source: Caselaw Access Project

author: STEGER, District Judge.

license: Public Domain

text:
    M.G. YOUNG, et al., v. AMOCO PRODUCTION COMPANY.
    No. TY-82-390-CA.
    United States District Court, E.D. Texas, Tyler Division.
    June 11, 1985.

      James N. Phenix, John R. Phenix, Henderson, Tex., for plaintiffs,
    Rodney H. Lawson, Carrington, Coleman, Sloman & Blumenthal, Dallas, Tex., Howard Coghlan, Kenley, Boyland & Coghlan, Longview, Tex., for defendant,
   STEGER, District Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

On November 13, 1984, came on for trial before the Court the above-entitled and numbered cause. Having heard the evidence presented and having duly considered all testimony, exhibits and arguments before it, the Court hereby enters these its Findings of Fact and Conclusions of Law in conformity with Fed.R.Civ.P. 52(a). Any finding of fact which constitutes a conclusion of law shall be deemed a conclusion of law. Any conclusion of law which constitutes a finding of fact shall be deemed a finding of fact.

FINDINGS OF FACT

1. The Plaintiffs in this action are M.G. Young, Agnes Menefee, Mary Effie Smith, Margaret Ann Murray, Helen Griffin, James K. Young, Jack E. Young, Effie Downs, and Katherine Gray.

2. The Defendant herein is Amoco Production Company (“Amoco”).

3. On May 4, 1950, Plaintiffs and/or their predecessors in title executed an oil, gas, and mineral lease (hereinafter referred to as “Lease # 1”) in favor of Jack H. Meeks. Plaintiffs’ Exhibit No. 2. This lease was for a primary term of ten (10) years and included six separate tracts. See Defendant’s Exhibit No. 1. On that same day, Lease # 1 was assigned to the Defendant’s predecessor, Pan American Production Company. Plaintiffs’ Exhibit No. 3. Delay rentals were paid and received for Lease # 1 effective through May 23, 1957. Defendant’s Exhibit No. 2. In April of 1956, the Carthage Unit No. V was established and included acreage covered by Lease # 1. See Plaintiffs’ Exhibit No. 6. The Carthage Unit No. V produced until July 26, 1963, at which time the well in this unit was plugged and abandoned. Plaintiffs’ Exhibit No. 7. In July of 1956, the Carthage Unit No. VI was established and also included acreage covered by Lease # 1. See Plaintiffs’ Exhibit No. 4. The Carthage Unit No. VI produced until June 12, 1963, at which time the well in this unit was plugged and abandoned. In March of 1960, the Mattie Horton Unit No. 1 was established. Plaintiffs’ Exhibit No. 8. In April of 1960, the A.O. Menefee Estate Unit No. 1 was established. Plaintiffs’ Exhibit No. 12. Both the Mattie Horton Unit No. 1 and the A.O. Menefee Estate Unit No. 1 included acreage covered by Lease # 1 and produced until January 1, 1962, at which time both of these units were absorbed into the Tatum Crane Water Flood Unit (hereinafter referred to as “Tatum Crane Unit”). Plaintiffs’ Exhibit Nos. 9, 10, and 13. The Tatum Crane Unit continued to include acreage covered by Lease # 1. See Plaintiffs’ Exhibit No. 10.

4. On May 4, 1950, Plaintiffs and/or their predecessors in title executed a second oil, gas, and mineral lease (hereinafter referred to as “Lease # 2”) in favor of Jack H. Meeks. Plaintiffs’ Exhibit # 14. This lease was also for a primary term of ten (10) years and included two separate tracts. See Defendant’s Exhibit No. 1. Lease # 2 was also assigned to Amoco’s predecessor, Pan American Production Company, on May 6, 1950. Plaintiffs’ Exhibit No. 15. The proper delay rentals were paid and received for Lease # 2 effective through May 4, 1960. See Defendant’s Exhibit No. 3. As previously noted, the A.O. Menefee Estate Unit No. 1 was established in April of 1960 and began production. Acreage covered by Lease # 2 was included in this unit and was later absorbed into the Tatum Crane Unit. See Plaintiffs’ Exhibit Nos. 12 and 13. All of the acreage covered by Lease # 2 is within the Tatum Crane Unit.

5. On April 23, 1953, Plaintiffs and/or their predecessors in title executed a third 011, gas, and mineral lease (hereinafter referred to as “Lease # 3”) in favor of W.D. Morrow. Plaintiffs’ Exhibit No. 16. This lease was also for a primary term of ten (10) years and contained only one tract. See Defendant’s Exhibit No. 1. Lease # 3 was also assigned to Amoco’s predecessor, Pan American Production Company, on May 11, 1953 and delay rentals were paid and received effective through April 23, 1961. See Plaintiffs’ Exhibit No. 17 and Defendant’s Exhibit No. 4. From February of 1961 until January 1, 1962, Lease # 3 was producing by means of the Minnie Bell Young Well No. 1. Plaintiffs’ Exhibit No. 18. On January 1, 1962, this lease, along with the Minnie Bell Young Well No. 1 was absorbed into the Tatum Crane Unit. Plaintiffs’ Exhibit No. 10. All of the acreage covered by Lease # 3 is within the Tatum Crane Unit. Id.

6. As noted above, the Tatum Crane Unit was established in January of 1961 and became effective on January 1, 1962. Plaintiffs’ Exhibit Nos. 10 and 11. Subsequently, on April 26,1961, Plaintiffs and/or their predecessors in title executed a Ratification of Unit Agreement regarding the Tatum Crane Unit. Plaintiffs’ Exhibit No. 11. This ratification was made effective as of December 1, 1960. Id. The production, expense and revenue records indicate, as the parties have stipulated, that, at all material times, the Tatum Crane Unit has been commercially productive and that there has never been a cessation of commercial production from such Unit. See Defendant’s Exhibit Nos. 6 and 7.

7. Each of the three leases in question contained a pooling provision which states as follows:

16. (a) Lessee is hereby granted the right and power, exercisable at any time and from time to time while this lease is in force and within 20 years from the date hereof, but not thereafter, to pool and combine the land covered by this lease, or any portion or portions thereof, as to all or any minerals or strata thereunder, situated in the same general area as the land covered hereby, so as to create a unit or units of such size in surface acres as Lessee may desire, and prior to obtaining production from the pooled area to dissolve a pool theretofore created and to create a new pool or pools.

8. As is evident from the findings of the Court above, there appears to be little question that the production history on various tracts covered by the three leases in question has been extensive. However, Plaintiffs contend that Amoco has failed in its covenant to reasonably develop, explore and produce the Cotton Valley Sand gas formation apparently located under these tracts. As early as 1981, Amoco had already begun reviewing the development of that particular strata in the area covered by the leases in question. Under its plan for the proposed development of the Cotton Valley Sand under the tracts in question, Amoco authorized two proposed units. At that time Amoco was of the opinion that the three leases in question were being held by production from the Tatum Crane Unit. However, Amoco determined that, because of the twenty-year pooling provisions in these leases, additional pooling authority would be necessary to develop the Cotton Valley Sand. In an effort to gain the necessary pooling authority, Dudley Baskett, on behalf of Amoco, contacted the Plaintiffs in January of 1982 about executing lease amendments giving the additional pooling authority. The Plaintiffs were offered the same terms as all other landowners in the area, but refused to authorize additional pooling. Again, in April of 1982, the Plaintiffs were contacted by Mr. Baskett and by John Studdard, an Amoco landman, about giving the additional pooling authority to allow the development of the Cotton Valley Sand. Again, the Plaintiffs refused. Although the actual development of the leases in question has been abated pending the outcome of this action, Amoco has continued to negotiate with the Plaintiffs in an effort to obtain this additional pooling authority.

9. The proposed development by Amoco of the leases in question will be pursuant to the Dirgin Field Rules adopted by the Texas Railroad Commission for the development of the Cotton Valley Sand. See Defendant’s Exhibit No. 8. These Rules provide for proration units of 160 to 704 acres. Id. Although the current plan is to drill two wells on the acreage covered by the leases in question, there is a possibility that, once production has begun, two additional wells might be drilled. Furthermore, pursuant to its plan for development of these leases, Amoco has entered into three contracts for the sale of the gas produced from the tracts in question.

10. Despite their claims that the leases in question have terminated and that Amoco has failed to reasonably develop the acreage in question, Plaintiffs have continued to receive and accept royalty payments from the Tatum Crane Unit.

11. The parties having stipulated to the following facts, the Court hereby adopts them as the Court’s findings of fact:

a. There was commercial production attributable to each of the three leases made the basis of this action at the end of the primary term of each lease.
b. The Tatum Crane Unit has at all material times been commercially productive and there has never been a cessation of commercial production from said Unit.
c. There has never been a cessation of production attributable to any of the three leases in question.
d. The Plaintiffs have not suffered any monetary damages as a result of the allegations made the basis of this action.

CONCLUSIONS OF LAW

1. The Court has jurisdiction of the subject matter and the parties in this action.

2. As noted above, there is no dispute among the parties that, at the end of their respective primary terms, there was commercial production attributable to each of the leases in question and that, therefore, each lease was, by its own terms, being held by production.

3. However, although Plaintiffs admit that they and/or their predecessors in title did execute the Ratification of Unit Agreement regarding the Tatum Crane Unit, they contend that while such Ratification may have authorized the formation of the Unit, it did not ratify the underlying leases. Such an argument is without merit. The Unit Agreement is clear and unequivocal in regard to the effect of said Agreement on the leases that become a part of the Unit. Paragraph 3.4 of the Unit Agreement states:

CONTINUATION OF LEASES AND TERM ROYALTIES. Operations, including drilling operations, conducted with respect to the Unitized Formation on any part of the Unit Area, or production from any part of the Unitized Formation, shall, except for the purpose of determining payments to Royalty Owners, be considered as operations upon or production from each Tract and such operations or production shall continue in force and effect each lease or term royalty interest just as if such operations had been conducted and a well had been drilled on and was producing from each such Tract. Each such lease and term royalty interest shall remain in force and effect so long as this agreement remains in force and effect. (Emphasis added).

Plaintiffs’ Exhibit No. 10. This Court has found no authorities, and Plaintiffs have pointed to none, that would require an Agreement such as this to contain specific language of ratification concerning leases that were in force and effect by means of production.

The above-quoted section clearly evidences that production from lands anywhere within the Unit shall be considered production from each such tract within the Unit. This section also indicates that each lease shall remain in full force and effect so long as this agreement remains in force and effect. As previously mentioned, the three leases were being held by production at the time of the formation and ratification of the Tatum Crane Unit and at the time these leases were absorbed into said Unit on January 1, 1962. Lease # 3 was also still within its 10 year primary term. Therefore, it was not necessary for the Plaintiffs’ ratification of the Tatum Crane Unit Agreement to “revive” these three leases because all three leases were alive and valid at the time of the formation and ratification of the Tatum Crane Unit and at the time said Unit became effective on January 1, 1962.

4. The Plaintiffs further argue that the 20 year pooling clause in each lease operates to terminate all acreage pooled or unitized within this 20 year period upon the expiration of the 20 year period. However, they have presented no evidence or law in support of this contention.

In construing the particular pooling provisions of these leases, this Court recognizes that the anticipatory pooling power given the lessee in an oil and gas lease is necessarily broad. Elliott v. Davis, 553 S.W.2d 223, 226 (Tex.Civ.App — Amarillo 1977, writ ref’d n.r.e.); Tiller v. Fields, 301 S.W.2d 185 (Tex.Civ.App. — Texarkana 1957, no writ). Thus, the Texas courts have consistently adhered to the general rule that, in the absence of clear language to the contrary, pooling clauses in oil and gas leases should not be construed in a narrow or limited sense. Mengden v. Peninsula Production Company, 544 S.W.2d 643, 647 (Tex.1976); Elliott, supra at 226; Texaco v. Lettermann, 343 S.W.2d 726, 732 (Tex.Civ.App. — Amarillo 1961, writ ref’d n.r.e.).

The three leases made the basis of this action clearly state that the “Lessee is ... granted the right and power, exercisable at any time and from time to time while this lease is in force and within 20 years from the date hereof to pool and combine the land covered by this lease ...” Plaintiffs’ Exhibit Nos. 2, 13, and 16, Paragraph 16(a). Furthermore, the leases also provide in Paragraph 16(c) that:

Any well drilled operations conducted on that part of a unit created hereunder which is not included in the land described in this lease, at depths down to and including the particular strata or depths unitized if so limited, shall be considered a well drilled or operations conducted under this lease, and production from any such well of a unitized mineral or from a unitized stratum shall be considered, except as to the amount of royalty payable thereon, as production under this lease.

Accordingly, the Court is of the opinion that the language of these pooling provisions is clear: the Lessee can and must exercise the right to pool within 20 years from the date of the lease and, if he does so, any unit formed within this period that includes acreage covered by the lease would operate to hold the lease beyond such 20 year period so long as there is commercial production from that unit.

The evidence in this case firmly establishes that the Tatum Crane Unit was established and became effective well within the 20-year period. Plaintiffs’ Exhibit Nos. 10 and 11; Defendant’s Exhibit No. 5. Further, the evidence also clearly indicates that the leases in question have been held and are still being held by commercial production from the Tatum Crane Unit. Defendant’s Exhibit Nos. 6 and 7. Therefore, the Court finds that, based on the relevant pooling provisions of the leases in question, production from the Tatum Crane Unit, formed and ratified by the Plaintiffs and made effective within 20 years from the date of said leases and which includes acreage covered by these three leases, operates to hold the leases beyond this 20 year term so long as there is commercial production from such Unit.

5. The Texas courts have long recognized that the lessee in an oil, gas, and mineral lease, absent express provisions relieving him of these obligations, assumes a number of implied covenants in favor of the lessor with reference to the development and operation of the leasehold premises. Amoco Production Co. v. Alexander, 622 S.W.2d 563, 567 (Tex.1981); Clifton v. Koontz, 160 Tex. 82, 325 S.W.2d 684, 693-95 (1959); Waggoner Estate v. Sigler Oil Co., 118 Tex. 509, 19 S.W.2d 27 (1929); Texas Pacific Coal & Oil Co. v. Barker, 117 Tex. 418, 6 S.W.2d 1031 (1928); Free-port Sulphur Co. v. American Sulphur Royalty Co., 117 Tex. 439, 6 S.W.2d 1039 (1928); Exxon Co. v. Dalco Oil Co., 609 S.W.2d 281, 284-85 (Tex.Civ.App. — Corpus Christi 1980, no writ); McCarter v. Ransom, 473 S.W.2d 235, 238 (Tex.Civ.App.— Corpus Christi 1971, no writ). These implied obligations and duties are as much a part of the lease and are just as binding as though they were expressed. McCarter, supra at 238. See also Clifton, supra; Freeport Sulphur Co., supra.

The standard of care in testing the performance of implied covenants is that of a reasonably prudent operator under the same or similar circumstances. Alexander, supra at 567-68; Shell Oil Co. v. Stansbury, 410 S.W.2d 187, 188 (Tex.1966). As the Texas Supreme Court explained in Alexander:

The reasonably prudent operator concept is an essential part of every implied covenant. Every claim of improper operation by a lessor should be tested against the general duty of the lessee to conduct operations as a reasonably prudent operator in order to carry out the purposes of the oil and gas lease.

622 S.W.2d at 568.

Among these obligations imposed upon the lessee is the implied covenant to reasonably develop the leasehold premises. Clifton, supra 324 S.W.2d at 693. This implied covenant generally imposes a duty upon the lessee, once production has been discovered on the premises, to conduct further development with reasonable diligence, to the end that such operations would result in a benefit or profit for both the lessor and the lessee. Id. See also Edgar v. Southwestern Oil & Refining Co., 377 S.W.2d 225, 228 (Tex.Civ.App.— Corpus Christi 1964, writ ref’d n.r.e.). Consequently the lessee’s obligation as to development is measured by this same reasonably prudent operator standard in that he is not required to begin or continue in the performance of such operations unless there is a reasonable expectancy of profit not only to the lessor, but also to the lessee. Clifton, supra at 695.

As with the other types of implied covenants, the required burden on the part of the lessor for proving a breach of the implied covenant to develop depends on the particular factual basis of the dispute between the lessor and lessee. See Alexander, supra at 567. From an examination of the record before the Court and the testimony, evidence, and arguments presented by Plaintiffs at trial, it is apparent that the essence of their complaint concerning Amoco’s alleged nondevelopment is that Amoco has failed to be reasonably diligent in the development of the Cotton Valley Sand by drilling additional wells.

In claiming a breach of the implied covenant to reasonably develop by reason of the failure to drill additional wells, the lessor is required to prove:

(1) that the lessees failed to measure up to the standards of the prudent operator;
(2) that the producing strata or horizons, which the lessor contends should have been further explored or drilled, required additional wells;
(3) that the strata or horizons other than those from which production is being obtained (on which further exploration or drilling is sought), exists in reasonable probability; and
(4) that by the drilling of additional wells, there would be a reasonable expectation of profit, not only to the lessor, but also to the lessee.

Clifton, supra at 695; Edgar, supra at 228-29; Felmont Oil Co. v. Pan American Petroleum Corporation, 334 S.W.2d 449, 455 (Tex.Civ.App. — El Paso 1960, writ ref’d n.r.e.).

Ron Hinn, an Amoco engineer, testified that the initial development of this formation began in early 1980, but that most of the extensive development began in 1982. L.E. Ostrom, the Plaintiffs’ expert, testified that a reasonably prudent operator would have begun development of the three leases by the Fall of 1982. Both Studdard and Hinn testified that Amoco authorized development of the Cotton Valley Sand in early 1981 and that it took several months to clear the title before Amoco could attempt to form production units. John Studdard testified that it was then determined that Amoco would have to obtain additional pooling authority from certain landowners such as the Plaintiffs whose leases limited the exercise of pooling authority to the first 20 years of the lease. As mentioned earlier Studdard and Baskett both testified as to Amoco’s efforts to obtain additional pooling authority from the Plaintiffs. The Plaintiffs were offered the same terms as all other landowners in the area, but refused. In fact, Studdard and Hinn both testified that the Plaintiffs’ refusal to grant additional pooling authority is the only thing preventing Amoco from further developing the Cotton Valley Sand, and that Amoco has obtained the necessary additional pooling authority from the other landowners.

Amoco further indicated that it is already in the final stages of its plans for two proposed gas units that had been authorized in January of 1981. See Defendant’s Exhibit No. 1, Proposed units — Garrett Gas Unit and Driver Gas Unit. Through these two proposed units, Amoco intends to develop the Cotton Valley Sand under the acreage covered by these leases. The proposed development will be under the Dirgin Field Rules adopted by the Railroad Commission, which permit proration units of 160 to 704 acres. While Amoco plans at this time to drill two wells on this acreage, Ron Hinn did not rule out the possibility that additional wells might be drilled once production has begun. In fact, L.E. Ostrom also testified that it was his recommendation that only two wells be drilled to develop this acreage.

Finally, Studdard and Hinn testified that further development of these leases has been put on hold due to this lawsuit filed by the Plaintiffs on June 16, 1982, in the midst of negotiations with the Plaintiffs for additional pooling authority.

Based on the foregoing, the Court is of the opinion that Amoco has in no way breached the implied covenant to reasonably develop under the leases in question. Plaintiffs have presented no credible evidence that a reasonably prudent operator would have done any more than the amount of development currently completed by Amoco. To the contrary, as was readily apparent from the evidence presented at the trial, Amoco began its development of the Cotton Valley Sand around he same time as other operators in the area and, since that time, has expended large amounts of time, effort, and money into maximizing the development of this stratum to the benefit of all parties involved. As noted above, Plaintiffs’ own expert in essence verified that the prior and contemplated development by Amoco were well in line with how a reasonably prudent operator would go about developing the acreage and strata in question. Accordingly, the Court finds that the Plaintiffs have failed to discharge their burden of proof and, therefore, are entitled to no recovery on these claims.

6. The Plaintiffs have further alleged that Amoco has placed a cloud on their title to tracts covered by the leases in question. Yet, Plaintiffs introduced no evidence at trial in support of such contention. Accordingly, the Court finds that Plaintiffs are not entitled to recover on this claim.

7. As noted above, Plaintiff Mack Young testified that he and the other Plaintiffs have continued to receive and accept royalty payments from the Tatum Crane Unit. Accordingly, Amoco contends that, by their continued acceptance of the royalty payments from the Tatum Crane Unit, Plaintiffs are estopped from asserting their claims that the leases have terminated and that Amoco has placed a cloud on their title to the lands covered by these leases. In order to establish equitable estoppel, the following must be shown:

(1) that the party made a false representation or concealment of material facts;
(2) that such representation or concealment was made with knowledge, actual or constructive, of those facts;
(3) that such representation or concealment was made to a party without knowledge, or the means of knowledge, of such facts;
(4) that the representation or concealment was made with the intention that it be acted upon; and
(5) that the party to whom the misrepresentation was made relied to his detriment.

Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929 (1953); Nichols v. Vantage Management Co., Inc., 638 S.W.2d 186 (Tex.Civ.App. — Dallas 1982, no writ); Mandril v. Kasishke, 620 S.W.2d 238 (Tex.Civ. App. — Amarillo 1981, writ ref’d n.r.e.); Group Life & Health Ins. Co. v. Brown, 611 S.W.2d 476 (Tex.Civ.App. — Tyler 1980, no writ); Cattle Feeders, Inc. v. Jordan, 549 S.W.2d 29 (Tex.Civ.App. — Corpus Christi 1977, no writ). It is essential to the application of this doctrine that the person to be estopped had full knowledge of the real facts at the time the representation, concealment, or other conduct alleged to be the basis of the estoppel. Champlin Oil & Refining Co. v. Chastain, 403 S.W.2d 376 (Tex.1966); Hallmark v. United Fidelity Life Ins. Co., 155 Tex. 291, 286 S.W.2d 133 (1956); Texas Employers Ins. Ass’n v. Bottoms, 200 S.W.2d 418 (Tex.Civ.App. — Fort Worth 1947, no writ); Williams v. Texas Employers Ins. Ass’n, 135 S.W.2d 262 (Tex.Civ.App. — Waco 1940, writ ref’d).

As such, the doctrine of equitable estoppel contemplates that it would be unconscionable to permit a person to maintain a position inconsistent with one he has acquiesced in, or of which he has accepted the benefits of with knowledge or notice of the facts and rights involved. Theriot v. Smith, 263 S.W.2d 181 (Tex.Civ. App. — Waco 1953, writ dism’d). When the basis of the estoppel is the acceptance of benefits by the party to be estopped, the need for the application of the doctrine is supported by the rule that a person who accepts and retains the benefits of a particular transaction will not thereafter be permitted to avoid its obligations or repudiate the disadvantageous portions. See Central Power & Light Co. v. Del Mar Conservation Dist., 594 S.W.2d 782 (Tex.Civ. App. — San Antonio 1980, writ ref d n.r.e.); Mueller v. Banks, 332 S.W.2d 783 (Tex.Civ.App. — San Antonio 1960, no writ); Theriot, supra; Graham v. Caballero, 243 S.W.2d 286 (Tex.Civ.App. — El Paso 1951, writ ref d n.r.e.); Simmons v. Clampitt Paper Co., 223 S.W.2d 792 (Tex.Civ.App. — Dallas 1949, writ ref d n.r.e.).

In the case at bar, it is undisputed that, despite their claims that the leases in question have terminated and that the Tatum Crane Unit is invalid as to them, the Plaintiffs have continued to receive and accept royalty payments in connection with their interests in the Tatum Crane Unit. The Court recognizes that Amoco has presented no evidence that the Plaintiffs had any knowledge of Amoco’s proposed plans for the development of the acreage covered by these three leases. Absent such knowledge, a claim of estoppel cannot be supported. However, once the Plaintiffs were contacted by Amoco concerning the plan for the two proposed gas units and the need for additional pooling authority to carry through with such plans, they became aware that Amoco was spending time and money in an effort to develop the leases. Plaintiffs were told by Amoco and other third parties that Amoco had already negotiated and entered into pooling agreements and lease amendments with other landowners in the area in preparation for the formation of the two units. Yet, with this knowledge of Amoco’s efforts in developing the leases and despite their position regarding the status of the leases and the Tatum Crane Unit, the Plaintiffs continued to accept the royalty payments. Unaware of the Plaintiffs’ intentions, Amoco worked diligently toward the formation of the two proposed gas units. The Court is thus of the opinion that the Plaintiffs are estopped from asserting their claims that these leases have terminated or that Amoco has unlawfully placed a cloud on their title to the lands covered by the leases. See Socony Mobil Oil Corporation v. Belveal, 430 S.W.2d 529, 534-35 (Tex.Civ.App. — El Paso 1968, writ ref’d n.r.e.). Further, by refusing to grant the additional pooling authority necessary for the development of the leases, the Plaintiffs have estopped themselves from contending that Amoco has failed to reasonably develop, explore, and/or produce the oil, gas, and other minerals under the leased acreage.

8. Further, in defense of Plaintiffs’ claims, Amoco has asserted that this acceptance of benefits constitutes a waiver of their right to complain that the leases have terminated and that Amoco has placed a cloud on Plaintiffs’ title to the tracts covered by such leases. Further, Amoco contends that the refusal of Plaintiffs to grant the necessary additional pooling authority to enable Amoco to further develop the Cotton Valley Sand under these tracts also constitutes a waiver of its claims that Amoco has failed to reasonably develop the leased acreage.

Under Texas law, it is well established that an assertion of waiver must be supported by proof of an intentional relinquishment of a known right by the person claiming that right or of intentional conduct on the part of that person which is sufficient to warrant an inference of the relinquishment of that right. Wells Fargo Business Credit v. Ben Kozloff, Inc., 695 F.2d 940, 947 (5th Cir.1983); Palmer v. Fuqua, 641 F.2d 1146 (5th Cir.1981); Massachusetts Bonding and Insurance Co. v. Orkin Exterminating Co., 416 S.W.2d 396 (Tex.1967); Texas & P. By. Co. v. Wood, 145 Tex. 534,199 S.W.2d 652 (1947); Cox v. Bancoklahoma Agri-Service Corp., 641 S.W.2d 400 (Tex.Civ.App. — Amarillo 1982, no writ); Landrum v. Devenport, 616 S.W.2d 359 (Tex.Civ.App. — Texarkana 1981, no writ); Texana Oil Co. v. Stephenson, 521 S.W.2d 104 (Tex.Civ.App. — El Paso 1975, no writ); Bluebonnet Oil & Gas Co. v. Panuco Oil Leases, Inc., 323 S.W.2d 334 (Tex.Civ.App. — San Antonio 1959, writ ref’d n.r.e.). As such, waiver implies an election on the part of the person to dispense with something of value or to forego some advantage that might have been demanded or insisted upon. Bluebonnet Oil & Gas Co., supra at 338. See also Ada Oil Co. v. Logan, 447 S.W.2d 205 (Tex.Civ.App. — Houston [14th Dist.] 1969, no writ). The question of whether a waiver has occurred is largely a question of the intent of the party possessing the right and may be express or implied. Wells Fargo Business Credit, supra; Alford, Meroney & Co. v. Rowe, 619 S.W.2d 210 (Tex.Civ.App. — Amarillo 1981, writ ref’d n.r.e.); Cattle Feeders, Inc. v. Jordan, 549 S.W.2d 29 (Tex.Civ.App. — Corpus Christi 1977, no writ); Smith v. Northwest Natl. Bank, 403 S.W.2d 158 (Tex.Civ.App. — Texarkana 1966, writ ref’d n.r.e.). However, waiver by implication is generally applied only to prevent fraud or inequitable consequences and, thus, an implied waiver must be evidenced by clear, unequivocal and decisive acts from which can be inferred the intent to relinquish the right or rights in question. Blardone’s Estate v. McConnico, 604 S.W.2d 278 (Tex.Civ.App. — Corpus Christi 1980) writ ref’d n.r.e. 608 S.W.2d 618; Jordan, supra; Commercial Credit Corp. v. Taylor, 448 S.W.2d 190 (Tex.Civ.App. — Tyler 1969, no writ); Smith, supra.

Having examined the record before it, the Court is of the opinion that the Plaintiffs’ intentional conduct of continuing to accept the royalty checks from the Tatum Crane Unit once they had knowledge of the dispute between their position regarding the leases and the ratification agreement and that of Amoco’s constitutes sufficient intentional conduct on their part to warrant the inference that they intended to relinquish certain of their rights under the leases. It is evident from the evidence presented that Plaintiffs were well aware of the provisions of the leases in question and their rights and obligations thereunder. Yet, with knowledge of those rights, they intentionally chose to accept the payments anyway. The Court therefore finds that the Plaintiffs’ acceptance of the royalty payments constitute the clear, unequivocal, and decisive acts necessary to support an implied waiver of their rights in question.

9. Having found that the leases in question are still being held by production and that Amoco has not failed in its duty to reasonably develop the leaseholds and, further, that Plaintiffs have waived and are estopped from asserting their claims herein by reason of their continued acceptance of royalty payments from the Tatum Crane Unit, the Court need not address the affirmative defenses of laches and limitations raised by Amoco.

10. Based on the foregoing, the Court finds that Defendant Amoco Production Company is entitled to judgment on each and all of the claims asserted herein by Plaintiffs.


author: JOYCE HENS GREEN, District Judge.

text:
    DRUMMOND COAL COMPANY, Plaintiff, v. Donald P. HODEL, Secretary of the Interior, Defendant.
    Civ. A. No. 82-2439.
    United States District Court, District of Columbia.
    June 11, 1985.

      Michael B. Barr, Hunton & Williams, Washington, D.C., for plaintiff.
    Alfred T. Ghiorzi, Land & Natural Resources Div., U.S. Dept, of Justice, Washington, D.C., for defendant.

       Pursuant to Fed.R.Civ.P. 25(d), Donald P. Hodel has been substituted for William P. Clark as Secretary of the Interior.

   MEMORANDUM OPINION AND ORDER

JOYCE HENS GREEN, District Judge.

Before the Court are the parties’ cross motions for summary judgment. The plaintiff, Drummond Coal Company, seeks declaratory and injunctive relief to prevent the Department of Interior (DOI) and the Office of Surface Mining (OSM) from enforcing regulations designed to govern the collection of reclamation fees under the Surface Mining Control and Reclamation Act of 1977 (SMCRA, the Act), 30 U.S.C. § 1201, et seq. At issue is a recently revised regulation that determines the method by which the plaintiff must calculate the fee it is required to pay under the Act for each ton of coal produced. Drummond contends that this revision, undertaken to clarify existing regulations, is both inconsistent with the language of section 402 of SMCRA (30 U.S.C. § 1232) and contrary to prior administrative practice and policy. The defendant, in turn, argues that the revised regulation is “not repugnant to the language of the statute or its underlying purposes” and is consistent with prior practice. As such, the defendant concludes, the promulgation of the challenged regulation falls within the scope of DOI’s broad rule-making power and is entitled to “great deference” upon review by this Court.

For the reasons set forth below, the Court concludes that the Secretary did not exceed his authority in promulgating the challenged regulations. Accordingly, the defendant’s cross-motion for summary judgment shall be granted.

I. Background

A. Regulatory Framework

In 1977 Congress passed the Surface Mining Control and Reclamation Act. The purpose of the Act, as stated by Congress, was in part to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” 30 U.S.C. § 1202(a). It was Congress’ hope that the Act would “promote the reclamation of mined areas” while striking a “balance between protection of the environment ... and the Nation’s need for coal.” 30 U.S.C. § 1202(f).

To achieve this end, Congress included in the Act a provision establishing an “Abandoned Mine Reclamation Fund”. 30 U.S.C. § 1231. The terms of the fund program, as set out in section 1232(a) of the Act, required all coal operators subject to the SMCRA to pay into the fund a reclamation fee of 35 cents for each ton of coal produced by surface mining.

In December, 1977 the Secretary of the Interior, acting through OSM, promulgated national regulations setting forth the procedures to be used by coal mine operators in computing their reclamation fees. 42 Fed.Reg. 62715 (1977). The regulations stated in pertinent part that:

(a) The operator shall pay a reclamation fee on each ton of coal produced for sale, transfer, or use, including the products of in situ mining.
(b) The fee shall be determined by the weight and value at the time of initial bona fide sale, transfer of ownership, or use by the operator.

These regulations, however, did not explain precisely how the “weight and value” of the coal at the time of initial sale or transfer was to be calculated. As a result, from 1977 to 1981 the regulations were subject to varying interpretations, both by operators and by certain OSM officials. In Alabama, for example, coal operators regularly reduced their “taxable” coal tonnage by claiming a deduction for the alleged “excess moisture” content of the coal.

Faced with evidence of confusion among operators and inconsistent interpretation by the OSM representatives, in December, 1981 the Secretary proposed revised regulations for reclamation fee computations. The revised regulations, ultimately approved in final form and codified at 30 C.F.R. § 870.12(b)(3)(i) (1982), stated in relevant part that:

(a) The operator shall pay a reclamation fee on each ton of coal produced for sale, transfer, or use, including the products of in situ mining.
(b) The fee shall be determined by the weight and value at the time of initial bona fide sale, transfer of ownership, or use by the operator.
(3) The weight of each ton shall be determined by the actual gross weight of the coal.
(i) Impurities, including water, that have not been removed prior to the time of initial bona fide sale, transfer of ownership, or use by the operator shall not be deducted from the gross weight. [Emphasis added.]

It is these 1981 revised regulations that serve as the focus for the plaintiffs challenge in this case. Before turning to the merits of Drummond’s claim, however, a brief review of the coal company’s involvement in this litigation is required.

B. Factual and Procedural History

Drummond Coal Company, a Delaware corporation, mines substantial amounts of coal in Alabama. Beginning in 1977 when the reclamation fee regulations were first issued, and continuing until June, 1982 when the revised regulations were promulgated, Drummond routinely subtracted a deduction for moisture from the actual tonnage of coal mined, before calculating the reclamation fee it believed was owing. The deductions were approved without exception by the OSM official responsible for the OSM region (“Region II”) in which Alabama was located. Five other Alabama based coal producers also followed this practice. The operators insisted that their calculations were based on an Alabama state coal severance tax law that permitted an excess moisture deduction.

According to OSM, it was not until March, 1981 that the Secretary discovered that certain operators were subtracting a deduction for moisture. Drummond’s practice, in particular, did not come to the attention of the Secretary until March 13, 1982, when Drummond filed its report with OSM for the first quarter of 1982. In that report, Drummond explained that it had inadvertently failed to take a moisture deduction for December, 1981 tonnage, and that it expected to receive a credit for the “overpayment” of reclamation fees.

In March, 1981, before Drummond’s practice came to light, the Deputy Director of OSM ordered an investigation of the fee collection method used in Region II. (See Secretary’s Record Supplement, Exhibit D). The results of that investigation — revealing a unique, albeit accepted, practice of excess moisture deductions in Alabama — sparked a policy decision at the highest levels of OSM to bring Region II and Alabama in line with what the Secretary argues had always been OSM’s nationally accepted method of fee calculation. Accordingly, in December, 1981 OSM promulgated the revised regulations. OSM notified Drummond on July 23, 1982, that OSM regulations did not permit an “excess moisture” deduction. Citing the revised regulations, OSM informed Drummond that “the deduction claimed ... for the fourth quarter of 1981 and all subsequent quarters is disallowed____ Any future requests for refund of fee payments should ... not [be] ‘offset’ by reduced payments in subsequent quarters.” Secretary’s Record Supp. Exh. C.

Drummond responded immediately to OSM’s decision by filing two separate actions simultaneously — one in the Northern District of Alabama, Drummond Coal Co. v. James Watt, No. CV82-H-1838-S (slip op. May 18,1983), and the other before this Court. The complaints, identical in all substantive respects, sought declaratory relief and injunctive relief. Specifically, Drummond requested that the revised 1982 regulations be declared and adjudged “arbitrary, [and] capricious[,] ... an abuse of the Defendant’s discretion^] and ... inconsistent with ... [the] SMCRA.” Plaintiff’s Complaint at 7. The complaint further requested that the defendant be permanently enjoined and restrained from enforcing or applying the challenged regulations.

At the heart of Drummond’s objection to OSM’s action was its belief that a coal operator should not be taxed for excess moisture added to the coal after severance and extraction from the ground. According to Drummond, coal was often exposed to water in the mine, or to rain, after severance and before sale. Absorption of this water might add to the gross weight of the coal, but not its value. It made little sense, Drummond argued, to tax an operator based on a gross weight that did not reflect the true quantity of coal removed from the ground.

Insofar as the SMCRA was designed to tax coal and not water, Drummond insisted, the revised regulations exceeded the scope of the Act and thus were unlawful. More importantly, Drummond noted, between 1977 and March, 1982, OSM never objected to a request from a Region II operator for a moisture deduction. From Drummond’s perspective, therefore, the 1982 revised regulations represented a departure from a prior administrative practice without a “reasoned justification”. Plaintiff’s Motion for Summary Judgment at 16-17. As such, the Secretary’s decision to promulgate the regulations was arbitrary and capricious, and constituted an abuse of discretion. For these reasons, Drummond argued, the regulations should be held void.

Shortly after the filing of the complaints, the Secretary filed a motion in the Northern District of Alabama to dismiss or transfer the Alabama case on the ground that the SMCRA provided for exclusive jurisdiction in the District of Columbia. On January 13,1983, the Alabama court denied that motion. One week later, the Secretary requested a permanent injunction to prevent further prosecution in the Northern District of Alabama. Drummond opposed that motion by moving to stay all proceedings in the District of Columbia pending the outcome of the suit in the Northern District of Alabama. On February 24, 1983, this Court granted Drummond’s motion to stay.

In response to Drummond’s challenge on the merits, the Secretary asserted two central claims. First, the Secretary argued that the revised regulations did not represent a change from prior administrative practice because Region II officers — allegedly the only officers to approve excess moisture deductions — were never authorized to grant deductions. Actions, of these “insubordinate” officials, the Secretary insisted, could neither bind DOI nor constitute the Department’s official administrative practice or policy.

Second, the Secretary argued that the regulations were entitled to “great deference” on review because they were consistent with the broad, remedial purposes of the SMCRA, and promoted the twin agency goals of uniformity in application and administrative efficiency. Specifically, the Secretary maintained that the ambiguity of the 1977 regulations permitted certain coal operators to pay less tax by contracting to sell coal based on its “energy value” per ton, as opposed to its gross weight. The 1982 revised regulations, the Secretary pointed out, merely ensured that all operators would be taxed on the same basis and at the same point in the coal mining process; the new regulations, therefore, were national in both purpose and design. The decision to promulgate could not be considered arbitrary or capricious.

Subsequently, the United States District Court for the Northern District of Alabama ruled that the 1982 revised regulations were valid. That court concluded that the new regulations did not constitute a “substantive change in the policy of the agency,” but rather represented a clarification of the SMCRA “so as to ensure uniform application of the law.” Drummond Coal Co. v. James G. Watt, CV 82-H-1838-S (Slip op., N.D.Ala. May 18, 1983 at 6). The Court also found that the regulations were not inconsistent with the plain language of the Act:

The regulations are invalid, Drummond argues, because they tax impurities such as water, while the Act authorizes a tax only on coal. This argument is not persuasive. The revised regulations are clearly within the scope of the agency’s authority under the Act. Congress chose to tax tonnage of “coal.” Obviously there are impurities mixed with coal— dirt, sulfur, water, etc. Congress made no attempt to remove from taxation this small percentage of impurities found in the mined coal. Had Congress been concerned that the inclusion of impurities would work an undue hardship on the coal operators, the tax could have been calculated in other ways. For example, Congress could have taxed the coal on its BTU content. Since Congress refused to distinguish coal from its impurities, the regulation requiring the inclusion of impurities in calculating gross weight at the time of initial sale, transfer, or use, is within the scope of the agency’s authority. The fact that the impurities involved here are “added” to the coal after it is mined does not change the result. Again, Congress was well aware that after mining and before sale or use, coal is exposed to water from a variety of sources.

Drummond, slip op. at 7.

On appeal, the United States Court of Appeals for the Eleventh Circuit reversed and vacated the Alabama district court decision. Although the Court expressed its “belie[f] that Drummond’s challenge to the revised regulations is wholly without merit,” the basis of the decision to reverse and the actual holding of the case were limited to the conclusion that section 1276(a)(1) of the SMCRA “vests in the United States District Court for the District of Columbia exclusive jurisdiction over th[e] case.” Drummond Coal Co. v. Watt, 735 F.2d 469 (11th Cir.1984).

With the Alabama litigation complete, this Court lifted the earlier stay. Thereafter, cross motions for summary judgment were filed on the very issues that the Eleventh Circuit found itself without jurisdiction to review. It is to these motions that the Court now turns.

II. Jurisdiction

Before reaching the merits of Drummond’s claim, a jurisdictional question need be addressed. 30 U.S.C. § 1276(a)(1) states that:

Any action of the Secretary to approve or disapprove a State program or to prepare or promulgate a Federal program pursuant to this chapter shall be subject to judicial review by the United States District Court for the District which includes the capital of the State whose program is at issue. Any action by the Secretary promulgating national rules or regulations including standards pursuant to sections 1251, 1265, 1266, and 1273 of this title shall be subject to judicial review in the United States District Court for the District of Co lumbia Circuit. Any other action constituting rulemaking by the Secretary shall be subject to judicial review only by the United States District Court for the District in which the surface coal mining operation is located. 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. A petition for review of any action subject to judicial review under this subsection shall be filed in the appropriate Court within sixty days from the date of such action, or after such date if the petition is based solely on grounds arising after the sixtieth day. Any such petition may be made by any person who participated in the administrative proceedings and who is aggrieved by the action of the Secretary. [Emphasis added.]

Before the Eleventh Circuit, Drummond argued that this section conferred concurrent jurisdiction over the case on the United States District Court for the District of Columbia and on “all other district courts that otherwise would have jurisdiction____” The Eleventh Circuit disagreed with this interpretation, accepting instead the Secretary’s argument that Congress intended to vest exclusive jurisdiction over challenges to national regulations in the District Court for the District of Columbia. The Eleventh Circuit drew support for its conclusion from a decision by the Fourth Circuit, Tug Valley Recovery Center v. Watt, 703 F.2d 796 (1983), but noted that other circuits had reached the opposite conclusion. See, e.g., Holmes Limestone Co. v. Andrus, 655 F.2d 732 (6th Cir.1981), cert. denied sub nom. Watt v. Holmes Limestone Co., 456 U.S. 995, 102 S.Ct. 2280, 72 L.Ed.2d 1292 (1982).

For the purposes of this suit at this point in the proceedings, it matters little whether the jurisdictional decision of the Eleventh Circuit in the “duplicate” case filed in Alabama would or would not be held appropriate upon review by the Supreme Court. Regardless whether this Court has concurrent or exclusive jurisdiction, the statute plainly provides the District Court for the District of Columbia with jurisdiction in some form over a challenge to national regulations. The cross motions for summary judgment, therefore, are properly before the Court.

III. Consistency, Legislative Purpose, and Prior Practice

Under the strict standard established by this Circuit, a motion for summary judgment may be granted only when it is shown that there “is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law____ In ruling on a summary judgment motion, the Court must draw all^ inferences from the record in the light most favorable to the party opposing the motion.” Williams v. Washington Metropolitan Area Transit Authority, 721 F.2d.„1412, 1414-15 (D.C.Cir.1983). “To warrant summary judgment the record ‘should show the right of the [movant] to a judgment with such clarity as to leave no room for controversy____’” Weiss v. Kay Jewelry Stores, Inc., 470 F.2d 1259, 1262 (D.C.Cir.1972).

In this instance, neither party disputes the validity of the evidence contained in the administrative record. The sole issues that remain for resolution are legal ones: (1) whether the decision to promulgate the 1982 revised regulations constitutes an unlawful abuse of discretion on the part of the Secretary because the regulations are inconsistent with the language and purposes of the Act; and (2) whether the Secretary’s decision to promulgate the revised regulations should be held arbitrary and capricious insofar as it represents a change in prior administrative practice for which no reasoned justification has been offered. Disposition of the suit on summary judgment, therefore, is proper.

A. Statutory Language and Legislative History

1. The “Deference” Standard

It is well established that when faced with a problem of statutory construetion, “great deference [must be shown] to the interpretation given the statute by the officers or agency charged with its administration.” Udall v. Tollman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). See also EPA v. National Crushed Stone Ass’n, 449 U.S. 64, 83, 101 S.Ct. 295, 306, 66 L.Ed.2d 268 (1980). Deference becomes all the more important when the interpretation of an administrative regulation is involved. Id. In that instance “ ‘the ultimate criterion is the administrative interpretation, which becomes of controlling weight unless it is plainly erroneous or inconsistent with the regulation.’ ” Bowles v. Seminole Rock Co., 325 U.S. 410, 413-14, 65 S.Ct. 1215, 1217, 89 L.Ed.2d 1700 (1945), quoted in Udall, 380 U.S. at 16-17, 85 S.Ct. at 801-802.

To sustain the agency’s interpretation, the Court “need not find that [the agency’s] construction is the only reasonable one, or even that it is the result [that] would have [been] reached had the question arisen in the first instance in judicial proceedings.” Udall, 380 U.S. at 16, 85 S.Ct. at 801. To the contrary, the burden rests with the party challenging the administrative action to demonstrate invalidity. “Absent a contrary indication in the statute,” the Secretary’s judgment must be accepted. In Re: Permanent Surface Mining Regulation, 653 F.2d 514, 522 (D.C.Cir.1981). As both the Supreme Court and this Circuit have noted,

it is not a reasonable canon of interpretation [to assume] that the draftsmen of acts delegating agency powers, as a practical and realistic matter, can or do include specific consideration of every evil sought to be corrected____[This] is precisely one of the reasons why regulatory agencies ... are created, for it is the fond hope of their authors that they bring to their work the expert’s familiarity with industry conditions which members of the delegating legislatures cannot be expected to possess.

American Trucking Ass’n v. United States, 344 U.S. 298, 309-10, 73 S.Ct. 307, 314, 97 L.Ed. 337 (1953), quoted in In Re: Permanent Surface Mining, 653 F.2d at 522. See also Miller v. Youakim, 440 U.S. 125, 145 n. 25, 99 S.Ct. 957, 969 n. 25, 59 L.Ed.2d 194 (1979); Maryland National Capital Park and Planning Comm’n v. Lynn, 514 F.2d 829, 834 (D.C.Cir., 1975) (burden rests on challenging party to overcome presumption of validity).

Application of the Bowles Court’s “rebut-table deference” standard of review is particularly appropriate in this instance because the drafters of the SMCRA clearly intended to delegate to the Secretary broad rulemaking power. Section 201(c)(2) (30 U.S.C. § 1211) of the Act states that the Secretary shall “publish and promulgate such rules and regulations as may be necessary to carry out the purposes and provisions of this Act.” Similarly, section 412 (30 U.S.C. § 1242) of the Act provides that the Secretary “shall have the power and authority, if not granted it otherwise, to engage in any work and to do all things necessary or expedient, including promulgation of rules and regulations, to implement and administer the provisions of this Subchapter.” 30 U.S.C. § 1242(a).

Even were Congress not to have granted the Secretary broad discretion in administering the Act, a “deference” standard of review would still be presumptively appropriate here because the regulatory framework underlying the SMCRA is the product of a long and complex legislative process:

Deference to the administering agency is particularly appropriate when a complex regulatory statute emerges from a process of difficult legislative gestation. The Surface Mining Act was the result of a protracted effort, dating back to the Ninetieth Congress, and including presidential veto of bills passed by the Ninety-third and Ninety-fourth Congresses. From such a process of compromise and adjustment, a symmetrical statute containing explicit answers to every question of administrative implementation is unlikely to emerge.

In Re: Permanent Surface Mining, 653 F.2d at 522.

OSM’s interpretation of the 1977 regulations, therefore, and of the statute as set forth in the revised regulations, must be accorded broad deference unless the record reflects that the agency’s interpretation is “plainly erroneous”, Udall, 380 U.S. at 17, 85 S.Ct. at 801, or patently “inconsistent” with the earlier regulation. To determine whether deference should be accorded the Secretary in this instance, two questions must now be addressed: (1) whether the 1982 regulations are consistent on their face with the language of the statute and of the 1977 regulations; and (2) whether the 1982 regulations are reasonably related to the legislative intent and purpose of the SMCRA.

2. Consistency with Statutory Language

30 U.S.C. § 1232 states that a reclamation fee of 35 cents per ton of “coal produced by surface coal mining” shall be levied on all coal operators. Emphasis added. The term “produced” is ambiguous. “Production” could reasonably be interpreted to include the entire process of extracting and selling coal, complete from pit to buyer’s door, or it could refer solely to the process of extraction. The latter interpretation would support the conclusion that impurities added after extraction, such as moisture, should not be taxed. The former interpretation would imply that the gross product sold to the buyer — even if it contains impurities and moisture — should serve as the basis for taxation.

The statute also fails to define the term “coal”. Types of coal — such as “lignite” coal, surface mined coal, and underground coal — are distinguished, but nowhere does the Act specify what elements comprise a “taxable” piece of coal.

As published in 1978, the 1977 regulations did little to remedy these ambiguities. The 1977 regulations, see 30 C.F.R. § 870.-12(b), 43 Fed.Reg. 49940 (1978), state only that

(a) The operator shall pay a reclamation fee on each ton of coal produced for sale, transfer, or use, including the product of in situ mining.
(b) The fee shall be determined by the weight and value at the time of initial bona fide sale, transfer of ownership, or use by the operator.

The preamble to the 1977 regulations, however, does provide some insight into OSM’s interpretative intent. In response to a question from a commentator about whether the fee was to be paid on “clean coal” or “run of mine” coal, OSM stressed that the crucial factor was not the composition of the coal, but the point in the mining and selling process that “first sale or transfer" took place:

Section 837.12(a) and (b) of the regulations specify that the fee be paid on each ton of coal produce for sale, transfer, or use and that the fee shall be determined at the time of initial bona fide sale, transfer of ownership, or use by the operator. For example, if the initial transaction is based on the weight of run-of-mine coal then the reclamation fee must be paid for each ton of run-of-mine coal sold, transferred or used. If the initial transaction is based on the weight of clean coal, then, the reclamation fee must be paid on each ton of clean coal sold, transferred, or used.

42 Fed.Reg. 62714, Dec. 13, 1977 (Dec. 13, 1977). Significantly, this interpretation of the 1977 regulations was reiterated one year later, in 1978, in an OSM Solicitor’s opinion:

... The fee must be determined by the weight and value of the coal at the time of initial bona fide sale. More [sic] computations or estimations of the clean coal weight would not be in compliance. The coal would actually have to be cleaned prior to sale or use to meet the conditions in Section 837.12(b).

Advisory Opinion of Apr. 17, 1980, quoted in Plaintiff’s Supp. to Admin. Record, Attachment 3 at 3.

The 1982 revised regulations adopt the first of the two possible interpretations of section 1232. The regulations state expressly that the time of sale, and not the value of the coal, is the determining factor. Impurities that have not been removed before the time of initial bona fide sale, transfer of ownership, or use by the owner, will be taxed.

Both interpretations, however, are potentially consistent with the Act. The conclusion reached depends upon the particular objectives that Congress sought to further in enacting the legislation. If, for example, the Act’s drafters intended to create a tax mechanism that would promote administrative efficiency and ensure consistent, evenhanded enforcement, the first interpretation is reasonable, for it envisions a flat tax based on a uniform time of sale. If, however, Congress hoped to tax operators based solely on the value and quantity of coal extracted, then the latter interpretation would be most logical.

At one extreme, therefore, the 1982 regulations are not in consistent with the plain language of the statute or its supporting regulations. They simply make express what had been implied. Because the SMCRA does not contain an express provision to the contrary in the SMCRA, there is nothing “plainly erroneous” about interpreting “coal produced” to refer to the condition of the coal at the time of sale or transfer. At the other extreme, the 1982 regulations may be viewed as consistent with an interpretation of section 1232 that OSM represented as its own from 1977 until 1981. See Solicitor’s Advisory Opinion of Apr. 17, 1980; preamble to 1977 regulations, 42 Fed.Reg. 62714 (Dec. 13, 1977). That this interpretation was not the only one possible is of minor consequence. See Udall, 380 U.S. at 16, 85 S.Ct. at 801. For purposes of this review, what matters is that the 1982 regulations were potentially consistent with a plausible — indeed, reasonable — interpretation.

In neither event, therefore, under either of the two possible interpretations, can the 1982 regulations be considered clearly inconsistent with the plain meaning and language of the statute.

3. Consistency With Legislative Purpose

In its 1977 House Report, Congress listed the objectives of the reclamation program as including

the protection of health or safety of the public; protection of the environment from continued degradation and conservation of land and water resources; the protection or enhancement of public facilities as part of reclamation of land and water conservation projects; the improvement of lands and waters to a suitable condition useful in economic social development; and research and demonstration relating to the development of surface mining reclamation and water quality control program methods.

H.R.Rep. No. 95-218, 95th Cong., 1st Sess. 169; U.S.Code Cong. & Ad.News 593, 700 (1977). An earlier House Report that accompanied the SMCRA made clear that the reclamation fund provisions were designed to be remedial in purpose and function:

[T]he widespread environmental degradation associated with coal surface mining — including the indiscriminate dumping of coal mine waste on the land surface and into streams — has resulted in the serious deterioration of the social and economic climate of affected regions. Where states have not accepted the burden of rehabilitating these regions, the environmental and social costs have devolved upon local residents. The injustice of requiring persons least able to shoulder such an enormous burden to do so is obvious.

H.R.Rep. No. 93-1072, 93d Cong., 2d Sess. 116 (1974). It was considered critical, therefore, that the fee provisions generate sufficient revenue to fund the Abandoned Mine Program. See id. at 117. Early reports estimated that as much as $180 million per year would be needed to meet “high priority program needs.” Id.

The bill’s sponsors, however, hoped to find a way to impose a reclamation fee without “constraining] the development or production” of coal:

Several principal considerations form the basis for the ... reclamation fee:
First, to set the fee at such a level that it is not a burden on the industry;
Third, to structure the fee so it would not exert an inflationary influence in the economy.

H.R.Rep. No. 95-218, 95th Cong., 1st Sess. 136, 137; U.S.Code Cong. & Ad.News 593, 668-69 (1977). To achieve this end, Congress devised a differential fee based solely on the genus of coal mined. Types of coal were limited to three: surface mined coal was to be taxed at 35 cents per ton; underground mined coal at 15 cents per ton; and lignite coal at 10 cents per ton. See 30 U.S.C. § 1232(a). Significantly, Congress expressly rejected an amendment to the reclamation fee provisions that would have provided for a uniform tax based on the BTU content (energy value) of the coal, see H.R.Rep. No. 93-1072, 93d Cong., 2d Sess. 116-17 (1974) (proposing fee of 1.23 cents per million BTUs), and rejected proposed admendments that would have permitted credits or deductions for state severance tax payments that, in turn, either provided for excess moisture deductions or were based on BTU value. See 120 Cong.Rec. H25230 (July 25, 1974) (amendment of Congressman Seiberling proposing a tax of $2.50 per ton of coal mined minus a credit of $0.01 for each 1000 BTUs “by which the weighted average BTU value of coal mined ... falls below 16,000 BTU per pound”); 121 Cong.Rec. H6809 (Mar. 17, 1975) (amendment of Congressman Regula proposing a credit for “the amount of any reclamation fee or severance tax ... paid to the State during that year.”).

This decision to base the fee on the weight of the coal at a given time during the coal production process, and not on the value or “inherent content” of the coal, was not an arbitrary choice unsupported by logic or reason; to the contrary, by focusing on uniformity of application rather than value Congress furthered three legitimate and important governmental interests.

First, the time-based tax ensured that the Abandoned Mine Reclamation Fund provisions would be enforceable. Clearly, a BTU tax, or any tax requiring a determination of moisture content, possesses the inherent liability of entangling federal authorities in the complicated process of overseeing testing for impurities. A tax based on gross weight at a definable point of time in the production process, however, avoids this problem because it eliminates the need to test. Second, by selecting an enforceable tax, Congress ensured that the funds necessary to conduct the program would be available. Given Congress’ concern that the cost of rehabilitating environmentally degraded areas not fall upon the shoulders of those [citizens] least able to afford it, see supra, H.R.Rep. No. 93-1072, 93d Cong., 2d Sess. 116 (1974), the mine program’s financial health was of critical importance. Third, by selecting a time -based tax Congress avoided the need to “choose [arbitrarily] between impurities”. If excess moisture were a deductible impurity, operators might argue, why not also deduct the weight of other impurities, such as sulphur, dust, or debris. Once caught in a technical debate over the “true” elements of “pure” coal, there might, conceivably, be no end to the deductions claimed. To permit such a situation would jeopardize efforts to meet the costly, remedial purposes of the Act without imposing new taxes — clearly an “inflationary influence,” — on other sectors of the economy. See H.R.Rep. No. 95-218, U.S.Code Cong. & Ad.News at 668-69.

The 1982 revised regulations are based on precisely these policy concerns. As discussed supra, although the preamble to the 1977 regulations and the Advisory Opinion of April 17, 1980, attempted to clarify the confusion surrounding the 1977 regulations and establish the reclamation fee as time, not value, based, the 1977 regulations continued to create uncertainty among operators. In 1980 OSM completed a review of the Abandoned Mine Reclamation Fund Fee Collection Program. The review covered enforcement activities from October 1977 through June 1980, and concluded that inconsistencies in the 1977 regulations had resulted in disparate treatment of coal operators. Specifically, OSM found that the wording of the preamble to the 1977 regulations had created a tax loophole that was currently being exploited by operators in Region II. The preamble stated that the reclamation fee was to be computed “on the weight on which the initial transactions was based.” Secretary’s Record Supp., Exh. A at 12. The regulations themselves stated only that the fee was to be “based on the weight at the time of initial bona fide sale, transfer of ownership, or use by operator.” Id. By devising contractual terms that permitted the operator to be paid at a higher rate for fewer tons of “clean” or “pure” coal, an operator would pay significantly less under the preamble interpretation because the “weight on which the transaction was based" would be the weight of the anticipated clean coal. Theoretically, therefore, two operators could tender the same gross weight of coal for sale, and depending on the contractual terms used, one might pay considerably less than than the other. Secretary’s Record Supp., Exh. A at 11-13.

In addition to this loophole, the OSM report also found that some operators in Region II were reading the plain language of the regulations to permit excess moisture deductions. Secretary’s Record Supp., Exh. A at 10-11. Fearful that these interpretations would significantly and critically deplete the revenues needed to fund the Abandoned Mine Program, thereby jeopardizing the broad, remedial purposes of the Act, OSM moved quickly to draft revised regulations unequivocally defining the fee as time, not value, based.

Viewed against this background, it is apparent that the 1982 regulations were promulgated out of a need to ensure uniform enforcement, a workable administrative framework, and adequate, “inflation free" funding. As a direct response to those parts of the 1977 regulations that failed to enforce effectively the remedial purposes of the SMCRA, the 1982 revisions are patently consistent with the legislative intent of the Act.

Finally, even were it not possible to identify the original purposes of the Act or analyze their relationship to the stated justifications for the 1982 regulations, the revised regulations would still survive judicial review because the explanation tendered by OSM reflects a “rational connection between the facts found and the choice made.” Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 246, 9 L.Ed.2d 207 (1962).

Under the standard established by the Supreme Court, an agency’s action will be found arbitrary and capricious if, inter alia, the agency has

entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Manufacturers Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2867, 77 L.Ed.2d 443 (1983), quoted in Nat’l Ass’n of Patients on Hemodialysis and Transplantation, Inc. v. Heckler, 588 F.Supp. 1108 (D.D.C.1984). In this instance, the record does not support the conclusion that OSM entirely failed to consider an aspect of the problem. The rationale tendered to support the 1982 regulations is both reasonable and logical given the evidence of administrative confusion before the agency. More important, one cannot reasonably conclude, in the absence of express statutory language or legislative history to the contrary, that it was “implausible” for the Secretary to assume that Congress was aware of the importance of creating an administratively enforceable tax mechanism — one that would meet the funding needs of the Abandoned Mine Program without' requiring overly-intrusive regulation of local operators. To the contrary, it is fair to assume that had Congress wanted to ensure that impurities added during the coal mining process, but not part of the “inherent content” of the coal, would not be taxed, it would have chosen one of the value-based amendments. Congress was free to strike a different type of balance between the needs of compliance and the nature of the tax burden on the coal operator.

In short, the 1982 regulations are neither patently “inconsistent” with nor plainly erroneous in their interpretation of the legislative purposes of the SMCRA. Indeed, the revised regulations reflect governmental and agency interests which, in the absence of express language to the contrary, stand on their own as legitimate bases for agency action. As such, the agency’s decision to promulgate the 1982 regulations is entitled to substantial deference.

B. Prior Practice

The Supreme Court has held that if an agency “chang[es] its course by rescinding a rule[,] [it] 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.” Motor Vehicles, 463 U.S. at 42, 103 S.Ct. at 2866. The Court has also pointed out, however, that “ ‘regulatory agencies do not establish rules of conduct to last forever.’ ” Id. quoting American Trucking Ass’ns v. Atchison, T. & S.F.R Co., 387 U.S. 397, 416, 87 S.Ct. 1608, 1618, 18 L.Ed.2d 847 (1967). “[A]n agency must be given ample latitude to ‘adapt their rules and policies to the demands of changing circumstances.’ ” Motor Vehicles, 463 U.S. at 42, 103 S.Ct. at 2866, quoting Permian Basin Area Rate Cases, 390 U.S. 747, 784, 88 S.Ct. 1344, 1368, 20 L.Ed.2d 312 (1968). When faced with “new developments”, an agency “may alter its past interpretation and overturn past administrative rulings and practice.” American Trucking, 387 U.S. at 416, 87 S.Ct. at 1618. Regulatory agencies “are supposed, within the limits of fair and prudent administration, to adapt their rules and practices to the Nation’s needs in a volatile, changing economy. They are neither required nor supposed to regulate the present and the future within the inflexible limits of yesterday.” Id.

Drummond contends that the 1982 revised regulations represent a change in OSM’s “policy and practice” for which a reasoned justification is required. It is Drummond’s position that the Secretary has failed to provide the necessary “reasoned analysis.” Motor Vehicles, 463 U.S. at 42, 103 S.Ct. at 2866.

Based on the record before the Court, there is little evidence to support the claim that the 1982 regulations represented a change in OSM policy on the national level. In the preamble to the 1977 regulations, discussed at length, supra, OSM clearly stated that the reclamation fee would be based on the gross weight of the coal in its current condition — with or without impurities — at the time of initial sale, transference, or use. Subsequent policy explanations released between 1978 and 1980 were largely consistent with this basic position. See e.g. Solicitor’s Opinion of Apr. 17, 1980, cited in Drummond’s Supp. to Admin. Record, Attachment 3 at 3 (discussed supra, Part III A 2). No official statement dealing with OSM’s national policy may be found to the contrary in the administrative record.

OSM’s practice and policy at the local level, however, is more complicated. According to the Secretary, only 12 of approximately 6000 coal operators nationwide claimed a moisture deduction. Defendant’s Mem. at 4. Of those who claimed deductions, all but one were located in Region II. Affidavit of Jane S. Robinson, Secretary’s Record Supp., Exh. E. The Secretary cannot be bound, the defendant argues, by the action of maverick officials in Region II.

Drummond correctly points out that the 1981 Inspector General’s report, drafted for the Assistant Secretary of the Interior and the Associate Solicitor, however, specifically found that “[t]he [1977] regulations concerning reclamation for computations are subject to various interpretations” and that “[a]s a result, the regulations have not been applied consistently by both the coal industry and OSM fee compliance personnel____” Secretary’s Record Supp., Exh. A at 10. See also Drummond’s Supp. to Admin. Record, Attachment 1 at 4. Other reports drafted by OSM personnel concede that “OSM has never disallowed ... a deduction [for excess moisture]; we simply never gave it to anyone who did not ask for it.” Drummond’s Supp. to Admin. Record, Attachment 3 at 4. It is Drummond’s position that the defendant’s admitted failure to deny a single request for a deduction amounted to a prior practice or policy to permit deductions when asked. Insofar as the 1982 regulations altered this “prior policy”, without justification, Drummond concludes, the Secretary’s decision to issue the revised regulations was arbitrary and capricious.

Drummond’s argument is flawed in several respects. First, on the basis of the record here it is difficult to conclude that OSM knowingly and deliberately altered a prior practice. All but one of the excess moisture deductions were authorized by fee compliance officers in a single region — Region II. There is no indication that either senior OSM officials or the Secretary’s Office learned that the deductions had been authorized for Alabama operators by the Region II Compliance Chief until well into 1981 when Steven Griles, Deputy Director of OSM, requested W. Hord Tipton, Acting Regional Director of Region II, to investigate the treatment of moisture deductions in Region II. See Drummond Supp. to Admin. Record, Attachment 2, Tipton letter of Aug. 6, 1981, at 1. Upon learning of Region II’s policy and discovering general uncertainty over the proper interpretation of the 1977 regulations, OSM moved quickly to correct Region II’s deviation and clarify the regulations. In short, once OSM was made aware of the problem, remedial action was taken relatively promptly. The record does not support the conclusion that senior OSM officials in Washington knowingly endorsed a policy of permitting moisture deductions.

Indeed, as a matter of law, the activities of insubordinates or misinformed government officials generally will not bind the government. See Federal Crop Ins. v. Merrill, 382 U.S. 380, 384, 68 S.Ct. 1, 3, 92 L.Ed. 10 (1947) (“anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority”); Schweiker v. Hansen, 450 U.S. 785, 101 S.Ct. 1468, 67 L.Ed.2d 685 (1981) (government not estopped from enforcing regulation where social security claimant given erroneous information by government field representative); cf. Boggs v. Regan, Civil Action No. 79-1090 (D.D.C., decided Sept. 18, 1981) {Hansen distinguished on grounds that plaintiffs made “every effort to obtain information from all sources including the responsible decisionmakers.” Slip op. at 5 (emphasis added)). In this instance, therefore, the activities of OSM officials in Region II can not properly be attributed to the Secretary. Because Drummond and the other Alabama operators who requested moisture deductions did not seek advice from the highest levels of OSM, they were in effect charged under the law with knowledge of the proper meaning and intent of the 1977 regulations. Viewed from this perspective, it is difficult to find that OSM ever altered its practice, for without knowledge or legal responsibility for Region II’s activities the Secretary could not have authorized excess moisture deductions.

Yet, even if Region II’s activities can be attributed to the higher levels of OSM, Drummond’s argument remains flawed for a second reason. In cases where a reasoned justification for a policy change has been required, the agency involved made a distinct and decisive break from an affirmatively established rule or regulation. See, e.g., Motor Vehicles (rescinding an agency rule requires reasoned justification); Farmers Union Central Exchange, Inc. v. FERC, 734 F.2d 1486 (D.C.Cir.1984) (agency decision to return to old ICC rate base requires reasoned justification).

In this case, however, there is no distinct, affirmative policy from which the 1982 regulations may be said to have deviated. OSM concedes that it never denied a deduction when requested, but it is also apparent that OSM never asserted in regulations, comments, or policy statements, that moisture deductions were permissible. Indeed, all of OSM’s official pronouncements implied the opposite. In short, the lack of a consistent practice at the local level argues not for the conclusion that OSM had a prior practice different from that required by the 1982 revised regulations, but rather that OSM had no real policy at all at the local level.

Third and finally, even if the actions of OSM officials in Region II can be held to constitute a “prior practice” that may be imputed to the Secretary, the promulgation of the 1982 regulations represented a legitimate, justifiable response to the “demands of changing circumstances.” Permian Basin, 390 U.S. 747, 88 S.Ct. 1344, 20 L.Ed.2d 312 (1968). It is clear from the record that the confusion which developed in Alabama over the 1977 regulations represented an unexpected but serious threat to the Abandoned Mine Reclamation Fund Program. Given the broad, remedial purposes of the Act, the need to insure continued funding for the program, and Congress’ clear intent to establish an administratively enforceable regulatory scheme that would not be based on a BTU or impurities-credit fee system, it was not unreasonable for OSM to promulgate new regulations designed to clarify the old. All of these reasons for the 1982 revisions — discussed at length supra —are contained in the administrative record. See Inspector General’s Report, Secretary’s Record Supp., Exh. A; Drummond’s Supp. to Admin. Record, Attachments 1, 3.

IV. Conclusion

After a “careful and searching inquiry into the record ... to assure itself that the agency has examined the relevant data and articulated a reasoned explanation for its action,” Farmers Unions, 734 F.2d at 1499, the Court concludes that a rational connection exists between “the facts found and the choice made.” Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 246, 9 L.Ed.2d 207 (1962).

Because the revised regulations are consistent with the plain language and purpose of the SMCRA, and because the challenged regulations do not constitute a change from a prior administrative policy or practice, the Secretary’s interpretation of the SMCRA and the 1977 regulations is entitled to broad deference. Based on this record, the plaintiff has not met its burden of establishing that the challenged agency action was arbitrary and capricious.

Accordingly, for the reasons set forth above, summary judgment must be granted in favor of the defendant. A separate Judgment accompanies this Memorandum Opinion and Order.

      . The regulations promulgated in December, 1977 were incorporated in the final regulations issued nearly one year later. See 30 C.F.R. 870.12(b), 43 Fed.Reg. 49940 (1978).

      . Alabama’s excess moisture provision sets a flat figure — 2.88% of the gross weight of mined coal — as the "inherent moisture” content of the coal. Any moisture content over and above 2.88% may be deducted from the gross taxable tonnage. Ala.Code § 40.13-31. See Coal Severance Tax Regulations, State of Alabama, Dep’t of Revenue, Montgomery, Ala., July 9, 1979.

      . According to the Secretary, only 12 out of 6000 coal operators nationwide were permitted to take deductions, and 11 of the 12 were based in Alabama; the other was in Pennsylvania.

      . Because the Secretary never attempted to recover the sums deducted by the Alabama operators from 1977 to 1981, Drummond limited its challenge to the validity of the 1982 revised regulations. As best as can be determined, the plaintiff has challenged only the prospective enforcement of the 1982 regulations. Accordingly, this decision does not purport to address the validity of the 1977 regulations, or the propriety of the Secretary's actions carried out under those regulations.

      . Indeed, as the defendant points out, the phrase "all things necessary or expedient” is rarely used by Congress. See Defendant’s Mem. at 14, n. 11. Congress’ decision to use that phrase in this instance, therefore, connotes a deliberate effort to delegate broad discretion to the Secretary for enforcement of the Act.

      . The 1977 regulations also include an "attempted” definition of coal. See 30 C.F.R. § 700.5, quoted in full infra Part III B, n. 9.

      . OSM identified three possible ways of interpreting the regulations:
      “1. The fee has been based on real weight of the coal (either run-of-mine or cleaned) at the time of sale.
      "2. The fee has been based on the 'calculated' reduced weight (supported by lab analysis), for which the operator was paid.

      "3. The fee has been based on the ‘calculated’ reduced weight (supported by lab analysis), even when the operator was not paid on the basis of fewer tons.”
      Secretary's Record Supp. Exh. A at 16. Drummond, OSM concluded, followed the third approach, and in so doing exploited a lucrative loophole:
      “Drummond fits into the third category. Drummond sells coal by the ton and gets paid more or less per ton, according to the BTU's per ton. If the coal has more moisture, it has fewer BTU's per ton, and Drummond gets paid less per ton. (Note that Drummond does not get paid for fewer tons; they get paid less per ton.) Drummond is not the only company to be allowed this deduction; the IG report estimates that such a deduction reduced fees in Alabama by $304,811 over the 33-month period examined, and the FCO estimated that approximately 70 percent of the tonnage reported by operators in that State included an adjustment for excess moisture.” Id. at 16-17.

      . See supra, n. 7.

      . In support of its position Drummond cites a recent decision by the Third Circuit, United States v. Brook Contracting Corp., 759 F.2d 320 (3rd Cir.1985). In Brook the Third Circuit held that the 1982 regulations could not serve as a basis for including "rock, clay, dirt, and other debris in the computation of the reclamation fee.” Brook, at 327. The court ruled that “[t]o the extent that the government interprets § 870.-12(b) [the 1982 regulations] to authorize imposition of the reclamation fee on noncoal material mined by appellants here, we hold this regulation exceeds the scope of 30 U.S.C. § 1232(a) and is therefore invalid.” Brook, at 327.
      In reaching its conclusion the Third Circuit relied heavily on legislative history indicating that:
      "Congress was very much concerned about economic burdens to the economy in general, and the coal industry in particular. Congressional research went to great pains to project costs to the consumers and the industry that would result from implementation of the reclamation fees. These projections strongly suggest that Congress intended to impose the fee on combustible coal only, and not ... on additional tonnages of rock, clay and dirt.”

        Brook, at 325. The legislative excerpts cited in Brook refer to cost studies contemplated, or actually undertaken, by Congress. Significantly, however, none of the excerpts noted by the court actually discuss the cost studies in the context of the question at issue here, and at issue in Brook. More important, Brook curiously ignores the legislative history underscoring Congress' equally pressing concern for the remedial purposes of the Act. As the Brook court points out, Congress’ purpose in establishing the reclamation fund was to avoid burdening the coal industry and exerting inflationary pressures on the economy, as well as “providing sufficient funds for meeting program objectives within a reasonable time frame.” H.R.Rep. No. 218, 95th Cong., 1st Sess., 170, reprinted in 1977, U.S.Code Cong. & Ad.News 593, 672; see supra at Part III A 3. Congress’s goal was to satisfy all of these concerns. An objective analysis, therefore, must consider all of the legislative history. Because Congress did not expressly discuss whether the fee actually agreed upon (35 cents per ton) would constitute an undue burden on the coal industry or the economy if based on a definition of coal that included impurities, we respectfully disagree with the conclusion that legislative history focusing solely on a "concern for costs" is either persuasive or dispositive of the issues involved in this case. To the contrary, it would appear that had a concern for "burdens to the industry” been of paramount concern to Congress, proposed amendments basing the fee on the BTU content of the coal would not have been rejected in favor of the current "flat tax” approach.
      Viewed in this light, then, the legislative history suggests that the remedial purposes of the Fund, and the need to rehabilitate those regions unable to absorb the costs associated with surface mining, were the focus of Congress’ concern. The 1982 regulations are reasonably consistent with this purpose.
      In reaching its conclusion, Brook also relied on the definition of coal as promulgated by the Secretary in 30 C.F.R. § 700.5:
      "As used throughout this chapter, the following terms have the specified meaning except where otherwise indicated—
      "Coal means combustible carbonaceous rock, classified as anthracite, bituminous, subbituminous, or lignite by ASTM Standard D 388-77, referred to and incorporated by reference in the definition of "anthracite” immediately above." Because this definition does not expressly include impurities, the court reasoned that impurities could not reasonably be included in the term “coal produced by surface mining.” 30 U.S.C. §§ 1201.
      The Secretary correctly points out, however, that the definition of "coal” is irrelevant to the question at issue here. The regulatory scheme challenged in this instance assesses the reclamation fees based on weight at a given time, not based on value. The focus of this Court’s analysis need only address the reasonableness of that scheme. If valid reasons exist to support the Secretary’s decision to base this tax on "time” rather than “value”, the manner in which coal is defined in section 700.5 clearly is not dispositive of the central issue. Of course, precisely the opposite would be true if Congress had in fact intended to base the tax on the inherent value of the coal mined. Cf. A.J. Taft Coal Co. v. United States, 605 F.Supp. 366 (N.D.Ala.1984), aff'd without opinion, 760 F.2d 280 (11th Cir.1985) (distinguishing Drummond as a case that, unlike Taft, (1) does not involve the interpretation of a "statute and regulation which make reference only to coal”, and (2) does not involve a tax based on the coal's BTU value).

      . According to the affidavit, a fee compliance officer in Pennsylvania permitted an operator to take a deduction on one occasion. Affidavit of Jane E. Robinson, Secretary’s Record Supp., Exh. E at 2.

      . In support of its argument that the Secretary’s interpretation of the Act is not entitled to deference, Drummond argues that the Secretary's interpretation is not "contemporaneous with enactment of [the] SMCRA.” Plaintiffs Mem. at 15. Judicial deference to an agency interpretation, Drummond concludes, is "not warranted where t[he] interpretation is not contemporaneous with enactment of the statute [citing General Electric v. Gilbert, 429 U.S. 125, 142-43, 97 S.Ct. 401, 411, 50 L.Ed.2d 343 (1975); Northern Colorado Water Conservancy District v. FERC, 730 F.2d 1509, 1519-20 (D.C.Cir.1984) ]”. Id.

      To the extent that the Court now concludes OSM’s current interpretation of the Act does not conflict with the prior administrative practice “begun when that statute became law,” id., Drummond's “contemporaneous” argument is essentially moot. Even were the Court less convinced that Region II’s activities cannot be attributed to the OSM' national policy, the absence of any clear or consistent policy at the local level would militate against overturning the agency's decision on the grounds that the interpretation was “contemporaneous” with the enactment of the SMCRA.

      . The Court notes that as a practical matter this decision need not work an undue hardship on the plaintiff. As the District Court in Alabama pointed out, there is nothing in the new regulations that would prevent an operator from removing impurities before the initial bona fide sale, transfer, or use. If Drummond chooses to clean or dry the coal before the coal is treated, there will be no tax on excess moisture or other impurities.