UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


NATL MINING ASSN

v.

BABBITT, BRUCE


98-5320a

D.C. Cir. 1999


*	*	*


Silberman, Circuit Judge: National Mining Association  challenges four
regulations promulgated by the Secretary of  the Interior (Office of
Surface Mining Reclamation and En- forcement) as part of a package of
regulations governing  damage to land, structures, and certain water
supplies caused  by mining subsidence. The district court rejected
appellant's  claims. We, however, agree with appellant that two of the
 agency's regulations are arbitrary and capricious.


I.


The Surface Mining Control and Reclamation Act, 30  U.S.C. ss 1201 et
seq. (1994), sets forth permit requirements  and performance standards
for coal mining operations. An  important aspect of this statutory
scheme is its regulation of  subsidence caused by underground mining.
Subsidence, as  used in the Act, apparently refers to the kind of
earth  movement that occurs "when a patch of land over an under-
ground [coal] mine sinks, shifts, or otherwise changes its 
configuration." National Wildlife Fed'n v. Hodel, 839 F.2d  694, 739
(D.C. Cir. 1988); see also Keystone Bituminous Coal  Ass'n v.
DeBenedictis, 480 U.S. 470, 474-75 (1987) (discussing  coal mine
subsidence and its effects). Although the word  subsidence literally
means lowering, tending downward, or  "flatten[ing] out so as to form
a depression," Webster's Third  New Int'l Dictionary 2279 (1971), and
there is no definition of  the term in the statute or the regulations,
the parties agree it  is used only to describe the kind of subsidence
caused by  underground coal mining. For purposes of this case, we 


The central statutory provision governing "subsidence"  provides that
an underground mining permit issued by an  approved State or Federal
program must require the opera- tor to "adopt measures consistent with
known technology in  order to prevent subsidence causing material
damage to the  extent technologically and economically feasible,
maximize  mine stability, and maintain the value and reasonably
foresee- able use of such surface lands...." 30 U.S.C. s 1266(b)(1) 


Subsidence regulation under the Mining Act has had vari- ous
incarnations and has generated a fair amount of litigation  before us.
See, e.g., National Wildlife Fed'n v. Lujan, 928  F.2d 453, 455-60
(D.C. Cir. 1991); National Wildlife Fed'n v.  Hodel, 839 F.2d at
739-41; In re Permanent Surface Mining  Regulation Litig., 653 F.2d
514 (D.C. Cir. 1981) (en banc). In  the aftermath, Congress added a
new s 720 to the Mining  Act, see Energy Policy Act of 1992, Pub. L.
No. 102-486, sec.  2504(a)(1), s 720, 106 Stat. 2776, 3104 (1992),


(a) Requirements. Underground coal mining operations  conducted after
October 24, 1992, shall comply with each  of the following
requirements:


(1) Promptly repair, or compensate for, material dam- age resulting
from subsidence caused to any occupied  residential dwelling and
structures related thereto, or  non-commercial building due to
underground coal mining  operations. Repair of damage shall include
rehabilita- tion, restoration, or replacement of the damaged occu-
pied residential dwelling and structures related thereto,  or
non-commercial building. Compensation shall be pro- vided to the owner
of the damaged occupied residential  dwelling and structures related
thereto or non- commercial building and shall be in the full amount of
the  diminution in value resulting from the subsidence. Com- pensation
may be accomplished by the purchase, prior to  mining, of a
noncancellable premium-prepaid insurance  policy.


(2) Promptly replace any drinking, domestic, or resi- dential water
supply from a well or spring in existence 


prior to the application for a surface coal mining and  reclamation
permit, which has been affected by contami- nation, diminution, or
interruption resulting from under- ground coal mining operations.


Nothing in this section shall be construed to prohibit or  interrupt
underground coal mining operations.


(b) Regulations. Within one year after October 24, 1992,  the Secretary
shall, after providing notice and opportuni- ty for public comment,
promulgate final regulations to  implement subsection (a) of this
section.


30 U.S.C. s 1309a (1994). In order to implement this new  statutory
provision, the Secretary in 1993 proposed subsi- dence regulations
revising the subsidence regulations previ- ously promulgated under the
Mining Act. See 58 Fed. Reg.  50,174 (1993). After a notice and
comment period, the Secre- tary modified the proposed regulations and
issued them in  final form in 1995. See 60 Fed. Reg. 16,722 (1995).


II.


Appellant National Mining Association brought this action  in the
district court challenging 10 parts of the new regula- tions as
arbitrary and capricious, see 30 U.S.C. s 1276(a)(1);  5 U.S.C. s
706(2)(A), and moved for summary judgment.  The Secretary, along with
intervenor National Wildlife Feder- ation, filed cross-motions for
summary judgment, which the  district court granted. The Association
limits its appeal to  four of the district court's rulings. We


A.The Angle of Draw Presumption


The Association's most vigorous challenge is to the regula- tion
establishing a rebuttable presumption of causation:


If damage to any non-commercial building or occupied  residential
dwelling or structure related thereto occurs  as a result of earth
movement within an area determined 


by projecting a specified angle of draw from the outer- most boundary
of any underground mine workings to the  surface of the land, a
rebuttable presumption exists that  the permittee caused the damage.
The presumption will  normally apply to a 30-degree angle of draw.


30 C.F.R. s 817.121(c)(4)(i) (1998). As the agency explained,  the
angle of draw "is the angle of inclination between the  vertical at
the edge of the underground mine workings and  the point of zero
vertical displacement at the edge of a  subsidence trough." 60 Fed.
Reg. at 16,738. It "is one way  to define the outer boundary of
subsidence displacement that  may occur at the surface." Id.


Once the presumption is triggered, the burden shifts to the  mining
company to offer evidence that the damage is attribut- able to another
cause. The regulation suggests some exam- ples: that the "damage
predated the mining in question; the  damage was proximately caused by
some other factor or  factors and was not proximately caused by
subsidence; or the  damage occurred outside the surface area within
which subsi- dence was actually caused by the mining in question." 30 
C.F.R. s 817.121(c)(4)(iv).


Appellant claims that this presumption actually shifts the  burden of
proof to mining companies to show a negative-- that their operations
did not cause subsidence--and that such  a shift runs afoul of the
Administrative Procedure Act given  the agency's posture in such
situations as proponents of an  order. See 5 U.S.C. s 556(d) (1994);
Director, Office of  Workers' Compensation Programs, Dep't of Labor v.
Green- wich Collieries, 512 U.S. 267, 281 (1994). The government 
responds that the agency's regulation merely shifts the bur- den of
production not the burden of persuasion, and it is only  the latter
that the APA forbids. See id. at 279-80. Although  we recognize that
at a certain point along an evidentiary  continuum a shift in the
burden of production can become de  facto a shift in the burden of
persuasion, we do not think it is  necessary in this case to draw the
line. For a factual  presumption that causes a shift in the burden of
production  must be reasonable (as we explain below, this means


tially that the circumstances giving rise to the presumption  must
make it more likely than not that the presumed fact  exists, see
Secretary of Labor v. Keystone Coal Mining Corp.,  151 F.3d 1096,
1100-01 (D.C. Cir. 1998)). For two reasons,  the agency's presumption
fails that test. The first is that the  nature of subsidence evidence
that triggers the presumption  has become hopelessly confused in this
litigation, and the  second is that the geographical boundary in which
the pre- sumption obtains--the angle of the draw--is irrationally 


The regulation states that the presumption is employed  wherever damage
to a structure covered by the Energy  Policy Act "occurs as a result
of earth movement" within the  angle of the draw, 30 C.F.R. s
817.121(c)(4), which gives rise  to the question: What is the
conceptual relationship between  "subsidence" (which, it will be
recalled, the parties agree  refers to mining subsidence) and "earth
movement"? On  appeal, contrary to its position in the district court,
the  government explains that "earth movement" does not mean  any
earth movement but only "earth movement consistent  with subsidence"
and that any resulting damage to covered  structures (also necessary
to trigger the presumption) is alas  consistent with the kind of


Appellant cries foul. It claims the government cannot shift  the
meaning of the regulation during litigation. Before the  district
court the government appeared to argue that proof of  subsidence in
fact (that is, coal mining subsidence) was neces- sary to trigger the
presumption. It is not uncommon, howev- er, when an agency regulation
is challenged in a facial attack,  as Congress permits parties to do,
that the meaning of  disputed provisions does not appear clearly until
the case is  before the courts of appeals. We typically accept the
agen- cy's construction--which often eliminates or narrows the dis-
pute--because we recognize the agency is entitled to defer- ence as to
the meaning of its own regulation. Auer v.  Robbins, 519 U.S. 452,
462-63 (1997); Serono Lab. v. Shalala,  158 F.3d 1313, 1325 (D.C. Cir.
1998); Association of Bitumi- nous Contractors, Inc. v. Apfel, 156
F.3d 1246, 1251-52 (D.C. 


Cir. 1998); Paralyzed Veterans of Am. v. D.C. Arena L.P.,  117 F.3d
579, 584 (D.C. Cir. 1997), cert. denied sub nom.  Pollin v. Paralyzed
Veterans of Am., 118 S. Ct. 1184 (1998).  Yet, we are entitled to
expect that at least by the time of oral  argument the agency will
have settled on an interpretation  that reflects its "fair and
considered judgment," Auer, 519  U.S. at 462--and that such an
interpretation is understanda- ble.


The government assures us that, despite some vacillation, it  has come
to rest, but, unfortunately, if it has, we do not  understand its
conceptual resting point. Pressed at oral  argument to define just
what "earth movement consistent  with subsidence" means, the
government, with manifest circu- larity, explained that the term
refers to earth movement not  caused by non-subsidence (i.e., earth
movement not caused by  earthquakes, floods, etc.). Establishing the
cause of the  damage, however--whether subsidence or something
else--is  the whole purpose of the evidentiary presumption. Indeed, 
as appellant correctly observes, one of the ways in which a  mining
company rebuts the presumption is to produce evi- dence that the
damage was proximately caused by some  factor other than mining. See
30 C.F.R. s 817.121(c)(4)(iv).  It thus does not help to define the
trigger for the presump- tion in terms of the presumption's intended
result. In short,  we have no clue what "earth movement consistent
with subsi- dence" means and the government's efforts to enlighten us 


We, of course, cannot approve a regulatory presumption  that the
agency's lawyers cannot interpret in an intelligible  fashion. But
even if we did understand the relationship  between subsidence and
earth movement, as those terms are  used in the regulation, it could
not stand because the geo- graphical boundary of the area in which the
presumption  operates--the angle of the draw--is both arbitrary and
capri- cious. That is to say, the presumption simply does not serve 
as a reasonable proxy to explain subsidence damage to struc- tures.


Appellant contends that the record reveals that the kind of  subsidence
that occurs within the angle of draw (pure vertical 


subsidence) is not the kind of subsidence (differential vertical  and
horizontal displacement) that ordinarily results in dam- age to
surface structures. The very authors of the scientific  studies on
which the agency relied in its proposed rulemak- ing, the Association
points out, have specifically rejected the  predictive value of the
angle of draw. And, even this evi- dence does not support the agency's
decision to base a  nationwide presumption of causation on the angle
of draw.  The nationwide presumption is further deficient, it is
argued,  because it overlooks the key distinction between high extrac-
tion and partial extraction mining (damage to structures from  the
latter method is said to be unlikely); it ignores the critical 
variable of mining depth (the deeper the mine, the greater  surface
area is covered by the 30-degree angle of draw, yet  the less likely
is actual structural damage at the surface); and  it ignores other
non-subsidence causes of earth movement  that are just as likely to
cause damage to structures within  the angle of draw.1


The government's response is anemic. It emphasizes that  the regulation
permits a state regulatory authority to petition  the Department for a
different angle if it can demonstrate  that its proposed angle is more
reasonable, see 30 C.F.R.  s 817.121(c)(4)(i), and also permits a
mining company to  request a different site-specific angle if it too
could demon- strate a more reasonable calculation, see id.  s
817.121(c)(4)(ii). But the government does not claim--nor  could
it--that these safety valve provisions could save the  regulatory
presumption if we thought it unreasonable. As we  have said
repeatedly, an evidentiary presumption is "only  permissible if there
is a sound and rational connection be- tween the proved and inferred




__________

n 1 Appellant also claimed that the Department unlawfully relied  on
studies not mentioned in the proposed rule. But informal  rulemaking
does not contemplate a closed record; the government  is entitled to
rely on information not exposed to comment so long as  it is
supplementary. See generally Air Transport Ass'n of America  v. FAA,
1999 WL 110689, at *5-6 (D.C. Cir. Mar. 5, 1999). The real  problem
with the studies is that they are inadequate support for the 


fact renders the existence of another fact so probable that it is 
sensible and timesaving to assume the truth of [the inferred]  fact
... until the adversary disproves it." Keystone Coal  Mining, 151 F.3d
at 1100-01 (quoting Chemical Mfrs. Ass'n  v. Department of Transp.,
105 F.3d 702, 705 (D.C. Cir. 1997)  (quoting NLRB v. Curtin Matheson
Scientific, Inc., 494 U.S.  775, 788-89 (1990))) (emphasis added)
(internal citation and  internal quotation marks omitted) (alterations
in original).  "If there is an alternate explanation for the evidence
that is  also reasonably likely, then the presumption is irrational." 


We think the government has failed to justify its presump- tion. It has
not offered any support, scientific or otherwise,  that even begins to
establish that the angle of draw delimits  the surface area within
which it is logical or reasonable to  employ an evidentiary
presumption of causation. Indeed, the  government apparently concedes
that it is not supported by  available science. This is not surprising
since, as appellant  argues, science seems more supportive of the view
that the  angle of draw has nothing whatever to do with identifying 
subsidence-caused damage to structures. A leading textbook  in the
field, which the government paradoxically listed as  support for the
presumption, see 60 Fed. Reg. at 16,738,  defines the angle of draw in
such a way as to seriously  undermine (pun intended) the government's
position. See  Syd S. Peng, Coal Mine Ground Control 422-23 (2d ed.
1986)  (defining angle of draw, noting that it varies from 15 to 45 
degrees, and then stating: "The angle of draw is more or less  of
academic interest. Because the subsidence profile levels  off and
subsidence becomes very small far before it reaches  the edges of the
subsidence basin[,] from [a] structural dam- ages point of view, it is
practically meaningless.") (emphasis  added).


Nonetheless, the government thinks it sufficient to explain  that the
angle of draw is used merely "to define the bound- aries of the area
within which earth movement resulting from  subsidence, if any, will
most probably occur." But the real  question in using the angle of
draw to set the applicable 


boundaries is whether subsidence-caused damage to struc- tures within
the angle is more likely than not to occur. After  all, the mining
company's potential liability is for causing  damage to protected
structures, not for causing "earth move- ment resulting from
subsidence." Unless the government  can establish a likely connection
between the former and the  angle of draw, the presumption cannot


The agency rejected the suggestion that the presumption  be limited to
the so-called "angle of critical deformation"--a  smaller angle,
within the angle of draw, that measures the  inclination from the edge
of the underground mining area to  the surface point exhibiting the
"maximum tensile strain" or  stretching. See 60 Fed. Reg. at 16,738.
(Dr. Peng, a leading  expert in the field, estimates that the angle of
critical defor- mation is on average 10 degrees smaller than the angle
of  draw. See Peng at 423.) Although the government concedes  that
subsidence-caused damage to structures within the angle  of critical
deformation portion of the angle of draw is more  likely to occur than
in the portion of the angle of draw beyond  the angle of critical
deformation, it contends that its decision  to use the entire angle of
draw is justified on "possibility"  grounds--the larger angle defines
the "outer boundary of  subsidence displacement that may occur at the
surface."  (Neither in its brief nor in the preamble to the final
rule, see  60 Fed. Reg. at 16,738-39, we should note, has the govern-
ment offered any scientific support for even the possibility of 
subsidence-caused damage within the angle of draw.)


To impose a presumption of causation of damage on a party  based merely
on the possibility that the party caused the  damage is to convert a
factual presumption into a counterfac- tual presumption. Although the
government has never wa- vered from its insistence that the
presumption is a factual  one, we do not see how a counterfactual
procedural device  could be justified even as a matter of policy, see


Mack Sales & Serv., Inc. v. NLRB, 118 S. Ct. 818, 828 (1998),  since
the statute imposes liability only for causation. More- over, the
government simply has no response at all to the  devastating objection
that the angle of draw is an inherently  illogical measure since, as a
matter of geometry, the deeper  the mine the wider the angle. Yet, it
seems undisputed that  the likelihood of any structural damage on the
surface de- creases with the depth of the mine. Since the agency
recog- nized, in its preamble to the final rule, see 60 Fed. Reg. at 
16,740, that the depth and location of the mine (and the  amount of
coal extracted) are all factors that bear on the  likelihood of
subsidence-caused damage, the Department nev- er even adequately
explains why it wishes to employ any sort  of nationwide


Essentially the government argues that its presumption is  justified by
efficiency; it is easier to establish a mine's  liability. There are
limits to that justification, otherwise the  government could dispense
with enforcement proceedings  altogether. To be sure, we would be
obliged to defer to a  reasonable agency determination of
probabilities--including  predictions based on its own expertise and
policies. But we  see nothing of the sort here. We have no difficulty
conclud- ing that this regulation is both arbitrary and capricious 
because it is irrationally overbroad, and we therefore vacate  it.


B.Pre-Subsidence Survey


Appellant challenges the regulation requiring all applicants  for a
mining permit to conduct, inter alia, a pre-subsidence  "survey of the
condition of all non-commercial buildings or  occupied residential
dwellings and structures related thereto,  that may be materially
damaged or for which the reasonably  foreseeable use may be diminished
by subsidence, within the  area encompassed by the applicable angle of
draw." 30  C.F.R. s 784.20(a)(3) (1998). Appellant's principal
objection  is that, when promulgating this regulation in 1995, the
agency  failed adequately to explain its deviation from its prior
policy  not to require pre-subsidence surveys. The government re-
sponds with two internally inconsistent arguments: that the  change in
policy was justified (if not mandated) by the 


Energy Policy Act of 1992, and that the requirement of a pre-
subsidence survey of the condition of structures is not a  change of
position at all because the regulation has always  implicitly required
such a survey. We take this latter argu- ment as an alternative one
(though it would have been helpful  if counsel had designated it as
such). Even so, it is plainly  wrong, and we are surprised that the
government would  choose to advance it. It cannot seriously be
maintained that  prior to 1995 the regulation required a
pre-subsidence survey.  The government admits as much in describing
the pre- Energy Policy Act regulatory regime: beginning in 1983, 
"[i]nstead of conducting a pre-subsidence survey, the appli- cant was
now only required to identify any lands or struc- tures that could be
materially damaged by subsidence." And  in the preamble to the
proposed version of the current  regulation, the Secretary explained
that "the survey itself  [required by the prior regulation] is
proposed to be changed  from a mere inventory of structures, and
renewable resource  lands, to a survey of the condition of structures,
facilities, and  surface features." 58 Fed. Reg. at 50,179 (emphasis
added).  The government's argument that a pre-subsidence survey of 
the condition of structures has always been implicitly re- quired is
palpably in conflict with its own account of the  regulatory


Much the better argument is that the change in policy was  justified by
Congress' explicit instruction to the Secretary in  the Energy Policy
Act to promulgate regulations to imple- ment the new Act, which
conferred greater protection to  structures and land from
subsidence-caused damage. Once  again, however, the government
overplays its hand and sug- gests that Congress' instruction to
promulgate new regula- tions completely absolves the agency of the
requirement to  supply a reasoned explanation for its change in
policy. The  government relies for this proposition on our decision in
City  of Las Vegas v. Lujan, 891 F.2d 927 (D.C. Cir. 1989), in which 
we stated that "[a] change in congressional instructions, of  course,
absolves the Secretary from explaining why his policy  has changed, if
indeed it has," id. at 934. But Lujan involved  a specific
congressional instruction to take a precise agency 


action--issuing emergency regulations--more readily than  the
Secretary previously had seen fit to take. See id. The  Energy Policy
Act does not refer to pre-subsidence surveys  at all, and so we do not
see how Congress' general instruction  to implement statutory
protection of structures through a  repair or compensate obligation
absolves the government of  explaining its decision to require a
pre-subsidence survey that  it previously had opted against.


Be that as it may, the agency did actually say in the  preamble to the
final rule that the new policy was necessary  "to effectively
implement the requirements of the Energy  Policy Act," 60 Fed. Reg. at
16,730, and more specifically that  the information gathered was
"essential to establish a base- line against which the effects of
subsidence may be measured  and to ensure full implementation [of the
Energy Policy  Act]," id. at 16,729. Consistent with the notion that
the  Energy Policy Act's mandate justified the Secretary's deci- sion
to increase mining companies' information-gathering re-
sponsibilities, the agency limited the survey requirement to 
structures and water supplies protected by the Energy Policy  Act. See
id. at 16,730. Greater protection for structures  (albeit only through
a repair or compensate obligation) was  the main impetus of the Energy
Policy Act, and we think the  agency's reliance on that impetus is a
satisfactory explanation  for its change of policy.


Appellant also contends that the agency failed to respond  adequately
to comments that the regulation is overly burden- some, and that it
irrationally requires information about the  condition of structures
at the time of the permit application,  rather than at the time (often
years later) when mining  operations actually commence. In our view,
the agency has  said enough and its regulations are not unreasonable.
The  Secretary specifically responded to the comments complain- ing
about the cost of the survey by limiting the structures to  which the
requirement applied, and by modifying some of the  mapping
requirements of the survey. See id. We do not  agree with appellant,
moreover, that the timing of the survey  (pre-application as opposed
to pre-mining) is without purpose. 


As the government points out, the results of the pre- subsidence
survey are used to determine whether the appli- cant is also required
to submit a subsidence control plan with  the application. See 30
C.F.R. s 784.20(b). The agency  concluded that, based on its
experience in this area, "the  proposed format for the survey
information is the minimum  needed to adequately assess the need for a
subsidence control  plan." 60 Fed. Reg. at 16,730. The government also
explains  that the possible effects of subsidence is a relevant factor
in  its determination of whether to grant a permit in the first 
place. We see no reason why the agency should be precluded  from
requiring all of this information at the time of the  application just
because conditions might change before min- ing begins. As the
Secretary explained, the mining company  can always supplement
outdated information later in the  process. See 60 Fed. Reg. at


Nevertheless, the regulation as currently written must be  vacated
along with the first one discussed because it defines  the area within
which the pre-subsidence survey is required  by reference to the angle
of draw. The government did not  argue that the survey requirement
could be sustained inde- pendent of the angle of draw--and we do not
see how it could.


C.Planned Subsidence Minimization


The Association next challenges two provisions of the new  regulations
that impose an obligation on mining permittees  who use a "planned
subsidence" mining technique to minimize  subsidence damage.


If a permittee employs mining technology that provides  for planned
subsidence in a predictable and controlled  manner, the permittee must
take necessary and prudent  measures, consistent with the mining
method employed,  to minimize material damage to the extent
technological- ly and economically feasible to non-commercial
buildings  and occupied residential dwellings and structures related 


30 C.F.R. s 817.121(a)(2); see also 30 C.F.R. s 784.20(b)(7) 
(providing that mining companies required to submit a subsi-


dence control plan and projecting to use planned subsidence  must,
with certain exceptions, include "a description of meth- ods to be
employed to minimize damage from planned subsi- dence to
non-commercial buildings and occupied residential  dwellings and
structures related thereto"). Planned subsi- dence refers to mining
methods that make it possible to  predict the time and manner of the
resulting subsidence (one  such method is "longwall mining").


Appellant disputes the regulation's damage minimization  requirement
for planned subsidence on the ground that such  a requirement is
contrary to s 516(b)(1) of the Mining Act,  which provides that any
permit issued must


require the operator to adopt measures consistent with  known
technology in order to prevent subsidence causing  material damage to
the extent technologically and eco- nomically feasible, maximize mine
stability, and maintain  the value and reasonably foreseeable use of
such surface  lands, except in those instances where the mining tech-
nology used requires planned subsidence in a predicta- ble and
controlled manner....


30 U.S.C. s 1266(b)(1) (1994) (emphasis added).


Since Congress explicitly approved longwall mining, not- withstanding
that, by definition, it causes subsidence, appel- lant argues that the
regulation would frustrate Congress'  intent. The government's
minimization of damage require- ment, we are told, is merely a
paraphrase of the prevention of  damage requirement from which
longwall mining is exempt- ed. The government argues that it is
entitled to Chevron  deference in interpreting the statutory language
for the  phrase "predictable and controlled manner" can be interpret-
ed as a manner that restricts collateral damage. Appellant,  by
contrast, would read predictable and controlled manner as  not
imposing any separate obligation but as words that simply  describe
longwall mining. If we were interpreting the statute  de novo, we
might well agree that appellant has the better  argument. But we are
not. And although the government's  reading is a bit of a stretch, we
think it passes the Chevron  test. See Chevron U.S.A. Inc. v. Natural
Resources Defense  Council, Inc., 467 U.S. 837, 842-43 (1984).


D.Waivers


The Association's last challenge is to the regulation that  implements
the Energy Policy Act's "repair or compensate"  obligation. See 30
C.F.R. s 817.121(c)(2) ("The permittee  must promptly repair, or
compensate the owner for, material  damage resulting from subsidence
caused to any non- commercial building or occupied residential
dwelling or struc- ture related thereto that existed at the time of
mining.").  The Association asserts that the regulation is
unreasonable  "to the extent it purports to nullify prior agreements
between  owners of eligible structures and underground mine opera-
tors." In appellant's view, nothing in the Energy Policy Act  suggests
an intent to override such waiver agreements that  would otherwise be
binding under state common law. More- over, it is urged, if the
statute were read to authorize  abrogation of waiver agreements, it
would confer a windfall to  the landowner, and consequently might
constitute an uncon- stitutional taking of the mining company's


The thrust of appellant's argument focuses on the unfair- ness (and
asserted conflict with the statutory language)  caused by a "double
recovery" regulatory regime, under  which a landowner is compensated
pre-subsidence damage  (and possibly pre-Energy Policy Act) by selling
a waiver of  rights to the mining company, and then post-subsidence,
post- damage through an enforcement action under the Energy  Policy
Act. The Association contends that Congress could  not possibly have
intended such a result. At oral argument,  however, the government
stated unequivocally (which it did  not do in its brief or in the
preamble to the regulation) that  any compensation owed to a landowner
under the Act will  always be reduced by at least the amount
previously paid in a  contractual waiver of subsidence rights--both
pre-damage,  pre-Act waivers, and pre-damage, post-Act waivers.2 In




__________

n 2 In the preamble, to be sure, the Secretary stated that "[t]he  use
of pre- and post-subsidence agreements would be an acceptable  means
of fulfilling the requirement so long as the terms meet the 
requirement under paragraph 817.121(c)(2) that the permittee re- pair
or compensate any subsidence-related material damage to any 


er words, the value of the landowner's rights under the  federal
regime may well exceed (indeed typically would) the  present value of
whatever compensation the landowner re- ceived under the previous
legal climate. But the landowner  would not be entitled to a double
recovery. The govern- ment's oral clarification seems to strip
appellant's challenge of  its force and appellant waived rebuttal.
Nonetheless, the  Association's brief appeared to argue that such
waivers must  be honored fully, and that the set-off approach also is
incon- sistent with the Act.


If appellant means to deny any obligation to compensate  beyond the
amount a mining company originally paid the  landowner for the waiver,
no matter how it would compare to  the landowner's legal rights post
passage of the federal  statute, we reject its position. We previously
upheld the  government's limitation of the obligation to repair or
compen- sate for damage to structures only to the extent required by 
state law, see National Wildlife Fed'n v. Lujan, 928 F.2d at  457-59,
in part because the Mining Act at the time did not  explicitly impose
an obligation to compensate for such dam- age, see id. at 458 n.3. The
Energy Policy Act imposes just  such an obligation on its face. See 30
U.S.C. s 1309a(a)(1)  ("Compensation shall be provided to the owner of
the dam- aged occupied residential dwelling and structures related 
thereto or non-commercial building and shall be in the full  amount of
the diminution in value resulting from the subsi- dence.") (emphasis
added). It is therefore wholly consistent  with the statute--indeed it
might even be mandated--for the  Secretary to require the mining
companies further to com- pensate landowners for damages to which the
new federal law  entitled them. That is not to say, of course, that a
landowner  and mining company would be barred from entering into a 
post-Act fair contract based on anticipated damages that 




__________

n non-commercial building or occupied residential dwelling or related 
structure." 60 Fed. Reg. at 16,735 (emphasis added). Although the 
Secretary did not make clear that this policy applies to both pre-Act 
and post-Act waivers, the government's position at oral argument  was
that it does. We accept the agency's interpretation of its own 
regulation.


would extinguish the landowner's claim if the damages turned  out to
be more than anticipated. But we do not understand  the agency to deny
that.


As for appellant's takings challenge, the argument is insuf- ficiently
developed to warrant much attention. Appellant  seems to assume that
interference with contract rights is a  per se taking, despite the
well-settled rule that "legislation  [that] disregards or destroys
existing contractual rights does  not always transform the regulation
into an illegal taking."  Connally v. Pension Benefit Guar. Corp., 475
U.S. 211, 224  (1986). To develop a real takings argument, appellant
would  be compelled to demonstrate why "(1) the economic impact of 
the regulation on the claimant; (2) the extent to which the 
regulation has interfered with investment-backed expecta- tions; and
(3) the character of the governmental action," id.  at 225 (quoting
Penn Cent. Transp. Co. v. City of New York,  438 U.S. 104, 124 (1978))
(internal quotation marks omitted),  warrant the conclusion that an
unconstitutional taking neces- sarily would result. See also Eastern
Enters. v. Apfel, 118  S. Ct. 2131, 2146-49 (1998) (reviewing takings
precedents and  concluding that "Congress has considerable leeway to
fashion  economic legislation, including the power to affect
contractual  commitments between private parties"). As we understand 
appellant's argument, based solely on the possibility that the 
government's alteration of a mining company's previously  settled
contract rights "could expose" the government to  liability for an
unlawful taking, we should construe the Ener- gy Policy Act to mandate
an exemption in the Secretary's  regulations for private waiver
agreements. But the avoid- ance canon is not applicable when the
statute or regulation  would effect a taking, if at all, only in
certain situations. See  United States v. Riverside Bayview Homes,
Inc., 474 U.S.  121, 127-28 (1985); Bell Atlantic Tel. Cos. v. FCC, 24
F.3d  1441, 1445 (D.C. Cir. 1994); Railway Labor Executives' Ass'n  v.
United States, 987 F.2d 806, 816 (D.C. Cir. 1993). We will  not
"frustrate[ ] permissible applications of a statute or regu- lation,"
Riverside Bayview Homes, 474 U.S. at 128, based on  the
specter--rather implausible from what we can tell now-- of a future


* * * *


For the foregoing reasons, we reverse the district court in  part and
affirm in part.