Virginia Citizens for Better Reclamation, Inc. v. Watt

No. 83-1828 (4th Cir. June 6, 1984)

The court affirms in part and reverses in part a district court decision upholding the Secretary of the Interior's approval of Virginia's permanent regulatory program under the Surface Mining Control and Reclamation Act (SMCRA). Initially, the court notes that to pass SMCRA's arbitrary and capricious standard of judicial review, the Secretary's approval will have to be supported by a reasoned explanation to the extent that it reverses prior agency policy under which similar provisions of the Virginia program were rejected. The court upholds the approval of Virginia's inspection staffing program, ruling that any change in the agency's previous position was adequately explained. The Secretary had initially rejected the program because of lack of information on staffing needs. Virginia has since demonstrated that it has enough personnel to conduct the requisite monthly inspections of all mines in the commonwealth. As a result, appellant's challenge to the commonwealth's criteria for exempting mines from the inspection requirement was irrelevant to the staffing question. The court holds that the Secretary properly upheld the commonwealth's requirement for use of subsoil for reclamation. The Secretary did not depart from the approval criteria used by his predecessor, and the Department of the Interior (DOI) regulations under which the Virginia subsoil requirement was upheld are consistent with the statutory requirement that only the best available subsoil be used as a substitute for topsoil in reclamation. The court next rules that appellant's challenge to Virginia's failure to require sedimentation ponds for water pollution control is moot since DOI had promulgated new regulations authorizing the type of controls required by the commonwealth. In addition, the court upholds the Secretary's approval of Virginia's limited provision for discovery in administrative proceedings, because the Secretary rationally concluded that the commonwealth procedures were as effective as the more extensive federal discovery requirements.

Next, the court rules that the Secretary improperly approved Virginia's program for protecting groundwater. The commonwealth program, which protects only groundwater actually in use, was not as stringent as the federal regulatory requirements, which mandate protection of "usable" groundwater. The record presents no rational basis for finding the commonwealth requirement as stringent as DOI's. In a footnote, the court holds that appellant's challenge to the commonwealth's failure to require provision of alternative water supplies whenever a mine has an adverse effect on groundwater supplies is not properly before the court, because it was not raised below. It further notes that the commonwealth provision is consistent with the Act in any event. The court holds that the Secretary improperly approved a commonwealth provision allowing cross-examination of nonexpert witnesses at hearings on designation of lands as unsuitable for mining. The federal regulations do not allow such broad cross-examination, and the Secretary's approval was an unexplained reversal of a final action taken by his predecessor on this issue. The court agrees with appellant that SMCRA § 510(c) requires applicants for surface mining permits to list notices of violation of all air and water pollution laws, not just notices issued under SMCRA § 521(a). It rules that the Secretary erred in concluding that the Virginia provision was "in accordance with" SMCRA, since a state law meets this test only if it is as stringent as, meets the minimum requirements of, and includes all applicable provisions of SMCRA. The Secretary's approval of the provision, based on the conclusion that the commonwealth law was as stringent as SMCRA, ignored the fact that the provision lacked the federal requirement for listing all notices of violation. Finally, the court rules that the Secretary erred in concluding that Virginia's plan for inspection of inactive and abandoned mining sites is as stringent as federal regulations. The former requires semiannual inspections of inactive sites, the latter quarterly inspections.

Counsel for Appellant
Suellen T. Keiner
Environmental Policy Institute
218 D St. SE, Washington DC 20003
(202) 544-2600

Counsel for Appellees
Claire L. McGuire, Robert L. Klarquist, Alfred T. Ghiorzi
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2855

Debra J. Prillaman, Ass't U.S. Attorney
P.O. Box 1257, Richmond VA 23210
(804) 771-2186

Stuart Sanderson
Office of the Solicitor
Department of the Interior, 18th & C Sts. NW, Washington DC 20240
(202) 343-4671

Before Winter, Sprouse, and Peck,^* JJ.

[14 ELR 20680]

Per curiam:

The district court gave judgment for Secretary James G. Watt in the suit instituted by Virginia Citizens for Better Reclamation, Inc. (VCBR) attacking the Secretary's approval and the validity of Virginia's permanent regulatory program for surface coal mining adopted pursuant to the requirements of the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. § 1201 et seq. (the Act). VCBR advances eight objections to the Secretary's approval. We conclude that four objections are lacking in merit, but we agree that, for various reasons, the Secretary's approval of four of the Virginia program's provisions cannot withstand scrutiny. Accordingly, we affirm in part, reverse in part and remand the case for further proceedings.

The Act authorizes each state to assume primary responsibility for enforcing, within its borders, the Act's minimum permit and performance standards for surface coal mining and reclamation, if the Secretary of the Interior approves the state's regulatory program. Before approving any state program, however, the Secretary must find that the program is "in accordance with" the Act's requirements and "consistent with" the Secretary's regulations promulgated pursuant to the Act. 30 U.S.C. § 1253(a). By regulation, the Secretary has promulgated definitions, which plaintiff does not question, for the terms "in accordance with" and "consistent with." Under these definitions, state laws are deemed in accordance with the Act if they are "no less stringent than, meet the minimum requirements of and include all applicable provisions of the Act." And state regulations are consistent with federal ones if they are "no less effective than the Secretary's regulations in meeting the requirements of the Act." 30 C.F.R. § 730.5.

The standards governing judicial review of the Secretary's action in approving or disapproving a state program also are set out in the Act. It provides that the Secretary's action "shall be affirmed unless the court concludes that such action is arbitrary, capricious, or otherwise inconsistent with law." 30 U.S.C. § 1276(a)(1). Read together, then, these statutory and regulatory provisions indicate that a court reviewing the Secretary's approval of a state program must decide whether the Secretary acted arbitrarily, capriciously, or otherwise inconsistently with law in concluding (a) that the proposed program comprises state regulations no less effective than the Secretary's, and (b) that state laws are no less stringent than, meet the minimum requirements of, and include all applicable provisions of the Act.

As a general rule of law, agency action is arbitrary, capricious, or otherwise inconsistent with law unless the record demonstrates that it is rational, based on relevant considerations, and within the scope of the agency's delegated authority. Motor Vehicle Mfr. Assn. v. State Farm Mutual, U.S. (1983); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 [1 ELR 20110] (1971). Furthermore, insofar as an agency decision marks a dramatic change in agency policy, it must be supported by a reasoned analysis explaining the change. Motor Vehicle Mfr. Assn., U.S. .

The latter rule is primarily relevant to our consideration of this case because Secretary Watt approved Virginia's proposed program under the statutory procedures allowing a state to resubmit a modified version of a proposal that has been disapproved or only partially approved. 30 U.S.C. § 1253(c). Virginia's original submission received only partial approval from Secretary Andrus, Secretary Watt's immediate predecessor. Accordingly, Secretary Watt's approval of the program raises the issue whether he adequately explained his reasons for approving provisions that his predecessor had disapproved.

II.

As we have stated, plaintiff challenges the Secretary's approval of eight aspects of the Virginia program. We consider the challenges seriatim, setting forth the facts relevant to each and addressing first the four we deem to be without merit:

1. Virginia's provision for inspection personnel.

Plaintiff maintains that Secretary Watt's acceptance of Virginia's proposal for staffing its inspection program was arbitrary and capricious for two reasons. One, it argues that the Secretary failed to explain adequately why he accepted the same proposal that Secretary Andrus had rejected. Two, it contends that the Secretary failed to consider all relevant factors, particularly a list submitted by plaintiffs of mines that had "not been accounted for by the state." These apparently were mines that plaintiff suspected of claiming, but not being entitled to, the exemption for mining operations affecting less than two acres. See 30 U.S.C. § 1278.

Both of plaintiff's argumentsare flawed. First, it is true that Secretary Watt approved the same inspection proposal that Secretary Andrus disapproved. But we question whether his approval represented a change in policy, and if it did, we conclude that he adequately explained his action. Secretary Andrus had [14 ELR 20681] disapproved Virginia's inspection proposal, noting that the accompanying explanation had insufficient information about the number of mines requiring inspection to allow him to assess the adequacy of the staffing plan. He was particularly concerned that the state might be underestimating the number of inspectable mines, either because it was using the wrong criteria to determine what mines were eligible for the two-acre exemption, or because mine operators were abusing that exemption. 45 Fed. Reg. 69,991 (1980).

When Virginia resubmitted its program to Secretary Watt, it provided him a basis for concluding that its staffing plans were adequate to meet the Act's requirements. It said that it presently was relying on the same number of inspectors it planned to employ under its proposed program and assured the Secretary that the inspection staff had been able to conduct monthly inspections of all inspectable as well as all exempt sites. These assurances provided a rational basis for the Secretary's conclusion that the Virginia proposal would allow the state to meet the Act's inspection requirements. Arguably his decision represents no change in policy since Secretary Andrus's decision turned on a lack of information that Secretary Watt considered remedied by Virginia's assurances. But, insofar as Secretary Watt's decision does represent a change, he has adequately explained it, stressing the factors described above.46 Fed. Reg. 61,101-02 (1981).

In light of Virginia's assurances, which the Secretary was entitled to accept at face value, see National Resources Defense Council, Inc. v. Environmental Protection Agency, 478 F.2d 875, 884 (1 Cir. 1973), plaintiff's argument that the Secretary failed to consider all relevant factors is obviously misconceived. If Virginia's staffing plans enabled it to inspect all inspectable and all exempt sites on a monthly basis, it is clearly irrelevant whether Virginia mistakenly classified some inspectable mines as exempt. It had demonstrated that it could inspect all inspectable sites monthly as the Act requires.

2. Virginia's requirement regarding the use of subsoil for reclamation.

The Act requires operators either to save and restore during reclamation the topsoil they remove or to replace it with "the best available subsoil which is best able to support vegetation." (emphasis added) 30 U.S.C. § 1265(b)(6). The Secretary's regulations allow an operator to substitute subsoil when he persuades the regulatory authority, on the basis of chemical and physical analyses of both the substitute and the original topsoil, that the substitute is "equal to, or more suitable for sustaining revegetation . . . and . . . is the best available in the permit area to support revegetation." 30 C.F.R. § 816.22(b).

Virginia's program in this regard provides that operators mining in steep slope areas of Virginia may use substitutes if they submit to the regulatory authority analyses demonstrating that the substitutes meet certain criteria. In effect, this system takes administrative notice that topsoil (if it exists at all) on steep slopes is of minimum quality, and it excuses the operator from analyzing such soil. In fixing its criteria, Virginia already has performed such analyses, and it set the criteria for substitutes so as to assure that the substitutes are equal or superior to the original soil.

When Secretary Andrus reviewed this portion of Virginia's original submission, he observed that a then recent interpretive regulation authorized programs requiring only analyses of the substitutes. He said, however, that he was disapproving the Virginia provision because it did not contain assurances that it would be implemented in accordance with the interpretive regulation. The proposal, he concluded, could be approved on resubmission if Virginia included such assurances. 45 Fed. Reg. 69, 983.

Plaintiff now complains that Virginia's proposal is inconsistent with federal requirements and that Secretary Watt's acceptance of it represents an abrupt and unexplained change of agency policy. The latter point certainly is not well taken. On resubmission, Virginia gave the assurances Secretary Andrus had requested, and Secretary Watt's approval of this provision on that basis clearly is consistent with Secretary Andrus's original action.

Plaintiff's challenge to the Virginia system itself rests on two bases. First, plaintiff protests that Virginia does not require approval of a substitute soil by the regulatory authority. This objection seems to stem from a misreading of the Virginia proposal. We agree with the Secretary that the proposal clearly requires operators to obtain the regulatory authority's approval by satisfying it that the proposed substitute soil meets the pre-set criteria. Second, plaintiff argues that the Virginia proposal is inconsistent with the federal requirements because it does not require the operator to use the best available substitute in the absolute sense of the word "best." The Secretary responds that neither the Act nor the regulations use "best" in that sense and that, instead, they use the term to mean "best . . . for establishing the particular desired vegetation." And the Virginia criteria, he maintains, require operators to use substitutes that are "best" in this sense.

The parties' disagreement thus centers on a question of statutory construction. The Secretary's interpretation is, of course, entitled to deference, see Batterton v. Francis, 432 U.S. 416, 426-27 (1977), and it is persuasive. Because subsoils are permissible "substitutes" for original topsoils, which an operator always can save and restore, it would be illogical to assume that Congress meant to require that the substitutes be superior to the originals.That, however, would often be the effect of using plaintiff's construction of the statutory language in the coal-bearing areas of Virginia which have poor soils.

We affirm the Secretary's approval of this provision of the Virginia program. It did not mark an abrupt, unexplained reversal of agency policy. Furthermore, it rests on a rational conclusion that the Virginia program conforms to federal requirements.

3. Virginia's failure to require sedimentation ponds across the board.

Plaintiff challenges the Secretary's decision to approve the portion of the Virginia plan allowing operators to employ alternatives to sedimentation ponds when the alternatives adequately control sediment. They claim this provision is less stringent that [sic] the corresponding section of the Act, which requires operators always to use the "best technology currently available" (BTCA), 30 U.S.C. § 1265(b)(10)(B)(i), defined by the Secretary in 30 C.F.R. § 816.42(a) (Repealed October 26, 1983) as sedimentation ponds.In any event, this issue appears moot, because the Secretary on September 26, 1983 promulgated new regulations specifically permitting the use of the alternative structures authorized in the Virginia plan. 48 Fed. Reg. 44,035 & 44,051 (1983); 30 C.F.R. § 816.46(a)(1).

4. Virginia's provision for discovery in administrative proceedings.

The Secretary's regulations provide for broad discovery rights in administrative proceedings, including rights to take depositions, file requests for admissions and interrogatories, and subpoena witnesses and documents. By contrast, the Virginia Administrative Procedure Act, which governs administrative proceedings under the state's surface mining program, makes more limited provisions for discovery — only subpoenas, depositions de bene esse, and requests for admissions "on order of the agency for good cause shown." VA. CODE § 9-6.14:13. In arguing that the Virginia regulations are fatally inconsistent with the federal ones, plaintiffs ignore the standard for judging that question — whether state rules are "no less effective than the Secretary's." 30 U.S.C. § 1253; 30 C.F.R. 730.5.

Because we think the Secretary rationally concluded that the Virginia regulations satisfied this standard, we affirm his approval of this portion of the program. He specifically found that the Virginia regulations were as effective as his own, basing his judgment on his experience that depositions and written interrogatories are rarely used in administrative cases and on the availability of relevant information through permit applications. 46 Fed. Reg. 61,099 (1981).

We now consider those of plaintiff's challenges that we think require us to reverse the district court's decision in part:

1. Virginia's program for protecting groundwater.

Plaintiff contends that the Virginia program for protecting groundwater is clearly less stringent than the Act's applicable requirements. Virginia requires operators to protect only "useable" groundwater, whereas the Act does not limit protectable groundwater to that which is useable, but simply employs the term "groundwater." The Secretary interprets the statutory language to refer only to groundwater "reasonably able to be used." This is a plausible interpretation and, as an administrative interpretation, is entitled to deference. See Batterton at 426-27 (1977).

[14 ELR 20682]

But, we have no doubt that Virginia's definition of "useable groundwater" is substantially different from the Secretary's interpretation of the statutory term. Virginia's definition, "[g]roundwater which serves existing residential, commercial, industrial, recreational, agricultural, or other managed use, and which contributes to water resources which are under management," V.C.S.M.R. Regulations, subchapter VA-general § V701.5, refers only to water in use, not all that is reasonably useable. By requiring protection of only groundwater in use, the Virginia program is less stringent than the Act, which requires protection of all reasonably useable groundwater as interpreted by the Secretary.

Because we perceive no rational basis for the Secretary having concluded otherwise, we must reject as arbitrary his approval of this portion of the state plan.^*

2. Virginia's provision for cross-examination of designation hearings.

The Act provides for designation of lands as unsuitable for mining upon a finding that the lands meet certain criteria. 20 U.S.C. § 1272. Any interested person may petition for particular land to be so designated, and a public hearing must be held on the petition within ten months of its receipt. Although the federal regulations provide that there shall be no cross-examination of witnesses other than expert witnesses at such hearings, 30 C.F.R. § 764.17(a), the Virginia program permits cross-examination of all witnesses. Secretary Andrus noted this discrepancy when he considered Virginia's original submission. In the findings section of his decision, he indicated that cross-examination might be proper in unusual circumstances and that he intended to monitor Virginia's practice. 45 Fed. Reg. 69,988 (1980). Although this passage of his opinion suggests that he approved Virginia's approach despite his reservations, he later specifically disapproved this portion of the Virginia rules. 45 Fed. Reg. 69,999 (1980). Secretary Watt, however, apparently construed the relevant portion of the original decision as an approval. He thus refused to consider plaintiff's comments regarding the Virginia rule allowing cross-examination, indicating that they were beyond the scope of the rulemaking. 46 Fed. Reg. 61,104 (1981).

Because Secretary Watt obviously was mistaken in concluding that Secretary Andrus already had approved this part of the Virginia program, Secretary Watt (or his successor) should now consider whether to approve it himself. Of course, if he decides to approve it, he will be obliged to explain the change in agency policy.

3. Virginia's failure to require operators to list special orders in their permit applications.

The Act provides that operators applying for permits must list "all notices of violations of this chapter and any law, rule, or regulation of the United States . . . pertaining to air or water environmental protection . . ." incurred within three years of the date of application. 30 U.S.C. § 1260(c). The parallel provision in the Virginia program excepts "special orders" from the required listing. Special orders were the initial citations issued by Virginia for violations of Virginia's environmental laws. These special orders were unlike the federal citations for which 30 U.S.C. 1271(a) provides, in that they did not, in the first instance, afford the basis for a cessation order and they did not carry civil sanctions, but failure to observe them could lead to issuance of a notice of noncompliance, which required compliance or else revocation of an operator's permit and bond.

Plaintiff argues that the Virginia provisions excepting special orders from the list of violation notices required with a permit application is inconsistent with the Act. It concludes that the Secretary's approval of that provision therefore violated the section of the Act requiring him to approve only programs that regulate mining "in accordance with" the federal Act.

The argument assumes that the Act requires inclusion of these special orders. The Secretary responds that the only "notices of violation of this chapter" contemplated by § 1260(c) are those provided for in § 1271(a). We agree with plaintiff that the statutory language, being broadly phrased, requires the inclusion of all notices that an operator is in violation of the Act. Furthermore, although the agency's interpretation of its statute is entitled to deference, see Batterton at 462-27, the agency is not free to define statutory terms on an ad hoc basis. By regulation, the Secretary already has defined violation notices as "any written notification from a governmental entity of a violation of law . . . ." 30 C.F.R. 770.5. His present position on the meaning of this statutory term thus marks an abrupt and unexplained change in the agency's interpretation of the Act.

We are not persuaded by the Secretary's argument that, even if the Act contemplates inclusion of these special orders, his decision was not arbitrary because he rationally concluded that the Virginia program is no less stringent than the Act. Virginia does allow any citizen to obtain free of charge from a state computer a record of an operator's special orders. Whether this provision is as stringent as the federal requirement that all violation notices be listed on the application is at least debateable. But, under the Secretary's definition, a state law is "in accordance with" the Act only if it is "no less stringent than, meet[s] the minimum requirements of and include[s] all applicable provisions of the Act." 30 C.F.R. 730.5. Accordingly, we hold that the Secretary acted arbitrarily in concluding that Virginia's program was "in accordance with" the Act's requirements regarding permit application; it clearly did not include all applicable provisions of the Act.

4. Virginia's plan for inspection of inactive and abandoned sites.

The Virginia plan calls for only semi-annual inspections of inactive and abandoned mines. The Act, on the other hand, requires monthly inspections of "any surface coal mining and reclamation operations." 30 U.S.C. § 1267. Plaintiff urges that § 1267 covers inactive and abandoned mines, but concedes that a state may comply with the Act by providing quarterly inspections of inactive sites in accordance with the Secretary's new regulation, 30 C.F.R. § 842.11(c)(2)(i).

The Secretary admits that the Virginia provision for inspection of inactive mines "may" be inconsistent with the federal requirements, but claims that plaintiff's only remedy is to seek an amendment. This aspect of the Virginia plan is plainly inconsistent with federal requirements. Virginia mandates only semiannual inspections; the federal regulations, quarterly ones. It is impossible to conclude that the Virginia plan is as stringent as the federal requirements. The Secretary's approval, therefore, was arbitrary and cannot be sustained.

The Secretary answers plaintiff's challenge to the Virginia plan for inspecting abandoned mines by noting that Virginia law requires the state to reclaim abandoned sites and hence makes more than semi-annual inspections unnecessary. The conclusion that semi-annual inspections would suffice to serve the Act's purposes appears rational, not arbitrary. But the Act requires more; it requires the Secretary to conclude that the state plan is in accordance with the Act. This he cannot rationally do without arguing that § 1267 should not be read to apply to abandoned mines. There is no basis on which to make such an argument, and the Secretary's approval of this portion of the Virginia plan thus is arbitrary.

We affirm the judgment of the district court in part and reverse in part, remanding for further proceedings in accordance with the views expressed herein. The district court should instruct the Secretary to amend his decision, directing Virginia to correct the identified deficiencies in its regulatory program.

* Honorable John W. Peck, Senior United States Circuit Judge for the Sixth Circuit, sitting by designation.

* Plaintiff also complains that the Virginia plan requires operators to provide alternative water supplies only if they do not minimize the adverse effects of their mines on groundwater whereas the federal law requires them to provide alternatives whenever they cause adverse effects. The question whether this difference makes Virginia's program less stringent than the Act is not properly before this court, for as the Secretary notes, plaintiff did not raise the issue in district court. In any case, plaintiff's argument appears to be without merit. At 30 U.S.C. § 1258, the Act requires operators to describe in their reclamation plans the measures they will take to assure the protection of "the quantity of . . . ground water . . . or to provide alternative sources of water where such protection of quantity cannot be assured." It does not define "protection" so it does not necessarily, as plaintiff suggests, mean that an operator must provide an alternative water source if he causes any adverse effects on groundwater quantity.In fact, the Act's performance standards require only that operators "minimize the disturbances . . . to the quality and quantity of . . . ground water . . . ." 30 U.S.C. § 1265(b)(10). These sections can plausibly be read together to indicate that only a failure to minimize adverse effects triggers the duty to provide alternative water sources. Accordingly the Secretary's approval of this aspect of the program is unassailable.