M.L. Johnson Family Prop. v. David Bernhardt
M.L. Johnson Family Prop. v. David Bernhardt
Opinion
*845 How to use a large plot of land known as "Tract 46" in Pike County, Kentucky has been a point of contention between the plot's joint owners for quite some time. The plot's surface and mineral estates have been severed for a century. Today, the Pike Letcher Land Company and Johnson LLC each own the surface estate as tenants in common. Pike Letcher also owns the entirety of the coal below. It wants to mine for the coal. But Pike Letcher and Johnson don't see eye to eye on how Pike Letcher may use the surface estate to pursue its planned mining activities.
Pike Letcher wants to use the surface to extract the coal using surface mining methods. To that end, in 2013, Pike Letcher granted Premier Elkhorn Coal LLC, its affiliate, a right to enter the land and commence surface mining. But Johnson objects to surface mining. Nonetheless, despite Johnson's protestations, the State of Kentucky granted Elkhorn a surface mining permit, and Elkhorn commenced operations in April 2014.
Johnson has been challenging the validity of Elkhorn's permit ever since-and with some success. In 2014, as the result of a lawsuit in federal court, the Secretary of the Interior determined that Elkhorn's permit violated federal law. Elkhorn then remedied the deficiencies in its first permit, and Kentucky issued it an amended permit later the same year. On review, the Secretary confirmed that, this time, Elkhorn's permit complied with federal law. Johnson sued again. An Administrative Law Judge ("ALJ") upheld the Secretary's determination. The United States District Court for the Eastern District of Kentucky affirmed. Johnson now appeals. For the following reasons, we affirm.
I.
A. Legal Background
Coal companies that hope to obtain a permit to surface mine must comply with certain requirements set out by the Surface Mining Control and Reclamation Act of 1977 (SMCRA). SMCRA was designed to "strike a balance between the nation's interests in protecting the environment from the adverse effects of surface coal mining and in assuring the coal supply essential to the nation's energy requirements."
Bragg v. W. Va. Coal Ass'n
,
The Secretary approved Kentucky's regulatory program in 1982, and the Kentucky Energy and Environment Cabinet has administered the State's program ever since.
Whether Elkhorn has a valid SMCRA-compliant permit is the question at the heart of this case. The answer turns on whether Elkhorn has met SMCRA's minimum requirements for establishing a right to surface mine on Tract 46, a severed estate. For its permit to be valid, Elkhorn must have submitted documents to the Kentucky Cabinet that satisfied one of three avenues for establishing a right to surface mine.
(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 ....
Because Elkhorn's current amended permit was issued pursuant to subsection (C), this case turns on the requirements of that subsection. However, prior litigation concerning Elkhorn's permit hinged on the meaning of subsection (A). Because that litigation has some relevance to this one, we discuss it briefly below.
*847 B. Factual and Procedural Background
The Kentucky Cabinet initially approved Elkhorn's permit under subsection (A). Because none of the severance conveyances connected to Tract 46 expressly grant a right to surface mine, Elkhorn relied on a 2013 right of entry agreement between it and Pike Letcher to establish that right. The Cabinet believed that the right of entry agreement sufficiently documented that Elkhorn had the "consent of the surface owner" to surface mine, as required by subsection (A). So the Cabinet approved Elkhorn's permit, and Elkhorn began surface mining in April 2014.
That approval spawned the first federal litigation over Elkhorn's permit. Shortly after Elkhorn commenced mining, Johnson filed a "citizen suit" in the Eastern District of Kentucky, under a SMCRA provision that authorizes private parties to bring suit against the Secretary to "compel compliance" with the Act.
Following the district court's order, the Secretary conducted an inspection. It found that Elkhorn's permit was invalid under subsection (A) and issued a cessation order prohibiting Elkhorn from continuing to surface mine on Tract 46.
While
Johnson I
was pending and the Secretary was conducting its inspection, Elkhorn was revising its permit application. Through its revisions, Elkhorn hoped to establish its right to surface mine under subsection (C), which directs "the regulatory authority" to determine "the surface-subsurface legal relationship ... in accordance with State law."
The Secretary then inspected Elkhorn's revised permit and confirmed that the permit complied with subsection (C). Consequently, it terminated the cessation order prohibiting Elkhorn from surface mining.
*848 That termination decision spawned the federal litigation now before us. Johnson administratively challenged the Secretary's termination decision in the Hearings Division of the Department of the Interior's Office of Hearings and Appeals. On October 30, 2015, an ALJ upheld the Secretary's termination decision, concluding that Elkhorn's permit comported with subsection (C)'s requirements. Johnson then administratively appealed the ALJ's decision to the Interior Board of Land Appeals of the Office of Hearings and Appeals ("Appeals Board"). While that appeal was still pending, Johnson also sought review of the ALJ's decision in federal court. The United States District Court for the Eastern District of Kentucky held that the ALJ's decision was not arbitrary or capricious or in violation of law and granted summary judgment in favor of the Secretary, as well as Elkhorn, who had intervened as a defendant in the federal suit.
Johnson now appeals.
II.
We review the district court's grant of summary judgment de novo but review the agency's decision under the arbitrary-and-capricious standard mandated by SMCRA and the Administrative Procedure Act (APA).
Coal. for Gov't Procurement v. Fed. Prison Indus., Inc.
,
III.
Before moving to the merits of Johnson's arguments, we pause to address an initial hurdle that Johnson must clear to have its case heard in federal court: administrative exhaustion. Although we have jurisdiction under
The exhaustion inquiry in this case centers on whether the ALJ decision before us is a final decision. A claim is administratively exhausted if it results in a "final decision ... subject to judicial review."
Willis v. Sullivan
,
Congress may define what constitutes a final decision.
Weinberger v. Salfi
,
That carve-out has straightforward application here. Johnson timely appealed the ALJ's ruling to the Appeals Board and simultaneously asked the Board to stay the ALJ's ruling until it resolved the appeal. Forty-five days after Johnson's appeal deadline, the Appeals Board still had not answered Elkhorn's request for a stay. At that point, the ALJ's decision, even though pending appeal before the agency, became "final," according to
Although § 4.21(c) seems to have obvious application to this case, Elkhorn contends that it is the wrong place to look and urges the court to turn to § 4.1101(a) instead. That section vests the Appeals Board with "authority to exercise the final decisionmaking power of the Secretary under the act ...."
Even so, Elkhorn asserts that
Shawnee
and
Southern Ohio
expressly hold that only decisions from the Appeals Board are final. Yet Elkhorn misrepresents the holdings of those cases.
Shawnee
and
Southern Ohio
simply state that SMCRA mandates exhaustion.
See
S. Ohio Coal Co.
,
IV.
Satisfied that Johnson has cleared this exhaustion hurdle, we move to the merits of its claims against Elkhorn. Johnson says
*850
the ALJ's affirmance of the Secretary's termination of the cessation order was arbitrary, capricious, or inconsistent with law for three main reasons: (1) the Secretary and the ALJ erroneously concluded that subsection (C) allows the Kentucky Cabinet to issue surface mining permits in reliance on Kentucky's cotenancy law
3
; (2) when the Kentucky Cabinet issued Elkhorn's revised permit over Johnson's objections it unlawfully adjudicated a "property rights dispute" in violation of
A.
The Secretary terminated its cessation order after concluding that Elkhorn's amended permit complied with the statutory requirements set out in subsection (C). And the ALJ upheld that decision after determining that subsection (C) allows a regulatory authority to turn to any state law to assess whether a permit applicant has submitted documents demonstrating it has a right to surface mine. Under that reading of the provision, the ALJ explained, the Cabinet was permitted to rely on Kentucky's law of cotenancy to approve Elkhorn's permit. Johnson argues that subsection (C) is narrower, permitting the Cabinet to consider only state-law rules of construction for interpreting severance conveyances that do not expressly grant a right to surface mine. 4
We agree with the Secretary that subsection (C) permits the Cabinet to rely on any state law in making its permitting decision. Therefore, the ALJ's application of Kentucky cotenancy law, instead of the state's rules of construction for vague severance deeds, to uphold the issuance of Elkhorn's permit and the Secretary's termination of the cessation order was not arbitrary, capricious, or contrary to law.
1. Subsection (C)
Our interpretation of subsection (C) begins and ends with the provision's text.
Robinson v. Shell Oil Co.
,
If the conveyance does not expressly grant the right to extract coal by surface *851 mining methods, the surface-subsurface legal relationship shall be determined in accordance with State law ....
Johnson reads subsection (C) differently. Under Johnson's interpretation, the provision unambiguously allows the regulatory authority to turn to state law only for determining the surface-subsurface legal relationship as defined by the severance conveyance and not any other document. Arriving at that interpretation, however, requires several feats of textual acrobatics that only contort a straightforward text.
Johnson's first maneuver misconstrues the relationship between subsection (C)'s two clauses. According to Johnson, the first clause announces a purpose that informs the meaning of the second clause. And because the first clause references "the conveyance," Johnson says that its purpose is to provide a method for interpreting a severance conveyance. That means, Johnson contends, that the "surface-subsurface legal relationship" in the second clause is a legal relationship that may only be defined by a severance conveyance-and, therefore, the only relevant "State law" is that which helps the regulatory authority construe the severance conveyance.
But that argument mischaracterizes the function of subsection (C)'s first clause. The clause is a classic conditional statement. As a conditional statement, rather than announcing the purpose of the entire subsection, it simply limits the subsection's applicability. When, according to the conditional statement, does subsection (C) apply? Only "if the conveyance does not expressly grant a right to surface mine." And what does the regulatory authority do when that condition is met? The remainder of subsection (C) tells us: the regulator determines "the surface-subsurface legal relationship ... in accordance with State law." No portion of subsection (C)'s text limits the realm of documents the regulatory authority may consult to make that state-law determination. Thus, any document that state law deems relevant-whether the severance conveyance, a right of entry lease, or otherwise-may inform the regulatory authority's permitting decision under subsection (C).
Johnson's second syntactical stunt attempts to rely on the canon of harmonious reading.
See
FDA v. Brown & Williamson Tobacco Corp.
,
*852 The way Johnson sees it, this difference in language indicates that Congress intended to provide only two methods of establishing a right to surface mine: by a conveyance or by consent. The only difference between subsections (B) and (C), Johnson contends, is that the latter "merely specifies the choice of law when interpreting rights that are not explicit in the [conveyance]." Appellant Br. 31.
Reading the subsections harmoniously, however, does not mandate such a narrow interpretation of subsection (C). An equally harmonious interpretation is that when an applicant has neither the consent of all surface owners, as allowed under subsection (A), nor an express conveyance, as allowed under subsection (B), it may establish a right to surface mine through any other method "in accordance with State law" under subsection (C). That interpretation does not create any inconsistencies between the three subsections.
Finally, Johnson urges that reading subsection (C) too broadly renders subsection (A) superfluous. That is, if subsection (C) allows resort to Kentucky cotenancy law, which authorizes surface mining based on the consent of fewer than all surface owners, then subsection (A)'s complete-consent requirement no longer plays any role whatsoever in a state's permitting determinations. That argument also fails to carry the day. Even Johnson acknowledges that not every state allows one tenant to surface mine over a cotenant's objections. Appellant Br. 34. It may be true that, as a practical matter, subsection (A) plays a diminished role in Kentucky. But we do not read nationally applicable statutes through a single-state lens.
In fact, SMCRA's national application in a domain traditionally controlled by the states is just one more reason to interpret subsection (C) broadly, allowing consideration of any state law to determine whether the surface-subsurface legal relationship includes a right to surface mine. Because " 'property' and 'interests in property' are creatures of state law,"
Barnhill v. Johnson
,
The text of subsection (C), then, is quite clear: when a conveyance does not expressly grant the right to surface mine, the regulatory authority may rely on any
*853
state law to determine whether the documents describing the surface-subsurface legal relationship of the severed estate grant such a right. Because subsection (C) is plain and unambiguous, our analysis ends where it began: with the statutory text.
Robinson
,
2. The ALJ's Decision
The ALJ, arriving at the same interpretation we do, found Kentucky's cotenancy law applicable to Elkhorn's permit and concluded that Elkhorn's permit was issued in accordance with cotenancy law outlined by a Kentucky appellate case,
Johnson v. Cabinet
,
In
Johnson v. Cabinet
, the Kentucky court of appeals ruled that "a cotenant ha[s] the right to begin strip mining operations on ... property despite objections from another cotenant."
Johnson v. Cabinet
,
The ALJ was not wrong to apply that precedent to this case. Here, just like the coal company in Johnson v. Cabinet , Elkhorn established its right to enter and surface mine by relying on a right of entry agreement with one of the plot's surface owners, Pike Letcher. And here, just as in Johnson v. Cabinet , some surface owners objected to surface mining. There is no meaningful difference between Johnson v. Cabinet and this case that would make Kentucky's law of cotenancy applicable there but not here.
Johnson's counterargument is unconvincing. Johnson argues that Kentucky's law of cotenancy only "defines the surface-surface legal relationship rather than the surface-subsurface legal relationship, as mandated by [subsection (C) ]." Appellant Br. 23. When it comes to the surface-subsurface legal relationship, Johnson again asserts, only the severance conveyance controls-and that means that the only relevant state law is that which guides the regulatory authority's interpretation of the severance conveyance. But Johnson v. Cabinet considered and expressly rejected the same argument by the nonconsenting cotenants there. The court explained that, in Kentucky, the law "does not make a distinction between surface and mineral interests when construing the mutual rights, duties and liabilities of cotenants"-the general rules of cotenancy "carr[y]
*854
over into the field of minerals, which are simply part of the land."
B.
SMCRA places an important limitation on a regulatory authority's power: in the course of reviewing permit applications, the regulatory authority may not "adjudicate property rights disputes."
SMCRA's prohibition against adjudicating a property rights dispute appears at the end of its list of potential ways an applicant may establish a right to surface mine on a severed estate. The end of that list begins with a (now-familiar) command and ends with the important property-rights-dispute caveat. It reads: "[I]f 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
."
SMCRA does not define what constitutes "property rights disputes." Johnson argues that the phrase covers any disagreement over an applicant's right to surface mine, including Johnson's disagreement over the range of applicable state law under subsection (C). But that interpretation of the phrase is too broad. The restriction against adjudicating property rights disputes operates as an exception from the general mandate that the regulatory authority determine whether a permit applicant has established that it has a right to surface mine.
See
A few court cases and administrative decisions provide an appropriately narrow description of the "property rights disputes" encompassed by SMCRA. Those
*855
cases conclude that such disputes challenge the validity or interpretation of a conveyance, the location of a parcel's boundary lines, allegations of waste or ouster, or other disagreements related to ownership over the land.
See
Akers v. Baldwin
, No. 84-88, Findings of Fact, Conclusions of Law and Order at 12 (E.D. Ky. Feb. 28, 1985), R. 64-3, PID 745 (property rights disputes over which the Cabinet lacks jurisdiction are those dealing with "whether any given conveyance had been obtained by fraud, whether the consent obtained was signed by the proper heirs to a particular tract of land, whether there was a boundary line or other dispute concerning the realty's description, and other such individualized matters");
Akers v. Bradley
, No. 84-88, Opinion, Order and Judgment 2 (E.D. Ky. June 20, 1988), R. 64-6, PID 752 (reiterating the definition in
Baldwin
);
Foster E. Sword
, 138 IBLA 74, 81 (Feb. 3, 1997) (describing a disagreement over the location of a property boundary line as "a property title or rights dispute[ ]" that the Cabinet cannot resolve);
Paul F. Kuhn
, 120 IBLA 1, 9 (July 3, 1991) (concluding that a dispute over proper surveying reference points for demarcating property boundary lines is "clearly a property dispute" outside the Cabinet's jurisdiction);
Johnson v. Cabinet
,
Johnson's objection to Elkhorn's permit does not fit within that narrow category of property rights disputes. Johnson does not contest the validity of any deed connected to Tract 46 or the right of entry agreement between Pike Letcher and Elkhorn. Instead, Johnson contests the Cabinet's application of settled Kentucky cotenancy law to Elkhorn's permit and the Secretary's affirmance that the Cabinet's application of that law was consistent with the requirements of subsection (C). Moreover, Johnson actually concedes that under Kentucky cotenancy law Elkhorn's right of entry agreement gives it a right to surface mine. Appellant Br. 20. Nonetheless, Johnson argues that the text of subsection (C) makes cotenancy law irrelevant. That is a dispute over statutory interpretation, not property rights.
What is more, Johnson's assertion that the Cabinet must withhold a permit until every possible dispute between landowners is resolved by a final, unappealable state court judgment is unsupported (as Johnson acknowledges) by SMCRA's express requirements. The cases Johnson cites do not support that position either-unlike this one, those cases dealt with bona fide property rights disputes. In the first case, the applicant's right to surface mine was subject to a dispute over the questionable validity of the applicant's surface lease.
Ky. S. Coal Corp. v. Ky. Energy & Env't. Cabinet
("
KSCC
"),
Finally, it is worth noting the types of property rights claims Johnson could have raised in the appropriate tribunal but did not. Johnson could have asserted in state proceedings that
Johnson v. Cabinet
was incorrectly decided, but it declined to do so.
For all these reasons, it was not arbitrary, capricious, or contrary to law for the ALJ to conclude that neither the Cabinet nor the Secretary adjudicated a property rights dispute when they approved Elkhorn's revised permit and terminated the cessation order, respectively.
C.
Johnson's final claim has to do with one of SMCRA's disclosure requirements. Every applicant for a permit to surface mine must inform the regulatory authority whether its "legal right to enter and commence surface mining operations ... is the subject of pending litigation."
To start, it is doubtful that the Johnson I litigation is the kind of "pending litigation" that is subject to SMCRA's disclosure requirements. The district court concluded, albeit without explanation, that the purpose behind SMCRA's disclosure rule is to keep the Cabinet from unlawfully adjudicating a property rights dispute. The parties (including Johnson) seem to assume the correctness of that proposition, although they likewise fail to cite any supporting authority. If that really is its purpose, then Elkhorn had no duty to disclose the pending lawsuit on its application, because the lawsuit is not a property rights dispute.
Yet even if Elkhorn was required to disclose the lawsuit on the application, its failure to do so was harmless error.
Sierra Club v. Slater
,
V.
Finally, the Kentucky Cabinet, acting as Amicus Curiae, raises a host of additional arguments that it says go to this court's subject matter jurisdiction over the case. In fact, none of the Cabinet's arguments raise jurisdictional concerns. Briefly, the Cabinet first argues that the court has no authority to review the Secretary's decision to terminate the cessation order or to compel the Secretary to re-issue the order. But SMCRA allows for judicial review of any of the Secretary's orders or decisions, including decisions concerning the issuance, modification, or termination of cessation orders.
VI.
For the foregoing reasons, we AFFIRM .
Kentucky's SMCRA regulatory analogue contains its own provision that is "substantively identical" to the federal act,
Elkhorn appealed
Johnson I
, but this court dismissed the appeal as moot and vacated the injunction.
M.L. Johnson Family Props. v. Premier Elkhorn Coal Co.
, No. 14-5867, Order, R. 29 (6th Cir. Oct. 31, 2014). The court took "no position on the merits" of the appeal.
Johnson also argues that Kentucky's regulatory analogue to subsection (C),
The specific rule of construction that Johnson believes applies here comes from the Broad Form Deed Amendment to Kentucky's Constitution. That amendment provides that severance deeds that do not expressly grant a right to surface mine must be interpreted to allow "coal extraction by only the ... methods ... commonly known to be in use ... at the time the instrument was executed."
Johnson v. Cabinet
,
Reference
- Full Case Name
- M.L. JOHNSON FAMILY PROPERTIES, LLC, Plaintiff-Appellant, v. David L. BERNHARDT, Secretary of the Interior, Defendant-Appellee, Premier Elkhorn Coal LLC, Intervenor-Appellee.
- Cited By
- 7 cases
- Status
- Published