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Graham v. Office of Surface Mining Reclamation and Enforcement

November 29, 1983


On Appeal from the United States District Court for the Western District of Pennsylvania.

Gibbons, Garth, and Higginbotham, Circuit Judges.

Author: Garth


GARTH, Circuit Judge:

Maynard Graham and Graham Brothers Coal Co. (Graham) appeal from an order granting summary judgment in favor of the Office of Surface Mining Reclamation and Enforcement (OSM). The district court upheld the constitutionality of Section 518(c) of the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C. § 1268(c) (Supp. II 1978). Section 1268(c) provides, inter alia, that a mine operator, against whom a civil penalty has been assessed by the OSM, must prepay the proposed amount of the penalty into escrow in order to preserve his right to appeal the penalty through various formal review procedures within the OSM and ultimately through the courts.*fn1 We agree with the district court that the Surface Mining Act (the Act) provides a mine operator ample opportunity to challenge the proposed penalty without prepayment into escrow, and thus affords due process. We also find that the statute is rationally based and does not offend the equal protection clause. We therefore affirm.


Graham has operated a mine in Clearfield County in Western Pennsylvania under a permit issued by the Commonwealth. By July or August of 1979, however, all coal had been removed from the permitted area. Graham then proceeded to mine in an adjoining ten acre plot for which a permit had not been issued. The Pennsylvania Department of Environmental Resources (DER) ordered Graham's operation shut down in November, 1979.

In January, 1980, Graham resumed mining under an agreement with DER which provided that the first $10,000 of mining receipts would be paid to DER as a bond for a permit amendment. By that time, however, all coal had already been removed from the adjoining ten acre plot. Graham expanded his operations even further to include areas which were not covered by the original permit nor in its amendment. In February, 1980, Graham received a notice from DER to cease mining. He apparently ignored that order. The police then delivered a special injunction to Graham at the site, at which time all coal operations stopped.

On March 21, 1980, a hearing was held before Judge Reilly of the Pennsylvania Court of Common Pleas. Judge Reilly gave Graham ten days to deliver a second mortgage on his own personal property for $60,000. He ruled that such a mortgage would satisfy the conditions and requirements of a permit and Graham could therefore continue operations. The Commonwealth indicated at that time that it would not appeal. Judge Reilly dissolved the special injunction, and Graham subsequently resumed mining. The Commonwealth later decided not to accept Graham's second mortgage, and refused to issue a permit. Graham considered the Commonwealth to be in contempt of court and continued to mine.

On June 10, 1980, inspectors from the OSM issued to Graham a Notice of Violation for mining without a valid state permit.*fn2 Graham was told that he must either obtain a valid permit or restore the area within ninety days, i.e. by September 8, 1980. An informal review hearing was held on July 8, 1980. App. at 4. The hearing officer took into account the confusion regarding the state permit. Nevertheless, the notice of violation was confirmed.

Graham continued to mine after the September 8, 1980 deadline. On September 11, 1980, OSM served Graham with a Cessation Order for failure to abate the violation. App. at 6. The form of the order mandated that operations cease immediately, and informed Graham that a fine of at least $750 per day would be imposed for each day the violation remained unabated. Graham was entitled to, but apparently did not request review of this order.

On November 16, 1981, a Notice of Proposed Penalty Assessment was sent to Graham. OSM proposed to find Graham $750 per day for a maximum period of thirty days, i.e. $22,500.00. Graham requested an informal assessment conference concerning the penalty. That conference was held on January 12, 1982. The OSM conference officer upheld the imposition of the fine. App. at 15-16.

In January 29, 1982, Graham sought formal review of the penalty before the Office of Hearings and Appeals of the Department of the Interior. App. at 17. Because Graham had not placed the amount of the proposed fine ($22,500) in an escrow deposit as required by 30 U.S.C. § 1268(c), see supra note 1, OSM successfully moved for dismissal of the appeal. On May 21, 1982, Graham appealed to the Board of Surface Mining and Reclamation Appeals. The Board denied discretionary review on June 9, 1982. App. at 39.

On July 9, 1982, Graham filed a petition for review in the District Court for the Western District of Pennsylvania. The OSM filed a motion to dismiss the action, or in the alternative for summary judgment, since Graham had not yet paid the proposed fine into escrow. Graham responded that he was unable to raise $22,500 and therefore could not comply with the statute's requirements. He argued that the statute which requires operators of mines to deposit the ...

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