National Mining Association v. Bruce Babbitt, Secretary, United States Department of Interior
Docket: 98-5320
Court: Court of Appeals for the D.C. Circuit; April 27, 1999; Federal Appellate Court
The National Mining Association appealed against four regulations established by the Secretary of the Interior concerning land, structure, and water supply damages from mining subsidence. The district court dismissed the appellant's claims, but the Court of Appeals found two of the regulations to be arbitrary and capricious. Under the Surface Mining Control and Reclamation Act, permits for underground mining operations must include measures to prevent subsidence that causes material damage, ensuring mine stability and preserving surface land value. The term "subsidence" specifically refers to earth movement caused by underground coal mining, as outlined in existing case law and statutory provisions. The regulations have been subject to various legal challenges, prompting legislative amendments to address subsidence issues, including the introduction of Section 720 via the Energy Policy Act of 1992, which sets compliance requirements for underground coal mining operations initiated after October 24, 1992.
Material damage from subsidence due to underground coal mining operations must be promptly repaired or compensated for, specifically concerning occupied residential dwellings and related structures, as well as non-commercial buildings. Repair includes rehabilitation, restoration, or replacement of the damaged properties, while compensation for the diminution in value must be made to the owners. Compensation may also involve purchasing a noncancellable premium-prepaid insurance policy prior to mining.
Any drinking, domestic, or residential water supply from existing wells or springs that becomes contaminated, diminished, or interrupted due to mining operations must be promptly replaced. This provision does not hinder ongoing underground coal mining activities.
Regulations to implement these requirements were to be finalized within one year of October 24, 1992, with the Secretary proposing subsidence regulations in 1993, which were modified after public comment and finalized in 1995. The National Mining Association challenged ten parts of the new regulations as arbitrary and capricious, leading to cross-motions for summary judgment. The district court ruled in favor of the Secretary and National Wildlife Federation, and the Association narrowed its appeal to four rulings.
A key challenge involves a regulation that creates a rebuttable presumption of causation for damage to non-commercial buildings or occupied dwellings resulting from earth movement within a defined angle of draw, typically set at 30 degrees from the mine workings. If damage occurs within this area, the mining company must then prove that the damage was caused by factors other than subsidence, such as pre-existing damage or external causes.
Appellant argues that the presumption in question improperly shifts the burden of proof to mining companies, requiring them to demonstrate that their operations did not cause subsidence. This, according to Appellant, contravenes the Administrative Procedure Act (APA), which prohibits such a burden shift when the agency acts as a proponent of an order. The government contends that the regulation only shifts the burden of production, not the burden of persuasion, which the APA forbids. The court acknowledges that a shift in the burden of production can, at times, resemble a shift in the burden of persuasion but does not find it necessary to delineate that line in this case.
For a factual presumption to be valid, it must be reasonable, meaning the circumstances must make it more likely than not that the presumed fact exists. The court finds that the agency's presumption fails this test for two reasons: first, the evidence regarding subsidence has become confused during litigation; second, the geographical scope of the presumption, defined as the "angle of the draw," is overly broad. The regulation applies whenever earth movement results in damage to a structure covered by the Energy Policy Act. The government clarifies that "earth movement" pertains only to that consistent with subsidence, which Appellant contests, claiming that the government cannot alter its interpretation of the regulation mid-litigation. While it is common for agencies to clarify disputed provisions during appeals, the court expects the agency's interpretation to be clear and reflect its considered judgment by the time of oral argument.
The government claims to have clarified its stance on "earth movement consistent with subsidence," but its definition remains vague, merely suggesting it excludes movements caused by non-subsidence factors like earthquakes or floods. This circular reasoning fails to clarify the causation of damage, which is the essence of the evidentiary presumption. The appellant argues that the term “earth movement consistent with subsidence” is not well-defined and that the regulatory presumption lacks a reasonable basis, particularly due to the arbitrary geographical boundary known as the angle of draw. Evidence presented indicates that the type of subsidence within this angle does not typically cause structural damage, a view supported by the original authors of the studies cited by the agency. Furthermore, the nationwide presumption fails to differentiate between high extraction and partial extraction mining, overlooks the impact of mining depth, and neglects other potential causes of earth movement that could also damage structures.
The government's defense of the regulation is weak, relying on the possibility for state regulatory authorities and mining companies to petition for adjustments to the angle of draw if they can provide a more reasonable basis. However, this does not address the fundamental issue of whether the presumption itself is rational. The legal standard for an evidentiary presumption requires a logical connection between proven and inferred facts; if alternate explanations exist that are equally plausible, the presumption cannot be justified as reasonable.
The government has not adequately justified its presumption regarding the angle of draw in relation to causation for subsidence-caused damage. It has failed to provide scientific evidence supporting the notion that the angle of draw defines a logical area for evidentiary presumption of causation. The government appears to concede that available scientific support does not back its position, as expert sources suggest the angle of draw is not relevant for identifying structural damage from subsidence. A key textbook references the angle of draw as primarily of academic interest, indicating that its relevance diminishes significantly before reaching the edges of the subsidence basin.
The government claims the angle of draw merely delineates where earth movement from subsidence could occur, but the critical issue is whether damage to structures within this angle is more likely than not to result from subsidence. Liability for the mining company hinges on actual damage to protected structures, not on general earth movement. Therefore, without establishing a direct connection between damage and the angle of draw, the presumption remains unsupported.
Furthermore, the agency dismissed limiting the presumption to the 'angle of critical deformation,' which is smaller than the angle of draw and indicates where structural damage is more likely. Although the government acknowledges that damage within this angle is more probable, it justifies using the larger angle of draw on the basis of 'possibility' for defining the outer boundary of potential subsidence displacement. However, the government has not provided scientific backing for the likelihood of damage occurring within the entire angle of draw.
Imposing a presumption of causation based solely on the possibility that a party caused damage transforms a factual presumption into a counterfactual one, which lacks justification. The government’s claim that this presumption is factual is challenged by the illogical nature of using the angle of draw as a measure, as deeper mines typically result in a wider angle yet decrease the likelihood of structural damage. The agency's failure to adequately explain the need for a nationwide presumption, despite recognizing factors affecting subsidence-caused damage, raises concerns about the regulation's rationality. The government argues the presumption promotes efficiency in establishing mining liability, but this rationale has limits and does not justify arbitrary regulations.
The regulation mandating pre-subsidence surveys for mining permit applicants is also contested. The appellant argues that the agency did not sufficiently explain its shift from a prior policy that did not require such surveys. The government presents two inconsistent defenses: one claiming the 1992 Energy Policy Act necessitated the change, and another incorrectly asserting that the previous regulations implicitly required surveys. This latter claim contradicts the government’s acknowledgment of the prior regulatory framework, which only required identification of potentially impacted structures rather than condition surveys. The historical context reveals that the previous regulations did not mandate pre-subsidence surveys, undermining the government's position.
The change in policy regarding subsidence-related regulations was justified by Congress' directive in the Energy Policy Act, which mandated the Secretary to create regulations that enhance protection for structures and land from subsidence damage. However, the government incorrectly asserts that this directive exempts the agency from providing a rationale for its policy change. The relevant case, City of Las Vegas v. Lujan, involved a specific congressional mandate for immediate action, while the Energy Policy Act does not specifically address pre-subsidence surveys. Consequently, the agency must explain its decision to introduce a requirement for these surveys after previously not including them.
The agency stated that the new policy was necessary to implement the Energy Policy Act effectively, indicating that the information from pre-subsidence surveys is essential for establishing a baseline to measure subsidence impacts. The agency appropriately limited the survey requirements to structures and water supplies protected under the Act. The primary goal of the Energy Policy Act was to enhance structural protection, which supports the agency's rationale for the policy change.
Concerns raised by the appellant regarding the burdensomeness of the regulation and the timing of the surveys were deemed adequately addressed by the agency, which modified the survey requirements to alleviate costs. The agency justified requiring pre-application surveys by explaining that the results would inform whether a subsidence control plan is necessary, and that the timing is relevant as it relates to the permit application process. The agency believes that all required information can be gathered at the application stage, allowing mining companies to update any outdated information as needed later in the process.
The regulation regarding pre-subsidence surveys must be vacated due to its reliance on the angle of draw for defining the survey area, which the government failed to defend independently. The Association challenges new regulations requiring mining permittees using "planned subsidence" techniques to minimize subsidence damage. Permit holders must implement necessary measures to mitigate damage to non-commercial buildings and occupied residences as far as technologically and economically feasible. The regulations specifically reference planned subsidence methods, like longwall mining, which allow for predictable subsidence. The appellant argues that these damage minimization requirements contradict the Mining Act, which mandates permit conditions to prevent subsidence-related damage only when not using planned subsidence techniques. The appellant claims that since Congress approved longwall mining, the regulations undermine this intent. The government contends that the requirement for damage minimization is a valid interpretation of the statute, advocating for Chevron deference. Although the government's interpretation is viewed as somewhat tenuous, it is deemed to meet the Chevron standard, allowing for a broader interpretation of "predictable and controlled manner."
The Association challenges the regulation implementing the Energy Policy Act's obligation for mining companies to 'repair or compensate' for damage to non-commercial buildings and occupied residential dwellings caused by subsidence during mining activities. Specifically, they argue the regulation is unreasonable as it appears to nullify existing agreements between property owners and mine operators regarding subsidence rights, contrary to the intent of the Energy Policy Act. They express concern that allowing such nullification would unfairly benefit landowners and potentially result in an unconstitutional taking of the mining company's contract rights.
The Association highlights a perceived unfairness in a 'double recovery' scenario, where a landowner could receive compensation twice: once for waiving subsidence rights and again through enforcement actions post-subsidence. In response, the government clarified that any compensation under the Act would be reduced by amounts already received from contractual waivers, ensuring no double recovery occurs. Despite this clarification, the Association continues to assert that waivers should be fully honored.
The Association's position is rejected when they imply that mining companies should not compensate beyond the initial waiver payment. The court previously upheld the government's authority to limit compensation obligations to state law requirements. However, the Energy Policy Act explicitly mandates compensation for damages, suggesting that the Secretary may require mining companies to compensate landowners to the full extent permitted under the new federal law. While parties may enter into new contracts post-Act, the agency does not deny its obligation to compensate landowners for damages as mandated by the Act.
The appellant's challenge regarding takings is inadequately substantiated, as it improperly assumes that interference with contract rights constitutes a per se taking. Established legal precedent indicates that legislation that disregards existing contractual rights does not automatically result in an illegal taking. For a valid takings argument, the appellant must demonstrate: (1) the economic impact of the regulation on the claimant; (2) the degree to which the regulation has interfered with investment-backed expectations; and (3) the nature of the governmental action. The appellant's reliance on the potential for the government's alteration of a mining company's contract rights to signify a possible unlawful taking does not suffice to warrant an exemption in the Secretary's regulations for private waiver agreements. The avoidance canon does not apply when the statute only potentially results in a taking under specific circumstances. The court will not invalidate permissible applications of a statute based on unlikely future claims of unconstitutional taking.
Additionally, the appellant's assertion that the Department unlawfully relied on unmentioned studies in the proposed rule is dismissed. Informal rulemaking allows the use of supplementary information not disclosed for public comment, provided the studies support the presumption adequately. The Secretary indicated that pre- and post-subsidence agreements could satisfy regulatory requirements, although the applicability to both types of waivers was not explicitly clarified. The court accepts the agency's interpretation of its regulations, affirming the agency's position based on established legal standards.
The legal excerpt critiques a regulatory presumption related to subsidence damage caused by mining activities. The court expresses concern over the government's unclear interpretation of "earth movement consistent with subsidence," which was described circularly, failing to provide a clear definition. This lack of clarity undermines the presumption's purpose—determining the cause of damage—as appellants argue that it allows for ambiguity regarding whether damage stems from mining or other factors.
The excerpt highlights that the presumption's geographical boundary, defined by the angle of draw, is deemed arbitrary and capricious, failing to accurately reflect subsidence damage. Appellants assert that the type of subsidence within this angle does not typically result in the damage described, citing scientific studies that reject the predictive value of the angle of draw. Furthermore, the regulation inadequately distinguishes between different mining methods and overlooks critical factors such as mining depth and other potential causes of earth movement.
The government's defense is described as weak, pointing out that while state authorities and mining companies can request adjustments to the angle, this does not address the fundamental issues of reasonableness in the regulatory presumption itself. The court indicates that if the presumption is deemed unreasonable, these provisions would not suffice to validate it.
An evidentiary presumption is valid only if there is a rational connection between established and inferred facts, making it sensible to assume the truth of the inferred fact until disproven by the opposing party. The government has not substantiated its presumption regarding the angle of draw's role in determining causation of subsidence-related damage, lacking any scientific backing. Notably, scientific literature, which the government cited for support, undermines its position by indicating that the angle of draw is largely irrelevant to assessing structural damage caused by subsidence. The government argues that the angle of draw merely defines the area where earth movement from subsidence is likely, yet the key issue is whether this area correlates with actual damage to structures. The agency declined to limit the presumption to the "angle of critical deformation," which some experts suggest would more accurately represent areas likely to experience damage, instead relying on the broader angle of draw based on a rationale of possibility. The agency acknowledges that damage is more likely within the critical deformation angle but maintains that the entire angle of draw defines the outer boundary of potential displacement.
The government has not provided scientific evidence to support the notion of subsidence-caused damage within the angle of draw, and imposing a presumption of causation based solely on possibility transforms a factual presumption into a counterfactual one. Despite the government's claim that the presumption is factual, there is no justification for using a counterfactual procedural device, especially since liability should only arise from established causation. Additionally, the angle of draw is criticized as an illogical measure, as deeper mines typically result in a wider angle while the likelihood of surface damage decreases with depth. The agency's rationale for a nationwide presumption is deemed arbitrary and capricious, as it lacks sufficient explanation for its broad application.
Furthermore, the regulation requiring mining permit applicants to conduct a pre-subsidence survey of potentially affected structures is challenged. The appellant contends that the agency failed to adequately justify its shift from a previous policy that did not require such surveys. The government's arguments for this change—claiming it was justified by the Energy Policy Act of 1992 and asserting that the survey requirement was always implicit—are found to be inconsistent and incorrect. The government's own regulatory history indicates that prior to 1995, no pre-subsidence survey was mandated. The Secretary's explanation of the regulatory changes further confirms that the current requirement represents a significant departure from past practice.
The change in policy regarding pre-subsidence surveys is justified by Congress's directive in the Energy Policy Act, which aimed to enhance protection for structures and land against subsidence damage. However, the government incorrectly claims that this directive exempts the agency from providing a reasoned explanation for the policy shift. The precedent set in City of Las Vegas v. Lujan is distinguishable, as it involved specific instructions for immediate regulatory action, while the Energy Policy Act does not specifically reference pre-subsidence surveys. The agency's rationale for requiring these surveys, outlined in the final rule's preamble, emphasizes their necessity for establishing baselines to measure subsidence effects, thereby supporting the Act’s objectives.
The agency appropriately limited the survey requirement to structures covered by the Energy Policy Act, aligning with its primary goal of enhanced structural protection. While the appellant argues that the regulation is overly burdensome and questions the timing of the surveys, the agency has adequately addressed these concerns by narrowing the scope and modifying mapping requirements. The timing of the pre-application surveys is purposeful, as the results inform whether a subsidence control plan is necessary upon permit application. The agency maintains that the prescribed format for survey information is the minimum needed to assess subsidence control requirements effectively. The government also states that subsidence effects are critical in the permit decision-making process.
The agency is permitted to require comprehensive information at the application stage, despite potential changes before mining begins, with the option for mining companies to update outdated information later. The existing regulation must be vacated as it improperly ties the pre-subsidence survey requirement to the angle of draw, a connection not defended by the government.
The document also addresses challenges to new regulations mandating mining permit holders using "planned subsidence" techniques to minimize damage to non-commercial buildings and occupied dwellings. Such permittees must implement feasible measures to mitigate material damage, aligning with the mining method used. This requirement is guided by specific regulations detailing the necessity of a subsidence control plan.
The appellant contests the damage minimization requirement, arguing it contradicts Section 516(b)(1) of the Mining Act, which allows for planned subsidence methods like longwall mining, exempting them from damage prevention measures. The government maintains that its interpretation of "predictable and controlled manner" as a standard for limiting collateral damage is valid and deserves Chevron deference, despite the appellant's assertion that the phrase merely describes longwall mining without imposing additional obligations. While the court acknowledges the government's interpretation may be a stretch, it ultimately finds it meets the Chevron test, affirming the agency's regulatory authority.
The Association challenges the regulation implementing the Energy Policy Act's requirement for mining permittees to repair or compensate for damage caused by subsidence to noncommercial buildings and occupied residential structures existing at the time of mining (30 C.F.R. 817.121(c)2). They argue that the regulation is unreasonable as it seems to nullify existing waiver agreements between landowners and mining operators, which should be upheld under state common law. The Association contends that interpreting the statute to allow for the abrogation of such agreements could result in an unconstitutional taking of the mining company’s contract rights, effectively granting landowners a windfall and leading to "double recovery."
The government clarified during oral argument that any compensation owed would be reduced by the amount previously received by landowners for waiving subsidence rights, preventing double recovery. This clarification weakened the Association's challenge, although they maintain that waivers must be fully honored and that the set-off approach contradicts the Act. The government previously limited compensation obligations to align with state law, citing that the Mining Act did not impose such obligations. However, the Energy Policy Act explicitly mandates compensation for damage, requiring full payment for the diminution in value of affected properties.
The Secretary may require mining companies to further compensate landowners for damages under the new federal law, which aligns with statutory requirements. Landowners and mining companies can enter into contracts that address expected damages, potentially waiving claims if actual damages exceed estimates. The appellant's takings challenge lacks sufficient development and relies on the misconception that contract rights interference constitutes a per se taking. Established legal precedent indicates that the alteration of contractual rights does not inherently result in an illegal taking. To substantiate a takings claim, the appellant must demonstrate (1) the economic impact of the regulation on the claimant, (2) how the regulation interferes with investment-backed expectations, and (3) the nature of the governmental action. The appellant's argument suggesting that the Energy Policy Act necessitates exemptions for private waivers is rejected, as the avoidance canon does not apply when takings may only occur in specific contexts. The court reverses part of the district court's ruling while affirming another part. Additionally, the Department's reliance on unmentioned studies during informal rulemaking is permissible as long as the information is supplementary. The Secretary indicated that pre- and post-subsidence agreements could satisfy requirements for compensating subsidence-related damages, and the agency's interpretation of its own regulation is accepted.
