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Farrell-Cooper Mining Co. v. United States Department of Interior

United States Court of Appeals, Tenth Circuit

July 25, 2017

FARRELL-COOPER MINING COMPANY, Plaintiff - Appellant,
v.
UNITED STATES DEPARTMENT OF THE INTERIOR; SALLY JEWELL, as the Secretary of the U.S. Department of the Interior; OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT; JOSEPH PIZARCHIK, as the Director of the Office of Surface Mining Reclamation and Enforcement, Defendants - Appellees.

         Appeal from the United States District Court for the Eastern District of Oklahoma (D.C. No. 6:16-CV-00012-RAW)

          Stan D. Smith, Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Little Rock, Arkansas (Brian A. Pipkin, Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Little Rock, Arkansas, and Thomas J. McGeady, and Donna L. Smith, Logan & Lowry, Vinita, Oklahoma, with him on the briefs), for Plaintiff-Appellant.

          John Emad Arbab, Attorney, United States Department of Justice, Washington, D.C. (John Austin, of Counsel, United States Department of Interior, Knoxville, Tennessee, John C. Cruden, Assistant Attorney General, and Katherine J. Barton, Attorney, United States Department of Justice, Washington D.C., with him on the brief), for Defendants-Appellees.

          Before KELLY, LUCERO, and McHUGH, Circuit Judges.

          LUCERO, CIRCUIT JUDGE.

         Under the Administrative Procedure Act ("APA"), agencies may require regulated parties to pursue administrative appeals before seeking review in federal court. But as the Supreme Court explained in Darby v. Cisneros, 509 U.S. 137 (1993), intra-agency review "is a prerequisite to judicial review only when expressly required by statute or when an agency rule requires appeal before review and the administrative action is made inoperative pending that review." Id. at 154. This rule prevents agencies from enforcing initial decisions while a mandatory administrative appeal is pending, which would effectively insulate such decisions from judicial scrutiny.

         The Department of the Interior ("DOI") has adopted an administrative appeal requirement for agency actions under the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. §§ 1201 et seq. Following an initial decision by an administrative law judge ("ALJ"), DOI regulations require an adversely affected party to concurrently file an appeal and a petition for stay pending appeal with the Interior Board of Land Appeals ("IBLA") to exhaust administrative remedies. 43 C.F.R. § 4.21(c). However, an ALJ decision is not always rendered inoperative pending appeal. Instead, the IBLA retains discretion to grant or deny the stay. § 4.21(b).

         We must decide whether the IBLA's denial of a stay renders an ALJ's decision final for purposes of judicial review, notwithstanding a pending IBLA appeal. This question is controlled by Darby: "Agencies may avoid the finality of an initial decision" only "by providing that the initial decision would be inoperative pending appeal. Otherwise, the initial decision becomes final and the aggrieved party is entitled to judicial review." 509 U.S. at 152 (quotation omitted). Because the ALJ's decision in this case was not rendered inoperative pending appeal to the IBLA, it constitutes final agency action. Exercising jurisdiction under 28 U.S.C. § 1291, we reverse the district court's contrary conclusion and remand for further proceedings.

         I

         Under SMCRA, states may submit proposed regulatory programs to DOI and, if approved, obtain regulatory jurisdiction over surface coal mining and reclamation operations. See Farrell-Cooper Mining Co. v. U.S. DOI, 728 F.3d 1229, 1232 (10th Cir. 2013) (citing 30 U.S.C. § 1253(a)). Oklahoma has obtained such approval and has designated the Oklahoma Department of Mines ("ODM") to administer its SMCRA program. Id. (citing 30 C.F.R. § 936.10; Okla. Admin. Code § 460:20-1-4).

         Although ODM is primarily responsible for enforcing SMCRA in Oklahoma, DOI retains oversight through its Office of Surface Mining Reclamation and Enforcement ("OSM"). Whenever OSM "has reason to believe that any person is in violation of any requirement of [SMCRA] or any permit condition required by [SMCRA], " it may issue notice to a state regulatory authority. 30 U.S.C. § 1271(a)(1). Unless a state takes "appropriate action" within ten days of the notice or shows "good cause" for failing to do so, OSM orders a federal inspection. Id. These notices are thus referred to as "ten-day notices." If, following federal inspection, OSM determines a permittee is in violation of SMCRA or a permit condition, it issues a notice of violation ("NOV"). § 1271(a)(3). OSM then sets "a reasonable time but not more than ninety days for the abatement of the violation." Id. A failure to abate will result in an OSM order for "cessation of surface coal mining and reclamation operations or the portion thereof relevant to the violation." Id. Further, a mine operator found to be in violation will be prohibited from obtaining new permits for other mines. § 1260(c).

         Farrell-Cooper Mining Co. ("Farrell-Cooper") operates the Rock Island Mine in Leflore County, Oklahoma, pursuant to a permit issued by ODM. In July 2012, OSM issued a ten-day notice for the Rock Island Mine, alleging a violation of SMCRA's requirement that mine operators "restore the approximate original contour of the land." § 1265(b)(3). OSM and ODM have been engaged in a long-running dispute regarding the proper interpretation of the approximate original contour ("AOC") standard. ODM responded to the ten-day notice by reiterating its position that OSM has misconstrued the AOC standard and arguing that the Rock Island Mine was compliant. By letter dated April 2, 2013, OSM rejected ODM's response as arbitrary, capricious, or an abuse of discretion. ODM sought informal review of that decision, and OSM affirmed.

         Following a federal inspection, OSM issued an NOV to Farrell-Cooper on August 19, 2013. The notice required Farrell-Cooper to abate reclamation activities, submit a new reclamation plan, diligently pursue OSM approval, and then implement the new plan. Farrell-Cooper alleges that complying with the NOV would require it to transfer millions of yards of earth, imposing an "untenable financial burden."

         On August 28, 2013, Farrell-Cooper filed a "Conditional Application for Review and Conditional Request for Temporary Relief and Stay" with DOI's Office of Hearings and Appeals ("OHA"). Following lengthy proceedings, an ALJ upheld the NOV on September 30, 2015. On October 19, 2015, Farrell-Cooper filed a notice of appeal and a petition for stay pending appeal with the IBLA. After the ALJ issued an amended decision clarifying his prior order, the IBLA denied a stay, concluding that Farrell-Cooper had not demonstrated a likelihood of success on the merits. That denial-issued December 14, 2015-rendered the ALJ's decision immediately effective. See 43 C.F.R. § 4.21(a)(3) ("A decision, or that portion of a decision, for which a stay is not granted will become effective immediately after . . . [the IBLA] denies or partially denies the petition for a stay."). Accordingly, OSM proceeded to enforce the NOV, issuing a document titled "Modifications of Notice of Violation or Cessation Order" that required Farrell-Cooper to undertake certain abatement measures.

         On January 12, 2016, Farrell-Cooper submitted its "Statement of Reasons" and Appellate Brief to the IBLA in the still-pending administrative appeal. The next day, it filed suit in federal court seeking review of the ALJ's decision under 5 U.S.C. § 706 and 30 U.S.C. § 1276, as well as a stay of further enforcement action. In light of the federal lawsuit, OSM filed a motion before the IBLA on January 20, requesting the administrative appeal be held in abeyance. The IBLA granted OSM's motion on February 26. It suspended all further action and briefing in the administrative appeal and requested periodic status reports until "the issuance of a final, non-appealable decision" in the federal case.

         DOI then moved to dismiss the federal complaint. The district court granted the motion, concluding it lacked subject matter jurisdiction because the ALJ's decision did not constitute final agency action. Farrell-Cooper moved for reconsideration pursuant to Fed.R.Civ.P. 59(e), but the district court denied relief. Farrell-Cooper then filed a timely notice of appeal and motion to enjoin DOI from enforcing the NOV pending appeal to this court. It submitted an affidavit indicating that as a result of the NOV, the company had already spent nearly $75, 000 in engineering, surveying, and permitting costs, and that an additional $3.5 million would be required absent intervention. The district court granted an injunction pending appeal.

         II

         We review de novo a district court's dismissal for lack of jurisdiction. Grynberg v. Kinder Morgan Energy Partners, L.P., 805 F.3d 901, 905 (10th Cir. 2015). "Pursuant to the APA, we have jurisdiction to review only final agency actions." McKeen v. U.S. Forest Serv., 615 F.3d 1244, 1253 (10th Cir. 2010) (quotation omitted). "Whether federal conduct constitutes final agency action within the meaning of the APA is a legal question." Colo. Farm Bureau Fed'n v. U.S. Forest Serv., 220 F.3d 1171, 1173 (10th Cir. 2000).

         A

         The APA provides that "[e]xcept as otherwise expressly required by statute, agency action otherwise final is final for the purposes of this section whether or not there has been presented or determined an application . . . for an appeal to superior agency authority[, ]" "unless the agency otherwise requires by rule and provides that the action meanwhile is inoperative." 5 U.S.C. § 704. The Supreme Court has explained that, in passing this provision, "Congress clearly was concerned with making the exhaustion requirement unambiguous so that aggrieved parties would know precisely what administrative steps were required before judicial review would be available." Darby, 509 U.S. at 146.[1] Accordingly, to avoid turning the statute "into a trap for unwary ...


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