Baynard, Ernest C., III

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University of Kentucky

Journal of Natural Resources & Environmental Law Volume 5 Issue 3 Journal of Mineral Law & Policy, volume 5, issue 3 Article 7 January 1990 Establishing a Definition of Valid Existing Rights, as Used in Section 522(e) of SMCRA Ernest C. Baynard III Holland & Hart Follow this and additional works at: https://uknowledge.uky.edu/jnrel  Part of the Administrative Law Commons Right click to open a feedback form in a new tab to let us know how this document benefits you. Recommended Citation Baynard, Ernest C. III (1990) "Establishing a Definition of Valid Existing Rights, as Used in Section 522(e) of SMCRA," Journal of Natural Resources & Environmental Law: Vol. 5 : Iss. 3 , Article 7. Available at: https://uknowledge.uky.edu/jnrel/vol5/iss3/7 This Article is brought to you for free and open access by the Law Journals at UKnowledge. It has been accepted for inclusion in Journal of Natural Resources & Environmental Law by an authorized editor of UKnowledge. For more information, please contact UKnowledge@lsv.uky.edu. Establishing a Definition of ValidExisting Rights, as Used in Section522(e) of SMCRABy ERNEST C. BAYNARD, III*Section 522(e) of the Surface Mining Control and Reclama-tion Act of 1977 ("SMCRA"), prohibits surface coal miningoperations in certain areas, except for those operations thatexisted on August 3, 1977 and, subject to valid existing rights("VER"). I Those areas in which such mining is precluded in-clude lands within the National Park System, the National Wild-life Refuge System, the National System of Trails, the NationalWilderness Preservation System, the Wild and Scenic RiversSystem, including study rivers, and National Recreation Areasdesignated by an act of Congress. Section 522(e) imposes a morelimited restriction, again subject to VER and except for thoseoperations which existed on August 3, 1977, on federal landswithin a national forest, certain places included within the Na-tional Register of Historic Sites, areas proximate to public roads,occupied dwellings, public buildings, schools, churches, com-munity or institutional buildings, public parks, and cemeteries.SMCRA itself does not define VER. In attempting to providea regulatory definition of VER, the Department of the Interiorhas promulgated definitions that have been found by reviewingcourts to be either substantively deficient or improperly prom-ulgated. Indeed, developing an acceptable definition of VER isa daunting task.The Department of the Interior's first attempt at a definitionof VER was in 1979. It included a requirement that in order tobe VER, rights must have been in existence on August 3, 1977and the owners must either have obtained all necessary mining* B.A. 1966, Trinity College; J.D. 1971, Georgetown University Law Center. Mr.Baynard has been practicing in the areas of environmental, energy and public land lawfor the last seventeen years. He is currently a partner in Holland & Hart, in Washington,D.C..Surface Mining Control and Reclamation Act of 1977, Pub. L. No. 95-87, 91Stat. 445 (codified at 30 U.S.C. §§ 1201-1328 (1988)).JOURNAL OF MINERAL LAW & POLICYpermits on or before that date, or have been able to demonstratethat the coal for which the exemption was sought was neededfor, and immediately adjacent to, a mining operation in existenceprior to that date. Upon review, the United States District Courtfor the District of Columbia remanded to the Secretary of theInterior that portion of the rule that required the owner to haveobtained all permits necessary to mine. The Court noted that "agood faith attempt to obtain all permits before the August 3,1977 cut-off date should suffice for meeting the all permitstest. 2In June 1982 the Department of the Interior again issued anotice of proposed rulemaking defining VER. The options in-cluded the so-called good faith-all permits test. However, thefinal rule relied on a general "takings" standard. In essence,that test was whether "the application of any of the prohibitionscontained in [Section 522(e) of SMCRA] to the property interestthat existed on [August 3, 1977] would effect a taking of theperson's property which would entitle the person to just com-pensation under the Fifth and Fourteenth Amendments to theUnited States Constitution . . . ."I Upon judicial review theUnited States District Court for the District of Columbia heldthat this test was such a significant departure from the proposedrule that a new notice and comment period was required.4 As aresult, the Department of the Interior suspended the VER defi-nition in 30 C.F.R. Section 761.5(a).5 According to the Depart-ment of the Interior, this suspension had the effect of puttingin place the VER definition that was in use before the 1983definition was promulgated.6The legislative history of SMCRA does suggest that "Con-gress did not intend to infringe on valid property rights or effecttakings through Section 522(e)." ' 7 Further, the provisions ofSection 522(e) should not be used to close existing mine opera-tions within areas subsequently declared to be subject to theprotection of Section 522(e).8 The Supreme Court has found thatI In Re Permanent Surface Mining Regulation Litig. 1, 14 Envtl. Rep. Cas. (BNA)1083 (D. D.C. 1980).48 Fed. Reg. 41,349 (1983), 30 C.F.R. § 761.5 (1984).In Re Permanent Surface Mining Regulation Litig. II, 22 Envtl. Rep. Cas.(BNA) 1557 (D. D.C. 1985).1 See 51 Fed. Reg. 41,952 and 41,961 (1986).6 53 Fed. Reg. 52,374 and 52,375 (1988).National Wildlife Federation v. Hodel, 839 F.2d 694, 750 (D.C. Cir. 1988).'Id.[VOL. 5:529ESTABLISHING A DEFINITIONthe earlier promulgated all permits test "is not compelled eitherby the statutory language [of SMCRA] or its legislative his-tory." 9 Beyond these findings, the legislative history of VER asused in Section 522(e) of SMCRA is difficult to gauge.It would, however, seem to be a strained interpretation ofcongressional intent to infer that Congress meant for VER to bebased on some variation of an all permits test. At the same timethat Congress was considering SMCRA, it was also consideringthe 1977 Amendments to the Clean Air Act which became ef-fective four days after SMCRA. In those amendments, Congressemployed an all permits test to determine when construction ofa source had commenced for purposes of prevention of signifi-cant deterioration (PSD) review. In order to have commencedconstruction, a source must have obtained "all necessary pre-construction approvals or permits required by Federal, State, orlocal air pollution emissions and air quality laws or regula-tions."' 0 If Congress had wished to include an all permits testin Section 522(e) of SMCRA as it did in the Clean Air ActAmendments of 1977, it could have easily done so. However, itchose not to do so."It is also a strained interpretation to require, as a part ofVER, that an applicant demonstrate that it had the right toextract the coal it owns by the method it intends to use. Thistype of showing is similar to that required by Section 510(b)(6)of SMCRA in the case of a severed mineral estate. In that casethe applicant must submit to the regulatory authority either:"the written consent of the surface owner to the extraction ofcoal by surface mining methods" or "a conveyance which ex-pressly grants or reserves the right to extract the coal by surfacemining methods" or "if the conveyance does not expressly grantthe right to extract coal by surface mining methods, the surface-subsurface legal relationship shall be determined in accordancewith State law."11 2 Here too, Congress knew how to require the9 Hodel v. Virginia Surface Mining & Reclamation Assn., 452 U.S. 264, 296 n.37 (1981).1* Clean Air Act Amendments of 1977, Pub. L. No. 95-95, 91 Stat. 712 (codifiedat 42 U.S.C. §§ 7401, § 7479(2)(A) (1982)). See Montana Power Co. v. EPA, 608 F.2d334, 355 (9th Cir. 1979).Montana Power, 608 F.2d at 356.' This section then ends with the proviso that nothing in the chapter shall beconstrued to authorize the regulatory authority to adjudicate property rights disputes.SMCRA § 510(b)(6)(A)-(C), 30 U.S.C. §§ 1260(b)(6)(A)-(C).1989-90]JOURNAL OF MINERAL LAW & POLICYowner of coal to show that it had the right to mine the coal bysurface mining methods. When Congress used such express lan-guage in Section 510, it strains credulity to assert that it actuallymeant to use the same language in Section 522 but, for somereason, failed to do so. 3Furthermore, an additional administrative problem is pre-sented if the owner of the coal must demonstrate that it had theright to mine the coal by the intended method as of the datethe Section 522(e) prohibition became effective. A federal agencyis then placed in the position of not only having to determinewhat state law is, but also what state law was at some point inthe past. Indeed, this is similar to the problem that the Outer-Continental Shelf Lands Act, as passed in 1953, presented untilit was amended in 1978.14 During that time, state laws as theyexisted in 1953 were applied to structures on the outer continen-tal shelf. Thus, courts were placed in the position of having toconstrue state laws that were no longer in force. For that reasonthis provision was amended in 1978.A "takings" definition of VER suffers from a differentinfirmity. There is little question but that Congress sought toavoid takings as a result of Section 522(e), as the Court ofAppeals for the District of Columbia Circuit found. 5 Thus, aVER definition which facially avoids a taking would certainlyseem to be consistent with the relevant congressional intent;however, the takings definition promulgated by the Departmentof the Interior in 1983 presents a reviewing court with a riddlethat it should not have to answer: when is a taking not a taking?Simply put, in order for the taking of private property byan officer of the United States to be compensable under theFifth Amendment, i.e., in order for a taking to be a FifthAmendment taking, it must be authorized expressly, or by nec-essary implication, by an act of Congress.16 Thus, if action takenby the Department of the Interior's Office of Surface Mining isbeyond the authority conferred by Congress in Section 522(e),such action probably could not be a compensable taking. ItSee also, SMCRA § 507(b)(9), 30 U.S.C. § 1257(b)(9).' Outer Continental Shelf Lands Act of 1953, as amended, Pub. L. No. 95-372,title II, § 202, 92 Stat. 634 (codified at 43 U.S.C. § 1331 (1982))., National Wildlife Federation v. Hodel, 839 F.2d at 750.6 Regional Rail Reorganization Act Cases, 419 U.S. 102, 127, n. 16 (1974).Recently, the Court has suggested that it may soften this requirement somewhat. See,Presault v. Interstate Commerce Commission, U.S. , 110 S.Ct. 914 (1990).[VOL. 5:529ESTABLISHING A DEFINITIONwould simply be illegal action taken under color of Section 522(e)of SMCRA. So long as the action taken was beyond the scopeof authority conferred by Congress, no Fifth Amendment takingwould occur and the "takings" definition of VER would pre-sumably not be triggered.Reviewing courts are also presented with a jurisdictionalproblem. Should a final decision of the Department of theInterior that a petitioner has not suffered a taking, and thusdoes not have VER, be challenged in United States District Courtor in the United States Claims Court? The United States ClaimsCourt has jurisdiction over taking cases brought against theUnited States. 7 The United States District Courts have originaljurisdiction concurrent with the United States Claims Court fortaking cases not exceeding $10,000. Thus, initially, one mightconclude that a taking case involving more than $10,000 mustbe brought in the United States Claims Court.The problem with bringing such an action in the UnitedStates Claims Court, however, is that in seeking review of aDepartment of the Interior decision that no taking has occurred,and, thus, petitioner does not have VER, the petitioner may beperceived as not really seeking a money judgment against theUnited States, but rather a judgment that the Department of theInterior was incorrect. Although the Claims Court has been givensome jurisdiction to issue declaratory judgments since UnitedStates v. King," it is doubtful that the Claims Court has juris-diction to enter a purely declaratory judgment against the UnitedStates finding that a taking has occurred. It could be arguedthat once it was determined that a taking had occurred, thenVER would be established. This, at first blush, suggests that anaction to review an adverse takings determination should bebrought in United States District Court. However, this assumesthat a United States District Court will not feel constrained bythe limits of the Tucker Act,' 9 and runs the risk of any subse-quent action brought in the United States Claims Court beingbarred by 28 U.S.C. Section 1500.20" Act of June 25, 1948, c. 646, 62 Stat. 940 (codified as 28 U.S.C. § 1491 (1988)),as amended.18 395 U.S. 1 (1969).19 See South Delta Water Agency v. United States Department of the Interior, 767F.2d 531 (9th Cir. 1985).o In essence, 28 U.S.C. § 1500 (1988), as amended, bars an action in United StatesClaims Court when that action is based on a claim pending in U.S. District Court. SeeJohns-Manville Corp. v. U.S., 855 F.2d 1556 (Fed. Cir. 1988).1989-90]JOURNAL OF MINERAL LAW & POLICYIssues of reviewability under a VER definition incorporatinga "takings" test are further clouded by a 1985 decision of theUnited States Claims Court invoking primary jurisdiction.21 Thecourt noted that primary jurisdiction applies where a claim maybe cognizable originally in a court, but enforcement of a claimrequires a resolution of issues that have been placed within thespecial competence of an administrative body, here the Depart-ment of the Interior. The court observed that delays experiencedin previous VER cases were largely attributable to challenges tothe validity of the VER definition contained in 30 C.F.R. Section761.5 and noted that inasmuch as disputes over this definitionhad been substantially settled, the agency proceedings in thiscase should move along quickly. Suffice it to say that the De-partment of the Interior has no special competence in the areaof "takings" law, and disputes over the proper definition ofVER are ongoing.Why is it so difficult to develop a regulatory definition ofVER? The answer to this question lies, perhaps, in long-recog-nized distinctions between agency rulemaking and agency adju-dication. As noted in the Attorney General's Manual on theAdministrative Procedure Act prepared by Attorney GeneralTom Clark in 1947,[T]he entire [Administrative Procedure Act] is based upon adichotomy between rule making and adjudication. Examina-tion of the legislative history of the definitions and of thedifferences in the required procedures for rule making and foradjudication discloses highly practical concepts of rule makingand adjudication. Rule making is agency action which regulatesthe future conduct of either groups of persons or a singleperson; it is essentially legislative in nature, not only becauseit operates in the future but also because it is primarily con-cerned with policy considerations. The object of the rule mak-ing proceeding is the implementation or prescription of law orpolicy for the future rather than the evaluation of a respon-dent's past conduct.Conversely, adjudication is concerned with the determinationof past and present rights and liabilities.[It] may involve the determination of a person's right to ben-" Ruth Z. Ainsley v. U.S., 8 CI. Ct. 394 (1985).[VOL. 5:529ESTABLISHING A DEFINITIONefits under existing laws so that the issues relate to whether heis within the established category of persons entitled to suchbenefits. In such proceedings, the issues of fact are sharplycontroverted .22This passage suggests that the determination of what is meantby VER may be more appropriately done by adjudication, inindividual cases, than by rulemaking.23The Department of the Interior might well wish to considerwhat Professor Davis said, albeit in a slightly different context:"Sometimes the best solution of the problem in a particular caseof classifying borderline activities may be to avoid classifyingthem-to skip the labeling and to proceed directly to the problemat hand." ' 24 Here, what the Department might do would be torefrain from defining VER by regulation and simply to applythe term on a case-by-case basis, as it has under other statutes,such as the Federal Land Policy and Management Act. Such anapplication should be grounded on the notion that VER underSection 522(e) of SMCRA is very similar to those referred to inSection 701(h) of the Federal Land Policy and Management Act,and other laws administered by the Department of the Interior.25 The inquiry over whether VER existed would begin and endwith a determination that the one asserting VER must establisha right to the coal, as of August 3, 1977 or, whatever subsequentdate the Section 522(e) prohibition became effective.It makes little sense for the Department of the Interior todecide within the context of a VER determination whether andto what extent a putative holder of VER may mine coal by anyparticular method. SMCRA requires that as part of the appli-cation process,22 U.S. DEPT. OF JUSTICE, Attorney General's Manual on the Administrative Pro-cedure Act (1947) 14.15. (1973 reprint, Wm.W. Gaunt & Sons, Inc.).23 Hodel v. Virginia Surface Mining & Reclamation Assn., 452 U.S. 264 (1981)can be read to suggest that adjudication rather than rulemaking is the appropriate meansfor evaluating VER. The Court speaks in terms of the Act being applied in specificcircumstances and its effect on particular coal mining operations. The Court also suggeststhat mutually acceptable solutions might well be reached with regard to individualproperties. 452 U.S. at 297.K.C. DAVIS, ADMINISTRATIVE LAW TREATISE § 7:2 at p. 7 (1979) (emphasisdeleted).25 See Solicitor's Op. M-36910 (Supp.), 88 I.D. 909, 912 (1981). See also, Note,Regulations and Land Withdrawal: Defining "Valid Existing Rights", 3 J. MIN. L. &POL'Y 517 (1988).1989-901JOURNAL OF MINERAL LAW & POLICYthe applicant . . . file [a map or plan) clearly showing the landto be affected as of the date of the application, the area ofland within the permit area upon which the applicant has thelegal right to enter and commence surface mining operationsand . . . a statement of the those documents upon which theapplicant bases his legal right to enter and commence surfacemining operations on the area affected, and whether that rightis the subject of pending court litigation .... -26Section 510, referred to earlier, contains additional requirementsthat are imposed when the mineral estate is severed from thesurface estate.27To the extent that there still exists some vestige of a regu-lation defining VER, the Department would have to conduct arulemaking proceeding to eliminate that definition. 28 This, how-ever, should not prove to be a major obstacle.SMCRA § 507(b)(9), 30 U.S.C. § 1257(b)(9) (1988).SMCRA § 510, 30 U.S.C. § 1260 (1988).z' See Motor Vehicle Manufacturers Assn. of the United States v. State FarmMutual Automobile Insurance Co., 463 U.S. 29, 41-42 (1983).[VOL. 5:529

Establishing a Definition of Valid Existing Rights, as Used in Section 522(e) of SMCRA

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Establishing a Definition of Valid Existing Rights, as Used in Section 522(e) of SMCRA

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