FOR PUBLICATION
ATTORNEYS FOR APPELLANT:
ATTORNEY FOR APPELLEE:
STEVE CARTER
Attorney General of Indiana
MICHAEL A. MULLETT
Mullett, Polk & Associates, LLC
Indianapolis, Indiana
FRANCES H. BARROW
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
INDIANA DEPARTMENT OF
NATURAL RESOURCES,
Appellant-Respondent,
vs.
HOOSIER ENVIRONMENTAL
COUNCIL, INC.,
Appellee-Petitioner.
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No. 49A05-0409-CV-493
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Patrick L. McCarty, Judge
Cause No. 49D03-0310-PL-1806
July 26, 2005
OPINION – FOR PUBLICATION
BAILEY, Judge
Case Summary
Appellant-Respondent Indiana Department of Natural Resources (“DNR”) appeals
the trial court’s order determining that Appellee-Petitioner Hoosier Environmental
Council, Inc. (“HEC”) is entitled to all of its fees and costs under Indiana Code Section
14-34-15-10. We affirm in part, reverse in part, and remand.
Issue
DNR raises one issue, which we restate as whether the trial court erred by
substituting its judgment for that of the Natural Resource Commission when it
determined that HEC was entitled to all of its fees and costs under Indiana Code Section
14-34-15-10.
Facts and Procedural History
On May 10, 1995, DNR approved an application filed by Foertsch Construction
Company (“Foertsch”) to amend its existing surface coal mining permit in order to allow
the disposal of coal combustion waste (“CCW”) on the permitted site in Daviess County.
On June 9, 1995, HEC filed a petition for administrative review of the approval and
requested injunctive relief. HEC alleged several problems with the permit amendment:
7.
The permit fails to meet the requirements of ISMCRA [Indiana
Surface Mining Control and Reclamation Act] (IC 13-4.1) and its
regulations and does not comply with requirements to supply
information, characterize the site and its interactions with CCW and
monitor the disposal of CCW that are found in Memorandum 92-1.
8.
The permit fails to define or characterize the premining hydrologic
balance as required by ISMCRA and its regulations. The premining
hydrologic balance has also not been defined or characterized by the
mining permit, #S-00312, that is being amended by this permit.
2
9.
Three aquifers have been identified by monitoring wells in the
permit area, but the permit fails to characterize any of them as
required by ISMCRA and its regulations. Bail tests done for the
permit revealed sufficient water in these aquifers to readily provide
domestic water supply for multiple residences making them aquifers
that must be characterized and protected under ISMCRA.
10.
The permit does not provide adequate site specific data about the
permeability of strata in the mine or the hydrology of the mine area
as required by Memorandum 92-1 and ISMCRA. The extent of
aquifers, direction of ground water flow and rate of flow of ground
water has not been determined correctly or to any degree in most
instances, as required by Memorandum 92-1 and ISMCRA. The
permit fails to place monitoring wells in positions that will monitor
down gradient or up gradient water from the CCW disposal areas as
required by Memorandum 92-1 and ISMCRA. The permit does not
include six months of baseline ground water monitoring data as
required by Memorandum 92-1 and ISMCRA.
11.
The permit will deliberately place millions of tons of toxic-forming
material into direct contact with ground water in the Little Sandy
#10 Mine in violation of ISMCRA and its regulations which prohibit
such contact.
12.
The permit provides no analysis, detailed approximations or even
projections of the leachate that will form in the coal combustion
waste (CCW) disposal areas. The permit has no detailed discussion
of the geochemistry that will take place as a result of CCW disposal
as required by Memorandum 92-1 and ISMCRA.
13.
The permit provides no plan to monitor and avoid impacts to the
offsite hydrologic balance as required by ISMCRA and its
regulations. Such a plan would include monitoring groundwater at
this mine down gradient from the disposal sites once the postmining
equilibrium of ground water flow has been established so that
monitoring wells on the perimeter of disposal areas will monitor
more than just ground water flowing into the mine. The permit does
not attempt to determine when this point in time will occur and
hence provides for no monitoring of groundwater at the Little Sandy
#10 Mine at this point in time. Evidence from other mine
dewatering operations implies that a much greater length of time will
be needed to monitor down gradient ground water from the disposal
areas at this mine than that period provided by the release of bonds
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for surface revegetation.
14.
The permit includes no plan to minimize or remediate adverse
impacts to the offsite hydrologic balance as required by ISMCRA
and its regulations.
The permit establishes no levels of
contamination of ground water which if surpassed will trigger or
require any remedial activity.
15.
The permit is not complete. ISMCRA and its regulations require
that only administratively and technically complete permits be
issued so that a determination can be made that the protection of the
hydrologic balance has been assured and all other requirements of
ISMCRA are being adhered to by the permit. The following are
examples of the permit’s violation of this requirement:
*
The permit does not include any current ash leaching data
from the generators of ash that will be disposed at this site.
*
The copy of this permit provided to HEC by the Division of
Reclamation after the permit was issued, (which copy was paid for
by HEC) includes no information that characterizes the combustion
and pollution control processes that produce the ash from one of the
generators.
*
Additionally the permit does not include data from six
months of baseline ground water quality monitoring, or any
information about the background water quality or water levels to
have been measured by the monitoring well that was to be installed
near drill hole #3. All of this information and much additional
information which was requested as modifications to the permit in a
letter dated January 17, 1995 and signed by Michael Sponsler,
Director of Division of Reclamation, is not in the final permit as
issued on May 10, 1995.
*
Similarly rather than committing to final drainage ways and
surface land contours required under ISMCRA and its regulations to
be shown on a final contour map, the permit states that disposal
needs and requirements will allow the operator to alter (to an
unspecified extent) final contours, post mining drainage ways and
even the locations of monofills as the CCW disposal operation
proceeds.
16.
The permit is based upon statements and data known to be
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inaccurate in violation of ISMCRA and its regulation. For example,
IDOR staff concede that much of the baseline ground water quality
monitoring data in the permit for CCW monitoring wells #2 and #3
is of very questionable value and probably resulted from improper
methods and procedures being used to take samples from these
wells. The permit is replete with other examples of inaccurate
and/or completely incorrect statements or assertions.
Appellant’s App. at 178-80.
HEC asserted that the permit should be denied and
requested that the permit be stayed.
The Natural Resources Commission (“NRC”) assigned Administrative Law Judge
William Teeguarden to hear the case. Over several months, Judge Teeguarden heard
twelve days of expert testimony, and the parties filed approximately 275 pages of briefs.
On October 10, 1996, Judge Teeguarden issued a non-final order. This order set out ten
issues raised by the parties, as follows:
a.
Whether or not the petition for review was timely filed.
b.
Whether or not collateral estoppel applies to a number of issues.
c.
Whether or not there is an adequate characterization of pre-existing
geological and hydrological conditions.
d.
Whether or not the monitoring wells are sufficient in number,
construction, and design.
e.
Whether or not there is adequate isolation and separation of the
CCW to prevent damage from occurring.
f.
Whether or not the lack of compliance criteria should invalidate the
permit.
g.
Whether or not there should be a mechanism in the permit to restrict
future land use or caution future buyers.
h.
Whether or not the amount of CCW allowed to be back filled should
bear some relationship to the amount of coal extracted.
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i.
Whether or not some mechanism must be in place to require long
term monitoring of the site.
j.
Whether or not the testing of the proposed waste was adequate.
Appellant’s App. at 185. Judge Teeguarden approved the issuance of the permit subject
to the following additional permit conditions:
a.
Once coal combustion waste disposal has commenced on a parcel of
leased property, the operator shall file an affidavit with the Daviess
County Recorder which contains the legal description of the
property and a statement that coal combustion waste has been
disposed on the property. The affidavit shall also include a
statement that information as to the location of the disposal and
other relevant information may be obtained from the Division of
Reclamation of the Indiana Department of Natural Resources.
b.
The total volume of coal combustion waste approved for disposal, as
specified on page 1 of permit S-312-1, is reduced by 75%.
c.
An application for final bond release must show the area addressed
by the application has completely recharged and groundwater flow
has stabilized before the application can be approved.
d.
No coal combustion waste can be disposed of on site until the
operator provides the department with base line testing results of
groundwater for 33 parameters which are valid and meaningful and
which are not considered flawed by the laboratory.
Appellant’s App. at 201.
The NRC adopted Judge Teeguarden’s non-final order in its entirety, with the
exception that it altered condition (b) so that CCW was reduced by only 50 percent. HEC
and Foertsch petitioned for judicial review of the NRC’s final order, and the Daviess
County Circuit Court ultimately denied the petitions on September 13, 1997.
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Following the NRC’s final order, HEC petitioned the NRC for costs and attorney
fees. A special administrative law judge found that HEC should be awarded costs in the
amount of $188,906.44. The NRC dissolved the special ALJ’s findings, and denied
HEC’s petition in a final order dated July 22, 2003. HEC sought judicial review, and
HEC and DNR filed motions for summary judgment. The trial court determined that the
NRC abused its discretion because HEC was eligible for fees and was entitled to an
award in the aggregate of its claimed fees and expenses, and reversed the NRC decision.
DNR filed a motion to correct error, which the trial court denied. This appeal ensued.
Discussion and Decision
A. Standard of Review
When we review the decision of an administrative agency, we are bound by the
same standard of review as the trial court. Andrianova v. Ind. Family & Soc. Servs.
Admin., 799 N.E.2d 5, 7 (Ind. Ct. App. 2003). We may neither try the case de novo nor
substitute our judgment for that of the agency. Ind. Dep’t of Envtl. Mgmt. v. Schnippel
Constr., Inc., 778 N.E.2d 407, 412 (Ind. Ct. App. 2002), trans. denied. We will reverse
an administrative decision only if it is “(1) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law; (2) contrary to a constitutional right, power,
privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or
short of statutory right; (4) without observance of procedure required by law; or (5)
unsupported by substantial evidence.” Ind. Code § 4-21.5-5-14(d)(1)-(5).
7
B. Analysis
The present case involves an issue of first impression in the application of Indiana
Code Section 14-34-15-10 and 312 Indiana Administrative Code 3-1-13, which govern
the award of costs to certain parties involved in an ISMCRA proceeding. We addressed
the history of ISMCRA in Peabody Coal Co. v. Ind. Dep’t of Nat. Resources, 629 N.E.2d
925 (Ind. Ct. App. 1994), summarily affirmed in part, 664 N.E.2d 1171 (Ind. 1996), as
follows:
In 1977, after previous attempts in 1973 and 1975, Congress passed, and
the President signed, the Surface Mining Control and Reclamation Act
(SMCRA) [30 U.S.C. § 1201 et seq.]. SMCRA is designed to provide a
uniform nationwide program for the reclamation of land affected by surface
coal mining operations. 30 U.S.C.A. § 1202. Uniformity is to be achieved,
however, not through direct United States Department of the Interior
control of surface mining across the nation, but rather through Interior
Department oversight authority over state programs which must be at least
as stringent as the federal program. 30 U.S.C.A. §§ 1253, 1271(d). If a
state fails to develop a program, or fails to develop an acceptable program
after the Secretary of the Interior has rejected a proposed program, the state
will not obtain permanent regulatory authority, and a federal plan will be
imposed. 30 U.S.C.A. § 1254; Hodel v. Indiana (1981), 452 U.S. 314,
319-20, 101 S. Ct. 2376, 2380-81, 69 L. Ed.2d 40. Once a state has
obtained permanent regulatory authority, it must labor diligently to enforce
its approved program vigorously, or the Interior Department will take over
enforcement duties. 30 U.S.C.A. §§ 1254(b), 1271(b). Indiana achieved
permanent regulatory authority, known as “primacy,” on July 29, 1982.
See C.F.R. § 914.10 (1991).
* * * * * *
[Indiana’s act, the ISMCRA] is largely a copy of the SMCRA . . . . In
enacting the [ISMCRA], our General Assembly made clear its unequivocal
intent to avoid federal control of Indiana surface coal mining and land
reclamation. See Ind. Code 13-4.1-1-1(4); 13-4.1-1-2(1). Indeed, the first
purpose of the [ISMCRA] is to implement and enforce SMCRA. Id.
Therefore, because our first goal in construing a statute is to give effect to
8
the intent of the legislature, [citation omitted], we will look to SMCRA and
the federal rules adopted under it as we analyze the [ISMCRA].
Id. at 930-31 (quoting Ind. Dep’t of Nat. Resources v. Krantz Bros. Const. Corp., 581
N.E.2d 935, 937 (Ind. Ct. App. 1991)).
Generally, awards of fees are governed by the American Rule, under which each
party bears its own costs. Rogers Group Inc. v. Diamond Builders LLC, 816 N.E.2d 415,
420 (Ind. Ct. App. 2004), trans. denied. However, exceptions to the American Rule exist
where certain fee-shifting statutes give a court or agency discretion to order one party to
pay another party’s reasonable attorney fees. See, e.g., Buckhannon Bd. & Care Home v.
West Virginia Dep’t of Health & Human Res., 532 U.S. 598, 603-04 (2001) (interpreting
Fair Housing Amendments Act and Americans with Disabilities Act). Even under feeshifting statutes, however, an award of attorney fees may be proper only if the requesting
party obtained “some degree of success on the merits.” Ruckelshaus v. Sierra Club, 463
U.S. 680, 694 (1983).
In interpreting ISMCRA, both parties turn to precedent from other jurisdictions
concerning the application of other jurisdiction’s SMCRA fee-shifting provisions. Based
upon this precedent, HEC and DNR agree that the examination of an award of fees
involves a two-prong analysis, as set forth in West Virginia Highlands Conservancy, Inc.
v. Norton, 343 F.3d 239 (4th Cir. 2003). First, there is an eligibility requirement, in
which a party must demonstrate that it achieved at least some degree of success on the
merits of the party’s claim. Id. at 245. If the party is able to demonstrate that it is
eligible for an award of costs, the focus shifts to an entitlement requirement, wherein the
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party must demonstrate that it made a substantial contribution to the determination of the
issues. Id.
In its brief, DNR concedes that the NRC erred in concluding that HEC was not
eligible for an award. Accordingly, our focus shifts to whether HEC is entitled to fees
under Indiana Code Section 14-34-15-10.
Under ISMCRA and the regulations
promulgated thereunder, the NRC may award costs, including attorney fees, in certain
situations. Indiana Code Section 14-34-15-10 provides:
Whenever an order is issued:
(1) under this chapter or under IC 13-4.1-11 (before its repeal); or
(2) as a result of an administrative proceeding under this article or
under IC 13-4.1 (before its repeal) instituted at the request of a person;
the court, resulting from judicial review, or the commission may assess
against either party to the proceeding an amount of money, determined by
the commission, equal to the aggregate amount of all costs and expenses,
including attorney’s fees, reasonably incurred by the person for or in
connection with the person’s participation in the proceedings, including any
judicial review of agency actions.
More specifically, 312 I.A.C. 3-1-13 outlines who and how one may receive an award, in
pertinent part, as follows:
(a) This section governs an award of costs and expenses reasonably
incurred, including attorney fees, under IC 14-22-26-5, IC 14-24-11-5, IC
14-34-15-10, or IC 14-37-13-7.
*****
(d) Appropriate costs and expenses, including attorney fees, may be
awarded under IC 14-34-15-10 only as follows:
*****
(2) To a person from the department, other than to a permittee or the
permittee’s authorized representative, who initiates or participates in a
10
proceeding and who prevails in whole or in part, achieving at least some
degree of success on the merits, upon a finding that the person made a
substantial contribution to a full and fair determination of the issues.
*****
(f) In determining what is a reasonable amount of attorney fees under
subsection (b), consideration shall be given to the following factors:
(1) The nature and difficulty of the proceeding.
(2) The time, skill, and effort involved.
(3) The fee customarily charged for similar legal services.
(4) The amount involved in the proceeding.
(5) The time limitations imposed by the circumstances.
(6) For a party represented by an attorney who is a full-time, salaried
employee of the party, consideration also shall be given to the prorated cost
of:
(A) the salary of the attorney and clerical or paralegal employees of the
party who assisted the attorney; and
(B) their employee benefits attributable to the time devoted to
representation.
*****
In West Virginia Highlands Conservancy (“WVHC”), the Fourth Circuit noted
that, while the question of eligibility is a matter of law that could be determined by the
trial court, the entitlement question was a factual question that was inappropriate for
determination by the trial court on judicial review. WVHC, 343 F.3d at 248. In that
case, the Department of the Interior’s Interior Board of Land Appeals (“IBLA”) denied
WVHC’s petition for attorney fees following the WVHC’s prosecution of a citizen
complaint under SMCRA. The IBLA denied WVHC’s petition, but upon judicial review,
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the trial court reversed, finding that WVHC was eligible for fees under SMCRA and was
entitled to them because WVHC had made a substantial contribution to the prosecution of
the citizen complaint. On appeal, the Fourth Circuit affirmed the trial court’s finding that
WVHC was eligible for fees, but reversed the trial court on the entitlement issue,
determining that the trial court improperly usurped the agency authority to make factual
findings.
The procedural history of WVHC is similar to the history in the present case.
HEC contends, however, that because the special ALJ already made findings with respect
to the entitlement issue, the trial court could properly determine the entitlement issue as a
matter of law. We disagree.
The NRC is the “ultimate authority” of the DNR, subject to certain exceptions not
applicable here. 312 I.A.C. 3-1-2. As such, the NRC may affirm, modify, or dissolve the
non-final order of an administrative law judge. Ind. Code § 4-21.5-3-29. In this case,
the NRC dissolved the special ALJ’s non-final order and made its own findings and
conclusions, ultimately deciding that HEC was not eligible for fees under Indiana Code
Section 14-34-15-10, a decision the DNR now concedes as erroneous. Thus, the NRC
never reached the issue of whether HEC is entitled to fees under ISMCRA. Rather than
remanding the matter to the NRC, the trial court substituted its judgment for the NRC and
essentially adopted the special ALJ’s findings and conclusions. The trial court erred in so
doing. See Ind. Code § 4-21.5-5-11; see also Ind. Code § 4-21.5-3-29 (reserving the
decision to affirm, modify, or dissolve a non-final order of an ALJ to the ultimate
authority).
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Our supreme court discussed the principles of administrative law in Medical
Licensing Bd. of Ind. v. Provisor, 669 N.E.2d 406 (1996). In that case, the supreme court
determined that agency principles are founded in the constitutional doctrine of separation
of powers:
As part of the judicial branch, a court has no authority to usurp or exercise
the functions of an administrative agency during judicial review of the
agency’s order. A court may not substitute its judgment on the merits of an
issue for that of an administrative body acting within its jurisdiction. The
purpose of judicial review of an administrative order is “solely to determine
whether or not the body was outside the limits and jurisdiction of such
body. Once the matter of jurisdiction is determined the court has no further
right to interfere with an administrative procedure which belongs to another
department of the government—not the judiciary.”
Provisor, 669 N.E.2d at 408 (quoting Enservco, Inc. v. Ind. Securities Div., 623 N.E.2d
416, 420 (Ind. 1993)) (internal citations omitted).
We pay due deference to the interpretation of a statute by the administrative
agency that is charged with its enforcement in light of its expertise in its given area.
Ballard v. Book Heating & Cooling, Inc., 696 N.E.2d 55, 56 (Ind. Ct. App. 1998), trans.
denied. However, we note that, as an issue of first impression, the NRC has not yet
interpreted or applied this part of ISMCRA because it erred in finding the HEC was not
eligible for an award of costs. Moreover, we note that the statute itself gives the NRC
discretion in awarding costs and determining the amount of the award. Williams v. City
of Indianapolis Dep’t of Pub. Works, 558 N.E.2d 884, 887 (Ind. Ct. App. 1990) (holding
that “normally, the word ‘may’ in a statute implies a permissive condition.”), trans.
denied; see also WVHC, 343 F.3d at 249 (holding that the Board will “set the amount” of
the award if it determined WVHC was entitled to costs). Accordingly, we reverse the
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trial court’s order with respect to the entitlement issue and remand this matter to the NRC
to conduct further proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded.
FRIEDLANDER, J., and ROBB, J., concur.
14
