WYODAK RESOURCES DEVELOPMENT CORP., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.
2013-5049
United States Court of Appeals for the Federal Circuit
December 13, 2013
Appeal from the United States Court of Federal Claims in No. 11-CV-0335, Judge Edward J. Damich.
A. BONDURANT ELEY, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were STUART F. DELERY, Acting Assistant Attorney General, and JEANNE E. DAVIDSON, Director.
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“),
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 statutе 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
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.”
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 еxample, 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 remоving 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
The end product of this process is coal that consists of a mixture of subbituminous and lignite coal. The рrice 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 determinе 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.
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 prod-
We agree with Wyodak. SMCRA makes the reclamation fеe 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,
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 therefоre 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 becausе 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.
That theory ignores the fact that the statute fixes the reclamation fee for “lignite coal” at a lower rate than all other coal,
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. Reс. 6689-90 (1975) (statement of Rep. Andrews);
Moreover, the legislative history shows that Congress explicitly considered a test that would make the amount
The government‘s “BTU-only” test would produce two potential anomalies. A mixture of cоal 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, Wyоdak 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.
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.
Another such example involves mixtures of surface-mined coal and underground-mined coal. Surface-mined coal is subject to a different fee rate from underground-mined coal. When surface-mined coal and underground-mined 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.”
A final consideration favoring Wyodak‘s construction is based on a parallel statute, the Black Lung Excise Tax,
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