations effective September 1, 1992 without specific legislative authority permitting such, and is contrary to law.
6. The September 8, 1995 final order of Administrative Law Judge William K. Teeguarden is neither arbitrary or capricious. However, the final order issued by the ALJ is contrary to law in that the ALJ found that I.C. 13-4.1-5-6 permits the DNR, under the facts and circumstances of this cause, to impose upon UMI and the permit approved April 23, 1990, the newly enacted regulations of September 1, 1992, as part of the mid-term permit review, and to impose substantially more onerous and costly regulations upon the operator than those existing at the time of and incorporated into the permit approved for UMI by the DNR on April 23, 1990, and upon which UMI conducted its mining and reclamation activities on the affected areas governed by permit S-247.
7. The final order issued by ALJ Teeguarden on September 8, 1995 should be and the same is hereby reversed, with this matter ordered remanded to the Administrative Law Judge for further proceedings consistent with this judgment.
JUDGMENT
IT IS ORDERED, ADJUDGED AND DECREED BY THIS COURT that any finding of fact deemed to be a conclusion of law shall be a conclusion of law, and that any conclusion of law deemed to be a finding of fact shall be a finding of fact. IT IS FURTHER ORDERED, ADJUDGED AND DECREED BY THIS COURT that the findings of fact and conclusions of law as set forth above shall be and are hereby made the findings and orders of this court without further enumeration or repetition thereof.
IT IS FINALLY ORDERED, ADJUDGED AND DECREED BY THIS COURT that the final
order of Administrative Law Judge William K. Teeguarden, Natural Resources Commission, is
contrary to law, should be and the same is hereby ordered reversed, with this cause now
remanded to Administrative Law Judge Teeguarden for further proceedings consistent with the judgment of this court.