United States Court of Appeals 

for the Federal Circuit ______________________ 

WYODAK RESOURCES DEVELOPMENT CORP.,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

______________________ 

2013-5049

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 11-CV-0335, Judge Edward J. Damich. 

______________________ 

Decided: December 13, 2013

______________________ 

WALTER F. EGGERS, III, Holland & Hart, LLP, of 

Cheyenne, Wyoming, argued for plaintiff-appellant. With 

him on the brief was ANDREW A. IRVINE, of Jackson, 

Wyoming. 

A. BONDURANT ELEY, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department 

of Justice, of Washington, DC, argued for defendantappellee. With her on the brief were STUART F. DELERY,

Acting Assistant Attorney General, and JEANNE E.

DAVIDSON, Director. 

______________________ 
2 WYODAK RESOURCES v. US

Before LOURIE, BRYSON, and O’MALLEY, Circuit Judges.

BRYSON, Circuit Judge.

This is a pure statutory construction case. The proper 

construction of the statute, as applied to this case, is not 

obvious, as evidenced by the fact that the Court of Federal 

Claims and a district court have both construed the 

statute differently than we do. In the end, however, we 

conclude that the language and purpose of the statute are 

best served by adopting the construction proposed by the 

appellant.

I 

The statute at issue is the Surface Mining Control 

and Reclamation Act of 1977 (“SMCRA”), 30 U.S.C. 

§§ 1201-1328. The Act was designed in part to require 

coal companies to underwrite the costs of restoring lands 

damaged by coal mining, especially surface mining. To 

achieve that goal, the statute imposes a fee on each ton of 

coal extracted from surface or subsurface mines in the 

United States. The fee is not uniform, but varies according to whether the coal came from a subsurface mine or a 

surface mine, and whether the coal is lignite or some 

other type of coal. This case turns on the latter distinction.

Section 402(a) of SMCRA imposes a reclamation fee of 

28 cents per ton of coal produced by surface coal mining 

and 12 cents per ton of coal produced by underground 

mining, or 10 percent of the value of the coal at the mine, 

whichever is less. However, the statute provides that the 

reclamation fee for lignite coal shall be eight cents per ton 

or two percent of the value of the coal at the mine, whichever is less.1 30 U.S.C. § 1232(a). The statute defines 

1 Prior to fiscal year 2008, the reclamation fees 

were 35 cents per ton of coal produced by surface coal 

 
WYODAK RESOURCES v. US 3

“lignite coal” to mean “consolidated lignitic coal having 

less than 8,300 British thermal units [“BTUs”] per pound, 

moist and mineral matter free.” Id. § 1291(30).

Lignite coal differs from other types of coal, i.e., bituminous, subbituminous, and anthracite, in that it is 

“brownish-black coal in which the alteration of vegetal 

material has proceeded further than in peat but not so far 

as subbituminous coal.” U.S. Dep’t of the Interior, Bureau of Mines, A Dictionary of Mining, Mineral, and 

Related Terms 641 (1968). “All [coal-like] fossil fuels form 

a continuous and progressive series, ranging from lignite, 

through the various bituminous coals, to anthracite.” Id.

at 896. Lignite produces less energy than other types of 

coal, as measured by the number of BTUs per pound. 

Wyodak Resources Development Co. owns and operates the Wyodak Mine in the Powder River Basin near 

Gillette, Wyoming. The mine is in an area where the coal 

transitions from subbituminous to lignite in the coal 

seams. For example, Wyodak’s evidence showed that in 

two seams otherwise consisting of subbituminous coal, an 

average of 4.2 feet of lignite occurred within eight feet 

above the parting of the two seams and an average of 5.6

feet of lignite occurred within nine feet below the parting. 

Wyodak engages in open-pit mining, also known as 

strip mining, which involves removing the overburden 

over a seam of coal and then extracting the uncovered 

coal. Coal is dislodged from seams in the mine by explosive charges. Where the seam contains both lignite and 

subbituminous coal, the controlled explosions dislodge 

both types of coal. The coal is then carried by front-end 

mining, 15 cents per ton of coal produced by underground 

mining, and 10 cents per ton of lignite coal. See Tax 

Relief and Health Care Act of 2006, Pub. L. No. 109-432, 

div. C, § 202, 120 Stat. 2922, 3008.

 
4 WYODAK RESOURCES v. US

loaders to an in-pit crusher system that crushes it into 

chunks about eight inches in diameter. After that initial 

processing, the coal is transported by conveyor belt to a 

secondary crusher where it is reduced to smaller sized 

pieces, after which it is stored for ultimate transport and 

sale. 

The end product of this process is coal that consists of 

a mixture of subbituminous and lignite coal. The price at 

which the product is sold depends on the BTU per pound 

value of the particular mixture. The BTU value depends 

on the amounts of different types of coal contained in the 

mixture. 

For years, Wyodak paid the higher statutory reclamation fee for non-lignite coal. In 2005, Wyodak retained an 

independent consulting service to determine whether 

lignite coal was present in the mine. After sampling and 

testing, the consulting service confirmed the presence of 

lignite coal. The consulting service estimated that 12 

percent of the coal at the Wyodak mine was lignite and 

the remaining 88 percent was the higher quality subbituminous coal. An expert for the Office of Surface Mining

(“OSM”) later admitted that the Wyodak mine contains 

lignite coal along with subbituminous coal.

Wyodak then advised OSM that because some of the 

coal removed from the mine was lignite, the company had 

been overpaying the reclamation fee. When Wyodak 

sought a refund of its reclamation fees for the amount of 

lignite coal that it had extracted, OSM denied the request. 

In an administrative review, OSM maintained its position 

that all of Wyodak’s coal was assessable at the higher fee 

for non-lignite coal having a BTU value higher than 8300 

BTUs per pound. Wyodak then sought judicial review of 

OSM’s decision. 

Wyodak initially sought relief from a district court, 

which ruled against Wyodak on the merits. Wyodak Res. 

Dev. Corp. v. United States, No. 07-CV-301 (D. Wyo. 
WYODAK RESOURCES v. US 5

2009). On appeal, the Tenth Circuit dismissed the action 

for want of jurisdiction. See Wyodak Res. Dev. Corp. v. 

United States, 637 F.3d 1127 (10th Cir. 2011). Wyodak

then filed this action in the Court of Federal Claims 

seeking a refund of a portion of the reclamation fees it 

had paid for coal that it produced from 1980 to 2006. 

The Court of Federal Claims first ruled that it had jurisdiction only over the portion of the refund claims 

arising within six years of the May 2011 filing date. 

Wyodak Res. Dev. Corp. v. United States, 107 Fed. Cl. 624, 

630-31 (2012). It then denied relief on the merits with 

regard to the claims that were still within its jurisdiction. 

Id. at 631-32. The court held that SMCRA imposes the 

reclamation fee on coal as extracted. Because the method 

of extraction at the Wyodak mine results in a blended-coal 

product, the court concluded that the coal as extracted is

not readily identifiable as either subbituminous or lignite. 

Because the BTU value of the blended product is higher 

than 8300 BTUs per pound, the court held that Wyodak 

was not entitled to a refund for any lignite coal that might 

be contained in the mixture. Wyodak then took this 

appeal.2 

II

On appeal, Wyodak contends that approximately 12 

percent of the coal in its mine is lignite, and that it is 

entitled to the lower statutory fee for that portion of its 

extracted coal. Wyodak argues that the mixing of lignite 

and subbituminous coal that results from the extraction 

process does not change the fact that the extracted prod2 Wyodak has not appealed from the part of the trial court’s judgment dismissing the portion of the refund 

claim going back more than six years. That part of the 

judgment is not affected by our ruling on the statutory 

construction claim.

 
6 WYODAK RESOURCES v. US

uct still contains a significant portion of lignite. It was 

lignite in the ground, Wyodak argues, and it is no less 

lignite after it is extracted. 

We agree with Wyodak. SMCRA makes the reclamation fee turn on the source or rank of coal that is extracted 

from the ground. See Consolidation Coal Co. v. United 

States, 615 F.3d 1378, 1382 (Fed. Cir. 2010); Consolidation Coal Co. v. United States, 528 F.3d 1344, 1347 (Fed. 

Cir. 2008). The Act refers not only to lignite coal, but also 

to bituminous coal, 30 U.S.C. § 1277, and anthracite coal, 

id. § 1279. It does not refer to mixed or blended coal as a 

type or rank of coal, however. The focus on recognized 

ranks of coal indicates that when the reclamation fee 

depends on the type of coal extracted from the mine, the 

fee should be calculated based on the amounts of coal of 

each rank that are extracted. 

The coal that is extracted from Wyodak’s mine includes lignite. The mixture that results from the extraction process in areas where both subbituminous and 

lignite coal are found is therefore partly lignite in composition. The fact that lignite is mixed with subbituminous 

coal in the course of the extraction process does not make 

the lignite portion of the mixture anything other than 

lignitic coal. 

The government relies on Consolidation Coal Co. v. 

United States, 615 F.3d 1378 (Fed. Cir. 2010), and Consolidation Coal Co. v. United States, 528 F.3d 1344 (Fed. Cir. 

2008), for the proposition that coal “produced” under the 

statute means coal that is “extracted.” The government 

contends that because Wyodak’s coal, following its extraction, is a mixture of lignite and subbituminous coal, it is 

not lignite coal at that stage. That argument misses the 

point. Following the extraction process, the product of the 

mine may be a mixture of different types of coal, but that 

mixture still contains lignite, and lignite is subject to a 

lower statutory reclamation fee.
WYODAK RESOURCES v. US 7

The government’s theory of this case distorts the test 

for determining whether coal will be taxed at the normal 

rate or at the rate for lignite. Under the government’s 

theory, it does not matter how much lignite is contained 

in a mixture of different types of coal that is extracted 

from the mine. According to the government, as long as 

the mixture has a BTU value of more than 8300 BTUs per 

pound, the entire mixture will be subject to the higher fee; 

none of it will be subject to the rate for lignite, no matter 

how much lignite the mixture contains. 

That theory ignores the fact that the statute fixes the 

reclamation fee for “lignite coal” at a lower rate than all 

other coal, 30 U.S.C. § 1232(a), and defines “lignite coal” 

as “consolidated lignitic coal having less than 8,300 

British thermal units per pound, moist and mineral 

matter free,” id. § 1291(30). The statutory test turns on 

the amounts of coal of different ranks in the product that 

is extracted from the mine; it is not simply a function of 

the BTU value of the mixture. 

The legislative history of SMCRA shows that Congress sought to impose lesser fees on lignite coal because 

that coal, having a lower energy level, is less valuable 

than other forms of coal and therefore would be disproportionately affected if it were subject to the same per ton 

reclamation fee as other coal. See H.R. Rep. No. 95-218, 

at 137 (1977); H.R. Conf. Rep. No. 95-493, at 98 (1977) 

(“lignite generally has had a lower value than coal and 

thus a 10 percent fee could be onerous”); 121 Cong. Rec. 

6689-90 (1975) (statement of Rep. Andrews); id. at 6797 

(statements of Reps. Hays and Udall). To ignore the 

presence of substantial amounts of lignite in calculating 

the reclamation fee would be inconsistent with the statutory purpose of imposing a lesser burden on that less

valuable type of coal.

Moreover, the legislative history shows that Congress 

explicitly considered a test that would make the amount 
8 WYODAK RESOURCES v. US

of the reclamation fee turn solely on the BTU value of the 

coal extracted from a mine. See H.R. Rep. No. 93-1072, at 

35 (1974). Congress ultimately rejected that approach in 

favor of charging a single fee for all types of coal other 

than lignite and a lesser fee for lignite. Yet the effect of 

the government’s test would be to make the reclamation 

fee turn solely on the BTU value of the blended coal, 

exactly the approach that Congress rejected in favor of 

creating a special reclamation fee rate for lignite coal. 

The government’s “BTU-only” test would produce two 

potential anomalies. A mixture of coal types that has a 

BTU value above 8300 would be subject to the higher fee, 

even though it might contain a substantial amount of 

lignite. But by the same token, a mixture of coal types 

that has a BTU value below 8300 would be subject to the 

lower, lignite fee, even though it might contain a substantial amount of higher quality coal, such as subbituminous 

coal. Those results would fly in the face of a statutory 

scheme that bases the reclamation fee on the type of coal 

extracted, not the energy level of the extracted product, 

without regard to its composition. 

The government’s theory suffers from another flaw as 

well. The government acknowledges that if, at the conclusion of the extraction process, Wyodak placed its 

lignite and subbituminous coal in separate containers, the 

coal in the lignite containers would be subject to the lower 

statutory reclamation fee. We see no reason that a different result should obtain simply because the extraction 

process results in Wyodak generating product that consists of a mixture of lignite and subbituminous coal that 

Wyodak does not separate into its constituent parts. If 

Wyodak is able to verify the quantity of lignite coal in the 

mixture that it extracts from the mine by a reliable method, there is no reason that the method of extraction 

should be deemed to convert coal that otherwise would 

have been treated as 12 percent lignite into a mixture 

that is treated as if it contains no lignite at all. 
WYODAK RESOURCES v. US 9

The government’s theory of this case is contrary to the 

way OSM assesses reclamation fees in other situations in 

which the product consists of a mixture of coal that is 

subject to different fee rates. One such example involves 

in situ gasification. In situ gasification is an on-site 

process in which the coal is converted into a gaseous 

substance that is then sold to customers. Once the coal is 

converted into gaseous form, it is impossible to determine 

whether it was originally lignite or some other form of 

coal.

OSM’s regulations provide that the reclamation fee 

assessed on the coal that is subject to gasification is 

determined by analyzing the type of coal that is used in 

the gasification process. 30 C.F.R. § 870.13(a)(4). That 

regulation makes clear that the statutory requirement 

that lignite coal be treated differently from other types of 

coal requires that the fees must be based on a preprocessing determination of the type or types of coal that 

are used in the gasification process. 

Another such example involves mixtures of surfacemined coal and underground-mined coal. Surface-mined 

coal is subject to a different fee rate from undergroundmined coal. When surface-mined coal and undergroundmined coal are combined before the coal is weighed for fee 

purposes, OSM’s regulations provide that the higher 

reclamation fee will apply “unless the operator can substantiate the amount of coal produced by surface mining 

by acceptable engineering calculations or other reports 

which the Director may require.” 30 C.F.R. § 870.12(c). 

Thus, in that analogous situation, OSM allows the mine 

operator to demonstrate that prior to mixing the coal from 

the surface and subsurface mines, the components of the 

mixture were subject to different fee rates and to have the 

fee lowered in light of the lower fee rate applicable to 

subsurface mined coal.
10 WYODAK RESOURCES v. US

To reach that conclusion, OSM must necessarily be 

construing the reclamation fee statute to require consideration of the source of the constituents of the coal mixture. Applying the same analysis to an extracted mixture 

of lignite and subbituminous coal would require the 

mixture to be characterized according to its constituent 

components.3

A final consideration favoring Wyodak’s construction 

is based on a parallel statute, the Black Lung Excise Tax, 

26 U.S.C. § 4121. That statute imposes a tax on coal from 

surface and underground mines, but does not impose the 

tax on lignite coal that is extracted from those mines. Id.

§ 4121(b), (c). By regulation, the Internal Revenue Service has addressed the situation presented in this case 

and has ruled that “[i]f a producer extracts both taxable 

coal and lignite, then the producer must maintain adequate records to establish the portion of the mineral

mined that is exempt from the tax.” 26 C.F.R. § 48.4121-

1(c)(1). Applying that regulation, the Internal Revenue 

Service has interpreted the statutory exemption for 

lignite to apply to the lignite present in Wyodak’s extracted coal, even though the coal as extracted consists of a 

mixture of lignite and subbituminous coal. See IRS Chief 

Counsel Advice No. AM2009-007 (Aug. 21, 2009). While 

the Internal Revenue Service’s regulations and practice in 

applying the Black Lung Excise Tax Act are not directly 

applicable to OSM’s construction of SMCRA, the adminis3 The government acknowledges that no OSM regulation explicitly addresses the issue this case and that the 

case therefore does not entail deference to the agency’s 

construction of the applicable statute under Chevron 

U.S.A., Inc. v. Natural Resources Defense Council, Inc.,

467 U.S. 837 (1984), or deference to the agency’s interpretation of its own regulations under Auer v. Robbins, 519 

U.S. 452 (1997). 

 
WYODAK RESOURCES v. US 11

trative construction of the analogous Black Lung Excise 

Tax provides support for Wyodak’s construction of the

SMCRA reclamation fee provision by demonstrating that 

Wyodak’s construction is both reasonable and administrable. 

For the foregoing reasons, we conclude that OSM’s 

application of SMCRA to the coal produced at the Wyodak 

mine is legally incorrect. That is not to say that Wyodak 

is necessarily entitled to the refund that it seeks. It 

remains for Wyodak to produce satisfactory evidence, 

pursuant to reliable methods of testing and ranking, 

showing that the coal extracted from its mine contains an 

appreciable quantity of lignite. Any issues as to the 

sufficiency of Wyodak’s evidence in that regard remain to 

be resolved on remand.

REVERSED and REMANDED