Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-05320/USCOURTS-caDC-98-05320-0/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 11, 1999 Decided April 27, 1999

No. 98-5320

National Mining Association,

Appellant

v.

Bruce Babbitt, Secretary,

United States Department of Interior, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

95cv00938

Thomas C. Means argued the cause for appellant. With

him on the briefs were J. Michael Klise and Harold P.

Quinn, Jr. John A. MacLeod entered an appearance.

Robert H. Oakley, Attorney, United States Department of

Justice, argued the cause for the federal appellees. With him

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on the briefs were Lois J. Schiffer, Assistant Attorney General, and Robert L. Klarquist, Attorney.

Glenn P. Sugameli argued the cause for appellees National

Wildlife Federation, et al. With him on the brief was Thomas J. FitzGerald.

Before: Silberman, Ginsburg, and Garland, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Silberman.

Silberman, Circuit Judge: National Mining Association

challenges four regulations promulgated by the Secretary of

the Interior (Office of Surface Mining Reclamation and Enforcement) as part of a package of regulations governing

damage to land, structures, and certain water supplies caused

by mining subsidence. The district court rejected appellant's

claims. We, however, agree with appellant that two of the

agency's regulations are arbitrary and capricious.

I.

The Surface Mining Control and Reclamation Act, 30

U.S.C. ss 1201 et seq. (1994), sets forth permit requirements

and performance standards for coal mining operations. An

important aspect of this statutory scheme is its regulation of

subsidence caused by underground mining. Subsidence, as

used in the Act, apparently refers to the kind of earth

movement that occurs "when a patch of land over an underground [coal] mine sinks, shifts, or otherwise changes its

configuration." National Wildlife Fed'n v. Hodel, 839 F.2d

694, 739 (D.C. Cir. 1988); see also Keystone Bituminous Coal

Ass'n v. DeBenedictis, 480 U.S. 470, 474-75 (1987) (discussing

coal mine subsidence and its effects). Although the word

subsidence literally means lowering, tending downward, or

"flatten[ing] out so as to form a depression," Webster's Third

New Int'l Dictionary 2279 (1971), and there is no definition of

the term in the statute or the regulations, the parties agree it

is used only to describe the kind of subsidence caused by

underground coal mining. For purposes of this case, we

accept that definition.

The central statutory provision governing "subsidence"

provides that an underground mining permit issued by an

approved State or Federal program must require the operator to "adopt measures consistent with known technology in

order to prevent subsidence causing material damage to the

extent technologically and economically feasible, maximize

mine stability, and maintain the value and reasonably foreseeable use of such surface lands...." 30 U.S.C. s 1266(b)(1)

(1994).

Subsidence regulation under the Mining Act has had various incarnations and has generated a fair amount of litigation

before us. See, e.g., National Wildlife Fed'n v. Lujan, 928

F.2d 453, 455-60 (D.C. Cir. 1991); National Wildlife Fed'n v.

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Hodel, 839 F.2d at 739-41; In re Permanent Surface Mining

Regulation Litig., 653 F.2d 514 (D.C. Cir. 1981) (en banc). In

the aftermath, Congress added a new s 720 to the Mining

Act, see Energy Policy Act of 1992, Pub. L. No. 102-486, sec.

2504(a)(1), s 720, 106 Stat. 2776, 3104 (1992), which provides:

(a) Requirements. Underground coal mining operations

conducted after October 24, 1992, shall comply with each

of the following requirements:

(1) Promptly repair, or compensate for, material damage resulting from subsidence caused to any occupied

residential dwelling and structures related thereto, or

non-commercial building due to underground coal mining

operations. Repair of damage shall include rehabilitation, restoration, or replacement of the damaged occupied residential dwelling and structures related thereto,

or non-commercial building. Compensation shall be provided to the owner of the damaged occupied residential

dwelling and structures related thereto or noncommercial building and shall be in the full amount of the

diminution in value resulting from the subsidence. Compensation may be accomplished by the purchase, prior to

mining, of a noncancellable premium-prepaid insurance

policy.

(2) Promptly replace any drinking, domestic, or residential water supply from a well or spring in existence

prior to the application for a surface coal mining and

reclamation permit, which has been affected by contamination, diminution, or interruption resulting from underground coal mining operations.

Nothing in this section shall be construed to prohibit or

interrupt underground coal mining operations.

(b) Regulations. Within one year after October 24, 1992,

the Secretary shall, after providing notice and opportunity for public comment, promulgate final regulations to

implement subsection (a) of this section.

30 U.S.C. s 1309a (1994). In order to implement this new

statutory provision, the Secretary in 1993 proposed subsidence regulations revising the subsidence regulations previously promulgated under the Mining Act. See 58 Fed. Reg.

50,174 (1993). After a notice and comment period, the Secretary modified the proposed regulations and issued them in

final form in 1995. See 60 Fed. Reg. 16,722 (1995).

II.

Appellant National Mining Association brought this action

in the district court challenging 10 parts of the new regulations as arbitrary and capricious, see 30 U.S.C. s 1276(a)(1);

5 U.S.C. s 706(2)(A), and moved for summary judgment.

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ation, filed cross-motions for summary judgment, which the

district court granted. The Association limits its appeal to

four of the district court's rulings. We consider them in turn.

A.The Angle of Draw Presumption

The Association's most vigorous challenge is to the regulation establishing a rebuttable presumption of causation:

If damage to any non-commercial building or occupied

residential dwelling or structure related thereto occurs

as a result of earth movement within an area determined

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by projecting a specified angle of draw from the outermost boundary of any underground mine workings to the

surface of the land, a rebuttable presumption exists that

the permittee caused the damage. The presumption will

normally apply to a 30-degree angle of draw.

30 C.F.R. s 817.121(c)(4)(i) (1998). As the agency explained,

the angle of draw "is the angle of inclination between the

vertical at the edge of the underground mine workings and

the point of zero vertical displacement at the edge of a

subsidence trough." 60 Fed. Reg. at 16,738. It "is one way

to define the outer boundary of subsidence displacement that

may occur at the surface." Id.

Once the presumption is triggered, the burden shifts to the

mining company to offer evidence that the damage is attributable to another cause. The regulation suggests some examples: that the "damage predated the mining in question; the

damage was proximately caused by some other factor or

factors and was not proximately caused by subsidence; or the

damage occurred outside the surface area within which subsidence was actually caused by the mining in question." 30

C.F.R. s 817.121(c)(4)(iv).

Appellant claims that this presumption actually shifts the

burden of proof to mining companies to show a negative--

that their operations did not cause subsidence--and that such

a shift runs afoul of the Administrative Procedure Act given

the agency's posture in such situations as proponents of an

order. See 5 U.S.C. s 556(d) (1994); Director, Office of

Workers' Compensation Programs, Dep't of Labor v. Greenwich Collieries, 512 U.S. 267, 281 (1994). The government

responds that the agency's regulation merely shifts the burden of production not the burden of persuasion, and it is only

the latter that the APA forbids. See id. at 279-80. Although

we recognize that at a certain point along an evidentiary

continuum a shift in the burden of production can become de

facto a shift in the burden of persuasion, we do not think it is

necessary in this case to draw the line. For a factual

presumption that causes a shift in the burden of production

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tially that the circumstances giving rise to the presumption

must make it more likely than not that the presumed fact

exists, see Secretary of Labor v. Keystone Coal Mining Corp.,

151 F.3d 1096, 1100-01 (D.C. Cir. 1998)). For two reasons,

the agency's presumption fails that test. The first is that the

nature of subsidence evidence that triggers the presumption

has become hopelessly confused in this litigation, and the

second is that the geographical boundary in which the presumption obtains--the angle of the draw--is irrationally

broad.

The regulation states that the presumption is employed

wherever damage to a structure covered by the Energy

Policy Act "occurs as a result of earth movement" within the

angle of the draw, 30 C.F.R. s 817.121(c)(4), which gives rise

to the question: What is the conceptual relationship between

"subsidence" (which, it will be recalled, the parties agree

refers to mining subsidence) and "earth movement"? On

appeal, contrary to its position in the district court, the

government explains that "earth movement" does not mean

any earth movement but only "earth movement consistent

with subsidence" and that any resulting damage to covered

structures (also necessary to trigger the presumption) is alas

consistent with the kind of damage caused by subsidence.

Appellant cries foul. It claims the government cannot shift

the meaning of the regulation during litigation. Before the

district court the government appeared to argue that proof of

subsidence in fact (that is, coal mining subsidence) was necessary to trigger the presumption. It is not uncommon, however, when an agency regulation is challenged in a facial attack,

as Congress permits parties to do, that the meaning of

disputed provisions does not appear clearly until the case is

before the courts of appeals. We typically accept the agency's construction--which often eliminates or narrows the dispute--because we recognize the agency is entitled to deference as to the meaning of its own regulation. Auer v.

Robbins, 519 U.S. 452, 462-63 (1997); Serono Lab. v. Shalala,

158 F.3d 1313, 1325 (D.C. Cir. 1998); Association of Bituminous Contractors, Inc. v. Apfel, 156 F.3d 1246, 1251-52 (D.C.

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Cir. 1998); Paralyzed Veterans of Am. v. D.C. Arena L.P.,

117 F.3d 579, 584 (D.C. Cir. 1997), cert. denied sub nom.

Pollin v. Paralyzed Veterans of Am., 118 S. Ct. 1184 (1998).

Yet, we are entitled to expect that at least by the time of oral

argument the agency will have settled on an interpretation

that reflects its "fair and considered judgment," Auer, 519

U.S. at 462--and that such an interpretation is understandable.

The government assures us that, despite some vacillation, it

has come to rest, but, unfortunately, if it has, we do not

understand its conceptual resting point. Pressed at oral

argument to define just what "earth movement consistent

with subsidence" means, the government, with manifest circularity, explained that the term refers to earth movement not

caused by non-subsidence (i.e., earth movement not caused by

earthquakes, floods, etc.). Establishing the cause of the

damage, however--whether subsidence or something else--is

the whole purpose of the evidentiary presumption. Indeed,

as appellant correctly observes, one of the ways in which a

mining company rebuts the presumption is to produce evidence that the damage was proximately caused by some

factor other than mining. See 30 C.F.R. s 817.121(c)(4)(iv).

It thus does not help to define the trigger for the presumption in terms of the presumption's intended result. In short,

we have no clue what "earth movement consistent with subsidence" means and the government's efforts to enlighten us

created instead hopeless confusion.

We, of course, cannot approve a regulatory presumption

that the agency's lawyers cannot interpret in an intelligible

fashion. But even if we did understand the relationship

between subsidence and earth movement, as those terms are

used in the regulation, it could not stand because the geographical boundary of the area in which the presumption

operates--the angle of the draw--is both arbitrary and capricious. That is to say, the presumption simply does not serve

as a reasonable proxy to explain subsidence damage to structures.

Appellant contends that the record reveals that the kind of

subsidence that occurs within the angle of draw (pure vertical

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subsidence) is not the kind of subsidence (differential vertical

and horizontal displacement) that ordinarily results in damage to surface structures. The very authors of the scientific

studies on which the agency relied in its proposed rulemaking, the Association points out, have specifically rejected the

predictive value of the angle of draw. And, even this evidence does not support the agency's decision to base a

nationwide presumption of causation on the angle of draw.

The nationwide presumption is further deficient, it is argued,

because it overlooks the key distinction between high extraction and partial extraction mining (damage to structures from

the latter method is said to be unlikely); it ignores the critical

variable of mining depth (the deeper the mine, the greater

surface area is covered by the 30-degree angle of draw, yet

the less likely is actual structural damage at the surface); and

it ignores other non-subsidence causes of earth movement

that are just as likely to cause damage to structures within

the angle of draw.1

The government's response is anemic. It emphasizes that

the regulation permits a state regulatory authority to petition

the Department for a different angle if it can demonstrate

that its proposed angle is more reasonable, see 30 C.F.R.

s 817.121(c)(4)(i), and also permits a mining company to

request a different site-specific angle if it too could demonstrate a more reasonable calculation, see id.

s 817.121(c)(4)(ii). But the government does not claim--nor

could it--that these safety valve provisions could save the

regulatory presumption if we thought it unreasonable. As we

have said repeatedly, an evidentiary presumption is "only

permissible if there is a sound and rational connection between the proved and inferred facts, and when proof of one

__________

1 Appellant also claimed that the Department unlawfully relied

on studies not mentioned in the proposed rule. But informal

rulemaking does not contemplate a closed record; the government

is entitled to rely on information not exposed to comment so long as

it is supplementary. See generally Air Transport Ass'n of America

v. FAA, 1999 WL 110689, at *5-6 (D.C. Cir. Mar. 5, 1999). The real

problem with the studies is that they are inadequate support for the

presumption.

fact renders the existence of another fact so probable that it is

sensible and timesaving to assume the truth of [the inferred]

fact ... until the adversary disproves it." Keystone Coal

Mining, 151 F.3d at 1100-01 (quoting Chemical Mfrs. Ass'n

v. Department of Transp., 105 F.3d 702, 705 (D.C. Cir. 1997)

(quoting NLRB v. Curtin Matheson Scientific, Inc., 494 U.S.

775, 788-89 (1990))) (emphasis added) (internal citation and

internal quotation marks omitted) (alterations in original).

"If there is an alternate explanation for the evidence that is

also reasonably likely, then the presumption is irrational."

Id.

We think the government has failed to justify its presumption. It has not offered any support, scientific or otherwise,

that even begins to establish that the angle of draw delimits

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the surface area within which it is logical or reasonable to

employ an evidentiary presumption of causation. Indeed, the

government apparently concedes that it is not supported by

available science. This is not surprising since, as appellant

argues, science seems more supportive of the view that the

angle of draw has nothing whatever to do with identifying

subsidence-caused damage to structures. A leading textbook

in the field, which the government paradoxically listed as

support for the presumption, see 60 Fed. Reg. at 16,738,

defines the angle of draw in such a way as to seriously

undermine (pun intended) the government's position. See

Syd S. Peng, Coal Mine Ground Control 422-23 (2d ed. 1986)

(defining angle of draw, noting that it varies from 15 to 45

degrees, and then stating: "The angle of draw is more or less

of academic interest. Because the subsidence profile levels

off and subsidence becomes very small far before it reaches

the edges of the subsidence basin[,] from [a] structural damages point of view, it is practically meaningless.") (emphasis

added).

Nonetheless, the government thinks it sufficient to explain

that the angle of draw is used merely "to define the boundaries of the area within which earth movement resulting from

subsidence, if any, will most probably occur." But the real

question in using the angle of draw to set the applicable

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boundaries is whether subsidence-caused damage to structures within the angle is more likely than not to occur. After

all, the mining company's potential liability is for causing

damage to protected structures, not for causing "earth movement resulting from subsidence." Unless the government

can establish a likely connection between the former and the

angle of draw, the presumption cannot stand.

The agency rejected the suggestion that the presumption

be limited to the so-called "angle of critical deformation"--a

smaller angle, within the angle of draw, that measures the

inclination from the edge of the underground mining area to

the surface point exhibiting the "maximum tensile strain" or

stretching. See 60 Fed. Reg. at 16,738. (Dr. Peng, a leading

expert in the field, estimates that the angle of critical deformation is on average 10 degrees smaller than the angle of

draw. See Peng at 423.) Although the government concedes

that subsidence-caused damage to structures within the angle

of critical deformation portion of the angle of draw is more

likely to occur than in the portion of the angle of draw beyond

the angle of critical deformation, it contends that its decision

to use the entire angle of draw is justified on "possibility"

grounds--the larger angle defines the "outer boundary of

subsidence displacement that may occur at the surface."

(Neither in its brief nor in the preamble to the final rule, see

60 Fed. Reg. at 16,738-39, we should note, has the government offered any scientific support for even the possibility of

subsidence-caused damage within the angle of draw.)

To impose a presumption of causation of damage on a party

based merely on the possibility that the party caused the

damage is to convert a factual presumption into a counterfactual presumption. Although the government has never wavered from its insistence that the presumption is a factual

one, we do not see how a counterfactual procedural device

could be justified even as a matter of policy, see Allentown

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Mack Sales & Serv., Inc. v. NLRB, 118 S. Ct. 818, 828 (1998),

since the statute imposes liability only for causation. Moreover, the government simply has no response at all to the

devastating objection that the angle of draw is an inherently

illogical measure since, as a matter of geometry, the deeper

the mine the wider the angle. Yet, it seems undisputed that

the likelihood of any structural damage on the surface decreases with the depth of the mine. Since the agency recognized, in its preamble to the final rule, see 60 Fed. Reg. at

16,740, that the depth and location of the mine (and the

amount of coal extracted) are all factors that bear on the

likelihood of subsidence-caused damage, the Department never even adequately explains why it wishes to employ any sort

of nationwide presumption.

Essentially the government argues that its presumption is

justified by efficiency; it is easier to establish a mine's

liability. There are limits to that justification, otherwise the

government could dispense with enforcement proceedings

altogether. To be sure, we would be obliged to defer to a

reasonable agency determination of probabilities--including

predictions based on its own expertise and policies. But we

see nothing of the sort here. We have no difficulty concluding that this regulation is both arbitrary and capricious

because it is irrationally overbroad, and we therefore vacate

it.

B.Pre-Subsidence Survey

Appellant challenges the regulation requiring all applicants

for a mining permit to conduct, inter alia, a pre-subsidence

"survey of the condition of all non-commercial buildings or

occupied residential dwellings and structures related thereto,

that may be materially damaged or for which the reasonably

foreseeable use may be diminished by subsidence, within the

area encompassed by the applicable angle of draw." 30

C.F.R. s 784.20(a)(3) (1998). Appellant's principal objection

is that, when promulgating this regulation in 1995, the agency

failed adequately to explain its deviation from its prior policy

not to require pre-subsidence surveys. The government responds with two internally inconsistent arguments: that the

change in policy was justified (if not mandated) by the

Energy Policy Act of 1992, and that the requirement of a presubsidence survey of the condition of structures is not a

change of position at all because the regulation has always

implicitly required such a survey. We take this latter argument as an alternative one (though it would have been helpful

if counsel had designated it as such). Even so, it is plainly

wrong, and we are surprised that the government would

choose to advance it. It cannot seriously be maintained that

prior to 1995 the regulation required a pre-subsidence survey.

The government admits as much in describing the preEnergy Policy Act regulatory regime: beginning in 1983,

"[i]nstead of conducting a pre-subsidence survey, the applicant was now only required to identify any lands or structures that could be materially damaged by subsidence." And

in the preamble to the proposed version of the current

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regulation, the Secretary explained that "the survey itself

[required by the prior regulation] is proposed to be changed

from a mere inventory of structures, and renewable resource

lands, to a survey of the condition of structures, facilities, and

surface features." 58 Fed. Reg. at 50,179 (emphasis added).

The government's argument that a pre-subsidence survey of

the condition of structures has always been implicitly required is palpably in conflict with its own account of the

regulatory history.

Much the better argument is that the change in policy was

justified by Congress' explicit instruction to the Secretary in

the Energy Policy Act to promulgate regulations to implement the new Act, which conferred greater protection to

structures and land from subsidence-caused damage. Once

again, however, the government overplays its hand and suggests that Congress' instruction to promulgate new regulations completely absolves the agency of the requirement to

supply a reasoned explanation for its change in policy. The

government relies for this proposition on our decision in City

of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989), in which

we stated that "[a] change in congressional instructions, of

course, absolves the Secretary from explaining why his policy

has changed, if indeed it has," id. at 934. But Lujan involved

a specific congressional instruction to take a precise agency

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action--issuing emergency regulations--more readily than

the Secretary previously had seen fit to take. See id. The

Energy Policy Act does not refer to pre-subsidence surveys

at all, and so we do not see how Congress' general instruction

to implement statutory protection of structures through a

repair or compensate obligation absolves the government of

explaining its decision to require a pre-subsidence survey that

it previously had opted against.

Be that as it may, the agency did actually say in the

preamble to the final rule that the new policy was necessary

"to effectively implement the requirements of the Energy

Policy Act," 60 Fed. Reg. at 16,730, and more specifically that

the information gathered was "essential to establish a baseline against which the effects of subsidence may be measured

and to ensure full implementation [of the Energy Policy

Act]," id. at 16,729. Consistent with the notion that the

Energy Policy Act's mandate justified the Secretary's decision to increase mining companies' information-gathering responsibilities, the agency limited the survey requirement to

structures and water supplies protected by the Energy Policy

Act. See id. at 16,730. Greater protection for structures

(albeit only through a repair or compensate obligation) was

the main impetus of the Energy Policy Act, and we think the

agency's reliance on that impetus is a satisfactory explanation

for its change of policy.

Appellant also contends that the agency failed to respond

adequately to comments that the regulation is overly burdensome, and that it irrationally requires information about the

condition of structures at the time of the permit application,

rather than at the time (often years later) when mining

operations actually commence. In our view, the agency has

said enough and its regulations are not unreasonable. The

Secretary specifically responded to the comments complaining about the cost of the survey by limiting the structures to

which the requirement applied, and by modifying some of the

mapping requirements of the survey. See id. We do not

agree with appellant, moreover, that the timing of the survey

(pre-application as opposed to pre-mining) is without purpose.

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As the government points out, the results of the presubsidence survey are used to determine whether the applicant is also required to submit a subsidence control plan with

the application. See 30 C.F.R. s 784.20(b). The agency

concluded that, based on its experience in this area, "the

proposed format for the survey information is the minimum

needed to adequately assess the need for a subsidence control

plan." 60 Fed. Reg. at 16,730. The government also explains

that the possible effects of subsidence is a relevant factor in

its determination of whether to grant a permit in the first

place. We see no reason why the agency should be precluded

from requiring all of this information at the time of the

application just because conditions might change before mining begins. As the Secretary explained, the mining company

can always supplement outdated information later in the

process. See 60 Fed. Reg. at 16,730.

Nevertheless, the regulation as currently written must be

vacated along with the first one discussed because it defines

the area within which the pre-subsidence survey is required

by reference to the angle of draw. The government did not

argue that the survey requirement could be sustained independent of the angle of draw--and we do not see how it could.

C.Planned Subsidence Minimization

The Association next challenges two provisions of the new

regulations that impose an obligation on mining permittees

who use a "planned subsidence" mining technique to minimize

subsidence damage.

If a permittee employs mining technology that provides

for planned subsidence in a predictable and controlled

manner, the permittee must take necessary and prudent

measures, consistent with the mining method employed,

to minimize material damage to the extent technologically and economically feasible to non-commercial buildings

and occupied residential dwellings and structures related

thereto....

30 C.F.R. s 817.121(a)(2); see also 30 C.F.R. s 784.20(b)(7)

(providing that mining companies required to submit a subsidence control plan and projecting to use planned subsidence

must, with certain exceptions, include "a description of methods to be employed to minimize damage from planned subsidence to non-commercial buildings and occupied residential

dwellings and structures related thereto"). Planned subsidence refers to mining methods that make it possible to

predict the time and manner of the resulting subsidence (one

such method is "longwall mining").

Appellant disputes the regulation's damage minimization

requirement for planned subsidence on the ground that such

a requirement is contrary to s 516(b)(1) of the Mining Act,

which provides that any permit issued must

require the operator to adopt measures consistent with

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known technology in order to prevent subsidence causing

material damage to the extent technologically and economically feasible, maximize mine stability, and maintain

the value and reasonably foreseeable use of such surface

lands, except in those instances where the mining technology used requires planned subsidence in a predictable and controlled manner....

30 U.S.C. s 1266(b)(1) (1994) (emphasis added).

Since Congress explicitly approved longwall mining, notwithstanding that, by definition, it causes subsidence, appellant argues that the regulation would frustrate Congress'

intent. The government's minimization of damage requirement, we are told, is merely a paraphrase of the prevention of

damage requirement from which longwall mining is exempted. The government argues that it is entitled to Chevron

deference in interpreting the statutory language for the

phrase "predictable and controlled manner" can be interpreted as a manner that restricts collateral damage. Appellant,

by contrast, would read predictable and controlled manner as

not imposing any separate obligation but as words that simply

describe longwall mining. If we were interpreting the statute

de novo, we might well agree that appellant has the better

argument. But we are not. And although the government's

reading is a bit of a stretch, we think it passes the Chevron

test. See Chevron U.S.A. Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 842-43 (1984).

D.Waivers

The Association's last challenge is to the regulation that

implements the Energy Policy Act's "repair or compensate"

obligation. See 30 C.F.R. s 817.121(c)(2) ("The permittee

must promptly repair, or compensate the owner for, material

damage resulting from subsidence caused to any noncommercial building or occupied residential dwelling or structure related thereto that existed at the time of mining.").

The Association asserts that the regulation is unreasonable

"to the extent it purports to nullify prior agreements between

owners of eligible structures and underground mine operators." In appellant's view, nothing in the Energy Policy Act

suggests an intent to override such waiver agreements that

would otherwise be binding under state common law. Moreover, it is urged, if the statute were read to authorize

abrogation of waiver agreements, it would confer a windfall to

the landowner, and consequently might constitute an unconstitutional taking of the mining company's contract rights.

The thrust of appellant's argument focuses on the unfairness (and asserted conflict with the statutory language)

caused by a "double recovery" regulatory regime, under

which a landowner is compensated pre-subsidence damage

(and possibly pre-Energy Policy Act) by selling a waiver of

rights to the mining company, and then post-subsidence, postdamage through an enforcement action under the Energy

Policy Act. The Association contends that Congress could

not possibly have intended such a result. At oral argument,

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however, the government stated unequivocally (which it did

not do in its brief or in the preamble to the regulation) that

any compensation owed to a landowner under the Act will

always be reduced by at least the amount previously paid in a

contractual waiver of subsidence rights--both pre-damage,

pre-Act waivers, and pre-damage, post-Act waivers.2 In oth-

__________

2 In the preamble, to be sure, the Secretary stated that "[t]he

use of pre- and post-subsidence agreements would be an acceptable

means of fulfilling the requirement so long as the terms meet the

requirement under paragraph 817.121(c)(2) that the permittee repair or compensate any subsidence-related material damage to any

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er words, the value of the landowner's rights under the

federal regime may well exceed (indeed typically would) the

present value of whatever compensation the landowner received under the previous legal climate. But the landowner

would not be entitled to a double recovery. The government's oral clarification seems to strip appellant's challenge of

its force and appellant waived rebuttal. Nonetheless, the

Association's brief appeared to argue that such waivers must

be honored fully, and that the set-off approach also is inconsistent with the Act.

If appellant means to deny any obligation to compensate

beyond the amount a mining company originally paid the

landowner for the waiver, no matter how it would compare to

the landowner's legal rights post passage of the federal

statute, we reject its position. We previously upheld the

government's limitation of the obligation to repair or compensate for damage to structures only to the extent required by

state law, see National Wildlife Fed'n v. Lujan, 928 F.2d at

457-59, in part because the Mining Act at the time did not

explicitly impose an obligation to compensate for such damage, see id. at 458 n.3. The Energy Policy Act imposes just

such an obligation on its face. See 30 U.S.C. s 1309a(a)(1)

("Compensation shall be provided to the owner of the damaged occupied residential dwelling and structures related

thereto or non-commercial building and shall be in the full

amount of the diminution in value resulting from the subsidence.") (emphasis added). It is therefore wholly consistent

with the statute--indeed it might even be mandated--for the

Secretary to require the mining companies further to compensate landowners for damages to which the new federal law

entitled them. That is not to say, of course, that a landowner

and mining company would be barred from entering into a

post-Act fair contract based on anticipated damages that

__________

non-commercial building or occupied residential dwelling or related

structure." 60 Fed. Reg. at 16,735 (emphasis added). Although the

Secretary did not make clear that this policy applies to both pre-Act

and post-Act waivers, the government's position at oral argument

was that it does. We accept the agency's interpretation of its own

regulation.

would extinguish the landowner's claim if the damages turned

out to be more than anticipated. But we do not understand

the agency to deny that.

As for appellant's takings challenge, the argument is insufficiently developed to warrant much attention. Appellant

seems to assume that interference with contract rights is a

per se taking, despite the well-settled rule that "legislation

[that] disregards or destroys existing contractual rights does

not always transform the regulation into an illegal taking."

Connally v. Pension Benefit Guar. Corp., 475 U.S. 211, 224

(1986). To develop a real takings argument, appellant would

be compelled to demonstrate why "(1) the economic impact of

the regulation on the claimant; (2) the extent to which the

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tions; and (3) the character of the governmental action," id.

at 225 (quoting Penn Cent. Transp. Co. v. City of New York,

438 U.S. 104, 124 (1978)) (internal quotation marks omitted),

warrant the conclusion that an unconstitutional taking necessarily would result. See also Eastern Enters. v. Apfel, 118

S. Ct. 2131, 2146-49 (1998) (reviewing takings precedents and

concluding that "Congress has considerable leeway to fashion

economic legislation, including the power to affect contractual

commitments between private parties"). As we understand

appellant's argument, based solely on the possibility that the

government's alteration of a mining company's previously

settled contract rights "could expose" the government to

liability for an unlawful taking, we should construe the Energy Policy Act to mandate an exemption in the Secretary's

regulations for private waiver agreements. But the avoidance canon is not applicable when the statute or regulation

would effect a taking, if at all, only in certain situations. See

United States v. Riverside Bayview Homes, Inc., 474 U.S.

121, 127-28 (1985); Bell Atlantic Tel. Cos. v. FCC, 24 F.3d

1441, 1445 (D.C. Cir. 1994); Railway Labor Executives' Ass'n

v. United States, 987 F.2d 806, 816 (D.C. Cir. 1993). We will

not "frustrate[ ] permissible applications of a statute or regulation," Riverside Bayview Homes, 474 U.S. at 128, based on

the specter--rather implausible from what we can tell now--

of a future unconstitutional taking.

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* * * *

For the foregoing reasons, we reverse the district court in

part and affirm in part.

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