United States District Court, E.D. Kentucky, Southern Division, Pikeville
M.L. JOHNSON FAMILY PROPERTIES, LLC, Plaintiff,
SALLY JEWELL, Secretary of the Interior, Defendant, and PREMIER ELKHORN COAL LLC, Intervenor Defendant.
MEMORANDUM OPINION AND ORDER
R. Thapar United States District Judge
doctrine requiring parties to finish up their agency
proceedings before coming to federal court is called
exhaustion. It will be clear by the end of this Opinion that
the doctrine deserves the name.
Johnson Family Properties filed this suit while still
involved in a related agency action. The targets of that
complaint now argue that Johnson's eagerness-and failure
to exhaust-deprives the Court of subject-matter jurisdiction.
The exhaustion doctrine requires parties to receive a final
agency decision before filing a complaint. Except when it
doesn't. As it turns out, “mandatory” does
not always quite mean mandatory. Nor does “final”
always quite mean final. Answering this case thus requires
figuring out just how mandatory exhaustion is here and
whether Johnson has received a final-enough agency decision.
a company made up of five siblings, owns a majority interest
in the surface area of some land in Virgie, Kentucky. R. 1
¶¶ 6-7. The land has spawned a lot of litigation.
The problem is that it sits on coal, coal that Premier
Elkhorn Coal LLC would like to get. Elkhorn has leased the
rights to the coal and received permission from one
minority-interest landowner to mine it. R. 37 at 10. Armed
with this consent, Elkhorn obtained a permit to begin surface
mining on the tract. Id.
Elkhorn broke ground, Johnson sued it and the Secretary of
the Interior, hoping to stop Elkhorn's machines in their
tracks. M.L. Johnson Family Properties, LLC v.
Jewell, 27 F.Supp.3d 767, 768-70 (E.D. Ky. 2014).
Because Elkhorn had not received Johnson's consent, the
Court ordered it to stop pending an inspection by the
Secretary. Id. at 773-75. Later, an arm of the
Secretary-the Office of Surface Mining Reclamation and
Enforcement (OSMRE)-inspected Elkhorn's permit, found it
invalid, and issued a cessation order, which prohibited
Elkhorn from mining the land any further. See R. 37
the Johnson-Elkhorn dispute meandered a while through the
agency's review system, OSMRE terminated the cessation
order that had been blocking Elkhorn's machines. An
administrative law judge (ALJ) from the Department of the
Interior affirmed the decision. Id. at 13-15.
Johnson appealed the ALJ's ruling to the Appeals Board,
while also petitioning the Board to stay that ruling until it
had resolved the appeal. Id. at 15. Days passed
without action from the Board. Forty-five days after
Johnson's deadline for taking the appeal, the Board had
still taken no action. So Johnson sued the Secretary of the
Interior in this Court. See R. 1; see also
43 C.F.R. § 4.21(b)(4) (“[The] Appeals Board shall
grant or deny a petition for a stay pending appeal . . .
within 45 calendar days of the expiration of the time for
filing a notice of appeal.”). Johnson seeks the same
relief here that it had sought from the agency: to vacate the
ALJ's ruling and to have the cessation order reinstated.
R. 1 at 7.
Johnson filed his federal court complaint, Johnson asked the
Appeals Board to dismiss its agency appeal, arguing that the
Board's jurisdiction over it ended with the
forty-five-day wait. R. 37 at 15. The Board granted the
request, but also took a moment to “correct
Johnson's erroneous assertion that this Board's
jurisdiction to rule on the Petition for Stay and the merits
of its appeal ended when this Board did not rule” on
Johnson's petition within forty-five days. R. 35-1 at 3
(internal quotation marks omitted). Johnson asked the Board
to reconsider its reasoning, but again withdrew the motion.
Id. Johnson believes the wait created a final-and
therefore reviewable-agency action; the Secretary believes
Secretary of the Interior now moves for judgment on the
pleadings. R. 35. “[W]hat really is at issue here,
” however, “is a jurisdictional challenge to the
allegations in the complaint.” Gentek Bldg. Prods.,
Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th
Cir. 2007). According to Rule 12, the Court must dismiss this
case if it lacks subject-matter jurisdiction. Fed.R.Civ.P.
12(h)(3). The Secretary-and Elkhorn, who has intervened as a
defendant-argue that Johnson came to this Court too early. R.
35; R. 36. As such, they say, the Court has no jurisdiction
over Johnson's complaint. R. 35-1 at 5-9; R. 36-1 at 4-6.
can challenge a federal court's jurisdiction in two ways.
A facial challenge “questions merely the sufficiency of
the pleading, ” i.e., the party argues that,
even taking the alleged facts as true, they fail to establish
subject-matter jurisdiction. Gentek, 491 F.3d at
330. A factual challenge, by contrast, “raises a
factual controversy, ” i.e., the party
disputes the alleged facts and argues that the real ones do
not establish federal jurisdiction. Id. The
challenge here is facial. Everyone agrees on the salient
fact: that Johnson filed suit before voluntarily dismissing
his agency appeal. The parties just disagree on what this
fact means. The Secretary and Elkhorn argue that it deprives
this Court of jurisdiction. Johnson argues that it does not.
disputes fall under the Surface Mining Control and
Reclamation Act (“SMCRA”). SMCRA's
judicial-review provision allows courts to review
“[a]ny order or decision issued by the [Interior]
Secretary.” 30 U.S.C. § 1276(a)(2). But SMCRA also
provides remedies from within the Department of the Interior
itself. Miners and landowners may ask the agency to review
any “order [issued] by the Secretary” or any
“modification, vacation, or termination” of an
order that affects their rights. Id. §
1275(a)(1); see also Id. § 1275(c) (permitting
temporary relief from an order). Thus, landowners looking to
halt an unlawful surface-mining project can do so either in
court or through the agency.
Secretary and Elkhorn argue that landowners must go to the
agency first, exhausting their opportunities to get relief
from the Secretary before heading into court. See R.
35-1 at 5-6; R. 36-1 at 5-6. Until then, the defendants
argue, the Secretary has issued no final “order,
” and a court therefore has nothing to review.
See R. 35-1 at 5-6; R. 36-1 at 6.
have a point: “In most cases, a failure to exhaust
administrative remedies is fatal to a suit in federal
court.” See Kentucky v. United States ex rel.
Hagel, 759 F.3d 588, 599 (6th Cir. 2014). The so-called
exhaustion requirement directs parties to seek relief from
the relevant agency-if that agency can provide the
relief-before seeking it in federal court. A litigant has
exhausted its opportunities for administrative relief when
the agency has reached a final decision on its claims.
See Weinberger v. Salfi, 422 U.S. 749, 763-64
(1975). Thus, heading to court, a litigant must wait for the
agency to give it a final decision.
exhaustion requirement is not one size fits all. Different
statutes will sport different styles. Some are more strict,
some more loose. Some permit judges to let the hem out a
little, by applying an exception to the requirement; some do
not. See, e.g., Hagel, 759 F.3d at 598
(distinguishing between stricter and looser requirements). To
determine whether Johnson has filled out SMCRA's
exhaustion requirement, therefore, the Court must take its
measure. Doing so requires the Court to ask three questions.
Is SMCRA exhaustion mandatory or merely
cases, exhaustion is a “prudential, court-created
doctrine.” Perkovic v. INS, 33 F.3d 615, 619
(6th Cir. 1994). Courts create the doctrine in the interests
of three groups affected by any given dispute. First, the
parties themselves. Some problems “require [the]
application of special expertise” to resolve.
McKart v. United States, 395 U.S. 185, 194 (1969).
Judges know something about the law, but next to nothing
about surface mining. The exhaustion doctrine keeps problems
before the proper problem solvers, allowing the agency to
apply its expertise without judicial
“interfere[nce].” Id. The second group
is the courts. If the case does make it to federal court,
“judicial review may be hindered by the failure of the
litigant to allow the agency to make a factual record,
” id.-so it benefits the court to let the
agency build the record. And third, Congress. When Congress
grants an agency certain powers, it likely does not want to
come back and see those powers sitting on a shelf, unused. To
prevent such disuse, courts have “fashion[ed]”
rules-like the exhaustion requirement-to channel disputes
through the administrative schemes that Congress has made
especially for them. McCarthy v. Madigan, 503 U.S.
140, 144 (1994). Thus, before a dispute leaves the belly of
the administrative state, courts will often require it to
gestate within the agency for an appropriate time.
this is the judiciary's choice. If “Congress has
not clearly required exhaustion, sound judicial discretion
governs” just how much exhaustion to require. Dixie
Fuel Co. v. Comm'r of Soc. Sec'y, 171 F.3d 1052,
1059 (6th Cir. 1999) (quoting McCarthy, 503 U.S. at
144). The doctrine is only prudential, after all, helping
courts decide whether hearing a case would be a good idea.
Since courts created the doctrine, they can do with it what
they like. Specifically, they “can craft prudential
exceptions.” Hagel, 759 F.3d at 598. If, for
example, exhaustion would be futile-because failure before
the agency is foregone and a return to it like the Charge of
the Light Brigade-a court can choose to hear an unexhausted
claim. See Coomer v. Bethesda Hosp., Inc., 370 F.3d
499, 505 (6th Cir. 2004).
Congress makes a court's life easier by explicitly
putting an exhaustion requirement in the statute. See,
e.g., Hoogerheide v. IRS, 637 F.3d 634, 639
(6th Cir. 2011) (construing 26 U.S.C. § 7433). And
Congress gets what it wants. Rather than prudential,
therefore, statutory exhaustion requirements are mandatory.
distinction matters. Both types of exhaustion requirements
flow from the statute, just in different ways. If a statute
constructs a remedial scheme, courts require parties to
exhaust it because that is prudent. If a statute has a
sentence that requires parties to exhaust, courts require
them to do so because it is mandatory. As a result, mandatory
exhaustion requirements have much less give. “[T]he
courts lack discretion to waive” requirements that
Congress puts in its statutes. Id. Courts therefore
may not “craft prudential exceptions” when an
exhaustion requirement comes from the specific words of a
statute rather than from general principles of prudent
judging. See Booth v. Churner, 532 U.S. 731, 741 n.6
(2001) (“[W]e will not read futility or other
exceptions into statutory exhaustion requirements where
Congress has provided otherwise.”); McCarthy,
503 U.S. at 144 (“Where Congress specifically mandates,
exhaustion is required.”).
first question is whether, under SMCRA, the Court
should require Johnson to exhaust administrative
remedies as a matter of judicial prudence, or whether it
must require exhaustion as a matter of Congressional
What Congress has said
first place to look is at what Congress actually wrote.
Congress provided judicial review for the kind of
adjudication at issue here in SMCRA's Section 1276.
See 30 U.S.C. § 1276(a)(2). And nowhere in that
section did Congress mention exhaustion. Compare this to
Section 7433 of the Internal Revenue Code (which the Sixth
Circuit interpreted in Hoogerheide), where Congress
explicitly placed a “[r]equirement that administrative
remedies be exhausted.” 26 U.S.C. § 7433(d).
Congress knows how to tell courts to require exhaustion. In
SMCRA, it did not. Thus, it would seem that SMCRA exhaustion
is not mandatory: Courts should require exhaustion not
because Congress told them to, but for their own
What the Sixth Circuit has said
cases, however, the Sixth Circuit appears to have read the
statute differently. In Shawnee Coal Company v.
Andrus, the court held that parties are “required
to exhaust [the] administrative remedies” available
under SMCRA “before obtaining judicial review.”
661 F.2d 1083, 1092 (6th Cir. 1981). Then in Southern
Ohio Coal Company v. OSMRE, the court followed
Shawnee and went on to explain that this requirement
is the will of Congress: “SMCRA unambiguously requires
resort to the prescribed administrative review process before
seeking judicial review.” 20 F.3d 1418, 1425 (6th Cir.
1994). According to these two holdings, then, SMCRA
exhaustion is mandatory: a creature of the statute itself.