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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Opening Memorandum Filed In Appeal Challenging Rejection Of Lands Unsuitable for Mining Petition For Lynch and Benham, Kentucky  Posted: October 10, 2013

COMMONWEALTH OF KENTUCKY
ENERGY AND ENVIRONMENT CABINET
FILE NO. LUP-41747-039
LANDS UNSUITABLE FOR MINING PETITION 10-1


ROY SILVER, CARL SHOUPE,
STANLEY STURGILL and
BENNIE MASSEY

PETITIONERS,


VS.

ENERGY AND ENVIRONMENT CABINET
RESPONDENT

And

RESOURCE DEVELOPMENT, LLC
And
ACIN, LLC
INTERVENING RESPONDENTS


* * * * * * * * * * * * * *
PETITIONERS’ MOTION AND MEMORANDUM IN SUPPORT OF A RECOMMENDATION OF SUMMARY DISPOSITION


Come now the Petitioners Roy Silver, Carl Shoupe, Stanley Sturgill and Bennie Massey, (the “Petitioners”), and file this motion and memorandum in support of a recommendation by the Hearing Officer for summary judgment on behalf of the Petitioners.

Petitioners represent that there are no material facts in dispute, and that they are entitled as a matter of law to entry of an Order Granting Summary Judgment on their claim that the Cabinet’s September 7, 2010 determination declining to process A Petition To Designate The Historic Districts Within The Cities Of Benham and Lynch And The Viewshed From Those Districts, And The Watersheds That Provide The Water Supply For The Towns Of Benham and Lynch, As Areas Unsuitable For Mining which was filed by the Petitioners with the Respondent Cabinet, was “frivolous,” is contrary to law and is thus arbitrary and capricious.

STATEMENT OF MATERIAL FACTS

The Petitioners and Respondent Energy and Environment Cabinet have stipulated these matters, which will be subject to a Joint Stipulation that will be entered in the record of this appeal and petition for review. It is not known at this time if the Intervening Respondents will agree to stipulate these facts.
Lands Unsuitable for Mining Petition 10-1 was received by the Department for Natural Resources on August 6, 2010, and was captioned “A Petition To Designate The Historic Districts Within The Cities of Benham And Lynch And The Viewshed From Those Districts, And The Watersheds That Provide The Water Supply For The Towns Of Benham And Lynch, As Areas Unsuitable For Mining.”

Lands Unsuitable for Mining (hereinafter “LUM”) Petition No. 10-1 stated that the Petition area encompassed 10,442 acres near the cities of Benham and Lynch, in northeast Harlan County, Kentucky; however, the Department for Natural Resources (hereinafter “DNR”) digitized the petition boundary shown on the topographical map submitted with the Petition into a GIS format and determined that the Petition area actually encompassed 11,774 acres.

By letter dated September 7, 2010, Director of the Division of Mine Permits notified Petitioners that “it has been found that the petition lacks merit and, by regulation, has been deemed frivolous.”
The letter declined to process the petition based on the Department conclusion “that over 90% of the petition area is under permit, and therefore exempt, from the lands unsuitable process.”

The digitized Petition area contained two areas identified by the National Register of Historic Places as the Benham Historic District and the Lynch Historic District, totaling 128 acres. Of the remaining 11, 646 acres in the digitized Petition area, 1,071 acres (9.2%) have never been the subject of a surface coal mining and reclamation operations permit issued by the DNR for either surface coal mining disturbance or for areas overlying underground mine workings.

All states exercising SMCRA jurisdiction and the federal government (pursuant to 30 U.S.C. § 1266) require that underground mining permits incorporate standards and measures designed to minimize surface impacts from underground mining operations, with one example being the protection against subsidence damage. SMCRA does not require the permitting of areas overlying underground mine workings. While some states require liability insurance, performance bond coverage, mapping or other identification of areas overlying underground mine workings, Kentucky requires that all areas overlying underground mine workings (“shadow areas”) be permitted pursuant to KRS 350.060(12), and those areas overlying underground workings that are not affected by surface operations and facilities on the surface are not subject to acreage fees or bond requirements.

According to the Cabinet’s calculations, of the remaining 11,646 acres in the digitized Petition area, 443 acres (3.8%) were at the time of filing the LUM 10-1 Petition the subject of existing permits issued by the DNR pursuant to KRS Chapter 350 which authorized surface coal mining disturbance(s).

According to the Cabinet’s calculations, of the remaining 11,646 acres in the digitized Petition area, 830 acres (7.1%) were at the time of filing the LUM 10-1 Petition the subject of pending application(s) for permit(s) which would authorize surface coal mining disturbance(s), not yet issued by DNR, and 430 of these acres were the subject of permit applications for which the public comment period had closed pursuant to 405 KAR 24:030, Section 3(6).

According to the Cabinet’s calculations, of the remaining 11,646 acres in the digitized Petition area, 9,231 acres (79.2%) were at the time of filing the LUM 10-1 Petition the subject of existing permits issued by the DNR pursuant to KRS 350.060(12) which permitted “shadow area,” or areas overlying underground mine workings. This number (9,231, or 79.2%) was determined by subtraction of the numbers described in Stipulation Nos. 3, 6 and 7 from the digitized Petition area, since to have computed the actual underground acreage (“shadow area”) permitted would have yielded a number approximating 22,650 acres for the reason that multiple coal seams within the Petition area had been permitted for underground coal removal. Of the 9,231 acres permitted by the DNR as “shadow area” at the time of filing the LUM 10-1 Petition, 346 of those acres were permitted for actual surface disturbance within the Petition area. These 346 acres of permitted surface disturbance are in addition to the 443 acres permitted as surface coal mining activity identified in Stipulation No. 6.

According to the Cabinet’s calculations, of the remaining 11,646 acres in the digitized Petition area, 1,157 acres were at the time of filing the LUM 10-1 Petition the subject of pending application(s) for permit(s) which would permit “shadow area,” or areas overlying underground mine workings, not yet issued by DNR, and 810 of those acres were the subject of permit applications for which the public comment period had closed pursuant to 405 KAR 24:030, Section 3(6).

ADDITIONAL FACTUAL BACKGROUND

The City of Lynch, Kentucky, an incorporated entity located in Harlan County, Kentucky, operates a water treatment and distribution system which is supplied from Gap Branch and Looney Creek watersheds. Petitioner Roy Silver, who resides at 170 Main Street in Benham, Kentucky with a mailing address at P.O. Box G, Benham, Kentucky 40807 is a resident of Benham, and uses water for beneficial purposes, including drinking water, from both Benham and Lynch. He also enjoys both the historic districts of Benham and Lynch, and the viewshed from those districts.

Carl Shoupe, a former City Councilman for the City of Benham, is a resident of Benham, with a street address of 434 Main Street and a mailing address of P.O. Box 185, Benham, Kentucky 40807. Mr. Shoupe lives on the bank of Looney Creek, and uses water for beneficial purposes, including drinking water, from the Benham water system. The Benham water system derives its water supply in part from the overflow of the Lynch reservoir, which is located in former underground coal mine workings. Mr. Shoupe enjoys both the historic districts of Benham and Lynch, and the viewshed from those districts.

Stanley Sturgill is a resident of Lynch, residing at 353 East Main Street with a mailing address of P.O. Box 776 Lynch, Kentucky 40855. Mr. Sturgill uses the water supply of the community of Lynch for beneficial purposes, including drinking water. Mr. Sturgill enjoys both the historic districts of Benham and Lynch, and the viewshed from those districts.

Bennie Massey, a member of the City Council of Lynch for 16 terms, has been a resident of Lynch for 60 years. He currently resides at 432 First Street, Lynch Kentucky, with a mailing address at P.O. Box 117, Lynch, Kentucky 40855. Mr. Massey uses water for beneficial purposes, including drinking water, supplied by the Lynch water system. Mr. Massey enjoys both the historic districts of Benham and Lynch, and the viewshed from those districts.

LUM 10-1, which is captioned as A Petition To Designate The Historic Districts Within The Cities Of Benham and Lynch And The Viewshed From Those Districts, And The Watersheds That Provide The Water Supply For The Towns Of Benham and Lynch, As Areas Unsuitable For Mining, was filed using the Cabinet’s form, and sought designation of the following areas as unsuitable for surface coal mining operations:

"the lands comprising the historic districts of the cities of Benham and Lynch, in Harlan County, Kentucky, and the viewshed from the historic districts of those cities, as well as the watersheds that supply the water sources for those cities, as areas unsuitable for surface coal mining operations, pursuant to KRS 350.465(2)(b), KRS 350.610 and 405 KAR Chapter 24."

On September 7, 2010, by letter signed by Mine Permit Division Director Luttrell, the Cabinet provided a final determination declining to process the petition. Each Petitioner received a letter identical in substantive text (other than the name and address of the Petitioner). The letter indicated that

"After a review of all submitted materials, it has been found that the petition lacks merit and, by regulation, has been deemed frivolous. The Department declines to process the petition based on the following rationale:

Regulations that articulate the procedures and procedures and criteria for reviewing lands unsuitable petitions are found at 405 KAR 24:030. A listing of those lands exempt from designation is found in Section 2 of that regulation. Pertaining to LUM 10-1, subsection (b) of Section 2 is “Lands covered by a permit issued under KRS 350 or a permit application for which the public comment period has closed.” Similar language is also found in KRS 350.610(5). The Department carefully reviewed the submitted petition area map and inventoried all existing and pending permits in the petition area. Surface acreage overlying underground mining operations is permitted according to Kentucky surface mining law(KRS 350.060(12). Given this fact, the Department has concluded that over 90% of the petition area is under permit, and therefore exempt, from the lands unsuitable process. With this determination, the Department is returning the original LUM Petition application to the petitioners."

This appeal followed.

SUMMARY OF ARGUMENT

The Cabinet is bound, by both state and federal law, to maintain and administer the approved surface coal mining regulatory program in a manner consistent with the Surface Coal Mining and Reclamation Act of 1977, 30 USC 1201 et seq., and as effective as the regulations promulgated by the Department of Interior under that statute. Among those requirements are the standards and procedures for processing petitions for designating lands as unsuitable for coal mining.

The Cabinet acted in a manner contrary to law in rejecting Lands Unsuitable for Mining (LUM) Petition 10-1 as being frivolous due to the existence of areas within the petitioned area that are under permit. A “frivolous” petition is defined, both in 30 CFR 764.15(a)(3) and 405 KAR 24:030 Section 3(4), as “one in which the allegations of harm lack serious merit[,]” and is unrelated to the amount of acreage within the petitioned area that is permitted.

A LUM petition is required to be based on allegations that a geographic “area” meets one or more of the criteria on which the area can be designated as unsuitable for mining. Within that area, there may be “lands” exempted from designation by virtue of being permitted, or because the mining operations were being conducted on August 3, 1977, or because of substantial legal and financial committed prior to January 4, 1977. 405 KAR 24:030 Section 2.

These lands are exempt from designation, based on Congressional intent that “[t]he designation process is not intended to be used as a process to close existing mine operations, although the area in which such operations are located may be designated with respect to future mines.” House Report No. 95-218, 95th Cong., 1st Sess. 94-5 (1977). Thus, the Cabinet is obligated to exempt from designation those lands on which mining was being conducted on August 3, 1977 those for which substantial legal and financial commitments existed on January 1, 1977, those lands which are “covered by a permit issued under KRS Chapter 350” and those with a permit application for which the public comment period has closed. Those lands may, as Congress noted, be designated with respect to future mining, but not as to current mining authorized under permit.

The question of whether a petition is frivolous speaks to the merits of the allegations that mining would harm people, land, air, water, or other resources. 52 Fed.Reg. 49323 (December 30, 1987)( “Also, the question of whether a petition is frivolous is unrelated to the imminence of mining, but rather relates to the merits of the allegations that mining would harm people, land, air, water, or other resources.”) LUM 10-1 contained three allegations, two of which covered the entire petition area, and one which pertained to a subarea identified in the petition. Allegation #1 alleged that the petitioned area A within the overall “area” is an “historic land,” for which surface coal mining operations could affect historic districts listed on the National Register of Historic Places, and which contain important historic and cultural resources that could be significantly damaged by the effects of surface coal mining operations; Allegation #2 requested designation of the area as unsuitable for mining as a “fragile land,” in which the surface coal mining operations could result in significant damage to important natural, ecologic, scientific and aesthetic resources. Allegation #3 sought designation of the area as unsuitable for surface coal mining operations because such operations will affect renewable resource lands in which the surface coal mining operations could result in a substantial loss or reduction in the long-range availability of water supplies. The allegations and the supporting evidence were not lacking in merit, nor did the Cabinet base the decision not to process the petition on the lack of merit of these allegations. Rather, the Cabinet conflated the concept of frivolity with that of exemption of lands under permit, in a manner contrary to law, and rejected a petition that it was obligated to process, after excluding those lands exempt from designation.

Finally, the Cabinet categorically excluded from consideration, all areas overlying permitted underground workings (the so-called “shadow area”), in a manner that is inconsistent with federal and state law. The exclusion should extend only to the coal seam or seams that are under permit, rather than all shadow areas, including those for which no right to extract coal exists.

I. A PETITION CANNOT BE REJECTED AS “FRIVOLOUS” DUE TO THE PRESENCE OF PERMITTED LANDS WITHIN THE PETITIONED AREA

The Cabinet declined to process LUM 10-1 due to the presence, within the boundaries of the petitioned area, of lands exempted from designation due to the existence of permits issued under KRS Chapter 350 or pending permit applications for which the comment period had expired.

The Cabinet’s determination that the existence of such permitted lands within the petition area made the petition “frivolous” is contrary to law, inasmuch as the Cabinet is authorized to reject as frivolous only those petitions in which “the allegations of harm lack serious merit.” 405 KAR 24:030 Section 3(4). The Cabinet decision made no such finding as to the merits of the allegations.

As noted above, the Cabinet is obligated both by federal law and regulation, 30 USC 1253(a)(1), (a)(7) and 30 CFR 733.11, to maintain and administer the approved state regulatory program in a manner consistent with federal laws and regulations. 30 CFR 733.11 provides in whole that “States with an approved State program shall implement, administer, enforce and maintain it in accordance with the Act, this chapter and the provisions of the approved State program.” Similarly, the General Assembly has directed that the Cabinet adopt regulations to allow the state to administer and enforce the permanent regulatory program under SMCRA, provided that the Cabinet’s regulations can be no more stringent than required by the law, KRS 350.028(5); cannot be inconsistent with SMCRA, 350.465(4); and cannot be “in conflict with the policy and purposes of [SMCRA].” KRS 350.465(2). KRS 350.610 obligates the Cabinet to make a determination as to whether a petition to designate an area as unsuitable for some or all types of mining is “complete, incomplete, or frivolous[,]” KRS 350.610(6), and in so doing, the Cabinet is constrained to utilize the definition of “frivolous” contained in 405 KAR 24:030 in a manner consistent with federal law and regulation.

“A frivolous petition is one in which the allegations of harm lack serious merit.” 405 KAR 24:030, Section 3(4). The question of whether a petition is frivolous relates to the merits of the allegations that mining would harm people, land, air, water, or other resources. In evaluating a petition to determine if it is frivolous, a regulatory authority must “determine if the allegations have a serious basis for the area being petitioned.” 48 Fed. Reg. 41332 (Sept. 14, 1983).

The preamble to the 1983 OSM rulemaking explained in more detail what the concept of “frivolous” means in the context of declining to process a designation petition:

"Frivolous was proposed to mean that a petition or the allegations of fact and supporting evidence are “trivial, insignificant, or unworthy of serious attention.”(47 FR 25302). OSM is adopting language to define a “frivolous” petition as one in which the allegations of harm lack serious merit. The concept of “frivolous” is intended to assist the States in determining if petitions lack merit. This procedure will enable the States to return petitions to the petitioner if the allegations lack serious permit.

* * *

OSM has defined frivolous in the final regulation to mean that the allegations in the petition lack serious merit. The regulatory authority must carefully evaluate the petition allegations and determine if the allegations have a serious basis for the area being petitioned. The adoption of the “frivolous” standard is not intended to exclude cultural, aesthetic or any other valid set of values from being considered in the petition process. All allegations must stand on their own merit for the specific area being petitioned as unsuitable."

48 Fed. Reg. 41332 (September 14, 1983).

It is apparent from this discussion of the final rule that whether a petition allegation is “frivolous” speaks to the substantive merits of the allegations, and not to the extent of exempt lands within the permit area. The presence of permitted areas and/or areas with pending permits does not justify rejection of a petition as “frivolous” or “without merit.” Instead, 405 KAR 24:030 Section 2 provides a mechanism for excluding those areas from consideration for designation, while continuing to process the petition as to those lands which are neither under permit or pending permitted status, as well as considering the lands under permit for designation as unsuitable for future mining.

The Cabinet has made no finding that the allegations in LUM 10-1 lacked serious merit. As noted above, a LUM Petition is required to petition an area, which is defined in 405 KAR 24:001 Section 1(5) as a “geographic unit in which the criteria alleged in the petition . . . occur throughout and form a significant feature.” Nothing in state or federal law or regulation allows a Petitioner to exclude portions of the “area” because they are under permit; rather because the petitioned area includes a geographic unit throughout which the significant features on which the petition allegations rest, Petitioners are compelled to include those areas, despite their exemption as permitted, and the inclusion of those areas does not render the LUM petition frivolous.

The petition sought a designation of unsuitability for mining for several defined geographic units. Area A was intended to include the boundary of the historic district listed on the National Register of Historic Places, within the cities of Benham and Lynch and the viewshed from those historic districts, in order to provide a visual buffer to prevent adverse effects on the use and enjoyment of the historic districts and historical and cultural values of the cities, and to prevent physical damage to such resources. Area B was intended to include the watershed and drainage area that comprise the water supply source for the city of Benham. The city of Benham draws its water supply from the Kellioka coal seam to the south of Looney Creek, where it is collected, piped to, and treated by the city of Benham for use by the residents of that community. Area C was intended to encompass the Gap Branch watershed, which provides some 30% of the recharge for the Darby seam reservoir that supplies raw water to the city of Lynch. The recharge occurs through an intake borehole in the streambed of Gap Branch, which is connected with the underground reservoir in the Darby coal seam. Area D was intended to encompass that area within the Looney Creek watershed, including the watersheds of Barnett Branch and Trace Branch that flow into Looney Creek, which is located above the borehole in the streambed of Looney Creek that is the primary water source for the Lynch Reservoir. The allegations that surface coal mining operations could harm these resources is hardly trivial or insignificant.

The rejection of the petition as “frivolous” due to the existence or extent of lands covered by permits issued under KRS Chapter 350 was contrary to law, since the Cabinet is obligated by federal regulation (and by state law, which commands that the Cabinet’s regulations be similarly administered), to process the petition with respect to those lands not exempted from designation. If a LUP covers both permitted areas and unpermitted areas, a state regulatory authority is constrained to process the petition for designation for those areas which are not exempted. 44 Fed. Reg. 15002 (March 13, 1979). (“Additionally, under this final regulation, the State regulatory authorities must continue to process petitions covering areas surrounding approved permit areas; they cannot reject a petition which covers both a permit area and other areas, but must process the petition for those unpermitted areas.”) The Cabinet’s determination that LUM 10-1 was frivolous is contrary to law and Petitioners are entitled to a recommendation of summary disposition as a matter of law on this point.

II. THE EXTENT OF EXEMPTION OF PERMITTED OPERATIONS IS LIMITED TO THOSE SEAMS AUTHORIZED TO BE MINED, AND AREAS OVERLYING UNDERGROUND WORKINGS (SHADOW AREAS) ARE NOT EXEMPT FROM BEING DESIGNATED UNSUITABLE FOR MINING AS TO SURFACE COAL MINING NOR AS TO FUTURE MINING OPERATIONS FOR SEAMS NOT CURRENTLY UNDER PERMIT

As argued above, the rejection of LUM 10-1 as “frivolous” was inconsistent with law, since the extent of lands exempted from the effect of a designation decision is unrelated to the “merits” of the petition allegations, and the Cabinet is obligated to identify and exempt lands consistent with the requirements and intent of federal and state regulation, and to process the petition with respect to those non-exempt lands.

The Cabinet’s determination that “over 90%” of the petition area would be exempt under LUM 10-1, is incorrect as a matter of law, and must be reversed as being an overbroad interpretation of the exemption for operations under current permit. Factually, the parties have stipulated that the acreage within the petition area, is affected by some form of permit, in this manner:

• 1,071 acres, or 9.2% of the digitized Petition area has never been subject of a surface coal mining and reclamation operations permit authorizing either surface coal mining disturbance or for areas overlying underground mine workings;

• 443 acres (3.8%) were at the time of filing the LUM 10-1 Petition the subject of existing permits issued by the DNR pursuant to KRS Chapter 350 which authorized surface coal mining disturbance(s).

• 830 acres (7.1%) were at the time of filing the LUM 10-1 Petition the subject of pending application(s) for permit(s) which would authorize surface coal mining disturbance(s), not yet issued by DNR, and 430 of these acres were the subject of permit applications for which the public comment period had closed pursuant to 405 KAR 24:030, Section 3(6).

• 9,231 acres (79.2%) were at the time of filing the LUM 10-1 Petition the subject of existing permits issued by the DNR pursuant to KRS 350.060(12) which permitted “shadow area,” or areas overlying underground mine workings. Of the 9,231 acres permitted by the DNR as “shadow area” at the time of filing the LUM 10-1 Petition, 346 of those acres were permitted for actual surface disturbance within the Petition area. These 346 acres of permitted surface disturbance are in addition to the 443 acres permitted as surface coal mining activity [.]

• According to the Cabinet’s calculations, of the remaining 11,646 acres in the digitized Petition area, 1,157 acres were at the time of filing the LUM 10-1 Petition the subject of pending application(s) for permit(s) which would permit “shadow area,” or areas overlying underground mine workings, not yet issued by DNR, and 810 of those acres were the subject of permit applications for which the public comment period had closed pursuant to 405 KAR 24:030, Section 3(6).

Petitioners do not dispute that those areas currently under a permit authorizing surface coal mining (as distinguished from underground coal mining), and pending permits that would authorize surface coal mining for which the comment period has closed, are exempt from designation for the seam or seams authorized to be mined. In this case, that combined acreage is 873, representing the 443 acres subject to existing permits and 430 for which the public comment period had closed.

Nor do Petitioners dispute that the acreage contained in underground coal mining permits authorizing surface operations and surface facilities incident to underground mining, representing an additional 346 permitted acres, would be exempt.

The Cabinet is in error however, as a matter of law, in concluding that the 79.2% of the remaining petitioned area (9,231 acres), would be exempted as “shadow area” overlying underground workings the extraction of which was permitted under a permit issued pursuant to KRS Chapter 350.

The “shadow area, which is that area overlying underground workings, is not required to be included within the area permitted for that underground coal mining operation under federal law; instead only surface facilities and operations incident to underground mining (such as the face-up area, haul and access roads, spoil storage areas, and waste impoundments) are required to be permitted. 30 U.S.C. 1256(a), 30 U.S.C. 1291(28).

Unlike the federal law, Kentucky requires shadow areas to be permitted, though the areas are not required to be bonded. KRS 350.060(13). The question is raised by the Cabinet’s September 7, 2010 determination letter, as to whether these “shadow areas” above a coal seam or seams for which coal extraction has been permitted, which may contain other seams of coal that have not been mined nor permitted for extraction, are categorically exempted from being eligible for designation.

The Cabinet is in error for three reasons. First, under an OSM interpretive rule, with which the Cabinet is obligated by state and federal law to conform, 30 USC 1272 does not currently extend to designation of areas overlying underground workings, whether permitted by the state or not, as contrasted with those areas authorizing surface facilities or operations incident to an underground mine for which designation can be sought. Declaring that all areas overlying underground workings are categorically exempt from designation is inconsistent with the current interpretation of the scope of Section 522(e) of the 1977 Surface Mining Control and Reclamation Act.

In 2003, OSM adopted an “interpretive rule” reversing the historic position of the agency that surface effects of underground mining (i.e. subsidence) were included within the definition of “surface coal mining operations” for purposes of the application of Section 522(e). The 2003 Rule provided that:

"761.200 Interpretive rule related to subsidence due to underground coal mining in areas designated by Act of Congress. OSM has adopted the following interpretation of rules promulgated in part 761.

(a) Interpretation of § 761.11—Areas where mining is prohibited or limited. Subsidence due to underground coal mining is not included in the definition of surface coal mining operations under section 701(28) of the Act and § 700.5 of this chapter and therefore is not prohibited in areas protected under section 522(e) of the Act."

The Secretary’s interpretation was challenged, and was ultimately upheld by the U.S. Court of Appeals for the District of Columbia Circuit in the case of Citizens Coal Council v. Norton, 330 F.3d 478 (D.C. Cir. 2003). The Court of Appeals upheld the Secretary’s 2003 Interpretive Rule, acknowledging that “the Secretary’s interpretation, albeit perhaps not the ‘‘most natural’’ reading, is a reasonable one, and therefore we defer to that interpretation in accordance with the requirements of Chevron.” Id.

After the issuance of that interpretive rule, areas overlying underground workings were no longer considered “surface coal mining operations” for the purpose of application of Section 522(e); rather, the only aspects of underground mines that remained subject to Section 522(e), according to the Secretary’s rule, are surface effects associated with surface operations and facilities (i.e. face-ups, fills, above-ground explosive storage areas) associated with underground mining operations.

Irrespective of whether the state requires that the area overlying underground workings to be permitted, exemption of the shadow areas from consideration for designation is inconsistent with the Cabinet’s obligations under KRS Chapter 350 and 30 USC Section 503, inasmuch as those “shadow areas” overlying underground workings would be considered eligible under federal law and federal regulation for designation as unsuitable for surface mining operations. The Cabinet must construe the exemption for permitted operations in a manner consistent with federal law, and can exempt only those areas of underground mining permits that support surface operations and surface facilities.

Second, assuming arguendo that the Cabinet’s exclusion of shadow areas is not inconsistent with state or federal law, that exclusion must be limited to those seam or seams currently under permit and cannot be lawfully read to preclude designation with respect to coal seams other than those authorized to be removed under the current permit, that could be mined by surface methods. Categorical exclusion of all areas overlying permitted underground workings simply because one or more seams is currently under permit authorizing coal extraction, is contrary to federal and state law.

Petitioners incorporate below the argument made by the Cabinet in successfully opposing a Petition for Hearing filed by several coal companies in a LUM case involving Black Mountain in Harlan County, Kentucky. There, it was the industry rather than the Cabinet making the argument that the shadow area overlying underground workings was categorically exempt from designation because it was “under” a permit.

"The coal companies argue that most of the area covered by the LUP is exempt from being designated unsuitable for mining, pursuant to 405 KAR 24:030, Section 2(1)(b). The coal companies have submitted the affidavit of Larry D. Adams in support of their argument. Adams’ affidavit states that 77.7% of the LUP area is currently under permit. What the coal companies fail to point out is that most of the permitted areas in the LUP area are areas overlying underground workings, known as shadow area. Less than 10% of the land on Black Mountain above the 3000 feet elevation (the LUP area) is permitted for surface disturbance. . . . . The remainder is shadow area that is not exempt from being designated unsuitable for mining.

KRS 350.610 provides for the designation of lands as unsuitable for surface coal mining. This statute provides that lands “under a permit issued pursuant to this chapter” are exempt from designation. KRS 350.610(5). 405 KAR 24:030, Section 2(1)(b) also provides that petitions for designating lands unsuitable for mining will not be considered for lands covered by a permit issued under KRS Chapter 350.

Kentucky’s surface mining laws have been modeled after the federal laws in order for Kentucky to obtain primary regulatory authority over surface coal mining operations conducted within the state. Preamble to Acts 1980, ch. 62; KRS 350.020, 350.028(5). Both federal and state laws require Kentucky’s surface coal mining regulatory program to be consistent with the regulatory program established by Public Law 95-87, the Surface Mining Control and Reclamation Act of 1977 (“SMCRA”), codified at 30 U.S.C. §§ 1201 et seq. 30 U.S.C. §§ 1253 and 1255, KRS 350.028(5), and 350.465(2) and (4). State laws which are inconsistent with federal surface coal mining laws are superseded by the federal law. 30 U.S.C. §1255, KRS 350.025.

When the purpose of a state law is to carry out a comparable federal law, the state must consider the way the federal law has been interpreted in applying the state law. See Harker v. Federal Land Bank of Louisville, Ky., 679 S.W.2d 226, 229 (1984); Kentucky Commission on Human Rights v. Commonwealth, Department of Justice, Ky. App., 586 S.W.2d 270, 271 (1979). Consequently, the requirements imposed by the federal laws must be taken into consideration in interpreting the provisions of Kentucky’s surface coal mining laws. See Payne v. Commonwealth, Natural Resources and Environmental Protection Cabinet, Ky.App., 746 S.W.2d 90, 92 (1988); Natural Resources and Environmental Protection Cabinet v. Whitley Development, Ky.App., 940 S.W.2d 904, 908 (1997).

30 U.S.C. 1272 sets forth requirements for state regulatory authorities to follow in designating areas unsuitable for surface coal mining operations. Lands under a permit are exempt from designation. 30 U.S.C. 1272(a)(6). Criteria and state processes for designating areas unsuitable for mining are set forth in 30 C.F.R. §§ 762-763. 30 C.F.R. § 762.13 also provides that land covered by a permit is exempt from designation. The language in KRS 350.610(5) and 405 KAR 24:030, Section 2(1) essentially duplicates the language contained in the federal law.

Legislative history makes clear that the intent of this exemption is to prevent the closure of existing mine operations. “The designation process is not intended to be used as a process to close existing mine operations, although the area in which such operations are located may be designated with respect to future mines.” House Report No. 95-218, 95th Cong., 1st Sess., 94-5 (1977)(copy attached). Also, a designation can prohibit specific types of mining while allowing other types that protect the values of the area. Id. at 94.

Shadow areas are not included in the permit area under federal law. 30 U.S.C. 1256(a), 30 U.S.C. 1291(28). Also, shadow areas are not exempt from designation as unsuitable for mining under federal law. Unlike the federal law, Kentucky requires shadow areas to be permitted. KRS 350.060(13). The coal companies argue that because shadow areas are permitted in Kentucky, they are exempt from designation as unsuitable for mining. This interpretation of the law would render this provision of Kentucky’s surface mining regulatory program less effective than federal law, and subject to being superseded by federal law. This result is clearly not the intent of the Kentucky General Assembly expressed in KRS 350.028(5), 350.069, and 350.465(4).

The argument that shadow areas are exempt from designation leads to an absurd result. A permittee has no legal rights under its permit to conduct surface mining operations on shadow areas. In an area with multiple coal seams, the permittee’s right to mine may be limited to a single seam, and it may not have the right to mine the seams above it. There is no logical reason to exempt an area from designation simply because it is permitted as shadow area. Such a result would go way beyond the intent of Congress to protect ongoing mining operations and existing permit rights.

Shadow areas are treated differently under state law than areas permitted for surface disturbance. Areas permitted for surface disturbance require the payment of acreage fees, and must be bonded. KRS 350.060(11). Shadow areas do not require the payment of acreage fees or additional bonding. KRS 350.060(13). In addition, a permit applicant must demonstrate in its permit application that it has the legal right to conduct surface mining activities. 405 KAR 8:030 § 4 and 405 KAR 8:040 § 4. An applicant for an underground mine is not required to demonstrate the legal right to conduct surface mining activities on shadow areas. Another difference involves extensions of the permit area. Generally, any extension of the permit area that is not an incidental boundary revision must be made by application for another permit or an amendment. KRS 350.070(1). However, an extension of an underground mining area that is not an incidental boundary revision and does not include planned subsidence or new surface disturbance may be done by application for a major revision. KRS 350.070(1).

The coal companies’ position that shadow areas are exempt from designation as unsuitable for mining is simply untenable. The purpose of the exemption is to protect the rights of ongoing mining operations. Even if a shadow area is designated unsuitable for surface coal mining operations, the permittee is allowed to continue with its underground mining operation, and does not lose any rights under its permit. Consequently, there is no reasonable basis to exempt shadow areas from being designated unsuitable for surface mining.

Even if the coal companies’ position that shadow areas are exempt from designation is correct, it still does not render the LUP frivolous. If a LUP covers both permitted areas and unpermitted areas, a state regulatory authority must process the petition for the unpermitted areas. 44 Fed. Reg. 15002 (March 13, 1979). “A frivolous petition is one in which the allegations of harm lack serious merit.” 405 KAR 24:030, Section 3(4). The question of whether a petition is frivolous relates to the merits of the allegations that mining would harm people, land, air, water, or other resources. See 52 Fed. Reg. 49323 (Dec. 30, 1987). In evaluating a petition to determine if it is frivolous, a regulatory authority must “determine if the allegations have a serious basis for the area being petitioned.” 48 Fed. Reg. 41332 (Sept. 14, 1983)."

Memorandum in Support of Respondent’s Cross-Motion for Summary Disposition and In Opposition to Petitioners’ Motion for Summary Judgment, pp. 2-7, Apogee Coal Company et al v. Natural Resources and Environmental Protection Cabinet et al., In Re: Lands Unsuitable for Mining Petition 98-2, OAH File No. LUP-24370-043.

As noted by the Cabinet in the Apogee case, the legislative history makes clear that the Congressional intent behind the exemption is to prevent the closure of existing mine operations, and not to blanketly exempt all areas overlying underground workings from designation simply because one or more seams below have been permitted for underground mining.

The state unsuitability statute is patterned after 30 U.S.C. 1272, which provides in relevant part that:

"(a)(6) The requirements of this section shall not apply to lands
on which surface coal mining operations are being conducted on the date of enactment of this Act [August 3, 1977] or under a permit issued pursuant to this Act, or where substantial legal and financial commitments in such operation were in existence prior to January 4, 1977."

The language is in substance identical, and thus the interpretation accorded the provision by Congress and the Secretary of Interior which illuminates the intent behind the language, binds the state to give the language the same interpretation.

The intent of the exemption was plainly addressed by the House Committee on Interior and Insular Affairs, which stated that:

"The designation process is not intended to be used as a process to close existing mine operations, although the area in which such operations are located may be designated with respect to future
mines. The committee recognized that an existing mine might not be one actually producing coal, because it was in a substantial stage of development prior to coal production. Thus the meaning of existing operations is extended to include operations for which there
are “substantial legal and financial commitments.”"

House Rept. No. 95-218, 95th Cong., 1st Sess. 94-5 (1977). (Emphasis added).

That same report continued, reflecting that the petition area was not to be tailored to individual mine permits:

"It should be noted that the designation process is structured to be applied on an area basis, rather than a site by site determination which presents issues more appropriately addressed in the permit application process."

Id. at 95.

While it is true that an area which is under permit is exempt from designation as to that permitted operation, the controlling legislative history indicates that such an area can be subject to a petition with respect to future mining that is not authorized by the current permit. For example, in this instance, while it may be true that “90% of the petition area is under permit,” the permitting of an area for underground coal removal does not automatically exempt all property and all coal seams above that permitted seam from evaluation for designation as to other coal seams not authorized to be removed under that permit, or as to other forms of mining not authorized under the permit. To assume that permitting one coal seam for underground mining precludes consideration of an unsuitability petition for all overlying areas, for mining methods and coal seams not approved in that permit, goes far beyond the goal of Congress of avoiding the application of the unsuitability process to existing operations, since the holder of the underground mine permit could not unilaterally decide to change mining method or mine seams not identified and approved in the permit, without a new permitting action.

The Cabinet is obligated to conform its interpretation and application of the state lands unsuitable for mining process to the federal regulation, including the Secretary’s 2003 rulemaking on 30 CFR 761.200. See: KRS 350.465; and KRS 350.028 (empowering the Cabinet to adopt administrative regulations to allow the state to administer and enforce the initial and permanent regulatory programs of Public Law 95-87, "Surface Mining Control and Reclamation Act of 1977" and providing that “Administrative regulations shall be no more stringent than required by that law.”

Rejection of the LUM 10-1 Petition on the basis of the existence of permitted underground mine “shadow areas” (i.e. areas overlying underground workings) was inconsistent with state and federal law, and justifies reversal of the decision and remand to the Department for Natural Resources for a determination of the completeness of the LUM 10-1 Petition.

WHEREFORE, based upon the foregoing, the Petitioners pray:

1. That the Hearing Officer enter a recommendation of Summary Disposition that the Cabinet determination of September 7, 2010 rejecting LUM 10-1 as being frivolous due to the percentage of area within the Petitioned Area that is under permit or pending permit application, was inconsistent with law, and reversing and remanding to the agency for further processing of the petition in a manner consistent with state and federal law

2. That they be awarded their costs and expenses, including reasonable attorney and expert witnesses fees, expended in pursuing this review, and

3. For any and all other relief to which they may be entitled.


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