Application and Permit Information Requirements; Permit Eligibility; Definitions of Ownership and Control; the Applicant/Violator System; Alternative Enforcement

DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Parts 701, 724, 750, 773, 774, 775, 778, 785, 795, 817, 840, 842, 843, 846, 847, 874, 875, 903, 905, 910, 912, 921, 922, 933, 937, 939, 941, 942, and 947

RIN 1029-AB94

Application and Permit Information Requirements; Permit Eligibility; Definitions of Ownership and Control; the Applicant/Violator System; Alternative Enforcement

AGENCY:

Office of Surface Mining Reclamation and Enforcement, Interior.

ACTION:

Final rule.

SUMMARY:

We, the Office of Surface Mining Reclamation and Enforcement (OSM), are publishing final rules to amend application and permit information requirements and to redesign permit eligibility criteria under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act), as amended. In this final rule, we are also amending related provisions in our regulations to incorporate changes for internal consistency. This rule fulfills our April 21, 1997, commitment to undertake new rulemaking, including public notice and comment, on ownership and control and related regulatory issues in the wake of the January 31, 1997, decision of the United States Court of Appeals for the District of Columbia Circuit.

This final rule also reflects the findings in another decision of the United States Court of Appeals. On May 28, 1999, the appeals court issued a ruling shortly after the initial close of the comment period for the proposed rule upon which this final rulemaking is based. We later found it advisable to reopen and extend the comment period in order to seek public comment on the effects of the May 1999 decision. As a result, we modified the provisions in this final rule in order to be consistent with the 1999 decision. Thus, this final rule is fully consistent with both court decisions.

EFFECTIVE DATE:

January 18, 2001.

FOR FURTHER INFORMATION CONTACT:

Earl D. Bandy, Jr., Office of Surface Mining Reclamation and Enforcement, Applicant/Violator System (AVS) Office, 2679 Regency Road, Lexington, Kentucky 40503. Telephone: (859) 260-8427 or (800) 643-9748. Electronic Mail:

ebandy@osmre.gov.

Additional information concerning OSM, this rule, and related documents may be found on OSM's Internet home page (Internet address:

http://www.osmre.gov

) and on our AVS Office's Internet home page (Internet address:

http://www.avs.osmre.gov

).

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What events precipitated this rulemaking?

II. How did we obtain and consider public input to assist in developing this final rule?

III. How does the final rule differ stylistically from the proposed rule?

IV. Derivation Table

V. What general comments did we receive on the proposed rule and how have we addressed these comments in this final rule?

A. Withdraw the proposal

B. Compliance with the Administrative Procedure Act

C. Public participation

D. Oversight

E. Plain language

F. Other general comments

VI. In what sections did we propose revisions, what specific comments did we receive, and how have we addressed these comments in this final rule?

A. Section 701.5—Definitions

B. Section 724.5—Definitions

C. Section 773.5—Definitions

D. Section 773.10—Information collection

E. Section 773.15—Review of permit applications

F. Section 773.16—Permit eligibility determination

G. Section 773.17—Permit conditions

H. Section 773.18—Additional permit conditions

I. Section 773.20—Improvidently issued permits: General procedures

J. Section 773.21—Improvidently issued permits: Rescission procedures

K. Section 773.22—Identifying entities responsible for violations

L. Section 773.23—Review of ownership or control and violation information

M. Section 773.24—Procedures for challenging a finding on the ability to control a surface coal mining operation

N. Section 773.25—Standards for challenging a finding or decision on the ability to control a surface coal mining operation

O. Section 774.10—Information collection

P. Section 774.13—Permit revisions

Q. Section 774.17—Transfer, assignment, or sale of permit rights

R. Section 778.5—Definitions

S. Section 778.10—Information collection

T. Section 778.13—Legal identity and identification of interests

U. Section 778.14—Violation information

V. Section 842.11—Federal inspections and monitoring

W. Section 843.5—Definitions

X. Section 843.11—Cessation orders

Y. Section 843.21—Procedures for improvidently issued State permits

Z. Section 843.24—Oversight of State permitting decisions with respect to ownership or control or the status of violations

AA. Part 846—Alternative enforcement

BB. Miscellaneous cross-references

VII. What effect will this rule have in Federal program States and on Indian lands?

VIII.How will this rule affect State programs?

IX. Procedural Mattersy

A. Executive Order 12866: Regulatory Planning and Review

B. Regulatory Flexibility Act

C. Small Business Regulatory Enforcement Fairness Act

D. Unfunded Mandates Reform Act of 1995

E. Executive Order 12630: Takings

F. Executive Order 13132: Federalism

G. Executive Order 12988: Civil Justice Reform

H. Paperwork Reduction Act

I. National Environmental Policy Act of 1969 and Record of Decision

I. What Events Precipitated This Rulemaking?

The National Mining Association (NMA) and the National Wildlife Federation filed suit challenging the validity of three of OSM's rules implementing section 510(c) of SMCRA, 30 U.S.C. 1260(c). These rules are generally known as the 1988 ownership and control rule, the 1989 permit information rules and the 1989 improvidently issued permits rule, which is also referred to as the permit rescission rule. In separate decisions dated August 31, 1995, the U.S. District Court for the District of Columbia upheld the three challenged rules in their entirety.

See National Wildlife Federation

v.

Babbitt

, Nos. 88-3117, 88-3464, 88-3470 (consolidated) (D.D.C. Aug. 31, 1995);

National Wildlife Federation

v.

Babbitt

, Nos. 89-1130, 89-1167 (consolidated) (D.D.C. Aug. 31, 1995);

National Wildlife Federation

v.

Babbitt

, Nos. 89-1751, 89-1811 (consolidated) (D.D.C. Aug. 31, 1995).

NMA appealed the rulings and, on January 31, 1997, the U.S. Court of Appeals for the District of Columbia Circuit reversed the district court's decisions and invalidated the three sets of rules on narrow grounds.

See National Mining Association

v.

U.S. Department of the Interior

, 105 F.3d 691 (D.C. Cir. 1997) (

NMA

v.

DOI I

). The appeals court held that the clear language of section 510(c) of SMCRA, 30 U.S.C. 1260(c), authorizes regulatory authorities to deny a permit only on the basis of violations of “any surface coal mining operation owned or controlled by the applicant.”

NMA

v.

DOI I

, 105 F.3d at 693-94. Because OSM's 1988 ownership and control rule also allowed regulatory authorities to deny a permit on the basis of violations of any person who owned or controlled the applicant, the appeals court invalidated that rule in its entirety. In addition, the court held that because OSM's permit information and permit rescission rules

were “centered on the ownership and control rule * * *, they too must fall.”

Id.

at 696.

While the court of appeals identified only one specific defect with the 1988 and 1989 rules, it nonetheless invalidated the three sets of rules in their entirety. This had the effect of invalidating many provisions of the regulations to which the court expressed no specific objection. At the same time, nothing in the court's decision eliminated the responsibility of OSM and State regulatory authorities to implement the permit eligibility requirements of section 510(c), 30 U.S.C. 1260(c). This meant that OSM and the States faced making permitting decisions required by the Act without any regulations to flesh out the statutory directive. The appeals court's action created a gap in the regulatory program and a great deal of uncertainty among State regulatory authorities about how to continue to meet their responsibilities to determine who was eligible to receive a permit under section 510(c), 30 U.S.C. 1260(c).

Following the appeals court's decision, we made adjustments in our process for responding to regulatory authorities' requests for permitting recommendations from our Applicant/Violator System (AVS). In each case, before we offered a permitting recommendation to support the system recommendation, we determined if the recommendation would be consistent with the court's decision. In those cases where it would have been inconsistent,

i.e.,

where the recommendation would be based on the violations of those who owned or controlled the applicant, we informed the regulatory authority that we could no longer recommend that it deny the permit.

As an initial regulatory step to remove the uncertainty created by the decision and to ensure there would be no lapse in permitting provisions under approved State programs, we published an interim final rule (IFR) on an emergency basis on April 21, 1997. See 62 FR 19451 (1997). We published the IFR to implement the Court of Appeals' decision in

NMA

v.

DOI I

and to close the regulatory gap created by that decision. In the IFR, we removed the portions of the 1988 and 1989 rules which were inconsistent with the appeals court's interpretation of SMCRA in

NMA

v.

DOI I

. Most significantly, the IFR did not authorize OSM to deny permits based on outstanding violations of an applicant's owners and controllers. Because the emergency publication of the IFR did not include public notice and opportunity for comment, we stated in the preamble to the IFR that we intended to replace the IFR through rulemaking conducted in accordance with standard notice and comment procedures under the Administrative Procedure Act. In honoring this commitment, we published proposed rules on December 21, 1998. See 63 FR 70580 (1998).

In June 1997, NMA filed suit in the U.S. District Court for the District of Columbia, challenging the IFR on broad grounds. On June 15, 1998, the district court issued a decision upholding the IFR in its entirety.

National Mining Association

v.

Babbitt

, No. 97-1418 (AER) (D.D.C. June 15, 1998).

On May 28, 1999, the U.S. Court of Appeals for the District of Columbia Circuit issued its decision in NMA's appeal of the district court's ruling.

National Mining Association.

v.

U.S. Department of the Interior

, 177 F.3d 1 (D.C. Cir. 1999) (

NMA

v.

DOI II

). The court agreed with OSM that section 510(c) of SMCRA, 30 U.S.C. 1260(c), allows an applicant to be held accountable for violations cited at operations that the applicant owns or controls, including “limitless downstream violations” at operations indirectly owned or controlled by an applicant through intermediary entities.

Id.

at 4-5. The court agreed with NMA, however, that “[f]or violations of an operation that the applicant ‘has controlled’ but no longer does, * * * the Congress authorized permit-blocking only if there is ‘a demonstrated pattern of willful violations’ ” under section 510(c) of SMCRA.

Id.

at 5.

Next, the court addressed NMA's challenge to certain of the IFR's presumptions of ownership or control. At 30 CFR 773.5(b)(1) through (6), the IFR contains six separate presumptions of ownership or control. If subject to one of the presumptions, the applicant (or other person subject to the presumption) could attempt to rebut the presumption by demonstrating that he or she “does not in fact have the authority directly or indirectly to determine the manner in which the relevant surface coal mining operation is conducted.” 30 CFR 773.5(b). NMA challenged four of these presumptions, which applied when a person: (1) was an officer or director of an entity (§ 773.5(b)(1)); (2) had the ability to commit the financial or real property assets or working resources of an entity (§ 773.5(b)(3)); (3) was a general partner in a partnership (§ 773.5(b)(4)); or (4) owned 10 through 50 percent of an entity (§ 773.5(b)(5)). NMA did not challenge the presumptions pertaining to being the operator of a surface coal mining operation (§ 773.5(b)(2)) or owning or controlling coal to be mined by another person and having the right to receive such coal after mining or having authority to determine the manner in which that person or another person conducts a surface coal mining operation (§ 773.5(b)(6)). Therefore, the court did not rule on their validity.

NMA

v.

DOI II

, 177 F.3d at 6 n.6.

In addressing NMA's challenge to the presumptions, the court described a general standard for evaluating the validity of rebuttable presumptions and then applied that standard to the four rebuttable presumptions challenged by NMA. The court found two of the challenged ownership or control presumptions—having the ability to control the assets of an entity and being a general partner in a partnership—to be “well-grounded.”

Id.

at 7. However, the court agreed with NMA that OSM cannot presume that officers and directors or 10 through 50 percent shareholders are controllers of mining operations.

Id.

at 6.

On the applicability of the 5-year statute of limitations at 28 U.S.C. 2462, the court agreed with OSM that the section 2462 limitations period does not apply to violations when determining permit eligibility under section 510(c) of SMCRA, 30 U.S.C. 1260(c).

Id.

at 7-8. However, the court agreed with NMA that the rule was impermissibly retroactive in its effect to the extent it authorized permit denials based on indirect control in cases where

both

the assumption of indirect control and the violation occurred before November 2, 1988, the effective date of OSM's 1988 ownership and control rule.

Id.

at 8.

NMA also challenged the IFR's permit application information provisions, which required like our previous rules, an applicant to submit information in addition to the information expressly required by sections 507 and 510(c) of SMCRA, 30 U.S.C. 1257 and 1260(c). The court agreed with OSM that SMCRA's information requirements “are not exhaustive” and that OSM can require the submission of additional information “needed to ensure compliance with the Act.”

Id.

at 9.

Finally, on NMA's challenge to the IFR's suspension and rescission provisions relative to improvidently issued permits, the court agreed with OSM that section 201(c) of SMCRA, 30 U.S.C. 1211(c), expressly authorizes OSM to suspend or rescind improvidently issued permits. In addition to that express authority, the court also found that OSM retained “implied” authority to suspend or rescind improvidently issued permits “because of its express authority to deny permits in the first instance.”

Id.

at 9. However, the court decided that OSM

may only order cessation of State-permitted operations in accordance with the procedures established under section 521 of SMCRA, 30 U.S.C. 1271. Specifically, OSM may order immediate cessation of a State-permitted operation if the operation poses an “imminent danger to the health or safety of the public, or is causing, or can reasonably be expected to cause significant, imminent environmental harm * * *” SMCRA section 521(a)(2), 30 U.S.C. 1271(a)(2). Absent these circumstances, OSM may order cessation of a State-permitted operation only in accordance with section 521(a)(3), which includes the requirements to: (1) Provide a notice of violation to the permittee or his agent; (2) establish an abatement period; (3) provide opportunity for a public hearing; and (4) make a written finding that abatement of the violation has not occurred within the abatement period.

Id.

at 9-10; SMCRA at section 521(a)(3), 30 U.S.C. 1271(a)(3).

II. How Did We Obtain and Consider Public Input To Assist in Developing This Final Rule?

In June of 1997, a team of Department of the Interior employees met with State regulatory authorities to discuss rulemaking options. We also sought input from citizens and the regulated industry. Subsequently, we decided to reevaluate all aspects of our regulations pertaining to ownership and control and related issues.

On October 29, 1997, we published an Advance Notice of Proposed Rulemaking in the

Federal Register

. In the notice, we committed to hold public meetings and solicit comments from all interested parties on a wide range of topics related to ownership and control, with the ultimate goal of proposing new rules. See 62 FR 56139 (1997).

We conducted outreach from October 29, 1997, through January 16, 1998. We invited approximately 900 people and organizations to participate in the outreach effort. We provided them with an issue paper to use as the basis to elicit ideas, comments, and suggestions on potential regulatory topics and issues. Seventy people attended seven public meetings held in different locations throughout the United States. We also received written comments from some parties. During the outreach period, we offered to meet separately with any person or group wanting such a meeting. As a result of our offer, members of the team also met with an industry association and held individual discussions with several environmental advocates.

At the conclusion of the outreach, the team began to develop rulemaking options on many regulatory provisions related to ownership and control. The team continued its discussions with State regulatory authorities to keep them informed of our progress. A meeting with the States was held January 28 through 30, 1998, to discuss the results of the outreach.

We published a proposed rule for public review and comment on December 21, 1998 (63 FR 70580). We originally scheduled the comment period to close on February 19, 1999. In response to requests, we reopened the comment period from February 23, 1999 to March 25, 1999 (64 FR 8763); from March 31, 1999 to April 15, 1999 (64 FR 15322); and from May 4, 1999 to May 10, 1999 (64 FR 23811). On June 7, 2000, we reopened and extended the comment period to July 7, 2000 (65 FR 36097) in order to obtain input from the public on the effects of

NMA

v.

DOI II.

During the comment period, we received separate requests from two State associations, an industry association, and representatives of several environmental organizations to meet with the team to ask questions about the proposal. We met with representatives of the two State associations, the industry association, and the representatives from environmental organizations (via a telephone conference call). A summary of each meeting is recorded in the Administrative Record for this rulemaking.

We received 103 comment documents specific to the proposed rule: 18 from private citizens, 36 from companies and associations affiliated with the coal mining industry, 31 from environmental advocates and organizations, and 18 from Federal, State, and local government entities and associations. Since no one requested a public hearing, we did not hold a hearing. In developing the final rule, we considered all comments that were germane to the proposed rule. In this preamble, we discuss how we modified certain concepts and provisions in response to comments and the

NMA

v.

DOI II

decision. We also explain the disposition of those comments that did not result in a change from the proposed rule.

III. How Does the Final Rule Differ Stylistically From the Proposed Rule?

On June 1, 1998, the President issued an Executive Memorandum requiring the use of plain language in all proposed and final rulemaking documents published after January 1, 1999. The memorandum provides the following description of plain language.

Plain language requirements vary from one document to another, depending on the intended audience. Plain language documents have logical organization, easy-to-read design features, and use:

• Common, everyday words, except for necessary technical terms;

• You and other pronouns;

• The active voice; and

• Short sentences.

On June 10, 1998, the Office of the Secretary of the Interior issued a memorandum requiring the immediate use of plain language in proposed and final rulemaking documents. We met this requirement by incorporating plain language principles to an even greater extent in this final rule than in the proposed rule.

The plain language principles, to the extent they were used in the proposed rule, generated a substantial number of comments. We address two of the comments here regarding the use of pronouns. One commenter asked, regarding proposed § 846.1, if “we” means only OSM, and whether this means the States do not have to use alternative enforcement or only have to use it on Federal lands. Another commenter asked, regarding proposed § 774.13(e), does “us” mean OSM if a State has not yet adopted a counterpart? In this preamble, “we”, “our”, and “us” refer to OSM, unless otherwise stated. In our rule language the pronouns “we”, “our” and “us” refer to both the Federal and State regulatory authorities, or whichever one applies in the specific situation, generally OSM for Federal programs or the State regulatory authority for an approved State program, unless otherwise indicated.

We also note that we use several terms with respect to the temporal aspect of this rulemaking. In this rulemaking, we refer to “previous,” “existing,” “proposed,” and “final” rules and regulations. “Previous” regulations are those that, once this rulemaking is effective, will no longer exist. “Existing” regulations are those that are unaffected by this rulemaking. “Proposed” regulations are those provisions we published in our December 21, 1998, proposed rule. “Final” rule and “final” regulations refer to this rulemaking, including existing regulations that are redesignated in this rulemaking.

The rest of the comments we received on plain language issues are discussed in section V.E. of this preamble.

IV. Derivation Tables

Following are the Derivation Tables for this final rule. The Derivation Tables provide a useful tool for ascertaining in

which sections our final provisions were proposed (if applicable) and where our previous, analogous provisions existed (if applicable). When two asterisks (**) appear in the “proposed rule” column, it means we retained an existing section or provision, verbatim (or nearly verbatim if only plain language principles were applied), but redesignated the section or provision in this final rule for organizational purposes. Three asterisks (***) in the “proposed rule” column means the final provision was not proposed, but that we added the provision: (1) In response to comments, or (2) in response to the decision in

NMA

v.

DOI II,

or (3) because a provision proposed to be removed is continued in this final rulemaking, or (4) because the provision is needed for

internally consistency

with other adopted provisions.

Part 701

Final rule

Proposed rule

Previous regulations

§ 701.5

§ [as indicated below]

§ [as indicated below].

Applicant/Violator System or AVS

§ 701.5 Applicant/Violator System or AVS

§ 773.5 Applicant/Violator System or AVS.

Control or controller

§ 778.5(a)(1) through (a)(8) and 778.5(b)(2) Control

§ 773.5 Owned or controlled and Owns or controls.

Knowing or knowingly

§ 701.5 Knowing or knowingly

§ 724.5 and 846.5 Knowingly.

Own, owner, or ownership

§ 778.5(b)(1) Ownership

§ 773.5 Owned or controlled and Owns or controls.

Successor in interest*

§ 701.5 Successor in interest

§ 701.5 Successor in interest.

Violation

§ 701.5 Violation notice

§ 773.5 Violation notice.

Violation, failure or refusal

§ 846.5 Violation, failure, or refusal

§ 724.5 and 846.5 Violation, failure or refusal.

Violation notice

§ 701.5 Violation notice

§ 773.5 Violation notice.

Willful or willfully

§ 701.5 Willful or willfully

§ 724.5 and 846.5 Willfully.

Willful violation is removed

Willful violation proposed to be removed

§ 701.5 Willful violation.

* Successor in interest is unchanged from the previous definition.

Final Part 724

Final rule

Proposed rule

Previous regulations

§ 724.5 is removed

§ [as indicated below]

§ 724.5 Definitions.

§ 701.5 Knowing or knowingly

Knowingly.

§ 846.5 Violation, failure, or refusal.

Violation, failure, or refusal

§ 701.5 Willful or willfully

Willfully.

Final Part 773

Final rule

Proposed rule

Previous regulation

§ 773.3

§ 773.10

§ 773.10.

(a)

(a)

(a).

(b)

(b)

(b).

§ 773.4

(**)

§ 773.11.

§ 773.5

(**)

§ 773.12.

§ 773.6

(**)

§ 773.13.

§ 773.7

(**)

§ 773.15.

(a)

(**)

§ 773.15(a)(1).

(b)

(**)

§ 773.15(a)(2).

§ 773.8

(***)

(a)

§§ 773.15(b)(1), (b)(2) and (b)(3)

(b)

§ 773.15(b)(1)

§ 773.22(d).

(b)(1)

§ 773.15(b)(1)

§ 773.22(d).

(b)(2)

§ 773.22(c)

§ 773.23(a)(2).

(c)

§ 773.22(c)

§ 773.22(d).

§ 773.9

§ 773.15(b)

§ 773.22.

(a)

§ 773.15(b)(1)

§ 773.22(a).

(b)

§ 773.15(a)(3)

§ 773.10

§ 773.15(b)(2)

§ 773.22(a).

(a)

§ 773.15(b)(2)(i)

§ 773.22(a).

(b)

§§ 773.15(a)(3) and (b)(2)(ii)

§ 773.22(b).

(c)

§ 773.15(b)(2)(iii)

§ 773.22(b).

§ 773.11

§ 773.15(b)(3)

§ 773.23.

(a)

§ 773.15(b)(3)

§ 773.23(a).

(a)(1)

§ 773.(b)(3)(i)(A)

§ 773.23(a)(1).

(a)(2)

§ 773.15(b)(3)(i)(A)

§ 773.23(a).

(a)(3)

§ 773.15(b)(3)(i)(A)

§§ 773.23(a)(1) and (b).

(a)(4)

§ 773.15(b)(3)(i)(A)

§§ 773.159(b)(1) and 773.23(a).

(b)

§§ 773.15(a)(3) and (b)(3)(i)(A)

§ 773.23(a).

§ 773.12

§ 773.16

§ 773.15(b).

(a)

§ 773.16(a)

§ 773.15(b)(1).

(a)(1)

§ 773.15(b)(3)(i)(B)

§ 773.15(b)(1).

(a)(2)

(***)

(a)(3)

(***)

(b)

(***)

(c)

§ 773.15(b)(i)(D)

§ 773.15(b)(3).

(d)

§ 773.15(e)

§ 773.15(e).

(e)

§ 773.16(a)(2)

§ 773.13

(**)

§ 773.15(b)(4).

(a)

(**)

§§ 773.15(b)(4) and (b)(4)(i)(B).

(a)(1)

(**)

§ 773.15(b)(4)(i)(A).

(a)(2)

(**)

§ 773.15(b)(4)(i)(C).

(a)(2)(i)

instruction #8.d

§ 773.15(b)(4)(i)(C)(

1

).

(a)(2)(ii)

(**)

§ 773.15(b)(4)(i)(C)(

2

).

(b)

(**)

§ 773.15(b)(4)(ii).

(b)(1)

(**)

§ 773.15(b)(4)(ii)(A).

(b)(2)

(**)

§ 773.15(b)(4)(ii)(B).

(b)(3)

(**)

§ 773.15(b)(4)(ii)(C).

§ 773.14

§ 773.16(b)

§§ 773.15(b)(1) and (b)(2).

(a)

§ 773.16(b)

§§ 773.15(b)(1) and (b)(2).

(a)(1)

§§ 773.16(b) and (b)(1)(ii)

§§ 773.15(b)(1) and (b)(2).

(a)(2)

§ 773.15(b)(3)(i)(C)

(b)

§§ 773.16(b)

§ 773.15(b)(2).

(b)(1)

(***)

§ 773.15(b)(2).

(b)(2)

§§ 773.16(b)(3) and 773.15(b)(3)(i)(B)(

1

)

(b)(3)

(***)

(b)(3)(i)

(***)

(b)(3)(ii)

(***)

(b)(4)

§ 773.15(b)(3)(i)(B)(

2

)

§ 773.15(b)(1)(ii).

(c)

§ 773.20(b)

§ 773.20(a) and (b).

(c)(1)

§ 773.16(b)(2)(iii)

§ 773.20(b)(1)(ii)(A).

(c)(2)

§§ 773.20(b)(2)(ii) and (b)(3)

§ 773.20(b)(1)(ii)(B).

(c)(3)

§ 773.15(b)(3)(i)(B)(

2

)

§ 773.15(b)(1)(ii).

(c)(4)

(***)

§ 773.15

(**)

§ 773.15(c).

(a)

(**)

§ 773.15(c)(1).

(n)

§ 773.15(a)(3)

§ 773.21

§ 773.20

§ 773.20.

(a)

§§ 773.20(a) and (b)(1)

§§ 773.20(a) and (b)(1)(i).

(b)

§ 773.20(b)

§ 773.20(b).

(b)(1)

§ 773.20(b)(3)

§ 773.20(b)(2)(ii).

(b)(2)

§ 773.20(b)(2)(i)

§ 773.20(b)(1)(ii)(A).

(b)(3)

§ 773.20(b)(2)(i)

§ 773.20(b)(1)(ii)(A).

(c)

§ 773.21

§ 773.21.

(c)(1)

§ 773.21

§ 773.21.

(c)(2)

(***)

(d)

§§ 773.21(a)(1) thru (a)(5)

§§ 773.21(a) and (a)(1) thru (a)(4).

(e)

(***)

§§ 773.20(b)(2) and (b)(2)(i).

§ 773.22

§§ 773.20 and 773.21

§§ 773.20 and 773.21.

(a)

§ 773.21

§ 773.20(c)(2).

(a)(1)

§ 773.21(a)

§ 773.20(a).

(a)(2)

(***)

(b)

§ 773.21(a)

§ 773.21(a).

(c)

§ 773.21(a)

§ 773.21(a).

(d)

(***)

(e)

§ 773.20(c)(2)

§ 773.20(c)(2).

(f)

§ 773.20(c)(2)

§ 773.21.

(g)

(***)

(h)

§ 773.20(c)(2)

§ 773.20(c)(2).

§ 773.23

§ 773.21(a)

§ 773.21(a)(2).

(a)

§ 773.21(a)(2)

§ 773.21(a)(4).

(a)(1)

§ 773.21(a)(4)

§ 773.21(a)(1).

(a)(2)

§ 773.21(a)(1)

§ 773.21(a)(3).

(a)(3)

§ 773.21(a)(3)

§ 773.21(a)(3).

(a)(4)

§ 773.21(a)(3)

§ 773.21(b).

(a)(5)

§ 773.21(b)

§ 773.21(b).

(a)(6)

§ 773.21(a)(5)

(b)

(***)

(c)

§ 773.21(b)

§ 773.21(b).

(c)(1)

§ 773.21(b)

§ 773.21(b).

(c)(2)

(***)

(d)

§ 773.20(c)(2)

§ 773.20(c)(2).

§ 773.24 is removed

§ 773.24

§ 773.24.

§ 773.25

§ 773.24(a)

§ 773.24(a)(1).

(a)

§ 773.24(a)

§ 773.24(a)(1).

(b)

§ 773.24(a)

(c)

§ 773.24(a)

§ 773.24(a)(1).

§ 773.26

§ 773.24(b)

§ 773.24(b).

(a)

§ 773.24(b)

§ 773.24(b).

(a)(1)

§ 773.25(b)(2)

§ 773.24(b).

(a)(2)

§ 773.25(b)(3)

§ 773.24(b).

(b)

§ 773.24(d)

(c)

§§ 773.25(b)(1) and (b)(2)

§§ 773.25(b)(1) and (ii).

(d)

(***)

§ 773.27

§ 773.25(c)

§ 773.25(c)(1).

(a)

§ 773.25(c)(2)

§ 773.25(c)(1)

(a)(1)

§ 773.25(c)(2)

§ 773.25(c)(1)(i)

(a)(2)

§ 773.25(c)(2)

§ 773.25(c)(1)(i).

(b)

§ 773.25(c)(3)

§ 773.25(c)(2).

(c)

§ 773.25(c)(3)(i)

§ 773.25(c)(2).

(c)(1)

§ 773.25(c)(i)(A)

§ 773.25(c)(2)(i)(A).

(c)(2)

§ 773.25(c)(i)(B)

§ 773.25(c)(2)(i)(B).

(c)(3)

§ 773.25(c)(3)(i)(C)

§ 773.25(c)(2)(i)(C).

(c)(4)

§ 773.25(c)(3)(i)(D)

§ 773.25(c)(2)(i)(D).

(c)(4)(i)

§ 773.25(c)(3)(i)(D)

§ 773.25(c)(2)(i)(D).

(c)(4)(ii)

§ 773.25(c)(3)(i)(D)

§ 773.25(c)(2)(i)(D).

(c)(4)(iii)

§ 773.25(c)(3)(i)(D)

§ 773.25(c)(2)(i)(D).

§ 773.28

§ 773.24(c)

§ 773.24(c).

(a)

§ 773.24(c)(1)

§ 773.24(c).

(b)

§ 773.24(c)(2)

§ 773.24(d)(2)(i).

(b)(1)

§ 773.24(c)(2)

§ 773.24(d)(2)(i).

(b)(12

§ 773.24(c)(2)

§ 773.24(d)(2)(i).

(c)

§ 773.24(c)(2)

§ 773.24(d)(2)(i).

(d)

(***)

(e)

§ 773.24(c)(3)

§ 773.24(d)(2)(ii).

(f)

§ 773.25(d)

§ 773.24(d).

** Section/provision redesignation only. This section was not redesignated in the proposed rule.

*** This section/provision was added at the final rule stage. A more detailed explanation of this notation appears at the beginning of section IV.B. of this preamble.

Final Part 774

Final rule

Proposed rule

Previous regulation

§ 774.1

* * *

§ 774.1.

§ 774.9

§ 774.10

§ 774.10.

(a)

(a)

(a).

(b)

(b)

(b).

§ 774.10

( * * )

§ 774.11.

§ 774.11

§ 773.22

(a)

§ 773.22(d)

§ 773.15(b)(1).

(a)(1)

§ 773.15(b)(2)(i)

§ 773.15(b)(1).

(a)(2)

§ 773.22(c)

§ 773.15(b)(1).

(a)(3)

§§ 774.13(e) and 774.17(a)(2)

§§ 773.15(b)(1) and 773.22(d).

(a)(4)

§ 773.22(c)

§ 773.15(b)(1).

(b)

§§ 773.22(a) and 773.25(d)

§ 773.22(d).

(c)

§ 773.15(b)(3)(i)(D)

§ 773.15(b)(3).

(c)(1)

§ 773.15(b)(3)(i)(D)(

1

)

§ 773.15(b)(3).

(c)(2)

§ 773.15(b)(3)(i)(D)(

2

)

§ 773.15(b)(3).

(d)

§ 773.15(b)(3)(i)(E)

§ 773.15(b)(3).

(e)

§§ 773.17(k) and 773.25(d)

§ 773.25(d).

(f)

§§ 773.15(b)(1)(i), (b)(1)(i)(A), (b)(1)(i)(B), and 773.17(k)

(f)(1)

§ 773.17(k)

(f)(2)

§§ 773.25(d)

§ 773.25(d).

(f)(3)

§ 778.13(c)(3)

§ 778.13(c).

(f)(3)(i)

§ 778.13(c)(3)

§ 778.13(c).

(f)(3)(ii)

§§ 773.17(k) and 778.13(m)

(g)

§§ 773.17(k) and 773.24

§ 774.12

§§ 773.17(h), and 774.13(e)

§ 773.17(h).

(a)

§ 773.17(h)

§ 773.17(h).

(b)

* * *

(c)

§§ 774.13(e) and 774.17(a)(2)

§ 774.17(a).

(c)(1)

§§ 774.13(e) and 774.17(a)(2)

§ 774.17(a).

(c)(2)

§§ 774.13(e), 774.17(a)(2), and 778.13(c)(1)(iii)

§ 778.13(c)(3).

* * Section/provision redesignation only. This section/provision was not redesignated in the proposed rule.

* * * This section/provision was added at the final rule stage. A more detailed explanation of this notation appears at the beginning of IV.B. of this preamble.

Final Part 778

Final rule

Proposed rule

Previous regulation

§ 778.8

§ 778.10

§ 778.10.

(a)

§ 778.10(a)

§ 778.19(a).

(b)

§ 778.10(b)

§ 778.10(b).

§ 778.9

§ 778.13(o)

(a)

§ 778.13(o)

(a)(1)

§ 778.13(o)

(a)(2)

§ 778.13(o)

(a)(3)

§ 778.13(o)

(b)

(* * *)

(c)

§ 778.13(p)

(d)

§§ 778.13(1) and 778.14(d)

§§ 778.13(k) and 778.14(d).

§ 778.11

§ 778.13

778.13.

(a)

§ 778.13

§ 778.13.

(a)(1)

§ 778.13(a)

§ 778.13(a).

(a)(2)

§§ 778.13(b)(1) and (b)(3)

§ 778.13(b).

(b)

§ 778.13(b)

§ 778.13(b).

(b)(1)

§ 778.13(b)(1)

§ 778.13(b)(1)

(b)(2)

§ 778.13(b)(2)

§ 778.13(b)(2).

(b)(3)

§ 778.13(b)(3)

(b)(4)

§ 778.13(b)(4)

§ 778.13(b)(3).

(c)

§ 778.13(c)(3)

§ 778.13(c).

(c)(1)

§ 778.13(c)(3)(i)

§ 778.13(c).

(c)(2)

§ 778.13(c)(3)(ii)

§ 778.13(c).

(c)(3)

§ 778.13(c)(3)(iii)

§ 778.13(c).

(c)(4)

§ 778.13(c)(3)(v)

§ 778.13(c)

(c)(5)

§ 778.13(c)(3)(iv)

§ 778.13(c).

(d)

§ 778.13(m)

(e)

§ 778.13(c)(1)

§ 778.13(c).

(e)(1)

§ 778.13(c)(1)(i)

§ 778.13(c)(1).

(e)(2)

§§ 778.13(c)(1)(ii) and (iii)

§§ 778.13(c)(2) and (c)(3).

(e)(3)

§ 778.13(c)(1)(iii)

§ 778.13(c)(3).

§ 778.12

§§ 778.13(e), (f), and (g)

§ § 778.13(d), (e), and (f).

(a)

§ 778.13(e)

§ 778.13(d).

(b)

§ 778.13(f)

§ 778.13(e).

(c)

§ 778.13(g)

§ 778.13(d) and (f).

(c)(1)

§ 778.13(g)

§ 778.13(f)(1).

(c)(2)

§ 778.13(g)

§ 778.13(f)(1).

(c)(3)

§ 778.13(g)

§ 778.13(f)(1).

(c)(4)

§ 778.13(g)

§ 778.13(f)(1).

(c)(5)

778.13(g)

§ 778.13(f)(2).

§ 778.13

§ 778.13(h), (i), (j), and (k)

§§ 778.13(g), (h), (i), and (j).

(a)

§ 778.13(h)

§ 778.13(g).

(a)(1)

§ 778.13(h)

§ 778.13(g).

(a)(2)

§ 778.13(h)

§ 778.13(g).

(a)(3)

§ 778.13(h)

§ 778.13(g).

(b)

§ 778.13(i)

§ 778.13(h).

(c)

§ 778.13(k)

§ 778.13(j)

(d)

§ 778.13(j)

§ 778.13(i).

§ 778.14

§ 778.14

§ 778.14.

(a)

§§ 778.14 and 778.14(a)

§§ 778.14 and 778.14(a).

(a)(1)

§ 778.14(a)(1)

§ 778.14(a)(1)

(a)(2)

§ 778.14(a)(2)

§ 778.14(a)(2).

(b)

§ 778.14(b)

§ 778.14(b).

(b)(1)

§ 778.14(b)(1)

§ 778.14(b)(1).

(b)(2)

§§ 778.14(b)(1) and (b)(4)

§§ 778.14(b)(1) and (b)(4).

(b)(3)

§ 778.14(b)(2)

§ 778.14(b)(2).

(b)(4)

§ 778.14(b)(3)

§ 778.14(b)(3).

(b)(5)

§§ 778.14(b)(4) and (b)(5)

§§ 778.14(b)(4) and (b)(5).

(c)

§ 778.14(c)

§ 778.14(c).

(c)(1)

§ 778.14(c)(1)

§ 778.14(c)(1).

(c)(2)

§ 778.14(c)(1)

§ 778.14(c)(1).

(c)(3)

§ 778.14(c)(1)

§ 778.14(c)(1).

(c)(4)

§ 778.14(c)(1)

§ 778.14(c)(1).

(c)(5)

§ 778.14(c)(2)

§ 778.14(c)(2).

(c)(6)

§ 778.14(c)(3)

§ 778.14(c)(3).

(c)(7)

* * *

§ 778.14(c).

(c)(8)

§ 778.14(c)(5)

§ 778.14(c)(5).

** Section/provision redesignation only. This section/provision was not redesignated in the proposed rule.

*** This section/provision was added at the final rule stage. A more detailed explanation of this notation appears at the beginning of IV.B. of this preamble.

Final Part 842

Final rule

Proposed rule

Previous regulation

§ 842.11:

(e)(3)(i)

proposed to be removed

§ 842.11(e)(3)(i).

Final Part 843

Final rule

Proposed rule

Previous regulation

§ 843.5

proposed to be removed

§ 843.5.

§ 843.11

(g)

§ 843.11(g)

§ 843.11(g).

§ 843.13

proposed as § 846.14

§ 843.13.

§ 843.21

§ 843.21

§ 843.21.

(a)

§ 843.21(a)

§ 843.21(a).

(a)(1)

§ 843.21(a)

§ 843.21(a).

(a)(2)

(***)

(b)

§ 843.21(b)

§ 843.21(b).

(b)(1)

§ 843.21(b)(1)

§ 843.21(b)(1).

(b)(2)

§ 843.21(b)(2)

§ 843.21(b)(2).

(b)(3)

§§ 843.21(d)(1)(ii) and (d)(4)

§ 843.21(d).

(c)

§ 843.21(c)

§ 843.21(c).

(c)(1)

§ 843.21(c)

§ 843.21(c)(1).

(c)(2)

(***)

(c)(3)

(***)

(d)

§§ 843.21(d) and (d)(1)(i)

§ 843.21(b).

(e)

§ 843.21(d)(1)

§ 843.21(d).

(e)(1)

§ 843.21(d)(2)

§ 843.21(d).

(e)(2)

§ 843.21(d)(2)(i)

§ 843.21(d).

(f)

§ 843.21(e)

§ 843.21(e).

(f)(1)

§ 843.21(e)(1)

§ 843.21(e)(1).

(f)(2)

§ 843.21(e)(2)

§ 843.21(e)(2).

(f)(2)(i)

§ 843.21(e)(2)(i)

§ 843.21(e)(2)(i).

(f)(2)(ii)

(***)

(f)(2)(iii)

§ 843.21(e)(2)(ii)

§ 843.21(e)(2)(ii).

(f)(2)(iv)

§ 843.21(e)(2)(ii)

§ 843.21(e)(2)(ii).

(f)(2)(v)

(***)

(g)

§ 843.21(f)

§ 843.21(f).

*** This section/provision was added at the final rule stage. A more detailed explanation of this notation appears at the beginning of IV.B. of this preamble.

Final Part 846

Final rule

Proposed rule

Previous regulation

§ 846.1 is unchanged

§ 846.1

§ 846.1.

§ 846.5 is removed

§ 846.5

§ 846.5.

§ 846.12 is unchanged

§ 846.12(a)

§ 846.12.

§ 846.14 is unchanged

§ 846.12(b)

§ 846.14.

§ 846.17 is unchanged

§ 846.12(c)

§ 846.17.

§ 846.18 is unchanged

§ 846.12(d)

§ 846.18.

Final Part 847

Final rule

Proposed rule

Previous regulation

Part 847

(***)

§ 847.1

§ 846.1

§ 847.2

(***)

(a)

§ 846.1

(b)

§ 773.22(d)

(c)

(***)

(d)

(***)

§ 847.11

§§ 846.11 and 846.11(a)

(a)

§ 846.11(a)(1)

(b)

§ 846.11(a)(2)

(b)(1)

§ 846.11(a)(2)(i)

(b)(2)

§ 846.11(a)(2)(ii)

(c)

§ 846.11(a)(3)

§ 847.16

§ 846.16

(a)

§ 846.16(a)

(a)(1)

§ 846.16(a)(1)(i)

(a)(2)

§ 846.16(a)(1)(ii)

(a)(3)

§ 846.16(a)(1)(iii)

(a)(4)

§ 846.16(a)(1)(iv)

(a)(5)

§ 846.16(a)(1)(v)

(a)(6)

§ 846.16(a)(1)(vi)

(b)

§ 846.16(a)(2)

(c)

§ 846.16(b)

(d)

§ 846.16(c)

** Section/provision redesignation only. This section/provision was not redesignated in the proposed rule.

*** This section/provision was added at the final rule stage. A more detailed explanation of this notation appears at the beginning of IV.B. of this preamble.

V. What General Comments Did We Receive on the Proposed Rule and How Have We Addressed These Comments in This Final Rule?

A. Withdraw the Proposal

Several commenters suggested that we withdraw the proposed rule and rewrite it using the “precise language” of the Act. We appreciate the concerns of these commenters. However, section 501(b) of the Act requires that we adopt regulations that not only implement the Act, but also “are written in plain, understandable language.” Furthermore, the courts have held in previous litigation concerning SMCRA that we have a duty to either flesh out the requirements or explain why it is unnecessary to do so.

A commenter recommended withdrawing the proposed rule because “the added burdens are not justified by the rate of non-compliance, which OSM's own figures show is low.” The commenter said we should “simplify, rather than complicate, the permitting process and the limited non-compliance problems that do exist.” The low rate of noncompliance is partially the result of the ownership and control and AVS-related regulations that have been in force since 1988. Moreover, in this final rule we are simplifying the permitting process to clarify the scope of the review and who is eligible for a permit under section 510(c) of the Act, 30 U.S.C. 1260(c).

A commenter said the proposed rule must be withdrawn because it does not adequately respond to or incorporate comments provided in response to the Advance Notice of Proposed Rulemaking. The commenter said two organizations sent comments to OSM urging that OSM retain the requirement that imputes primary responsibility for compliance on those entities which own or control permit applicants and have outstanding unresolved violations of SMCRA or other environmental laws. The commenter said the agency's response to these comments has been wholly unsatisfactory.

We disagree. The commenter asks that we devise a compliance and permit eligibility scheme that the court has ruled to be unlawful. Under

NMA

v.

DOI I,

we cannot “block” applicants under section 510(c) based upon the outstanding violations of an applicant's owners and controllers. However, we can and must determine responsibility for outstanding violations and use all enforcement provisions available under the Act to achieve compliance from persons responsible for outstanding violations. Nothing in

NMA

v.

DOI I

or

NMA

v.

DOI II

changes this statutory requirement.

The same commenter also said the proposed rule fails to require that States (and OSM in Federal program states) use common law mechanisms to disregard corporate forms where applicants seek to apply for permits on behalf of owners and controllers who would be barred in their own right. Common law mechanisms exist independently from the enforcement provisions under SMCRA and are always available for a regulatory authority's use when circumstances warrant.

The same commenter also said the proposed rule fails to address coal exploration operations. We included coal exploration among the subjects in our solicitation for ideas and suggestions to be considered in the development of the proposed rule. States opposed requiring review under section 510(c) of SMCRA, 30 U.S.C. 1260(c), for coal exploration permits. These comments persuaded us not to address coal exploration, in the context of section 510(c), in this rulemaking.

B. Compliance With the Administrative Procedure Act

One commenter claimed that we provided no explanations for the proposed rule and that we thus had violated the Administrative Procedure Act (APA) by denying interested parties the opportunity to provide meaningful comments. Other commenters, expressed similar APA concerns.

We disagree with the various criticisms of our proposed rule with respect to the APA. First, the proposed rule did not deny interested parties the opportunity to provide meaningful comment. We provided the proposed rule language and an extensive preamble, explaining the subjects and issues involved. We received 103 written comments on the proposed rule, totaling over 800 pages of comments. We extended the comment period four

times in response to requests for extensions, including a reopening to accept comments on the effects of the

NMA

v.

DOI II

decision. See section II of this preamble. Before the development of the proposed rule, we provided public notice of our intent to propose a rule. We conducted both informal outreach and an extensive formal public outreach to gather ideas, suggestions, and concepts to consider in the development of the proposed rule. We hosted and attended meetings with the major groups of parties interested in this rulemaking. Taken together, these activities provided more than sufficient opportunity for input into this rulemaking. Not only have we fully complied with the APA, we actively reached out to bring all affected parties into this rulemaking process.

Commenters said the proposed rule is a radical departure from past ownership and control rules. They also said the 60-day comment period was “woefully inadequate” to allow meaningful public participation, and that OSM's advance pronouncement that no extensions of the comment period would be considered was arbitrary and capricious. In fact, we extended the comment period on the proposed rule three times in response to requests for extensions and reopened the comment period to allow for comments on the effects of

NMA

v.

DOI II

on the proposed rule. The final comment period totaled 140 days.

C. Public Participation

Several commenters suggested that citizens should have rights in the permitting process and related matters. These commenters also said OSM should expressly allow citizens to petition the agency to take enforcement action where citizens have a reason to believe that a violation exists, whether or not the State regulatory authority has taken action. Another commenter also expressed concerns about the citizen complaint process, and said it is important that citizens continue to be part of the SMCRA process so that they can voice concerns about inadequate data collection and tracking of violators by OSM.

We support public participation in regulatory processes, as required by the Act. Citizens have the right to voice their concerns regarding any aspect of a regulatory program. This final rule strengthens public participation in processes related to permit eligibility determinations. We further address public participation as it applies to this rulemaking, in our responses to comments received on specific sections of the proposed rule. See,

e.g.,

sections VI.M. and Y. of this preamble.

Further, our existing regulations emphasize the role of the public under SMCRA. The provisions for public participation in permit processing were found at previous 30 CFR 773.13 and existing 30 CFR part 775, which includes the ability of persons who have an interest which is or may be adversely affected to raise ownership and control issues during the permitting process and to request a hearing on the reasons for a permitting decision. Previous 30 CFR 773.13 is redesignated 30 CFR 773.6 in this final rule. Additional provisions pertaining to public participation and access to public records are found at existing 30 CFR 842.11, 842.12, and 842.16 and final § 843.21.

We also made AVS available to the public to increase public access to the computer system. AVS software is provided free of charge and can be ordered from the AVS Office in Lexington, Kentucky, by calling, toll-free, 1-800-643-9748. The software can also be downloaded from the AVS Office's Internet home page (Internet address:

http://www.avs.osmre.gov

). Citizens may also use the traditional method of visiting Federal and State offices to view application, permit, violation, ownership and control challenge, and enforcement records.

A commenter said that the public often has important information concerning ownership and control and that the Congress was very clear in demanding a public role in administrative and judicial processes, including the permitting process. According to the commenter, the proposed rule reflects a limited, insular, two-way relationship between the regulatory authority (we) and the applicant (you) that excludes affected citizens (us) because there is no pronoun for the general public.

We have and will continue to ensure that public participation is considered in all facets of the regulatory program. We heard very clearly the concerns expressed during the public outreach regarding citizen participation in regulatory processes. To the extent possible, we address those concerns in this rulemaking. We are always willing to accept information from citizens which may bear upon our responsibilities, or the responsibilities of the regulated industry, under the Act. Both our existing regulations and the provisions we adopt today expressly require us to consider information provided by the public, when appropriate.

D. Oversight

A commenter said that the proposal has serious implications for the States in terms of OSM's oversight of permitting decisions and all facets of the regulatory program. The commenter said States are most concerned about oversight expectations in the quantity of application information and the level of detail that should be devoted to investigations. Two commenters asked what oversight States can expect since AVS will not make permitting recommendations. The same commenters asked if oversight will be consistent and whether States will be “taken to task” over their permitting decisions during oversight. In contrast, another commenter said the proposed rule will result in inadequate oversight because OSM plans to cease providing permitting recommendations. Other commenters said oversight should be consistent and that OSM should adopt uniform review criteria. Two commenters asked whether the oversight reviews required for this final rule would be left to the OSM regional offices. These commenters suggested that the determinations required under the proposed rule would require OSM to give discretion and flexibility to States.

Our oversight obligations under the Act and regulations will not diminish as a result of these rules. To facilitate oversight of AVS, OSM's Directive REG-8, “Oversight of State Regulatory Programs,” provides that OSM will monitor States' responses to complaints and requests for assistance and services and each year will review a sample of one or more specified State activities, including permit eligibility determinations. We prepare an oversight findings report for each review and the findings report is summarized in the annual report for each State.

Concerning the level of detail that should be devoted to investigation, in this final rule we leave that decision principally to the regulatory authorities. We are not adopting specific references to investigations in part 773 in these final rules. However, we expect that regulatory authorities will investigate when circumstances warrant.

We previously provided permit eligibility recommendations to, among other things, assist in expediting the States' permitting processes. We are aware that the purpose of the recommendations was sometimes misinterpreted as a mandate. We also know that many States benefitted from the recommendations and some expressed their appreciation. However, the States now possess sufficient technology as well as familiarity with

the uses of the information in the computer system that they no longer require permitting recommendations. See further discussion of this point in section VI.E. of this preamble.

E. Plain Language

“Shall” Is the Language of the Act

We received numerous comments on the use of plain language principles in the proposed rule and our failure to use the word “shall.” Some commenters argued that the word “shall” is the language of the Act and that no other word is sufficient as the language of command. However, the guidance on plain language principles prohibits use of “shall” in rulemaking. The Department has provided two guidance documents on plain language,

Writing User-Friendly Regulations

and

Writing Readable Regulations,

by Thomas A. Murakowski. The regulations in this final rule are consistent with plain language principles. We use “must” instead of “shall” as the language of command. Where the Act or regulations provides for a mandatory action, we use “must.” Where previous regulations used “shall” to indicate a future action, we use “will.” When an action is not mandatory, we use “may,” except that the use of “may not,” is equivalent to a mandatory prohibition.

Changing “shall” to “may” Undermines Mandatory Enforcement of the Act

Many commenters said that changing “shall” to “may” undermines mandatory enforcement under the Act and that “may” is an unacceptable substitute. Some of the commenters said the change gives regulatory authorities the option not to enforce the regulations.

The absence of the word “shall” does not compromise obligations under our regulations or the obligations of the States and the industry to comply with the Act and regulatory requirements. To the contrary, we believe using the word “shall” creates confusion in the minds of readers. We are not alone in this belief. In his book,

Plain English for Lawyers,

Richard C. Wydick, Professor of Law at the University of California at Davis, has this to say about the word “shall”:

When you draft rules * * * be precise in using words of authority.* * * The biggest troublemaker is

shall.

Sometimes lawyers use it to impose a duty: “The defendant

shall

file an answer within 30 days.* * *” Other times lawyers use it to express future action (“the lease shall terminate * * *”) or even an entitlement (“the landlord shall have the right to inspect * * *”). Drafting experts have identified several additional shades of meaning

shall

can carry. To make matters worse, many lawyers do not realize how slippery shall is, so they use it freely, unaware of the booby traps they are laying for their readers * * *. In recent years * * * many U.S. drafting authorities have come around to the British Commonwealth view: don't use shall for any purpose—it is simply too unreliable.

1

1

Richard C. Wydick,

Plain English for Lawyers,

Durham, 1998, pp. 66-67.

In the proposed rule, we used the words “must,” “will,” and “may.” We were cognizant of the effect of these words in each instance they were used. In this final rule, we consistently employed the following principles with respect to “must,” “will,” and “may.”

We use the word * * *

to indicate that * * *

must

an action is mandatory.

will

an action will occur in the future.

may

an action could occur, but is not mandatory.

may not

not taking the specified action is mandatory.

Any change in meaning that the reader may perceive because we used the words in the table is due solely to the former use of the imprecise word “shall” to indicate that an action must, will, or may occur.

Plain Language Attempt is Unsuccessful

Several commenters said our attempt to use plain language principles in the proposed rule was unsuccessful and inconsistent with President Clinton's June 1, 1998, memorandum. The commenters also claimed that we failed to follow the recommendations of the

Federal Register

Document Drafting Handbook

because we used more than three paragraph levels within a section. The commenters said we should create more sections instead of using more than three paragraph levels.

Our use of plain language principles in the proposed rule was consistent with the President's June 1, 1998, memorandum. However, we acknowledge that the proposed rule did not fully conform with plain language principles. This final rule, more fully uses plain language principles.

Most notably, in this final rule, we reorganized parts 773 and portions of parts 774 and 778 to accommodate fuller use of plain language principles. We divided lengthy sections into smaller, more numerous but more concise, sections; eliminated duplicate provisions; streamlined provisions, incorporated tables; and eliminated excessive paragraph levels within sections. The guidance provided to us regarding plain language is not optional. Rather, we are expected to adhere to the guidance, unless specific circumstances allow for variance within the rule language structure.

Use of Pronouns

Several commenters expressed concern over our use of pronouns in the proposed rule. Some of these commenters said that the use of “we” and “you” is confusing. These commenters also said that “you” should always mean the person to whom the regulation applies because industry will claim that “you” only means the applicant and that all other uses of “you” are irrelevant. Other commenters said the use of plain language implies that there are only two sides represented in the regulations—industry and regulators—and that there is no pronoun used to represent citizens.

The guidance documents on plain language that we previously cited in this section of the preamble provide explicit instructions on the use of personal pronouns. According to the guidance, the use of personal pronouns “straightens out sentences and saves words.” As with the preferred use of “shall,” we must use pronouns in our regulations unless we are avoiding a grammatical fracture or redundancy, or to make a distinction between or among the subjects that make up “we” or “you.”

We acknowledge that our use of pronouns in the proposed rule sometimes may have been confusing. We eliminate that confusion in this final rule. Within the Department's restrictions, we always use “we” to mean OSM and the State regulatory authorities, unless otherwise stated. We always use “you” to mean whoever must comply with the regulation. Therefore, “you” almost always means an applicant or permittee, as applicable. For example, when we use the phrase, “you, the applicant,” it clarifies that “you” means “the applicant” whenever “you” appears in the provisions of that section.

We elected not to define “we” or “you” generically in these regulations because the antecedent for these pronouns varies in our regulations. Instead, we specified the meaning of “we” or “you” in each section of this final rule. As more of our regulations are converted to plain language, we will incorporate greater use of “we” and “you.”

A commenter called the use of pronouns an informal, quasi-conversational style. This commenter

also said our use of “you” and “we” does not conform to the guidance in the

Federal Register Document Drafting Handbook.

Our use of “we” and “you” conforms to the guidance in the

Federal Register Document Drafting Handbook.

For example, the

Handbook

says we must use “you” to designate “whoever must comply.” (October 1998 Revision at MRR-1) This is how we used “you” in the proposed rule and how we use it in this final rule.

F. Other General Comments

A commenter expressed concern that the proposed rule will result in permit-specific eligibility determinations instead of entity or company-specific eligibility determinations and that this result is a step backward. Permit eligibility is inherently application or permit specific because violations are specific to a particular operation. The permit block sanction of section 510(c) applies only to the extent that a person remains responsible for that violation.

A commenter claimed that the proposed rules establish complex processes for determining eligibility and meeting information disclosure requirements. The commenter also claimed that “owners” and “controllers” are newly created categories that would be targeted for novel enforcement tools such as “blocking permits where a permit applicant is an owner or controller of an operation with an outstanding violation,” “permanent ineligibility” for a permit, “special permit conditions,” and “joint and several liability for violations of permits to an extent not contemplated by the Act.”

The review process and eligibility determination are not complex and, in fact, have been simplified in this final rule. A regulatory authority will review applicant, operator, and ownership or control information; permit history information; and compliance information to arrive at an eligibility determination under section 510(c) of the Act, 30 U.S.C. 1260(c). A finding of permit eligibility is the end-product of a regulatory authority's review under section 510(c) of the Act, 30 U.S.C. 1260(c). This final rule also attempts to make information disclosure requirements clearer by organizing the requirements for providing applicant, operator, and ownership and control information; permit history; property interests; and violation information into separate, more easily understood sections. An applicant also may certify as to which parts of this information already in AVS are accurate and complete. See final § 778.9(a).

We disagree that “owners” and “controllers” are newly created categories. These designations are clearly anticipated under section 510(c) of SMCRA, 30 U.S.C. 1260(c), which uses the phrase “owned or controlled.” We also disagree that the final rule creates “novel enforcement tools.” We are not adopting the provisions concerning joint and several liability or special permit conditions. Under the final rule, the section 510(c) permit block sanction applies only to the extent authorized under

NMA

v.

DOI I

and

NMA

v.

DOI II.

Commenters said they agreed with OSM that “scofflaws” should not be allowed to abandon one mining operation with uncorrected violations and uncompleted reclamation only to obtain permits for new operations “through subterfuge or abusive manipulation of corporate entities.” However, the commenters said, AVS relied upon massive information-gathering and mechanical name-linking and that this approach caused paperwork delays for legitimate operators. The commenters claimed the proposed rule would not reduce the burdens for legitimate operators “to any significant level” and that it “does violence” to a number of established legal principles and threatens new confusion, delays, and litigation.

We disagree that our regulations cause either massive information-gathering or delays in permitting for legitimate operators. Further, in

NMA

v.

DOI II,

the court ruled that we and the States may require information from permit applicants in excess of the information requirements specifically stated in the Act so long as the information is necessary to ensure compliance with the Act.

Id

., 177 F.3d at 9. The information requirements in this final rule are, necessary to ensure compliance with the Act, including the permit block sanction of section 510(c).

A commenter expressed appreciation for OSM's efforts to propose regulations that are consistent with

NMA

v.

DOI I.

However, the commenter said the proposed rule appears more cumbersome and burdensome than the previous regulations, would require much additional effort to administer, and may detract from ensuring good reclamation in the field.

Our principal goal in this rulemaking is to adopt revised or new regulations that improve our implementation of SMCRA and with

NMA

v.

DOI I

and

NMA

v.

DOI II.

We have streamlined procedures and reduced burdens to the extent that we could do so while still retaining our ability to fully implement the permit block sanction of section 510(c). We relied upon the input of many sources, including our State partners, in developing the proposed and final rules. We disagree that the changes in our regulations, will detract from or inhibit good reclamation. On the contrary, we believe the provisions that allow a regulatory authority to better know an applicant will contribute to a more accurate forecast of whether an applicant, as a permittee, will be able to complete its reclamation and other statutory and program obligations.

Several commenters expressed concern that the changes in the proposed rule represent a weakening of the Federal rules and appeared to give unauthorized options to regulatory authorities relative to required enforcement actions. Some opposed the proposed rule changes because, they said, SMCRA requires OSM and the States to take enforcement action against every violation, that is, “when you see a violation, you write a violation.” These commenters asserted that SMCRA has a mandatory enforcement system that does not allow discretion when considering enforcement actions. We agree that violations, when known to a regulatory authority, must be cited. Nothing in this rulemaking alters that principle.

Several commenters asserted that the proposed rule weakens Federal protections, undercuts those State requirements that may exceed Federal requirements, and allows owners and controllers to engage in sham business arrangements to contravene section 510(c) of SMCRA. We believe this final rule strengthens the ability of regulatory authorities to take a variety of actions both inside and outside the permitting process to ensure compliance with SMCRA. The rule strengthens the information disclosure requirements for applicants and operators. It also clarifies the post-permit issuance obligations of regulatory authorities and permittees with respect to submitting new information, updating AVS, and other matters. It also emphasizes other enforcement provisions that may be used if applicants, permittees, operators, and other persons subject to the regulations fail to comply. Taken together, these revisions not only clarify and emphasize our ability to enforce section 510(c), 30 U.S.C. 1260(c), but other SMCRA provisions as well.

Another commenter said the proposed rule would not adequately address the regulatory gap left by the appeals court decision in

NMA

v.

DOI I.

The commenter claimed the industry has used the gap to continue to profit from past non-compliance of contract miners. The commenter said the proposed rule

would not require States to use all available procedures to bar owners and controllers from receiving new permits or to prosecute them. We disagree. The permit eligibility criteria and related procedures in the final rule are as restrictive as the rationale in the

NMA

v.

DOI I

and

II

decisions will allow.

A commenter said the proposal fails to address how to prevent new permit-related damage by entities who are owned or controlled by violators since section 510(c) of SMCRA can no longer be used. The commenter stated that, instead of lowering compliance requirements, regulatory authorities should adjust performance bonds to address the risk of default on reclamation obligations. This final rule does not reduce compliance requirements. Furthermore, section 509(a) of the Act and 30 CFR 800.14(b) already require that the amount of the bond be sufficient to assure completion of the reclamation plan if the work has to be performed by the regulatory authority in the event of forfeiture.

VI. In What Sections Did We Propose Revisions, What Specific Comments Did We Receive on Them, and How Have We Addressed These Comments in This Final Rule?

A. Section 701.5—Definitions

We proposed to make several changes to our regulatory definitions. We intended that the proposed changes would result in clearer and more useful regulatory definitions. One commenter said the definitions were satisfactory as proposed. Based upon our review of the comments and further deliberation, we modify most of the proposed definitions in this final rule. Each proposed definition is discussed below. Comments on a proposed definition and modifications adopted in this final rule are included in the discussion of each proposed definition.

Applicant/Violator System or AVS

We proposed to revise the definition for

Applicant/Violator System

or

AVS

and to move the definition to § 701.5. We received no comments on the proposed definition. The final rule modifies the proposed definition to clarify that AVS assists in implementing the Act. It is clearly not the only tool we use to implement the purposes of the Act. AVS is among several automated systems and other mechanisms that we rely upon to assist in implementing the Act. We modified the final definition to remove any potential confusion on this point.

“Control or controller” and “Own, Owner, or Ownership”

Section 510(c) of SMCRA, 30 U.S.C. 1260(c), provides that a surface coal mining permit will not be issued when a surface coal mining operation “owned or controlled by the applicant” is currently in violation of SMCRA or other laws pertaining to air or water quality. However, the Act does not define the phrase “owned or controlled.” We first defined the phrase in the 1988 “ownership or control” rule. 53 FR 38868 (October 3, 1988). In that rule, the concepts of ownership and control were defined together through a series of statuses or relationships under which OSM would either “deem” or “presume” ownership or control.

See, e.g.,

previous § 773.5. In the proposal underlying this final rule, we proposed to define “ownership” and “control” separately, eliminate presumptions of ownership or control, and provide examples to support the proposed definitions of ownership and control.

See

proposed §§ 778.5(a) and (b).

After the close of the comment period for the proposed rule, the D.C. Circuit issued its decision in

NMA

v.

DOI II

. 177 F.3d 1 (D.C. Cir. 1999). The court struck down two of the six presumptions of ownership or control in our previous ownership or control definitions at 30 CFR 773.5, and upheld two of the six. The court did not address the remaining two presumptions or the categories of “deemed” ownership or control, since these provisions were not challenged. The court's ruling on presumptions had no direct effect on our proposed definitions of ownership and control, since we had already proposed to eliminate all presumptions of ownership or control, including those invalidated by the court. Like the proposal, this final rule does not contain rebuttable presumptions.

The court also upheld our ability to deny permits based on

indirect

ownership or control. We retained a similar provision in this final rule. However, since the ability to deny permits based on indirect ownership or control, or “downstream” relationships, pertains more to how the definitions are applied than to the definitions themselves, we addressed the applicability of the court's holding in the discussion of permit eligibility determinations in section VI.E. of this preamble. At this point, however, we note that this final rule continues our prior ability to deny permits based on both direct ownership or control and indirect ownership or control through intermediary entities. We also retained the ability to ascertain ownership or control at all levels of a corporate chain through any combination of relationships establishing ownership or control under the definitions we adopt today. For example, if Company A owns Company B under our definition of ownership, Company A also owns all entities and operations which Company B owns or controls, and so on.

In this final rule, we retained the basic approach and substance of the proposed rule. However, based on comments, guidance from the court, and further deliberation, we made certain modifications which clarify the scope and applicability of the definitions and examples.

We moved the definitions and examples from proposed § 778.5 to final § 701.5. This will improve the organization by having all of our definitions in one section; this modification also emphasizes the general applicability of the definitions throughout 30 CFR parts 773, 774, and 778 and § 843.21 of our regulations (except as noted otherwise). We also modified the defined terms, from “ownership” and “control” to “

own, owner,

or

ownership

” and “

control

or

controller

”, to clarify that the definitions encompass all forms of the words “own” and “control,” including both the verb and noun forms.

We retained the approach of defining ownership and control separately, to emphasize that section 510(c) uses the disjunctive phrase “owned or controlled.” This is significant in that section 510(c) requires permit denials when the applicant either owns

or

controls an operation with current violations. We moved the proposed examples of ownership or control to follow one of the categories of control—

see

final paragraph (5) of the definition—since the examples are more appropriately viewed as examples of control, rather than ownership. In this final rule, the examples are used to indicate when a person may, but does not necessarily, have “the ability, alone or in concert with others, to determine, indirectly or directly, the manner in which a surface coal mining operation is conducted.” Since the focus of the inquiry is on who controls an entity or mining operation, in this preamble we use the phrase “examples of control” to refer to this regulatory provision. Thus, our final definition of control contains categories of “deemed” control (paragraphs (1) through (5)) and examples of control (paragraphs (5)(i) through (5)(vi)).

Our final definition of “

own, owner,

or

ownership

” is largely the same as our proposed definition of “ownership,” except that we moved the “general

partner” criterion from this definition to the definition of “

control

or

controller

” in final § 701.5 and eliminated the phrase “or having the right to use, enjoy, or transmit to others the rights granted under a permit.” We also added language to clarify that the final definition does not apply to ownership of real property, such as under final § 778.13 of this rule and 30 CFR § 778.15 of the existing rule. The final definition of “

own, owner,

or

ownership

” includes being a sole proprietor or possessing or controlling in excess of 50 percent of the voting securities or other instruments of ownership of an entity (

i.e.,

majority ownership). We added the term “controlling” based on the reality that sometimes persons who do not technically own stock (or other instruments of ownership) nonetheless have the ability to control the stock, either by holding the voting rights associated with the stock or other arrangement with the owner of record. Under this definition, if the predicate facts are present—

i.e.,

a person is a sole proprietor or majority shareholder—then the person is an owner. Our rationale for the greater than 50 percent threshold is explained below in our responses to comments. Also, while a sole proprietor is subsumed within the category of majority ownership, we decided to retain that criterion for the sake of clarity. We also reiterate that the definition we adopt today encompasses both direct ownership and indirect ownership through intermediary entities. Thus, if Company A owns 51 percent of Company B, and Company B owns 51 percent of Company C, Company A owns Company C. However, if Company A owns 49 percent of Company B, and Company B owns 51 percent of Company C, Company A

does not

own Company C, since Company A does not own Company B. In summary, if an entity owns another entity, it also owns all entities the other entity owns or controls.

We defined “

control

or

controller

” in terms of a series of specific relationships and statuses, which are individually enumerated, rather than the more general definition of control in the proposal. In our experience, since we first promulgated definitions of ownership and control in 1988, the relationships and statuses identified in the “deemed” portion of the definition (paragraphs (1) through (5)) will always constitute control, assuming the predicate facts are true. For example, if someone is a permittee, that fact alone, without further inquiry, demonstrates control under the definition. By contrast, in the examples of control listed in paragraphs (5)(i) through (5)(vi) of the definition, even if the predicate facts are true, that person may or may not be a controller, depending on the particular circumstances. Thus, a 20 percent shareholder of a corporation may be a controller, but only if that person also has “the ability, alone or in concert with others, to determine, indirectly or directly, the manner in which a surface coal mining operation is conducted.”

See

final paragraph (5) of the definition. We provide the examples to identify statuses and relationships which, in our experience since 1988, often indicate actual control. Regulatory authorities and the regulated industry should consider the examples, and any other relevant factors or information, in meeting their responsibilities under this final rule. However, we stress that these examples do not give rise to a presumption of control and do not necessarily constitute control. Finally, as with our definition of “

own, owner,

or

ownership

”, the definition of “

control

or

controller

” we adopt today encompasses both direct control and indirect control through intermediary entities. For example, if Company A controls Company B, Company A also controls all entities which Company B owns or controls.

Consistent with the view expressed in the preceding paragraph, we incorporated some of the proposed examples into the deemed categories of control because the person will always be a controller if the predicate facts are true. For example, we decided to move the examples encompassing permittees and operators from the proposed examples to the “deemed” portion of the final definition. We also moved the “general partner in a partnership” criterion from the proposed definition of “ownership” to the final definition of “

control

or

controller.

” Finally, based on comments, guidance from the court decisions, and further deliberation, we added two new examples of control.

See

final examples (5)(iii) and (5)(iv).

One other general point we emphasize is that our definition of “

control

or

controller

” includes the

ability

to control as well as the exercise of control. The reason is simple: The failure to exercise one's ability to control in order to prevent or to abate violations is as damaging to the environment or as dangerous to the public as actively causing violations. As such, paragraph (5) of the definition specifically provides that those who have the

ability

to determine the manner in which a surface coal mining operation is conducted, not just those who actually exercise control, are encompassed within our final definition of “

control

or

controller.

” When we use the term “actual control” in this preamble, we are referring to both the exercise of control and the ability to control.

Comments on the Proposed Definition of “Ownership”

A commenter said the Congress intended that new permits should not be issued to an applicant who has an ownership relationship to a violation. The commenter said the proposed rule appears to make ownership irrelevant. The commenter suggested that all references to control should also include references to ownership. The thrust of the comment is that “ownership alone, or control alone, are sufficient to impute responsibility.” Another commenter said that proposed §§ 778.5(b)(1) and (b)(2) refer to “owner” and “controller” separately as though they have different meanings, while proposed § 778.5(a) defines “owner or controller” without distinguishing between the two.

We agree that an applicant's ownership of an operation with a current violation, standing alone, renders the applicant ineligible for a permit under section 510(c) of the Act, 30 U.S.C. 1260(c). As explained above, because section 510(c) uses the disjunctive phrase “owned

or

controlled” (emphasis added), we retained our proposed approach of defining ownership and control separately to give independent meaning to the two terms. This is significant in that section 510(c) requires permit denials when the applicant either owns

or

controls an operation with current violations. In the proposal, we made it clear that either ownership or control of operations with violations could form the basis of a permit denial.

See, e.g.,

proposed §§ 773.15(b)(3)(i)(A) and (B); 773.16(a). When appropriate, this final rule references ownership and control concepts together to emphasize the statutory requirement of section 510(c). Also, we clarified that the examples pertain to control, and not to ownership.

This final rule emphasizes that the scope of permit denials under section 510(c) does not depend solely on the presence of control. Mere ownership, without control, can provide a basis for a permit denial. As such, a person who is an owner under the definition we adopt today cannot successfully challenge such ownership by demonstrating a lack of ability to control. The only way to successfully challenge ownership is to demonstrate that the predicate facts indicating

ownership are not true,

i.e.,

the person is not a sole proprietor or majority shareholder.

The same commenter said that the 10 percent threshold of ownership in section 507 of the Act, 30 U.S.C. 1257, should also be the threshold of ownership under our definition because, under certain circumstances, 10 percent ownership “gives effective control to an entity.” Another commenter agreed, making the same argument relative to section 507 of the Act, 30 U.S.C. 1257. The commenter claims, in substance: (1) The greater than 50 percent threshold is “too restrictive for any meaningful application” of SMCRA provisions; (2) few, if any, coal companies have a 50 percent owner; and (3) owners of substantial means in the company should be on notice of their ownership obligations to encourage compliance.

We disagree that the greater than 50 percent threshold is too restrictive and that the 10 percent threshold referenced in section 507 of the Act, 30 U.S.C. 1260(c), is appropriate. As noted, the Act does not define the term “owned.” Congress, in using that term, did not indicate if it meant partially owned or wholly owned. Thus, arguments can be made that as little as a few shares of stock all the way to 100 percent ownership, or anywhere in between, should constitute ownership. We adopted the greater than 50 percent threshold because greater than 50 percent ownership will usually confer control. However, we emphasize that a regulatory authority need not demonstrate actual control to deny a permit based on our definition of ownership.

We agree that even as little as 10 percent ownership may constitute effective control of an entity. Indeed, in striking down our previous presumption of ownership or control based on 10 through 50 percent ownership of an entity, the court of appeals, in

NMA

v.

DOI II,

noted that as little as 10 percent ownership “may, under specific circumstances, confer control.* * * ” 177 F.3d at 6-7. As such, we adopted the 10 through 50 percent criterion as an example which

may

constitute control.

See

final paragraph (5)(iii). For ownership of 50 percent or less, it is appropriate to tie such ownership to control. Under paragraph (5) of the definition of “

control

or

controller,

” a regulatory authority attempting to sustain a finding of control based on 10 through 50 percent ownership must also demonstrate that that person has the ability to determine the manner in which mining is conducted. At paragraph (5)(iii), we also introduced the concept of “relative percentage” of ownership as an example of possible control. For example, a person may own only 20 percent of an entity, but may nonetheless be the greatest single owner of the entity. In that context, what may seem like a relatively small percentage of ownership may in fact confer actual control. Finally, while we note that less than 10 percent ownership is not likely to confer control, if a 10 percent shareholder does in fact control an entity, the applicant is required to identify the person in a permit application. Also, in identifying owners or controllers which are not disclosed by the applicant, a regulatory authority has leeway under paragraph (5) of the control definition to establish that even such minimal ownership constitutes control.

A commenter suggested that we change the portion of the proposed definition of “ownership” regarding percentage of ownership to “more than 50 percent or controlling interest in the stock.” In substance, this commenter believes that a controlling interest of less than 50 percent is sufficient to impute ownership.

We disagree. The final definition of ownership includes “possessing or controlling in excess of 50 percent of the voting securities or other instruments of ownership of an entity.” A person must own or control greater than 50 percent of the instruments of ownership in order to fall within our definition of ownership. If a person is the greatest single owner, but owns less than 50 percent, that is an indicator of actual control under paragraph (5)(iii) of our definition of

control

or

controller,

but it does not constitute ownership under this final rule.

Several commenters suggested that we delete the last part of the proposed definition: “or having the right to use, enjoy, or transmit to others the rights granted under a permit.” These commenters said that the phrase could “result in improper interpretations” by regulatory authorities. Alternatively, they agreed that it is unnecessary because it is clear that an owner possesses these rights. We agree with the latter comment. Therefore, we removed the phrase from the final definition of “

own, owner,

or

ownership

.”

A commenter said that the proposed definition of ownership was “without any consistent context,” and that, “[f]or the purposes of section 510(c), ownership means one thing—ownership of the mine operation.” The commenter continued: “The definition here does not even reference [a] mine operation.” Another commenter said: “[t]hese paragraphs do not specify ‘owner or controller’ of what: no operation is referred to in this section, only violations.”

We disagree that the proposed definition was without consistent context. However, we modified the proposed definition of “ownership” for the sake of simplification. Our definitions of ownership and control are not restricted to the implementation of section 510(c); rather, as explained above, the definitions also relate to the permit application requirements of section 507 and its implementing regulations. As such, while the definitions are of obvious importance to our implementation of section 510(c), we see no particular reason to define ownership or control exclusively in terms of that one section of the Act. At the same time, our definition of ownership is fully consistent with section 510(c).

As explained in more detail in section VI.F. of this preamble, we disagree with the argument that ownership of an entity does not equate to ownership of that entity's surface coal mining operations. Indeed, this argument was advanced and rejected in

NMA

v.

DOI II

. Under this final rule, as well as our previous rules, if a parent company owns or controls a subsidiary, the parent company is also a

de facto

owner or controller of the subsidiary's operations. The commenter's statement that under section 510(c) ownership means ownership of the mine operation begs the question: What does “ownership” mean? We answered that question by adopting a definition of “

own, owner,

or

ownership

” in this final rule. We chose to define the term and apply it in a manner which encompasses both direct ownership and indirect ownership through intermediary entities.

Finally, a commenter suggested, in substance, that we add “may” to the definition of “ownership” to clarify that the proposed factors do not always constitute ownership. We decline to adopt this commenter's suggestion. Our final definition of “

own, owner,

or

ownership

” comprises only two specific circumstances, which always constitute ownership. If the predicate facts are true, then the person is an owner. As such, there is no need to add “may” to the definition.

Comments on the Proposed Definition of “Control”

Our final definition of control includes five categories of persons who are deemed to be controllers. Four of the five categories were proposed as examples of ownership or control; we

will address comments on the proposed examples in the relevant section below.

The one category that was not proposed as an example is paragraph (5) of the final control definition, which identifies as controllers those persons “having the ability, alone or in concert with others, to determine, indirectly or directly, the manner in which a surface coal mining operation is conducted.” We modified and adopted this criterion from paragraph (b)(2) of the definition of control in proposed § 778.5. This provision is carried forward, in substance, from the “deemed” portion of our definition at previous § 773.5. In addition to the specific factors establishing control—

e.g.,

being a permittee, operator, etc.—it is important to retain a general category which allows regulatory authorities and the regulated industry to identify persons who have the ability to control a surface coal mining operation, regardless of their official title, label, or status. This will also allow regulatory authorities to consider specific facts pertaining to a relationship—such as the existence of personal relationships, informal agreements, and the mining histories of the parties in question—in determining whether control is present. In the absence of such a provision, persons could easily use creative titles or business arrangements to evade regulation.

Several commenters objected to the repeated use of the term “controller” in the proposed rule language. They said the use of the term “controller” is a new term or concept that represents an expansion of OSM's authority under section 510(c) of SMCRA, 30 U.S.C. 1260(c). Two of these commenters asked that we define “controller” in § 701.5 or stop using the term in the regulations. Other commenters noted that the proposed rule uses the terms “ownership” and “control” several times before defining them in § 778.5. Several of these commenters preferred that the term be eliminated but said that if it is used, it should only refer to an applicant.

We agree that “control” should be defined in § 701.5; for the reasons stated above we adopted this modification. Also, while the proposed definition of “control” encompassed the noun form of the word—“controller”—we modified the defined term to

control

or

controller

to remove any confusion. The modifications we adopted add to the clarity of the definition.

The term “controller,” as used in the proposal and this final rule, is not a new term or concept. The statuses and relationships which constituted control and the examples of control in the proposed rule were largely imported from the valid portions of our previous regulations. This final rule carries forward many of the control concepts contained in the valid portions of our previous regulations and the proposal. Further, as previously noted, since “control” is not defined in the Act, it is important for us to define the term so that we may adequately implement section 510(c) and other sections of the Act. We also disagree that “controller” should be used to refer only to an applicant. Persons other than applicants routinely own or control mining operations. To arbitrarily restrict the definition only to applicants would circumvent the plain meaning and intent of the Act.

Various commenters said the proposed definition of “control” was inconsistently used, over-broad, ambiguous, and inherently contradictory. These commenters also said the proposed definition contradicted the proposed definition of “ownership,” expanded the base for assignment of potential liabilities, and exceeded statutory authority. These and other commenters also suggest that the proposed definition was vague, and that the final definition should be clear and concise. One commenter said the vagueness of the proposal dooms its application as unlawful because it fails to provide fair notice of what is expected prior to any sanctions or deprivation of rights. Another commenter echoed the objection stating that because the proposed definition of “control” is vague, it could mean delays in permitting, as well as penalties and other sanctions, for failure to disclose all controllers in applications. The commenter said: “Before the applicant is subjected to this sanction, it should be afforded an ample and complete opportunity to understand, clearly and concisely, the types of entities and relationships that OSM expects to be disclosed when the applicant submits its application.”

We disagree with these commenters. First, we are well within our statutory authority to define the terms ownership and control, which are not defined in the Act. Our final definition of “

control

or

controller

” is reasonable and fully consistent with section 510(c) of the Act, 30 U.S.C. 1260(c), as well as the two rulings of the D.C. Circuit in the

NMA

litigation. Second, as stated previously, the definition is logical, consistent, and well supported by our experience implementing SMCRA since its enactment in 1977. Also, this final rule substantially improves upon the proposal in terms of conciseness and clarity. We find nothing “inherently contradictory” about either the proposal or the final rule.

Also, this final rule does not expand “the base for assignment of potential liabilities,” as the commenters assert. As we stress throughout this preamble, the ownership or control definitions and permit eligibility aspects of this rule do not purport to hold a person personally liable for another person's violations. Rather, the definitions of ownership or control are relevant to, among other things, the information submission requirements for applicants and permittees, the section 510(c) compliance review obligations of regulatory authorities, regulatory authorities' findings of ownership and control, and challenges to ownership or control listings or findings. Despite the view of some commenters, denial of a permit does not equate to personal liability. True, the ownership and control information we receive may assist us in initiating enforcement actions under SMCRA, but that is entirely consistent with and appropriate under the Act. Indeed, the

NMA

v.

DOI II

court expressly upheld our right to require submission of information “needed to ensure compliance with the Act.” 177 F.3d at 9.

One of the commenters said the proposed definition of “control” is inconsistent with the way control information is used to determine permit eligibility. The commenter also asked whether a controller controls the operation as a whole, or just a part of an operation.

There is no precise correlation between the permit information disclosure requirements of the final rule and the section 510(c) permit eligibility determination required under final § 773.12. That is, the Act and our regulations require the submission of specific information, which the D.C. Circuit has ruled cannot form the basis of our permit eligibility determinations. For example, while we must still require certain information pertaining to persons who own or control the applicant, we may no longer routinely consider that information in the section 510(c) permit eligibility process. However, we have no authority to delete information disclosure requirements imposed by other sections of the Act. Furthermore, the information required by the Act and this final rule is pertinent to other statutory obligations beyond permit eligibility determinations, such as enforcement actions, including individual civil penalty assessments.

With regard to whether a controller controls the entire operation, or just a portion thereof, the answer is twofold.

For the most part, the persons identified in the deemed portion of the definition (paragraphs (1) through (5)), as well as the examples of control in paragraphs (5)(i) through (vi), will control the entire operation. However, we recognize that some persons will have control over a significant aspect of an operation, but not necessarily the entire operation. In light of this reality, and in response to several comments, we modified the proposal in key respects. As to the information submission requirements in final § 778.11(c)(5), we now allow applicants to identify the “portion or aspect of the surface coal mining operation” which their owners and controllers own or control. Further, in the final challenge procedures at §§ 773.25 through 773.28, we allow persons to challenge their alleged ownership or control “of an entire surface coal mining operation, or any portion or aspect thereof.” These requirements and procedures will allow regulatory authorities to link the proper persons to violations, as intended by section 510(c), and allow persons to challenge an ownership or control listing or finding by demonstrating that they do not own or control a particular portion or aspect of the operation. In our view, this approach properly takes into account the reality of ownership and control relationships in the coal mining industry.

Another commenter said the central focus in identifying control relationships should remain “the capability of an entity to direct or affect the compliance status of the operations and activities of the nominal applicant,

i.e.,

to direct which reserves are to be mined, to design or control the manner of operation, to direct the flow of coal, etc.” We agree that these are important factors in determining control; they are encompassed in paragraph (5) of the final definition of control.

A commenter noted that the proposed definition included those who “own, manage, or supervise” and asked if it is our “intent to require the listing of mine management personnel responsible for day-to-day operating decisions at a mine.” The commenter said that “these are the people most often responsible for the causation and abatement of violations.”

The final definition of “

control

or

controller

” does not include the phrase, “own, manage, or supervise.” We also did not adopt the proposed example relating to persons who direct the day-to-day business of the surface coal mining operation.

See

proposed § 778.5(a)(2). If these persons are controllers, they will be covered under final paragraph (5) of the definition. We do not necessarily disagree with the commenter that mine management personnel are “the people most often responsible for the causation and abatement of violations.” However, these persons may not always be controllers of a surface coal mining operation. Instead, the controllers may be the persons who direct mine management personnel. Nonetheless, depending on the size of a company, the number of operators and employees at a site, or the delegation of authority within a company, mine management or other personnel may in fact have the ability to determine the manner in which a surface coal mining operation is conducted. The initial onus is on the applicant to identify its owners or controllers, consistent with the final definitions.

See

final § 778.11(c)(5). Regulatory authorities then have the authority to identify owners or controllers who might not have been disclosed.

See

final § 774.11(f).

A commenter objected to what the commenter called an “ability to control standard.” The commenter suggested that the standard should be actual control and not ability to control or influence. As explained above, we retained the “ability to control” concept at paragraph (5) of the final definition of “

control

or

controller

.” In our view, it is the power or authority to control, and not the exercise of control, which is the primary determinant of “actual control.” As previously explained, when we use the term “actual control” in this preamble, we are referring to both the exercise of control and the ability to control. The failure to exercise one's ability to control, when such control could be exercised, in order to prevent or to abate violations is of the same nature as an action causing a violation.

We also note that we removed the term “influence” from the definition of control. However, one of the examples of control refers to persons who contribute capital or other working resources and substantially influence the conduct of a surface coal mining operation. This example is discussed below.

The same commenter also said that the ability to control should be limited to the elements of an agency relationship “established between the applicant and other persons.” We disagree that “control” should be so narrowly defined. The definition we adopt today includes relevant agents of an applicant or permittee and all other persons who can determine the manner in which a surface coal mining operation is conducted. Our definition is reasonable and consistent with section 510(c) of SMCRA, 30 U.S.C. 1260(c).

A commenter suggested, in substance, that we add “may” to the definition of “control” to clarify that the factors in the proposed definition do not always constitute control. As stated above, our final definition of “

control

or

controller

” consists of a series of statuses or relationships which

always

constitute control (paragraphs (1) through (5)), and a series of examples in paragraphs (5)(i) through (5)(vi) which

may

constitute control. Use of the word “may” is appropriate when referring to the examples of control in paragraph (5), but it would be inappropriate in the other portions of the definition, since the identified statuses and relationships will, and do, constitute control in all cases.

Comments on the Proposed Examples of (Ownership or) Control

The proposed rule provided examples of ownership or control.

See

proposed § 778.5(a). In this final rule, we modified the proposed examples and moved them to the definition of “

control

or

controller

” to emphasize that they are more properly viewed as examples of control, not ownership. The examples now pertain only to paragraph (5) of the definition, which refers to a “person having the ability, alone or in concert with others, to determine, indirectly or directly, the manner in which a surface coal mining operation is conducted.” With respect to the conduct of surface coal mining operations, this criterion is the essence of “control.” Thus, when we refer to “examples of control,” we are referring to the examples enumerated in paragraphs (5)(i) through 5(vi) of the final control definition. The list of examples is not exhaustive; a regulatory authority retains flexibility to consider any and all facts or circumstances which may indicate that a control relationship exists.

General Comments on the Proposed Examples of Control

A commenter suggested that we adopt the first sentence in proposed paragraph (a): “This part applies to any person who engages in or carries out mining operations as an owner or controller,” but not adopt any of the eight proposed examples. The commenter said we should eliminate the examples and, “in the spirit of primacy,” leave it up to the regulatory authorities to determine who is an owner or controller. The commenter said the list of examples contains broad, vague, and potentially confusing definitions, and that “definitions for ‘ownership’ and

‘control’ at [proposed] § 778.5(b)(1) and (2) provide [regulatory authorities with] sufficient guidance.”

We agree that the definitions of

“own, owner,

or

ownership”

and

“control

or

controller”

stand alone, but the examples are useful for both the regulated industry and regulatory authorities to consider in determining who may be controllers under paragraph (5) of the final definition of control. We derived the examples from our experience in implementing SMCRA since 1977 and from comments received on the proposed rule. We see no reason not to pass on the benefit of our experience, via the examples of control, to persons who have responsibilities under this final rule. We also note that regulatory authorities providing comments on the proposed examples of control did not raise concerns regarding State primacy.

A commenter said that OSM proposed eight categories of “conclusively deemed ‘owners or controllers.’ ” The commenter argued that “no manager or supervisor other than the mine manager [should] be considered a controller.” Finally, the commenter also asserted that requiring permittees to notify the regulatory authority under proposed § 774.13(e) each time there was a change in personnel or in the ownership or control structure would impose a significant burden.

As explained above, we clarified that the examples at paragraphs (5)(i) through (vi) of the final control definition do not conclusively establish control. In addition, we did not adopt proposed § 774.13(e), which would have required updates of certain information, including changes of officers and directors, under the requirements for permit revisions. Instead, we adopted a notification-only process in final § 774.12 that is not subject to the application, notice, and public participation requirements for permit revisions. We disagree with the commenter's assessment that only a mine manager should be considered a controller; other managers and supervisors may well be controllers, depending on their responsibilities and conduct. Neither do we agree that the mine manager is always a controller. The definition we adopt today reasonably identifies persons who control a surface coal mining operation.

The same commenter expressed concern regarding OSM's attempt to distinguish between employees of mining operations and those who engage in or carry out mining operations. The commenter said its own “participatory management style” has “ ‘pushed down’ responsibility for many activities, including reclamation and environmental compliance, to the lowest possible level.”

A business entity is free to adopt any management model it desires. However, persons meeting the definition of ownership or control cannot escape their responsibilities under the Act simply because they choose unique management styles or “push down” their responsibilities to lower management levels. As explained above, the lower level employees to whom the commenter refers will not routinely be “controllers” under the regulatory definition. However, if these employees do in fact have the ability to determine the manner in which mining is conducted, then they have the authority and responsibility normally accorded to higher level managers. In such cases, they should be held accountable to exercise their authority and execute their responsibilities in ensuring that mining and reclamation are conducted in accordance with the requirements of the permit. However, the fact that subordinate employees may exercise control does not allow higher level managers, who have the ability to control those employees, to escape their status as controllers.

A commenter said that “the ‘control’ parameters exceed the scope of SMCRA and violate the spirit, if not the letter, of (

NMA

v.

DOI I

), by allowing OSM to expand ‘ownership and control’ beyond the plain meaning and common legal interpretation of those terms.”

We disagree. We adopted limited and succinct definitions of “

control

or

controller

” and “

own, owner,

or

ownership,

” which are consistent with section 510(c) and other provisions of the Act. Also, neither the final definition of “

control

or

controller

” nor the supporting examples violates the D.C. Circuit's rulings in

NMA

v.

DOI I

or

NMA

v.

DOI II.

In

NMA

v.

DOI I

, the court did not invalidate the definition of ownership or control itself, just the application of the definition in the permit eligibility context.

NMA

v.

DOI I

, 105 F.3d at 694. The

NMA

v.

DOI II

court did rule specifically on our previous definition, but only in terms of our use of rebuttable presumptions.

NMA

v.

DOI II

, 177 F.3d at 5-7. In this final rule, we eliminated the use of rebuttable presumptions. Further, the court did not rule on any of the deemed categories of ownership or control, including paragraph (a)(3) of the definition at previous § 773.5, which defined ownership or control, among other things, as: “[h]aving any other relationship which gives one person authority directly or indirectly to determine the manner in which an applicant, an operator, or other entity conducts surface coal mining operations.” We retained the substance of the previous (a)(3) category in paragraph (5) of the final definition of “

control

or

controller

.”

A commenter said that the proposed rule: (1) Created newly defined persons and entities, (2) identified them as “owners” and “controllers” and (3) created “novel enforcement tools” that focus on the owners and controllers. The commenter also said OSM lacks the authority to extend the use of the terms “owner” and “controller” beyond section 510(c) of SMCRA, 30 U.S.C. 1260(c). We disagree. Neither the proposed rule, nor this final rule, creates newly defined persons or entities. Rather, we define “

own, owner,

or

ownership

” and “

control

or

controller

” in a manner which is fully consistent with section 510(c) of the Act (30 U.S.C. 1260(c)), the decisions of the D.C. Circuit in the

NMA

litigation, and fundamental tenets of corporate law. Also, we did not create “novel enforcement tools.” The enforcement provisions we adopt today at final part 847 are derived from the plain language of, and are fully consistent with, the Act. Finally, we also disagree that “owner” and “controller” are terms that must be confined to section 510(c), 30 U.S.C. 1260(c). As the D.C. Circuit expressly held, SMCRA's information requirements at section 507(b), 30 U.S.C. 1257(b), “are not exhaustive,” and OSM may require the submission of additional information “needed to ensure compliance with the Act.”

NMA

v.

DOI II

, 177 F.3d at 9. Under this rationale, the court upheld our previous information disclosure requirements, which required applicants to disclose information—including ownership and control information—beyond the requirements expressly set out in section 507, 30 U.S.C. 1257; this final rule carries forward much of our previous information provisions. As explained elsewhere in this preamble, the ownership and control information we require applicants to submit pursuant to final § 778.11(c)(5), (d), and (e) is necessary to enforce both section 510(c), and other provisions of the Act.

Several commenters claim that the proposed rule disregards the corporate form to impose personal liability on officers, directors, and shareholders (including parent corporations) of a corporation. Several of these commenters cited the decision in

United States

v.

Bestfoods

, 524 U.S. 51 (1998), in support of their contention.

We disagree. Nothing in the permit eligibility provisions of this rule or in section 510(c) of the Act renders a

person legally liable or responsible for another person's outstanding violations. A finding of ownership or control under section 510(c) and this rule

does not

require a person subject to the finding to abate any violations (though he or she may be directly liable for abatement under other provisions of the Act). The permit eligibility aspect of this rule is not a direct enforcement mechanism brought to bear against owners or controllers since the permit eligibility provisions, which rely on the definitions of “

own, owner, or ownership

” and “

control

or

controller

,” cannot lead to an injunction or judgment against owners or controllers. They may, however, result in permit ineligibility pursuant to section 510(c)'s mandate that a permit “shall not be issued” if an operation owned or controlled by the applicant is currently in violation of the Act or other applicable laws. We also stress that owners or controllers may be subject to direct enforcement actions, as appropriate, under other provisions of the Act and our regulations.

United States

v.

Bestfoods

assessed the standards to determine the financial liability of parent companies for the actions of their subsidiaries under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Unlike the provisions at issue in

Bestfoods

, our definition and the associated rules do not impose personal financial liability on officers, directors, or shareholders. It instead, determines when persons are eligible to receive permits under section 510(c) of SMCRA. Being ineligible to receive a permit based on ownership or control of operations with outstanding violations is not the same as being personally liable for the debts or wrongs of a corporation. As such,

Bestfoods

is simply not applicable to this rulemaking. Indeed, in

NMA

v.

DOI II

, which was decided

after

the decision in

Bestfoods

, the court upheld rules which allowed parent companies to be denied permits based on the violations of their subsidiaries.

NMA

v.

DOI II

, 177 F.3d at 4-5. The final rule adheres to this principle.

In a similar vein, two commenters said it is a misconception that persons who own or control a corporate permittee or operator thereby “engage in or carry out” the surface coal mining operations owned by that permittee or operator. In substance, these commenters believe that, under

Bestfoods

, ownership or control of an entity does not equate to ownership or control of the entity's operations.

Again, we disagree. This argument was presented and rejected in

NMA v. DOI II

, which was decided

after

the decision in

Bestfoods

. The court expressly upheld our previous regulations, which allowed for permit denials when an applicant indirectly owned or controlled “downstream” operations through ownership or control of “intermediary entities.” As such, the court expressly endorsed rules which allowed for permit denials based on ownership or control of entities, rather than direct ownership or control of operations.

NMA

v.

DOI II

, 177 F.3d at 4-5. The final rule adheres to this principle.

A commenter said that “any suggestion that section 506 and section 510(c) together allow the agency to attribute the responsibilities of one who holds a permit (the “permittee”) to anyone the agency deems as an owner or controller of mining operations is simply arbitrary.” The permit eligibility aspects of this rule do not impose personal liability or responsibility on owners or controllers to abate or correct violations at operations they own or control, although they may be liable for abatement under other provisions of the Act and our implementing regulations. The preamble to this rule and the underlying proposed rule explain the rationale for each category of ownership and control.

A commenter asked the meaning of “engages in or carries out.” The commenter said that the language of the proposed rule does not distinguish between employees and those “who OSM describes, under the amorphous phrase, as persons ‘who engage in or carry out mining operations.”' In an effort to simplify and clarify our final ownership and control definitions, we are not adopting the phrase “engages in or carries out” in the final regulatory language. The final definitions identify those persons who must be disclosed in permit applications as owners or controllers of the applicant.

Another commenter said that the proposed examples capture people who do not engage in or carry out surface coal mining operations, and thus fall outside the jurisdictional reach of SMCRA. The commenter said our definition should focus on actual control. The definition we adopt today does focus on actual control, which includes both the ability to control and the exercise of control.

Elimination of the Rebuttable Presumption for Ownership or Control

Paragraph (b) of our prior definition of ownership or control listed six relationships which were “presumed to constitute ownership or control.” 30 CFR 773.5 (1997). The presumption could have been rebutted if the person subject to the presumption could demonstrate that he/she in fact “does not have the authority directly or indirectly to determine the manner in which the relevant surface coal mining operation is conducted.”

Id

. Once a regulatory authority made a

prima facie

showing that the presumption applied because the person fit into one of the enumerated categories, the burden shifted to the person to disprove that he or she was an owner or controller. Our rationale for shifting the burden rested on our belief that the person subject to the presumption was most likely to have access to the information regarding the nature of the relationship and thus should bear the burden of producing evidence demonstrating a lack of control.

In our 1998 proposed rule, we proposed to eliminate rebuttable presumptions from our ownership and control definitions. See 63 FR 70604 for an explanation of our rationale. After the proposal was published, the

NMA

v.

DOI II

court struck down two of the previous rule's presumptions pertaining to officers and directors and 10 through 50 percent owners of entities. This ruling provided further impetus to move forward with our proposed elimination of presumptions.

Our final rule emphasizes that applicants have the burden to identify all owners or controllers in a permit application (see final § 778.11(c)(5)), which must be accurate and complete before a permit can be issued. SMCRA section 510(b)(1), 30 U.S.C. 1257(b)(1); final 30 CFR §§ 778.9(b) and 777.15(a). Further, if we find that there has been a knowing withholding of information required under 30 CFR part 778, including ownership or control information, we will refer the evidence to the Attorney General for prosecution under final 30 CFR 847.11(a)(3) and section 518(g) of the Act, 30 U.S.C. 1268(g).

See also

final 30 CFR 773.9(d). Also, regulatory authorities have the ability to later identify owners or controllers who were not disclosed in the permit application. The proposed provisions, taken together, will ensure that all owners and controllers are properly identified.

A commenter opposed eliminating the rebuttable presumptions, noting that rebuttable presumptions are an evidentiary tool used to shift the burden of producing information to the individual or individuals most likely to have access to information. The commenter also said OSM had not sufficiently justified eliminating the presumptions “since the underlying questions of whether control exists or

not, and whether ownership exists or not, will still be required to be adjudicated.” According to the commenter, the absence of presumptions of ownership or control would increase the burden on the agency to demonstrate the existence of the relationship. The commenter stated that the permit applicant should bear that responsibility under section 507(b) of the Act.

Consistent with the commenter's observation that persons subject to our previous presumptions were most likely to have access to pertinent information, applicants are also most likely to possess the knowledge and information necessary to determine their owners and controllers. Thus, this rule requires applicants to identify all owners and controllers and list them in the permit application. As explained above, the information submitted by applicants must be accurate and complete. If applicants properly identify all owners and controllers in a permit application, there is no additional burden on regulatory authorities. However, if an applicant fails to disclose an owner or controller, and a regulatory authority attempts to identify an owner or controller under final § 774.11(f), the regulatory authority will appropriately bear the initial burden of establishing the existence of the ownership or control relationship. The rule does not alter the burdens and responsibilities that section 507 of the Act assigns to permit applicants.

Another commenter stated that we should not eliminate the two presumptions that were not challenged by the National Mining Association, or the two presumptions on which we prevailed. The commenter suggested that as to the two presumptions which were invalidated, the court of appeals did not preclude regulatory authorities from making a finding that a 10 through 50 percent shareholder, officer, or director in fact owns or controls a violating entity.

The commenter presented no new arguments in favor of retaining the presumptions. Therefore, for the reasons set forth in the preamble to the proposed rule, the final rule does not include presumptions. However, we agree with the commenter that the court of appeals did not preclude regulatory authorities from making findings of fact with regard to persons covered by the invalidated presumptions. Nothing in the final rule precludes regulatory authorities from doing so. We also added final § 774.11(f) to allow regulatory authorities to make findings of ownership or control if the applicant fails to disclose all required ownership or control information in its application, or to update the information as necessary.

Proposed § 778.5(a)

Proposed § 778.5(a) stated that “this part applies to any person who engages in or carries out mining operations as an owner or controller,” and provided examples of owners or controllers to support the definitions of “ownership” and “control” at proposed § 778.5(b). Several commenters said that we should clarify that the persons identified in the examples “are not automatically considered owners and controllers.” We agree. As explained above, this final rule clarifies that the categories at paragraphs (5)(i) through (vi) of the final definition of “

control

or

controller

” are merely examples of those persons who could have control, they are not deemed categories of control.

Proposed § 778.5(a)(1)—Officers, Directors, and Agents

Our first example of owners or controllers was “the president, other officers, directors, agents or persons performing functions similar to a director.” We retained the substance of this provision as an example of control at paragraph (5)(i) of our final definition of “

control

or

controller

.” While we anticipate that the president of a business entity will almost always control the entity, a president will not necessarily do so in every instance. Therefore, we included presidents as an example of persons who may control an entity rather than classify presidents as “deemed” controllers.

Two commenters said that our statement in the preamble to the proposed rule that we do not intend for all employees to be identified in a permit application is inconsistent with our proposal “to define ‘owner or controller’ to include agents” and our “acknowledg[ment] that all employees are ‘agents.’ ” According to the commenters, if agents are owners or controllers, and if all employees are agents, then the proposal would have required all employees to be identified in the application as owners or controllers. These commenters also said that “the class of employees who actually engage in mining operations would include the very employees with the least ability to control the permittee's decisions concerning mining operations: equipment operators, pumpers, truck drivers, drillers, etc.”

We did not intend for every employee to be identified in an application. The final definition of “

control

or

controller

” lists agents are an example of persons who

may

have actual control. This rule does not require all agents or employees to be disclosed in a permit application, only those agents and employees who meet our final definition. As a general matter, our final definition does not encompass the specific employees identified by the commenters—“equipment operators, pumpers, truck drivers, drillers, etc.”—since these individuals typically do not have the ability to determine the manner in which a surface coal mining operation is conducted. Rather, these employees are typically under the supervision of, or take orders from, management personnel who do possess the ability to control the operation. However, should the responsibilities, duties, or actions of these employees meet the definition of “

control

or

controller

,” then they must be disclosed as, or may be found to be, controllers under final §§ 778.11(c)(5) and 774.11(f), respectively.

A commenter asked for an explanation of the phrase “functions similar to a director.” A corporate board of directors controls and manages the business affairs of the corporation in accordance with applicable State law, articles of incorporation, and corporate by-laws. The board of directors has ultimate decision-making authority with respect to significant corporate matters. The will of the board is usually manifested by a majority vote of the directors. A person, such as a director, cannot escape being a controller under this final rule by asserting that he or she is a member of a group,

e.g.,

a board of directors, and can only exercise authority collectively with the group. At final paragraph (5), we clarify that a controller is a person who has the ability,

alone or in concert with others

, to determine the manner in which a surface coal mining operation is conducted. Thus, if a director votes with the majority of the board, we cannot foresee an instance in which that director is not a controller of that particular aspect of the corporation's operations. However, a director who dissents with regard to a particular course of action—or can otherwise prove that he or she took meaningful actions to prevent or abate a violation—likely is not a controller as to that aspect of the operation.

The phrase “functions similar to a director,” which we borrow from section 507(b)(4) of the Act, 30 U.S.C. 1257(b)(4), clarifies that a person may have the functional power, but not the official title, of a director. In essence, a person who, alone in or concert with others, exercises final managerial control or authority over the affairs of a business entity—be it a corporation or

other entity—performs a function similar to a director.

Proposed § 778.5(a)(2)—Day-to-Day Activities

Our second example pertained to those “persons who have the ability to direct the day-to-day business of the surface coal mining operation.” We are not adopting this example because it is subsumed within final paragraph (5) of the control definition.

Proposed § 778.5(a)(3)—Permittees and Operators

Our third example encompassed permittees and operators. We decided to include permittees and operators in the deemed portion of the final control definition at paragraphs (1) and (2), respectively. There is no time when a permittee does not control its entire surface coal mining and reclamation operation. In addition, experience has demonstrated that there is no time when an operator does not control its own conduct on a surface coal mining and reclamation operation. However, we recognize that non-permittee operators will not necessarily control the entire operation. The final challenge procedures at §§ 773.25 through 773.28 allow persons, including operators who are listed as or found to be controllers, to challenge their alleged ownership or control “of an entire surface coal mining operation, or any portion or aspect thereof.” There were no specific comments on the proposed third example.

Proposed § 778.5(a)(4)—Partnerships and Limited Liability Companies

Our fourth example pertained to “[p]artners in a partnership, the general partner in a limited partnership, or the participants, members, or managers of a limited liability company.” Based in part on guidance from the D.C. Circuit in

NMA

v.

DOI II

, we moved the general partner in a partnership criterion to the deemed portion of the control definition at final paragraph (3). We retained the remainder of the proposed provision as an example of control at final paragraph (5)(ii).

With regard to our previous definition identifying general partners in a partnership as presumptive owners or controllers, the D.C. Circuit stated: “As for subsection (4)'s presumption that control vests in each general partner, it naturally flows from ‘the tenet of partnership law that a general partner has control of partnership affairs as against the outside world.’ ”

NMA

v.

DOI II

, 177 F.3d at 7 (citations omitted). While the court was ruling in terms of a presumption of control, and not a category of deemed control, the court's statement clearly supports our inclusion of general partners of a partnership in the deemed portion of our control definition. Our experience in administering SMCRA also bears out this reality.

On the other hand, partners in a partnership and participants, members, or managers of a limited liability corporation will not always control the business entity, though they certainly might. Therefore, we included these persons as examples of potential controllers in paragraph (5)(ii) of the final definition.

A commenter said limited liability companies should not be treated in the same manner as limited partnerships, since, unlike limited partners, the individuals in a limited liability company do not retain the capability to make decisions. The commenter also said OSM should “re-evaluate the historic policy of allowing new permits to be issued based only on the evaluation of the general partner in a partnership.” Another commenter suggested that members of a limited liability company are often passive investors who “have little to do with the functional operation of any company, let alone a mining company” and “know little or nothing about the mining industry, let alone having any control over an operation.”

The final rule defines owners or controllers of business entities or mining operations without any regard to the particular form of the business entity. Hence, we treat partners in a partnership and members of a limited liability company similarly to the extent that we include them as examples of persons who may control an entity. Under paragraph (5) of our final definition, control determinations rest upon a person's ability to determine the manner in which a surface coal mining operation is conducted, not the type of business entity or the person's title. It is incorrect to say that OSM's “historic policy” included only an examination of general partners in a partnership. While not specifically mentioned in a deemed or presumed category of ownership or control, regulatory authorities certainly had flexibility to determine whether other persons had authority to determine the manner in which a surface coal mining operation was conducted.

See

previous § 773.5, at paragraph (a)(3) of the ownership or control definition. Finally, we do not fully agree with the commenter's generalization that the members, managers, or participants in limited liability companies are merely passive investors with little involvement with a company's operations and little or no knowledge of the mining industry. If that statement is true in a given instance, then the person is highly unlikely to be a controller under our definition any way.

Proposed § 778.5(a)(5)—Contract Mining

Our fifth example pertained to “persons owning the coal (through lease, assignment, or other agreement) and retaining the right to receive or direct delivery of the coal.” We retained the substance of this provision as an example at paragraph (5)(v) of the final control definition. Under the final rule, persons who own or control the coal to be mined by another person through lease, assignment, or other agreement and have the right to receive or direct delivery of the coal after mining are potential controllers. The circumstance described in this example is generally referred to as “contract mining,” wherein an entity (generally referred to as a “contract miner” or “captive contractor”) obtains a SMCRA permit in its own name, mines the coal belonging to another person (the owner or lessor), and must deliver the mined coal to that person or pursuant to that person's directions. The obligation to deliver the coal to the owner/lessor is often referred to as a “captive coal supply contract.” Generally, persons who have the ability to control contract miners are controllers who should be barred from receiving new permits under section 510(c) of the Act, 30 U.S.C. 1260(c), if they fail to prevent or correct violations. Further, most coal lessors who retain the right to receive the mined coal will be controllers because they have typically chosen to structure their relationship with an operator so as to retain the ability to control the mining operation.

Several judicial and administrative decisions support our inclusion of the contract mining example. For example, in

United States

v.

Rapoca Energy Co.

, 613 F. Supp. 1161 (1985) (“

Rapoca

”), OSM sued under section 402(a) of the Act, 30 U.S.C. 1232(a), to collect reclamation fees from the Rapoca Energy Company, which had contracted with others to mine the coal it owned. The issue was “whether a large coal company that contracts with independent companies to produce coal that it owns or leases is an ‘operator’ responsible for the payment of [such] fees.”

Id.

at 1163. Finding that Rapoca was liable for payment of the fees, the court stated:

Because of the degree of control which Rapoca Energy Company exerts over the mining companies with respect to crucial aspects of the mining process, along with the

corresponding lack of freedom regarding the mining companies ability to sell to anyone other than Rapoca, this court must conclude that the “independent contractors” are no more than Rapoca's agents.

Id.

at 1164.

Similarly, in

S & M Coal Co. and Jewell Smokeless Coal Co.

v.

Office of Surface Mining Reclamation and Enforcement

, 79 IBLA 350 (1984) (“

S & M Coal

”), the Department of the Interior's Office of Hearings and Appeals (“OHA”) held a lessor of coal liable for violations at a mining site even though the coal produced at that site was mined by another party pursuant to an oral contract. In reaching its decision, OHA noted that the lessor's employees took an active part in the planning and engineering functions in support of the mining operations. OHA also held that while the amount of control actually exercised is indicative of the relationship between the owner of the coal and the company or individual extracting the coal, the determination regarding exercise of control should not solely be based on past exercise of control and that it is important to determine the extent that a party can exercise control.

Several commenters said that the example should be deleted because it is “unfair and discriminates against a coal company simply because it owns minerals, leases them, and happens to be in the business of selling coal.” These and other commenters said, in substance, that retaining a right of first refusal to purchase coal from a third party, in an arm's length transaction, is not sufficient to establish control. Another commenter supported the example, agreeing that entities with an economic interest in the coal should be considered controllers to the extent that the entity does or can exercise control over, or derive benefits from, the mining operation.

We did not delete the contract mining example. Because owners or lessors of coal are not always “controllers” of contract mining operations, we included contract mining as an example of control in paragraph (5)(v) of the definition, rather than incorporating it into the deemed portion of the final definition of “control or controller.” However, when an owner or lessor of coal controls salient features of an operation performed by a contractor, a determination of control over the coal mining operation is justified and should be established. Our extensive experience evaluating and analyzing contract mining arrangements supports a conclusion that leasing coal combined with the right to receive or direct delivery of the coal generally establishes control. As to rights of first refusal, we agree that retaining such a right, in an arm's length transaction based on market conditions, will not, in and of itself, always establish control. However, a regulatory authority certainly has the authority to examine the particular circumstances to ascertain whether there are other indicators of control.

Another commenter said that:

rights sold to mining companies specifically describe the rights of each party. It's exceedingly presumptuous to state that those who happen to own the coal also have control over compliance with regulations when the coal is mined. Those rights generally stay with the entity mining the coal.

We disagree. The terms of a contract may establish the rights of the parties among themselves, but these terms are not a conclusive determination of the responsibilities of the parties under SMCRA. A contract in which an owner or lessor of coal purports to contract away the obligation to comply with SMCRA does not mean that the owner or lessor is not a controller under section 510(c) of the Act, 30 U.S.C. 1260(c). Again, what is relevant under this rule is whether the owner or lessor has the ability to determine the manner in which a surface coal mining operation is conducted.

Proposed § 778.5(a)(6)—Contribution of Capital or Other Resources

Our sixth example pertained to “[p]ersons who make the mining operations possible by contribution (to the permittee or operator) of capital or other resources necessary for mining to commence or for operations to continue at the site” We retained the substance of this provision as an example at paragraph (5)(vi) of our final definition of “control or controller.” Under this final rule, persons who contribute capital or other working resources under conditions that allow that person to substantially influence the manner in which a surface coal mining operation is or will be conducted are potential controllers. We agree with commenters who suggested that influence is not equivalent to control; however, contribution of capital or other resources, coupled with substantial influence over the manner in which the surface coal mining operation is conducted, may be tantamount to control.

Numerous commenters said that OSM should not “extend the ‘ownership or controller' definition to utilities that have a captive coal supply contract.” We deleted direct reference to captive coal supply contracts in this example. However, if a utility has a captive coal supply contract whereby it contributes capital to the operation, substantially influences the conduct of the operation, and can direct delivery of the coal, the utility is, in all likelihood, a controller under paragraph (5) of the final definition. That paragraph includes all persons and entities with the ability to control the manner in which the surface coal mining operation is conducted. A captive coal supply contract is typically indicative of a contract mining scenario, and may be covered under the contract mining example, which we discuss more fully above.

Numerous commenters said that OSM should not “extend the ‘ownership or controller' definition to mining equipment rental and leasing companies.” One asked if equipment dealers who provide credit in exchange for a security interest are controllers of the mining operation. Another said that equipment leasing is a valid arm's-length contract.

We adopted a subparagraph within the final example to clarify that providing mining equipment in exchange for the coal to be extracted is a factor which may indicate control. However, under paragraph (5)(vi)(A) of the final definition, equipment dealers who sell or lease equipment in arm's length transactions, but do not receive the mined coal, will not be routinely encompassed within the definition of “

control

or

controller

.” To be classified as a controller, the person must have the ability to determine the manner in which the surface coal mining operation is conducted.

Three commenters said a family member or friend who provides a personal guarantee to obtain a reclamation bond should not be considered an owner or controller. Depending upon the circumstances of the guarantee, and the nature of the guarantor's relationship to the surface coal mining operation, a family member or friend may in fact be a controller. Again, the focus is on that person's ability to determine the manner in which the relevant surface coal mining operation is conducted.

Taking an opposing view, another commenter said that, in addition to personal guarantees to obtain a reclamation bond, the provision should also include “any type of guarantor on an indemnity agreement to get a reclamation bond.” The commenter also said any person “or other entity who guarantees a bond should be listed under this provision.” We decline to specifically add the language suggested by the commenter because persons who guarantee a bond generally do not have

the ability to determine the manner in which a surface coal mining operation is conducted. However, final paragraph (5)(vi) could encompass such persons, provided that they also substantially influence the conduct of the mining operation.

One commenter said this example should be deleted because none of the circumstances in the example “necessarily mean[s] that an entity can exercise control over the day-to-day operations at a mine site.” We agree that the examples do not constitute

de facto

control. The persons identified in the examples will only be controllers if, in addition to meeting the criteria in the examples, they also have the ability to determine the conduct of the mining operation.

A commenter asked if banks, other lending institutions, third parties that have never been to the mine, construction companies who lease equipment, limited liability partners in a leasing company, and utilities that receive 100 percent of a mine's production are all controllers. The commenter expressed concern that if all these entities are controllers, they all would then be required “to submit signed, notarized certifications stating that they assume personal financial and criminal liability for a mine's transgressions.” Other commenters said OSM should not “extend the ‘ownership or controller’ definition to banks or any other lending institutions or to some individual who makes an arm's-length loan to a coal operator without any other ‘control’.”

As to banks, lending institutions, and individuals who make arm's length loans, we revised the example in paragraph (5)(vi) of the final definition to include only these persons who contribute capital or other working resources under conditions that allow that person to substantially influence the manner in which the mining operation is conducted. Therefore, the mere act of lending money will not render a person a controller. Our previous discussion of other comments addresses the other scenarios posited by the commenters. Neither the proposed rule nor this final rule requires controllers to certify to personal financial or criminal liability.

Proposed § 778.5(a)(7)—Persons Who Can Commit Financial or Real Property Assets

Our seventh example pertained to persons “who control the cash flow or can cause the financial or real property assets of a corporate permittee or operator to be employed in the mining operation or distributed to creditors.” We retained the substance of this provision and, based in part on guidance from the D.C. Circuit in

NMA

v.

DOI II

, moved it to the deemed portion of the definition of “

control

or

controller

” at paragraph (4). Final paragraph (4) includes as controllers persons having the ability to, directly or indirectly, commit the financial or real property assets or working resources of an applicant, permittee, or operator. This language largely mirrors one of our previous rebuttable presumptions of control. With regard to that presumption, the D.C. Circuit said:

There is nothing strained about section (3)'s presumption that one “[h]aving the ability to commit the financial or real property assets or working resources of an entity” controls it. The ability to control assets goes hand-in-hand with control and is typically entrusted, along with general managerial authority, to a single officer, often the president.

NMA

v.

DOI II

, 177 F.3d at 7 (citations omitted). While the court was ruling in terms of a presumption of control, and not a category of deemed control, the court's statement clearly supports our decision to include these persons in the deemed portion of our final control definition. Our experience in administering SMCRA also supports this action.

One commenter said the proposed example was vague. We disagree. The language in this final rule closely resembles and is consistent with the provision upheld by the D.C. Circuit, which found “nothing strained” about that provision.

A commenter asked if, under the proposed example, the following persons are “controllers”: chief accountant; payroll clerk; customers, by virtue of paying their bills; coal company customers; a bankruptcy court “authorized to disperse the assets of a company”; or a land agent who secures leases. As previously discussed, under paragraph (5)(vi) of the final definition, none of the listed persons would be considered controllers unless they have the ability to determine the manner in which a surface coal mining operation is conducted. The relevant inquiry is whether the person in question has the ability to commit the assets of a business entity in furtherance of the mining operation.

Proposed § 778.5(a)(8)

Our final proposed example pertained to “[p]ersons who cause operations to be conducted in anticipation of their desires or who are the animating force behind the conduct of operations.” We received many comments that said proposed § 778.5(a)(8) was “difficult to understand and would be difficult to implement.” We did not adopt this example because the concepts that we intended to convey in the proposed example are adequately captured in paragraph (5) of the final definition of “

control

or

controller

.”

Final Paragraphs (5)(iii) and (5)(iv)—10 Through 50 Percent Ownership, Interlocking Directorates and Commonality of Officers

As explained above, we added two examples of control to this final rule. We addressed the first of these examples—10 through 50 percent ownership of an entity—in our responses to comments on our proposed definition of ownership. We added the second example—“an entity with officers or directors in common with another entity, depending upon the extent of overlap”—since interlocking directorates and commonality of officers tend to indicate that a control relationship may exist between two entities. However, as with our other examples, the mere existence of the factual scenario—

e.g.,

interlocking directorates—does not necessarily mean there is a control relationship. A person is not a controller under paragraph (5) of the final definition unless that person has the ability to determine the manner in which a surface coal mining operation is conducted.

“Federal Violation Notice” and “State Violation Notice”

We proposed to revise the definitions of

Federal violation notice

and

State violation notice

. Several commenters said

Federal violation notice

should specifically mean a Federal surface coal mining violation notice and that

State violation notice

should specifically mean a surface coal mining violation notice.

Upon further review, we determined that there is no need to define these terms. The definitions of “violation” and “violation notice” adopted in 30 CFR 701.5 of this final rule are sufficient. The commenters' concern is addressed in the context of the rules in which these terms are used. They include only violations in connection with a surface coal mining operation. Therefore, we are not adopting definitions for

Federal violation notice

or

State violation notice

and will remove these terms from our regulations.

Knowing or Knowingly

We proposed to replace the definition of

knowingly

in §§ 724.5 and 846.5 with a new definition of “

knowing

or

knowingly

” in 30 CFR 701.5. The final

definition of “

knowing

or

knowingly

” reflects the proposed rule, although we revised the text of the definition to read: “

knowing

or

knowingly

” means “that a person who authorized, ordered, or carried out an act or omission knew or had reason to know that the act or omission would result in either a violation or a failure to abate or correct a violation.”

We revised the definition to ensure that its applicability would not be restricted to “violation, failure or refusal” as that term is defined in 30 CFR 701.5. We removed redundant language. In addition, we replaced the word “individual” with “person.” The Act and our regulations define

person

in a manner that includes both individuals and business entities, as is appropriate in the context in which the Act and regulations employ this term.

See

30 CFR 700.5 and SMCRA at section 701(19), 30 U.S.C. 1291(19).

Two commenters addressed the proposed definition. Both objected to the “knowing” standard being applied to “administrative” violations, violations which the commenters describe as those that do not cause environmental harm. One of the commenters observed that “knowingly” and “willfully” were originally associated with the issuance of individual civil penalties to the officers and directors of corporate entities.

The “knowing” standard appears in sections 518(e), 518(f), and 518(g) of the Act, 30 U.S.C. 1268(e), 1268(f), and 1268(g). There is nothing in any of these sections that would support a regulatory authority's use of this criterion to distinguish among violations when applying the “knowing” standard. Nor do we perceive the need to make such a distinction among violations of the Act and our regulations.

We agree that the “knowing” standard has been more visibly associated with individual civil penalties and corporate permittees. On February 8, 1988, at 53 FR 3664

et seq.

, we adopted initial and permanent regulatory program provisions for individual civil penalties at 30 CFR parts 724 and 846. These regulations included definitions for “knowingly” and “willfully.” However, the “knowing” standard is employed in sections 518(e) and (g) of the Act, 30 U.S.C. 1268(e) and (g), not just in the individual civil penalty provisions of section 518(f), 30 U.S.C. 1268(f). Hence, the final rule broadens the applicability of the “knowing” standard because the standard is not exclusive to an individual civil penalty that may be assessed under section 518(f) of the Act, 30 U.S.C. 1268(f).

Link To a Violation

We proposed to add a definition of

link to a violation

to § 701.5. After considering the comments on the proposed definition and upon further deliberation, we are not adopting the proposed definition because the term is too closely associated with a previously defined term,

ownership or control link

, and the previous concept of presumptive ownership or control. The final rule does not use the term “links” and it eliminates the concept of presumptions.

Outstanding Violation

We proposed to add a definition for

outstanding violation

. Commenters expressed confusion about the meaning of this term and questioned its consistency with section 510(c) of the Act, 30 U.S.C. 1260(c). Upon further deliberation, we are not adopting the definition in this rulemaking.

Instead, when expiration of an abatement or correction period has significance, we use the phrase, “violation that is unabated or uncorrected beyond its abatement or correction period.” Under this final rule, the phrases “outstanding violation” and “unabated or uncorrected violations” are used interchangeably. The term “outstanding violation” means any violation that is unabated or uncorrected.

Successful Environmental Compliance

We proposed to add a definition of

successful environmental compliance

. However, we are not adopting the proposed rules that would have used this term. Since the term

successful environmental compliance

does not appear in the final rule, we are not adopting this proposed definition.

Successor in Interest

We proposed to revise the definition for

successor in interest

. A commenter said the term should be more thoroughly defined in terms of what is required in proposed § 774.17. Another commenter argued that, “[t]he proposed definition fails to capture the language or the intent of the term used in the Act and the Congressional Record.” The same commenter also said the definition alters the expressed intent of the Congress that there should be a brief but reasonable opportunity for a successor to continue the active mining operation while becoming the permittee.

After considering the comments on our proposed revision of § 774.17, we decided that transfer, assignment, or sale of permit rights and successor in interest issues require further study. As a result, we are not adopting either the proposed changes to those provisions, or the proposed revision of the definition of

successor in interest

.

Violation and Violation Notice

We proposed to revise the definition of

violation notice

. The proposed revision included a notice of bond forfeiture when the cost of reclamation exceeded the amount forfeited, or in States with bond pools, a determination that additional reclamation or reimbursement is required.

After considering the comments we received and the changes we made to other provisions of the proposed rule, we decided to adopt definitions of both

violation

and

violation notice

. We moved most elements of our previous and proposed definitions of

violation notice

to the new definition of

violation

.

In this final rule, we redefine

violation notice

to mean “any written notification from a regulatory authority or other governmental entity, as specified in the definition of

violation

in this section.”

The final rule defines

violation

as that term is used in the context of the permit application information or permit eligibility requirements of sections 507 and 510(c) of the Act, 30 U.S.C. 1257 and 1260(c), and related regulations. The definition specifies that the term

violation

includes: (1) A failure to comply with an applicable provision of a Federal or State law or regulation pertaining to air or water environmental protection, as evidenced by a written notification from a governmental entity to the responsible person, and (2) a noncompliance for which OSM or a State regulatory authority has provided one or more of the following types of notices: (i) A notice of violation under 30 CFR 843.12; (ii) a cessation order under 30 CFR 843.11; (iii) a final order, bill, or demand letter pertaining to a delinquent civil penalty assessed under 30 CFR part 845 or 846; (iv) a bill or demand letter pertaining to delinquent reclamation fees owed under 30 CFR part 870; or (v) a notice of bond forfeiture under 30 CFR 800.50 when (A) one or more violations upon which the forfeiture was based have not been abated or corrected; (B) the amount forfeited and collected is insufficient for full reclamation under 30 CFR 800.50(d)(1), the regulatory authority orders reimbursement of the additional reclamation costs, and the person has not complied with the reimbursement order; or (C) the site is covered by an alternative bonding system approved under 30 CFR 800.11(e), that system requires reimbursement of any reclamation costs incurred by the system above those covered by any site-

specific bond, and the person has not complied with the reimbursement requirement or paid any associated penalties.

With respect to notices of bond forfeiture, we recognize that the violation review criteria in the preamble to the previous rule at 54 FR 18440-41, (April 28, 1989) states that OSM and most States would only consider the first situation to be a violation notice. That is, there would have to be an unabated or uncorrected violation underlying a bond forfeiture before a notice of bond forfeiture could be considered a violation or a violation notice. However, the two new conditions under which a notice of bond forfeiture will be considered a violation or violation notice are appropriate because each of these situations involves (1) a failure to comply with requirements of the Act or regulatory program, and (2) a separate notification to the person who forfeited the bond or defaulted on the reclamation obligations.

Several commenters suggested that references to bond forfeitures, State bond pools, and cost of reclamation should be removed from the examples. For the reasons discussed above, we do not find adopting this suggestion to be appropriate. We revised these portions of the definition for clarity.

A commenter said the definition should include permit revocation orders and bond forfeiture notices in situations in which someone other than the permittee or its controllers ultimately abates or corrects the violation. The commenter said that abatement by a third party should not clear those responsible for the violation.

We agree only to the extent that an unabated or uncorrected violation (including unpaid fees or penalties) still exists or that a person has failed to comply with a cost reimbursement order from a regulatory authority. In terms of permit eligibility under section 510(c) of the Act, 30 U.S.C. 1260(c), the critical element is whether some type of violation remains unabated or uncorrected. In this context, the Act provides no basis for making distinctions based on the party completing the reclamation or abating or correcting the violation.

A commenter said that including bond forfeitures in the proposed definition of

violation notice

blurs what constitutes a notice of violation. For the reasons discussed above, we do not agree.

Another commenter argued that “if there is an unanticipated change in circumstances, no ‘violation' is involved until there has been a refusal or failure to comply with the notice.” We disagree. The Act does not make the distinction that the commenter advocates. Furthermore, except for remining operations under section 510(e), the Act's permit eligibility requirements do not distinguish between violations resulting from unanticipated changes in circumstances and violations resulting from other situations.

Several commenters said the proposed definition of

violation notice

was too broad, and that orders, bills or demand letters for penalties and notices of bond forfeiture are already defined and have sanctions for failure to abate. We revised the definition to add more specificity and to restrict SMCRA-related violations to the circumstances under which a person receives the types of notice listed in the second paragraph of the definition.

One commenter agreed that the definition should not include bills or demand letters for delinquent reclamation fees. The commenter stated that OSM sometimes issues these bills and letters in error and that the Act does not mandate that we classify delinquencies as violations. Delinquent payment of reclamation fees is a statutory violation under section 402 of the Act, 30 U.S.C. 1232. Timely payment of reclamation fees and the penalty for delinquent payment is provided for under section 402(e) of the Act, 30 U.S.C. 1232(e). In addition, 30 CFR 773.17(g) establishes payment of reclamation fees owed under 30 CFR part 870 as a condition of permit issuance. We see no reason to treat this type of violation in a manner that differs from the treatment afforded to other violations.

A commenter also said that including unliquidated debt as a “violation notice” without requiring a notice of violation “blurs State obligations and raises potential due process claims regarding notice of the remaining debt and opportunity-to-defend, that are better left avoided.” As discussed at length in the preamble to the previ

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