United States District Court, E.D. Kentucky, Southern Division, Pikeville
M.L. JOHNSON FAMILY PROPERTIES, LLC, Plaintiff,
RYAN ZINKE, SECRETARY OF THE INTERIOR, Defendant, and PREMIER ELKHORN COAL LLC, Defendant-Intervenor.
OPINION AND ORDER
K. CALDWELL, CHIEF JUDGE
of land known as Tract 46 in Pike County, Kentucky has
valuable coal and two owners who cannot agree on how it
should be used. One cotenant, Pike-Letcher Land Company
(“PLLC”), has conveyed the right to enter and
surface mine coal to its affiliate Premier Elkhorn Coal LLC.
The other cotenant, M.L. Johnson Family Properties, LLC, has
not consented to mining. Over Johnson LLC's objection,
Kentucky has granted Elkhorn a right of entry to surface mine
Tract 46. Johnson LLC challenged that decision before the
Secretary of the Interior and now seeks review of the
administrative decision that permitted Elkhorn to commence
mining operations. For the reasons discussed below, the Court
affirms the Secretary's decision.
Statutory and Regulatory Framework
companies must comply with certain minimum requirements
before mining a surface estate. Those requirements are set
forth in the Surface Mining Control and Reclamation Act of
1977 (“SMCRA”). 30 U.S.C. § 1201 et
seq. SMCRA's regulatory requirements are primarily
implemented through a permitting regime. 30 U.SC. §
1256(a) (“[N]o person shall engage in or carry out on
lands within a State any surface coal mining operations
unless such person has first obtained a permit issued by such
State pursuant to an approved State program or by the
Secretary pursuant to a Federal program . . . .”). As
§ 1256(a) suggests, regulatory power under SMCRA is not
solely vested in the federal government. Instead, states
which “wish to assume exclusive jurisdiction over the
regulation of surface coal mining” are invited to
submit to the Secretary a state program “which
demonstrates that such State has the capability of carrying
out the provisions of this chapter and meeting its
purposes.” 30 U.S.C. § 1253(a). This system of
“cooperative federalism” sets SMCRA as a national
floor for regulation of surface mining, but permits
state's to develop more demanding regulatory regimes.
Kentuckians for the Commonwealth v. U.S. Army Corps. of
Eng'rs, 746 F.3d 698 (citing Hodel v. Va.
Surface Mining & Reclamation Ass'n, 452 U.S.
264, 289 (1981)). Once a state submits and receives approval
of its state program, SMCRA's grant of “exclusive
jurisdiction” means that state law, not federal law,
governs surface mining within the state. See Bragg v.
W.Va. Coal Ass'n, 248 F.3d 275, 295 (4th Cir. 2001);
see also In re Permanent Surface Min. Regulation
Litig, 653 F.2d 514, 519 (D.C. Cir. 1981) (en banc)
(“[I]t is with an approved state law and with state
regulations consistent with the Secretary's that surface
mine operators must comply. Administrative and judicial
appeals of permit decisions are matters of state jurisdiction
in which the Secretary plays no role.”) (internal
grant of exclusive jurisdiction to state regulatory
authorities contains an important exception. The Office of
Surface Mining Reclamation and Enforcement
(“OSMRE”) retains authority to conduct a federal
inspection of an existing mine if (i) there is reason to
believe a permitee is in violation of a state program
requirement or permit condition, (ii) OSMRE has provided
notice of the suspected violation to the state, and (iii) the
state fails to take corrective action or show good cause for
the failure within ten days. 30 U.S.C. § 1271(a)(1). If,
after conducting an inspection, OSMRE determines that a
permitee is in violation of a program requirement or permit
condition, and that violation “creates an imminent
danger to the health or safety of the public, or is causing,
or can reasonably be expected to cause significant, imminent
environmental harm to land, air, or water resources, ”
the Secretary must “immediately order a cessation of
surface coal mining” operations. Id. §
1271(a)(2). A cessation order may only remain in
effect until OSMRE “determines that the condition,
practice, or violation has been abated, or until modified,
vacated, or terminated by [OSMRE].” Id.;
see 30 C.F.R. § 843.11(f).
received the Secretary's approval of its state program in
May 1982 and the Kentucky Department of Natural Resources and
Environmental Protection was deemed the Commonwealth's
regulatory authority for surface coal mining. 30 C.F.R.
§ 917.10; see generally Ky. Rev. Stat. Ch. 350;
405 Ky. Admin. Reg. Ch. 1-30. Kentucky's permitting
requirements largely mirror those set forth in the federal
statute and implementing regulations. See Ky. Rev.
Stat. 350.060; 405 Ky. Admin. Regs. 8:001 et seq.
Having had its state program approved, changes to Kentucky
law or regulations that “affect the implementation,
administration, or enforcement of the approved State
program” cannot “take effect for purposes of a
State program until approved as an amendment” by the
Secretary. 30 C.F.R. § 732.17(b), (g).
sets forth the minimum national requirements for establishing
a valid right of entry in order to receive surface mining
No permit or revision application shall be approved unless
the application affirmatively demonstrates . . . that-
(6) in cases where the private mineral estate has been
severed from the private surface estate, the applicant has
submitted to the regulatory authority--
(A) the written consent of the surface owner to the
extraction of coal by surface mining methods; or
(B) a conveyance that expressly grants or reserves the right
to extract the coal by surface mining methods; or
(C) if the conveyance does not expressly grant the right to
extract coal by surface mining methods, the
surface-subsurface legal relationship shall be determined in
accordance with State law: Provided, That nothing in
this chapter shall be construed to authorize the regulatory
authority to adjudicate property rights disputes.
30 U.S.C. § 1260(b)(6)(A)-(C). SMCRA's implementing
regulation is substantively identical to the statutory
language, but is restated to require the applicant to submit
documentation that establishes a right to entry under each
provision. 30 C.F.R. § 778.15. Kentucky's analogous
regulation is also restated in terms of the documentation
requirements for an application. 405 Ky. Admin. Regs. 8:030
Sec. 4(1)-(3) (2014). Most pertinent, subsection (C) requires
the following documentation for severed estates:
conveyance does not expressly grant the right to extract the
coal by surface mining methods, a copy of the original
instrument of severance upon which the applicant bases his
right to extract coal by surface mining methods and
documentation that under applicable state law, the applicant
has the legal authority to extract the coal by those methods.
405 Ky. Admin. Regs. 8:030 Sec. 4(2)(c). The burden to
establish compliance with these right of entry provisions
falls squarely on the permit applicant. 30 U.S.C. §
1260(a) (“The applicant for a permit, or revision of a
permit, shall have the burden of establishing that his
application is in compliance with all the requirements of the
applicable State or Federal program.”).
Factual and Procedural Background
mineral and surface estates of Tract 46 in Pike County,
Kentucky have been severed since the early 1900s. The mineral
estate is owned by PLLC. The surface estate, which consists
of approximately 450 acres, was previously owned by M.L.
Johnson, who left an undivided interest to each of his eight
heirs. Two of the heirs conveyed their interests to PLLC,
while five transferred theirs to Johnson LLC. By fall 2014,
the surface estate was owned collectively by Johnson LLC
(62.5%), PLLC (25%), and the eighth heir (12.5%) as tenants
in common. PLLC entered into an Original Right of
Entry Agreement in 1995, and an Amended Right of Entry
Agreement in 2013 with its affiliate Elkhorn, granting it the
right to enter and conduct surface mining operations. Johnson
LLC has not consented to surface mining on Tract 46.
Kentucky Cabinet first issued Elkhorn a permit for surface
mining operations on Tract 46 in 2003. Elkhorn subsequently
sought approval of Amendment #1 to increase the number of
acres covered by the permit. The Cabinet determined that
Elkhorn had demonstrated a right of entry based upon the
consent of PLLC and the holding of the Kentucky Court of
Appeals in Johnson v. Envtl. & Pub. Prot.
Cabinet, 289 S.W.3d 216 (Ky. Ct. App. 2009). Certain
Johnson heirs initially challenged Amendment #1 in
Kentucky's Office of Administrative Hearings on the basis
that not all cotenants consented to surface mining, but the
heirs ultimately dismissed that appeal with prejudice.
Instead, Johnson LLC initiated a citizen suit pursuant to 30
U.S.C. § 1270(a) in this Court. That suit sought an
injunction to compel the Secretary to inspect Elkhorn's
permit, alleging the Cabinet's permit approval violated
30 U.S.C. § 1260(b)(6)(A) because Elkhorn did not have
the written consent of all surface cotenants, and a
preliminary injunction to stop surface mining operations on
Tract 46. Compl., M.L. Johnson Family Properties, LLC v.
Jewell, No. 14-CV-78-ART, ECF No. 1 (E.D. Ky. 2014).
Johnson LLC's citizen suit was pending, the Cabinet
approved Minor Revision #1, updating the surface ownership
information for Tract 46, and Minor Revision #2, finding that
the application contained sufficient documentation to satisfy
the right of entry requirements of 405 Ky. Admin. Regs. 8:030
Sec. 4(2)(c) and 30 U.SC. § 1260(b)(6)(C). On June 13,
2014, then District Judge Amul Thapar issued a preliminary
injunction order in the citizen suit, finding that Johnson
LLC had demonstrated a likelihood of success on the merits
that 30 U.S.C. § 1260(b)(6)(A) required the consent of
all surface owners. M.L. Johnson Family Properties, LLC
v. Jewell (Johnson I), 27 F.Supp.3d 767, 773 (E.D. Ky),
vacated as moot, No. 14-5867, Order, ECF No. 29-2
(6th Cir. Oct. 31, 2014). In compliance with the preliminary
injunction, OSMRE conducted a federal inspection of
Elkhorn's permit and, applying this Court's
interpretation of 30 U.S.C. § 1260(b)(6)(A), found that
Elkhorn's permit was non-compliant because Johnson LLC
did not consent to mining. Elkhorn's alternative claim
that its permit was valid under 30 U.S.C. §
1260(b)(6)(C), as approved by Minor Revision #2, was rejected
as procedurally flawed due to the lack of adequate notice and
opportunity to object. OSMRE concluded that Elkhorn lacked a
valid permit and issued a cessation order.
to abate the cessation order, Elkhorn submitted (1) copies of
the original severance, deed which did not expressly grant
the right to surface mine, (2) chain of title documents, and
(3) the Original and Amended Right of Entry Agreements.
Elkhorn's application also cited to the Kentucky Court of
Appeals decision in Johnson, 289 S.W.3d 216, holding
that consent of one cotenant could satisfy the right of entry
requirement. The Cabinet approved Minor Revision #3. Johnson
LLC filed an objection with the Cabinet to the proposed
revision, but did not pursue a state administrative appeal.
determined that Minor Revision #3 abated the violations and
moved to terminate the cessation order. The Hearings Division
issued a decision upholding the issuance of the cessation
order and granting OSMRE's motion to terminate the order.
Premier Elkhorn v. OSMRE, NX-2014-01-R Consolidated
(Dec. 19, 2014). Following an unsuccessful appeal to the
Interior Board of Land Appeals (“IBLA”) by
Johnson LLC, OSMRE's Lexington Field Office issued the
termination order. Johnson LLC filed an application for
review of that order with the Hearings Division, which was
heard by Administrative Law Judge (“ALJ”) Harry
C. Sweitzer. On October 30, 2015, the ALJ issued a decision
upholding OSMRE's termination of the cessation order.
Johnson LLC now appeals from that decision and has filed a
motion for summary judgment. (DE 46). Defendant Ryan Zinke,
Secretary of the Interior, and Defendant-Intervenor Elkhorn
have filed responses in opposition and cross-motions for
summary judgement. (DE 62, DE 63). All parties have filed
replies (DE 68, DE 71, DE 75) and this matter is now ripe for
Standard of Review
LLC seeks review of the ALJ's decision under SMCRA, 30
U.S.C. § 1276(a)(2), and the Administrative Procedure
Act (“APA”), 5 U.S.C. §§ 702-703.
Because there are no factual disputes, this matter is
appropriate for disposition on summary judgment. Fed.R.Civ.P.
56(a). (“The court shall grant summary judgment if the
movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.”). SMCRA limits this Court's review
to whether the Secretary's action was arbitrary,
capricious, or otherwise inconsistent with law. 30 U.S.C.
1276(a)(2); see Drummond Coal Co. v. Hodel, 796 F.2d
503, 504 n.1 (D.C. Cir. 1986) (“With an exception not
here relevant, Section 1276(a)(2) of the SMCRA incorporates
the arbitrary and capricious standard of review set forth in
the Administrative Procedure Act, 5 U.S.C. § 706(2)(A)
Court reviews questions of law de novo, but, in
doing so, “deference may be owed where the agency is
reasonably interpreting the statutes it is charged with
administering.” R/T/ 182, LLC v. F.A.A., 519
F.3d 307, 309 (6th Cir. 2008). If a statute is silent or
ambiguous with respect to a specific issue, this Court must
uphold the agency's interpretation if it is “based
on a permissible construction of the statute.”
Chevron U.S.A., Inc. v. Nat. Res. Def. Council,
Inc., 467 U.S. 837, 843 (1984). An agency's
interpretation of its own regulations are also owed deference
by a reviewing court. Auer v. Robbins, 519 U.S. 452,
LLC brings a number of challenges to the ALJ's decision
upholding termination of the cessation order and allowing
Elkhorn to surface mine Tract 46 pursuant to Minor Revision
#3. For the reasons set forth below, the Court finds that the
ALJ's decision was not arbitrary or capricious.
Elkhorn has a valid right of entry based on ...