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Administrative Law Judge Decision 79-24 |
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ROBERTS BROTHERS COAL CO., INC. v OSM; Docket Nos. NX 9-20-R, NX 9-34-P (November 14, 1979)
TYPE: ALJ Hearing: Decision
NAME: ROBERTS BROTHERS COAL CO., INC., Applicant v OFFICE OF SURFACE MINING RECLAMATION
AND ENFORCEMENT (OSM), Respondent
DATE: November 14, 1979
CASE-NO: Docket Nos. NX 9-20-R, NX 9-34-P
PROCEEDING: Docket No. NX 9-20-R, Application for Review, Notice of Violation No. 78-II-21-12; Docket No.
NX 9-34-P, Civil Penalty Proceeding, Notice of Violation No. 78-II-21-12
COUNSEL: William D. Donan, Esquire, 101 E. Center Street Madisonville, Kentucky, for Applicant; John Philip
Williams, Esquire, Office of the Field Solicitor, U.S. Department of the Interior, Knoxville, Tennessee, for Respondent.
OPINIONBY: Administrative Law Judge Truswell
OPINION:
BACKGROUND
In accordance with section 525 of the Surface Mining Control and Reclamation Act of 1977 (the Act), Roberts
Brothers Coal Co., Inc. (applicant) applied on January 22, 1979 for review of the notice of violation issued by the Office
of Surface Mining Reclamation and Enforcement (respondent) under section 521(a) (3) of the Act. Subsequently, on
July 9, 1979 under section 518 of said Act applicant petitioned for review of a proposed civil penalty assessment issued
by respondent. Contemporaneous with the filing of this petition, applicant in accordance with the requirements of 43
CFR 4.1152(b) (1) paid the full amount of the proposed penalty ($900.00) to the Assessment Office, Office of Surface
Mining to be placed in an escrow account pending a final determination of the proposed assessment. A hearing was
held before the undersigned in Evansville, Indiana, on August 31, 1979 at which time both cases were consolidated for
hearing and decision.
A schedule for the submission of posthearing briefs was established and all such briefs have now been received.
FACTS
{2} On October 27, 1978 OSM inspector Gail Kowaleski, an authorized representative of the Secretary of the
Interior, inspected applicant Roberts Brothers Coal Company, Inc.'s operation in Hopkins County, Kentucky (Tr. 18).
The operation had no sediment control whatsoever (Tr. 23). Ms. Kowaleski discussed the situation with Bennie
Roberts, a co-owner of applicant, on October 27, and subsequently telephoned him on October 31, 1978 to inform him
that applicant's operation is subject to OSM requirements (Tr. 23). Mr. Roberts assured her that applicant could install
sediment control within 30 days (Tr. 23-24).
Ms. Kowaleski inspected this operation again on December 13, 1978 with two officials from the Environmental
Protection Agency (EPA) (Tr. 24-25). By December 13 the company had constructed a berm alongside the creek, but
there were no sedimentation ponds to catch the surface drainage. The drainage was merely channeled by the berm
directly into the creek at the south end of the disturbed area (Tr. 25, 37-38).
Ms. Kowaleski again inspected the operation on December 27, 1978. She found that there were still no
sedimentation ponds, so she issued Notice of Violation No. 78-II-21-12 to applicant (Tr. 26-27; Exh. R #1). The nature
of the violation was: "All surface drainage from the disturbed area does not pass through a sedimentation pond or series
of sedimentation ponds" (Tr. 26; Exh. R #1).
OSM subsequently received a letter from applicant's consultant, Donan Engineering, Inc., dated January 4, 1979
stating that the remedial work would be completed by February 9, 1979 (Tr. 24-35; Exh. R #5). In response to this
letter, OSM modified the notice of violation to extend the time for completion of the remedial action from January 10,
1979 to February 9, 1979 (Tr. 35; Exh. R #2).
The time for completion of the remedial action was later extended again by OSM to March 5, 1979 due to the bad
weather (Tr. 35-36; Exh. R #3). The notice of violation was finally terminated on March 7, 1979 after the company had
constructed two sedimentation ponds, seeded and mulched the berm, and installed treatment devices to treat the water
before it was discharged into the creek (Tr. 36; Exh. R #4).
OSM initially assessed applicant $3,500.00 for the notice of violation. Following an assessment conference
requested by applicant, the penalty was reduced from $3,500.00 to $900.00 (Tr. 147-148; Exh. R #6).
The hearing involved both the validity of the violation and the amount of the penalty for the violation.
ISSUES
Applicant expressed the following to be the issues in this case:
{3} 1. Whether or not the applicant's tipple operation falls within the purview of the respondent's regulations as a
surface coal mining operation and as such, subject to respondent's regulations or whether or not applicant, as a tippling
operation, is not subject to the regulations; and
2. Whether or not applicant having submitted itself to the compliance with the Environmental Protection Agency
and being in conformity with said law should be removed or exempted from the respondent's regulations; and
3. Whether or not the respondent in assessing the applicant the maximum violation did not consider respondent's
pertinent criteria in order to establish the proposed assessment.
DISCUSSION, FINDINGS, & CONCLUSIONS
Bennie Roberts testified that the following activities are conducted at applicant's operation: weighing, crushing,
preparation, and stokering of coal (Tr. 64). The facility is owned and operated by Roberts Brothers Coal Company, Inc.
(Tr. 63-64). Coal is bought from producers in the surrounding area. The most remote producer is 25 miles away
(Answer to Interrogatory #5)
Ms. Kowaleski testified that applicant's operation has disturbed about 20 acres (Tr. 22). She observed scales to
weigh the in-coming coal, a sprayer to keep the dust down, and a crusher to crush the coal (Tr. 23, 49).The coal leaves
applicant's operation by truck after being crushed (Tr. 49).
Immediately adjacent to applicant's operation - about 200 - 300 feet from it - is a surface mine (Tr. 18, 21).
According to Ms. Kowaleski, one must drive through applicant's operation in order to reach the surface mine (Tr. 18).
She had inspected the surface mine on October 27, 1978 immediately prior to her initial inspection of applicant's
operation (Tr. 18).
Orbit Mining Company had obtained the mining permit for the adjacent surface mine - Permit No. 054-0003 (Tr.
19). Orbit's permit map shows the close geographical relationship between this mine and applicant's operation (Tr. 19;
Exh. R #7). The access road included as a part of Orbit's permit area runs through applicant's operation (Tr. 19-20).
Orbit's permit map shows that "Roberts Brothers" owns the land and the mineral rights where Orbit's surface mine
is located adjacent to applicant's operation (Tr. 20-21; Exh. R #7). Mr. Roberts admitted that this mine is on "Roberts
Brothers Coal lease property" (Tr. 76). He was not certain but thought that the land and mineral rights are owned by the
two Roberts brothers (Paul and Bennie) individually and not by the corporation, Roberts Brothers Coal Company, Inc.
(Tr. 92-94). At any rate, the only two stockholders of Roberts Brothers Coal Company, Inc. are Paul and Bennie
Roberts (Tr. 68).
{4} The first page of Orbit's permit application for this surface mine shows that Orbit Mining Company is owned by
Gene Quisenberry (Exh. R #8). Mr. Quisenberry is also the owner of Kirkwood Excavating, Inc. (Exh. R #10), which is
currently the largest supplier of coal to applicant's coal processing facility (Answer to Interrogatory No. 4). Mr. Roberts
testified that Gene Quisenberry has been applicant's largest supplier of coal over the last several years (Tr. 86-87).
Roberts Brothers has a financial interest in much of the mining machinery and equipment used by Mr. Quisenberry
at his mines (Tr. 71-75, 87-88; Exh. R #18). Roberts Brothers advanced operating capital to Orbit Mining Company,
and took a mortgage on the equipment used at Orbit's mines on Roberts Brothers coal lease property (Tr. 74-75).
The time period during which OSM inspected and took enforcement action against applicant's processing operation
is October, 1978 to March, 1979. During this time period, Orbit Mining Company had sub-contracted with Glen
Larkins to mine coal at the surface mine adjacent to applicant's facility. Orbit was the permittee, Larkins the operator
(Tr. 21-22; Exh. R #9, R #12).
During October to December, 1978, applicant recieved 10,862 tons of coal from the adjacent surface mine,
according to Mr. Roberts' testimony (Tr. 76-77). This figure coincides exactly with the figure supplied by Larkins to the
Kentucky Department of Mines & Minerals as the amount of coal produced at this mine during that time period (Tr. 60-62; Exh. R #12). In other words, all the coal being mined at this surface mine was being processed at applicant's nearby
facility.
Ms. Kowaleski observed the coal being delivered by Larkins from Orbit's surface mine to applicant's facility (Tr.
22). According to her testimony, "there was a particular section of the tipple site that was set aside for coal from that
mine" (Tr. 22). In fact, Glenn Larkins confirmed for her that "one special area - northern most portion of the tipple area
was set aside just for the coal for (sic) that mine" (Tr. 28).
Roberts Brothers has a unique arrangement with its suppliers. More than 50 percent of the coal delivered to
applicant's processing plant comes from Roberts Brothers' coal lease property, i.e., the coal from mines operated by T
& N Powell Mining Company, Inc., Kirkwood Excavating, Inc., and J.C. Coal Company (Tr. 82; Answer to
Interrogatory No. 4). Bennie Roberts testified that applicant has "an unwritten contract" and "a close working
relationship" with these suppliers (Tr. 81).
{5} The Roberts Brothers own some mining machinery, under the name Richland Mining Company (a corporation
wholly owned by Paul and Bennie Roberts). They lend this machinery to their suppliers whenever necessary, "sort of
like farmers in communities swapping work" (Tr. 69-71). In fact, the Roberts Brothers have such a close "working
relationship" with their suppliers that they were recently investigated by the Internal Revenue Service for failure to
engage in arms-length transactions. The finding, however, was that all such agreements were at arms length (Tr. 103).
Applicant controls the amount of coal delivered to its facility by deciding how much of its property to lease out for
mining (Tr. 86). Although there is not a written contract which requires the suppliers to deliver the coal mined on
Roberts Brothers property to applicant's processing facility, Mr. Roberts admitted he anticipates that all this coal will
come back to applicant's facility to enable applicant to meet its contract demands (Tr. 104-105).
Also the recent history of the area is at least interesting. Roberts Brothers purchased the property where the
processing plant is now located in 1968 (Tr. 90). Included were abandoned facilities which had been used for mining
and processing coal (Tr. 91). The underground mine there was operated for a while (Tr. 91). Applicant now owns the
land where its processing plant is located (Tr. 91-92). This property included what is now referred to as the Orbit
surface mine (Tr.92).
Applicant relies upon two cases in support of its argument that it is not subject to the regulations of respondent:
Western Engineering, Inc. 1 IBSMA 202 and Ross Tipple Company, Docket No. NX 9-17-P and NX 9-49-R.
Respondent argues, however, that the facts of Western are easily distinguishable from the facts of this case. It has
interpreted the Board's decision to allow OSM to exercise jurisdiction over the following classes of processing or
loading facilities:
(1) any such facility which is on or at a minesite;
(2) any such facility adjacent to a mine which sends substantially all of its coal to that facility, regardless of ownership
differences between the mine and the facility;
(3) any such facility which is connected to a minesite by a private road, belt line or other private way or conveyance,
and which receives substantially all the coal from that mine, regardless of ownership differences between the mine and
the facility; and
(4) any facility that receives a majority of its coal from one particular mine, and is operated by the same legal entity
that operates the mine or by a legal entity at least 50 percent of which is owned by the same person or persons owning
the facility.
It contends that applicant's facility falls squarely within the second of the four classes described above.
The testimony of Bennie Roberts could have been more certain but I shall nevertheless accept as a fact the contention
of applicant in its reply brief: "...applicant, as a legal entity, has no interest in any mining activity, coal or coal leases or
no contracts with any producers covering coal production." It is equally true, however, that the Roberts Brothers as
individuals or through other corporations owned by them are involved, as above indicated, with corporate permitees
and/or operators or their individual owners. All coal mined at the Orbit mine - about 200 - 300 feet from applicant's
facility - during the time in question was processed at applicant's adjacent facility. A particular section of the tipple site
was set aside for coal from this mine. Over 50 percent of the coal delivered to and purchased by applicant's processing
plant comes from Roberts Brothers' coal lease property. Bennie Roberts anticipates that all this coal will come back to
applicant's facility to enable it to meet its contract demands. And the amount of coal delivered to applicant's facility is
controlled by determing how much Roberts Brothers' property to lease for mining.
{6} The above are facts which I find distinguish this case from Western Engineering, Inc. I further find that
applicant is engaged in the processing or preparation of coal, from a surface mine, at or near the mine site and that such
product enters commerce. I therefore conclude that applicant's operation constitutes "surface coal mining operations"
within the meaning of this term as it is used in the interim regulations.
Applicant next contends that it is not subject to OSM's jurisdiction inasmuch as it has been subjected to the
jurisdiction and regulations of the Environmental Protection Agency.It recites in its brief that it had applied to the U.S.
Environmental Protection Agency (EPA) for a National Pollutant Discharge Elimination System (NPDES) permit.
Normally a mining company is subject to the jurisdiction of both EPA and OSM. Nothing in the Act or in the
interim regulations suggests that a company can remove itself from OSM's jurisdiction by applying to EPA for a
NPDES permit.
Applicant, in support of its argument, relies upon the case of In re Surface Mining Regulation Litigation, 452, F.
Supp. 327 (1978), at page 344:
The command of the Act is clear, however. The regulations of OSM may not supersede, amend, modify or repeal
the provisions of the Federal Water Pollution Contract Act 33 U.S.C. Section 1151-1175 and regulations promulgated
pursuant to its commands. Thus, although the Secretary has the authority to apply the standards of the FWPCA
program to the operators and to fill in the gaps of the program with a more comprehensive regulatory scheme, the
interim regulations may not impose stricter standards than those specifically set forth in the FWPCA program.To allow
the Secretary to do so would amend and modify the FWPCA and its regulations. Therefore, the standards of Section
715.17(a) of the regulations will be enjoined to the extent that they supersede, amend, repeal or modify the provisions of
the FWPCA and its regulations."
{7} The court here recognized the authority of the Secretary of the Interior to apply the standards of the FWPCA
program to the operators and to fill in the gaps of the program with a more comprehensive regulatory scheme.
Furthermore, Judge Flannery in another opinion, in the same case, on August 24, 1978, 456 F. Supp. 1301, 1314, said:
"...Thus, the court cannot conclude that the requirements of Sections 715.17(a) and 717.17(a) repeal, amend,
supersede, or modify the provisions of Section 208 of the FWPCA because the Secretary has filled a regulatory gap
where the EPA has no authority to act and the states have not yet promulgated a regulatory program..."
For a detailed discussion of this whole matter see Peabody Coal Company v. OSM, Docket No. KC 9-1-P (April 10,
1979).
I find this argument of applicant to be without merit.
(3) Civil Penalty of $900.00
Respondent is seeking a civil penalty of $900.00 based on the following point total: 30 CFR 723.1 et seq.
{7}
________________________________________________________________________________
History of Previous Violation
0
Seriousness
Probability of Occurrence
15
Extent of Potential or Actual Damage
8
Negligence
6
Good Faith
0
29
________________________________________________________________________________
I find that a civil penalty of $460.00 is sustainable for this violation based on the following point total:
{8}
________________________________________________________________________________
History of Previous Violation
0
Seriousness
Probability of Occurrence
15
Extent of Potential or Actual Damage
8
Negligence
0
Good Faith
0
23
________________________________________________________________________________
The surface drainage from applicant's operation on December 27, 1978 did not pass through a sedimentation pond
prior to leaving the disturbed area. Water pollution, the event the violated standard was designed to prevent, had
occurred. The assignment of 15 points is proper.
The pollutants drained into a stream which flowed beyond applicant's operation thus making an assignment of eight
points the lowerst number possible.
Applicant is here engaged in a process to determine whether OSM regulations have application to its operation. A
reading of the Act and of the regulations would not necessarily so convince it. It has nevertheless accomplished the
stated remedial action with work "of real high quality". Under these facts it appears improper to characterize applicant
as negligent and to assign penalty points therefor. I find no negligence and assign no points.
Applicant, with benefit of two time extensions, completed the remedial work in a normal manner within a normal
time period. No points therefor should be added or subtracted.
ORDER
Notice of Violation No. 78-II-21-12, December 27, 1978, is sustained. The amount of proposed civil penalty is
reduced from $900.00 to $460.00. The remainder of the penalty assessment, $440.00, which has been held in an
escrow account, must be returned to applicant with interest at the rate of six percent or with interest at the prevailing
Department of the Treasury rate, whichever is greater.
This decision may be appealed in accordance with 43 CFR Section 4.1270 and/or Section 4.1271 by filing a notice
of appeal and/or petition for discretionary review within 30 days from receipt of this decision with the Board of Surface
Mining and Reclamation Appeals, U.S. Department of the Interior, 401