United States v. Brook Contracting Corp.

No. 84-5607 (3d Cir. April 18, 1985)

The court rules that the Surface Mining Control and Reclamation Act (SMCRA) § 402 reclamation fee may be levied only upon the weight of combustible coal mined, not on the weight of rock, clay, dirt, and other debris mined with the coal.The court preliminarily holds that the district court's grant of summary judgment for the government is a reviewable final order. Although the judgment did not specify the exact amount of fees owed by appellant companies, this amount can be readily calculated. Reaching the merits, the court analyzes the SMCRA legislative history to discern what Congress intended to include in the § 402 phrase "coal produced by surface coal mining." Congress' concern that the reclamation fee not be burdensome on the coal industry nor fuel inflation counsels against an expansive interpretation of this phrase. Also, various calculations in congressional cost studies to determine the burden imposed evidently assume that the reclamation fee was to be imposed only upon combustible coal. The regulatory definition of coal likewise militates against an expansive construction.

Counsel for Appellants
Leon H. Kline, Sharon T. Walsh
Suite 104, 135 South 18th St., Philadelphia PA 19103
(215) 568-7171

Counsel for Appellee
David D. Queen, U.S. Attorney, James J. West, First Ass't U.S. Attorney
P.O. Box 11754, Harrisburg PA 17108
(717) 590-4482

Stuart A. Sanderson, Beverly Perry
Office of the Solicitor
Department of the Interior, Washington DC 20240
(202) 343-1100

Before Sloviter and Mansmann,^* JJ.

[15 ELR 20540]

Aldisert, J.:

In this appeal by two coal producing companies from summary judgment in favor of the government, we must decide what is meant by the expression "coal produced by surface mining" under the Surface Mining Control and Reclamation Act (SMCRA or the Act), 30 U.S.C. §§ 1201-1328. This is not mere semantic exercise, because upon our decision depends the extent of tonnage upon which a reclamation fee of 35 cents per ton may be levied by the Secretary of the Interior. The government argues, and the district court found, that tonnage of "coal produced" includes the weight of rock, clay, dirt and other debris mined with the "coal" that was delivered by the companies to a coal washing and sizing plant. The companies seem to borrow from Gertrude Stein's "a rose is a rose is a rose" and argue that coal is coal and it means a mineral that is combustible. We conclude that we have jurisdiction to hear this appeal, and that the district court erred in determining that all the material mined by appellants was subject to the reclamation fee. Accordingly, we reverse the judgment of the district court.

Consolidated actions for collecting reclamation fees were brought by the United States against Brook Contracting Corporation and Tri-County Land and Coal Company in the district court. The complaints alleged that the companies, which have identical corporate offices and are represented by the same counsel, owed $73,930.98 and $24,378.67 respectively in delinquent reclamation fees under the SMCRA. The companies had paid only for the combustible coal that was mined; the government concluded that they owed additional fees for the rock, clay, dirt and other debris that was unearthed in the surface mining process. The district court granted the government's motion for summary judgment and the companies' appeal followed.

II.

The SMCRA states in relevant part:

All operators of coal mining operations subject to the provisions of this chapter shall pay to the Secretary of the Interior, for deposit in the fund, a reclamation fee of 35 cents per ton of coal produced by surface coal mining and 15 cents per ton of coal produced by underground mining or 10 per centum of the value of the coal at the mine, as determined by the Secretary, whichever is less, except that the reclamation fee for lignite coal shall be at a rate of 2 per centum of the value of the coal at the mine, or 10 cents per ton, whichever is less.

30 U.S.C. § 1232(a) (emphasis supplied). The companies contend that the district court accorded an overly expansive meaning to the language "coal produced by surface coal mining." In construing the Act, the district court relied in part on 30 C.F.R. § 837.12 (now codified at 30 C.F.R. § 870.12):

(a) The operator shall pay a reclamation fee on each ton of coal produced for sale, transfer, or use, including the products of in situ mining.

(b) The fee shall be determined by the weight and value at the time of initial bona fide sale, transfer of ownership, or use by the operator.

The companies argue that application of this regulation to support imposition of the reclamation fee on the total tonnage of material mined is an improper extension of the scope of 30 U.S.C. § 1232(a).

Because resolution of this case turns on statutory construction involving the interpretation and application of legal precepts, our standard of review is plenary. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 102 (3d Cir. 1981).

III.

As a preliminary matter we decide that we have jurisdiction, properly based on the final judgment rule of 28 U.S.C. § 1291. The government argues that the order appealed from is not final, relying on UGI Corp. v. Clark, 747 F.2d 893 (3d Cir. 1984). In UGI, a mining company sought a declaratory judgment that it did not owe reclamation fees and in a separate action the government sued the company to collect delinquent fees. The actions were consolidated and the district court awarded summary judgment in favor of the government on the declaratory judgment action. We dismissed the mining company's appeal from this order because there was no disposition of the consolidated collection case. The requirements of Rule 54(b), Federal Rules of Civil Procedure, were not satisfied and, therefore, there was no final judgment. Id. at 894. The UGI case differs from the case before us in which the only underlying action — the government's collection case — has been disposed of in favor of the government.

The government argues, however, that the judgment entered below is not final because the district court did not specify in its order the exact amount of fees owed by appellants. We find this argument unpersuasive. The government alleged in its complaint against Brook Contracting Corporation that"defendant owes the Secretary the total of $73,930.98 in delinquent reclamation fees plus interest at the rate of one percent per month commencing thirty (30) days after the end of the calendar quarter for which reclamation fees are due . . . ." App. at 9a. The government alleged that Tri-County Land and Coal Company "owes the Secretary $24,378.67 in delinquent fees, plus such additional amounts as may be determined upon review of defendant's records," plus interest computed in the manner alleged in the Brook Contracting Corporation complaint. App. at 16a. In its motion for summary judgment the government stated:(Missing Pages 20541-20542)

[15 ELR 20543]

VI.

Then, too, the views of those members of Congress who dissented from passage of H.R. 25 are relevant. They opposed the Act because they believed 35 cents per ton was too high, and opted for a reclamation fee of 10 cents. They based their argument on the basis that the total tonnage of coal produced in 1975 was 654,000,000 tons. See id. at 72, reprinted in 1977 U.S. Code Cong. & Ad. News at 610. The dissenting report to H.R. 25 contended that the reclamation fee of 35 cents per ton was too high, "extracting unneeded cash from the consumer and the money supply . . . ." H.R. Rep. No. 45, 94th Cong., 1st Sess. 168 (1975). The dissenters advocated a fee of 10 cents per ton, stating that this "could generate between $60 and $70 million dollars on an annualized basis." Id. at 169. This is a computation based on the tonnage of combustible coal produced. Had these legislators been proceeding on the basis that the reclamation fee of 35 cents was to be applied to more tonnage than the 654 million tons of actual coal produced, that figure would have been included in their argument as an a fortiori proposition.

In sum, Congress's analysis of costs associated with imposition of the reclamation fee supports appellants' argument that Congress intended to impose the fee on tonnages of combustible coal only.

VII.

The definition of coal promulgated by the Secretary likewise militates against the expansive construction adopted by the district court. Title 30, C.F.R. § 700.5 states in pertinent part:

As used throughout this chapter, the following terms have the specified meaning except where otherwise indicated—

Coal means combustible carbonaceous rock, classified as anthracite, bituminous, subbituminous, or lignite by ASTM Standard D 388-77, referred to and incorporated by reference in the definition of "anthracite" immediately above.

We note that the provisions dealing with the imposition of the reclamation fee do not explicitly "otherwise indicate" an alternative definition of "coal," although 30 C.F.R. § 870.12(b)². seemingly permits reclamation fee liability to be determined on the basis of the gross weight of all mined material at the time of the initial bona fide sale. To the extent that the government interprets § 870.12(b) to authorize imposition of the reclamation fee on the noncoal material mined by appellants here, we hold this regulation exceeds the scope of 30 U.S.C. § 1232(a) and is therefore invalid.

The government relies on Combs v. Hawk Contracting, Inc., 543 F. Supp. 825 (W.D. Pa. 1982). At issue in Combs was the meaning of a provision in the Coal Wage Agreement obligating employers to pay royalties into the Miners Pension Fund based on the amount of "coal produced by each employer for use or sale." Id. at 827. The district court rejected the company's argument that it could deduct the coal's ash content in computing its royalty payment, reasoning that any coal mine production sold or used as fuel qualifies for inclusion in calculating royalties.Id. Combs does not compel us to adopt the government's position here. First, and most obviously, Combs dealt with construction of a contract between the employers and the union. The court's task in that case was to determine the intent of the parties to the agreement. We scarcely need mention that a statute and a contract identically because congressional intent may differ from the intent of parties to the contract. Second, the company's argument in Combs that the ash content be deducted from the coal weight is qualitatively different from appellants' argument here. Appellants do not seek a reduction in the coal tonnage based on impurities within the combustible coal itself. Rather they seek a reduction based on the weight of the overburden that is mixed with the coal prior to the washing and sizing operations. Much of this debris is loose material that is inadvertently "scooped" from the mine and loaded with the coal. App. at 41a-42a.

VIII.

We therefore hold as a matter of law, that as used in the statute, "coal produced by surface coal mining" means combustible coal that would qualify as such under ASTM standards and excludes the weight of rock, clay, dirt and other debris in the computation of the reclamation fee.³. The judgment of the district court will be reversed with a direction to enter judgment in favor of the appellants.

* Honorable Carol Los Mansmann. of the United States District Court for the Western District of Pennsylvania, sitting by designation.

2. 30 C.F.R. § 870.12(b) states in pertinent part:

(b) The fee shall be determined by the weight and value at the time of initial bona fide sale, transfer of ownership, or use by the operator.

(1) The initial bona fide sale, transfer of ownership, or use shall be determined by the first transaction or use of the coal by the operator immediately after it is severed, or removed from a reclaimed coal refuse deposit.

(2) The value of the coal shall be determined F.O.B. mine.

(3) The weight of each ton shall be determined by the actual gross weight of the coal.

(i) Impurities, including water, that have not been removed prior to the time of initial bona fide sale, transfer of ownership, or use by the operator shall not be deducted from the gross weight.

(ii) Operators selling coal on a clean coal basis shall retain records that show run-of-mine tonnage, and the basis for the clean coal transaction.

3. Appellants also argue that the reclamation fee provisions as applied violate the equal protection component of the due process clause of the 5th amendment. Because we have disposed of this case on statutory grounds, we do not meet this issue.