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B & M Coal Corp. v. Office of Surface Mining Reclamation and Enforcement

decided: February 1, 1983.


Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 79-973-C -- William E. Steckler, Judge.

Pell, Circuit Judge, Swygert, Senior Circuit Judge, and Marovitz, Senior District Judge.*fn*

Author: Swygert

SWYGERT, Senior Circuit Judge.

The issue in this appeal is whether section 518(c) of the Surface Mining Control and Reclamation Act of 1977 ("the Act"), 30 U.S.C. § 1268(c), which requires an escrow deposit of a proposed penalty assessment prior to a formal hearing, is unconstitutional as violative of procedural due process rights secured by the fifth amendment. Given the procedural and administrative safeguards provided by the Act and various regulations, the district court found no constitutional deficiency in this prepayment requirement.*fn1 We affirm.


Plaintiff-appellant B & M Coal Corporation ("B & M Coal") conducts a surface coal mining operation in Spencer County, Indiana. Between September 1978 and March 1979 the Office of Surface Mining Reclamation and Enforcement ("OSM") issued three notices of violations against B & M Coal for improper mining and reclamation practices.*fn2 The proposed penalties for these three violations totaled $6900. B & M Coal requested an assessment conference with the OSM on all three violations. The June 13, 1979 conference resulted in a reduction in fines to a total of $2900.

B & M Coal subsequently petitioned the Hearings Division of the Interior Department's Hearings Office for an evidentiary hearing to challenge both the validity of the alleged violations and the proposed penalty. Because B & M Coal refused to pay the $2900 fine into an escrow account as required by the Act, the administrative law judge in the Hearings Division granted the OSM's motion to dismiss.

B & M Coal filed the instant action in the United States district court*fn3 against the Secretary of Interior and the OSM, alleging that section 518(c) of the Act and its accompanying regulations*fn4 violated its procedural due process rights by requiring an escrow deposit of the proposed penalty prior to receiving a formal hearing on the assessment. The Secretary counterclaimed for the $2900 assessed fine. The district court granted summary judgment in favor of the Secretary and the OSM, finding the prepayment requirements constitutional and ordering B & M Coal to pay the penalty. This appeal followed.


Section 102(a) of the Act states a congressional intent to "establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations."*fn5 30 U.S.C. § 1202(a). Title V of the Act incorporates enforcement provisions, including cessation orders and the assessment of civil penalties, to ensure compliance. 30 U.S.C. §§ 1251-79. The portion of the Act in dispute in this case is section 518(c), 30 U.S.C. § 1268(c), which provides in relevant part:

Upon the issuance of a notice or order charging that a violation of the Act has occurred, the Secretary shall inform the operator within thirty days of the proposed amount of said penalty. The person charged with the penalty shall then have thirty days to pay the proposed penalty in full or, if the person wishes to contest either the amount of the penalty or the fact of the violation, forward the proposed amount to the Secretary for placement in an escrow account. . . . Failure to forward the money to the Secretary within thirty days shall result in a waiver of all legal rights to contest a violation or the amount of the penalty.

The crux of B & M Coal's challenge to this provision is that the prepayment, enforced by the sanction of a complete waiver of all legal rights to contest the violation, constitutes a denial of procedural due process.*fn6 B & M Coal argues in essence that a full adversarial hearing before deposit of the penalty is constitutionally mandated. Our decision begins with a review of the Act's procedural framework, the substance of which is not disputed.

The Act authorizes the Secretary to assess civil penalties for violations and, together with regulations promulgated by the Secretary, prescribes the following procedural steps.

Within ten days after service of a notice of violation, an operator may submit written information concerning the cited violations. 30 C.F.R. § 723.16(a). OSM must consider any information submitted in determining whether to assess a civil penalty and the amount of the penalty. (Despite receipt of written notice of this right in each of the three citations, B & ...

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