UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
AT PIKEVILLE
COAL OPERATORS AND ASSOCIATES, INC. )
2166 North Mayo Trail )
Pikeville, Kentucky 41501 )
)
PHELPS COAL AND LAND CO., INC. )
7617 Upper Johns Creek Road )
Phelps, Kentucky 41553 )
)
ROY SEAGRAVES )
835 Johns Run )
Grayson, Kentucky 41143-6992 )
)
Plaintiffs )
)
v. ) CIVIL ACTION NO.
) ________________________
BRUCE BABBITT, )
IN HIS OFFICIAL CAPACITY AS )
SECRETARY OF THE INTERIOR )
1849 C Street, NW )
Washington, DC 20240 )
)
Defendant )
__________________________________________)
COMPLAINT FOR ACCOUNTING, DECLARATORY RELIEF,
MANDAMUS AND CLASS ACTION CERTIFICATION
(Jury Trial Demanded)
Plaintiffs Coal Operators and Associates, Inc., Phelps Coal and Land Co., Inc., and Roy Seagraves by counsel, for their Complaint for injunctive and declaratory relief against Defendant Bruce Babbitt, in his official capacity as Secretary of the Interior, to require Defendant to perform his fiduciary obligations as Trustee of a trust fund known as The Abandoned Mine Reclamation Fund, state as follows:
NATURE OF THE CASE
1. This is an action to redress Defendant's, and Defendant's predecessors' in
office since 1977 (all hereinafter referred to as "Defendant"), breach
of their fiduciary duties owed to Plaintiffs and a multi-state class of other
persons similarly situated by virtue of a statutory trust established under 30
U.S.C. § 1231 and known as the Abandoned Mine Reclamation Fund trust (the
"Trust"). The Plaintiffs seek an accounting, declaratory relief
establishing Defendant's duties and obligations as Trustee, and injunctive
relief in the nature of mandamus requiring Defendant to properly perform his
fiduciary duties as Trustee, including the payment of in excess of $1.3 billion
due and owing for the benefit of the class members as beneficiaries under the
Trust.
THE PARTIES
2. Plaintiff Coal Operators and Associates, Inc. ("COA") is a
not-for-profit corporation, organized and existing and in good standing in the
Commonwealth of Kentucky, whose members are corporations and individuals who own
land and minerals, and engage in auxiliary businesses related to coal
production, sale and distribution. COA has its executive offices in Pike County,
Kentucky, in this district, and many of its members are owners of real estate in
this district, produce coal from this district on which the fees described in
this Complaint are paid, and have property which may be directly affected by the
use of Trust moneys sought to be returned and otherwise are directly affected by
the outcome of this action. COA and its members are beneficiaries under the
Trust in that the safety, health and general welfare and property of COA and its
members have been, and are being, adversely affected due to the adverse effects
of coal mining practices, which can be remedied only by use of the moneys from
the Trust for projects such as those set forth in 30 U.S.C. § 1231(c).
3. Plaintiff Phelps Coal and Land Co. Inc, ("Phelps") is a land and
mineral owner in Pike County, Kentucky and has its executive office in Phelps,
Kentucky, in this district. Phelps has produced coal from this district on which
the fees described in this Complaint are paid. Phelps also owns property upon
which Trust funds may be expended and is a beneficiary of the Trust in that the
safety, health, general welfare and property of Phelps has been, and is,
adversely affected due to the adverse effects of coal mining practices, which
can be remedied only by use of the moneys from the Trust for projects such as
those set forth in 30 U.S.C. § 1231(c).
4. Plaintiff Roy Seagraves ("Seagraves") is a citizen of the
Commonwealth of Kentucky, residing in Carter County, Kentucky, in this district.
Seagraves is a beneficiary under the Trust in that his health, safety, general
welfare, and property have been, and are, adversely affected due to the adverse
effects of coal mining practices, which adverse effects can be remedied only by
the use of moneys from the Trust for projects such as those set forth in 30
U.S.C. § 1231(c).
5. Plaintiffs are members and representatives of a class comprised of a larger
number of persons and corporations residing in Alabama, Alaska, Arkansas,
Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland,
Missouri, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania,
Texas, Utah, Virginia, West Virginia, and Wyoming, who are similarly situated
and who are beneficiaries under the Trust for the same reasons as are
Plaintiffs.
6. Defendant Bruce Babbitt ("Defendant") is Secretary of the United
States Department of Interior ("Interior"), having his principal
office in Washington, D.C. Defendant is currently trustee ("Trustee")
of the Trust pursuant to 30 U.S.C. § 1231(a) and, as such, acts in a fiduciary
capacity to Plaintiffs and all other class members, all of whom are
beneficiaries under the Trust. Prior to Defendant becoming Trustee, he was
preceded in that fiduciary position by his predecessor Interior secretaries who
have held office since 1977.
JURISDICTION AND VENUE
7. Subject matter jurisdiction is proper in this Court pursuant to 28 U.S.C. §
1331, in that it arises under the laws of the United States, and 28 U.S.C. §
1361, which provides United States district courts with original jurisdiction in
actions to compel officers or employees of the United States or any agency
thereof to perform duties owed pursuant to law. Venue is proper in this district
and division pursuant to 28 U.S.C. § 1391(e) and LR 3.2(a)(3)(A).
FACTS
8. Acid run-off and sedimentation from abandoned mine sites contaminate
thousands of miles of streams nationwide. The United States Environmental
Protection Agency has identified drainage from abandoned coal mines as the
number-one water quality problem in Appalachia. An estimated ten percent (10%)
of Kentucky residents do not have safe drinking water due to contamination from
abandoned mine runoff. Some six hundred (600) miles of rivers and streams in
Kentucky are plagued with acidic mine drainage from mining activities that
occurred many years ago.
9. Abandoned mine sites have also contributed to deaths in Kentucky and
elsewhere. High walls, open shafts, dilapidated mine structures and water-filled
pits are especially attractive to children, posing serious health and safety
threats to them. Additionally, mine lands are, in many instances, located in the
most economically depressed areas of the country. These areas are in desperate
need of new industries to replace the jobs that the coal mining industry once
provided. But, abandoned mine sites make it difficult for these communities to
compete for industry and tourism. The appearance of abandoned mine sites –
with spare (if any) vegetation, stagnant water and illegal trash dumps –
depress land values, detract from the tax base and make the affected areas less
attractive for industrial and other commercial uses and economic growth.
10. Unattended abandoned mine sites tend to worsen over time, thereby increasing
reclamation costs. Inflation also increases reclamation costs if projects are
delayed. The longer reclamation is postponed, therefore, the less reclamation
ultimately will be accomplished.
11. In 1977, Congress sought to address the foregoing problems by establishing
the Abandoned Mine Lands ("AML") program and the Trust as part of its
enactment of the Surface Mining Control and Reclamation Act, 30 U.S.C. § 1201
et seq. ("SMCRA"). To fund the AML program and generally to repair
environmental and natural resource damage resulting from coal mining activities,
as referred to in, inter alia, 30 U.S.C. §§ 1231(c) and 1233, Congress imposed
certain fees ("Fees") on coal operators in Kentucky and those in other
states, including, Alabama, Alaska, Arkansas, Colorado, Illinois, Indiana, Iowa,
Kansas, Louisiana, Maryland, Missouri, Montana, New Mexico, North Dakota, Ohio,
Oklahoma, Pennsylvania, Texas, Utah, Virginia, West Virginia, and Wyoming
(hereinafter the "Other States"). Pursuant to 30 U.S.C. § 1232(a),
AML Fees are set at 35 cents per ton for surface mined coal, 15 cents per ton
for underground mined coal, and 10 cents per ton for lignite.
12. Under the AML program, funds in the form of the AML Fees collected from coal
operators in Kentucky and the Other States, were, and are, required to be set
aside in the Trust. Based upon United States Government records, such as those
published by the Defendant, in its report entitled Annual State Reclamation
Grant Distribution, 1999, for Fiscal Year 1998 Award Activity, there remains a
balance of at least $1,351,564,993.63 of undistributed funds which have been
received from all sources. See Annual Grant Distribution, 1999, Section A, Page
1.
13. Through the AML program, Congress intended to remedy the problems caused by
abandoned mine lands in a timely and comprehensive manner. To that end, Congress
mandated that at least fifty percent (50%) of the AML Fees collected annually
from Kentucky coal operators and those of the Other States be paid annually by
Defendant for use for qualifying projects within those States. Specifically, 30
U.S.C. § 1232(g) states:
(1) Except as provided in subsection (h) of this section, moneys deposited into the fund shall be allocated by the secretary to accomplish the purposes of this subchapter as follows:
(A) 50 percent of the reclamation fees collected annually in any State (other than fees collected with respect to Indian lands) shall be allocated annually by the secretary to the State, subject to such State having each of the following:
(i) An approved abandoned mines reclamation program pursuant to section 1235 of this title.
(ii) Lands and waters which are eligible pursuant to section 1234 of this
title (in the case of a State not certified under 1240a(a) of this title or
pursuant to section 1240a(b) of this title (in the case of a State certified
under section 1240a(a) of this title).
Kentucky and the Other States are in compliance with both 30 U.S.C. §
1232(g)(1)(A)(i) and (ii). Because 30 U.S.C. § 1232(g)(1)(A) unequivocally
mandates that 50% of the AML Fees collected annually must be allocated to the
state from which they are collected, with no discretion on the part of the
Defendant for use of the funds otherwise, that portion of the Trust is referred
to herein as the "Non-Discretionary Funds" portion of the Trust.
14. According to 30 U.S.C. §§ 1231(c) and 1233, the monies in the Trust are
intended and required to be used for the protection of public health, safety,
general welfare, and property from adverse effects of prior coal mining
practices, including, inter alia, to reclaim and restore land and water
resources adversely affected by past coal mining practices; to prevent, abate,
treat and control water pollution problems; to prevent, abate and control coal
mine subsidence; and for other similar purposes.
15. The Commonwealth of Kentucky and the Other States have approved Abandoned
Mine Reclamation programs pursuant to 30 U.S.C. § 1235 and land and waters
which are eligible pursuant to 30 U.S.C. § 1234 for remediation of harmful
effects of pre-SMCRA practices. Thus, pursuant to 30 U.S.C. § 1232(g)(1)(A),
Kentucky and the Other States unequivocally are entitled to receive annually 50
percent of the AML Fees collected annually from operators mining coal within
their respective jurisdictions for expenditure on necessary projects that meet
the SMCRA criteria. Kentucky has an inventory of high priority abandoned mine
hazards in excess of $300,000,000.00 (Three Hundred Million Dollars). An
additional (approximately) two hundred high priority landslides are added to the
inventory annually as they are discovered or as emergencies arise. See 20th
Anniversary Surface Mining Control and Reclamation Act, Report, Part 2
Statistical Information, Office of Surface Mining, Washington, D.C., June 1,
1999. The Other States have different but equally compelling needs for the use
of the Funds.
16. For example, since the enactment of SMCRA in 1977 through September 30,
1999, approximately $363,790,000.00 in AML Fees have been collected from
Kentucky coal producers for the Non-Discretionary Funds portion of the Trust.
However, of that amount, only some $265,000,000.00 in the Non-Discretionary
Funds portion of the Trust has been paid to Kentucky for use on qualified
projects within the Commonwealth. According to Defendant's own records, as of
September 30, 1998, over Ninety-seven Million Dollars ($97 Million) remained
payable to Kentucky in the Non-Discretionary Funds portion of the Trust, despite
the fact that 30 U.S.C. § 1232(g)(1)(A) requires that it be expended annually
and that numerous projects in Kentucky are in need of funding. Similar large
amounts remain in the Non-Discretionary Funds portion of the Trust for use on
projects in the Other States. On information and belief, the Fund total would
likely be proven substantially higher if a current audit was available.
17. Fifty percent (50%) of the AML Fees collected annually from Kentucky coal
operators and those of the Other States is required to be paid annually by
Defendant for use for qualifying projects within those jurisdictions. Defendant
has breached his fiduciary duty by failing to pay to Kentucky, and the Other
States amounts totaling fifty percent (50%) of the AML Fees that Kentucky coal
operators and those operating within the Other States have paid into the Trust
plus those federal discretionary funds for use as required by statute.
Plaintiffs and other persons similarly situated, residing in Kentucky and the
Other States, who are members of the class, have been, are being, and will be in
the future, directly injured in their health, safety, welfare, and property as a
result of Defendant's failure to comply with his fiduciary duties under the
Trust and under the statute, in that they reside in areas whose health, safety,
welfare, and property, including land and water resources, have been adversely
affected by past coal mining and whose injuries, including but not limited to
lack of clean and healthy water, proper sanitation and stable land, can only be
effectively remedied by expeditious expenditure of funds from the Trust. Because
Plaintiffs are among the ultimate intended beneficiaries of the statutory Trust,
they are appropriate plaintiffs and have standing to bring and maintain this
action.
18. Upon information and belief, based upon statements attributed to Interior
officials in media reports and elsewhere, AML Non-Discretionary trust funds have
been systematically and deliberately withheld by the Defendant solely as a hedge
against the long-standing federal budget deficit which, if current estimates are
accurate, has disappeared, or will disappear, during this fiscal year and will
not reappear within the foreseeable future. According to the Congressional
Budget Office, Congress's non-partisan budget analyst, this year's federal
budget surplus should exceed $200 Billion, without counting Social Security
funds. In essence, then, funds in the AML program statutorily dedicated to
rectifying problems caused by abandoned mine lands have been, and are being,
used illegally by Defendant to avoid spending cuts in other programs. In this
matter, Defendant has illegally and improperly diverted AML funds held by him in
trust for spending on unauthorized projects unrelated to coal mining.
19. Absent an order from this Court requiring the Defendant to comply with his
statutory and fiduciary obligations over the remaining life of the AML program,
Kentucky and the Other States cannot adequately prevent death and injuries from
continuing to occur on abandoned mine sites, cannot provide clean and safe water
supply systems, and cannot reclaim abandoned mine lands to productive use.
Unless Defendant is ordered to comply with law and fulfill his statutory
fiduciary obligations, Plaintiffs and other class members will continue to be
injured in both their health, safety and general welfare, including their
persons and their properties, as a result of their inability to have their
water, sewer, land and other health and environmental problems remedied.
20. As ultimate beneficiaries of the Trust for which Defendant is statutory
Trustee, Plaintiffs and other members of the class are entitled to an accounting
by Defendant of all funds held in the Trust to which they are entitled,
including the Non-Discretionary Funds, and for remedies against Defendant for
his breach of the Trust, including prospective redress for breaches of his
fiduciary duty through the common law remedies of injunction and declaratory
relief, with the ultimate remedy being the prompt allocation and release of all
funds due for qualifying projects within Kentucky and the Other States,
including projects which will benefit Plaintiffs and other class members.
CLASS ACTION
21. This action is brought as a class action under Rule 23(b)(1)(A) of the
Federal Rules of Civil Procedure on behalf of a class consisting of all persons
residing within Kentucky and the Other States whose health, safety, general
welfare, and property, including their land, water and other natural resources,
have been adversely affected by past coal mining, including all persons who have
been injured, and are being injured, in the manner set forth within 30 U.S.C. §
1231(c). Class certification is required because the class is so numerous that
joinder of all members is impracticable; there are questions of law and fact
common to the class; the claims of the representative Plaintiffs are typical of
the claims of the class; the representative Plaintiffs will fairly and
adequately protect the interest of the class; and the prosecution of separate
actions by individual members of the class would create a risk of inconsistent
or varying adjudications with respect to individual members of the class which
would establish incompatible standards of conduct for the Defendant; all of
which is more fully set forth hereinbelow.
22. Numerosity: The class is potentially composed of thousands of Kentuckians
residing in, and who own property in and around those counties comprising the
eastern coal fields and western coal fields of Kentucky, including Pike County,
and thousands more persons similarly situated in the Other States who are the
intended beneficiaries of the use of the funds being illegally withheld from the
approved state programs. The exact numbers and identities of class members is
almost impossible to accurately ascertain at this time
23. Common Questions: Common questions of law and fact predominate in this
action. These include the common legal issue concerning the obligation of
Defendant to pay annually to Kentucky and the Other States all funds contained
in the Non-Discretionary Funds portion of the Trust and the common fact that all
class members reside in areas being and having been adversely affected by past
coal mining practices and activities.
24. Typicality: The claims of the representative Plaintiffs and all other
members of the class arise from the same breach of statutory fiduciary duties
and obligations, and the course of conduct of the Defendant, and are based on
the same legal theories. Each Plaintiff owns properties adversely affected by
past coal mining practices which are in need of remediation and qualify for
funds from the Trust, but for which no funds have been made available due to the
illegal actions of Defendant and his breach of his fiduciary duties.
25. Fair and Adequate Representation: As set forth in Paragraphs 2, 3, 4, and 5,
supra, all named Plaintiffs reside in counties within the eastern Kentucky coal
fields and own or reside on or near areas which have been adversely affected by
past coal mining, the effects of which can only effectively be remedied by
remediation projects funded by monies from the Trust.
26. Counsel for Plaintiffs are experienced in the substantive and procedural law
involved in this action and are competent to represent the class, if certified.
COUNT I
27. Plaintiffs reallege and incorporate by reference the allegations contained
in Paragraphs 1 - 26 hereof.
28. Defendant, in his fiduciary capacity as Trustee of the Trust, has breached
his obligations and duties and Trustee by failing to allocate, and cause payment
to be made to the Commonwealth of Kentucky and the Other States, for the benefit
of Plaintiffs and other class members, of those Non-Discretionary Funds from the
Trust required to be paid pursuant 30 U.S.C. § 1232(g)(1)(A). Defendant's duty
is clearly defined by statute and his obligation is essentially ministerial in
nature as to the Non-Discretionary Funds.
29. The law presumes that Congress intends the executive officers of the United
States Government, such as Defendant, to obey its statutory commands and,
accordingly, relief must be granted when a governmental executive, such as
Defendant, violates such a command.
30. Accordingly, Defendant should be required to provide Plaintiffs and the
other class members a thorough and complete accounting as to all sums due and
owing from the Trust for use on projects which will benefit them. Additionally,
the Court should enter an order in the nature of mandamus requiring Defendant to
take all necessary measures to release payments of all sums contained in the
Non-Discretionary Funds portion of the Trust for use on projects in Kentucky and
the Other States beneficial to Plaintiffs and the other class members consistent
with SMCRA and the AML Program.
COUNT II
31. Plaintiffs reallege and incorporate by reference the allegations contained
in Paragraphs 1 - 30 hereof.
32. There is a case of actual controversy between Plaintiffs and the class other
members and Defendant concerning whether Defendant is required by law to pay
annually all AML Fees contained in the Trust fund which are Non-Discretionary
Funds, i.e., fifty percent (50%) of the AML Fees which have been, are being, and
will be, collected annually, to Kentucky and the Other States from whose coal
operators the Fees have been collected. Accordingly, pursuant to 28 U.S.C. §
2201, Plaintiffs request this Court to declare the rights of Plaintiffs and
other class members and the obligations of Defendant and enter a final judgment
declaring that all Non-Discretionary Funds now, and in the future, placed and
maintained in the Trust, are due and owing immediately and, hereinafter,
annually, to the Commonwealth of Kentucky and the Other States for use on
qualifying projects for the benefit of Plaintiffs and the other members of the
class, and, pursuant to 28 U.S.C. § 2202, to order Defendant to immediately pay
out those funds to Kentucky and the Other States.
COUNT III
33. Plaintiffs reallege and incorporate by reference the allegations contained
in Paragraphs 1 - 32 hereof.
34. In the event it is determined the Defendant has complete authority and
unfettered discretion over the Non-Discretionary Funds portion of the Trust
without reasonable and sufficient standards, such a delegation of power would
amount to an unconstitutional delegation of discretionary power by Congress over
trust funds collected for a particular purpose and should be held void.
COUNT IV
35. Plaintiffs reallege and incorporate by reference the allegations contained
in Paragraphs 1 - 34 hereof.
36. Plaintiffs and the other class members, as beneficiaries under the Trust,
are entitled to have the Non-Discretionary Funds portion of the Trust used for
remediation of their properties and otherwise as set forth in the statute.
Defendant's arbitrary refusal to pay over said trust funds to the states for
uses consistent with the statute, and his diversion of the trust funds for
purposes inconsistent with, and not intended by, the statute, amount to a taking
of Plaintiffs' and other class members' property without just compensation and
without due process under the law.
WHEREFORE, Plaintiffs demand as follows:
1. That the action be certified as a Class Action pursuant to FRCP 23(b)(1)(A);
2. That Defendant be ordered to provide Plaintiffs and the class with a
thorough, accurate and complete accounting as to all sums due and owing to
Kentucky and the Other States for use of projects consistent with the AML
program;
3. That an order be entered declaring that Defendant has always been, and is
now, required to pay annually to Kentucky and the Other States all AML Fees
contained in the Non-Discretionary Funds portion of the Trust;
4. That an order be entered declaring that Defendant's refusal and failure to
pay out annually all Funds which have accumulated in the Non-Discretionary Funds
portion of the Trust be declared a violation of Plaintiffs' due process rights
under the United States Constitution;
5. That Defendant be ordered to pay all Funds which have accumulated in the
Non-Discretionary Funds portion of the Trust from prior years collections, to
Kentucky and the Other States for use for projects under their respective AML
programs in accordance with law;
6. That Defendant be ordered to pay all Non-Discretionary Funds collected this
year and in future years to Kentucky and the Other States, within a reasonable
time after the end of each collection year, for use by those states for projects
under their respective AML programs;
7. That Plaintiffs obtain their reasonable attorney fees and costs herein
expended; and,
8. That Plaintiffs obtain all other and further relief to which they may be
entitled, including trial by jury on all issues so triable.
____________________________________
M. Stephen Pitt
J. Anthony Goebel
Angela C. McCorkle
WYATT, TARRANT & COMBS
Citizens Plaza
Louisville, Kentucky 40202
Tel: (502) 589-5235
Fax: (502) 589-0309
mspitt@wyattfirm.com
____________________________________
George L. Seay, Jr.
Joseph J. Zaluski
WYATT, TARRANT & COMBS
Taylor-Scott Building
311 West Main Street
Frankfort, Kentucky 40601
Tel: (502) 223-2104
Fax: (502) 227-7681
gseay@wyattfirm.com
____________________________________
James R. Cox
THE COX LAW FIRM
209 Breckenridge Lane
Louisville, Kentucky 40207
Tel: (502) 721-9555
Fax: (502) 721-9517
jcox@thecoxlawfirm.com
Counsel for Plaintiffs
20114035.1