Arch Mineral Corp v. Babbitt, Sec , 104 F.3d 660 ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ARCH MINERAL CORPORATION, a
Delaware corporation,
Plaintiff-Appellee,
v.
BRUCE BABBITT, SECRETARY, UNITED
No. 95-2793
STATES DEPARTMENT OF THE INTERIOR;
ROBERT URAM, Director, Office of
Surface Mining Reclamation and
Enforcement, United States
Department of the Interior,
Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-95-32-2)
Argued: September 27, 1996
Decided: January 16, 1997
Before ERVIN and HAMILTON, Circuit Judges, and SPENCER,
United States District Judge for the Eastern District of Virginia,
sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Ervin wrote the opinion, in
which Judge Hamilton and Judge Spencer joined.
_________________________________________________________________
COUNSEL
ARGUED: John Thompson Stahr, Environment and Natural
Resources Division, UNITED STATES DEPARTMENT OF JUS-
TICE, Washington, D.C., for Appellants. Michael Bruce Victorson,
ROBINSON & MCELWEE, Charleston, West Virginia, for Appellee.
ON BRIEF: Lois J. Schiffer, Assistant Attorney General, Martin W.
Matzen, Richard M. Hall, Environment and Natural Resources Divi-
sion, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C.; Richard N. McNeer, Steven C. Barcley, Office of the Solicitor,
UNITED STATES DEPARTMENT OF THE INTERIOR, Washing-
ton, D.C., for Appellants. Christopher B. Power, ROBINSON &
MCELWEE, Charleston, West Virginia; Blair M. Gardner, Senior
Counsel, ARCH MINERAL CORPORATION, St. Louis, Missouri,
for Appellee.
_________________________________________________________________
OPINION
ERVIN, Circuit Judge:
Bruce M. Babbitt, Secretary of the Interior, United States Depart-
ment of the Interior, appeals from a decision of the United States Dis-
trict Court for the Southern District of West Virginia granting
summary judgment in favor of Arch Mineral Corporation and grant-
ing the company's motion for a permanent injunction. For the reasons
hereinafter explored, we affirm.
I.
This case arises from an attempt by the Interior Department's
Office of Surface Mining Reclamation and Enforcement ("OSM") to
impose penalties upon Arch Mineral Corporation ("Arch") under the
OSM's ownership and control rule, 30 C.F.R. § 773.5 (1995). OSM
is responsible for issuing the permits necessary for mining companies
to operate at particular sites. Pursuant to the Surface Mining Control
and Reclamation Act (SMCRA), when a permit applicant owns or
controls a company in violation of OSM rules, that applicant can be
"permit-blocked" until the violations are corrected or are being cor-
rected. Greendale Coals, Inc. ("Greendale") owes delinquent aban-
doned mine reclamation ("AML") fees and penalties to OSM. OSM
alleges that Arch should be considered an owner or controller of
Greendale Coals, Inc. because Greendale entered into a lease agree-
2
ment with a subsidiary of Diamond Shamrock Coal Company
("Diamond Shamrock") which was subsequently purchased by Arch.
After receiving letters from OSM declaring a presumed link of
ownership and control between Arch and Greendale, Arch filed this
action for declaratory and injunctive relief to preclude OSM from
making this link. On August 1, 1995, the district court granted sum-
mary judgment in favor of Arch and entered a permanent injunction
"prohibiting OSM from linking Arch to Greendale under the owner-
ship and control rule." Arch Mineral Corp. v. Babbitt, 894 F. Supp.
974, 988 (S.D. W.Va. 1995).
II.
Greendale mined coal in West Virginia until its dissolution in 1987
under permits issued by that state's OSM-approved regulatory pro-
gram. Much of the coal was mined under a mineral lease with Clay-
Nicholas Minerals Company, a subsidiary of Diamond Shamrock.
This lease was entered into on September 6, 1983. Greendale also
entered into a contract known as a "coal sales agency agreement" with
Diamond Shamrock Coal Sales Company ("Diamond Shamrock
Sales"), another subsidiary of Diamond Shamrock, giving Diamond
Shamrock the right to sell coal from the Greendale operation. This
agency contract was terminated on December 12, 1985.
Greendale became financially unstable in the early 1980's and
failed to pay $58,000.00 in AML fees it owed OSM. OSM issued a
cessation order to Greendale and, when the fees were not paid after
30 days, OSM imposed penalties of $22,000.00. When the penalties
and fees remained unpaid, OSM brought a civil action in district court
and received a judgment for the funds on November 18, 1986. OSM
neither joined Diamond Shamrock as a defendant nor filed suit
against that company to collect the money.
Greendale filed for bankruptcy on February 27, 1987, and was dis-
solved under state law. OSM filed a proof of claim for the uncollected
funds but received no money from the bankruptcy estate. Again, OSM
did not attempt to collect the delinquent fees or penalties from Dia-
mond Shamrock.
3
On April 17, 1987, Arch purchased the outstanding stock of Dia-
mond Shamrock. At that time, Diamond Shamrock Sales and Clay-
Nicholas Minerals Company were still wholly-owned subsidiaries of
Diamond Shamrock. The parties stipulate that Arch had no interest in
these companies prior to this transaction, and that OSM had notice of
the acquisition by October 1987. Diamond Shamrock's name was
changed to Arch Mineral Coal Company and it was dissolved in June
1988. There is no evidence in the record to indicate that Arch knew
that OSM would attempt to hold it responsible for Greendale's viola-
tions until Arch received notification from OSM on May 21, 1993.
On October 3, 1988, OSM promulgated its regulations defining
"ownership and control." See 53 Fed. Reg. 38877 (Oct. 3, 1988). This
regulation determined when a person could be linked to a violator and
thus "permit-blocked" from obtaining new mining permits or having
currently issued permits revoked.
In a May 1993 letter, OSM notified Arch that it was presumed to
be linked to Greendale through the ownership and control regulation,
30 C.F.R. § 773.5(b)(6). The agency explained in a September 30,
1994 letter that Arch was linked because Diamond Shamrock both
controlled the coal which Greendale mined, as lessor of the mineral
interest, and had a right to receive the coal pursuant to the agency
agreement, both of which are prerequisites to an assertion of control
under the ownership and control rule. Id.After OSM's initial correspondence with Arch concerning the link,
Arch responded with information to rebut the presumption of owner-
ship and control. In its September 30, 1994, reply, OSM stated that
the presumption had not been rebutted and that if no response was
received within 30 days, Arch would be entered into the Applicant/
Violator System ("AVS"). Arch wrote again to OSM on October 18,
1994, further attempting to refute its link to Greendale. On January
13, 1995, Arch filed this action.
III.
SMCRA was enacted in 1977, and Title II of the Act created OSM
within the Department of the Interior to administer and enforce the
Act. See 30 U.S.C. § 1211(c). Title V sets out the enforcement provi-
4
sions to be used by OSM. No entity is allowed to enter into surface
mining operations without first obtaining a permit from OSM. Id. at
§ 1256. If any entity is in violation of SMCRA, and if remedial mea-
sures are not taken after the entity is notified of the violation by OSM,
OSM will order the operations to cease. Id. at § 1271(a). Penalties are
then assessed against the party for continuing the violation. Id. at
§ 1268(h).
SMCRA requires that permit applications contain information
about the applicant's corporate structure, those entities controlled by
or under common control with the applicant, the holders of interests
in the property to be mined, and the mining operator (if different from
the applicant). SMCRA § 507(b), 30 U.S.C.§ 1257(b). In addition,
§ 510(c) of SMCRA requires that applicants file a schedule listing all
notices of violation of SMCRA, and the final resolution of each such
notice. 30 U.S.C. § 1260(c). Where that schedule, or other informa-
tion, indicates that any surface mining operation"owned or controlled
by the applicant" is currently in violation of SMCRA, the permit shall
not be issued until the applicant submits proof that the violation has
been or is being corrected. Id. Further, where OSM or a state regula-
tory authority determines that an existing permit was improvidently
issued because of an unabated violation, that authority may impose
permit conditions to abate the violation, or may suspend or rescind the
permit. See 30 C.F.R. § 773.20(a), (c) (1995).
The ownership and control rule, 30 C.F.R. § 773.5(b)(6), is the pri-
mary language at issue in this case and is used by OSM to establish
a link between Arch and Greendale. The rule reads as follows:
(b) The following relationships are presumed to constitute
ownership or control unless a person can demonstrate that
the person subject to the presumption does not in fact have
authority directly or indirectly to determine the manner in
which the relevant surface coal mining operation is con-
ducted:
...
(6) Owning or controlling coal to be mined by another
person under a lease, sublease or other contract and having
5
the right to receive such coal after mining or having author-
ity to determine the manner in which that person or another
person conducts a surface coal mining operation.
30 C.F.R. § 773.5(b)(6).
OSM has set up a computer network to "identify ownership and
control links involving permit applicants, permittees, and persons
cited in violation notices." 30 C.F.R. § 773.5 (1995). This system is
known as the AVS. OSM enters ownership or control links into the
AVS, and this information bank is then used to evaluate permit appli-
cations or review whether current permits were improvidently issued.
If linked on the AVS, an entity is said to be permit-blocked.
IV.
OSM challenges the jurisdiction of the district court over Arch's
claims. We are not persuaded by the agency's arguments and find that
the district court acted properly in exercising jurisdiction. Since we
find below that the statute of limitations, 28 U.S.C. § 2462, bars
OSM's enforcement actions, we need only consider whether the dis-
trict court possessed subject matter jurisdiction to evaluate the merit
of Arch's statute of limitations defense.
OSM argues that the federal district court of West Virginia lacked
subject matter jurisdiction to consider whether its actions against
Arch are time-barred. The agency asserts that this case could only
have been brought in the United States District Court for the District
of Columbia because it constitutes an attack on the Secretary's
promulgation of national rules. SMCRA § 526(a), 30 U.S.C.
§ 1276(a)(1).
Arch does not contest OSM's argument that attacks on SMCRA
regulations are within the exclusive jurisdiction of the United States
District Court for the District of Columbia under SMCRA § 526(a),
30 U.S.C. § 1276(a). Rather, Arch argues that its challenge is not to
the rule itself, but to the application of the rule, and therefore any fed-
eral district court may exercise jurisdiction if it is otherwise compe-
tent. Arch specifically maintains that, by asserting the statute of
6
limitations as an affirmative defense to the agency's action, it was
thereby accepting the regulations as valid and only asserting that suf-
ficient time had lapsed so that the rule did not apply to Arch.
We agree that, in the instant case, Arch is not attacking the regula-
tions themselves, but their application to Arch. The authority relied
upon by OSM to support its argument to the contrary is unpersuasive.
In Tug Valley Recovery Ctr. v. Watt, 703 F.2d 796 (4th Cir. 1983),
an environmental group challenged OSM's approval of a state regula-
tory program review board which allowed persons having financial
interests in mining operations to be members. Id. at 797-798. In Tug
Valley, we held that the district court in West Virginia properly dis-
missed the action for lack of jurisdiction because the applicable regu-
lation specifically allowed states to appoint multiple-interest boards
such as the one whose makeup Tug Valley was contesting. Id. at 800.
Given this fact, Tug Valley was limited to arguing for a change in the
regulation, that argument being a direct attack to the promulgation of
the SMCRA rule itself and only appropriate before the United States
District Court for the District of Columbia. See 30 U.S.C.
§ 1276(a)(1).
OSM further relies upon Virginia v. Watt, 741 F.2d. 37 (4th Cir.
1984). In Watt, the Commonwealth of Virginia and coal miners filed
actions challenging cessation orders issued by OSM against coal
operators. The OSM took this enforcement measure because plaintiff
miners had proceeded with operations based on their belief that cer-
tain coal mines, pursuant to newly enacted Virginia law, were exempt
from SMCRA permitting requirements. Id. at 39. We found that the
plaintiffs' suit constituted "attacks on administrative action, taken in
accordance with the Secretary of the Interior's regulations . . . [which]
may not be heard in this Circuit." Id. at 40 (citing Tug Valley, 703
F.2d at 769). Again, only the District of Columbia federal district
court had jurisdiction.
Finally, in Pittston Coal Company v. Babbitt, 66 F.3d 714 (4th Cir.
1995), cert. denied, 116 S.Ct 1417 (1996), the coal company chal-
lenged, on procedural due process grounds, OSM's denial of mining
permits where federal regulation provided procedure that the mining
company claimed was defective. Pittston represents another example
7
of a party contesting the content of a regulation; in that case, the pro-
cedure that was part of the regulation.
Unlike the plaintiffs in Tug Valley, Watt, and Pittston, Arch did not
try to override existing regulatory language, read language into or out
of a regulation. Rather, Arch simply sought a ruling on whether the
five-year statute of limitations at 28 U.S.C. § 2462 applied to OSM's
action. Section 2462 provides:
Except as otherwise provided by Act of Congress, an action,
suit or proceeding for the enforcement of any civil fine, pen-
alty, or forfeiture, pecuniary or otherwise, shall not be enter-
tained unless commenced within five years from the date
when the claim first accrued . . . .
28 U.S.C. § 2462.
Arch's invocation of the statute of limitations as an affirmative
defense suggests that the OSM regulations themselves are not the
problem. This defense is not analogous to a direct attack on the regu-
lations since there is no statute of limitations written into SMCRA.
Arch claims only that OSM's actions were not taken in accordance
with § 2462. This claim did not require the district court to consider
the merits of OSM's permit-blocking regulation. Thus, since the ques-
tions Arch presents are when and how to apply the ownership or con-
trol rule as written, not whether it is flawed, Arch's invocation of
§ 2462 is not an attack upon the regulation itself.
Policy considerations do not weigh against granting jurisdiction to
the court below. One of the reasons for giving the United States Dis-
trict Court for the District of Columbia exclusive jurisdiction over
regulatory challenges is to prevent conflicting decisions by various
courts on mining regulations. Watt, 741 F.2d at 40. Applications of
the statute of limitations by other district courts does not require con-
tent evaluation of the regulations and does not present a threat to con-
tinuity of regulatory enforcement.
We conclude that the court below properly exercised subject matter
jurisdiction over Arch's statute of limitations defense.
8
V.
Before this Court can evaluate whether OSM's enforcement action
is barred by the statute of limitations, we must also evaluate the facts
to determine whether this case was ripe for judicial review by the dis-
trict court. We find that it was.
For a case or controversy to be ripe for judicial review, it must
involve "an administrative decision [that] has been formalized and its
effects felt in a concrete way by the challenging parties." Charter
Fed. Sav. Bank v. Office of Thrift Supervision, 976 F.2d 203, 208 (4th
Cir. 1992) (citing Pacific Gas & Elec. v. Energy Resources Comm'n,
461 U.S. 190, 200 (1983)). This description and others attempt to
flesh out the holding of the seminal case on this point, Abbott Labora-
tories v. Gardner, 387 U.S. 136 (1967), overruled on other grounds
by Califano v. Sanders, 430 U.S. 99 (1977). Abbott requires that two
questions be asked: (1) are the issues fit for judicial review and (2)
will hardship fall to the parties upon withholding court consideration?
Id. at 149. We will examine each prong in turn.
We have clarified the first prong of the Abbott test:
A case is fit for judicial decision where the issues to be con-
sidered are purely legal ones and where the agency rule or
action giving rise to the controversy is final and not depen-
dent upon future uncertainties or intervening agency rulings.
Charter Federal, 976 F.2d at 208, citing Abbott, 387 U.S. at 149. The
critical facts are not disputed in our case and, thus, the district court
was called upon to consider the legal questions of the case. Accord-
ingly, OSM focuses its argument on convincing this Court that the
agency's enforcement action against Arch was not final, and the sec-
ond of the requirements stated in Charter Federal has thereby not
been met.
OSM asserts that it still has made no decision as to whether to link
Arch to Greendale, and therefore its action is not final. The agency's
presumption linking the two companies through the ownership or
control rule has yet to proceed through all of OSM's administrative
9
channels. Arriving at an official decision would involve a multi-step
process, beginning with a written staff recommendation and ending
with a decision from OSM's director in Washington, D.C.
For all practical purposes, however, the decision has been made.
After exchanging several letters with OSM in which it attempted to
explain why it was neither an owner nor a controller of Greendale,
Arch received the final letter from the agency dated September 30,
1994, which related the following:
Arch is a presumed controller of Greendale pursuant to 30
C.F.R. § 773.5(b)(6) . . . . If no response is received by
the end of the 30 day period, Arch will be entered in the
Applicant/Violator System ["AVS"] as an owner and con-
troller of Greendale based on the information in our files.
Once entered into the AVS, Arch would be linked to Greendale for
agency purposes of reviewing the permits already issued to Arch, and
for any future permits for which Arch may apply. Arch filed suit
because it "had no additional evidence to provide and so informed the
agency."
We agree with the district court's determination on this point:
Arch has no additional rebuttal evidence to provide. As a
result, there can be little doubt OSM intends to enter Arch
into the AVS as linked to Greendale, and therefore permit-
blocked, in the immediate future. The Court is thus of the
opinion the action giving rise to this controversy is final and
not dependent upon future uncertainties or contingencies.
Arch Mineral, 894 F. Supp. at 981.
OSM describes the 30-day letter process as it existed at the time
of its correspondence with Arch, and cites it as support for the propo-
sition that Arch might have avoided AVS listing simply by keeping
up the letter exchange. If, after receiving an OSM letter stating a pre-
sumed link, the party issues an explanation which OSM deems "un-
persuasive", OSM then issues a second letter explaining its reasoning
10
and inviting further response. Pittston Co. v. Lujan, 798 F. Supp. 344,
346 (W.D. Va. 1992). If the party fails to respond within ten days, the
information is entered into the AVS; if a response is made, a determi-
nation of ownership or control is made. Id. at 346. Based on this pro-
cedure, OSM maintains that the agency's 30-day letters mandate the
entry of a link on the AVS only if an entity fails to respond at all. This
process suggests that a party could forestall an AVS listing simply by
making a hollow reply containing no new evidence of why a link
should not be made. Under the specific facts of the instant case, we
find that Arch's failure to make such a reply does not preclude it from
asserting the statute of limitations defense.
Further, OSM suggests that, even if Arch had no additional rebuttal
evidence to offer, the agency should have been given more time to
unearth evidence through its own investigations. This contention is
unconvincing in light of the fact that OSM told Arch in the September
1994 letter that the presumption of ownership and control could only
be rebutted by Arch's submittal of "additional evidence." OSM's own
investigations presumably began before May 1993 when it first gave
Arch notice of its presumed link to Greendale, allowing the agency
a significant amount of time in which to determine what evidence
linked the two companies.1
OSM's strongest argument on the finality issue is that it should
have been given longer to evaluate the issues raised in Arch's last
response. The district court apparently regards Arch's final response
to OSM's September 30, 1994, letter of presumption as giving no new
evidence which might rebut that presumption. Arch Mineral, 894 F.
Supp. 974. The court below, however, does not evaluate the contents
of Arch's final response to OSM, dated October 18, 1994. That letter
does respond to points raised in OSM's September letter and gives
specific reasons why Diamond Shamrock did not have control of
Greendale. Thus, OSM contends that a suit was filed before the
agency was able to respond to Arch's October letter.
_________________________________________________________________
1 Approximately six years had passed between Arch's acquisition of
Diamond Shamrock in 1987 and the agency's first letter of presumption
to Arch in 1993. OSM has offered no evidence that it continues its inves-
tigation, nor has it given any indication that evidence exists which could
alter its presumption.
11
While the district court does not suggest that OSM's September let-
ter constituted a final action, the court found that the agency may take
such action "without further notice at any moment." Id. at 980. In
finding that OSM had taken the equivalent of final action, the district
court might have specifically decided that Arch's October letter to
OSM provided no new information to the agency, thus leading to the
inevitable confirmation of OSM's presumption, or by deciding that
the same decision was imminent because OSM had not responded to
the company's October letter when Arch filed its complaint almost
three months later.
Our decision in Fort Sumter Tours v. Andrus leads us to conclude
that the first prong of the Abbott test is met. Fort Sumter Tours, Inc.
v. Andrus, 564 F.2d 1119 (4th Cir. 1977). OSM describes the facts of
the case well:
That action arose from a statute granting preferential
renewal rights to existing concessioners of the Department
of the Interior. The Department advised Fort Sumter, the
existing concessioner, of its intent to negotiate a new con-
tract, conditioned, however, on Fort Sumter's agreement to
certain terms in a competing proposal, with the failure to
accept those terms constituting a waiver of preferential
rights. Fort Sumter filed suit, asserting that the conditional
offer was an improper denial of its preferential rights. Fort
Sumter also advised the Department that it was accepting
the offer, and would meet the additional terms if its suit was
unsuccessful. The Department, however, advised Fort Sum-
ter that it construed that conditional acceptance as a rejec-
tion and a waiver of preferential rights.
Brief of Appellant (id. at 1122-3).
In Fort Sumter we held that the two-part Abbott test was met when
the Department imposed new conditions upon the renegotiation of
Fort Sumter's contract and informed Fort Sumter of its decision to
negotiate with another concessioner. In response to claims that the
Department's decision was not a "final agency action" under 5 U.S.C.
§ 704, we held that "[w]hile it is generally true that judicial review
awaits the issuance of a formal administrative order enforceable
12
against a person or class of persons, such action is not an absolute
prerequisite to judicial review." Fort Sumter , 564 F.2d at 1123 (citing
Abbott, 387 U.S. 136).
The decision of whether Fort Sumter applies to the instant case
turns on the legal conclusion we draw from the facts before us. We
accept the argument that placing Arch on the AVS had become a fore-
gone conclusion, simply a formality, at the time this case was com-
menced, and thus we "take a functional approach in resolving [this]
ripeness question" and find that it is ripe for judicial review. Id.We find the instant case to be readily distinguishable from two
cases relied upon by OSM in which the agencies involved had not
taken sufficient steps to make their final action possible "without
notice at any moment." Arch Mineral Corp. v. Babbitt, 894 F. Supp.
974, 980. In Charter Fed. Sav. Bank v. Office of Thrift Supervision,
976 F.2d 203 (4th Cir. 1992), a financial institution sought a ruling
from the FDIC as to the enforceability of a contract before the FDIC
even threatened any action against the institution. We held that the
case was not ripe for review. Id. at 207. In Appalachian Energy
Group v. Environmental Protection Agency, 33 F.3d 319 (4th Cir.
1994), we found that judicial review was not proper for a challenge
to an internal EPA memorandum discussing a proposed new permit-
ting system.
Our decision on this matter is supported by decisions of the First
Circuit. We embrace the reasoning of the First Circuit:
[A controversy is] sufficiently particularized. . . [and] final
. . . [if it is] at least a firm (and perhaps binding) adoption
of a position by the agency with regard to a course of con-
duct on the part of a member of the regulated industry which
does not require further administrative action other than the
possible imposition of sanctions.
Northeast Airlines, Inc. v. CAB, 345 F.2d 662, 664 (1st Cir. 1965). In
Northeast Airlines, the Civil Aeronautics Board took final action
when it issued an order setting forth its "interpretation of the [Federal
Aviation] Act as applied to the specific facts alleged by Northeast in
its petition." Id. at 664. OSM's presumption of ownership and control,
13
coupled with the fact that Arch had no further evidence with which
to rebut the presumption, can logically constitute a"firm (and perhaps
binding) adoption of a position by the agency." Further, if the pre-
sumption could not be challenged by new evidence from Arch, the
only step left was the imposition of the sanction: listing Arch on the
AVS.
In Roosevelt Campobello International Park v. United States EPA,
684 F.2d 1034 (1st Cir. 1982), the court stated the Northeast holding
in the negative when it found that an agency action was not final "if
it makes no change in the status quo itself, but requires `further
administrative action other than the possible imposition of sanctions'
before rights, obligations or duties arise." Id. at 1040. Arch claims
that OSM's September 30, 1994, letter was so certain to lead to
permit-blocking as to constitute the sanction itself. We agree.
Given the degree of certainty of OSM's decision, and our freedom
under Fort Sumter and Abbott not to be bound by a formalistic
approach to reviewing agency decisions, we label OSM's action
"final." Also, since the factual record is well-developed, and since
Arch seeks to bar the agency's action based upon the statute of limita-
tions, 28 U.S.C. § 2462, and avoid being linked to Greendale under
the ownership and control rule, purely legal issues are in controversy.
Thus, the first prong of the Abbott two-prong test has been met.
The second prong of the test asks the court to determine "whether
hardship will fall to the parties upon withholding court consider-
ation." Abbott, 387 U.S. at 148. When calculating whether the action
in Fort Sumter was ripe for review, we also considered the cost to the
parties of delaying judicial review. Fort Sumter , 564 F.2d at 1124.
The district court interpreted the facts to find that Arch faced an
"immediate" threat of being entered into the AVS, and that this would
inflict "immense" harm on Arch. Arch Mineral, 894 F. Supp. at 981.
"If Arch is linked to Greendale by the AVS, its operating subsidiaries
will be blocked from obtaining new permits and from obtaining per-
mit renewals and modifications required for Arch's existing opera-
tions." Id. (citing 30 C.F.R. § 773.15(a)). The court properly noted
possible effects of an AVS listing on Arch's present and future min-
ing and reclamation projects through canceled or scaled back projects,
14
increased costs for operation, loss of business reputation, disruptions
in coal delivery, and job losses for workers. Id.OSM admits that it could list Arch on the AVS without notice, but
the agency attempts to appease us regarding the inevitable costs of
such a listing by noting Arch's post-listing avenues of review. The
agency notes that, prior to permit denial or suspension, Arch could
seek an administrative review and request temporary relief from the
agency pending that review. See Pittston Co. v. Lujan, 798 F. Supp.
346, 346 (W.D. Va. 1992); 43 C.F.R. §§ 4.1380-4.1387. Such tempo-
rary relief could also be given after an AVS listing is made by pursu-
ing an administrative appeal under 30 C.F.R. § 773.24(a)(1) and
(d)(2)(ii), and 43 C.F.R. § 4.1386. Further, once placed in the AVS,
a district court could exercise its equitable powers and grant relief
pursuant to SMCRA § 526(c), 30 U.S.C. § 1276(c).
Even given the possible options for relief, the fact remains that,
once listed in the AVS, punitive consequences follow. Therefore, the
district court sufficiently examined the likelihood of hardship to the
parties and properly determined that the second prong of the Abbott
test was met.
Both prongs of the Abbott test being met, this controversy is ripe
for judicial review.2
VI.
Having earlier determined that the district court had subject matter
jurisdiction to consider the applicability of the statute of limitations,
the question now is whether 28 U.S.C. § 2462, in fact, bars OSM
from permit-blocking Arch.
The statute of limitations in question provides that"an action, suit
or proceeding for the enforcement of any civil fine, penalty, or forfei-
ture, pecuniary or otherwise, shall not be entertained unless com-
_________________________________________________________________
2 We do not require Arch to make the Hobson's choice suggested by
OSM: either wait until the company is listed in the AVS and suffer the
incumbent economic and reputation loss, or pay the penalties and bring
an action against OSM for a refund.
15
menced within five years from the date when the claim first accrued.
. . ." 28 U.S.C. § 2462.3 If OSM's 1993 action against Arch is con-
strued as a "civil fine, penalty, or forfeiture" then it was brought too
late because November 8, 1986 (the date the penalties against Green-
dale and Diamond Shamrock Coal took effect because no appeal was
made), is the date of accrual of the action.4
OSM maintains that the statute of limitations does not apply. The
agency argues that it "is not assessing penalties against Arch, nor is
it bringing an action to recover penalties from Arch. . . . [r]ather,
OSM is making a determination of ownership or control which, if
entered into the AVS, will be applied to the review of subsequent per-
mit applications or existing permits." Brief of Appellant at 29. OSM's
argument is not convincing for two reasons.
First, OSM's own regulations suggest that a link through the AVS
constitutes a civil fine or penalty:
[W]here the permittee was linked to the violation, penalty,
or fee through ownership or control under the violations
review criteria . . . the permittee continues to be responsible
for the violation, penalty, or fee."
30 C.F.R. § 773.20(b)(iii). Consistent with this regulation, the agen-
cy's letter of May 21, 1993, told Arch that an AVS listing would
make the company liable for "civil penalties in the amount of
$22,500.00" which were incurred by Greendale. Further, while OSM
is correct that the AVS is used to review permit applications and per-
mits already issued, the very listing on the AVS establishes the link
which is at once both the penalty and the means of enforcing that pen-
alty.
The second reason why the statute of limitations bars OSM from
acting against Arch in this instance is the holding in 3M Company v.
_________________________________________________________________
3 OSM's claim to Greendale's unpaid abandoned mine land (AML)
fees was found by the district court not to be subject to the statute of lim-
itations. Arch does not contest this ruling.
4 The district court found this to be the accrual date and OSM does not
contest the finding. Arch Mineral, 894 F. Supp. at 984.
16
Browner, 17 F.3d 1453 (D.C. Cir. 1994). In that case, 3M petitioned
for review of EPA's assessment of civil penalties for violations of the
Toxic Substances Control Act (TSCA). Id. In making the determina-
tion that EPA's action was an "action, suit or proceeding" pursuant
to § 2462, the 3M court reasoned that there was no evident rationale
for applying the statute of limitations to proceedings brought in court
and not to those brought by an administrative agency. Id. at 1456-
1457. Further, in concluding that the EPA's proceeding for the assess-
ment of civil penalties was "for the enforcement of" a penalty under
§ 2462, the court held that "enforcement" could be read to mean "im-
position." Id. at 1458. See also Johnson v. SEC, 87 F.3d 484, 485
(D.C. Cir. 1996) (where SEC proceeding resulting in censure and
disciplinary suspension of securities industry supervisor was a pro-
ceeding for the enforcement of a penalty pursuant to§ 2462). Reading
"enforcement" to mean "imposition" "forecloses stale claims, one of
the functions of a statute of limitations, since it is in the administra-
tive proceeding that evidence is taken, findings are made and liability
determined." Id. at 1459. We adopt the reasoning of the D.C. Circuit
in 3M and apply it to the instant case. In both 3M and this case,
administrative proceedings are at issue. Also, just as the assessment
proceedings in 3M sought to impose civil penalties, so did the steps
taken to list Arch in the AVS.
OSM seeks to avoid the holding of 3M by claiming that an AVS
listing is simply a permit review tool "to determine whether an entity
owned or controlled by the violator had outstanding violations." Brief
of Appellant at 32. However, an AVS listing is, in addition to being
an aid for reviewing present or potential permittees, a penalty in itself.
Once listed, Arch would not only be permit-blocked, but also auto-
matically subject to the "civil penalties" initially imposed against
Greendale. We thus conclude that the civil penalties sought by OSM
were time-barred.5
_________________________________________________________________
5 The court below ruled on this same statute of limitations question in
a subsequent case and held that § 2462 bars OSM from enforcing civil
penalties levied against a party where violations occurred more than five
years prior to the date OSM began issuing penalties. The OSM sought
to deny permit applications from an entity linked to the violator through
the ownership and control rule. Balmer v. Babbitt, Civ. No. 96-0010
(S.D. W.Va., May 28, 1996). The appeals from this decision are in abey-
ance pending the disposition of the instant case.
17
VII.
We find that the district court had subject matter jurisdiction to
consider Arch's statute of limitations defense, the case was ripe for
judicial review, and the five-year statute of limitations bars OSM's
imposition of civil penalties. For these reasons, we
AFFIRM.
18