Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


8-2-2007

PA Fedr Sportsmens v. Secretary Interior
Precedential or Non-Precedential: Precedential

Docket No. 06-1780




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                                               PRECEDENTIAL

           UNITED STATES COURT OF APPEALS
                FOR THE THIRD CIRCUIT


                          No. 06-1780


          PENNSYLVANIA FEDERATION OF
             SPORTSMEN’S CLUBS, INC.;
      PENNSYLVANIA CHAPTER SIERRA CLUB;
            PENNSYLVANIA TROUT, INC.;
    TRI-STATE CITIZENS MINING NETWORK, INC.;
    MOUNTAIN WATERSHED ASSOCIATION, INC.,

                                      Appellants

                                 v.

       DIRK KEMPTHORNE,* SECRETARY,
 UNITED STATES DEPARTMENT OF THE INTERIOR;
     BRENT WAHLQUIST, ACTING DIRECTOR,
          OFFICE OF SURFACE MINING
      RECLAMATION AND ENFORCEMENT;
   BRENT WAHLQUIST, REGIONAL DIRECTOR,


       *
         Pursuant to Fed. R. App. P. 43(c)(2), Dirk Kempthorne
is substituted for his predecessor, Gale A. Norton, as Secretary
of the Department of the Interior. Brent Wahlquist is substituted
for his predecessor, Jeffrey D. Jarrett, as Acting Director, Office
of Surface Mining Reclamation and Enforcement.
    OFFICE OF SURFACE MINING RECLAMATION
               AND ENFORCEMENT;


     COMMONWEALTH OF PENNSYLVANIA,
 DEPARTMENT OF ENVIRONMENTAL PROTECTION,

                                     Intervenor in D.C.


      On Appeal from the United States District Court
          for the Middle District of Pennsylvania
                  (D.C. No. 03-cv-02220)
       District Judge: Honorable Sylvia H. Rambo


               Argued March 26, 2007
  Before: FISHER, JORDAN and ROTH, Circuit Judges.

                  (Filed: August 2, 2007 )

Kurt J. Weist (Argued)
PennFuture
610 North Third Street
Harrisburg, PA 17101
       Attorney for Appellants




                                 2
Tamara N. Rountree (Argued)
U.S. Department of Justice
Environment & Natural Resources Division
P.O. Box 23795
L’Enfant Plaza Station
Washington, DC 20026
      Attorney for Appellees, Dirk Kempthorne, et al.,
      and Brent Wahlquist, et al.

Dennis Whitaker (Argued)
Department of Environmental Protection
909 Elmerton Avenue, 3rd Floor
Harrisburg, PA 17110
       Attorney for Appellee, Pennsylvania
       Dept. of Environmental Protection




                 OPINION OF THE COURT


FISHER, Circuit Judge.

       This is an appeal from a grant of summary judgment by
the District Court sustaining two decisions of the United States
Department of the Interior, Office of Surface Mining
Reclamation and Enforcement. Plaintiffs challenge the agency’s
decisions to terminate a program deficiency notice issued
pursuant to 30 C.F.R. § 732.17, and delete a required
amendment that was codified at 30 C.F.R. § 938.16(h), both of
which directed Pennsylvania to comply with the requirements of

                               3
30 C.F.R. § 800.11(e). For the reasons that follow, we conclude
that the agency’s decisions were inconsistent with its own
regulations and regulatory obligations. We will therefore
reverse the judgment of the District Court, in part, and set aside
both agency actions.

                      I. BACKGROUND

                                 A.

        Plaintiffs in this case are several nonprofit public interest
organizations, corporations, and coalitions dedicated to the
preservation of Pennsylvania’s environment and conservation of
its natural resources. For the sake of convenience, they will be
referred to collectively as the “Federation.” The individual
defendants have all been sued in their official capacities as
administration officials. In addition, the Commonwealth of
Pennsylvania, Department of Environmental Protection
(“PADEP”), has been permitted to join as an intervenor-
defendant. The Federation alleges that the Office of Surface
Mining Reclamation and Enforcement (“OSM”) has taken a
position and performed actions inconsistent with its regulatory
obligations under the Surface Mining Control and Reclamation
Act of 1977 (“SMCRA”), 30 U.S.C. § 1201, et seq. A short
review of the origin and purpose of SMCRA is therefore in
order.

        Congress enacted SMCRA to provide protection against
environmental degradation from coal mining and to clean up
areas damaged by past coal mining. See 30 U.S.C. § 1202(a)
(“It is the purpose of this Act to . . . establish a nationwide

                                 4
program to protect society and the environment from the adverse
effects of surface coal mining operations . . . .”). Many of the
adverse effects of surface coal mining relate to the large number
of abandoned and unreclaimed coal mining sites strewn across
the nation. These sites “continue, in their unreclaimed
condition, to substantially degrade the quality of the
environment, prevent or damage the beneficial use of land or
water resources, or endanger the health or safety of the public .
. . .” 30 U.S.C. § 1202(h). SMCRA aims to promote the
complete reclamation of these abandoned mining sites and seeks
to assure that the untreated mine discharges of abandoned sites
are abated. See Pennsylvania Coal Ass’n v. Babbitt, 

, 233 (3d Cir. 1995). The statute empowers the Secretary of
the Interior, through OSM, to promulgate regulations to realize
these goals and oversee the regulatory program. 30 U.S.C.
§ 1211(c).

        Significantly, however, SMCRA allows a State to
steward its own regulatory program if it can administer that
program according to federal standards. Under this “cooperative
federalism” approach, individual States are expected to take the
lead in regulation while the federal government oversees their
efforts. Once a State program is approved, the State achieves
“primacy” over the regulation of its surface mining program
under SMCRA. Pennsylvania attained primacy in 1982. See 47
Fed. Reg. 33,050, 33,076 (July 30, 1982).

       When a State has primacy, operators of surface coal
mining sites are required to file an application for a surface coal
mining and reclamation permit with the state regulatory
authority. 30 U.S.C. § 1252(a). To receive a mining permit,

                                5
operators are required to submit a detailed reclamation plan for
the site in question. This plan must provide sufficient
information to demonstrate that complete reclamation can be
accomplished. 30 U.S.C. §§ 1257(d), 1258(a). In addition, after
the permit application has been approved, but before the permit
is issued, applicants are required to file a performance bond with
the regulatory authority. 30 U.S.C. § 1259(a). SMCRA’s
bonding program is designed to provide further assurance of
“complete reclamation of mine sites.” Cat Run Coal Co. v.
Babbitt, 

, 774-75 (S.D. W. Va. 1996). Under
SMCRA, the bonds collected by States from mining operators
must be “sufficient to assure the completion of the reclamation
plan if the work had to be performed by the regulatory
authority,” i.e., the State. 30 U.S.C. § 1259(a).

        A conventional bond system (“CBS”), authorized by 30
U.S.C. § 1259(a), is sometimes referred to as a “full cost”
system because the cost of the bond is not discounted or
supplemented by any other source. Rather, the operator must
pay the entire cost of the bond needed to complete reclamation
in the event of forfeiture. 

bond is site specific,
covering the permit area upon which the operator conducts
surface coal mining. 

shall cover that area of land
within the permit area upon which the operator will initiate and
conduct surface coal mining and reclamation operations within
the initial term of the permit.”). As mining and reclamation
operations within the permit area are expanded, the permit
holder must file additional bonds to cover the additional
operations. 

increments of surface coal
mining and reclamation operations are to be initiated and
conducted within the permit area, the permittee shall file with

                                6
the regulatory authority an additional bond or bonds to cover
such increments . . . .”).

        An alternative bond system (“ABS”), authorized by 30
U.S.C. § 1259(c), is a collective risk-spreading system that
draws in part on a bond pool to cover the reclamation liabilities
of each individual mining site. An ABS allows a State to
discount the amount of the required site-specific bond to an
amount that is less than the full cost needed to complete
reclamation of the site in the event of forfeiture. Individual
mine operators contribute to the bond pool, thereby sharing the
liability of reclamation and compensating for the discounted
site-specific bonds.

                               B.

        Pennsylvania’s past and present efforts to comply with its
obligation to maintain a solvent bond system form the backdrop
for this appeal. Pennsylvania first instituted an ABS to cover
surface coal mines in 1981, even before it obtained primacy over
mining activities in the Commonwealth. See 11 Pa. Bull. 2680
(August 1, 1981) (final rule implementing ABS). As previously
noted, OSM approved Pennsylvania’s surface coal mining
regulatory program in 1982. 47 Fed. Reg. 33,050 (July 30,
1982); see generally Hodel v. Virginia Surface Mining &
Reclamation Ass’n, 

, 268-72 (1981) (describing
state program approval process). Under the approved program,
Pennsylvania had the authority to implement either an ABS or
CBS.



                                7
        From 1982 until 2001, Pennsylvania opted for a
bifurcated bond system, with surface coal mines, as well as coal
refuse reprocessing operations and coal preparation plants,
covered by an ABS, and underground coal mines and coal refuse
disposal operations covered by a CBS. The ABS that
Pennsylvania used for its surface coal mines consisted, in part,
of site-specific bonds set below the cost of reclamation. These
discounted site-specific bonds were supplemented by a
statewide bond pool called the “Surface Mining Conservation
and Reclamation Fund” (“PA SMCRA Fund”), 52 Pa. Stat. Ann.
§ 1396.18. The PA SMCRA Fund receives revenue from
several sources, including the collection of a one-time, non-
refundable, per-acre reclamation fee paid by individual
operators of surface coal mines. That fee was originally $50 per
acre, but was raised to $100 per acre in 1993. See 25 Pa. Code
§ 86.17(e).

        On January 10, 1991, OSM’s director notified PADEP
that Pennsylvania’s “alternative bonding system must be
modified to provide the resources needed to reclaim existing
permanent forfeiture sites within a reasonable timeframe and to
ensure that future forfeiture sites will be reclaimed in a timely
manner. These resources must be sufficient to complete the
reclamation plan approved in the permit.” On May 31, 1991, in
a final rule conditionally approving a proposed state program
amendment, OSM codified a “required regulatory program
amendment,” 30 C.F.R. § 938.16(h), directing Pennsylvania to
submit information by November 1, 1991, indicating that the PA
SMCRA Fund was solvent. Specifically, the rule required
Pennsylvania to either “submit information, sufficient to
demonstrate that the [ABS] can be operated in a manner that

                               8
will meet the requirements of 30 C.F.R. § 800.11(e),” or to
amend its rules or otherwise amend its program by November 1,
1991, to be compliant with Federal standards. 56 Fed. Reg.
24,687, 24,719-21 (May 31, 1991). This “required amendment”
was published in the Federal Register on May 31, 1991, as a
final rule, following public notice as a proposed rule in the
February 26, 1990 Federal Register and a period of public
comment. 

on October 1, 1991, OSM sent Pennsylvania
a letter pursuant to 30 C.F.R. § 732 (“Part 732 Notice”). Part
732 of the Code sets out the procedural requirements for
submission, review and approval of state programs, 

along with the requirements for submission
and approval of state program amendments. 

As
described by the District Court, a Part 732 Notice “is a
document in which [OSM] notifies the State that its regulatory
program must be amended to be in accordance with SMCRA
and consistent with the Federal regulations . . . . Such
notification may be necessary as a result of Federal regulation
changes, State or Federal court decisions, or problems identified
during oversight or other program review processes.”
Pennsylvania Fed’n of Sportsmen’s Clubs v. Norton, 413 F.
Supp. 2d 358, 364 (M.D. Pa. 2006).

      The Part 732 Notice in this case indicated that
Pennsylvania’s regulatory program was no longer in compliance




                               9
with SMCRA and related federal regulations.1 Specifically,


      1
       The Part 732 Notice states, in part:
      The specific event leading to this determination is
      an OSM Field Office evaluation of the adequacy
      of the Commonwealth’s alternative bonding
      system (ABS).        This evaluation identified
      unfunded reclamation liabilities (for backfilling,
      grading, and revegetation) in excess of eight
      million dollars for current bond forfeiture sites
      alone. The review also found that the ABS is
      financially incapable of abating or permanently
      treating pollutional discharges from bond
      forfeitures. Even if no such discharges are
      created in the future, annual treatment costs for
      existing discharges are currently estimated at 1.3
      million dollars.
              Section 509(c) of SMCRA authorizes the
      Secretary to approve an ABS if it will achieve the
      objectives and purposes of the otherwise
      mandatory conventional bonding program. As set
      forth in 30 CFR 800.11(e), this provision means
      that the ABS must (1) assure that sufficient funds
      are available to complete the reclamation plans
      for any areas in default at any time, and
      (2) provide a substantial economic incentive for
      the operator to comply with all reclamation
      requirements. As discussed in the preceding
      paragraph, these conditions no longer exist in
      Pennsylvania.

                              10
OSM explained that a field office evaluation had determined
that Pennsylvania’s ABS system was “financially incapable of
abating or permanently treating pollutional discharges from
bond forfeiture sites . . . ,” and that the default reclamation
requirements of 30 C.F.R § 800.11(e) were no longer satisfied.
OSM acknowledged that Pennsylvania had already initiated the
legislative process to increase the per-acre reclamation fee for
the PA SMCRA fund (which would eventually lead to the $50
to $100 increase in 1993), but concluded that a more
comprehensive analysis had to be conducted to determine if the
revised ABS could reasonably be expected to generate sufficient
funds. OSM required that Pennsylvania submit within sixty
days “either proposed amendments or a description of
amendments to be proposed to remedy the deficiency.” In
response to this demand, PADEP sent a letter on December 6,
1991, which briefly outlined its plan to address the bonding
concerns. The letter described PADEP’s efforts to initiate an
actuarial review of its ABS and proposed a site-specific and
umbrella “trust fund” approach to meeting its obligations under
SMCRA. On March 3, 1992, OSM responded that PADEP’s
plan was still insufficient to satisfy the requirements of the Part
732 Notice.

       On July 6, 1993, OSM approved Pennsylvania’s per-acre
reclamation fee increase from $50 to $100. 58 Fed. Reg.
36,139, 36,141.         However, it emphasized the mutual
understanding between OSM and Pennsylvania that this fee
increase was a “stop-gap” measure, “an intermediate step to
keep the shortage in the [PA SMCRA] Fund from further
deteriorating,” 

rather than a long term solution to
the insolvency problem of the PA SMCRA Fund. The

                                11
Pennsylvania Environmental Quality Board agreed that “[t]o
allow the [PA SMCRA] Fund to remain insolvent is not an
acceptable bond program under Pennsylvania SMCRA or the
Federal SMCRA.”

        Nearly two years later, on May 31, 1995, OSM sent the
Secretary of PADEP a letter the Federation describes as a
dunning letter reminding the Secretary of PADEP’s outstanding
obligations under OSM’s Part 732 Notice to amend its program
to address the PA SMCRA insolvency problem. The letter
acknowledged an earlier October 1993 PADEP proposal to
enhance its bonding system through a master trust fund, but
observed that no action had been taken to implement this
proposal. It directed PADEP to take immediate action to
finalize these or other proposals.

       A letter dated September 28, 1998, from PADEP to the
Pennsylvania Coal Association’s Director of Regulatory Affairs,
underscored the magnitude of Pennsylvania’s bonding program
deficiencies:

       [PA]DEP is currently holding about $89 million
       in reclamation bonds, involving 178 coal
       operators and 102 financial institutions on 331
       permits that have long been reclaimed, but have
       one or more discharges. Pennsylvania law
       prohibits the release of these bonds unless other
       financial assurances for the long-term treatment
       of water are provided. In addition, the bonds do
       not represent anywhere near the amount of money


                              12
       required to provide for the long-term treatment of
       discharges in case of default by an operator.

       This letter set forth various proposals for ameliorating the
problem and concluded that “[t]he risk, and I believe certain
consequence, of not dealing with this problem now and in
earnest is the real possibility that some court will eventually
decide the issues for us. The dog is no longer sleeping.”

       Less than a year later, on June 3, 1999, the Citizens for
Pennsylvania’s Future (“PennFuture”), on behalf of various
parties, filed the advance notice required for a citizen’s suit.
This notice alleged, inter alia, that Pennsylvania’s bonding
system had been insolvent for over a decade, and that “[t]he
amount of bond money posted for those sites [] is grossly
insufficient for providing long term treatment.” In the midst of
settlement negotiations between PennFuture and PADEP,
PADEP issued an October 6, 1999 news release announcing its
decision to adopt a full-cost CBS that would “fully reflect the
department’s estimated cost for reclamation . . . .” 2

       OSM’s initial position on this proposed solution to the
insolvency of the PA SMCRA Fund was expressed at a


       2
        On October 13, 1999, the Federation filed a related
action in the Middle District of Pennsylvania seeking to compel
Federal and State officials to comply with various provisions of
SMCRA. Pennsylvania Fed’n of Sportsmen’s Clubs, Inc. v.
Kathleen A. McGinty, No. 99-CV-1791. That action is stayed
pending disposition of this matter.

                                13
November 18, 1999, meeting with PADEP representatives. The
OSM concluded that “conversion to FCB [full cost bonding] for
all current and future permits, as outlined by PADEP, would not
resolve the outstanding [1991] Part 732 Notification” because
it failed to address “current liability that has accrued against the
ABS” and that PADEP could not dissolve the ABS without first
addressing those existing liabilities. OSM explained that “the
liability of a bond pool for the reclamation costs on a given
forfeited site is not limited to any assigned amount. Rather its
obligation, as stated in 30 C.F.R. § 800.11(e)(1), is to ‘have
sufficient money available to complete the reclamation plan for
any areas which may be in default at any time.’” Consequently,
OSM concluded that “PADEP’s proposal cannot be approved in
its entirety.”

         OSM clarified this position in a document sent to PADEP
in a June 2000 memorandum in response to PADEP’s request
for guidance, explaining that “[f]ederal regulations do not
authorize partial or full ‘write off’ of liability through ABS
modification, and Pennsylvania must administer the program so
that all liabilities accrued against the ABS are accounted for
. . . .” Three months later, in a letter to the Secretary of PADEP
dated October 11, 2000, OSM’s Regional Director restated the
position that “[a]ddressing forfeiture sites remains a critical
aspect of OSM’s 1991 notice on ABS insolvency and requires
corrective action.” The Regional Director explained that OSM
had consistently interpreted the provisions of 30 C.F.R.
§ 800.11(e)(1) as “requiring that (1) a state is responsible to
administer its ABS in a manner that provides sufficient funds,
including funds for treatment of AMD [acid mine drainage]
emanating from forfeiture primacy permits; and (2) an ABS can

                                14
only be terminated when all sites bonded under the system are
successfully reclaimed or adequate replacement bonds are
provided.”

                              C.

       On August 4, 2001 PADEP formally announced the
termination of its ABS and conversion to a CBS for surface
mines, coal refuse reprocessing and coal preparation plants. In
an attempt to resolve concerns regarding OSM’s May 1991
Codified Required Amendment and Part 732 Notice, PADEP
and OSM exchanged drafts of what would become the jointly
authored “Pennsylvania Bonding Systems Program
Enhancements” (“Program Enhancements Document”). The
Program Enhancements Document was officially submitted to
OSM on June 5, 2003, and provides descriptions of various
aspects of Pennsylvania’s bonding program, including
summaries of actions taken and plans for future actions.

       The Program Enhancements Document outlines
Pennsylvania’s August 2001 termination of the ABS and
conversion to a CBS as well as revisions made and proposed to
the CBS system subsequent to the conversion. Specifically, it
explains that, after the conversion, Pennsylvania’s existing and
future mine operators could no longer rely on the
Commonwealth’s existing ABS to meet performance bond
requirements. Existing operators originally permitted and
bonded under the ABS fund were required to obtain new CBS
bonds. New operators were also required to be permitted and
bonded under a CBS bond and, consequently, were required to
pay the full cost of bond coverage.

                              15
        In addition, the Program Enhancements Document
discusses revisions and proposed revisions to the CBS, including
measures directed to OSM’s original concerns regarding
Pennsylvania’s compliance with 30 C.F.R. § 800.11(e). For
land reclamation on bond forfeiture sites, the Program
Enhancements Document indicates that PADEP requested and
the Pennsylvania General Assembly appropriated $5.5 million
to address the deficit in the PA SMCRA Fund. Additionally, in
the course of the ABS to CBS conversion, the Program
Enhancements Document indicates that PADEP would continue
to collect the $100 per-acre reclamation fee from mine operators
filing for new permits for the PA SMCRA Fund “to cover
forfeitures that occurred during the conversion.”

        Finally, the Program Enhancements Document includes
a “Workplan” that prioritizes and allocates resources, purporting
to “adequately provide for abatement or treatment of pollutional
discharges on primary forfeiture sites.” The document asserts
that this Workplan “addresses more discharges than is required
by federal SMCRA.” Attached as an appendix to the Program
Enhancements Document, the Workplan’s full title is the
“Alternate Bonding System Primacy Discharge Abatement
Workplan.” It explains that PADEP and OSM had completed
an initial inventory of discharges on sites forfeited under the
State’s ABS. Briefly summarized, the Workplan describes
PADEP’s intent to clean up those discharges through a




                               16
“watershed approach” that utilizes various financial and
programmatic resources.3

       OSM’s regional director sent a letter to PADEP on
June 12, 2003, one week after submission of the Program
Enhancements Document, stating that PADEP’s “transition of
existing active and inactive permits covered by the ABS
conventional bonds . . . is now complete.” The letter concurred
with PADEP’s conclusions that the measures taken by PADEP,
as described in the Program Enhancements Document, were
sufficient to remedy the deficiencies set forth in OSM’s
October 1, 1991 Part 732 Notice.            OSM noted that
Pennsylvania’s CBS had been “revised and improved” and
concluded that the actions taken by PADEP warranted
termination of the Part 732 Notice.

       In addition, two weeks later on June 26, 2003, OSM
issued a proposed rule to remove the required amendment at 30
C.F.R. § 938.16(h). 68 Fed. Reg. 37,987. In that proposed rule,
OSM asserted that the strategy outlined in the Program


       3
         Those resources are: (1) Remining; (2) Reclamation-in-
lieu of civil penalty agreements with active operators; (3) Surety
reclamation/abatement of forfeited sites; (4) Bonds forfeited and
collected from the site; (5) Excess funds from the ABS; (6) Title
IV AML funding for insolvent surety companies; (7) Title IV
10% set-aside funding for insolvent sites in Qualified
Hydrologic Units; (8) Additional Pennsylvania funding, such as
Growing Greener; (9) Other funds or approaches that become
available.

                               17
Enhancements Document would “satisfy [OSM’s] concerns as
to whether the [PA SMCRA] Fund can be operated in a manner
that will meet the requirements of 30 C.F.R. § 800.11(e).” 

OSM also stated “[s]ince we are now satisfied that
[Pennsylvania’s] bonding program enhancements adequately
address[ed] our concerns about the ability of the bonding
program to ensure the completion of the reclamation plan . . .,
we are proposing the removal of the first portion of 30 C.F.R.
938.16(h).” 

public comments on whether it
should consider the information submitted by Pennsylvania
sufficient to remove the required amendment. 

stated that “[b]ecause we decided on June 12, 2003, that
PADEP’s bonding program enhancements satisfy the concerns
expressed in our October 1, 1991, Part 732 Notification Letter,
we are not seeking comments on the adequacy of those bonding
program enhancements.” 

          The Federation submitted extensive comments on the
proposed rule, as well as on OSM’s decision to terminate the
Part 732 Notice, in a 40-page memorandum to OSM’s Regional
Director on July 25, 2003. It asked the Regional Director to
“reconsider and rescind [the termination of the 732 Notice], and
. . . similarly reconsider and decline to adopt the proposed rule
. . . .” The Federation characterized OSM’s actions as a “Retreat
from Responsibility,” and a “flip-flop,” and argued that
Pennsylvania’s new program failed to cover the costs of mine
drainage treatment, and thus the full cost of reclamation, at
many sites with post-mining discharges. The Federation
complained that Pennsylvania was “writing off” ABS
reclamation liabilities by leaving discharges from ABS
forfeiture sites untreated and by transferring those liabilities to

                                18
other programs and sources of funding identified in the
Workplan. In addition, the Federation observed that the
Workplan lacked any meaningful and enforceable commitments
to funding levels or implementation deadlines. To this end, the
Federation argued that “[a] ‘Workplan’ is no substitute for [the]
guarantee” of treatment required by SMCRA. Consequently, the
Federation argued that the required amendment at 30 C.F.R.
§ 938.16(h) should not be removed.

       On October 3, 2003, OSM declined the Federation’s
request that it rescind its June 12, 2003 letter terminating the
Part 732 Notice, and stated that the Federation’s request that
OSM retain 30 C.F.R. § 938.16(h) “will be separately addressed
in a FR [final rule] notice to be published in the near future.”
On October 7, 2003, OSM published a final rule in the Federal
Register, announcing its removal of the required amendment at
30 C.F.R. § 938.16(h). 68 Fed. Reg. 57805. The final rule
responded to the Federation’s objections by explaining that
“Pennsylvania’s conversion from the ABS to full cost bonding,
renders moot that portion of the required amendment concerned
with the solvency of the Fund.” 

       On December 8, 2003, the Federation commenced the
underlying action in the District Court by filing a three-count
complaint. The parties presented their cases, as is customary in
agency review proceedings, in cross motions for summary
judgment. The District Court denied the Federation’s motion
and granted OSM’s cross motion to dismiss the complaint on all




                               19
three counts in a Memorandum and Order issued February 1,
2006.4 This timely appeal followed.

  II. JURISDICTION AND STANDARD OF REVIEW

        The District Court had subject matter jurisdiction over
this matter under 28 U.S.C. § 1331 and 30 U.S.C. § 1276(a)(1).
We have jurisdiction over the appeal from a final judgment of
the District Court under 28 U.S.C. § 1291. Our review of the
District Court’s grant of summary judgment is plenary, applying
the same standard the District Court was required to apply.
Gordon v. Lewistown Hosp., 

, 201 (3d Cir. 2005).
A grant of summary judgment is proper where, viewing the facts
in the light most favorable to the non-moving party, the moving
party has established that “there is no genuine dispute of
material fact” and it “is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c).

       Judicial review of agency actions under SMCRA is
conducted according to the deferential standard applied to
administrative actions. SMCRA provides that “any action
subject to judicial review under this subsection shall be affirmed
unless the court concludes that such action is arbitrary,
capricious, or otherwise inconsistent with law.” 30 U.S.C.
§ 1276(a)(1).         This standard is consistent with the


       4
        Dismissal of the first count, alleging that OSM had
failed to follow administrative procedures required by law in
rescinding the final rule and required amendment, is not
appealed by the Federation.

                                20
Administrative Procedure Act’s requirement that an agency’s
action be set aside if it is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A); see also Ohio River Valley Envtl. Coal., Inc. v.
Kempthorne, 

(4th Cir. 2006) (comparing SMCRA
standard to APA standard). The scope of review under this
standard “is narrow and a court is not to substitute its judgment
for that of the agency.” Motor Vehicle Mfrs. Ass’n v. State
Farm Mut. Auto. Ins. Co., 

, 43 (1983).

        However, courts are “not obliged to stand aside and
rubber-stamp their affirmance of administrative decisions that
they deem inconsistent with a statutory mandate or that frustrate
the congressional policy underlying a statute.” NLRB v. Brown,

, 291 (1965); see also Mercy Catholic Med. Ctr. v.
Thompson, 

, 151 (3d Cir. 2004) (a reviewing court
must ensure that an agency’s ruling is not “inconsistent with
applicable regulations”). The arbitrary and capricious standard
of review applies equally to an agency’s decision to pass a rule
or rescind a rule. Motor Vehicle Mfrs. 

.
Moreover, “an agency changing its course by rescinding a rule
is obligated to supply a reasoned analysis for the change beyond
that which may be required when an agency does not act in the
first instance.” 

        In determining whether an agency’s actions were
arbitrary, capricious, an abuse of discretion, or otherwise
inconsistent with law we look to the statute delegating authority
to the agency to make and enforce rules pursuant to the statute.
See Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 

, 842 (1984). In this case, the statute is SMCRA, which

                               21
delegated rulemaking power to the Department of Interior (and
consequently OSM, which is within the Interior Department).
30 U.S.C. § 1251(b) (authorizing permanent program
regulations). Under the familiar two-step Chevron analysis, a
court first looks to the statute to determine “whether Congress
has directly spoken to the precise question at issue.” 

If the statute is silent or ambiguous, we move to step two of the
inquiry. At step two, “the question for the court is whether the
agency’s answer is based on a permissible construction of the
statute.” 

The Supreme Court has described the
standard of review at step two as “arbitrary and capricious”
review. See United States v. Mead Corp., 

, 227
(2001); see also National Cable & Telecomms. Ass'n v. Brand
X Internet Servs., 

, 986 (2005) (“[W]e defer at step
two to the agency’s interpretation so long as the construction is
a reasonable policy choice for the agency to make.” (internal
quotes omitted)). We therefore approach agency regulations
with great deference when reviewing them under Chevron’s
second step.

                      III. DISCUSSION

                               A.

       The OSM actions under review in this appeal are the
agency’s termination of the Part 732 Notice and removal of the
codified required amendment at 30 C.F.R. § 938.16(h). Our
review of these actions requires us to consider the applicability
of 30 C.F.R. § 800.11(e) because OSM argues, and the District
Court agreed, that Pennsylvania’s conversion from an ABS to a
CBS rendered § 800.11(e) inapplicable and mooted the issue of

                               22
compliance with the provision.       Pennsylvania Fed’n of
Sportsmen’s 

(“[A] conversion to
the CBS amounts to a conversion of applicable statutory
provisions and regulations [and as a result] any ongoing
obligations from 30 C.F.R. 800.11(e) cease to apply.”). As a
threshold matter, however, we must determine whether
Pennsylvania’s ABS system was actually terminated by
Pennsylvania’s August 4, 2001 announcement, and, if so,
whether OSM’s actions in approving this purported termination
of the ABS and conversion to a new bonding system were
inconsistent with the applicable regulations and therefore an
abuse of discretion.

        The Federation argues that because Pennsylvania’s ABS
is part of the approved Pennsylvania regulatory program, it may
be dissolved only through PADEP’s submission and OSM’s
approval of a State program amendment deleting the
authorization for an ABS from the program.5 See 30 C.F.R.
§ 732.17(g) (“Whenever changes to laws or regulations that
make up the approved State program are proposed by the State,
the State shall immediately submit the proposed changes to the


       5
         OSM argues that the Federation has waived the
argument that “Pennsylvania’s ABS could be terminated only
through a program amendment,” Br. of Appellee OSM 39 n.9,
by failing to raise it below. However, we believe this argument
is preserved as a component of a larger issue argued by the
Federation in the District Court, namely that “the ABS continues
to exist as an approved part of the Pennsylvania program.”
Plaintiffs’ Surreply Br., Doc. 55 at 6 n.6.

                              23
Director as an amendment. No such change to laws or
regulations shall take effect for purposes of a State program
until approved as an amendment.”). However, Pennsylvania’s
program, as originally approved in 1982, provides for the option
to implement either a CBS or an ABS. PA SMCRA states in
relevant part that:

       The amount of the bond required shall be in an
       amount determined by the department based upon
       the total estimated cost to the Commonwealth of
       completing the approved reclamation plan, or in
       such other amount and form as may be established
       by the department pursuant to regulations for an
       alternate coal bonding program which shall
       achieve the objectives and purposes of the
       bonding program.

52 Pa. Cons. Stat. Ann. § 1396.4. OSM approved this bonding
portion of PA SMCRA without condition. See 47 Fed. Reg.
33,079-80 (setting forth Ҥ 938.11 Conditions of state regulatory
program approval.”). As such, it is unnecessary for PADEP to
codify a new regulation or amend its existing regulation. Under
the current regulations, both state (52 Pa. Cons. Stat. Ann.
§ 1396.4) and federal (47 Fed. Reg. at 33,079-80), Pennsylvania
is already authorized to pursue any bonding scheme it desires so
long as that scheme achieves the ultimate objective of the
bonding program, which is to guarantee sufficient funds for
reclamation. The conversion from an ABS to a CBS is therefore
not a “change[] to laws or regulations that make up the approved
State program,” 30 C.F.R. § 732.17(g), that triggers the SMCRA
program amendment process. It is merely an exercise of

                               24
authority already granted to Pennsylvania in the existing
regulations. OSM’s actions in approving this conversion were
therefore not arbitrary, capricious, an abuse of discretion, or
otherwise inconsistent with law.

        The Federation alights on the fact that Pennsylvania
continues to collect the OSM-approved reclamation fee, which
continues to supply the PA SMCRA Fund (or “ABS fund,” App.
265). This fund, the Federation observes, may only be used to
reclaim mining sites that had obtained bond coverage under the
former ABS by paying the ABS reclamation fee. 25 Pa. Code
§§ 86.17(e), 86.187(a)(1). This continued use of an ABS fund
fed by an ABS reclamation fee, the Federation argues, confirms
the continued existence of an ABS.6 However, while it is true
that the “ABS Fund” continues to exist in name, it no longer
operates as an ABS, that is, as a bond pool to provide liability
coverage for new and existing mining sites. Under the new
terms of PADEP’s Program Enhancements Document, existing
and future operators can no longer rely on the PA SMCRA Fund
for their bond coverage. Existing operators that were originally
bonded under the ABS, and relied on the supplemental revenue
in the Fund, were required to obtain new, CBS bonds. New


       6
         OSM proposed a rule including a proposed amendment
to 25 Pa. Code § 86.17(e) that would “discontinue the collection
of [Pennsylvania’s] Alternative Bonding System (ABS) $100
per acre reclamation fee.” 71 Fed. Reg. 50868, 50869 (col. 1)
(August 28, 2006). However, in its final rule, OSM has deferred
its decision on the proposed change until final disposition of this
appeal. 72 Fed. Reg. 19117, 19120 (col. 1) (February 23, 2007).

                                25
operators were and are required to be permitted and bonded
under a CBS bond and, consequently, were and are required to
pay for the full cost of their bond coverage. Thus, while there
still is a legacy alternative bond fund that is being paid into and
drawn on “to cover for forfeitures that occurred during the
conversion,” there is no longer a current or prospective ABS in
Pennsylvania.

                                B.

        Although we have determined that Pennsylvania has
effectively converted to a CBS and OSM did not abuse its
discretion in approving that conversion, neither we nor OSM are
yet out of the woods, so to speak. That is because we are still
faced with the question of what obligations, if any, Pennsylvania
has to ensure reclamation of sites forfeited before the conversion
to a CBS began, plus any additional sites whose reclamation
costs are still not fully covered by CBS bonds. To clarify, it is
important we distinguish between the ABS as a bonding
program, which no longer exists in Pennsylvania, and the
particular mine sites bonded under that now defunct program.
This distinction is a critical one as the conclusion that it is
permissible under SMCRA for a State to dissolve its ABS
program, in the manner Pennsylvania has, does not lead
ineluctably to the conclusion that all liabilities accrued under
that program are also automatically dissolved. In other words,
there are still mining sites in Pennsylvania that were originally
bonded under the ABS and forfeited prior to the CBS
conversion. The question remains as to what obligations
Pennsylvania has to provide for complete reclamation and
treatment of these mining sites and their pollutional discharges.

                                26
       OSM argues, and the District Court agreed, that whatever
obligations Pennsylvania has, those obligations are not the ones
set forth in 30 C.F.R. § 800.11(e). That provision, OSM
maintains, simply ceased to apply once the prospective
conversion to a CBS was announced and approved. OSM’s
position, simply stated, is that, because there is no longer an
ABS in Pennsylvania, § 800.11(e) is no longer applicable and
any obligations set forth in that provision are no longer binding.
To reiterate, the District Court “agree[d] that a conversion to the
CBS amounts to a conversion of applicable statutory provisions
and regulations.” Pennsylvania Fed’n of Sportsmen’s 

. We do not agree with this conclusion
entirely. We agree that the conversion to a CBS amounts to a
change in statutory provisions going forward for those mining
sites where complete reclamation costs are now fully covered by
CBS bonds. However, we do not agree that sites forfeited
before the conversion began are no longer subject to regulation
under § 800.11(e).

       To start, like the Federation, we find OSM’s apparent
“about face” on the issue of the applicability of 30 C.F.R.
§ 800.11(e)(1), and more generally Pennsylvania’s outstanding
and future reclamation liabilities, striking.7 However, an agency


       7
       OSM examined § 800.11(e)(1) in a 1991 final rule
concerning the ABS of Missouri. 56 Fed. Reg. 21281 (May 8,
1991). In an effort to address an “unexpectedly large default”
leaving substantial acreage unreclaimed at mines forfeited
before September 1988, 

(col. 1), 21286 (col. 2),
Missouri submitted a program amendment to OSM that would

                                27
have modified the state’s ABS “to provide money to cover only
part of the cost of reclaiming sites that were in bond forfeiture
prior to September 1, 1998.” 

(col. 1). Rejecting
that proposal, the agency explained:

       Reclamation liability under a bond pool must be
       continuous. The liability and obligation of an
       ABS does not disappear if the bond pool finds
       itself unable to meet its obligations as they
       mature, or its existing capital structure is impaired
       or its ability to perform any of its obligations is
       impaired. Additionally, existing liabilities of an
       impaired pool cannot be erased simply because
       proposed modifications to the pool will assure
       partial satisfaction of existing reclamation
       liabilities. Stated differently, if a bond pool
       comes up short of cash, the regulatory authority
       cannot and should not be able to simply “write
       off” any existing reclamation liabilities and then
       resume business as usual by proposed
       modifications to the previous ABS. This would be
       directly in conflict with the language of 30 CFR
       800.11(e) and the purposes and objectives of
       section 509 of SMCRA, which provide that an
       ABS, must have available sufficient money to
       complete reclamation for any areas which may be
       in default at any time.

56 Fed. Reg. at 21286 (col. 2-3).

                                28
         In the same rule, OSM rejected a proposal by Missouri to
supplement its ABS with a CBS. Missouri proposed to allow
new operations to “opt-out” of the ABS by posting a full cost
conventional bond, 56 Fed. Reg. at 21287 (col. 1-2, Finding
B.5(a)), and existing permittees to “buy out” of the ABS by
posting such a bond and paying a one-time assessment into the
State’s ABS bond pool fund. 

(col. 2-3, Finding
B.5(c)). OSM explained that the Missouri ABS fund had
“continuing liability to reclaim sites forfeited in the past,” 

(col. 3), and rejected these CBS proposals because
Missouri had provided “no assurances that past bond forfeiture
liabilities [of the ABS] will be met.” 

(col. 1-3).
OSM reasoned that Missouri was relying on the ABS at the time
of the bond forfeitures, which, coupled with the language of 30
C.F.R. § 800.11(e)(1), gave the Missouri ABS a “continuing
liability to reclaim sites forfeited in the past.” 56 Fed. Reg. at
21287 (col. 3).
         Similarly, in a final rule involving West Virginia’s ABS,
OSM required the State “to eliminate the deficit in the State’s
alternative bonding system and to ensure that sufficient money
will be available to complete reclamation, including the
treatment of polluted water, at all existing and future bond
forfeiture sites.” 60 Fed. Reg. 51900, 51918 (col. 2) (October 4,
1995).
         As 

, Part I.B, in various communications
with PADEP, OSM previously took a similar position with
respect to Pennsylvania’s ABS. OSM emphasized that “Federal
regulations do not authorize partial or full ‘write off’ of liability
through ABS modification, and Pennsylvania must administer

                                 29
is not estopped from “changing a view [it] believes to have been
grounded upon a mistaken legal interpretation [and] . . . an
administrative agency is not disqualified from changing its mind
. . . .” Good Samaritan Hosp. v. Shalala, 

, 417
(1993) (citations omitted). Indeed, Chevron itself involved an
agency reversal on a significant question of statutory
construction. See 

. On the other
hand, “[a]s a general matter, of course, the case for judicial
deference is less compelling with respect to agency positions
that are inconsistent with previously held views.” Pauley v.
BethEnergy Mines, 

, 698 (1991); see also INS v.
Cardoza-Fonseca, 

, 447 n.30 (1987) (“An agency
interpretation of a relevant provision which conflicts with the
agency’s earlier interpretation is entitled to considerably less
deference than a consistently held agency view.”). When an
agency “sharply change[s] its substantive policy, then, judicial
review of its action, while deferential, will involve a scrutiny of
the reasons given by the agency for the change.” Natural Res.
Def. Council, Inc. v. EPA, 

, 760 (3d Cir. 1982).


the program so that all liabilities accrued against the ABS are
accounted for . . . .” OSM “insist[ed] that PADEP must deal
with the current liability that has accrued against the ABS
[through past bond forfeitures] as well as any future liability
from the forfeiture or existing permits under the ABS that are
unwilling or unable to convert to FCB.” OSM made clear its
conviction that this position was “mandated by the Federal
regulations at 30 C.F.R. § 800.11(e)(1) . . . ,” and “consistent
with decisions it ha[d] issued with respect to ABS program
amendments from Missouri and West Virginia.”

                                30
Under these circumstances, OSM bears the burden of rationally
explaining its departure from its previous position. See Motor
Vehicle Mfrs. 

(1983).

        With respect to the step one of the Chevron inquiry –
whether Congress has spoken directly to the question at hand –
we agree with the District Court that “[t]he language of SMCRA
itself does not address dissolution of an ABS one way or the
other.” Pennsylvania Fed’n of Sportsmen’s Clubs, 

at 377. To state the issue more precisely, Congress has not
set forth any requirements under SMCRA or any of its
regulations dictating how a conversion from an ABS to a CBS
is to be executed and how any remaining liabilities from an
insolvent ABS are to be discharged. As SMCRA and its
regulations are silent on the issue of dissolution of an ABS, we
proceed to step two of the Chevron analysis where “the question
for the court is whether the agency’s answer is based on a
permissible construction of the statute.” Chevron, U.S.A., 

. The basic tenets of statutory construction apply
to construction of regulations and “[our] starting point on any
question concerning the application of a regulation is its
particular written text.” Wilson v. United States Parole
Comm’n, 

, 197 (3d Cir. 1999). The regulation at
issue provides:

       OSM may approve, as part of a State or Federal
       program, an alternative bonding system, if it will
       achieve the following objectives and purposes of
       the bonding program:



                               31
       (1) The alternative must assure that the regulatory
       authority will have available sufficient money to
       complete the reclamation plan for any areas which
       may be in default at any time.

30 C.F.R. § 800.11(e)(1).

        OSM fixes on the words “may approve” and argues that
the terms of the provision therefore refer only to the conditions
for approval of ABS programs. 8 However, this suggested
narrow construction is contradicted by the more expansive
language in § 800.11(e)(1), which requires that “the regulatory
authority [] have available sufficient money to complete the
reclamation plan for any areas which may be in default at any
time . . . .” “Read naturally, the word ‘any’ has an expansive
meaning, that is, ‘one or some indiscriminately of whatever
kind.’” United States v. Gonzales, 

, 5 (1997) (quoting
Webster’s Third New International Dictionary 97 (1976)).
OSM’s argument that the “‘at any time component’ . . . applies
to the ABS that is the subject of the proposal and approval,” Br.
of Appellees at 40, is unavailing given that the words “at any


       8
         In addition, PADEP points out that the section heading
of § 800.11 is entitled “Requirement to file a bond” (emphasis
added), and argues that the provision only sets forth those initial
requirements for filing. However, it is a “well-settled rule of
statutory interpretation that titles and section headings cannot
limit the plain meaning of statutory text where that text is clear.”
M.A. ex rel. E.S. v. State-Operated Sch. Dist., 

, 348
(3d Cir. 2003).

                                32
time” are immediately preceded by the words “any areas which
may be in default.” The context makes clear that the words “at
any time” apply not to the ABS program in general, but to
specific “areas”, i.e., mining sites bonded under the ABS. See
Textron Lycoming Reciprocating Engine Div. v. Automobile
Workers, 

, 657 (1998) (“[I]t is a fundamental
principle of statutory construction (and, indeed, of language
itself) that the meaning of a word cannot be determined in
isolation, but must be drawn from the context in which it is
used.” (citation and quotations marks omitted)). Thus, a plain
reading of the words “any areas which may be in default at any
time” indicate that the obligations prescribed by § 800.11(e) are
not restricted to the immediate circumstances surrounding the
approval of an ABS, but are instead ongoing in nature and apply
at any time, so long as those mining areas originally bonded
under the ABS, and not yet converted to CBS bonds, still exist.

       Furthermore, keeping in mind the distinction between
sites bonded under the ABS and the ABS itself, we see no
reasonable basis for OSM’s assertion that a purely prospective
process – the transition to a CBS initiated on August 4, 2001 –
should have retroactive effects on obligations that already
accrued and guarantees that were already made under the ABS
while the ABS was still active. This assertion is inconsistent
with the expansive language of § 800.11(e) insofar as it adds to
the phrase “any areas which may be in default at any time” an
implicit limitation – “until a new bonding system is in place for
new or ongoing mine operations.” Furthermore, it would allow
the regulatory authority to disclaim or “write off” existing



                               33
reclamation liabilities,9 a result which would be contrary to the
fundamental purpose of SMCRA’s bonding requirement, which
is to ensure complete reclamation of mining sites in the case of
forfeiture. See Cat Run Coal 

; 30
U.S.C. § 1259(a). Consequently, even under the deferential
standard applicable to agency interpretations, OSM’s
construction of 30 C.F.R. § 800.11(e) is impermissible. Mercy
Catholic Med. 

. We conclude that
§ 800.11(e) continues to apply to sites forfeited prior to the CBS
conversion and that § 800.11(e) requires that Pennsylvania
fulfill the obligations it voluntarily assumed to ensure that these
sites are fully reclaimed.

                                C.

        Finally, we turn to Pennsylvania’s Program
Enhancements Document.         This document provided the
justification for Pennsylvania’s claim that the deficiencies
identified in OSM’s 732 Notice and 30 C.F.R. § 938.16(h)
amendment had been remedied. OSM is careful to emphasize
that, for purposes of its review, it did not view the Program


       9
         At oral argument, counsel for the Federation analogized
OSM’s argument to that of a credit cardholder who cancels the
card and then claims that his or her outstanding balance should
be limited to the cash he has on hand. While we recognize that
the analogy is imperfect, as Pennsylvania is not in the position
of a debtor, we believe it illustrates the principle that accrued
liabilities under a particular financial regimen do not simply
disappear when an individual or entity abandons that regimen.

                                34
Enhancements Document as a means of complying with
§ 800.11(e) because it believed that Pennsylvania’s bond
conversion mooted the issue of compliance with that provision.
As the District Court correctly observed, however, “the decision
to terminate the Part 732 Notice was made after consideration of
the actions taken over the years – actions that were described in
the program enhancements document.” Pennsylvania Fed’n of
Sportsmen’s 

. In light of our
conclusion that § 800.11(e) continues to apply to sites forfeited
prior to the conversion, the Program Enhancements Document
takes on special significance. If, in fact, the Program
Enhancements Document does not ensure compliance with
§ 800.11(e), then it is an inadequate response to OSM’s 732
Notice and 30 C.F.R. § 938.16(h) amendment, both of which
emphatically called for Pennsylvania to take measures to comply
with its obligations pursuant to § 800.11(e).

       As 

, the Program Enhancements
Document presents an elaborate array of proposals for discharge
abatement. The Federation argues that many of these proposals
are inadequate, but we need not reach that argument because we
believe the Program Enhancements Document is inadequate for
a more basic reason: none of the proposals described in it
represent enforceable commitments. OSM and PADEP describe
these proposals in the language of a guarantee, see, e.g., Br. of
Appellee PADEP at 31 (describing the Workplan as a
“commitment, acknowledged by OSM [that] became a
programmatic obligation”), but Pennsylvania is only obligated
under the regulations to enforce the provisions of its approved
State program. 30 C.F.R. § 733.11. In turn, OSM may only
take oversight action against Pennsylvania for failure to

                               35
implement those OSM-approved provisions.           30 C.F.R.
§ 733.12. Because the Program Enhancements Document is not
part of an approved program amendment, it is not part of the
Commonwealth’s approved State program, and Pennsylvania is
therefore under no obligation to implement its “programmatic
commitments.” While we would not go as far as the Federation
in describing the use of language such as “programmatic
commitments” and “programmatic accountability” as
bureaucratic obfuscation, we do agree that such references do
not obscure the simple fact that the Program Enhancements
Document sets forth policy aspirations, not enforceable
obligations.

        Even if we were to concede that PADEP is unlikely to
disregard the goals described in the Program Enhancements
Document, given the time and effort put into drafting it,
SMCRA demands that “sufficient money” will be available “at
any time” a discharge from an ABS bond forfeiture site must be
treated. 30 C.F.R. § 800.11(e)(1). The plain language of this
provision requires that Pennsylvania demonstrate adequate
funding for mine discharge abatement and treatment at all ABS
forfeiture sites. While the Program Enhancements Document
appears to be a good faith effort by OSM and PADEP to allocate
scarce resources, SMCRA requires that reclamation and
treatment of all post-SMCRA mining areas be guaranteed. 30
U.S.C. § 1259; 30 C.F.R. § 800.11(e)(1). The Program
Enhancements Document is a policy directive, not an




                             36
enforceable guarantee.10 Accordingly, OSM’s actions in
rescinding the October 1, 1991 Part 732 Notice and deleting the
30 C.F.R. § 938.16(h) amendment were inconsistent with
SMCRA and OSM’s own regulation, 30 C.F.R. § 800.11(e)(1),
and therefore an abuse of discretion.

                     IV. CONCLUSION

       Close to thirty years ago, through SMCRA, Congress
dealt with the reclamation problem that then faced this country
as a result of decades of coal mining that provided needed
supplies of energy, but left many States and communities with
land that was badly scarred, no responsible party to reclaim the
land, and no taxpayer funds that would allow the federal or state
government to do the work. Pennsylvania was one of those
States with such a problem. At the same time, Pennsylvania had
an abundance of coal, communities whose economies benefitted
from coal mining, and a coal mining industry interested in doing
the work. To provide for reclamation and at the same time
allow States such as Pennsylvania to continue mining, SMCRA


       10
         The parties confirmed at oral argument that the
administrative process has been initiated to codify the
substantive proposals of the Program Enhancements document
as a formal amendment to Pennsylvania’s approved regulatory
program. We do not reach the question of whether a formal
amendment incorporating the substantive proposals of the
Program Enhancements Document would adequately address the
concerns raised in OSM’s 732 Notice and required program
amendment.

                               37
established new stringent rules for permitting, bonding, mining
and reclamation. Notably, it was also one of the first laws
passed by Congress employing a new form of federalism,
whereby States could assume primary responsibility for
implementing the law with a limited amount of federal
supervision. Pennsylvania’s approved program provided an
ABS as an alternative to full cost bonding, which allowed the
cost and burden of bonding to be shared across the
Commonwealth and the industry. Over the period in which the
ABS was in place, significant mining operations took place by
responsible operators who met their commitments fully, and
produced needed coal while employing thousands of
Pennsylvanians in well paying jobs.

        However, as well intentioned as the ABS program may
have been, within the first ten years of its operation, it became
clear that the ABS left the Commonwealth with now
unreclaimed land, unabated mine discharges, and a reclamation
fund insufficient to meet the new obligations. In 2001, PADEP
scrapped the ABS for existing and future mining operations, and
converted to the full cost CBS. Since SMCRA was enacted
thirty years ago, we are faced in this case, for the first time, with
the question of what continued level of supervision OSM should
maintain over a State’s program where an ABS is converted to
a CBS without firm financial guarantees of complete
reclamation in place. Although Congress did not speak
explicitly to its intention on this precise issue, its message to
America in the form of SMCRA is clear enough – the
environmental damage resulting from unreclaimed mining sites
must be mitigated. To this end, we believe the only reasonable


                                 38
conclusion in this case is that OSM supervision is required until
full guarantees of reclamation are in place.

       For the reasons set forth above, we will reverse the
District Court’s judgment with respect to Counts Two and Three
of the Complaint, sustaining the agency actions in this case, and
remand to the District Court with instructions to set aside
OSM’s June 12, 2003 termination of its October 1, 1991 Part
732 Notice, and the portion of OSM’s October 7, 2003 final rule
deleting the 30 C.F.R. § 938.16(h) amendment, both of which
required that Pennsylvania bring its program into compliance
with 30 C.F.R. § 800.11(e).




                               39