Matter of Lac Minerals , 2017 SD 44 ( 2017 )

#28020-aff in pt & rev in pt-GAS
2017 S.D. 44IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
IN THE MATTER OF LAC MINERALS (USA), LLC’S
PETITION FOR RELEASE OF RECLAMATION LIABILITY,
UPDATED RECLAMATION FINANCIAL ASSURANCE,
POSTCLOSURE PLAN AND FINANCIAL ASSURANCE,
AND REQUEST TO RETAIN WATER MANAGEMENT FACILITIES
AND ACCESS ROADS
MINE PERMIT NOS. 445 AND 460.
****
APPEAL FROM THE CIRCUIT COURT OF
THE FOURTH JUDICIAL CIRCUIT
LAWRENCE COUNTY, SOUTH DAKOTA
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THE HONORABLE MICHELLE K. PALMER PERCY
Judge
****
HARLAN A. SCHMIDT
Spearfish, South Dakota Attorney for appellants Harlan
A. Schmidt and Robert G.
Fowler.
MAX MAIN
KELLEN B. WILLERT of
Bennett Main, Gubbrud
& Willert, PC
Belle Fourche, South Dakota Attorneys for appellee LAC
Minerals (USA), LLC.
MARTY J. JACKLEY
Attorney General
STEVEN R. BLAIR
Assistant Attorney General
Pierre, South Dakota Attorneys for appellee South
Dakota Department of
Environment and Natural
Resources.
****
CONSIDERED ON BRIEFS
ON APRIL 24, 2017
OPINION FILED 07/26/17
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SEVERSON, Justice
[¶1.] Robert Fowler and Harlan Schmidt, intervenors in LAC Mineral USA,
LLC’s (LAC) petition regarding mine permit Nos. 445 and 460, appeal from the
circuit court’s affirmance of the Board of Minerals and Environment’s
determination that it had subject matter jurisdiction over the petition. They also
appeal both the circuit court’s determination that they waived due process issues
and the court’s denial of a motion to supplement the administrative record. We
affirm in part and reverse in part.
Background
[¶2.] This case concerns the Richmond Hill Mine near Lead, South Dakota.
The mine was approved as a large-scale gold mine in 1988 under Mine Permit No.
445. All mining and exploration stopped by order of the South Dakota Department
of Environment and Natural Resources (DENR) in 1993, after detection of acid rock
drainage. LAC obtained a permit amendment with a revised reclamation plan in
1994 that addressed the drainage. In 2014, LAC submitted a petition to DENR for
a release of reclamation obligations; a postclosure plan and financial assurance; an
updated reclamation plan and financial assurance; a request for extension of
reclamation period; and a request for road and building retention. It sought a
hearing before the South Dakota Board of Minerals and Environment (Board).
[¶3.] Harlan Schmidt, personally and as attorney on behalf of Robert
Fowler, petitioned to intervene. Fowler’s interest in some of the mining property
has been previously litigated in federal court. See Fowler v. LAC Minerals (USA),
LLC, 694 F.3d 930, 935 (8th Cir. 2012) (“Fowler retains an ongoing reversionary
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interest in the property.”). There has been no showing of what interest, if any, that
Schmidt has in the matter. However, his interest has not been challenged. The
petition to intervene raised three issues, but one of those issues was voluntarily
dismissed prior to the hearing before the Board. The two remaining issues were
“whether the Department [had] jurisdiction to conduct [the] hearing” and “whether
LAC’s ‘Request’ without payment of an ‘application fee’ is actually a proposed
amendment under SDCL 45-6B-18 because it makes ‘minor modifications of the
terms and conditions of the reclamation plans’?”. (Emphasis added.) According to
Schmidt and Fowler, the Board did not have jurisdiction over the matter because
LAC failed to consult with Fowler, which he contends is required by various
statutes in SDCL chapter 45-6B and is a prerequisite to the Board obtaining
jurisdiction. Schmidt and Fowler also asserted that the changes to the reclamation
plan amounted to an amendment of the mining petition, which required a fee
pursuant to SDCL 45-6B-18. According to Schmidt and Fowler, the failure of LAC
to submit the fee likewise divested the Board of jurisdiction.
[¶4.] Pursuant to administrative rule, a member of the board was appointed
to act as chair of the hearing. See ARSD 74:09:01:08. On October 5, 2015, after the
parties submitted briefs on the issues raised in the petition to intervene, the
hearing chair issued a memorandum decision determining that the Board had
jurisdiction over LAC’s petition. The hearing chair noted that there was no
evidence that LAC consulted with Fowler, but it concluded that Fowler was not a
“landowner” who needed to be consulted under SDCL 45-6B-44. The hearing chair
determined that it did not have sufficient information to decide whether LAC’s
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petition, with regard to reclamation, amounted to an amendment. However, the
hearing chair opined that one method for resolution would be for LAC to dismiss its
current request and resubmit it along with a filing fee, thereby treating it as an
amendment. Thereafter, prior to the full Board hearing, LAC withdrew its updated
reclamation plan and its request to extend reclamation period. Schmidt and Fowler
submitted proposed findings of fact and conclusions of law to the hearing chair.
They also submitted a letter to the Board raising some concerns about leach pads
and stating that they were “obliged to appeal” the ruling that Fowler was not a
“landowner.”
[¶5.] The Board held a hearing on LAC’s requests on October 15, 2015.
Those requests included being released from reclamation liability for portions of the
land; approval of new reclamation financial assurance; approval to keep certain
roads, buildings, and structures for water management activities; approval of
postclosure financial assurance; and release of current reclamation financial
assurance. Neither Schmidt nor Fowler attended the Board hearing. The Board
subsequently incorporated the hearing chair’s memorandum decision into its
findings of fact and conclusions of law and adopted it as the final decision of the
Board. The Board determined that because “LAC withdrew the updated
reclamation plan and the . . . request to extend reclamation period, the Hearing
Chair and the Board need not reach the issue of whether or not said documents
were a permit amendment application.” Furthermore, it found that because the
reclamation plan and request for extension had been withdrawn, those “materials
were therefore not considered by the Hearing Chair or by the Board.” Nevertheless,
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it went on to determine that “Fowler and Schmidt are not ‘landowners’ as that term
is used in SDCL 45-6B-44.” 1 The Board rejected all of Schmidt and Fowler’s
proposed findings of fact and conclusions of law.
[¶6.] Schmidt and Fowler appealed the Board’s decision to the circuit court.
They presented four issues in their statement of issues. Those issues were as
follows:
1. Whether the Board had jurisdiction to act where LAC did not
provide notice to Fowler [who is] entitled to notice by SDCL
45-6B-17 . . . ?
2. Whether the Board erred in determining that Fowler was not
a ‘landowner’ entitled to notice, consultations, and approvals
under South Dakota mining statutes and regulations thereby
denying Fowler the rights and privileges of South Dakota law
...?
3. If [the c]ourt affirms that Fowler is not a landowner entitled
to such notice, consultations, and approvals under the
provisions of SDCL 45-6B-44, SDCL 45-6B-45[,] ARSD
74:29:06:01 and ARSD 74:29:06:05, then do those statutes
and regulations, or the failure to provide statutory notice,
deny Fowler due process of law?
4. Whether the Board had jurisdiction to act where LAC did not
submit the amendment fee required by SDCL 45-6B-14?
The circuit court determined that Fowler and Schmidt waived issue three by failing
to appear at the Board hearing. However, it addressed the three other issues. The
court determined that the Board had subject matter jurisdiction. But the court also
1. The Board also released portions of land from reclamation liability;
determined that some areas did not meet criteria for release; approved new
reclamation financial assurance; granted approval to keep roads, buildings,
and structures for water management activities; approved postclosure
financial assurance; and released current reclamation financial assurance.
These determinations are not related to this appeal.
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determined a legal issue that the Board never reached, which Schmidt and Fowler
had cast as a jurisdictional issue—that the submission of a postclosure plan under
SDCL 45-6B-91 is not a permit amendment because there was a reservation of the
right to make modifications in the 1994 permit amendment. 2 The court also held
that Fowler and Schmidt were not “landowners” under SDCL chapter 45-6B. On
appeal to this Court, Schmidt and Fowler largely attempt to raise the same issues
as they did before the circuit court. They state those issues as follows:
1. Whether Fowler is either a landowner entitled to certain
consultations rights under SDCL 45-6B-44 or an owner entitled to
notice under SDCL 45-6B-17?
2. If Fowler is entitled to consultation and notice, then did the failure
to comply with SDCL 45-6B-17 and 44 by conferring and giving
notice deprive the DENR of subject matter jurisdiction to issue and
amend mining permits?
3. If the said statutes do not require consultation and notice, then was
Fowler denied due process of law?
4. Was the application [relating to postclosure issues] a proceeding for
an amendment which required an amendment fee?
5. Did the circuit court err by denying the motion to add documents to
the record?
Standard of Review
[¶7.] We review the “agency record in the same light as does the trial court
to determine whether or not the agency’s decision was clearly erroneous. Further,
in reviewing an administrative agency record, this [C]ourt is not bound by any
presumption that the decision of the circuit court was correct.” In re Koch Expl.
2. Prior to the circuit court proceedings, Schmidt and Fowler had only
challenged reclamation issues as an amendment; they never asserted that
the postclosure plan was an amendment.
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Co., 387 N.W.2d 530, 536 (S.D. 1986); see also South Dakota Administrative
Procedure Act, SDCL chapter 1-26. “[Q]uestions of law are reviewed de novo.”
Wendell v. S.D. Dep’t. of Transp., 1998 S.D. 130, ¶ 5, 587 N.W.2d 595, 597.
Analysis
1. Whether the Board had subject matter jurisdiction over LAC’s petition
[¶8.] Often, various proceedings prior to an appeal to this Court narrow and
clarify the issues to be addressed. Here, after proceedings in front of the Hearing
Chair, the full DENR Board, and the circuit court, the issues as presented to this
Court are like two ships passing through the fog at night. Thus, we reorder the
issues presented and first address whether the Board had subject matter
jurisdiction over this matter. “Subject matter jurisdiction is conferred solely by
constitutional or statutory provisions.” Koch, 387 N.W.2d at 536. “Furthermore,
subject matter jurisdiction can neither be conferred on a court, nor denied to a court
by the acts of the parties or the procedures they employ.” Id. SDCL 45-6B-73
confers subject matter jurisdiction to the Board. It provides in part: “The Board of
Minerals and Environment shall carry out and administer the provisions of this
chapter [45-6B Mined Land Reclamation]. The board has jurisdiction and authority
over all persons and property, public and private, necessary to enforce the
provisions of this chapter.” SDCL 45-6B-73. SDCL 45-6B-81 further provides in
relevant part that “[t]he board may promulgate rules, pursuant to chapter 1-26,
consistent with the provisions of this chapter, to provide for: (1) The procedure for
filing and departmental review of mining permit applications; (2) The procedure for
amending mining permits[.]”
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[¶9.] SDCL 45-6B-5 sets forth mining application requirements and
provides that “[a]ny person desiring to engage in a mining operation shall make
written application to the Board of Minerals and Environment for a permit for each
mining operation on forms furnished by the board.” Fowler and Schmidt contend
that LAC failed to consult with Fowler pursuant to SDCL 45-6B-44, SDCL 45-6B-
45, ARSD 74:29:06:01, and ARSD 74:29:06:05. In general, those provisions provide
that a proposed reclamation plan, substantial amendment to an existing
reclamation, and choice of reclamation must be developed and agreed to by the
operator, the department, and the landowner. Schmidt and Fowler also contend
that LAC did not submit an amendment fee required by SDCL 45-6B-14 and SDCL
45-6B-18. SDCL 45-6B-18 provides in part that “[a]n application to amend a large
scale permit shall include the application fee provided by § 45-6B-14.” SDCL 45-6B-
14 sets the amount of the fee at $5,000 “for an amendment to an existing large scale
precious metal . . . mine permit[.]” And they assert that there was no notice of the
application as required by SDCL 45-6B-17, which notice “become[s] part of the
application.”
[¶10.] All the provisions that Schmidt and Fowler contend have not been met
in this case are statutory requirements that a mining application or amendment
must meet. Those statutes are not jurisdictional. The Board is tasked with
determining whether an application “complies with the requirements of this
[mining] chapter and all applicable local, state, and federal laws.” SDCL 45-6B-32.
If the application does, then the Board “shall grant a permit to an operator[.]” Id.
“The board may not deny a permit, except for one or more” reasons listed in SDCL
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45-6B-32. For example, an application may be denied if “(1) The application is
incomplete or the surety has not been posted; [or] (2) The applicant has not paid the
required fee[.]” Id. The Board must determine whether an application meets all the
requirements. Accordingly, the Board had subject matter jurisdiction over the
matter, regardless of whether LAC’s petition met the statutory requirements. See
SDCL 45-6B-73.
[¶11.] Lastly, by casting all the requirements above as jurisdictional matters,
Schmidt and Fowler attempt to have this Court review the prior permit and permit
amendment, which were issued decades ago. They claim that Fowler has never
been consulted on reclamation plans or amendments and that such a failure
constitutes a jurisdictional defect that can be addressed at any time. As we have
explained, those statutes and rules are not jurisdictional requirements for the
Board to consider an application, and therefore we do not address those prior
proceedings.
2. Issues that have been rendered moot or that are not properly before this
Court.
[¶12.] Next, we address the issues that are not properly before this Court.
The first, third, and fourth issues raised by Schmidt and Fowler are not properly
before this Court for consideration. Issue one—whether Fowler is a “landowner”
under SDCL 45-6B-44, SDCL 45-6B-45, ARSD 74:29:06:01, or ARSD 74:29:06:05—
concerns reclamation statutes and administrative rules that are inapplicable to this
case. In general, those provisions provide that a reclamation plan, a substantial
amendment to an existing reclamation plan, and a choice of reclamation must be
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developed and agreed to by the operator, the department, and the landowner. 3 LAC
withdrew the reclamation issues governed by those statutes and regulations prior to
the Board hearing. It is unclear why the Board addressed Fowler’s ownership
status under inapplicable statutes and rules. The issue only arose because Fowler
contended that it affected the jurisdiction of the Board. As we have explained, those
provisions are not jurisdictional. Supra ¶ 9. Accordingly, it was improper for the
Board to address an issue that was not before it, and thus we reverse the Board’s
and circuit court’s determinations that Fowler is not a landowner pursuant to SDCL
3. SDCL 45-6B-44 provides in relevant part:
A proposed reclamation plan filed pursuant to § 45-6B-5 or any
substantial amendment to an existing reclamation shall be
developed by the operator, the department, and the landowner.
SDCL 45-6B-45 provides in part:
Depending on the reclamation plan approved by the board, the
operator shall meet the following requirements: . . . (4) If the
choice of reclamation is for the development of the affected land
for homesite, recreational, industrial, or other uses, including
food, shelter, and ground cover for wildlife, the requirements
necessary for such reclamation shall be agreed upon by the
operator, landowner, and the board.
ARSD 74:29:06:01 provides:
Before a mining operation permit application or a permit
amendment application for an existing reclamation plan is
submitted, the operator, the department, and the landowner or
the landowner’s designated representative must confer on and
determine the postmining land use of the affected lands.
ARSD 74:29:06:05 provides:
Future mineral exploration and development as a reclamation
type is subject to approval by the board, the operator, the
landowner, and the local board of county commissioners
pursuant to SDCL 45-6B-44. Landowner, county commission,
and operator approval of this reclamation type must obtained
[sic] before submission of a mining operation permit application
or a permit amendment application.
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45-6B-44. Furthermore, having held that consultation with the landowner under
SDCL 45-6B-44 is not required to confer subject matter jurisdiction on the Board,
we do not determine the meaning of landowner under those provisions or the record
before us, which was not fully developed.
[¶13.] Additionally, issue three—whether South Dakota mining statutes deny
Fowler due process—is one which Fowler and Schmidt have waived; it was not
presented at any time prior to or during the Board hearing. See In re State of S.D.
Water Mgmt. Bd. Approving Water Permit No. 1791-2, 351 N.W.2d 119, 122 (S.D.
1984). Furthermore, as discussed above, it addresses statutes that do not apply in
this case.
[¶14.] Finally, issue four—whether LAC’s petition on postclosure matters
constituted an amendment requiring a fee—was addressed by the circuit court. But
it was not preserved by Schmidt and Fowler prior to the circuit court appeal and is
not properly before this Court. The Board did not address this amendment issue
because Schmidt and Fowler had only challenged reclamation changes as
constituting an amendment. LAC withdrew those requested changes. Thereafter,
neither Fowler nor Schmidt asserted before the Board that the remaining
postclosure requests amounted to an amendment. They presented it to the circuit
court for the first time on appeal. Therefore, we do not address it.
3. Whether the circuit court erred by denying appellants’ request to
supplement the administrative record.
[¶15.] Schmidt and Fowler sought the addition of several documents to the
administrative record. They asked that the circuit court add the “federal district
court judgment of August 10, 2011; (2) the Fowler Notice to DENR of the Federal
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District Court Judgment; (3) the Cepak deposition; (4) the RJVA 6.4 paragraph
entitled Access and Information; and (5) the 1999 Fowler deed.” 4 Schmidt and
Fowler attached those items to their brief in the circuit court. LAC and DENR
jointly moved to strike four of the five documents; they did not move to strike the
district court judgment because it was part of the administrative record. The court
granted the motion to strike (striking all five documents) and denied a subsequent
oral motion by Schmidt and Fowler to add them to the record.
[¶16.] On appeal, Schmidt and Fowler assert that three of those documents
should have been added to the record: the district court judgment, the notice to
DENR and the Cepak deposition. According to Schmidt and Fowler, the deposition
testimony addresses the periods of mining. And according to them, “the Judgment
and notice to the agency should have been in the Record in the first place . . . [and]
are eligible for judicial notice.” LAC and DENR acknowledge that the federal
district court judgment was properly in the administrative record and therefore the
court erred when it struck it. However, LAC and DENR also assert that it was a
harmless error.
[¶17.] Schmidt and Fowler assert that SDCL 1-26-33 applies to this situation.
It provides in relevant part:
Within thirty days after the service of the notice of appeal, or
within further time allowed by the court, the agency shall
transmit to the reviewing court the original or a certified copy of
the entire record of the proceeding under review. By stipulation
4. The Cepak deposition is the deposition of Mike Cepak, an engineer for the
Minerals and Mining Program of the Board. RJVA stands for the 1988
Restated Joint Venture Agreement.
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of all parties to the review proceedings, the record may be
shortened. A party unreasonably refusing to stipulate to limit
the record may be taxed by the court for the additional costs.
The court may require or permit subsequent corrections or
additions to the record.
SDCL 1-26-33. There is no stipulated, shortened record in this case. That portion
of SDCL 1-26-33 allowing the court to permit additions to the record is inapplicable.
[¶18.] LAC and DENR note that the applicable statute for additional
evidence is SDCL 1-26-34, which states:
If, before the date set for hearing, application is made to the
court for leave to present additional evidence, and it is shown to
the satisfaction of the court that the additional evidence is
material and that there were good reasons for failure to present
it in the proceeding before the agency, the court may order that
the additional evidence be taken before the agency upon
conditions determined by the court. The agency may modify its
findings and decision by reason of the additional evidence and
shall file that evidence and any modifications, new findings, or
decisions with the reviewing court.
(Emphasis added.) We agree. Under SDCL 1-26-34 the court has discretion to
allow additional evidence be taken, therefore we review the court’s determination
for an abuse of discretion. None of the documents were relevant to determining the
issues properly before the circuit court. And the court could not independently add
the evidence to the record, it would need to order that the additional evidence be
taken before the agency—a request that Fowler and Schmidt did not make.
Furthermore, Fowler and Schmidt have not demonstrated what “good reasons” they
had for not presenting the documents to the Board. Thus, we cannot say that the
court abused its discretion by denying the motion to add evidence.
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Conclusion
[¶19.] Mining application requirements and mining permit amendment
application requirements are not requirements that need to be met for the Board of
Minerals and Environment to obtain subject matter jurisdiction over a mining
permit or permit amendment application. Schmidt and Fowler waived the issue
whether SDCL 45-6B-44 and SDCL 45-6B-45 deny Fowler due process.
Furthermore, the circuit court did not abuse its discretion by denying Schmidt and
Fowler’s request to add evidence to the administrative record. Therefore, we affirm
that portion of the circuit court’s judgment that determined that the Board had
jurisdiction over the matter and the portion determining that Fowler and Schmidt
waived due process arguments. We also affirm its order denying the motion to add
documents to the record. However, we reverse the circuit court’s and Board’s
determination that Fowler is not a landowner as that issue was not properly before
the circuit court or the Board. Because Schmidt and Fowler did not present the
issue whether postclosure changes amounted to an amendment requiring an
amendment fee before the Board, we do not address it and we reverse the circuit
court’s order with respect to that issue.
[¶20.] GILBERTSON, Chief Justice, and ZINTER and KERN, Justices, and
WILBUR, Retired Justice, concur.
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