In re Permanent Surface Mining Regulation Litigation

No. 79-1144 (D.D.C. March 22, 1983)

The court holds that the Office of Surface Mining promulgated parts of its regulations defining "valid existing rights" under the Surface Mining Control and Reclamation Act (SMCRA) without sufficient notice and opportunity for comment as required by Administrative Procedure Act § 553 and, alternatively, by SMCRA § 501(b). The court first holds that the definition is legislative, rather than interpretive, and so must be issued with notice and comment. The way the agency has treated the rules and the rules' role in the SMCRA regulatory scheme suggest they are legislative.

The court then considers whether the final rules differed so much from the proposed rules that the public was deprived of opportunity to comment. The final rules, which embodied a constitutional taking test, were so unlike the proposed rules, which embodied three "mechanical" and three alternative tests, that a new notice and comment period would provide the public with the first occasion to offer pertinent and new criticism that the agency might find convincing. The takings test is new to the regulations and was not clearly embodied in the previous (1979) definition of valid existing rights. Also, a provision in the June 1982 proposed definition did not put the parties on notice of this new standard. Though some of the comments addressed takings, they did not address the sorts of concerns that probably would have been raised if the final rule had been offered for comment. In fact, the comments suggest the commenters did not anticipate that the mechanical tests would be abandoned in favor of the takings approach. The court further holds that publication of the final rule in an environmental impact statement (EIS) nine months before publication in the Federal Register did not constitute actual notice with opportunity for comment, because the agency did no seriously consider amending the rule based on comments received in response to the EIS.

The court rejects a second challenge, that one portion of the regulation is unlawful because it allows valid existing rights to come into being after SMCRA's enactment. The court holds that the regulation is in accord with the statute and prior court opinions but remands the portion of this section that incorporates the takings test for further notice and comment.

The court next holds that the agency promulgated rules proscribing mining on federal holdings in national parks and other protected areas without adequate notice and comment. The rules would allow mining on private inholdings in such areas, a provision of questionable legality that has not been fairly opened to public comment.

The court rejects plaintiffs' challenge to provisions allowing the states to determine valid existing rights on private inholdings. To the extent the challenge addresses the SMCRA federal land program regulations, it is untimely. The only reviewable action is the withdrawal of 30 C.F.R. § 761.4. For the regulations to do as plaintiffs wish and give the federal government the right to review all valid existing rights on inholdings, the agency would have to find that all inholding development affects neighboring federal holdings. There is no need for the court to force the agency to make this finding. So long as the regulations reserve the possibility of federal rulings on existing rights when operations affect federal lands, the regulations are consistent with SMCRA. Also, plaintiffs have not demonstrated how the withdrawal of § 761.4 causes the harm to which they allude.

Finally, the court holds that the "needed for and adjacent" test was promulgated without adequate notice and comment, since nothing in the proposed rule suggested the expansion of the test embodied in the final rule.

[Related cases appear at 9 ELR 20720; 10 ELR 20113, 20208, 20526; 11 ELR 20941; 14 ELR 20617; and 15 ELR 20481.

Counsel are listed at 14 ELR 20617.

[15 ELR 20494]

Flannery, J.:

Memorandum Opinion

This opinion addresses issues in the Round III briefing of challenges to regulations promulgated by the Secretary of the Interior under the Surface Mining Control and Reclamation Act of 1977 ("SMCRA" or "the Act"), 30 U.S.C.A. § 1201 et seq. (West Supp. 1984). The History of this litigation is set out in this court's Round I opinion filed July 6, 1984. In Re: Permanent Surface Mining Regulation Litigation II, No. 79-1144, slip op. Round I, [14 ELR 20617] (D.D.C. July 6, 1984). The court decided Round II issues in an opinion filed in this action on October 1, 1984. By an Order dated October 2, 1984, the court agreed to hear and decide in advance of other Round III issues, issues raised by the promulgation on September 14, 1983 of a final rule defining the term "valid existing rights" ("VER") as used in § 522(e), 30 U.S.C.A. § 1272(e), of SMCRA. 48 Fed. Reg. 41313-316; 41348-49 (1983). Oral argument was heard by the court on December 21, 1984 and the matter taken under advisement. Bearing in mind the standard of review set out in this court's Round I opinion at pp. 2-3, the court now turns to the issues before it.

I — The Definition of Valid Existing Rights

Plaintiff citizen and environmental organizations along with plaintiff Pennsylvania Department of Environmental Resources ("PADER"), and Amicus Commonwealth of Kentucky argue that the final definition of "valid existing rights" was promulgated without adequate notice and comment under section four of the Administrative Procedures Act, 5 U.S.C. § 553. The essence of the notice and comment attack against the definition as finally promulgated stems from the fact that the proposed definition consisted of three tests which, for the sake of brevity, shall be described as "mechanical" tests, and three alternative tests which were proposed as methods for determining whether VER exists for a given surface mining operation.¹ The Secretary finally promulgated a definition of VER in 30 C.F.R. § 761.5(a) which defined the term as meaning:

Except for haul roads, that a person possesses valid existing rights for an area protected under section 522(e) of the Act on August 3, 1977, if the application of any of the prohibitions contained in that section to the property interest that existed on that date would effect a taking of the person's property which would entitle the person to just compensation under the Fifth and Fourteenth Amendments to the United States Constitution.

48 Fed. Reg. 41349 (1983); 30 C.F.R. § 761.5 (1984). Plaintiffs complain that this standard represents an approach so different from the proposed options that a new notice and comment period was necessary. This court agrees.

A. Interpretative or Legislative Rule

Federal defendants argue somewhat half-heartedly that "The Secretary regards the VER rule as 'interpretative' rather than 'legislative' inasmuch as it merely explains and clarifies the statute." Federal Defendants' Memorandum in Support of Their Cross-Motion for Summary Judgment and in Opposition to Plaintiffs' Motion for Summary Judgment (VER Issue) at 8 [hereinafter Fed. Mem.]. Because interpretative regulations can be issued without notice and comment, 5 U.S.C.A. § 553(d)(2) (West 1977 & Supp. 1984); Batterton v. Marshall, 648 F.2d 694, 701 (D.C. Cir. 1980), the practical effect of this argument, if correct, would be to moot the notice and comment issue before the court.

The court finds that the VER definition embodied in § 761.5(a) of the rule as finally promulgated is a legislative rule subject to notice and comment. In so deciding, the court notes first that the government has provided no support for its statement that the Secretary regards the rule as interpretative. Second, as PADER points out in its reply brief, the preamble to the rule explained that "further procedures regarding VER determinations are expected to be proposed in the near future." 48 Fed. Reg. 41314 (1983). The preamble also declares that "[n]o permit to mine may be issued for a prohibited area unless such a determination has been made." Id. Further, given the Secretary's authority to approve or disapprove state programs as set forth in § 503(a) of the Act, 30 U.S.C. § 1253(a), and his ability to provide for Federal enforcement where a state program is not properly enforcing the program, under § 504(b), 30 U.S.C. § 1254(b), and § 521(b), 30 U.S.C. § 1271(b), of the Act, the regulations are not merely advisory.

Congress did not set up a scheme whereby the Secretary was merely to make broad interpretative, non-binding regulations which state programs would be free to ignore as long as they acted in a manner consistent with the Act. Rather, the Secretary was interposed in the process to be certain that the state programs would comply with the Act and would be carried out in a manner consistent with guidelines and regulations promulgated by the Secretary. See § 503(a)(7), 30 U.S.C. § 1253(a)(7); § 504(b), 30 U.S.C. § 1254(b); § 521(b), 30 U.S.C. § 1271(b). Were a state, for example, to find VER in all cases in which such a determination were sought, regardless of whether such a finding was justified, the language of the statute, as well as its scheme, suggests that the Secretary would act pursuant to § 504(b) and § 521(b) to enforce the VER determination. Section 761.5's definition of VER is a legislative rule subject to the notice and comment requirements of the APA. Having made this determination, the court must now consider whether those procedures were properly followed.²

B. Necessity of Re-Noticing the Rule

Plaintiffs' main complaint is that the rule as finally promulgated differed so significantly from the rule as proposed that the Secretary was required to hold an additional notice and comment period. The District of Columbia Circuit has warned that "[t]he process of notice and comment rulemaking is not to be an empty charade. It is to be a process of reasoned decisionmaking. One particularly important component of the reasoning process is the opportunity for interested parties to participate in a meaningful way in the discussion and final formulation of rules." Connecticut Light and Power Co. v. Nuclear Regulatory Commission, 673 F.2d 525, 528 (D.C. Cir.), cert. denied, 459 U.S. 835 (1982). In considering when a new notice and comment period is required the court in Connecticut Light declared:

An agency adopting final rules that differ from its proposed rules is required to renotice when the changes are so major that the original notice did not adequately frame the subjects for discussion. The purpose of the new notice is to allow interested parties a fair opportunity to comment upon the final rules in their altered form. The agency need not renotice changes that follow logically from or that reasonably develop the rules it proposed originally. Otherwise, the comment period would be a perpetual exercise rather than a genuine interchange resulting in improved rules.

Id. at 533. The Court of Appeals for the First Circuit has allowed that "[e]ven substantial changes in the original plan may be made so long as they are 'in character with the original scheme' and 'a logical outgrowth' of the notice and comment already given." BASF Wyandotte Corp. v. Costle, 598 F.2d 637, 642 [9 ELR 20609] (1st Cir. 1979), cert. denied, 444 U.S. 1096 (1980). The First Circuit explained that in order to require a new notice and comment period, a court must conclude that given a new opportunity to comment, commenters would have their first occasion to offer new and different criticisms which the agency might find convincing. Id.³ The court finds, the notes that the government appeared to concede the point at oral argument, that a new notice and comment period on the definition of VER as finally promulgated would provide such a first occasion.⁴

[15 ELR 20496]

The government and the industry-intervenors argue that even under the old "all-permits" test promulgated in 1979, states had to make, in addition to the all-permits determination, an independent takings analysis on a case by case basis in order to determinine whether VER existed. Thus, the final rule should have comes as no surprise, and therefore grew logically out of — or is identical to — the old rule. Defendants next point to one aspect of the June 1982 proposed rules — part (d) of the VER definition — and argue that this section put parties on notice that a general takings standard was being considered. The court is not persuaded by either of these arguments and will consider each in turn.

To support their claim that the 1979 takings rule included an independent takings test, in addition to the all-permits test, defendants and intervenors point to one sentence in the preamble to the 1979 rule. "Under the final definition, VER must be applied on a case by case basis, except that there should be no question about the presence of VER where an applicant had all permits for the area as of August 3, 1977." 44 Fed. Reg. 14993 (1979). That sentence, to be sure, does suggest that there would be instances other than the all-permits situation in which a VER determination could be made. But the paragraph in which it is included, however, may also mean simply that the VER all-permits issue must of necessity be decided anew each time a person seeks VER.⁵ In any event, no such alternate method of obtaining VER was incorporated in the final 1980 rule, see 30 C.F.R. § 761.5 (1980). Further, plaintiffs have pointed to other representations made in court by industry and the government in which these parties have failed to raise the possibility of a case by case takings analysis under the old rule. Citizens and Environmental Reply at 8 n.11 (citing Secretary's Memorandum, In Re: Permanent Surface Mining Regulation Litigation I, No. 79-1144 (D.D.C.) at 87; Joint Brief of Industry Appellants, In Re: Permanent Surface Mining Regulation Litigation, No. 80-1810 (D.C. Cir. October 31, 1980) at 41. Most important for present purposes, however, the court cannot conclude that this aspect of the 1979 rule, if it existed, was so clear that it put parties on notice that a general takings standard was always under consideration; nor was this aspect of the 1979 rule so clear that this court can conclude that the rule as promulgated in 1983 is identical to the 1979 rule.

The government further argues that section (d) of the VER definition proposed as a part of each of the three alternative VER tests, 47 Fed. Reg. 25296-7 (1982), along with its preamble discussion, "would place any reasonable person on notice that the Secretary was contemplating promulgating a takings test." Transcript of Oral Argument, December 21, 1984, at 34. The proposed section (d) stated:

Valid existing rights may be found where no reasonable use of the property other than surface coal mining operations remains, including all nonmining uses. For owners of only coal rights, there is not reasonable remaining use where surface coal mining operations cannot occur by any technological means available under the Act in the foreseeable future, and there is no other reasonable use available provided that coal rights were severed from surface rights prior to August 3, 1977.

47 Fed. Reg. 25296-97 (1982).

The court does not read proposed § 761.5(d) as foreshadowing the rule as promulgated. In its preamble discussion of 761.5(d) the Secretary made clear that 761.5(d) embodied one instance in which courts have found a taking where the property in question "has no reasonable remaining use" if surfacemining is disallowed. 47 Fed. Reg. 25281 (1982). Section 761.5(d) did not put parties on notice that the type of standard ultimately chosen was among the alternatives.

Both the federal defendants and the industry intervenors argue that interested parties prior to the closing of the comments period "filed additional lengthy comments on the proposed takings standard. . . ." National Coal Association/American Mining Congress and Peabody Coal Company Memorandum in Support of Cross-Motion for Summary Judgment at 27. On this point, the court notes first that it is not sufficient to justify failure to renotice that the comments simply mention takings. It is not disputed here that the valid existing rights concept is related to the takings concept. The problem before the court is to determine whether the comments on the proposed regulations served the purpose of informing the agency of the problems, concerns, etc. that might flow from the rule if finally promulgated. Small Refiners Lead Phase-Down Task Force v. EPA, 705 F.2d 506, 547 [13 ELR 20490] (D.C. Cir. 1983) ("notice improves the quality of agency rulemaking by ensuring that agency regulations will be 'tested by exposure to diverse public comment'").

Thus, in examining the comments that actually were made, the court must consider first whether they covered the same kinds of concerns that would be addressed to the rule as finally promulgated, or second, whether the nature of the criticisms offered against the proposed options were such that it would be foreseeable by the commenters that acceptance of those criticisms would lead to the rule as promulgated. See BASF v. Wyandotte, 598 F.2d at 643 ("It should be clear to commenters when they criticize a regulatory scheme that if the agency accepts those criticisms, a new scheme will be substituted"). The court has examined the comments cited in the briefs and made during the comment period and finds that the comments made during the comment period were not such that it was permissible for the agency to promulgate the regulation as finally promulgated without a new notice and comment procedure. The comments on which the federal defendants and intervenors rely all discuss the various options proposed with varying degrees of criticism or support. What the court finds significant, however, is that the comments focused on the various mechanical tests being considered — and did not anticipate the possibility that the approach of using a mechanical test would be jettisoned in favor of the approach finally taken.⁶

[15 ELR 20497]

The Secretary and intervenors also argue that the APA was satisfied because the plaintiffs here had actual notice of the rule as promulgated well before its actual promulgation. Some factual background is necessary to understand this argument. The Secretary proposed six options — three primary options and three related options — for the definition of VER on June 10, 1982.47 Fed. Reg. 25279-81 (1982). The comment period closed on September 10, 1982. 47 Fed. Reg. 39201-02 (1982). On January 11, 1983, the Secretary issued the final environmental impact statement ("EIS") on the rules. The EIS announced to the public that the Secretary had concluded that the mechanical options were "no longer considered reasonable alternatives." It was in this final EIS that the Secretary announced his preferred alternative to grant VER whenever the regulatory authority determined that a taking would occur. After the final EIS became public, and the path that the Secretary sought to take became clearer, certain parties complained that aspects of the draft final regulations had never been proposed, and these parties sought the reopening of the comment period. See Administrative Record at 10370 (statement of Kentucky Department of Natural Resources and Environmental Protection). Others, in th is post-comment period, commented on the preferred approach that turned out to be the rule as promulgated. Thus, the defendants argue that comments were made on the rule as finally promulgated and that even though the rule as promulgated was not proposed in the Federal Register, the APA was complied with in that the parties had actual notice.

It is true that section 553(b) of the APA requires that "[g]eneral notice of proposed rule making shall be published in the Federal Register unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law." Even if the court were to conclude that the notice here was sufficient, in that all of the interested parties had actual notice, the court is left with the impression that the comments made were never seriously considered by the Secretary. This impression comes from the fact that the preamble to the rule as finally promulgated did not address in even the most indirect way the objections raised to the preferred, broad approach. As this court stated in its Round I opinion, "[t]he agency must demonstrate how it resolved significant problems raised by comments and explain how it arrived at the ultimate rule." In Re: Permanent Surface Mining Regulation Litigation II, No. 79-1144, slip op., Round I, at 2 [15 ELR 00000] (D.D.C. July 6, 1984) (citing Rodway v. United States Department of Agriculture, 514 F.2d 809, 817 (D.C. Cir. 1975)). Failure to address the concerns raised by the parties even after the comment period was closed, robs the government's actual notice argument of its force. The definition of VER must be remanded for additional notice and comment.

II — Continually Created VER

Plaintiff environmental and citizen groups also challenge that portion of 30 C.F.R. § 761.5(d) which establishes what the Secretary refers to as "continually created VER." See 47 Fed. Reg. 25281 (1982). Subsection (d) of the definition of VER in § 761.5 provides that:

Where an area comes under the protection of Section 522(e) of the Act after August 3, 1977, valid existing rights shall be found if —

(1) On the date the protection comes into existence, a validly authorized surface coal mining operation exists on that area; or

(2) The prohibition caused by Section 522(e) of the Act, if applied to the property interest that exists on the date the protection comes into existence, would effect a taking of the person's property which would entitle the person to just compensation under the Fifth and Fourteenth Amendments to the United States Constitution.

The plaintiffs claim that this provision is inconsistent with the Act, its legislative history as well as inconsistent with this court's prior opinion.⁷ First, they believe that the term "existing" in the Act leaves no room for the possibility that VER could be created after August 3, 1977. Section 522(e), 30 U.S.C. § 1272(e), states "After August 3, 1977, and subject to valid existing rights no surface coal mining operations except those which exist on August 3, 1977, shall be permitted" in the various areas described in §§ 522(e)(1) through (e)(5). The government argues that the statute does not provide for a situation in which an area becomes protected after August 3, 1977, but a person has a preexisting coal mining operation at the site at the time the protection attaches. The government argues further that the Secretary's rule is in accord with the Congress' desire to avoid takings. The court does not agree with plaintiffs that the legislative history they cite, or the language of the statute requires a finding that the Secretary's concept of "continually created VER" is inconsistent with law. Given the language of the Act, and Congress' concern with takings, the court finds that "continually created VER" is in accord with law.

Because, however, this court is remanding the broad takings test under the definition of valid existing rights in section 761.5(a), and because the continually created VER rules as finally promulgated incorporates this broad takings definition, see 48 Fed. Reg. 41349 (1983), 30 C.F.R. § 761.5(d)(2) (1984), the court remands that portion of the "continually created VER" regulation which incorporates the takings test of § 761.5(a) for further notice and comment.

III — Challenge to 30 C.F.R. 761.11(h) proscribing mining operations on federal lands within areas protected under § 522(e)(1)

Plaintiff citizen and environmental groups next challenge 30 C.F.R. 761.11(h) (1984) which proscribes:

surface coal mining, permitting, licensing or exploration of Federal lands in the National Park System, National Wildlife Refuge System, National System of Trails, National Wilderness Preservation System, Wild and Scenic Rivers System, or National Recreation Areas, unless called for by Acts of Congress.

(Emphasis added.) Plaintiffs complaint that by prohibiting mining altogether on federal lands within the described § 522(e)(1) systems, notwithstanding VER, the Secretary acted arbitrarily and capriciously in not affording to privately owned inholdings within those systems the same protection extended to federal lands. Plaintiffs further claim that the above-cited provision was promulgated without adequate notice and comment in violation of the APA. The government responds by asserting that in granting total protection to federal lands, the regulation enhances rather than diminishes the Act's protection. That argument, however, is not responsive to the [15 ELR 20498] plaintiffs' claims. In the preamble to the rules as finally promulgated the Secretary explained:

OSM has included § 761.11(h) in response to voluminous comments by persons who fear that mining or drilling may occur in the National Parks or other statutorily protected areas. There will be no surface coal mining, permitting, licensing or exploration of Federal lands in the [section 522(e)(1) protected areas] unless called for by Acts of Congress. The Secretary will employ the full range of his legal capabilities to meet this objective.

If any person successfully establishes valid existing rights to conduct mining operations within these areas, the Secretary may use authority granted under other statutes to acquire these rights by purchase, exchange, or condemnation so that mining does not occur.

48 Fed. Reg. 41315 (1983). The preamble further explained that certain agencies such as the National Park System would be notified when persons sought VER to mine within units under their control. The notification would apparently include notification concerning private inholdings. The Secretary noted that "[t]his notification at the beginning of the application review process will enable the National Park Service to take any action at its disposal, including possible acquisition of the property . . . ."

Id.

The court begins by noting that to be a rational rule, there would have to be some basis for distinguishing federal from nonfederal lands in this context. Plaintiffs argue that section 522(e)(2), 30 U.S.C. § 1272(e)(2), demonstrates that when Congress wanted to distinguish between Federal and nonfederal lands it knew how to do so. Section 522(e)(2) prohibits, subject to VER, mining on any federal lands within the boundaries of any national forests, subject to a proviso not relevant here, whereas 522(e)(1) prohibits, subject to VER, mining on any lands within the boundaries of units of the National Parks System, and other protected areas. This argument is persuasive. Plaintiffs may also be correct that Congress intended all lands within 522(e)(1) areas to be treated the same. On the other hand, it seems clear to the court that an absolute proscription on any mining, permitting, licensing or exploration within the 522(e)(1) protected areas, might run directly contrary to the statute's language that such proscriptions are subject to VER. Further, such a rule might result in many takings that would require compensation.

Merely outlining the arguments pro and con, however, demonstrates the practical inadequacies of the notice and comment surrounding this rule. To have this court decide whether the rule is arbitrary and capricious would mean that this court would be the first forum in which the competing arguments are publicly weighed. The APA requires that the public have an opportunity to make its arguments to the agency, and for the agency to respond to the major concerns in promulgating a final rule. This was not done here, thus this rule is remanded for lack of adequate notice and comment.

IV — State Determination of VER on Private Inholdings within § 522(e)

Although the matter is not free from doubt, and is disputed by the parties, the court reads the next challenge of plaintiff citizen and environmental groups as a challenge to the withdrawal of old 30 C.F.R. § 761.4 (1980) and plaintiffs have in no way persuaded the court that this act on the part of the Secretary was arbitrary and capricious or in any way violative of law. Alternatively, the court characterizes the challenge here as one to regulations promulgated as part of the federal lands program on February 6, 1983. If characterized this way, the court agrees with industry intervenors that the challenge here is untimely and therefore must be denied. However characterized, plaintiffs are asking the court to read the Act to require that in all cases a VER determination on private inholdings in National Parks and other § 522(e) protected areas must be made by the Secretary. This court in its Round I opinion struck down 30 C.F.R. 740.11(a)(3) which limited the definition of federal lands and consequently limited the applicability of the federal lands program in situations such as those in which the federal government owned subsurface coal but not the surface area. In Re: Permanent Surface Mining Regulation Litigation II, No. 79-1144, slip op. at 15, Round I, (D.D.C. July 6, 1984). There this court struck down the regulation in question stating: "The Secretary seems to have found that the federal interest will never be affected, or is insignificant even if it is affected. It is difficult to understand how the Secretary can determine this for all cases in advance." Id. at 14. Plaintiffs in this case, on the other hand, ask the court to require the Secretary in advance to determine that all mining on private inholdings within protected areas will in all cases affect federal lands. They argue that the broad "affected by" language of § 701(28)(B), 30 U.S.C. § 1291(28)(B), which defines the term "surface coal mining operations" compels such a conclusion. But, as counsel for the government pointed out in oral argument:

[I]f there are federal lands, the Secretary makes the VER determination. He has no regulatory jurisdiction, doesn't issue permits for private inholdings, so therefore that's a responsibility of the state.

However, in those situations where surface mining on private inholdings will affect federal lands, that kicks in the Federal Lands Program, and under the Federal Lands Program, the Secretary makes the VER determination, so there may be circumstances where you have a private inholding within the protected area, in which the Secretary would make the VER determination, but he can't in the abstract know when he's going to be required to make that determination, until he knows what land is going to be mined, and what potential impact that might have on federal lands.

Transcript of Oral Argument, Dec. 21, 1984, at 46.

To the extent that the government at oral argument recognized that there will be circumstances in which the Secretary will have to make a determination relative to private inholdings due to the fact that federal lands are affected, the government appears to be in agreement with the plaintiffs. But such a recognition does not require a holding that the Secretary must make the VER determination for private inholdings in all cases. This reading is consistent with § 503(a), 30 U.S.C. § 1253(a), of the Act which permits states to assume exclusive jurisdiction over the regulation of surface coal mining and reclamation operations on non-federal lands. Further, nothing in § 523(c), 30 U.S.C. § 1273(c), prohibiting the Secretary from delegating to the States his duty to designate certain Federal lands as unsuitable for surface coal mining pursuant to § 522, 30 U.S.C. § 1272, persuades the court to the contrary.

In any event, the plaintiffs have not demonstrated to the court how the removal of § 761.4 causes the harm to which they allude, even if the court were to admit that the full import of the federal lands regulations could not be known until this removal was effected. Plaintiffs' challenge whether it be characterized as a challenge to the removal of 30 C.F.R. § 760.4 (1980) or a challenge to 30 C.F.R. §§ 740.4(a)(4) or 745.13(o) (1984) is rejected.

V — Needed for and Adjacent Test

The "needed for and adjacent test" as currently promulgated provides:

A person possesses valid existing rights if the person proposing to conduct surface coal mining operations can demonstrate that the coal is both needed for, and immediately adjacent to, an ongoing surface coal mining operation which existed on August 3, 1977. A determination that the coal is "needed for" will be based upon a finding that the extension of mining is essential to make the surface coal mining operation as a whole economically viable.

30 C.F.R. 761.5(c). The plaintiffs contend that this provision goes beyond any required taking protection by permitting an operator of an existing mine to purchase coal after August 3, 1977, in areas intended to be protected by Section 522(e), 30 U.S.C. § 1272(e), and to invoke the "need and adjacent test" to mine that coal. They argue that the Secretary's rule creates valid future rights contrary to the express language of the statute. They also argue that the rule was promulgated without adequate notice and comment.

In 1980 this court upheld a "needed for and adjacent" test which differed from the one at issue here in that the test was an alternate method of determining VER in the case where an operator owned land but had not received all the permits to mine. He could alternatively get VER if he could show first, that he had "property rights in existence on August 3, 1977" and that the coal was needed for and adjacent to an ongoing site for which all mine plan approvals and permits were obtained prior to August 3, 1977. In its February, [15 ELR 20499] 1980 opinion this court upheld that formulation of the needed for and adjacent test stating that "[t]he need and adjacent test is thus a rational method of allowing mining when denial would gravely diminish the value of the entire mining operation, thereby constituting a taking under Supreme Court declarations." In Re: Permanent Surface Mining Regulation Litigation I, No. 79-1144, slip op. at 21 (D.D.C. Feb. 26, 1980).

The issue now before the court is whether the rule as reformulated still constitutes a rational method to avoid possible takings. The Secretary's argument must be that it would constitute a taking of the original surfacemining operation to forbid a mineowner from subsequently acquiring and mining adjacent land necessary to make the original operation economically viable. This right to guard the economic viability of one's land by finding a taking when the government refuses to permit a new acquisition goes beyond the situation in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S. Ct. 158 (1922). There the mine owner had already acquired the right from the surface owner to mine in such a way that the mine operation could destroy the surface residence. In Mahon the statute in question purported "to abolish what is recognized in Pennsylvania as an estate in land — a very valuable estate — and what is declared by the Court below to be a contract hitherto binding the plaintiffs." 260 U.S. at 414, 43 S. Ct. at 159.

The court need not decide at this time whether the rule is rational because it concludes that the rule as promulgated did not have adequate notice and comment under the APA. First, this issue is related to the overall VER definition being remanded by the court. In the preamble to the final rule, the Secretary noted: "In some instances, there may be valid existing rights associated with lands acquired after August 3, 1977; however, that would have to be determined case by case using the definition set forth in paragraph (a)." 48 Fed. Reg. 41316 (1983). Most important, however, the court finds nothing in the proposed rule to suggest such an expansion of the "needed for and adjacent" test. The "needed for and adjacent test" embodied in paragraph (c) of the definition of "valid existing rights" is remanded to the Secretary for appropriate notice and comment.

An appropriate Order accompanies this Memorandum Opinion.

Judgment and Order

This matter is before the court on cross-motions for summary judgment. After careful consideration of the motions submitted by the parties, oppositions thereto, as well as arguments presented by counsel before the court, it is, by the court, this 22nd day of March, 1985

ORDERED that the following regulations be remanded to the Secretary for proceedings not inconsistent with the foregoing Memorandum Opinion: the portions of the definition of valid existing rights embodied in 30 C.F.R. 761.5(a) ("takings test"); (c) ("needed for and adjacent test"); and (d)(2) (counterpart to part (a) of the definition embodied in "continually created VER"); and 30 C.F.R. 761.11(h); and it is further

ORDERED, ADJUDGED, and DECREED that the defendants be granted summary judgment with respect to all other matters considered in the foregoing Memorandum Opinion.

1. The proposed options were summarized by the Secretary as follows:

OSM is proposing three options for revising the definition of VER. Option 1 is similar to the existing definition, with changes to reflect judicial action and to clarify terminology. Option 2 would establish ownership of the coal as VER, and Option 3 would make ownership plus the right to mine by method to be used as the test for VER.

47 Fed. Reg. 25279 (1982).

The relevant portion of the original definition of "valid existing rights" promulgated in 1979 defined VER as:

(a) except for haul roads,

(1) Those property rights in existence on August 3, 1977, that were created by a legally binding conveyance, lease, deed, contract or other document which authorizes the applicant to produce coal by a surface coal mining operation; and

(2) The person proposing to conduct surface coal mining on such lands . . .

(i) Had been validly issued, on or before August 3, 1977, all State and Federal permits necessary to conduct such operations on those lands . . .

44 Fed. Reg. 15342 (1979); 30 C.F.R. § 761.5 (1980).

This court's February 1980 opinion remanded this portion of the VER definition noting that "[t]he court believes that a good faith attempt to obtain all permits before the August 3, 1977 cut-off date should suffice for meeting the all permits test." In Re: Permanent Surface Mining Regulation Litigation I, slip op. at 20 (D.D.C. February 26, 1980). Option 1, proposed in 1982, incorporated the court's suggestion. See 47 Fed. Reg. 25279 (1982).

The precise wording of the proposed options is set out at 47 Fed. Reg. 25296-97 (1982) and are explained at 47 Fed. Reg. 25279-81 (1982).

2. The plaintiff citizen and environmental groups claimed that notice and comment was called for under § 501(b), 30 U.S.C. § 1251(b) of the Act. Neither the federal defendants, nor the industry intervenors opposed this contention. Alternatively, then, the court concludes that notice and comment is required under section 501(b) as well as under the APA. See H.R. REP. NO. 218, 95th Cong., 1st Sess. 62 ("Subsection (b) gives the Secretary up to 1 year to promulgate regulations to implement the full regulatory program . . . .") (emphasis added); 30 C.F.R. §§ 701.1(3); 701.3 (1984); cf. In Re: Permanent Surface Mining Regulation Litigation, 653 F.2d 514, 524-25 [11 ELR 20941] (D.C. Cir.), cert. denied, 454 U.S. 822 (1981).

3. One aspect of Connecticut Light can be analogized to the facts here. In Connecticut Light the Nuclear Regulatory Commission had proposed a series of rules that took what was called a "postulated hazards" approach to the protection of duplicate safe shutdown capacity at nuclear power plants. 673 F.2d at 528.The final rule abandoned this approach for one based on approval of certain specific methods for protecting duplicate shutdown capacity. Id. at 529. The circuit court believed that this change in methods of protecting duplicate shutdown capacity presented a close question on the issue of whether a new notice was necessary, but declined to require a new notice because the agency had provided an exemption procedure that would still permit certain plants to operate according to methods acceptable under the proposed approach. Thus, the court was satisfied that given a certain degree of functional equivalence the final rule did not have to be renoticed. The court, however, placed particular emphasis on the flexibility introduced by the exemption provision. Id. at 533-34.

The analysis in Connecticut Light suggests first that it is not sufficient for the new rules simply to be based broadly on the same subject matter as the old.Given the fact that any possible final regulation will usually be designed to meet a specific concern, such a broad view of what constitutes a "logical outgrowth" would almost never require renoticing. Further, the Connecticut Light court was clearly concerned that when the final regulation differs significantly in method, approach or character from any of the proposed rules, then renoticing may be necessary. See BASF, supra, at 642 ("even substantial changes in the original plan may be made so long as they are in character with the original scheme . . .").

4. At oral argument counsel for the government apparently conceded that the comments would have been significantly different had the agency given notice of the rule ultimately promulgated.

THE COURT: Well, on Issue I — and that's whether the final VER regulations were promulgated without adequate notice and comment under the APA — now if the agency had given notice of the specific rule it adopted, don't you think the comments would have been significantly different from those which were offered with respect, for example, as to how well state agencies would have been able to implement their task under the final rule? MR. GHIORZI: I think the answer to that question is an unequivocal yes, but I also say that the Secretary, when he proposed the VER rules, did not propose, as Ms. Brandon has indicated, three options. The Secretary specifically proposed four options, and the fourth option is set forth in rule, proposed rule 761.5(d), and that proposed rule is a rule based on the takings clause specifically of the Fifth Amendment . . . .

5. The sentence appeared in the following context:

Must VER be determined on a case-by-case basis?

Some commenters believed that, if VER are determined on a case-by-case basis, the designation process would be delayed and the regulatory authorities would have an undue burden. OSM believes, however, that VER is a site-specific concept which can be fairly applied only by taking into account the particular circumstances of each permit applicant. OSM considered not defining VER, which would leave questions concerning VER to be answered by the States, the Secretary and the courts at later times. Without a definition, however, many interpretations of VER would be made and no doubt challenged by both operators and citizens; and once valid existing rights determinations are challenged, the permitting process would be delayed. OSM has therefore concluded that VER should be defined in order to achieve a measure of consistency in interpreting this important exemption. Under the final definition, VER must be applied on a case-by-case basis, except that there should be no question about the presence of VER where an applicant had all permits for the area as of August 3, 1977.

44 Fed. Reg. 14993 (1979).

6. The closest case in determining whether the complaints of the commenters justified a complete departure from the mechanical test comes in the case of the comments of Kentucky dated August 23, 1982 ADMIN. REC. 10758).

Kentucky is sympathetic to OSM's difficulty in defining VER. The term is intended to be the "saving" measure for 522(e) of the Act — to avoid unjust takings. The problem is that an unjust taking cannot be determined in a vacuum of facts. As stated in Hodel v. Virginia Surface Mining and Reclamation Association, 101 S. Ct. 2352, 2370 [11 ELR 20569] (1981):

this court has generally "been unable to develop any 'set formula' for determining when 'justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." Rather, it has examined the "taking" question by engaging in essentially ad hoc, factual inquiries that have identified several factors — such as the economic impact of the regulation, its interference with reasonable investment backed expectations, and the character of the government action — that have particular significance." Kaiser Aetna v. United States, 444 U.S. 164, 175 [10 ELR 20042] (1979) (citations omitted).

The Court continued: "These 'ad hoc factual inquiries' must be conducted with respect to specific property, and the particular estimates of economic impact and ultimate valuation relevant in the unique circumstances." Id. Thus, a court might find that the "good faith permits" [sic] test as applied to one-area constituted a taking because coal was minable only by the strip method, and surface disturbance within the area was prohibited by 522(e). On the other hand, where coal could be removed by underground mining methods, there might be a finding that no taking occurred because coal could be mined within the proscribed limits, although that might not be the method preferred by the owner [sic].

Avoidance of Taking — VER(d)

As stated above, OSM seems to be attempting to address the taking issue by regulation, although the preamble recognizes that takings are generally considered on a case-by-case basis, considering numerous factors. OSM, by adopting certain catchwords of some court cases, has failed to recognize other factors presented by the courts. OSM's own preamble [at 47 Fed. Reg. 25282], states: "There is no set formula for determining whether a particular factual situation constitutes a taking. Each case must be decided on its individual facts." Some courts may determine that the public interest would justify greater detriment to operators than proposed subsection (d) of 761.5 would provide. Further, subsection (d) is not clear. Where mining cannot technologically occur, there should be no taking because the coal is then of no worth (unreachable).

(Emphasis in original.) This comment from Kentucky comes closest to foreshadowing a realization that no mechanical formula will ever perfectly define the universe of circumstances in which failure to grant VER will constitute a taking. But the Kentucky comments still took place in the context of the proposed options and ultimately favored Option 1, the good-faith all-permits test. ADMIN. REC. at 10759. Thus, even the above comments fall short of being of a type that would justify the change made between the proposed rule and the promulgated rule.

Had the final rule as promulgated been renoticed, one seemingly critical assumption and its ramifications underpinning the final VER definition could have been aired. The Secretary seems to assume, and this court expresses no opinion on this issue, that Congress intended each and every VER determination made by a state agency or OSM to coincide precisely with what a judicial determination of a taking would be in that given factual setting. But Congress could not demand that the agency be right in every case under either a mechanical or a broad takings test because only a court can decide whether a taking has occurred. Thus, while at first blush, it would appear that the broad constitutional takings test as promulgated by the Secretary comports with Congress' wishes to avoid any takings, it is not clear whether the broad test or one of the mechanical tests will better carry out congressional intent.

7. At oral argument counsel for plaintiff citizen and environmental groups conceded that this issue was not before the court in In Re: Permanent Surface Mining Regulation Litigation I, slip op. (D.D.C. February 20, 1980). Transcript of Oral Argument, December 21, 1984, at 21-22.