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In re Lac Minerals (USA)

Supreme Court of South Dakota

July 26, 2017

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, 460.

          CONSIDERED ON BRIEFS DATE: APRIL 24, 2017

         APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT LAWRENCE COUNTY, SOUTH DAKOTA THE HONORABLE MICHELLE K. PALMER PERCY, Judge

          HARLAN A. SCHMIDT 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.

          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 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 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, 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 ...

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