Pennsylvania Coal Ass'n v. Babbitt

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit

8-16-1995

PA Coal Assoc v Babbitt
Precedential or Non-Precedential:

Docket 94-7538

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 UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

No. 94-7538

PENNSYLVANIA COAL ASSOCIATION,
an unincorporated association

v.

BRUCE BABBITT, Secretary of the Interior
of the United States Department of Interior;
ROBERT URAM, Director, Office of Surface
Mining Reclamation and Enforcement,
United States Department of Interior,
Appellants

PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL RESOURCES (DER),
Intervenor in D.C.

No. 94-7558

PENNSYLVANIA COAL ASSOCIATION,
an unincorporated association

v.

BRUCE BABBITT, Secretary of the Interior
of the United States Department of Interior;
ROBERT URAM, Director, Office of Surface
Mining Reclamation and Enforcement,
United States Department of Interior

PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL RESOURCES (DER),
Intervenor in D.C.

Commonwealth of Pennsylvania,
Department of Environmental Resources,

1
 Appellant

2
 On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civ. No. 93-cv-00780)

Argued May 5, 1995

Before: SLOVITER, Chief Judge, ALITO, Circuit Judge,
and SCHWARZER, District Judge*

(Opinion Filed August 16, 1995)

Robert R. Long, Jr.
Office of United States Attorney
Federal Building
Harrisburg, PA 17108

Steven C. Barcley
United States Department of Interior
Office of the Solicitor
Pittsburgh, PA 15220

Ellen J. Durkee
Tamara N. Rountree (Argued)
United States Department of Justice
Environmental & Natural Resources
Washington, D.C. 20026

Attorney for Appellants Secretary of the Interior of
the United States and Director of the Office of
Surface Mining Reclamation and Enforcement

Joseph G. Pizarchik
Dennis Whitaker (Argued)
Office of Attorney General of
Pa. Department of Environmental Resources
Harrisburg, PA 17105

Attorneys for Appellant Department
Environmental Resources

_________________________

3
* Hon. William W Schwarzer, Senior United States District Judge,
United States District Court for the Northern District of
California, sitting by designation.

4
Stephen C. Braverman (Argued)
Buchanan Ingersoll
Philadelphia, PA 19103

Attorney for Appellee Pa. Coal Association

OPINION OF THE COURT

SLOVITER, Chief Judge.

The Secretary of the Interior of the United States

("Secretary"), the Director of the Office of Surface Mining

Reclamation and Enforcement ("Director"), and the Pennsylvania

Department of Environmental Resources ("DER") appeal from the

district court's grant of summary judgment in favor of the

Pennsylvania Coal Association ("PCA") on its challenge to the

Secretary's approval of certain amendments to Pennsylvania's

surface mining regulatory program. At issue is whether the

Secretary acted arbitrarily and capriciously in approving

amendments that eliminate the "willfully and knowingly" scienter

requirement for imposition of civil penalties on corporate

officers and that change the appeal procedures by requiring

alleged violators to perfect an appeal from a compliance order at

the risk of having their challenge to the fact of violation

deemed waived.

5
 I.

Facts and Procedural History

In 1977, in response to the growing environmental and

social costs of coal extraction in the United States, Congress

enacted the Surface Mining Control and Reclamation Act ("SMCRA"),

30 U.S.C. §§ 1201-1328 (1988 & Supp. IV 1993). Among other

things, the SMCRA proposed "to establish a nationwide program to

protect society and the environment from the adverse effects of

surface coal mining operations." 30 U.S.C. § 1202(a). By

establishing nationwide standards governing surface coal mining

operations, Congress hoped that "the unnecessary degradation of

land and water resources [would] be avoided as the country makes

good use of its abundant coal supply." H. R. Rep. No. 95-218,

95th Cong., 1st Sess. 57 (1977), reprinted in 1977 U.S.C.C.A.N.

593, 595.

The SMCRA established the Office of Surface Mining

Reclamation and Enforcement ("OSM") as a subdivision of the

Department of the Interior. 30 U.S.C. § 1211(a). The SMCRA

empowers the Secretary, acting through the OSM, to administer the

programs for controlling surface coal mining operations set forth

in the Act. Id. § 1211(c).
The principal regulatory and enforcement provisions of

the SMCRA are set forth in Subchapter V of the Act. See 30

U.S.C. §§ 1251-1279; see also Hodel v. Virginia Surface Mining &

Reclamation Ass'n, Inc., 452 U.S. 264, 269 (1981). A permit is

required before any person or company may engage in surface coal

mining operations. See 30 U.S.C. § 1256. That permit must

6
require the surface coal mining operation to satisfy certain

environmental protection performance standards. See id. §§ 1265-

66. Permittees who violate any permit condition or who violate

any other provision of Subchapter V may be assessed with civil

penalties. Id. § 1268(a). Permittees who "willfully and

knowingly" commit such violations may be punished by a fine

and/or imprisonment. Id. § 1268(e).

Two SMCRA civil penalty provisions are particularly

relevant to this case. One provides that when a violation is

committed by a corporate permittee "any director, officer, or

agent of such corporation who willfully and knowingly authorized,

ordered or carried out such violation, failure or refusal shall

be subject to the same civil penalties" that may be imposed upon

permittees. Id. § 1268(f) (emphasis added). The other deals

with the opportunity of parties charged with violations by the

Secretary to challenge the fact of the violation. Under the

SMCRA, a party may challenge the Secretary's charge of violation

either within thirty days of receiving a notice or order charging

a violation, see id. § 1275(a)(1), or after a penalty has been

assessed. See id. § 1268(c); see also 30 C.F.R. § 845.19.
In addition to the provisions for federal enforcement

of the SMCRA, see 30 U.S.C. § 1254, the statute contains a

mechanism by which states may "assume exclusive jurisdiction over

the regulation of surface coal mining and reclamation operations"

on non-Federal lands within the state. Id. § 1253(a). To

achieve this control, a state must submit to the Secretary a

proposed program "which demonstrates that such State has the

7
capability of carrying out the provisions of [the SMCRA] and

meeting its purposes . . . ." Id. The proposed state program

must contain state laws which provide for the regulation of

surface coal mining and reclamation operations "in accordance

with the requirements of [the SMCRA]," id. § 1253(a)(1), and

rules and regulations "consistent with" regulations issued by the

Secretary under the SMCRA. Id. § 1253(a)(7). Section 505(b) of

the SMCRA provides, however, that "[a]ny provision of any State

law or regulation . . . which provides for more stringent land

use and environmental controls and regulations of surface coal

mining and reclamation operation than do the provisions of this

chapter or any regulation issued pursuant thereto shall not be

construed to be inconsistent with this chapter." Id. § 1255(b)

(emphasis added). Moreover, with respect to civil and criminal

penalty provisions, the SMCRA requires that the state program

"incorporate penalties no less stringent than those set forth in

this section, and . . . contain the same or similar procedural

requirements relating thereto." Id. § 1268(i) (emphasis added).

The Secretary has the authority to promulgate

regulations establishing procedures and requirements for the

preparation, submission and approval of state programs. Id.
§1251(b). The criteria established by the Secretary for the

approval or disapproval of state programs provide, in relevant

part, that the Secretary shall not approve a proposed state

program unless the Secretary finds that:
(a)The program provides for the State to
carry out the provisions and meet the
purposes of the Act and this Chapter within

8
 the State and that the State's laws and
regulations are in accordance with the
provisions of the Act and consistent with the
requirements of the Chapter.

(b) The State regulatory authority has the authority
under State laws and regulations pertaining to
coal exploration and surface coal mining and
reclamation operations and the State program
includes provisions to--

. . . .

(7) Provide for civil and criminal sanctions for
violations of the State law, regulations and
conditions of permits and exploration
approvals including civil and criminal
penalties in accordance with section 518 [30
U.S.C. § 1268] of the Act and consistent with
30 C.F.R. 845, including the same or similar
procedural requirements;

30 C.F.R. § 732.15.

The Secretary has also promulgated regulations

governing any changes, referred to as "amendments," to an

approved state program. See 30 C.F.R. § 732.17. A state that

proposes any amendments to the laws or regulations that make up

the approved state program must submit them for approval to the

OSM Director. 30 C.F.R. § 732.17(g). The OSM Director must

review the proposed amendments with reference to the criteria set

forth in 30 C.F.R. § 732.15 for the approval or disapproval of

the state program. See 30 C.F.R. § 732.17(h)(10).

On July 31, 1982, the Secretary approved the

Pennsylvania regulatory program for surface coal mining and

reclamation operations. See 30 C.F.R. Part 938; 47 Fed. Reg.

33,079 (1982). The Pennsylvania program is set forth in the

Pennsylvania Surface Mining Conservation and Reclamation Act

9
("PaSMCRA"), 52 Pa. Stat. Ann. §§ 1396.1-1396.31 (Supp. 1994),

and its accompanying regulations, 25 Pa. Code §§ 86.1- 86.242.

The Pennsylvania program vests the primary authority for

enforcement of the program with the Pennsylvania DER. See 52 Pa.

Stat. Ann. § 1396.4c.

On December 18, 1991, Pennsylvania submitted proposed

program amendments for approval by the Director of the OSM,

including the three proposed amendments that have been challenged

by PCA in this lawsuit. Two of those amendments ("the civil

liability amendments") would alter the standard for the

imposition of civil penalties on corporate officers for

violations of the PaSMCRA by a permittee corporation. See 25 Pa.

Code § 86.195(a) (as amended 1993); 25 Pa. Code 86.1 (as amended

1993). The third amendment ("the civil appeals amendment") would

alter the appeal procedure for persons charged with a violation.

See 25 Pa. Code § 86.202 (as amended 1993).

Upon receipt of Pennsylvania's proposed amendments, the

OSM initiated a public comment period and announced the

opportunity for a public hearing. PCA, the principal trade

association of Pennsylvania's coal producers, forwarded comments

and, at its request, a public hearing was held on June 30, 1992.

After receiving assurance from the state that the civil appeals

amendment was in conformity with state law, the OSM approved each

of the challenged amendments on April 8, 1993. See 58 Fed. Reg.
18,149, 18,152-53, 18,157-58 (1993). Thereafter, the Secretary

issued a final order approving the three proposed amendments. See
30 C.F.R. § 938.15(y).

10
 PCA filed this action on May 25, 1993 seeking

declaratory and injunctive relief to set aside the three

amendments. It named as defendants Bruce Babbitt, the Secretary

of the Department of the Interior, and W. Hord Tipton, who was

then Acting Director of the OSM.1 The Pennsylvania DER

intervened as a party defendant in the action.

After the parties had filed cross-motions for summary

judgment, the district court issued an order granting PCA's

motion for summary judgment on the issue of the Secretary's

approval of the civil liability amendments, concluding that the

Secretary's approval was "arbitrary, capricious and inconsistent

with SMCRA," and enjoined the Secretary and the Director from

enforcing those amendments. See Order & Judgment of March 30,

1994. The court denied PCA's motion for summary judgment on its

challenge to the civil appeals amendment. Id.

The parties filed motions to reconsider and to alter or

amend the district court's judgment. On July 12, 1994 the

district court vacated its prior order denying PCA's motion for

summary judgment regarding the civil appeals amendment, and

granted PCA's motion, concluding that the Director's approval of

that amendment was "arbitrary and capricious" because

inconsistent with the Secretary's own regulations. The court

then enjoined the Secretary and the OSM from enforcing the civil

appeals amendments. See Order & Judgment of July 12, 1994. The

court denied the motions of the Secretary, the OSM Director and

1
Tipton was replaced as the OSM Acting Director by Ann Shields,
and later by current OSM Director Robert Uram.

11
the Pennsylvania DER to alter and amend its grant of summary

judgment on the civil liability amendments.

The Secretary and the OSM Director (the "federal

defendants") appeal from the district court's order invalidating

the Secretary's approval of the civil liability amendments. The

Pennsylvania DER ("the State") filed a separate appeal from that

order and the district court's order invalidating the approval of

the civil appeals amendment. The two appeals have been

consolidated. We have jurisdiction over the district court's

grant of summary judgment to PCA pursuant to 28 U.S.C. § 1291.

II.

Standard of Review

An appellate court reviews the district court's grant

of summary judgment de novo, applying the same standard as the

district court. Beazer East, Inc. v. United States Envtl.

Protection Agency, Region III, 963 F.2d 603, 606 (3d Cir. 1992).

This requires that we view the underlying facts and all

reasonable inferences therefrom in the light most favorable to

the party opposing the motion.

Judicial review over the Secretary's actions under the

SMCRA uses the deferential standard applied to administrative

actions. The Act provides:
Any action of the Secretary to approve or
disapprove a State program . . . pursuant to
this chapter shall be subject to judicial
review by the United States District Court
for the District which includes the capital
of the State whose program is at issue. . . .
. . . .

12
 Any action subject to judicial review under
this subsection shall be affirmed unless the
court concludes that such action is
arbitrary, capricious, or otherwise
inconsistent with law.

30 U.S.C. § 1276(a)(1) (emphasis added).

In determining whether the Secretary's actions are

"arbitrary, capricious, or otherwise inconsistent with law," we

look to the statute to determine "whether Congress has directly

spoken to the precise question at issue." Chevron U.S.A., Inc.

v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842

(1984). If the statute is silent or ambiguous, however, courts

typically defer to the Secretary's reasonable interpretation. See

National Wildlife Fed'n v. Lujan, 928 F.2d 453, 456 (D.C. Cir.

1991); see also Chevron, 467 U.S. at 843 ("the question for the

court is whether the agency's answer is based on a permissible

construction of the statute"). Such deference is particularly

appropriate when a court reviews the Secretary's interpretation

of the Secretary's own regulations. See Udall v. Tallman, 380

U.S. 1, 16 (1965).
III.

Discussion

A.

The Civil Liability Amendments

The issue between the parties over the civil liability

amendments to the PaSMCRA is based upon the difference between

the language in the federal statute governing the imposition of

civil penalties on corporate officers and the language now in the

13
Pennsylvania regulations. As noted above, under the federal

statute the Secretary may assess civil penalties against any

corporate director, officer or agent who "willfully and knowingly

authorized, ordered, or carried out such violation, failure or

refusal . . . ." 30 U.S.C. § 1268(f). The same standard is

incorporated in a parallel federal regulation. See 30 C.F.R.

§846.12(a).

In contrast, with the omission of the "willfully and

knowingly" language from Pennsylvania's civil liability

regulation, the DER may assess civil penalties against a

corporate officer who "participates in a violation or whose

misconduct or intentional neglect causes or allows a violation."

See 25 Pa. Code § 86.195(a) (as amended 1993). The related

amendment defines "participates" as "[t]o take part in an action

or to instruct another person or entity to conduct or not to

conduct an activity." See 25 Pa. Code § 86.1 (as amended 1993).

Neither party elucidates precisely what effect the

language change eliminating the "willfully and knowingly"

scienter requirement will have on the standard of proof in a

particular case. Arguably it makes the scienter requirement as

to corporate officers one of general intent rather than specific

intent. Inasmuch as PCA's challenge in this suit was only to the

Secretary's approval of the omission of the "willfully and

knowingly" language and the district court did not discuss how

that might apply to a corporate officer's conduct, we leave that

issue for resolution by a state court or agency in an appropriate

case.

14
 The district court agreed with PCA that the Secretary's

approval of Pennsylvania's civil liability amendments was invalid

under the SMCRA. The court held that because the Pennsylvania

Code would now permit the assessment of civil penalties against

corporate officers who do not act "willfully and knowingly," it

authorized imposition of individual liability on "a lesser

standard of proof concerning the individual's intent than in the

federal law," although "no particular provision of SMCRA or

federal regulations authorizes a state to vary the standard of

individual liability." Memorandum of Decision, March 30, 1994,

at 16-18. The district court also found that the omission of the

"willfully and knowingly" language that is in 30 U.S.C. § 1268(f)

meant that the Pennsylvania law and regulations do not include

"all applicable provisions" of the SMCRA and therefore the

amended civil liability regulations were "defective" under 30

C.F.R. § 730.5(a). Id. at 18.

The district court cited various provisions of the

federal statute and regulations which require that state law be

"consistent with" and "in accordance with" the requirements of

the SMCRA and regulations issued thereunder. See, e.g., 30
U.S.C. § 1253(a)(1) (state law must be "in accordance with the

requirements of" SMCRA); 30 U.S.C. § 1253(a)(7) (state rules and

regulations must be "consistent with regulations issued by the

Secretary"); 30 C.F.R. § 732.15(a) (permitting approval of a

state program only if, inter alia, the State's laws and

regulations are "in accordance with the provisions of the Act"

and "consistent with the requirements of the Chapter"); 30 C.F.R.

15
§ 732.15(b)(7) (requiring that the state program "[p]rovide for

civil and criminal sanctions for violations of the State law,

regulations and conditions of permits and exploration approvals

including civil and criminal penalties in accordance with section

518 [30 U.S.C. § 1268] of the Act . . . .").

The court acknowledged that section 505(b) of the

SMCRA, 30 U.S.C. § 1255(b), explicitly permits states to enact

"more stringent land use and environmental controls and

regulations," but it read that provision as "only intended to

allow states to impose more stringent substantive standards on

coal mining operations," and "not intended to lower the threshold

of liability." Memorandum of Decision, March 30, 1994, at 15. It

therefore believed that section 505(b) of the SMCRA was

inapplicable.

On appeal, the federal defendants contend that the

district court's construction of section 505(b) was plainly

incorrect. They argue that because Pennsylvania's civil

liability amendments impose a stricter standard of liability for

individual corporate officers, they are necessarily "more

stringent land use and environmental controls" authorized by

section 505(b). The federal defendants also argue that the

district court's distinction between "substantive state standards

on coal mining operations" and the standards for "individual

liability" is untenable, and note that section 505(b) applies to

"[a]ny provision of any State law or regulation." 30 U.S.C.

§1255(b) (emphasis added). Congress's use of the term "any,"

they reason, permits states to enact any law or regulation which

16
is more stringent than the federal laws or regulations, not

merely "substantive" land use or environmental control

provisions. Pennsylvania's more expansive standard for individual

corporate officer liability is one such form of more stringent

regulation.

The plain language of the statute and our prior

precedent convince us that the district court's interpretation of

section 505(b) is too narrow. That section reflects Congress's

intent to give the states primary jurisdiction over regulation of

surface mining, see 30 U.S.C. §§ 1201(f), 1253, as long as the

states impose laws and regulations that at least meet the minimum

Federal standards. H.R. Conf. Rep. No. 493, 95th Cong., 1st

Sess. 102 (1977), reprinted in 1977 U.S.C.C.A.N. 728, 733. Of

course, the states may not impose a law or regulation that is

"inconsistent" with the SMCRA, as section 505(a) makes clear, see

30 U.S.C. § 1255(a), but section 505(b) clarifies that "more

stringent" laws or regulations shall not be construed as

"inconsistent." Instead, the entire purpose of section 505(b) is

to ensure that the federal standards act as a floor. There would

be no reason to allow the states to impose their own regulations

if the regulations had to be the same as the federal Act and

regulations. That the federal sanction is to serve only as the

base rather than the ceiling for the state programs is spelled

out in the SMCRA itself.

We see no support in the SMCRA for reading sanctions

out of section 505(b). Sanctions for violations are an integral

element of "land use and environmental controls and regulations."

17
While not determinative, it is relevant that the SMCRA civil

liability provisions, including the provision imposing individual

liability on corporate officers, fall within Subchapter V dealing

with Control of the Environmental Impacts of Surface Coal Mining,

the Subchapter directed to substantive controls. The provision

for the Secretary's approval of state programs requires, inter

alia, that the state have in place sanctions that "meet the

minimum requirements of [the SMCRA]." 30 U.S.C. § 1253(a)(2).

Had Congress contemplated that states could not reach farther

than the SMCRA in conduct subject to sanction, it hardly would

have included such a provision.

This court previously considered the scope of section

505(b) of the SMCRA in Budinsky v. Pennsylvania Dep't of Envtl.

Resources, 819 F.2d 418 (3d Cir.), cert. denied, 484 U.S. 926

(1987). At issue in that case was a Pennsylvania amendment

requiring a permit for all mining activity, notwithstanding that

the SMCRA at the time contained an exemption (since repealed) for

surface mining operations that affect two acres or less.

Pennsylvania justified its broader permit requirement under

section 505(b) as a "more stringent" requirement than that

imposed under the federal law. On appeal, Budinsky, a coal mine

operator, argued that section 505(b) applied solely to the

"procedural, technical and substantive permit application

requirements" of 30 U.S.C. §§ 1256-1257, and therefore could not

be construed as allowing the Pennsylvania DER to regulate mining

operations of less than two acres. Budinsky, 819 F.2d at 421.

18
We rejected the operator's restrictive interpretation of that

provision and concluded instead that section 505(b) "manifestly

pertains to the entire Act, including the two-acre exemption of

[30 U.S.C.] § 1278(2)." Id. at 422 (emphasis added). We stated

that nothing in the SMCRA "precludes a state from exceeding the

Act's land use and environmental directives with more stringent

standards." Id. at 422-23.

The district court in this case attempted to reconcile

Budinsky with its conclusion that section 505(b) is inapplicable

here by stating that Budinsky involved "land use and

environmental controls and regulations." Memorandum of Decision,

July 14, 1994, at 13-14. This conclusory attempt to distinguish

Budinsky is unpersuasive. In Budinsky, we plainly stated that

section 505(b) applies "to the entire Act." Id. at 422. Having

held in Budinsky that 30 U.S.C. § 1255(b) (section 505(b))

applies to 30 U.S.C. § 1278, we see no reason not to apply it to

30 U.S.C. § 1268(f), which contains the individual corporate

officer liability standard.

The district court and PCA both relied on Pennsylvania
Coal Mining Ass'n v. Watt, 562 F. Supp. 741 (M.D. Pa. 1983), an

earlier decision by this district judge. Of course, that opinion

is not precedential for us. In any event, it is distinguishable.

The SMCRA requires that bond hearings be held within thirty days

after a request for such hearing and that the decision be

announced within thirty days of the hearing. See 30 U.S.C.

§1269. In contrast, the Pennsylvania program had no time

requirement for hearings and allowed sixty days from the hearing

19
for announcement of decisions. The court held in Watt that the

Pennsylvania program was not "in accordance with" or "consistent

with" the provision in the SMCRA, and that it was not saved as a

"more stringent" control or regulation than the federal law

because, in fact, it was not "more stringent."

While we need not decide whether the Watt court

correctly analyzed the parameters of "stringency," we fail to

see that Watt is applicable here. The state rule at issue in

Watt did not impose a "more stringent" land use or environmental

control than the applicable federal rule, but merely created the

possibility for delays by the regulatory authorities that federal

law specifically prohibited. In this case, by contrast, the

state liability standard is directed to those who are regulated

and is inclusive of the federal standard, as no person who is

liable under the federal law will be able to avoid liability

under the state standard.

Similarly, In re: Permanent Surface Mining Regulation

Litigation, 14 Env't Rep. Cas. (BNA) 1083 (D.D.C. Feb. 26, 1980),

aff'd in relevant part & rev'd in part, 14 Env't Rep. Cas. (BNA)

1813 (D.C. Cir. 1980), on which PCA relies, does not support its

position. In suggesting that state programs must incorporate the

same statutory criteria as those set forth in the federal

statute, the Permanent Surface Mining court was referring
specifically to the four criteria set forth in 30 U.S.C. §1268(a)

to be used in determination of the amount of a penalty to be

assessed. See id. at 1089 n.10. The Permanent Surface Mining

decision does not suggest that states cannot expand the relevant

20
"statutory criteria" to create a more stringent standard. Rather,

it holds that the federal law sets forth the minimum criteria

which must be incorporated into the state programs.

We conclude that section 505(b) of the SMCRA applies to

Pennsylvania's civil liability amendments, and that under that

section the Pennsylvania civil liability amendments, which impose

a more stringent standard of individual liability, may not be

construed as inconsistent. It follows that the district court

erred in holding that the Secretary's approval of those

amendments was invalid.

B.

The Civil Appeals Amendment

We turn to the State's challenge to the district court's order

holding arbitrary and capricious the OSM's approval of the civil

appeals amendment. In 1988 the Pennsylvania Commonwealth Court

interpreted the PaSMCRA and regulations to permit a party against

whom the DER assessed a civil penalty to contest the fact of the

violation when the party challenges the later assessed civil

penalty. See Kent Coal Mining Co. v. Commonwealth, 550 A.2d 279,

283 (Pa. Commw. 1988). In so holding, the Commonwealth Court

looked to what it viewed as the unambiguous language in section

18.4 of the PaSMCRA, 52 Pa. Stat. Ann. § 1396.18d (previously

codified at 52 Pa. Stat. Ann. §1396.22), and the similar language

in the comparable regulation in the Pennsylvania Code. Section

18.4 of the PaSMCRA provides: "[t]he person or municipality

charged with the penalty shall then have thirty (30) days to pay

the proposed penalty in full or, if the person or municipality

21
wishes to contest either the amount of the penalty or the fact of

the violation, forward the proposed amount to the secretary for

placement in an escrow account . . . " 52 Pa. Stat. Ann. §

1396.18d (emphasis added). Under the regulation: "[t]he person

charged with the violation may contest the penalty assessment or

the fact of the violation by filing an appeal with the

Environmental Hearing Board, including with the appeal an amount

equal to the assessed penalty--to be held in escrow as provided

in subsection (b)--within 30 days from receipt of the assessment

or reassessment." 25 Pa. Code, § 86.202(a) (1988) (emphasis

added) (amended 1993).

DER did not include a proposed penalty when it sent a compliance

order to Kent Coal notifying it of a PaSMCRA violation, and

apparently DER has a practice of issuing a compliance order in

advance of assessment of a penalty. When Kent Coal sought to

challenge both the violation and the penalty, DER argued that

under the doctrine of administrative finality Kent Coal's failure

to appeal the compliance order within thirty days precluded it

from contesting the fact of violation. The Kent Coal court

rejected this argument by reference to the statute and regulation

quoted above which expressly refer to an appeal on both issues.

In the proposed amendments submitted to the OSM for approval,

Pennsylvania modified 25 Pa. Code § 86.202 in two ways: one was a

modification of subsection (a) so that it now refers only to an

appeal of a "penalty assessment." 25 Pa. Code §86.202(a) (as

amended 1993). The other was to add the following language to

subsection (d):

22
 A person may challenge either the fact of the
violation or the amount of the penalty once
an appeal of that issue has been perfected.
In either challenge, the appellant will be
bound as to actions of the Department which
have become final under section 4 of the
Environmental Hearing Board Act (35 P.S.
§7514). A final action includes a compliance
order which has become final, even though the
order addresses the same violation for which
a civil penalty is assessed.

25 Pa. Code § 86.202(d) (as amended 1993).

As summarized by the Director of the OSM in granting approval to

the amendment, this change "would eliminate the chance to appeal

the fact of the violation at the time of penalty assessment if

the appeal of the compliance order had not been perfected . . .

." 58 Fed. Reg. at 18,153. The details of the procedure are not

before us but it appears that, under the amended regulation, a

party seeking to challenge the fact of a PaSMCRA violation must

perfect an appeal to the Environmental Hearing Board within 30

days of the compliance order. See 25 Pa. Code § 21.52; 35 Pa.

Stat. Ann. § 7514(c).
After the Secretary ratified the Director's approval of the civil

appeals amendment, PCA asserted a many-pronged challenge to that

approval in district court. The district court rejected PCA's

contention that the change in the Pennsylvania regulation was

"inconsistent" with federal law notwithstanding that the SMCRA

gives parties the opportunity to challenge both the fact of

violation and the penalty at the same time. See 30 U.S.C. §

1268(c). The court recognized that state programs were required

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to contain "the same or similar procedural requirements" as those

available under the federal law, 30 U.S.C. § 1268(i), but held

that Pennsylvania's amended civil appeals regulation did provide

"similar," albeit not the "same," procedural rights as those

available under federal law. See Memorandum of Decision, March

30, 1994, at 6. Notably, the court reasoned that "the amendment

affects only the timing of an appeal and not the substantive

matters that can be raised." Id. at 6-7.

In the same opinion, the district court rejected PCA's contention

that the amended regulation conflicts with state law. On

reconsideration, however, the district court reached a different

result, noting that its earlier decision had been based on its

view that the provisions as to procedure in section 18.4 had been

implicitly repealed because they were inconsistent with a

subsequently enacted Pennsylvania statute. Memorandum of

Decision, July 12, 1994, at 4-5. The court was now persuaded

that section 18.4 had not been repealed by implication. It

concluded that the amended civil appeals regulation was in

conflict with the still viable section 18.4 as it had been

interpreted by Kent Coal. The district court then held that

because a statute controls over a regulation, the amended civil

appeals amendment was invalid under Pennsylvania law. Id. at 11.

Continuing its analysis, the district court interpreted the

federal SMCRA regulations as prohibiting the OSM from approving

an amendment that was invalid under Pennsylvania state law. The

court read 30 C.F.R. § 732.15(b)(7) to require that the OSM

determine "that Pennsylvania had authority under state law to

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adopt a provision like new section 86.202." Memorandum of

Decision, July 12, 1994 at 9. Relying on its own conclusion as

to the invalidity of the amended civil appeals regulation under

state law, the court held that the OSM's approval of an invalid

regulation violated the Secretary's own regulation at 30 C.F.R.

§732.15(b)(7) and was "arbitrary and capricious." See Memorandum

of Decision, July 12, 1994 at 11. It therefore enjoined the

enforcement of the civil appeals amendment.

On appeal, the State argues primarily that the district court's

conclusion rests upon a misinterpretation of 30 C.F.R.

§732.15(b)(7). In particular, the State contends that the

Secretary's (here inclusive of the Director's) obligation under

that provision is limited to ensuring that the state regulatory

authority has the "authority" to promulgate appropriate

regulations under state law, and that the Secretary is not

required to ensure that every proposed amendment is consistent

with all other provisions in state law. If there is a conflict

with state law, the State argues, that issue is best resolved by

the Pennsylvania courts.

The question before us is not whether the district court

correctly analyzed the intricacy of Pennsylvania administrative

law but whether the SMCRA regulations mandate that the Secretary

undertake such an intricate analysis before approving a state

program or amendment. The plain language of the regulation

imposes no duty on the Secretary to ensure that all elements of

the state program are consistent with state law. Under 30 C.F.R.
§ 732.15(a) the Secretary must ensure consistency with the

25
relevant provisions of federal law, and the findings relevant

here were limited to the conclusion that the provisions in the

amended civil appeals regulation are similar to the SMCRA

regulations dealing with the procedures for civil penalties. See

58 Fed. Reg. at 18,158. Sections 732.15(b)(7) and (8) require

only that the Secretary find that the DER "has the authority

under State law and regulations" to provide for civil and

criminal sanctions for PaSMCRA violations and to enforce them. 30

C.F.R. § 732.15(b)(7)-(8).

PCA correctly notes that during the OSM's review of the civil

appeals amendment in this case, the Director questioned

Pennsylvania regarding the consistency of the amendment with

state law. During the course of its review of the amendment,

"OSM expressed concern that this change to section 86.202 would

render it inconsistent with section 18.4 of PA-SMCRA [52 Pa.

Cons. Stat. Ann. § 1396.18d]." 58 Fed. Reg. at 18,153.

Pennsylvania satisfied these concerns by providing a letter from

the Pennsylvania Attorney General approving the proposed

regulations "in both form and legality." Id. (emphasis added).

We are troubled by the Secretary's failure to articulate a

binding administrative interpretation to clarify the extent of

the Secretary's duty to inquire into state law, but we decline to

glean from the OSM's inquiry during the administrative

proceedings an affirmative obligation on the Secretary to do more

than was done here. We have no need here to consider the

separate question whether the Secretary has the authority to

26
reject proposed amendments to state programs due to their

inconsistency with state law.

Finally, apparently as an alternative ground to uphold the

district court's order, PCA argues that the civil appeals

amendment is not consistent with federal provisions which permit

an alleged violator to wait to challenge the fact of violation

until making a challenge to the penalty that is assessed. See 30

U.S.C. § 1268(c); see also 30 C.F.R. § 845.19. We find no basis

for PCA's argument.

Under 30 U.S.C. § 1268(i), state programs are only required to

"contain the same or similar procedural requirements" as those

set forth in the federal statute. 30 U.S.C. § 1268(i) (emphasis

added); see also 30 C.F.R. § 732.15(b)(7) (requiring, among other

things, that the state program include "the same or similar

procedural requirements" for civil and criminal sanctions as

those contained in 30 U.S.C. § 1268 and 30 C.F.R. § 845). The

Director acknowledged that the new PaSMCRA civil appeals

regulation eliminates an alleged violator's ability to delay its

appeal of the fact of a violation, but approved the amendment

because it contains procedures which are "similar to the

counterpart Federal regulations," see 58 Fed. Reg. at 18,153; see
also id. at 18,158, a conclusion also reached by the district

court.

Because the state civil appeals amendment follows the federal

procedures in assuring notice and an opportunity to be heard and

merely restricts the timing of appeals, we agree with the

Director's conclusion that the procedural requirements of the

27
civil appeals amendment are "similar" to the procedural

requirements available under the SMCRA, as that term is used in

30 U.S.C. § 1268(i). The Director's interpretation of "similar"

as used in 30 U.S.C. 1268(i) is not unreasonable, nor does it

violate any clear statutory or regulatory mandate. It is

therefore entitled to deference. See Chevron, 467 U.S. at 844.

Thus, we conclude that the district court erred in holding that

the Secretary's approval of the civil appeals amendment was

"arbitrary, capricious, or otherwise inconsistent with law" due

to what the court viewed as an inconsistency with state law, and

we cannot affirm the district court's order on the alternative

grounds advanced by PCA.

IV.

Conclusion

For the foregoing reasons, the orders of the district court will

be reversed with instructions to vacate the injunctions and enter

summary judgment for the defendants and the intervenor.

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