Abandoned Mine Land Reclamation Fund Reauthorization Implementation; Final Rule DEPARTMENT OF THE INTERIOR

SUMMARY: The Office of Surface Mining Reclamation and Enforcement (OSM)

of the U.S. Department of the Interior is issuing final rules to amend

its abandoned mine land regulations, 30 CFR Subchapter R implementing

amendments made to Title IV of the Surface Mining Control and

Reclamation Act (SMCRA) of 1977, by the Omnibus Budget Reconciliation

Act of 1990 (November 5, 1990) (which included the Abandoned Mine

Reclamation Act of 1990, as amended), and by the Energy Policy Act of

1992 (October 24, 1992).

EFFECTIVE DATE: June 30, 1994.

FOR FURTHER INFORMATION CONTACT: Norman J. Hess, Office of Surface

Mining Reclamation and Enforcement, U.S. Department of the Interior,

1951 Constitution Avenue, NW., Washington, DC 20240; Telephone: 202-

208-2949.

SUPPLEMENTARY INFORMATION:

I. Background

II. Organization

III. Final Rules and Disposition of Comments

IV. Procedural Matters

I. Background

A. Summary of the Abandoned Mine Land Program--Public Law 95-87

The Abandoned Mine Land (AML) Reclamation Program was established

by SMCRA, Public Law 95-87, 30 U.S.C. 1201 et seq., in response to

concern over extensive environmental damage caused by past coal mining

activities. In effect, the Abandoned Mine Reclamation Fund (Fund) and

the program it supports is the coal industry's equivalent to the

``Superfund'' administered by the Environmental Protection Agency to

address hazardous waste discharges.

As originally enacted, only areas abandoned prior to the date of

enactment of SMCRA, where there is no continuing reclamation

responsibility by any person under State or Federal law, were eligible

for reclamation under Title IV. Funding of reclamation projects is

subject to a priority schedule. For example, ``priority 1'' projects

concern those that involve the protection of public health, safety,

general welfare and property from extreme danger of the adverse effects

of coal mining practices. ``Priority 3'' projects, on the other hand,

concern environmental problems associated with past coal mining

practices that do not necessarily constitute a public health or safety

threat.

The Fund, administered by the Secretary of the Interior through

OSM, is financed by a reclamation fee assessed on every ton of mined

coal at the rate of 35 cents per ton of surface mined coal, 15 cents

per ton of underground mined coal and 10 cents per ton for lignite.

Expenditures from the Fund are subject to appropriation by Congress.

The authority to collect the reclamation fee was due to expire on

August 3, 1992, 15 years after the date of enactment of SMCRA.

The Fund is divided into the State/Tribal and Federal shares with

each State or Indian tribe under a federally approved reclamation

program (generally referred to as ``program'' or ``primacy'' States)

entitled to 50 percent of the reclamation fees collected from coal

operations within the State or Indian lands. Annually, these States/

Indian tribes receive reclamation project construction grants and

administrative grants from their share of the Fund. States are also

authorized to use up to $3 million of their State share funds to

establish State coal mine subsidence insurance programs, and deposit

ten percent of their annual grants into special interest-bearing State

trust accounts for use after August 3, 1992, to carry out reclamation

activities.

The Federal share of the Fund is allocated among a number of

Federal programs such as emergency projects (involving sudden and life-

threatening situations which demand immediate attention), high-priority

reclamation projects in States and Indian tribes without federally

approved reclamation programs (referred to as ``nonprogram'' States),

the Rural Abandoned Mine Program (RAMP) administered by the Secretary

of Agriculture through the Soil Conservation Service (SCS), and the

Small Operators Assistance Program (SOAP) which provides financial

assistance to coal operators who produce less than 100,000 tons per

year to help defray certain costs associated with the surface coal

mining permitting process. Remaining funds are distributed to program

States under an allocation formula. At present, 23 States and three

Indian tribes have OSM-approved abandoned mine reclamation programs.

Noncoal abandoned mine reclamation projects can be undertaken in

only two instances. Program States and Indian tribes can utilize State

or Tribal share monies to reclaim an abandoned noncoal mine site if the

request is made by the State governor or Tribal head and the project

represents a public health and safety hazard. Moreover, once a program

State or Indian tribe certifies it has completed the reclamation of all

eligible abandoned coal mine projects, it can then use the full amount

of its State or Tribal share for abandoned noncoal mine land

reclamation projects.

B. AML Regulations

On October 25, 1978, OSM published final regulations implementing

an abandoned mine land reclamation program incorporating the provisions

of Title IV of the Act. The regulations establish procedures and

requirements for the preparation and implementation of State and Indian

reclamation programs, consisting of reclamation plans, submission of

annual projects, and applications for annual grants. Additional parts

of this subchapter include provisions for Federal, State, and Indian

Abandoned Mine Reclamation Funds, general reclamation objectives,

rights-of-entry, liens, emergency reclamation acquisitions, disposition

of lands and waters, reclamation on private lands, and Indian

reclamation programs.

Regulations relating to the amount and collection of fees were

promulgated in 30 CFR part 837 on December 31, 1977 (42 FR 62713). This

part has since been redesignated as part 870.

On June 30, 1982, OSM published revisions to its abandoned mine

land regulations in response to the Administration's request for

regulatory review. These revised rules concerned the establishment and

administration of the Abandoned Mine Land Reclamation Program by the

States, Indian tribes, and Federal Government, as required by SMCRA.

For more information regarding the exact nature of these revisions

refer to 47 FR 28574-28604 (June 30, 1982).

C. Accomplishments of the Abandoned Mine Land Reclamation Program

AML Fee Collections

From the beginning of the program through the Fiscal Year 1992,

reclamation fee collections into the Abandoned Mine Land Reclamation

Fund amounted to approximately $3.2 billion. The Fund also received

donations, user charges, and other recovered amounts such as late-

payment fines.

AML Emergency Program

Since the beginning of the program, OSM has encouraged States to

take over emergency project responsibility. Beginning in 1983, Arkansas

and Montana assumed emergency project responsibility, followed by

Illinois in 1984. During 1988-89, Kansas, Virginia, and West Virginia

took over responsibility for their emergency projects, and Alabama

assumed responsibility in 1990. In 1992, Ohio and Alaska assumed

responsibility. In 1989, OSM established a new emergency program policy

that provided Federal share funds, in addition to the formula-based

allocation, to States with emergency programs. Since 1988, it has been

OSM policy to stabilize the emergency portion of AML problems

permanently, and then to refer any remaining work at the site to the

State for consideration under its regular AML reclamation program. In

1992, OSM declared 179 new emergency projects, while States with

emergency programs initiated 110.

State and Tribal AML Programs

Beginning with Texas in 1980, OSM has approved State reclamation

programs so that currently all primacy States except Mississippi have

approved AML programs. During 1988 the Navajo and Hopi Tribe programs

were approved, and in 1989 the Crow Tribe received approval for its

program. States and the Indian tribes received grants totaling

$143,541,172 in 1993. Since 1981, when the States began receiving AML

administrative grants to operate their programs and construction grants

to complete reclamation projects, through 1993, they have received over

$1.9 billion from the Fund.

Minimum Programs

The minimum-level AML program was established by Congress in 1988

to assure funding for existing high-priority projects in States where

the annual State share allocation is too small for the State to

administer a program and initiate reclamation. Eleven States and Indian

tribes (Alaska, Arkansas, Iowa, Kansas, Maryland, Missouri, New Mexico,

North Dakota, Oklahoma, Utah, and the Crow Tribe) were eligible for

minimum-level program funding during 1993 and received such grants

during the year. Authorized funding of the minimum-level program was up

to $2,000,000 per eligible State/Indian tribe for 1993. The minimum-

program States/Indian tribes received $14,669,719 of Federal share

money in 1993, to bring these States to the minimum program level.

D. Abandoned Mine Reclamation Act (AMRA) of 1990

Since 1977, when the AML Fund was established, many of the scars

left from past mining practices have been reclaimed. Thousands of acres

have been contoured, revegetated and brought back to productive uses.

Despite such accomplishments, the inventory of unreclaimed high

priority public health and safety problems is still significantly high.

All such problems would not have been addressed with AML Funds

collected through 1992, the original expiration date for fee

collection.

In light of this continuing need to address high priority coal

problems, Congressman Rahall introduced a bill, H.R. 2095, in the 101st

Congress to extend the AML fee and adjust the allocation of AML Funds.

A detailed examination of this bill, as amended, can be found in H.R.

Report 294, 101st Congress, 1st Session (October 18, 1989). H.R. 2095,

as amended, was passed by the House of Representatives on October 23,

1989.

On October 16, 1990, the House again passed H.R. 2095 as part of

H.R. 5835, the Omnibus Budget Reconciliation Act of 1990. In conference

with the Senate, the text of H.R. 2095 was retained except for six

modifications and one addition. They are as follows: First, the

authority to collect reclamation fees was extended through September

30, 1995, rather than the year 2007. Second, a provision that provided

for modified reclamation fees after 1992 in States which have certified

the completion of all abandoned coal mine projects was dropped. Third,

provisions that would have expanded the scope of the emergency program

were deleted. Fourth, while the House bill limited the objectives of

the Fund to the first three priorities listed in current law, the

amendments maintain the current law list of project priorities. Fifth,

the requirement that the Secretary promulgate environmental standards

for reclamation projects was deleted. Sixth, the bill's authorization

of a new abandoned minerals and mineral materials mine reclamation fund

was dropped. Finally, an amendment relating to certain projects in

certified States was adopted.

On November 5, 1990, the President signed into law the Omnibus

Budget Reconciliation Act of 1990, Public Law 101-508, which included

the Abandoned Mine Reclamation Act of 1990, as amended. Besides

extending the authority to collect reclamation fees, the amendments to

Title IV contain several other significant provisions as follows:

The amendments concentrate a greater amount of resources toward

combating the highest priority abandoned coal mine reclamation

projects. This goal is accomplished by allocating forty percent of the

Federal share of funds to program States and Indian tribes until they

complete all of their priority 1 and 2 abandoned coal mine reclamation

projects.

The new provisions also provide additional resources to combat

abandoned coal mine hazards by enabling interest to accrue to amounts

in the AML Fund and by strengthening reclamation fee collection and

auditing authority.

The legislation also recognizes the severe hazards to public health

and safety caused by water supplies contaminated by past mining

practices.

The new amendments allow States and Indian tribes to establish

comprehensive acid mine drainage programs to combat the devastating

effects on land, water and quality of life in areas affected by acid

mine drainage.

The new provisions allow States and Indian tribes to address high

priority coal sites abandoned after enactment of the 1977 Act. Sites

which were abandoned prior to a State receiving primacy pursuant to

Title V of SMCRA, or which remain unreclaimed due to the insolvency of

a surety company, can now be addressed with Title IV funds.

The new legislation provides for a specific allocation of collected

fees from which funds may be transferred annually to the Department of

Agriculture to administer RAMP under Section 406 of SMCRA.

The new legislation expands the rights of States and Indian tribes

which have certified the completion of all known coal problems to

utilize State/Indian tribe share funds for noncoal reclamation

purposes, including the protection, repair, replacement, construction,

or enhancement of public facilities damaged by past mining practices or

which exist in communities adversely impacted by present mining.

The new legislation also provides that mineral owners and

purchasers be reported to OSM each quarter with the filing of the Form

OSM-1.

Finally, the new legislation raised the annual coal production

limit from 100,000 to 300,000 tons for eligibility under the Small

Operator Assistance Program authorized at Section 507(c).

E. Proposed Rules

OSM published proposed rules implementing the 1990 amendments to

Title IV and Title V of SMCRA and requested comments from the public.

In addition, other changes were proposed for part 795, Small Operator

Assistance, based on statutory authority existing under SMCRA. 56 FR

57376-57401 (November 8, 1991). During the comment period on the

proposed rules, OSM received comments through three public hearings as

well as written comments from a variety of sources.

Pursuant to Executive Order 12866, every Federal agency is required

within applicable statutory limits to choose regulatory goals that

maximize benefits to society and to select the most effective means to

achieve these goals. To this end OSM has met with and received comments

and recommendations from the representatives of coal mining States/

Indian tribes.

All comments received during the comment period were considered in

this rulemaking process, and all substantive comments received are

addressed in the following preamble. All comments received, as well as

summaries of meetings held and the record of the public hearings, are

available for inspection in the OSM Administrative Record, room 660,

800 N. Capitol Street, NW., Washington, DC.

F. The Energy Policy Act of 1992

On October 24, 1992 the President signed into law the Energy Policy

Act of 1992, Public Law 102-486. Included in this law were several

amendments to the Abandoned Mine Reclamation Program under Title IV of

SMCRA and to the Small Operator Assistance Program established pursuant

to Section 507(c) of SMCRA. The legislative changes to the AML program

include: an extension of the AML reclamation fee; the transfer of AML

funds to the United Mine Workers of America Combined Benefit Fund; a

reallocation of interest earned by the AML Fund; the deletion of the

reclamation priority regarding AML funded coal research; the extension

of reclamation eligibility for AML water problems created after August

3, 1977; new mine fire control procedures; and the modification of AML

eligibility criteria for sites affected by remaining operations.

The Energy Policy Act of 1992, Public Law 102-486, also amended the

Small Operator Assistance Program (SOAP) authorized at Section 507(c)

of SMCRA. The changes to the SOAP at Section 2513 of the Energy Policy

Act fall into two areas that will be covered in this rulemaking. First,

enhancements have been added to the basic technical services to provide

a more complete permitting package. These enhancements include:

Engineering analyses and designs necessary for the determination of

probable hydrologic consequences; cross-section maps related to the

permitting requirements of SMCRA; collection of archaeological and

historical information required by SMCRA and regulatory authorities and

development of associated plans; collection of site-specific resource

information and production of protection and enhancement plans for fish

and wildlife habitats and other environmental values required by the

regulatory authority; and pre-blast surveys required by SMCRA. Geologic

drilling for collection of samples associated with the statement of

results of test borings and core samplings is also authorized by the

Energy Policy Act.

Second, This rulemaking also includes another SOAP provision from

the Energy Policy Act that deals with reimbursement of costs. A coal

operator who has received assistance must reimburse the regulatory

authority if the operator's actual and attributed annual production of

coal for all locations exceeds 300,000 tons during the 12 months

immediately following the date on which the operator is issued the

surface coal mining and reclamation permit.

Except for provisions dealing with mine fire control procedures and

the training of eligible small operators concerning the preparation of

permit applications (which will be the subject of separate

rulemakings), OSM has included in these final rules the provisions made

by the Energy Policy Act, as outlined above for the Small Operators

Assistance Program and for the Abandoned Mine Reclamation Program. Such

changes are mandated by statute and do not require additional

implementing provisions or conditions. Accordingly, OSM is adopting

these provisions, as enacted, without interpretation or the addition of

any new requirements. Notice and comment pursuant to the Administrative

Procedure Act, 5 U.S.C. 553 is not required. All amendments made by the

Energy Policy Act of 1992 that are adopted by these final rules are

specifically explained in more detail in Part III--Final Rules and

Disposition of Comments.

II. Organization

The regulatory revisions are intended to implement the requirements

of the Act consistent with the purposes stated in Section 102(h), its

legislative history, and the Secretary's commitment to avoid excessive

and burdensome rules. The material concerning the Abandoned Mine Land

Program is organized into parts which comprise Subchapter R. The

material regarding the Small Operator Assistance Program (SOAP) is

found in Subchapter H. At the end of each part, comments received from

interested parties are addressed. It should also be noted that the term

``allocated'' as used in this preamble refers to the earmarking of

funds for a specific purpose. This administrative identification in OSM

records of monies in the Fund for a specific purpose does not mean that

such monies will be appropriated in a specific appropriation or will be

available for use in the year in which they were allocated.

In response to comments from Indian tribes, OSM has inserted

throughout the regulations references to Indian tribes when it uses the

word ``State''. Section 405(k) of SMCRA specifically provides that an

Indian tribe should be considered as a ``State'' for purposes of Title

IV. OSM has also made one further adjustment for Indian tribes.

Regarding the reclamation of post-SMCRA sites pursuant to Section

402(g)(4)(E) of SMCRA, the new amendments reference the date in which

the Secretary approved a State program pursuant to Section 503. Indian

tribes, however, do not have approved regulatory programs. To rectify

this problem, OSM has used September 28, 1984, as the applicable date

for Indian tribes. This date was chosen because it is the date that the

permanent Federal regulatory program on Indian lands took effect.

III. Final Rules and Disposition of Comments

Part 795--Permanent Regulatory Program--Small Operator Assistance

Program

General

The initial authorization for the SOAP at Section 507(c) of SMCRA

provided certain technical permitting services for hydrology and

overburden and geology for operators annually producing 100,000 tons or

less of coal from all locations. These technical services are directly

linked to the permitting requirements associated with the determination

of probably hydrologic consequences (PHC) and the statement of results

of test borings.

The Abandoned Mine Land Act of 1990 amended Section 507(c) by

raising the annual coal production cap from 100,000 to 300,000 tons at

all locations for eligibility for the technical permitting services

provided under the program.

The Energy Policy Act of 1992, Public Law 102-486, further amended

Section 507(c) by adding enhancements to the program's basic services

in order to provide a more complete permitting package. These

enhancements include: Engineering analyses and designs necessary for

the PHC; cross-section maps required by the permitting provisions of

SMCRA; collection of archaeological and historical information;

collection of site-specific resource information and production of

protection and enhancement plans for fish and wildlife habitat and

other environmental values; and pre-blast surveys. Furthermore,

geologic drilling for the collection of samples associated with the

requirements for the statement of the results of test borings is

authorized. The Energy Policy Act also reduced the operator's liability

period for reimbursement of costs from up to five years or the length

of the permit, whichever is shorter, as specified in OSM regulations,

to 12 months starting with the date the operator is issued the permit.

Discussion

Section 795.3 Definitions

The definition of ``qualified laboratory'' is being amended by

adding ``or other services as specified at Sec. 795.9.'' This will

ensure that qualified laboratories provide all technical services

authorized for the SOAP, i.e., the new technical services mandated by

the Energy Policy Act, as well as the basic hydrologic and geologic

services.

Section 795.4 Information Collection

Section 795.4 contains a list of the information collection

requirements contained in part 795 and the Office of Management and

Budget (OMB) clearance number. The proposed revision updates the data

contained in this section by including the estimated reporting burden

per respondent for complying with the information collection

requirements. The revision also provides the OSM and OMB addresses

where comments regarding the information collection requirements may be

sent.

No comments were received on this section which is therefore

adopted as proposed.

Section 795.6 Eligibility for Assistance

In paragraph 795.6(a)(2), OSM proposed revising the production

level of 100,000 tons to 300,000 tons with respect to operator

eligibility under the SOAP program. This change is nondiscretionary and

has been mandated by the Abandoned Mine Land Reclamation Act of 1990.

OSM wishes to emphasize that past production will be used as the

standard for evaluating whether an operator's probable total attributed

annual production from all locations is reasonably expected to be

within the 300,000 ton limit for eligibility under the SOAP. This

approach will reduce the potential for fraud and abuse by eliminating

large independent operators who might otherwise qualify under the

reduced liability period of paragraph (a)(2).

No comments were received on this paragraph.

Regarding paragraphs 795.6(a)(2)(i) and (a)(2)(ii), OSM proposed

changing the five percent to ten percent with respect to the baseline

above which ownership will play a role in determining ``attributed coal

production.'' The basis for the ten percent baseline is Section

507(b)(4) and regulations for determining ownership and control, as

well as permit information requirements promulgated thereunder. The

change would make SOAP eligibility provisions for ownership and control

consistent with all other similar requirements in the permanent program

rules.

One commenter stated that the proposal to change five percent to

ten percent with respect to the baseline above which ownership would

play a role in determining attributed coal production is logical and

necessary to have SOAP consistent with the normal permitting

requirements of ownership and control.

Another commenter, however, disagreed stating that the change from

five to ten percent for the purposes of attributing coal production

mistakenly links the percentage of ownership to the other provisions of

the Act where ownership is relevant only for permit-blocking and other

enforcement purposes. The commenter noted that existing part 795

already contains self-limiting language and believes that threshold for

attributed production should be set low so that assistance through the

SOAP is provided to those most in need. The commenter offered that the

Security and Exchange Commission (SEC) considers five percent ownership

significant for reporting purposes.

OSM disagrees with the dissenting comment. SOAP provides permitting

services and like all permitting requirements is authorized under

Section 507 of SMCRA. Furthermore, eligibility for the SOAP is tied to

eligibility for a permit at existing Sec. 795.6(a)(3) as explained at

48 FR 2268, January 18, 1983. OSM is unaware of any significance or

benefits to be gained by linking the percentage of attributed

production to SEC reporting requirements and the commenter provided

none. For these reasons, attributed production in the final rule will

be tied to the ten percent ownership as proposed and thus be consistent

with related permitting requirements.

Section 795.9 Program Services and Data Requirements

Paragraph (a) contains a general description of the basic technical

services available under the SOAP and references paragraph (b). The

language ``and provide other services'' is being added to reference the

list of enhancements added to paragraph (b) by the Energy Policy Act of

1992.

Paragraph (b) lists the specific technical services authorized for

the SOAP. Paragraph (b)(1) authorizes the determination of probable

hydrologic consequences. The phrase ``including the engineering

analyses and designs necessary for the determination'' is being added

based on the similar provision in the Energy Policy Act.

Under Sec. 795.9(b)(2), OSM proposed adding ``Drilling and'' at the

beginning of Sec. 795.9(b)(2). The objective is to clarify, consistent

with Section 507(c) of the Act, that drilling where it is needed to

provide the rock samples for overburden analysis is an authorized

service under the program. OSM believes that to link these services is

both logically and technically sound. Drilling of ground observation

wells is authorized currently on a case-by-case basis. To coordinate

any drilling with respect to serving needs for both rock samples and

ground water monitoring for baseline data would integrate several

important technical components of SOAP assistance and help to create a

sounder environmental analysis. It would also have the added benefit of

shortening the time frame for completion of technical studies.

OSM wishes to emphasize that drilling would be used only in

situations where adequate samples cannot be obtained from other sources

such as existing cores or nearby freshly exposed highwalls.

Furthermore, drilling is in no way intended to be explorative in

nature. Exploration activities are the responsibility of the operator

and the program administrator must ensure that the information on coal

depth, thickness, and reserves required under existing Sec. 795.7 is

reasonably accurate before authorizing drilling.

In the proposal, the phrase ``drilling and'' was inadvertently

placed in the middle of the rule instead of at the beginning. The

objective of the proposal as discussed in the preamble at 56 FR 53379,

November 8, 1991, would authorize drilling under the SOAP.

Two comments were received on this proposal and both were

supportive. One of the commenters pointed out the editorial error

discussed above and recommended that section 795.9(b)(2) be reworded,

as done in this final rule, to reflect that drilling is being added as

an authorized SOAP service. The other commenter noted that adding the

words ``Drilling and'' at the beginning of this paragraph to allow for

the payment of geologic drilling services is a long sought change and

totally supported.

This paragraph is being adopted as proposed with the exception of

the editorial changes highlighted earlier.

Paragraphs (b)(3) through (b)(6) are being added based on specific

provisions contained in the Energy Policy Act.

Statutory references to SMCRA contained in the Energy Policy Act

for these provisions have been changed to the corresponding permanent

program regulations.

Paragraph (b)(3) authorizes cross-section maps and plans as

required by 30 CFR 779.25 and 783.25 of the permanent program

regulations.

Paragraph (b)(4) authorizes the collection of archaeological and

historical information and related plans required by 30 CFR 779.12(b),

780.31, 783.12(b) and 784.17 of the permanent program regulations, as

well as other information required by the regulatory authority.

Paragraph (b)(5) authorizes pre-blast surveys required by 30 CFR

780.13 of the permanent program regulations.

Paragraph (b)(6) authorizes the collection of site-specific

resources information and production of protection and enhancement

plans for fish and wildlife habitats required by 30 CFR 780.16 and

784.21 of the permanent program regulations and information and plans

for any other environmental values required by the regulatory authority

under SMCRA.

Section 795.12 Applicant Liability

Paragraph (a) sets forth an introduction for the liability factors.

An editorial change is being made by substituting the phrase ``services

rendered'' for the existing phrase ``laboratory services performed'' to

be consistent with similar language associated with the Energy Policy

Act codified in paragraph (a)(2) below.

Paragraph (a)(2) deals with the liability period during which the

operator must reimburse the regulatory authority if the operator's

production exceeds the 300,000 annual ton limit. Paragraph (a)(2) is

being revised by substituting the following language from the Energy

Policy Act for the current requirement which references a liability

period of five years or the length of the permit, whichever is shorter:

``A coal operator who has received assistance pursuant to Sec. 795.9

shall reimburse the regulatory authority for the cost of the services

rendered if * * * (2) The program administrator finds that the

operator's actual and attributed annual production of coal for all

locations exceeds 300,000 tons during the 12 months immediately

following the date on which the operator is issued the surface coal

mining and reclamation permit.''

One commenter stated all operators being monitored under a

liability period should be held to the 300,000 ton standard for any

coal produced after October 1, 1991. The commenter believed this option

to be simple, logical and fair and consistent with the intent of

Congress in raising the eligibility standard for new operators to

300,000 effective that date. Another commenter stressed that it made

little sense to be providing SOAP services to a new company mining

300,000 tons while at the same time penalizing a smaller company for

exceeding a 100,000 ton production cap.

OSM agrees with the first comment and believes a dual standard for

liability as proposed, would cause confusion and disenchantment with

the SOAP, contrary to the intent of Congress. The final rule deletes

the phrase ``exceeds coal tonnage governing SOAP eligibility in effect

at the time assistance was approved'' from the proposal and in its

place the final rule will provide for an annual liability limit of

300,000 tons as mandated by AMRA. The 300,000 ton limit will not be

retroactive. Coal production prior to October 1, 1991, must be less

than 100,000 tons to avoid liability and reimbursement under the SOAP.

Section 795.12(a)(3) deals with transferred liability in the event

a permit acquired with SOAP assistance is sold, transferred, or

assigned to another person. OSM proposed removing this section and thus

eliminating liability in cases where SOAP supported permits were sold,

transferred, or assigned to others as a normal business practice.

Notwithstanding this view, OSM believed there to be a potential for

abuse by removing 795.12(a)(3) and specifically sought comments on this

concern or on regulatory criteria that could be used to distinguish

between normal business practices and those practices that could result

in abuse of the SOAP.

Two comments were received. One commenter supported the proposal

and stated that no significant potential for abuse is perceived. The

other commenter opposed the proposal and stated that requirements such

as contained in Sec. 795.12(a)(3) are essential to ensuring that SOAP

funds are not raided through the use of sham entities and further that

SOAP is not mandatory and thus anyone believing transferred liability

to be disruptive need not participate in the SOAP.

Because of the potential for abuse and the fact that no substantive

reasons were provided to balance this concern and no regulatory

criteria were offered to distinguish between normal business practices

and those that could result in abuse of the SOAP, the proposal to

remove Sec. 795.12(a)(3) which deals with transferred liability in the

event a permit acquired with SOAP assistance is sold, transferred, or

assigned to another person, has been rejected. This paragraph is being

updated to reflect the Energy Policy Act provisions by replacing the

phrase ``100,000 ton annual production limit during any consecutive 12-

month period of the remaining term of the permit'' with the new phrase

``300,000 ton production limit during the 12 months immediately

following the date on which the permit was originally issued.''

Part 870--Abandoned Mine Reclamation Fund--Fee Collection and Coal

Production Reporting

General

Title IV of the Surface Mining Control and Reclamation Act of 1977

directed the Secretary of the Interior to collect per-ton reclamation

fees from coal mine operators to support the reclamation and other

activities listed under this Title. OSM developed a reclamation fee

collection program and published rules in the Federal Register to

assist mine operators in meeting their fee obligations, to specify

management activities for fee collection, and to define a range of

compliance activities that include compliance audits, debt collection,

and litigation procedures.

The major components of the fee collection program are the fee

collection system, the fee compliance system, and the litigation

system.

Fee collection system: OSM operates and maintains the Abandoned

Mine Land Fee Collection System (AMLFCS) in Denver, Colorado.

The AMLFCS is an automated system which records and accounts for:

(1) Collections and deposits of reclamation fees into the Federal

depository, (2) fee payments and delinquencies, and (3) identification

of collections for appropriation and use by States and Indian tribes

under OSM approved reclamation programs.

Fee compliance system: Duly authorized officers, employees, or

representatives of the Secretary are located in the coal producing

regions to ensure that fees are collected through appropriate

investigations and audits.

Litigation system: The Associate Solicitor, Division of Surface

Mining, in concert with the Department of Justice (Justice), is

responsible for litigation associated with the collection of delinquent

fees. The Division initiates enforcement action through Justice to

collect delinquent fees and provides legal assistance to OSM on fee-

related issues.

On December 13, 1977, OSM published final rules as part 837 (42 FR

62713) setting forth procedures for payment of reclamation fees and

recordkeeping requirements. On May 15, 1978, OSM published an amendment

to these rules (43 FR 20793) to establish the interest rate on late

payments. These rules were later renumbered in the Code of Federal

Regulations as part 870.

Discussion

Section 870.5 Definitions

OSM has amended the definitions in section 870.5 for ``eligible

lands and water,'' and ``left or abandoned in either an unreclaimed or

inadequately reclaimed condition,'' and added new definitions for

``mineral owner'' and ``qualified hydrologic unit.'' The new

definitions update these terms so that they are consistent with the

amendments made by the Abandoned Mine Land Act of 1990, Public Law 101-

508 (November 5, 1990) and the Energy Policy Act of 1992, Public Law

102-486 (October 24, 1992). Although, due to oversight, most of these

definitions were not presented in the proposed rules published November

8, 1991 (56 FR 57376-57401), OSM is publishing them in the final rule.

These definitions merely reflect the eligibility criteria already

presented in the proposed rule. OSM therefore believes that it has

received adequate comment on the eligibility criteria. In addition, the

changes to the definitions reflect the mandatory changes to eligibility

as set forth in the 1990 and 1992 amendments to Title IV of SMCRA. The

definitions now reflect the additional eligibility for lands adversely

affected by mining between August 3, 1977 and November 5, 1990; for

noncoal lands after certification of the reclamation of all known coal

problems; for water projects; and finally for lands affected by

qualifying remaining operations.

Section 870.10 Information Collection

OSM has revised section 870.10 which contains a list of the

information collection requirements contained in part 870 and the OMB

clearance numbers. The revision updates the data contained in the

section by including the estimated reporting burden per respondent for

complying with the information collection requirements. The revision

also provides the OSM and OMB addresses where comments regarding the

information collection requirements may be sent.

Section 870.12 Reclamation Fee

New section 870.12(d) has been added to specify the new termination

date for the payment of reclamation fees. As originally passed by

Congress in 1977, the reclamation fee obligation was for a 15-year

period starting in the last quarter of 1977 and extending to September

30, 1992. Congress extended this date 3 years through the enactment of

Public Law 101-508. The reclamation fee obligation was applicable to

coal produced through September 30, 1995. As noted in H.R. Report No.

294, 101st Congress, 1st Session 17-18 (1989), the extension of the

reclamation fee was based in large measure on the continuing need to

address high priority coal problems. Though the AML program over the

last 13 years has reclaimed a significant number of acres of abandoned

lands, Congress found that the ``inventory of unreclaimed high priority

coal mine sites was still overwhelming''. Id. at 17.

In 1992 Congress once again took up the issue of an AML fee

extension as part of the Energy Policy Act of 1992. H.R. Report No.

474, accompanying H.R. 776, recommended that the AML fee be extended

until 2010. Of significance to the House Committee was an OSM estimate

that when the existing authority to collect the reclamation fee expires

in 1995, approximately $1.6 billion worth of high priority health and

safety threatening sites would remain unreclaimed. In order to finance

the reclamation of these remaining sites, the Committee recommended

extending the AML fee until 2010 (H.R. Rept. No. 474, 102d Cong., 2d

Sess. 90 (May 5, 1992)). In conference this date was revised to

September 30, 2004. The amendment to 30 CFR 870.12 would implement this

new fee extension date.

One commenter stated that based on the estimated costs for

reclaiming all AML sites under its jurisdiction, OSM would not complete

this task under current funding levels until 2035 AD. Thus, OSM is

urged to consider extending the AML fee.

OSM does not accept this comment. Extensions of the fee collection

authority are a matter to be addressed by legislation and are

considered to be beyond the scope of this rulemaking.

Section 870.15 Reclamation Fee Payment

OSM has amended Form OSM-1 to collect additional coal production

and ownership information. Public Law 101-508 requires that additional

information be reported in the quarterly report filed by operators;

specific requirements include identification of the permittee, the

permit number, the Mine Safety and Health Act (MSHA) number, the owner

of the coal, the preparation plant, tipple, or loading point for the

coal, and the purchaser of the coal.

In OSM's proposed rule the Agency sought comments regarding the

detail to which this information must be collected so as to ensure that

information that is to be collected is useful. Also, as a means of

achieving Congress' intent of minimizing the reporting burden, OSM

noted its consideration of the establishment of thresholds (percentage

of coal purchased, or percent of mineral ownership) for purposes of

determining who qualifies as a reportable mineral owner and reportable

purchaser, with the requirement that each Form OSM-1, when the

thresholds are not met, identify at least the largest mineral owner and

purchaser.

Information contained in the quarterly reports, including

information updates would be maintained in a computerized data base by

OSM. In enacting these new reporting requirements, Congress believed

that this information would be necessary for the agency to determine

the identity of entities from whom to seek payment in the event of

under-payment or non-payment of the reclamation fees. H.R. Report. No.

294, 101st Congress, 1st Session 26 (1989).

OSM has also made a minor editorial change to section 870.15(C)

consistent with its proposed rule. This modification changes the title

of the current Form OSM-1 from ``Coal Production and Reclamation Fee

Report'' to ``Coal Sales and Reclamation Fee Report.'' This is intended

to more closely reflect the rules under section 870.15(b) which require

operators to report tonnage of coal sold, used, or transferred as

opposed to coal produced.

The SMCRA amendments require that mine operators report changes in

mineral ownership, purchasers, tipples, preparation plants, loading

points, and other information required to be reported as part of the

quarterly Form OSM-1 process. Congress stated it did not expect these

new requirements to place a significant additional reporting burden on

operators.

The revised Form OSM-1 incorporates the new information required by

the amendments. The instructions accompanying the Form OSM-1 set forth

the new data reporting requirements, including mineral owner,

purchaser, tipples, loading points, etc. As part of OSM's analysis of

the new amendments for this part, the Agency conducted a study of

owner/purchaser profiles in large, medium, and small coal producing

companies to develop an estimate of the nature and extent of the owner/

purchaser information which OSM might collect (and require operators to

report) as a result of the 1990 AML amendments.

OSM analyzed data from eight coal companies to determine how the

amendments could impact their administrative reporting burden. The

Agency gathered ownership and sales statistics for two large companies,

four medium companies and two small companies in order to evaluate the

potential impact of the SMCRA amendments. While the study was not based

on statistical selection criteria, the data fairly represents the kind

of owner/purchaser relationships that OSM would expect to encounter

across the industry.

The study supports the need to establish reasonable interpretations

of the terms ``owner'' and ``purchaser'' in order that the data

furnished by operators to OSM is both manageable and useful. The eight

companies examined represent a wide spectrum of purchaser and owner

relationships. For example, during 1990, one large company in Kentucky

operated its own mines, bought coal from contract miners, brokered coal

representing several purchasers, and sold coal to 90 individual

purchasers. Four purchasers (major public utilities) accounted for

about 90 percent of its sales. The company reported 2,100,000 tons of

coal sales during 1990.

In contrast, a small Colorado coal company operated a single mine.

Except for one major buyer, the company sold coal on a cash basis to as

many as 652 customers during a single quarter, each purchasing one ton

or less. Annual sales amounted to 24,500 tons.

Another coal company located in Ohio operates eight company mines

and purchases coal from seven contract miners. There are 47 permits

associated with the 8 MSHA-ID's under which the company reports and

pays its quarterly fees. On one permit number which OSM selected for

review, there were three mineral owners registered with the regulatory

authority. Similar profiles exist for other companies selected for

review.

Although OSM's study was limited, the data suggests that thresholds

would assure that the information collected identifies only those

mineral owners and purchasers who are in a position to influence the

coal operations that are reported. This would avoid a proliferation of

reporting and data collection and the associated significant

administrative and cost burden that would otherwise result.

On the basis of this study and other information, OSM proposed the

following threshold definition of ``owners'' and ``purchasers'' for

Form OSM-1.

The name and address of any person or entity who, in a given

quarter, is the owner of ( ) percent or more of the mineral estate

for a given permit, and any business entity or individual who, in a

given quarter, purchases ( ) percent or more of the production from

a given permit shall be reported to OSM on a quarterly basis. In the

event that no single mineral owner or purchaser meets the ( )

percent rule, then the largest single mineral owner and purchaser

shall be reported.

OSM suggested that the threshold value of 10 percent be

incorporated into the above definition, and accordingly requested

comments on this or other threshold values. Without thresholds, OSM

believed that data reporting and collection would proliferate without

significant benefit. However, by establishing reporting limits, OSM

would not only minimize its own administrative burden and that of the

operator, but it would assure the usefulness of the data by identifying

only those individuals and entities who, by the significance of their

ownership and/or purchasing power, may influence coal mining

operations.

Three commenters provided detailed comments regarding their

opposition to the reporting requirements in 30 CFR 870.15, particularly

the requirements relating to the submission of information on persons

who own 10 percent or more of the mineral or who purchase 10 percent or

more of the production. The commenters note that the current proposal

would amend the regulations at 30 CFR 870.15 to require operators to

report tonnage on a revised Form OSM-1. One of these commenters refers

to the preamble wherein OSM states that the legislation reauthorizing

the AML fee expanded the reporting requirements to include the

identification of the permittee, the permit number, any operator in

addition to the permittee, the owner of the coal, the preparation

plant, tipple, or loading point for the coal and the purchaser of the

coal. 30 U.S.C. 1232(c), 56 FR 57379, 57396.

OSM's own study, however, reveals that the reporting of all

ownership and purchaser data would impose costly reporting burdens on

companies with multiple operations and/or purchasers. Requiring the

operator to report all ownership and purchaser information on a

quarterly basis would be a wasteful and costly exercise. Thus, OSM set

the threshold value at 10 percent.

The commenters agree that the results of the OSM study demonstrate

the need to establish reasonable interpretations of the terms ``owner''

and ``purchaser'' in order that ``the data furnished by operators to

OSM is both manageable and useful.'' 56 FR 57380 (col. 1). They further

agree that establishing limits on such reporting data would ``minimize

[OSM's] own reporting burden and that of the operator.''

The commenters disagreed, however, with several aspects of the

proposal. First, they disagree with the establishment of an arbitrary

10 percent threshold (or any numerical threshold) for reporting mineral

purchases and ownership. Instead, they suggest that OSM simply require

the operator to report the single largest mineral owner and purchaser.

In many cases, they assert, the operator/lessee will be the single

largest mineral owner, often leasing reserves from several different

mineral owners prior to submitting a permit application. Requiring the

identification of all lessors will only increase the administrative

burden on the operator and OSM, and will duplicate the existing permit

application information requirements at Section 507(b), 30 U.S.C.

1257(b).

The commenters further state that while the OSM proposal to reduce

the reporting burden is a step in the right direction, there is no

rational basis for establishing a minimum 10 percent threshold for

reporting mineral ownership or coal purchases on Form OSM-1. In fact,

the commenters assert, OSM itself provides no justification in the

preamble for its suggestion that a 10 percent threshold be set. They

argue that, while the ownership and control rules provide that the

ownership of 10 percent of the voting stock of an entity creates a

rebuttable presumption of control over the surface coal mining

operation, 30 CFR 773.5(b)(5), the rules do not establish a similar

presumption for 10 percent mineral owners, nor has OSM cited evidence

demonstrating that such owners/purchasers are responsible for payment

of the fee. Moreover, many operations lease the coal from several

different owners, and are, for all practical purposes, the owners of

the coal. The commenters assert that requiring the additional listing

of all coal owners who lease to any company will only increase the

reporting burden on operators and OSM, without providing any meaningful

information on the person responsible for the fee payment.

The commenters believe that in order to meet the requirements of

Section 402(c) of SMCRA, it should be sufficient for an operator/

lessee, especially one that leases coal from multiple lessors and that

sells to more than one purchaser, to list the single largest purchaser

and mineral owner on Form OSM-1. They argue that requiring coal

operators to list all mineral owners or purchasers would impose a heavy

administrative burden on both the industry and the Secretary, without

any corresponding benefit. In the commenters' view, identifying all of

the coal purchasers or purchasers of 10 percent or more of the coal or

all of mineral owners or owners of 10 percent or more would reveal no

useful information and would subvert the Congressional intent that the

agency collect and computerize the information required by Section

402(c) for the purpose of determining ``what parties are responsible

for payment of the reclamation fees, and * * * the identity of entities

from whom to seek payment in the event of under or non-payment of the

reclamation fees.'' H.R. Rep. No. 101-294, 101st Cong., 1st Session 26

(1990).

The commenters further state that identifying the mineral owners

and purchasers is a costly, time-consuming task. One company that is

among the nation's ``top 10'' coal producers, reported that it took 8

man-days to compete approximately 50 OSM-1 forms, with each form

listing an average number of 3 purchasers. This substantial amount of

time does not include the time it would take to list all mineral

lessors, as the company/lessee has listed itself as the owner of the

coal on each form.

Secondly, these commenters also raised concerns regarding OSM's

revised Form OSM-1 and the agency's proposed 10 percent threshold for

reportable mineral ownership or coal purchaser information. They state

that the proposed rules refer to the revised Form OSM-1 and request

comment on whether the agency should establish a 10 percent threshold

for reportable mineral ownership or coal purchaser information. 30 CFR

870.15. Yet the agency has proceeded to implement the 10 percent

threshold requirement prior to the close of the comment period. The

revised Form OSM-1 currently requires operators to list ``the names and

addresses of any person or entity owning 10 percent or more of the

mineral estate for [the] permit.'' Similarly, a purchaser of coal is

defined as follows:

* * * those persons or entities who purchased 10 percent or more of

the production from a given permit.

See, Instructions for Completing Form OSM-1, Part 3.

The commenters questioned the agency's apparent predisposition to

establish a 10 percent threshold without benefit of public comment on

the issue, pursuant to the Administrative Procedure Act.

Third, a commenter stated that the 10 percent threshold for

reporting mineral ownership is the same definition used in 30 CFR 773.5

in the context of ownership and control (as it pertains to permit

applications). The commenter argued that, although it is conceivable

that an entity who owns the coal may indeed have the authority to

directly or indirectly determine the manner an applicant, operator, or

other entity conducts the coal mining operations, OSM must also realize

that many mineral owners do not exercise ``control'' of the surface

mining operations.

Even more troubling to the commenter is the assertion that the

definition as used on the Form OSM-1 is one for which there is no

rebuttable presumption, particularly if it is the same definition that

OSM uses for ``owned or controlled and owns or controls.''

Another commenter disagreed. This commenter stated that the

establishment of thresholds for mineral owners and purchasers undercuts

the collection of information that may be of significance for both

Title IV purposes, and for supporting the database for ownership and

control under Title V. Particularly in the case of contract mining

situations, the purchaser and mineral owner information becomes of

critical importance.

Typically, the commenter noted, the mineral owner information is

readily available to the reporting entity, since it appears on the mine

lease or other document authorizing coal removal, or is readily

accessed in courthouse records. Establishment of a threshold in this

case is unnecessary. Similarly, direct marketing of small amounts of

coal is unheard of, and the reporting entity can readily access the

information relating to where the coal was marketed or brokered.

Alternatively, the commenter said, if a tonnage or percentage of

sales threshold is to be used, it should be set at a level so as to

exclude de minimis amounts but low enough to ``capture'' all

information that might reflect ownership or control of the disposition

of the coal.

In response to the first general comment, regarding the

appropriateness and practicality of the 10 percent threshold, OSM has

carefully reviewed these concerns but has elected to retain the 10

percent threshold. A strict interpretation of the language of the Act

might require collection of information on all mineral owners and

purchasers. OSM, on the basis of its experience and the study conducted

after this legislation was enacted, however, has determined that a

lesser level of information collection is justified and is consistent

with Congressional intent.

OSM believes that Congress' intent in enacting this language was to

provide information relevant to the collection of ownership and control

data on mining operations. For instance, it must be noted that Congress

specifically required that the information be retained in a

computerized database. Clearly, the best known computerized database

maintained by OSM, both at the time that the AML legislation was

enacted and currently, is the Applicant/Violator System (AVS). The

information provided under Section 402(c) would be relevant to the

identification of ownership or control links pursuant to 30 CFR 773.5.

Such identified owners or controllers might, under certain

circumstances, be responsible for implementing certain requirements

under the Act, such as the payment of AML fees. See 30 CFR 773.5(a)(3)

and 30 773.5(b)(6). See also United States v. Rapoca Energy Co., 613 F.

Supp 1161 (1985).

Application of Section 402(c) to all mineral owners and purchasers

would impose an excessive administrative burden on the agency. If

information on every owner or purchaser, no matter how minor their

interest, were collected and maintained on AVS, AVS would be cluttered

with irrelevant information that would not clearly identify actual

owners or controllers of surface coal mining operations. The net effect

of such extraneous information would be to hinder the effective

implementation and maintenance of AVS. Accordingly, OSM believes that

limiting the collection of information to owners or purchasers with

interest of 10 percent or more fulfills the intent of the legislation

by enabling OSM to identify the most likely owners or controllers of

surface coal mining operations. In substance, the larger percentage

owners or purchasers are more likely to be the actual owners or

controllers of surface coal mining operations.

On the other hand, with respect to the concern that OSM should

require identification of only the single largest owner or purchaser,

OSM believes that this could create a misleading picture of a surface

coal mining operation. For instance, under the theory of this comment,

a surface coal mining operation with a significant number of both

mineral owners and purchasers would only report the single largest

owner and purchaser. The difference between the largest purchaser or

owner and the smallest purchaser or owner could be a de minimis amount.

There is no useful purpose in distinguishing one small percentage owner

or purchaser from another. This in no way would advance OSM's mission

of identifying the true owners or controllers of the site. Further,

under the theory of this comment, a site with only a few owners or

purchasers would report only one of each category under this theory.

Thus, OSM would not have access to information identifying potentially

influential persons who can exercise control over the site.

With respect to the concern about how time-consuming it is to

identify purchasers and mineral owners, OSM recognizes that this task

will require some commitment on the part of the regulated community.

Nevertheless, the task has been imposed by the Congress in its revision

of Section 402(c). OSM has made every attempt to make this a manageable

task by establishing the 10 percent threshold, which should ensure that

no more than 10 owners and 10 purchasers are required for each Form

OSM-1 submission. Furthermore, the commenters should remember that

information on all mineral owners is already a requirement of the

permit application; this information thus should be readily available

for Form OSM-1 compliance.

OSM also understands the commenters' concern regarding the

collection of information prior to promulgation of this rule. This rule

is prospective in its application, and OSM's actions prior to

promulgation were not intended to affect the decisions made in this

rulemaking. However, the relevant provisions of SMCRA contained in

Section 402(c) went into effect on October 1, 1991. As of that date,

OSM was required to collect the information required by the Federal

statute, and did so. In the absence of a reasonable threshold standard

for the information collection, OSM and the AVS would have been

inundated with information which would have included de minimis owners

and purchasers. Such information would have been of limited utility for

purposes of identifying parties responsible for the payment of

reclamation fees and the owners and controllers of surface coal mining

operations. Accordingly, OSM acted to limit the amount of information

collected to assure that useful information was collected in a

manageable manner for storage and use on AVS. To the extent that the

commenter believes that insufficient information was collected prior to

the promulgation of this rule, that issue is beyond the scope of the

current rulemaking, and may be addressed in another forum.

The third issue raised by the commenters concerned the use of

ownership and control concepts in AML reporting requirements. In

substance, the commenters' concern appears to be that OSM has

inappropriately mixed the statutory requirements of Title IV with the

regulatory requirements of Title V. For instance, they note that OSM

has applied the 10 percent threshold of presumed control by

stockholders under 30 CFR 773.5(b) to the reporting of mineral owners

and purchasers under Section 402(c) of SMCRA.

OSM disagrees with the view that ownership and control concepts are

irrelevant to the implementation of Section 402(c) of SMCRA. The

reporting requirements imposed by Congress in the legislation appear to

track the needs of OSM's ownership and control regulation at 30 CFR

773.5(b)(6) which provides a presumption of control of surface coal

mining operations for certain mineral owners. Further, the legislation

contains an explicit reference to OSM's computerized database (i.e.,

AVS), which indicates that the focus of the amended reporting

requirements of Section 402(c) is to assist the ownership and control

review process.

Accordingly, the use of ownership and control concepts, such as a

10 percent threshold, are appropriate in OSM's implementation of

Section 402(c) of SMCRA. Although the 10 percent threshold is not

applied to mineral owners or purchasers under the current ownership and

control rule, application of a 10 percent threshold to such individuals

under Section 402(c) of SMCRA is consistent with Congressional intent,

serves the public interest, and is within the spirit of the ownership

and control rules.

OSM further recognizes that the application of the 10 percent

threshold to purchasers and mineral owners may not identify the

controllers of a surface coal mining operation in every case, or those

otherwise responsible for the payment of AML fees in every case.

Nevertheless, such a threshold for reporting is a good starting point

to enable OSM to identify potential owners or controllers, and

represents an achievable level of reporting and record keeping for both

the agency and the regulated community.

Further, in response to the concern that the use of ownership and

control concepts creates an irrebuttable presumption that the

purchasers or mineral owners control surface coal mining operations,

OSM observes that the disclosure of the purchaser, mineral owner, or

other information pursuant to Section 402(c) would not, in and of

itself, establish a presumption of ownership or control for either

Title IV or Title V purposes. OSM's use of concepts from the ownership

or control rule is undertaken to simplify reporting by the regulated

community and data collection by OSM under section 402(c) in a manner

which OSM believes is consistent with Congressional intent in revising

Section 402(c) and requiring such disclosure.

Besides those comments regarding the 10 percent threshold issue,

other comments were submitted on 30 CFR 870.15, raising issues of

privacy regarding information collected under the revised Form OSM-1

requirements. The commenters state that requiring disclosure of owners

and purchasers raises serious concerns about the potential disclosure

of sensitive and confidential information about coal markets, royalty

rates and utility customers. They argue that release of this

information could prove extremely damaging and that there is no

guarantee in the statute or the proposed rules that such information

shall remain confidential. They indicate that although the information

on owners and controllers of surface coal mining operations is a matter

of public record, the proposed regulations would go well beyond that,

to require operators to list all purchasers and coal owners whose

interests exceed 10 percent of the resources produced. Thus, the

commenters assert, operators should have the right to request

confidentiality of such information, in order to avoid the disclosure

of sensitive information about coal purchasers and markets that might

be used unfairly by competitors. This, they argue, is consistent with

the Freedom of Information Act (FOIA) policy against disclosure of

commercial or financial information deemed privileged or confidential.

5 U.S.C. 552(b)(4). They assert that the identity of all coal

purchasers from a mine is not a matter of public record and should

remain confidential.

OSM permitting regulations allow coal operators to request that

certain data be withheld from public disclosure. 30 CFR 773.13(d)(3).

The commenters believe that OSM should incorporate similar protection

for confidential financial information in the rules governing the

submission of Form OSM-1.

With regard to these comments on privacy, OSM accepts the comments

in part. OSM has concluded that the comments, by themselves, do not

establish a reason to believe that disclosure of this information may

result in competitive harm. However, OSM recognizes commenters'

concerns that they be able to request confidentiality for certain

information submitted under Section 402(c) of SMCRA. In response to

these concerns, OSM has revised Sec. 870.15(b) to allow submitters to

request confidentiality.

Section 870.15(b) includes a provision specifically intended to

afford submitters of information under Section 402(c) with the

opportunity to designate such information as confidential. Following

such opportunity, if a submitter does not designate the information as

confidential, OSM will treat the infornation as subject to disclosure

upon request. Conversely, if a submitter in good faith designates the

information as confidential, OSM will treat the information as subject

to disclosure upon request. Conversely, if a submitter in good faith

designates the information as confidential, OSM will notify the

submitter of any request for that information unless an exception to

the notification requirement applies. Such exceptions appear in the

Department's FOIA regulations at 43 CFR 2.15(d)(4).

For example, under 43 CFR 2.15(d)(4)(iii) OSM would not be required

to notify submitters of Section 402(c) information when the information

is required to be disclosed by statute or regulation. Two sections of

SMCRA, Sections 507(e) and 517(f), require public disclosure of permit

applications and other information on file with regulatory authorities.

30 U.S.C. 1257(e) and 1267(f) (1988). The information required to be

listed in permit applications, in part, is set forth in 30 CFR part

778, Permit Applications--Minimum Requirements for Legal, Financial,

Compliance, and Related Information. Specifically, 30 CFR 778.13(d)

requires permit applicants to list their owners or controllers. Under

30 CFR 773.5(b)(6), ``owners'' or ``controllers'' presumptively include

persons who own or lease coal to be mined by another and who have a

right to receive the coal after mining. Thus, in permit applications

coal operators are required to identify coal purchasers when such

persons own or control surface coal mining operations. As previously

noted, these applications are required to be publicly disclosed under

Sections 507(e) and 517(f) of SMCRA (30 U.S.C. 1257(e) and 1267(f)).

Consequently, to the extent a submitter provides OSM with coal

purchaser information that identifies owners or controllers, the

exception in 43 CFR 2.15(d)(4)(iii) applies, regardless of a

confidentiality designation.

In addition, Congress authorized disclosure of coal purchaser

information to the extent such information is available on OSM's AVS.

Section 402(c), as amended, requires the Secretary of the Interior to

maintain coal production and purchaser information on a computerized

database. 30 U.S.C. 1232(c), as amended by Public Law 101-508 (November

5, 1990). At the time of the 1990 amendments, Congress was aware that

OSM maintained the AVS as the pertinent computerized database for

including such information. In accordance with Section 402(c) as

amended, OSM thus intends to place such information on the AVS.

Congress also was aware, at the time the 1990 AML amendments were

enacted, that it is the function of the AVS database to disclose

ownership and control information: To Federal, State, and local

authorities responsible for investigating and enforcing violations of

SMCRA; to the Internal Revenue Service when assisting OSM in collecting

civil penalties and AML fees; to Congressional offices upon request; to

public interest groups as may be required by court order; to applicants

and permittees pursuant to permit determinations; and to individuals or

entities in response to their requests for permit-related information

about themselves and related entities. See, 52 FR 29570 (1987), amended

53 FR 22575 (1988). Thus, the statutory requirement that Section 402(c)

information be placed in a computerized database that, as its function,

discloses information to various parties, falls squarely within the

exception to notification found in 43 CFR 2.15(d)(4)(iii).

Consequently, to the extent information is available on the AVS, the

exception in 43 CFR 2.15(d)(4)(iii) applies, regardless of a

confidentiality designation.

The commenters are also concerned about the structure of the

revised Form OSM-1. Part 3 provides that the operator list the mineral

owners and purchasers of coal by permit number. For large companies

operating mines under several different permit numbers, tracking the

coal produced by permit number and consumer presents an impossible

burden. Typically an operator delivers the coal produced from its mines

to a preparation plant, where it is blended with coal produced at other

mines operated by the same company and then delivered to the utility

consumer. The companies do not possess the ability to report the

specific amount of coal purchased by a customer from a particular

permit number. The company simply reports the total tonnage produced at

its various mines. While it can identify purchasers of coal, it cannot

link the specific amount purchased to a particular permit number.

For these reasons, the commenters believe that Form OSM-1 should be

further revised to allow the company to report the tonnage produced

from its mines, without having to track that tonnage to a particular

utility purchaser or broker, and that simply reporting the tonnage and

identifying the largest purchaser meets the requirements of SMCRA.

OSM appreciates the commenter's concern, but disagrees with the

commenter's suggested solution. Instead of only identifying one

purchaser, it would be acceptable to report purchasers on a pro rata

basis in situations involving the commingling of coal produced under

several permits and sold to multiple purchasers. For example, if coal

produced from five permitted mines was commingled and sold to three

purchasers, operators would identify each of the three purchasers on

the Form OSM-1 filed for each permit, according to their percentage of

the total coal sold.

In response to these comments OSM has included a definition of

``mineral owner'' in Form OSM-1 and revised Sec. 870.5 to include a

similar definition. ``Mineral owner'' is defined as any person or

entity owning 10 percent or more of the mineral estate for a permit. If

no single mineral owner meets the 10 percent rule, then the largest

single mineral owner shall be considered to be the mineral owner. If

there are several persons who have successively transferred the mineral

rights, OSM is requesting in Form OSM-1, information on the last

owner(s) in the chain prior to the permittee, i.e. the person or

persons who have granted the permittee the right to extract the coal.

If the permittee has obtained the right to mine the coal directly from

the fee simple property owner(s), then those owners should be shown.

Sections 870.16 and 17 Production records and Compliance Authority

Although the regulations in Sec. 870.16 have not been amended, OSM

notes that provisions in Public Law 101-508 have clarified and ratified

the Secretary's authority to conduct compliance audits of coal

operators. Moreover, the provisions would require the Secretary to

share information obtained through audits of coal operators with the

Internal Revenue Service. In addition, the provisions in Sec. 870.17

have been expanded and clarified, utilizing the authority in Sections

201(c) and 413(a) of SMCRA, to cover all persons involved in a coal

transaction, including without limitation, permittees, operators,

brokers, purchasers, and persons operating preparation plants and

tipples.

Section 870.17 currently provides that fee compliance officers have

the authority to examine records of the second party involved in the

sale or transfer of ownership of coal by the operator. The amended

section no longer refers to the terms ``fee compliance officers'' or

``second party,'' and specifies that the Secretary or any duly

authorized officer, employee, or representative of the Secretary would

have access to relevant documents. The final language regarding duly

authorized persons makes this section consistent with the language in

Sec. 870.16.

These revisions are supported by a number of provisions of SMCRA in

addition to Section 402(c). Section 413(a) of SMCRA provides that the

Secretary shall have the power and authority, if not granted otherwise,

to engage in any work and to do all things necessary or expedient,

including the promulgation of rules and regulations, to implement and

administer the provisions of Title IV. Section 201(c) (1) and (2) also

provides authority for these rules.

The legislative authority to conduct audits of coal production and

the payment of fees, including tipples and preparation plants as well

as the authority to have access to relevant documents of any other

person involved in a coal transaction, including purchasers of coal

whether or not the purchase is from one who originally produced the

coal, a secondary seller or an ultimate end user of the coal is a means

to provide reasonable assurance that coal operators are properly

reporting coal produced and subsequently sold, used, or transferred.

This authority is necessary for the Agency to determine the identity of

entities from whom to seek payment in the event of underpayment or

nonpayment of the reclamation fees. The Agency believes that the new

provisions in Section 402(d)(2) of SMCRA reinforce OSM's ongoing audit

activities and do not mandate any specific level of tipple or

preparation plant audit. OSM auditors have always verified the AML fee

payment or non-payment and the accuracy of the tonnage reported. The

legislative amendments confirm OSM's interpretation of its existing

authority as implemented through current regulations.

In enacting these provisions, Congress sought to provide OSM the

authority to verify for accuracy and completeness the representations

made in the quarterly reports. H.R. Report No. 294, 101st Congress, 1st

Session 26 (1989). Moreover, through these amendments Congress provided

that the Secretary report any failure to pay the full amount of the

reclamation fee to the federal agency responsible for ensuring

compliance with provisions of Section 4121 of the Internal Revenue

Code.

Congress believed that this sharing of information would foster

greater compliance under the Black Lung Disability Trust Fund.

Two commenters state that the proposed rules dramatically expand

the powers of OSM to conduct audits of coal sales, transfers and use,

beyond the authority contained in SMCRA. Under the proposed rules at 30

CFR 870.17, OSM would gain access not only to records of the permittee

or the operator of a surface coal mining operation, but also to ``* * *

any person involved in a coal transaction, including without limitation

* * *'' brokers, purchases, persons operating preparation plants and

tipples, and any recipients of royalty payments for the coal.

The commenters oppose the expanded audit requirements that allow

the OSM compliance officers access, without guarantee of

confidentiality, to records of mineral owners, brokers and other

parties to a coal transaction. The commenters assert that matters

involving royalties paid to mineral owners are matters of utmost

secrecy within the industry and their potential disclosure through an

audit to third parties could have substantial anti-competitive impacts.

The commenters believe that under the proposed regulation, OSM

seeks to gain access to the records of mineral owners, as well as

utilities and other end users of the coal, without limitation and

without any showing that the information is needed to identify the

person responsible for payment of the fee or the tonnage produced. In

the commenters' view, such sweeping, limitless authority to conduct

audits of persons whose only involvement with the permittee or operator

is through a coal purchase or royalty agreement exceeds the authority

conferred by Congress in Section 402(d)(2) of SMCRA that only permits

the Secretary to audit the books and records of ``any person who is

subject to the provisions of this Title.'' 30 U.S.C. 1232(d)(2). Title

IV of SMCRA does not apply to mineral owners, coal brokers, or end

users of the product. Thus, the commenters argue, such persons are

``not subject to the provisions of this Title,'' as that term is used

therein. Section 402(a) of SMCRA limits the provisions of Title IV and

the levy on coal production to ``operators of coal mining operations

subject to the provisions of this Act.'' 30 U.S.C. 1232(a). Thus, the

statute only empowers the Secretary to ``conduct audits of any surface

coal mining and reclamation operation, including without limitation,

tipples and preparation plants,'' but goes no further. 30 U.S.C.

1232(d)(2).

The commenters further stated that as defined by SMCRA, the term

``operator'' includes a person ``engaged in coal mining who removes or

intends to remove more than 250 tons of coal from the earth,'' a term

that does not automatically include coal brokers, owners and

particularly end users. 30 U.S.C. 1291(13). According to the

commenters, OSM had offered no explanation of the reasons why the

authority to audit operators is not sufficient to ensure that the

Secretary has access to the documents and other records needed to

determine the accuracy of AML fee reporting.

The commenters stated that OSM also has failed to explain why such

a dramatic expansion of its auditing authority is needed to implement

the changes in the AML program enacted by Congress. The statute clearly

does not command or authorize such a rule, they asserted. OSM itself

admits that the new provisions in Section 402(d)(2) ``do not mandate

any specific level of tipple or preparation plant audit * * * and

merely confirm OSM's interpretation of its existing authority as

implemented through current regulations.'' 56 FR at 57380 (col. 3). If

anything, the commenters said, OSM's preamble explanation demonstrates

that the existing regulatory scheme is adequate and sufficient to

ensure that the agency has reasonable access to books and records

verifying the accuracy of the tonnage reported and/or fees paid. OSM

has pointed to no evidence of under collection or noncollection of AML

fees that necessitates granting it the sweeping powers of audit

virtually every person connected with the coal transaction, regardless

of whether they are in a position to control the operation, nor does

such evidence exist.

The commenters believe that OSM's current regulations provide

sufficient authority to audit the books and records of persons

associated with a coal transaction most likely to be responsible for

the payment of AML fees. Compliance officers possess the authority to

examine the records of: (1) The second party involved in the sale or

transfer of coal by the operator and (2) any party selling coal to the

operator. 30 CFR 870.17. The ability to review the records of the

second party enables the fee compliance officer to review the records

maintained by coal tipple operators and those immediately involved in

the coal sales transaction who might exercise control over the surface

coal mining operation, to determine the person ultimately responsible

for payment of the fee. There is no indication that OSM has ever used

such authority to audit the records of the end user of the coal, nor is

such authority necessary or appropriate, the commenters stated. 47 FR

28579 (June 30, 1982).

According to the commenters, OSM's reliance on its general powers

in Section 413(a) and 201(c) of SMCRA to do all things necessary or

expedient to implement the provisions of SMCRA, including the

promulgation of rules and regulations, provides no independent basis

for this rulemaking. As the Supreme Court has held, an administrative

agency's powers to promulgate regulations is limited to the authority

delegated by Congress. Bowen v. Georgetown University Hospital, 109 S.

Ct. 468, 471 (1988). An ``agency may not bootstrap itself into an area

in which it has no jurisdiction.'' SEC v. Sloan, 436 U.S. 103, 118-119

(1978). Congress limited the agency's authority to audit the records of

the operator of a ``surface coal mining operation,'' the commenters

stated, including tipple and preparation plant operators subject to the

provisions of Title IV of SMCRA, a term that does not include end users

of coal or minerals owners not engaged in coal mining operations. Thus,

in the commenters' view, the general powers to do all things necessary

an expedient to implement the provisions of SMCRA provide no basis for

the current rulemaking proposal, where no authority to promulgate such

rules exists in the first place.

OSM does not accept these comments. Section 402(d)(2) states, in

part, that ``The Secretary shall conduct such audits * * * as may be

necessary to ensure full compliance with the provisions of this

title.'' The rule, as proposed, is a proper and natural interpretation

of the congressional intent to recognize a need to expand and

strengthen OSM's audit powers. Experience gained by OSM auditors is

evidence of the need for that authority. In Fiscal Year 1993, OSM's

audit staff identified $7.3 million in unreported or under reported AML

fees. In identifying those amounts, the audit staff has used the

existing authority in Sec. 870.17 to examine the records of a second

party involved in a coal transaction, with little or no objection from

those parties. This produced was necessary because the operators failed

to meet their recordkeeping obligations, In effect, the expanded rule

language in Sec. 870.17 further defines and identifies the term

``second party'' in a way that will enable OSM to more effectively

execute and enforce the Section 402 provisions of SMCRA in those cases

where such action is necessary. For OSM to ensure compliance with the

reclamation fee provisions of SMCRA, it is essential for the audit

staff to have access to information of all parties involved in coal

transactions. The OSM auditors frequently encounter cases involving

missing or incomplete operator records, thus necessitating a

determination of the correct tonnage through other means. While data

from buyers is useful in these circumstances, royalty information is

also an invaluable aid in validating the tonnage subject to fees.

These comments also opposed the expanded audit authority due to

concerns about potential disclosure of financial information. OSM

rejects these comments for two reasons: (1) As explained previously,

the rule is consistent with Congressional intent; and (2) the need for

expanded audit authority outweighs commenters' concerns, which can be

accommodated in other ways. Where requested, all copied information

shall be protected to the extent authorized or required by the Privacy

Act and the Freedom of Information Act (5 U.S.C. 522, 552a). OSM would

point out that Sec. 870.16(c) already provides that if the AML fee is

paid at the maximum rate, fee compliance officers shall not copy

information relative to price.

Furthermore, OSM does not intend to use this expanded authority as

a primary means of identifying audit targets. Instead, it generally

will be used to provide the agency with additional sources of

information to identify coal sales or transfers.

Part 872--Abandoned Mine Reclamation Funds

General

The United States Department of the Treasury established an account

on its books in accordance with Title IV provisions of Public Law 95-87

and Treasury's rules for a fund of this type. Section 401(a) creates

the authority for the account:

There is created on the books of the Treasury of the United

States a trust fund to be known as the Abandoned Mine Reclamation

Fund (hereinafter referred to as the ``fund'') which shall be

administered by the Secretary of the Interior.

Section 401(d) delineates availability and purpose of account

monies:

Moneys from the fund shall be available for the purposes of this

Title, only when appropriated therefor, and such appropriations

shall be made without fiscal year limitations.

These provisions provide the authority for a fiduciary relationship

whereby Congress controls the use of fund monies for Title IV purposes

by the appropriation process, and the Treasury maintains the amounts

collected in a special account.

Fund revenues are derived from per-ton reclamation fees and late

payment interest charges, sales of acquired lands, and donations. The

fees and interest charges are paid by coal mine operations and

submitted with coal sales and reclamation fee reports for payment

identification and credit through a lockbox operation to OSM's Finance

Center in Denver.

Collections and related transactions are controlled by Deposit

Tickets (prepared by the collection officer), Debit Vouchers issued by

the Federal depository for uncollected checks, and Refund Schedules for

overpayment. These transactions are identified by mine operators as

well as by mine and geographic location. Data from the OMB approved

Form OSM-1 submitted by mine operators with their payments are coded

and stored in OSM's automated system for compliance and disbursement

purposes. Net collections (per deposit tickets, debit vouchers and

refund schedules) are reconciled on a monthly basis with the amounts

reported by mine operators on OSM's approved forms.

All accounts are closed at the end of business on September 30, the

final day of the Federal fiscal year. The system is reconciled and

collections are identified by State and Indian lands. Fifty percent of

the fiscal year collection is reserved for use by States and Indian

tribes to carry on approved reclamation programs. The remainder is to

be allocated or expended by the Secretary of the Interior through the

Director, OSM, as set forth in Section 402(g) of Title IV. Any errors

found in prior year allocations are corrected in current allocations.

This financial information is one of the inputs for budget requests to

support Title IV programs.

SMCRA, as originally enacted, did not authorize the investment of

the AML Fund. In the new amendments to Title IV, however, Congress

specifically provided for the investment of the AML Fund into interest-

bearing accounts.

To comply with this mandate OSM has developed, with the assistance

of the Department of the Treasury, a cash management plan providing for

the investment of AML monies not required for current withdrawals.

Discussion

Section 872.10 Information Collection

This section deals with information collection requirements and

includes the estimated reporting burden per respondent for complying

with these requirements. Due to oversight this section did not appear

in the proposed regulation, however, it is now being included in the

interest of providing a comprehensive regulation.

Section 872.11 Abandoned Mine Reclamation Fund

OSM has added a new paragraph 6 to Sec. 872.11(a) to note that

interest and any other investment income from the AML Fund would be

earned and credited to the Federal share of the Fund. Options for

splitting the earned interest between the State and Federal shares were

not accepted. As explained in the response to comments below, it is

clear from the language of the amendments and the legislative history

that Congress sought to place the interest only in the Federal share.

H.R. Report No. 294, 101st Congress, 1st Session 19, 20 (1989). See

amended Section 402(g) of SMCRA.

The Energy Policy Act of 1992 established a different use relating

to the interest earned by the AML fund, however. Rather than using the

money to supplement Federal reclamation responsibilities, Congress

directed that an amount equal to the interest earned by the AML fund be

available for transfer to a private pension fund. Beginning on October

1, 1995, the Secretary is directed to transfer from the AML fund to the

United Mine Workers of America Combined Benefit Fund (Combined Benefit

Fund) an amount goal to: (1) the interest estimated to be earned and

paid to the AML fund during the fiscal year and (2) to the extent that

such amount transferred is less than $70,000,000, and amount sufficient

so that the total of the amounts transferred equal $70,000,000, or the

amount requested by the Trustees of the Benefit Fund, whichever is

less. OSM has implemented these provisions in the final rules.

Congress did limit these additional funds, however, so that the

aggregate amount transferred under (2) for all fiscal years could not

exceed an amount equivalent to all interest earned and paid to the fund

after September 30, 1992 and before September 30, 1995. Additionally,

the aggregate amount transferred for any fiscal year may not exceed the

amount of expenditures which the trustees of the Combined Benefit Fund

estimate may be debited against the unassigned beneficiaries premium

account under Section 9704(e) of the Internal Revenue Code of 1986 for

the fiscal year of the Combined Benefit Fund in which the transfer is

made.

To summarize, interest earned by the AML Fund in fiscal year 1992

would be credited to the Federal-share of the AML fund and used to

carry out the Federal reclamation responsibilities enumerated in Title

IV. All interest earned in fiscal years 1993, 1994, and 1995, would be

recorded and, beginning in fiscal year 1996, an amount equal to such

interest would be used to supplement the funds transferred to the

private pension fund if the AML interest amounts earned and the amount

necessary to be transferred were less than $70,000,000. Assuming that

the trustees of the pension fund document the need for additional

funds, as set forth in Section 402(h) of SMCRA, an amount equal to all

interest earned by the AML fund starting in fiscal year 1996 would be

transferred by the Secretary to the pension fund. Such transfers would

continue under the present statutory scheme as long as a need is

documented by the trustees and the AML fund earns interest.

The United Mine Workers of America (UMWA) health and retirement

funds were established in 1974 pursuant to an agreement between the

UMWA and the Bituminous Coal Operator's Association (BCOA) to provide

pension and health benefits to retired coal miners and their

dependents. The funds have been maintained for this purpose through a

series of collective bargaining agreements. The funds created in 1974

were a restructuring of the original benefit fund which was established

in 1946.

The funds consist of four different plans, each of which is funded

through a separate trust. The 1950 Pension Plan provides retirement

benefits to miners who retired on or before December 31, 1950 and their

beneficiaries. The 1950 Benefit Plan provides health benefits for

retired mine workers who receive pensions under the 1950 Pension Plan

and their dependents. The 1974 Pension Plan provides retirement

benefits to miners who retire after December 31, 1975 and their

beneficiaries. The 1974 Benefit Plan provides health benefits to miners

who retire after December 31, 1975. It also provides health benefits to

miners whose last employers are no longer in business or, in some

cases, no longer signatory to the applicable bargaining agreement.

These miners are generally referred to as ``orphaned'' retirees.

The Energy Policy Act of 1992 provides that the 1950 Benefit Plan

and the 1974 Benefit Plan are to be merged into a new UMWA Combined

Benefit Fund to provide health and death benefits for eligible retirees

and their dependents. The Combined Benefit Fund is to be financed by

health benefit premiums, death benefit premiums, and unassigned

beneficiaries premiums imposed on assigned operators. The Combined

Benefit Fund would also receive additional funding from transfers from

the 1950 Pension Plan and, as discussed above, moneys from the AML

Fund. The Energy Policy Act also created a 1992 Benefit Fund to provide

benefits for persons not eligible under the Combined Benefit Fund.

Congressional Record H-12169-70 (October 5, 1992) (Conference Committee

statement on H.R. 776).

The final rules in section 872.11(a)(6) implement the statutory

scheme discussed above. This is, AML interest payments earned in fiscal

year 1992 would be allocated to the Federal share for use in carrying

out Federal reclamation responsibilities as outlined in Title IV of

SMCRA. An amount equal to interest earned in succeeding years would be

available for use as specified in Section 402(h) of SMCRA regarding

transfers to the Combined Benefit Fund. OSM is also revising the

language of Sec. 872.11(b)(3) regarding allocation of AML fees and

interest to the Rural Abandoned Mine Program (RAMP). In 1992 RAMP would

be allocated 20% of the interest earned from the AML fund. This

represents RAMP's percentage allocation of the Federal share of the AML

fund. Further allocations of AML interest would be made to RAMP;

however, an amount equal to such interest might have to be transferred

to the Combined Benefit Fund unless the trustees of the Combined

Benefit Fund notify OSM pursuant to Section 402(h) of SMCRA that the

estimated expenditures to be debited against the unassigned

beneficiaries premium account for the fiscal year of the Combined

Benefit Fund in which the transfer is made would be less than the AML

interest estimated to be earned that year.

The following comments address OSM's proposed rule for allocating

interest income. As noted in the preceding discussion, however,

subsequent to the publication of the proposed rule, Congress in the

Energy Policy Act of 1992 designated a new scheme relating to interest.

Accordingly, the comments received on the proposed rule do not reflect

the current statutory scheme. Because of certain Federal/State issues

raised by the comments, OSM has decided to respond to these comments.

The majority of the comments received on section 872.11(a)(6)

disagree with OSM's proposed rule regarding the allocation of related

income and believe that interest income should be credited to the

entire Fund (i.e., Federal and State share). Commenters state that the

controlling authority for allocating interest is found in Section

401(e) (e.g., credited to and form a part of the Fund) and that OSM's

references to the legislature history to support its proposal is

invalid.

Another commenter, however, disagreed with the other commenters and

stated that it supported OSM's allocation of interest.

Although OSM is sympathetic to the arguments raised by the

commenters favoring the distribution of interest payments to the State

accounts, OSM believes that it is constrained by the specific statutory

language of SMCRA and the legislative history of the 1990 and 1992

amendments, and therefore has decided to allocate interest income only

to the Federal share accounts consistent with the rationale set forth

above.

Specifically, Section 402(g)(1) of SMCRA allocates to the States/

Indian tribes only 50 percent of the fees collected. There is no

mention of interest payments as was done for RAMP in Section 402(g)(2).

In addition, the language regarding the allocations to the different

Federal accounts does not refer to percent allocations as was done for

State/Indian tribe allocations, but instead refers to distributions of

monies from the Fund not previously allocated (see Sections 402(g) (2),

(3), (4), and (5)). OSM therefore interprets the language of SMCRA as

directing that interest allocations are only to be distributed to the

Federal accounts. Commenters argue that OSM should give greater

credence to the language in Section 401(e) which specifies that

interest income is to be ``credited to, and form a part of, the fund.''

This language, however, is not dispositive. The interest income does

become a part of the AML Fund. The States/Indian tribes, though, have

no additional rights to this income money merely because the income is

credited to the Fund. The AML fees result from a Federal tax and are

Federal funds. Their distribution to the States must be based on

specific Congressional direction and, based on OSM's review of the

statute, there is no explicit directive to allocate income money to the

individual State/Indian tribe accounts.

To support this decision, OSM has also reviewed the legislative

history of this section, and it is clear that Congress intended that

the interest income to be distributed only to the Federal accounts. For

example, the following three excerpts from the House Report

accompanying H.R. 2095 (the legislation which formed the core of the

1990 amendments) clearly demonstrate how Congress envisioned the

distribution of interest income.

H.R. Report 294, 95th Cong., 1st Sess. 19 (1989)

* * * The remaining 50 percent of reclamation fees collected

would continue to be dedicated to the Secretary's discretionary

share of the Abandoned Mine Land Reclamation Fund for Federal

programs. However, the legislation provides for the Secretarial

share to be augmented by interest authorized to accrue to the

unappropriated balance in the entire Fund * * *

H.R. Report 294, 95th Cong., 1st Sess. 20 (1989)

* * * Under the bill, after allocation of the State and tribal

shares, the remaining amounts in the Fund (the Secretary's share of

the reclamation fees plus all interest which would accrue to the

unappropriated balances as authorized by legislation) would be

available for a number of current Federal Title IV programs * * *

H.R. Report 294, 95th Cong., 1st Sess. 27 (1989)

* * * The Committee further notes that while interest would

accrue to the entire unappropriated balance in the Fund, amounts

earned from this interest would be dedicated solely to programs

financed under the Secretarial share of the Fund * * *

Some commenters argue that OSM should not resort to this

legislative history since the bill was never enacted as originally

passed by the House of Representatives. OSM, however, discounts this

argument. Although H.R. 2095 was not passed as a separate bill, it was

included in the Omnibus Budget Reconciliation Act of 1990. Accordingly,

the legislative history for H.R. 2095 is relevant. Additionally,

although the bill was ultimately amended during the House-Senate

conference review process (see previous discussion in preamble

regarding conference amendments), these amendments did not alter the

statutory provisions regarding interest. Moreover, if the commenters

are correct in their assertion, logic would dictate that the House-

Senate Conference Committee would have noted such concerns about the

relevance of the legislative history. However, there are no such

references. Accordingly, OSM believes that the legislative history to

H.R. 2095 is relevant in determining Congressional intent.

Based on the specific language in SMCRA and the legislative

language discussed above, OSM has decided to keep the provisions

originally set forth in the proposed rule to allocate interest income

only to Federal accounts.

Section 872.11(b) has been revised to incorporate the provisions of

Section 402(g) of the Act as amended by the Abandoned Mine Reclamation

Act of 1990. Section 872.11(b) describes the manner in which monies

deposited into the Fund are allocated by the Secretary. These funds,

once appropriated by Congress, would be used to accomplish the purposes

of Title IV of SMCRA.

Existing paragraph (b)(1) has been removed and allocations of funds

of SOAP are addressed at new paragraph (b)(5) as specified at Section

401(c)(11) of SMCRA. The distribution of AML Funds for RAMP is funded

from the 20 percent to the funds remaining after allocation of

collections to the States/Indian tribes in accordance with Section

402(g)(2) of the Act. The distribution of funds for RAMP is set forth

in paragraph (b)(3).

In response to comments regarding the discretionary authority to

withdraw granted unexpended AML funds, OSM has deleted

Sec. 872.11(b)(1)(ii) and (b)(2)(ii) and merged the language in

(b)(1)(i) and (b)(2)(i) into the main text of those sections. OSM's

practice is not to withdraw funds. Rather, it is to deobligate funds

and make them available to the States/Indian tribes in future years.

This policy is further explained in the following comment response

section.

Existing paragraphs (b)(2) and (b)(3) of the regulations are

revised and redesignated as paragraphs (b)(1) and (b)(2). These

redesignated and revised paragraphs continue to require the allocation

of 50 percent of annual fee collections to a specific State or Indian

tribe. This fulfills the requirements of the Act at Section 402(g)(1).

The new amendments use the grant award date as the time from which to

calculate the three year period the States and Indian tribes have to

use appropriated funds. Monies which remain unexpended by a State or

Indian tribe after the three year period may, under certain conditions,

or withdrawn and expended by the Secretary to accomplish the purposes

of Title IV.

Existing paragraph (b)(4) of the regulations has been redesignated

as paragraph (b)(3) and revised to require that 10 percent of the

monies collected and deposited annually, and 20 percent of the

interest, if such amount is not necessary for transfer to the Combined

Benefit Fund based on the provisions of 402(b) of SMCRA under the 1992

amendments, and other miscellaneous receipts to the Fund, be allocated

for use by the Secretary of Agriculture for the purpose of funding

RAMP. Twenty percent of funds, if withdrawn from the State's and Indian

tribe's unexpended grant awards under Section 402(g)(1)(D) of the Act,

would also be reprogrammed to RAMP. This requirement is consistent with

Section 402(g)(2) of the Act.

A new paragraph (b)(4) has been added to the regulations to fulfill

the requirement of Section 402(g)(5) of SMCRA. New paragraph (b)(4)

requires that 40 percent of the monies deposited in the Fund annually

after making the allocations of subparagraphs (b) (1) and (2) shall be

allocated for use in making additional grants to the States and Indian

tribes. To be eligible for funds allocated under this provision, a

State or Indian tribe would not have certified under Section 411 (a) of

SMCRA and would have priority 1 and priority 2 coal problems within the

State or on Tribal lands. Under this paragraph, the distribution of

funds would be based on a formula addressing the respective State's or

Indian tribe's historical coal production prior to August 3, 1977, as a

percentage of the nationwide total for eligible States and Indian

tribes.

Also, funds to be granted under this paragraph could be reduced or

curtailed under two specific conditions relating to the adequacy of

funding. These two conditions are: (1) if State or Tribal share funds

to be granted in a given year are sufficient to address remaining

eligible priority 1 or priority 2 coal sites, no additional funds will

be provided during that year; and (2) if the cost to reclaim all

remaining priority 1 or priority 2 coal sites exceeds the amount of

State or Tribal share funds to be granted in a year pursuant to Section

402(g)(1), but is less than the total amount of funds to be granted to

the State or Indian tribe in that year under paragraphs (b) (1), (2),

(3) and (4) of this section, Federal funds granted under this paragraph

will be reduced to that amount required to fully fund all remaining

priority 1 or priority 2 coal sites after utilizing all available State

share funds. To make the above determination each year on September 30,

OSM will continue to use its Abandoned Mine Land Inventory System in

order to determine the dollar amount of remining (i.e., unfunded)

eligible priority 1 and priority 2 coal problems.

Existing paragraph (b)(5) of the regulations has been revised to

list the purposes for which the Secretary may expend funds from the

remaining or unallocated balance of the AML Fund (not already allocated

to the States, Indian tribes, and RAMP), in accordance with Section

402(g)(3) of the Act. These purposes would include SOAP, emergency

projects, nonemergency projects in nonprogram States and on nonprogram

Tribal lands, funding for eligible interim program and insolvent surety

sites, and administration of Title IV of the Act.

Two million dollars is the minimum program level established at

Section 402(g)(8) of the Act. A new paragraph (b)(6) is added to the

regulations to specify that not less than $2,000,000 would be

distributed annually to States and Indian tribes having an approved

abandoned mine reclamation program and eligible lands and waters

pursuant to Section 404, so long as an allocation of funds is necessary

to achieve the priorities stated in paragraphs (1) and (2) of Section

403(a) (priority 1 or priority 2 coal problems). However, annual State

share funds must be utilized first, and supplemental funds granted

under paragraph (b)(4) and this paragraph shall not exceed the costs of

reclaiming all remaining priority 1 and priority 2 sites. In response

to comments, OSM notes that minimum program States, like all other AML

States, will still be able to do associated priority 3 work when they

do priority 1 or 2 reclamation projects. No change to the proposed rule

was deemed necessary.

A new paragraph (b)(7) is also added to the regulations to specify

that additional funds allocated or expended annually by the Secretary

would not be deducted from funds allocated or granted annually to a

State or Indian tribe pursuant to Sections 402(g)(1), (5) or (8) of

SMCRA. In response to comments, OSM added the word ``allocate'' to

ensure States and Indian tribes that there will be no reduction against

allocated funds.

Finally, the new statutory provisions in Section 402(g)(3)(C)

authorize the Secretary to expend monies for reclamation purposes in

States or on Indian lands which do not have an approved abandoned mine

land program. Section 872.11(b)(8) implements this provision.

One commenter stated that the word ``expended'' in Sec. 872.11(b)

(1) and (2) should be defined so that it can be used consistently. In

the past words like ``expended'' and ``obligated'' have had different

meanings depending on the context. ``Expended'' could mean obligated,

paid out for goods or services, drawn down from the Federal account,

etc., the commenter said.

The term ``expended'' is already defined in Sec. 870.5. For

purposes of these regulations ``expended'' means that monies have been

obligated, encumbered, or committed for reclamation by contract by OSM,

State, or Indian tribe for work to be accomplished or services to be

rendered.

Another commenter stated that proposed regulation 872.11(b)(1)(ii)

concerning the withdrawal after three years of unexpended grant funds

is too subjective and could result in arbitrary OSM Field Office

recommendations.

The commenter suggested that this term be defined as follows:

* * * as a result of avoidable delays that are beyond the direct

control of the state AML Program director * * *.

This language would not hold the State AML programs hostage to

delays caused by other State agencies, programs, or policies over which

the State program director has no direct control or authority, the

commenter argued.

Another commenter stated that the phrase ``granted to a State or

Indian tribe that have not been expended'' does not appear to include

those unspent funds from a prior grant which are deobligated for grants

management purposes and are again available to be regranted to that

State. Such funds should not be included in the three year limitation,

the commenter stated.

The regulations should clarify this. Also, all funds withdrawn from

a State or Indian tribe because of the three year limitation should be

returned to the Federal share of the Fund and should then be available

for any other discretionary share purpose, not restricted solely to

those purposes identified under Sec. 872.11(b)(5), as proposed. If

these are discretionary share funds, they should be made available for

any and all discretionary purposes, the commenter asserted.

OSM has accepted the spirit of the comments. The language regarding

the withdrawal of funds in Sec. 872.11(b) (1) and (2) implements a

specific statutory provision in Section 402(g)(1) of SMCRA. OSM notes,

however, that the authority to withdraw is discretionary. OSM's

practice since the beginning of the AML program is not to withdraw

funds from the States/Indian tribes. Rather, funds which are not

expended by a State/Indian tribe during the grant period are returned

to the State/Indian tribe account for future grants. This practice is

within the discretionary language of the Act and still provides States/

Indian tribes flexibility to manage their programs. To avoid any

misunderstanding regarding this practice, OSM has decided to delete the

language in proposed Sec. 872.11(b)(1)(ii) and (b)(2)(ii) and to merge

the language found in (b)(1)(i) and (b)(2)(i) into the main text in

those sections.

One Indian tribe commented that there are 11 abandoned coal sites

located on Tribal land. Three of these sites are priority 1. The total

estimated cost to reclaim the sites is $2 million. There are 86

abandoned noncoal sites located throughout the reservation. Four sites

are priority 2. The estimated cost to reclaim all sites is $17.9

million. The Indian tribe has $3.2 million available as Tribal share

money, but has inventoried $19.9 million of abandoned sites. It is

apparent that the current allocation method will leave numerous sites

which present a hazard to public health and safety unreclaimed. Due to

this inadequate funding and due to the fact that the Indian tribe has

no historical production records for coal which was stolen from the

Indian tribe, the Indian tribe urges OSM to amend the proposed

regulations to allow a State/Indian tribe with a demonstrated need for

reclamation to qualify for minimum program funding of priority 3

projects. In addition, since there are no historical records of the

stolen coal, OSM should provide some special consideration under this

regulation.

OSM has not been able to implement this comment due to the specific

provisions contained in Section 402(g)(8) of SMCRA which limits

allocations for minimum program States and Indian tribes to those

necessary to carry out priority 1 and 2 coal projects. OSM has looked

into the matter of historic coal production from Indian lands and

determined that the three Indian tribes with approved AML programs

would not qualify for more funds pursuant to Section 402(g)(5) of

SMCRA. This is caused by the amount of unfunded priority 1 and 2 coal

projects in each Indian tribe and not historical coal production.

Other commenters also stated that prohibiting minimum program

States and Indian tribes from doing priority 3 work would be

discriminatory. Minimum program States need the latitude to determine

when associated priority 3 reclamation is necessary and beneficial to

the total priority 1 and 2 reclamation within the State. All States and

Indian tribes receiving discretionary and or minimum program monies

should be treated equally and impartially.

OSM has accepted these comments. OSM will treat minimum program

States/Indian tribes the same as other States/Indian tribes. That is,

all States/Indian tribes with approved AML programs under Title IV of

SMCRA will be able to do priority 3 projects that are associated with a

priority 1 or 2 site. There will be no artificial limitation on minimum

program States. In addition, OSM will be reviewing the criteria for

priority 1 and 2 projects to provide the States and Indian tribes

greater flexibility in selecting eligible projects. Due to the

limitations in SMCRA regarding the funding of priority 1 and 2 projects

from minimum program and historic coal production allocations, however,

OSM believes States/Indian tribes must still maintain their focus on

projects that qualify as a priority 1 or 2 site.

Another commenter stated that the Act in Section 402(g)(5) provides

that 40 percent of discretionary funds should be allocated to the

States and Indian tribes on a historical production basis as

inventoried high priority problems require. This 40 percent of the

remaining funds includes the interest and other fund revenues including

withdrawn funds from States and Indian tribes plus other miscellaneous

receipts to the Fund. According to the commenters, the regulations

should specifically state this to be consistent with the Act. This is

consistent with the allocation of 20 percent of the interest and other

fund revenues to RAMP in Sec. 872.11(b)(3).

OSM has declined to implement this comment. As previously discussed

in this preamble, interest earned by the AML fund will be allocated

among the three Federal accounts based on the percentages specified in

SMCRA. OSM does not believe that such language needs to be specified in

a regulation. Furthermore, as previously noted, under Section 402(h) an

amount equal to the interest earned by the AML Fund needs to be

available, if necessary, to transfer to the United Mine Workers of

America Combined Benefit Fund.

Another commenter stated concerning Sec. 872.11(b)(4)(ii) that the

proposed regulation should provide that if the actual cost of

reclamation to accomplish all inventory priority 1 and 2 problems is

less than the Federal share funds actually granted for minimum program

States or Indian tribes, then any excess funds must be returned to the

Federal share of the Fund.

OSM has not accepted this comment. The preamble to the rules

specifies how distributions will be made as a State or Indian tribe

funds all remaining 1 or 2 priority projects. Further references in the

regulations regarding funding procedures are unnecessary.

Another commenter agreed with OSM's proposed rule which provided

funding only until all priority 1 and 2 problems have been addressed.

This commenter states, however, that the rules should further provide

that no supplemental grants under this provision will be expended on

any site other than a priority 1 or 2 problem area as defined in

Section 403(a) of SMCRA.

As noted previously, OSM has decided to fund the reclamation of

priority 3 problems if they are associated with priority 1 or 2 problem

sites. This should avoid artificial distinctions and arguments on what

qualifies as a priority 2 or 3 problem and allow States and Indian

tribes greater flexibility in selecting eligible projects. By allowing

States and Indian tribes the authority to do associated priority 3

work, OSM believes that the cost effectiveness and overall efficiency

of the AML program will be improved.

Most commenters responding to OSM's proposed rules in 872.11(b)(4)

(historical coal production allocation) and 872.11(b)(6) (minimum

program funding) disagreed with OSM's approach and stated that minimum

program States should be able reclaim priority 3 projects. Some

commenters felt that minimum program States or Indian tribes should be

able to do any priority 3 reclamation work; others, however, were more

limited. Some felt that minimum program States should be able to do

priority 3 work if it is associated with higher priority reclamation

activities, and others felt that minimum program States should be able

to utilize their State share funds for any priority. Most commenters

requesting authority to do some type of priority 3 work felt that such

authority was consistent with the intent of Congress and the purposes

of the AML program. According to these commenters, such authority is

cost-effective and provides the States the management authority which

OSM's consolidated grant approach is supposed to provide.

Other commenters, however, disagreed and stated the minimum program

States should be required to complete all known priority 1 and 2 sites

before funding priority 3 projects. Moreover, OSM should consider funds

set-aside by the State for future reclamation purpose (873.12(a)) in

determining the appropriate distribution amount.

Given the various limitations in SMCRA regarding program funding,

OSM's options regarding distributions to minimum program States and

Indian tribes are somewhat constrained. Federal share funds are limited

to priority 1 or 2 problem coal sites. Accordingly, comments suggesting

no restrictions concerning the funding for priority 3 sites could not

be accepted. Similarly, OSM does not believe it would be proper to go

to the opposite extreme and deny funding for all types of priority 3

work. States and Indian tribes are still receiving State/Indian tribe

share funds and in many instances doing associated priority 3 work

would increase the efficiency of the State/Indian tribe program. OSM

has, instead, chosen a middle ground. OSM will not single out minimum

program States/Indian tribes for more stringent funding criteria, but

instead will treat all States/Indian tribes equally. OSM will fund

associated priority 3 work.

OSM has not accepted the part of the comment requesting that OSM

require minimum program States and Indian Tribes to use their future

set-aside funds first. By statute once these funds have been granted

and placed in a special trust fund, the monies are considered to be

State funds. In addition, the purpose behind the establishment of

specific State set-aside funds was to allow the AML States to prepare

for a time when the AML program had ended and the AML funding had

ceased. At that time States could utilize the set-aside funds if AML

problems arose. Mandating the use of such funds at this time would be

contrary to this purpose.

One commenter commended OSM for funding emergency projects

separately from grants allocated to the States pursuant to the annual

reclamation plan. This funding mechanism encourages States which do not

presently administer an emergency program to work toward eliminating

those obstacles which prevent them from assuming these

responsibilities. The unpredictable nature of emergencies coupled with

the potential for expensive reclamation techniques could seriously

disrupt a State's reclamation plan if emergency funding had to come

from the State's annual grant.

Another commenter observed that under Sec. 872.11(b)(7), ``Funds

allocated or expended annually by the Secretary under Sections

402(g)(2), (3) or (4) of SMCRA for any State or Indian tribe shall not

be deducted against funds to be granted annually to a State or Indian

tribe under the authority of Section 402(g)(1) (5) or (8) of SMCRA.''

According to the commenter, the use of the word ``granted'' as opposed

to ``allocated'' suggests that Section 402(g)(2), (3) or (4)

expenditures may still ultimately be deducted from State share

allocations, even though OSM will not reduce annual grants. This should

be clarified to provide that such expenditures shall not reduce annual

grants or be deducted from total allocations, the commenter said.

OSM notes the language in Sec. 872.11(b)(7) implements language in

Section 402(g)(5) of SMCRA. This provision controls funds that are

either ``allocated or expended.'' To avoid any misunderstanding OSM has

made the change suggested by the comment and has added the word

``allocated'' to the regulatory language.

Part 873--Future Reclamation Set-Aside Program

General

In 1987 Congress amended Section 402(g)(3) SMCRA authorizing States

to deposit up to ten percent of their annual State share grant funds

into special trust accounts. Such funds deposited, together with any

interest earned, could then be utilized by a State after August 3,

1992, to carry out the purposes of Title IV. The purpose behind the

1987 provision was to ensure that a State would have AML Funds

available after the expiration of the AML fee provisions to handle

future reclamation problems.

The new statutory amendments in Public Law 101-508 also include a

future reclamation set-aside program with five specific differences.

First, this new set-aside program does not supersede or transfer funds

deposited under the original set-aside program established in 1987.

Funds deposited under that program can still be utilized by a State/

Indian tribe at its discretion after August 3, 1992, to carry out the

purposes of Title IV. Second, the new trust fund accounts have a new

timeframe. Funds deposited pursuant to the amendments of 1990 may only

be utilized after September 30, 1995. Third, the new trust accounts

would only be utilized to reclaim eligible coal problems. The original

set-aside accounts could be used for any purposes in Title IV; thus

both coal and noncoal problems could be addressed. Fourth, rather than

being limited to up to ten percent of the State/Indian tribe share

funds granted annually, the States/Indian tribes can now deposit up to

ten percent of the total State/Indian tribe share and historic coal

production (Federal share) funds granted annually. Fifth, the State/

Indian tribe now has an option on whether to utilize funds for the

future reclamation set-aside program or to deposit the monies in a

special trust account for use in a State/Indian tribe acid mine

drainage program. The statute and regulations allow States/Indian

tribes to utilize available funds for either the acid mine drainage

program or the future reclamation set-aside program. However, a ten

percent cap is placed on the total funds available annually.

Discussion

Section 873.1 Scope

This section provides requirements for the award of grants to

States/Indian tribes for the creation of special trust accounts to

provide funds for coal reclamation purposes after September 30, 1995.

Section 873.11 Applicability

This section provides that provisions of this Part would apply only

to the granting of funds and their use by the States/Indian tribes for

coal reclamation purposes after September 30, 1995.

Section 873.12 Future Reclamation Set-Aside Program Fund Criteria

This section tracks the legislative language of Congress and limits

the use of the monies to eligible coal reclamation purposes after

September 30, 1995. To be eligible to receive a grant for such

purposes, a State/Indian tribe would have to first establish a special

trust fund account which would limit the use and withdrawal of the

funds as specified earlier.

If the conditions are met and monies are properly deposited,

Sec. 873.12(c) specifies that the monies so deposited, together with

interest earned, would be considered State/Indian tribe monies. The

1987 amendment originally establishing the special State set-aside

specified that monies deposited in the special State trust accounts, as

well as interest earned, would be considered State monies. Although the

1990 amendments do not contain equivalent language, OSM intends to

provide the same treatment under these proposed rules because the

legislative history of the 1990 Act does not evidence Congressional

intent to change this feature of the set-aside.

All comments received on this Part objected to OSM's proposal to

limit future set-aside funds to coal problems only. These commenters

argued that OSM's reliance upon the legislative history to H.R. 2095

was inappropriate given the vast difference between the original bill

and the fund language in the Omnibus Budget Bill. Moreover, these

commenters believe that Sections 403(a) and 404 can be interpreted to

include both coal and noncoal problems.

OSM is unable to accept this comment and therefore has made no

changes to part 873. OSM interprets the 1990 amendments to SMCRA as

limiting future set-aside grants to coal projects only. This

interpretation is consistent with the statutory language and the

legislative history. As stated in H.R. Report 294:

* * * Provision is made for a State to deposit up to 10% of its

annual state share allocations, including amounts available to the

State from Secretarial share supplemental grants, into a special

interest-bearing trust fund established by the State for the purpose

of undertaking abandoned coal mine reclamation * * *. The Committee

notes that several states have already established such a program

under the current law provision limiting use of set-aside amounts

for use after August 3, 1992. The current law provision does not

necessarily restrict the use of set-aside amounts for abandoned coal

mine reclamation projects. As such, the Committee intends for states

to have the opportunity, at their discretion, on or after August 3,

1992, either to withdraw or maintain as a separate account for the

purpose of accomplishing authorized Title IV purposes, as set forth

prior to the amendment of this Title by the legislation, amounts

set-aside prior to enactment of the Abandoned Mine Reclamation Act

of 1989.

H.R. Report 294, 101st. Cong., 1st. Sess. 28 (1989).

The modifications made to Section 403(a) do not expand this

authority as urged by the commenters. These modifications merely cross

reference another set of priorities which would be applicable to a

State's noncoal program. The commenters' position is not supported by

any references in the legislative history. As demonstrated above,

however, the opposite is true. House Report 294 specifically directs

that set-aside funds be limited to coal projects only and that this

future set-aside program (limited to coal only) is different than the

previous set-aside program which authorized expenditures to carry out

any Title IV purposes. See H.R. Report 294, 101st. Cong., 1st. Sess. 28

(1989). Finally, if the commenters' position were correct that Congress

wanted to fund both coal and noncoal projects with future set-aside

monies, logic would dictate that the language in the old law would have

been repeated, i.e. ``accomplish the purposes of this title.'' However,

this was not the case. Instead, Congress referenced the coal

eligibility section only.

Part 874--General Reclamation Requirements

General

Part 874 sets forth requirements relating to eligibility and

selection of reclamation projects that are equally applicable to those

reclamation activities to be carried out by OSM and to the Rural

Abandoned Mine Program administrated by the Secretary of Agriculture

under Title IV.

Discussion

Section 874.11 and 12 Applicability and Eligible Coal Lands and Water

SMCRA, as enacted in 1977, specified that lands and water eligible

for reclamation funding are those which were mined for coal or which

were affected by such mining, wastebanks, coal processing, or other

coal mining processes, and abandoned or left in an inadequate

reclamation status prior to the date of enactment (August 3, 1977) and

for which there is no continuing reclamation responsibility under State

or other Federal law.

The amendments to Title IV significantly enlarge these original

eligibility criteria. Most notably, Congress has extended in two

instances the eligibility criteria for reclamation funding to priority

1 or 2 coal problems on lands which have been mined and abandoned after

August 3, 1977. The first time interval involves land mined and

abandoned between August 4, 1977 and the date on which the Secretary

approved a State program under Section 503 of SMCRA and specifies that

any funds for reclamation or abatement which are available pursuant to

a bond or other form of financial guarantee or from any other source

must not be sufficient to provide for adequate reclamation or abatement

at the site. Regarding the reclamation of post-SMCRA sites pursuant to

Section 402(g)(4)(E) of SMCRA, the new amendments reference the date on

which the Secretary approved a State program pursuant to Section 503.

Indian tribes, however, do not have approved regulatory programs. To

rectify this problem, OSM has used September 28, 1984 as the applicable

date for Indian tribes. This date was chosen because it is the date

that the permanent Federal regulatory program on Indian lands took

effect. The second time interval would extend eligibility to lands

mined and abandoned between August 3, 1977 and November 5, 1990, where

the surety of the mining operator became insolvent and funds

immediately available from other proceedings or sources are not

sufficient to provide for adequate reclamation or abatement at the

site.

The eligibility requirements for sites abandoned prior to August 3,

1977, are set forth in Sec. 874.12 (a), (b), and (c). To these general

eligibility requirements, OSM has added subsections 874.12 (d), (e),

(f), (g) and (h) to address eligibility for sites abandoned after

August 3, 1977.

In order for sites abandoned after August 3, 1977, to be eligible

for funding, lands adversely affected during either of the time

intervals as discussed above and specified in Sec. 874.12(d), must be

abandoned and must qualify as a priority 1 or 2 problem pursuant to

Section 403(a) of SMCRA.

Subsection 874.12(e) establishes the eligibility criteria for

States and Indian tribes to reclaim lands adversely affected after

August 3, 1977. It is similar to subsection (d), and includes the same

criteria with one additional requirement. In addition to making the

findings required for subsection (d), a State or Indian tribe would

also have to find in writing that the reclamation priority of the site

is the same or more urgent than the reclamation priority for the lands

and water adversely affected prior to August 3, 1977 and that the site

qualifies as a priority 1 or 2 site. This subsection implements Section

402(g)(4)(E) of SMCRA.

In extending eligibility to high priority sites left abandoned

after August 3, 1977, Congress noted that tens of thousands of acres of

land mined since August 3, 1977 remain unreclaimed due to the less

stringent standards applicable during the ``interim program'' period

and the bankruptcies of the mining companies and their insurers. The

damage to these lands has created a new generation of abandoned mine

problems unforeseen by the original law. Indeed, Congress notes in its

report on H.R. 2095 that the public health and safety threat posed by

these acres may exceed those of eligible but lower priority pre-August

3, 1977, sites. H.R. Report No. 294, 101st Congress, 1st Session 24

(1977).

Although not part of the amendments passed by Congress in 1990, the

Secretary is utilizing his rulemaking authority granted under Section

413(a) of SMCRA in establishing two additional subsections to

Sec. 874.12. Subsection (f) provides that any monies recovered or

available from other sources to reclaim sites abandoned after August 3,

1977, should be either utilized to offset the cost of the reclamation

or transferred to the AML Fund. This ensures that monies available for

reclamation purposes are ultimately used for such purposes and not lost

due to the intervention of Title IV activities. The operative language

in the statutory amendments states that ``available funds are

insufficient to reclaim'' the lands. This language addresses only

availability and does not specifically state that the monies must be

utilized. Subsection (f) resolves this ambiguity by requiring that the

monies either be used to reclaim the land or transferred to the AML

Fund if no longer needed to reclaim the entire permitted site.

Subsection (g) is similar to the intent and purpose of subsection

(f) in that it tries to prevent unjust enrichment. This subsection

specifies that a person shall be liable for reclamation expenses which

are in excess of any bond forfeited to ensure reclamation. The

permittee shall reimburse the Abandoned Mine Land Fund for the cost of

reclamation. This ensures that a party liable for the reclamation

damages does not evade his legal and financial responsibilities to

reclaim the land. Further, this subsection specifies that neither the

Secretary nor a State or Indian tribe performing reclamation on these

sites would be held liable for any Title V violations, whether they

occur before, during or after the reclamation. As provided in

Sec. 874.13(a), the reclamation activities need only comply with the

AML Final Guidelines for Reclamation Programs and Projects (45 FR

14810-14819, March 6, 1980). These requirements should protect the

public and health and safety, while also protecting a State or Indian

tribe or the Secretary from potential liability and provide the State

flexibility to utilize its scarce resources in the most efficient

manner.

The Energy Policy Act of 1992 affected the eligibility criteria in

two ways. First, Congress extended eligibility to lands which are

reaffected by remining operations. OSM has added a new Sec. 874.12(h)

to specify that surface coal mining operations on lands eligible for

reclamation under SMCRA Sections 404 (abandoned prior to August 3,

1977), 402(g)(4)(B)(i) (affected between August 3, 1977 and the date on

which the Secretary approved the State program pursuant to Section

503), and 402(g)(4)(B)(ii) (affected between August 3, 1977 and

November 5, 1990) would not affect the eligibility of such lands for

reclamation and restoration following the release of the bond for any

such operation as provided for under Section 519 of the Act. In the

event the bond or deposit for a surface coal mining operation on lands

eligible for remining is forfeited, funds available under Title IV of

the Act may be used if the amount of such bond or deposit is not

sufficient to provide for adequate reclamation or abatement, except

that if the conditions warrant, the Secretary may immediately exercise

his emergency authority under Section 410 of the Act. The regulatory

text tracks the amended language of SMCRA and is not intended to impose

additional requirements.

One commenter stated that Section 402(g)(4)(B)(i) does not seem to

require that eligible interim sites must be abandoned prior to primacy.

Specifically, mining must have ``occurred during the period beginning

on August 4, 1977, and ending on or before the date in which the

Secretary approved a State program * * *'' (emphasis added). Mining

activities prior to August 4, 1977 may be eligible as provided under

Section 404 of SMCRA. According to the commenter, mining activities

occurring after States achieved primacy should be eligible to the

extent that ``mining occurred'' during the statutory period and those

mining activities were not conducted under authority of permanent

program permits. Not until after State primacy was granted were

operators confronted with the new mining constraints and required to

make a decision as to whether they would proceed with mining under

permanent program permits. The interim program regulations, 30 CFR

773.11, allowed operators eight months after primacy to obtain these

permits. In reality, it took much longer. If they did not proceed,

abandonment and forfeiture frequently occurred in some cases, several

years after primacy. The commenter did not believe Congress desire to

exclude these sites from eligibility through Public Law 101-508. The

Civil Penalty program which funds reclamation of similar forfeiture

sites does not preclude reclamation of sites mined after State primacy.

The commenter said that the interim reclamation program is, in many

respects, a continuation of the Civil Penalty program, and, therefore,

the cut-off date should be the date of the issuance of the permanent

program permit for the site, if there was one. In other words, eligible

interim sites should be defined as sites without permanent program

permits where mining activities occurred during the period beginning

August 4, 1977, and ending on or before the date at which the State was

awarded primacy.

Similarly, the commenter believes that site eligibility under

Section 402(g)(4)(B)(ii) should be addressed in the same manner with

the further requirement that the surety of the mine operator became

insolvent sometime during the period from August 4, 1977 through

November 5, 1990. A literal interpretation of Sec. 874.12(d)(3) may

require that mining end exactly on November 5, 1990. The section seems

to extend eligibility for Title IV funding to primacy sites. The

commenter asked if this possibility is consistent with OSM's position.

OSM has not accepted this comment. Although OSM realizes that

certain interim sites were allowed to exist after a State received

primacy, the language of the 1990 amendments does not allow

flexibility. The amendment states that it applies to coal operations

abandoned between two specific dates. The ability to alter those dates

does not exist.

Another commenter stated that OSM appears to favor retention by

States and Indian tribes of flexibility in determining standards to be

achieved for these interim program and insolvent surety sites. The

commenter asked how this flexibility will be implemented in a

consistent manner by the various OSM Field Offices. The commenter

believes that OSM must strive to assure consistent application of Title

IV regulations and policies nationwide. Additionally, this commenter

questioned whether environmental assessments were necessary for mined

and permitted sites.

OSM will develop the necessary guidance documents to ensure that

the regulations are consistently applied by its Field Offices. In

addition, OSM will be reviewing its procedures for complying with the

National Environmental Policy Act (NEPA). OSM will ensure that all NEPA

requirements are met.

Another commenter stated that under the new SMCRA amendments post-

1977 sites which are in the immediate vicinity of a residential area or

which have an adverse economic impact upon a community should be

considered a priority 1 or 2 site. Furthermore, the commenter asserted,

consistent with Section 402(g)(4)(E) of SMCRA, the State is the sole

determiner of reclamation priorities and the extent of reclamation.

This SMCRA section provides that if the reclamation priority of a post-

1977 site is the same or more urgent then sites eligible under Section

404, the State may make the sole determination of the priority.

OSM has accepted this comment in part. Sites that are in the

immediate vicinity of a residential area or which have an adverse

economic impact upon a community will be considered priority 1 or 2

sites eligible for funding. Similarly, if a State makes a determination

that the priority of a site is the same or more urgent than the

reclamation priority of sites eligible under Section 404, and meeting

the criteria in Sections 403(a) (1) or (2), that site automatically

will become a priority 1 or 2 site eligible for funding.

One commenter stated that Sec. 874.12(d)(2) expands eligibility to

include interim program sites where bonds are insufficient to provide

for adequate reclamation at the site. The commenter believes that the

site would be eligible if mining ended before the date on which the

Secretary approved a State program if the site qualified as a priority

1 or 2. Further, Section 506(a) of the Act allows mining activities

under the interim program for up to eight months beyond the date of

primacy. The commenter believes that the interim period should include

this eight month grace period, and in certain circumstances could even

extend further. The commenter requested clarification of this section

in order to assure that all sites which can be technically defined as

interim could be considered under this section.

OSM has examined this issue and, as discussed previously, the new

amendments to SMCRA do not provide flexibility on this point. The dates

on eligibility are specific and OSM does not believe that it has the

authority to extend such dates to take into account the ``grace

period'' mentioned in the comment.

Several commenters noted that Sec. 874.12(d)(3) would expand

eligibility to include sites where mining ended prior to November 5,

1990 where the surety of the mining operator became insolvent and funds

available from proceedings are not sufficient to provide for adequate

reclamation at the site. In some States alternate bonding pools have

been set up to provide a more economic method of such bonding

opportunities. In these cases, the commenters stated, when an alternate

bonding pool is insufficient, such sites should remain eligible and if

the alternate bonding source is insufficient the State or Indian tribe

should not incur any additional financial liability for the

reclamation. The commenters requested clarification in this regard in

the rules.

OSM has not made any changes to its regulations based on these

comments. The new amendments to SMCRA do not specifically prohibit

eligibility for sites abandoned after 1977 in primacy States which

utilize bonding pools. However, where bond pools are solvent and

applicable, such sites would not be eligible.

An additional commenter suggested that the term ``immediately

available'' in Section 402(g)(4)(B)(ii) should be interpreted in the

AML regulations to mean ``in-hand'' as illustrated by an account

deposit entry on or before November 5, 1990. Any funds collected after

that date and before completion of construction should simply be

expended to pay billings, to the extent necessary to settle

obligations, in preference to using grant funds. Money recovered in

excess of remaining billings during construction and money recovered

after project completion would be payable to the Fund, limited to the

total cost and consistent with the statute. Bond recovered in excess of

the total cost of reclamation and specific to the site would be

returned consistent with surety law. Recoveries or settlements, not

site specific, resulting from State actions would be managed at the

discretion of the State.

Another commenter urged OSM to revise the proposal in 30 CFR

874.12(d)(3) to enable States with alternative bonding systems to

qualify for Title IV monies on sites with insolvent surety bond.

Further, this commenter does not believe that the proposed rule at

Sec. 874.12(g) is consistent with OSM's established regulation at 30

CFR 800.50(b)(2) (relating to the use of bond forfeiture funds). The

commenter received notification in 1985 under 30 CFR 732.17 that its

program was deficient, and subsequently revised its regulation in

response to OSM's interpretation. The commenter's regulations now

require permanent permit sites to be reclaimed to Title V standards;

they do not allow for reclamation under Title IV requirements. If it is

not OSM's intention that the relaxed reclamation standards suggested in

30 CFR 874.12(g) be extended to insolvent surety sites that were

permitted and eventually forfeited under a State's approved permanent

regulatory program, OSM should clarify this in the regulation.

This commenter believes that OSM could better meet its goal stated

in the preamble (56 FR 57385), to ``* * * provide the State flexibility

to utilize its scarce revenues in the most efficient manner,'' by

eliminating the restrictions on funding eligibility at 30 CFR 874.12(d)

(3) and (4) pertaining to other sources of funding and the AML priority

1 and 2 criteria.

OSM has accepted these comments in part. As stated before regarding

another comment, the alternative bonding system in a State would

normally foreclose the AML eligibility of sites abandoned after a State

achieves primacy so long as the alternative system was solvent and

applicable to the remaining work. This is a matter that may require a

case-by-case determination. OSM does not however, believe that it has

to adopt a definition of ``immediately available'' to mean ``in-hand''.

The term ``immediately available'' is one that may depend on State

specific criteria. OSM believes that it is necessary for each State to

address this issue in its legal eligibility opinion. Furthermore, if a

site is reclaimed using Title IV funds, there is no requirement that

the site be reclaimed to Title V standards. The State bond pool where

applicable, or the operator, is still liable for meeting the full Title

V standards. The State AML program may design the reclamation it

believes best addresses the situation within its own budget restraints

and such reclamation could, but does not have to, meet Title V

standards. Finally, OSM has not accepted that part of the comment that

asked for the deletion of Sec. 874.12(d) (3) and (4). These

requirements are found directly in the language of the 1990 amendments.

One commenter stated that it was unclear whether the term ``site''

in 30 CFR 874.12(f) referred to the actual site where the AML funds are

applied or the entire interim permit. This commenter stated that it

would be more appropriate to use the term ``permit'' rather than

``site''. The proposed regulation did not appear to give the State/

Indian tribe the authority to reclaim a priority 1 or 2 site within an

interim permit site using AML funds and use the posted bond money, once

collected, to supplement reclamation on other areas of the same permit,

the commenter said. A scenario would be an interim program permit with

incremental bonding that is currently under a time consuming bond

forfeiture process. There is an extremely dangerous highwall requiring

immediate attention on Bond Area A which has a $75,000 bond earmarked

for this reclamation. The State/Indian tribe elects to apply for and is

awarded $100,000 of AML funds to reclaim the dangerous highwall. After

the highwall is reclaimed, the entire bond for all increments is

collected. According to the proposed regulations, the State/Indian

tribe could not retain the $75,000 earmarked for Bond Area A to

supplement the remaining reclamation, but rather must reimburse the AML

Reclamation Fund for the amount expended, unless the bond money was

needed to do additional work at the site that was reclaimed with AML

money.

OSM has accepted this comment and has clarified the regulation to

note that recovered monies need only be transferred if no further

reclamation of the ``permitted site'' is required.

Another commenter stated that it supported including of language in

subsection (f) that would require the utilization of existing monies

from bond forfeitures and likewise inclusion of language in subsection

(g) to prevent unjust enrichment.

The commenter believes the Act's language ``available funds are

insufficient to reclaim[,]'' plainly suggest that those other funds

must be expended on the reclamation in conjunction with the AML funds

that might be dedicated to reclamation. The commenter believes that it

is pivotal that the operator who defaulted on reclamation obligations

remain liable, both for additional reclamation at the site where AML

funds are expended in conjunction with available forfeiture funds, and

further that the responsible entity be blocked from obtaining Title V

permits until such time as both the site is reclaimed and all monies

expended from AML awards be repaid to the State or OSM as appropriate.

In Kentucky, for example, current law allows a party who has

defaulted on reclamation obligations to regain access to new mining

permits on abatement of violations and restoration of the site. It is

important that violations that have been written against the

responsible entity not be vacated, as one commenter suggested, to avoid

both unjust enrichment and subsequent mining by an entity whose

failures have been offset through the use of AML funds. Repayment

should be included in subsection (g).

Sections 874.12 (f) and (g) in the final regulations require the

use of existing monies from bond forfeitures and avoids unjust

enrichment of defaulting operators. The regulations require the

permittee of a site to reimburse the AML fund for the cost of

reclamation which is in excess of any bond forfeited to ensure

reclamation.

Another commenter stated that in providing that neither the

Secretary nor the State performing reclamation is liable for Title V

violations, the rules do not properly recognize that a third party

performing reclamation pursuant to a State or Federal AML contract must

meet the obligations of the National Pollutant Discharge Elimination

System program under the Clean Water Act. This continuing obligation to

control sediment and other parameters to assure that no water quality

violations occur during reclamation should be clarified in the final

rule or preamble.

OSM has declined to make any changes to the regulations based on

this comment. All AML programs are responsible for insuring that all

Federal, State, or local permitting laws or requirements are met. There

is nothing in SMCRA which relieves an AML agency from such

responsibilities. This has been standard agency practice since the

beginning of the AML program and is already clearly set forth in the

1980 AML reclamation guidelines.

Another commenter stated that it supported the statement in OSM's

preamble to the proposed rules at page 57387 that the reclamation

standards applicable to AML work on bankrupt surety sites and other

post-August 3, 1977 sites are not those specified in Title V but

instead are the AML program's reclamation guidelines. Any other

interpretation would be inconsistent with past practice and would

greatly inhibit effective AML work at these sites. OSM agrees with this

comment and has made no changes to the final rules regarding

reclamation guidelines.

Section 874.13 Reclamation Objectives and Priorities

This section sets forth the reclamation priorities listed in

Section 403(a) of the Act. The provisions in this regulation have been

expanded and clarified. Subsection (a), like the original Sec. 874.13,

specifies that reclamation projects, as applicable, should be

accomplished in accordance with OSM's ``Final Guidelines for

Reclamation Programs and Projects'' (45 FR 14810-14819, March 6, 1980).

Subsection (b) specifies that the priorities in Section 403(a) of the

Act be followed.

To implement the directive that AML resources be directed to the

highest priority problems, OSM is including a new requirement in

Sec. 874.13(b) specifying that, in general, lower priority projects

(priority 3 or below) should only be undertaken if (1) All known higher

priority projects either have been addressed or are in the process of

being reclaimed (i.e., included in a current grant request) or (2) such

lower priority projects are undertaken in conjunction with a priority 1

or 2 site. However, it must also be noted that final rule language

differs from that proposed in that the word ``generally'' has been

inserted in Sec. 874.13(b). This was done to expand the original

proposed language to allow greater flexibility in performing lower

priority reclamation work.

Two commenters questioned whether OSM would allow States to do

priority 3 projects when remaining priority 1 or 2 projects are either

in the process of being reclaimed or should be deferred (e.g., due to a

potential for private reclamation, lack of adequate reclamation

technology, lack of landowner consent, or proper grant management).

One commenter noted that the proposed Sec. 874.13(b) states that

projects lower than a priority 2 may not be undertaken until all known

high priority projects have been or are in the process of being

reclaimed, are funded, or are done in conjunction with priority 1 or 2

sites in accordance with OSM's ``Final Guidelines for Reclamation

Programs and Projects'' (1980 Guidelines). The commenter notes that the

selection criteria in the 1980 Guidelines require that the following

criteria, among other things, be considered prior to selecting sites

for reclamation:

Landowner consent for post reclamation maintenance

Public and/or multiple benefits

Probability of success using current technology

Future remining potential

Post reclamation plan use benefits

In response to these comments, OSM has included the word

``generally'' in the final regulation in order to allow greater

flexibility in performing lower priority reclamation work. Further, OSM

recognizes that site-specific situations related to the criteria listed

above can develop which may require postponement of priority 1 or 2

sites. If this occurs, and no other priority 1 or 2 sites are available

or meet the selection criteria of the Guidelines, a State or Indian

tribe may reclaim lower level priorities if it is consistent with the

State or Indian tribe's approved Reclamation Plan and such work

reflects the order of priorities listed in Section 403 of the Act.

Likewise, there may be instances when a State or Indian tribe is aware

of eligible land previously affected by coal mining but believes it

does not warrant expending AML funds to restore or reclaim that area

since current site conditions do not warrant consideration under the

priorities established under the Act. Also, where a landowner refuses

access to the property, reclamation need not be undertaken unless site

conditions meet the standards established in Section 407(a) (1) and (2)

and the State/Indian tribe reclamation plan provides a mechanism for

implementing Section 407 at the subject site. Postponement of higher

priority sites in accordance with the 1980 Guidelines, for reasons

beyond the control of the administering agency, does not preclude a

State/Indian tribe from utilizing State share funds for lower priority

work, as long as all discretionary funds still go toward priority 1 and

2 work. The regulations have been revised to add this flexibility. The

general rule, however, is that the States/Indian tribes should follow

the priorities in the order stated; lower priority projects should be

undertaken in conjunction with high priority projects. In addition,

Federal share funds cannot be utilized to fund lower priority projects

due to the specific limitations in the 1990 amendments.

Additional guidance concerning the reclamation of lower priority

projects in conjunction with the reclamation of higher priority

projects is found in OSM's ``Final Guidelines for Reclamation Programs

and Projects'' (45 FR 14810-14819, March 6, 1980).

Although no regulatory changes have been proposed, OSM notes that

the Energy Policy Act of 1992 deleted the fourth priority regarding

coal research originally found in Section 403(4). OSM has notified all

States that grant requests for research funding pursuant to Section

403(4) of SMCRA is no longer authorized.

Section 874.14 Utilities and Other Facilities

Section 874.14 sets forth the requirements for funding water

projects, including the protection, repair, replacement, construction,

or enhancement of facilities relating to water treatment, supply or

distribution. In the 1990 amendments to SMCRA, Congress specifically

recognized the severe public health hazards that are associated with

water supplies contaminated by abandoned coal mine workings. As pointed

out in the Committee report accompanying H.R. 2095:

For many areas of the Appalachian Region groundwater resources

used for household water supply have been contaminated as a result

of drainage from abandoned underground and surface mines. The

Committee strongly believes that when abandoned mines have degraded

groundwater quality or depleted groundwater quantity to such an

extent that citizens no longer have an acceptable supply, an adverse

impact on health, safety and the general welfare is self evident.

H.R. Report No. 294, 101st Congress, 1st Session 24 (1989).

To reflect the new provisions regarding the funding of water

projects, OSM is promulgating a new Sec. 874.14. Subsection (a)

provides that a State/Indian tribe not certified under Section 411(a)

of the Act may expend up to 30 percent of the funds granted annually

from State share or historic coal distribution share to such State or

Indian tribe for the purpose of protecting, repairing, replacing,

constructing, or enhancing facilities relating to water supply,

including water distribution facilities and treatment plants, to

replace water supplies adversely affected by past coal mining

practices.

Subsection (b) implements Section 403(b)(2) of the Act by modifying

the eligibility standards in 30 CFR 874.12(b) by stating that the water

supply projects remain eligible if the State or Indian tribe finds in

writing that the adverse effects to the water system processes are due

predominately to effects of mining processes undertaken and abandoned

prior to August 3, 1977.

Subsection (c) as proposed would have provided criteria for not

only funding projects to repair or replace existing water facilities,

but also to enhance them. In order to receive monies to enhance public

facilities, States would have had to demonstrate and the Director

concur in the finding that: (1) Monies from other sources are either

not available or such other sources are contributing their fair share

of construction funds, (2) there is an urgent need to undertake the

project which gives it the same or higher priority than projects

remaining, and (3) the enhancement of the facility is necessary to

achieve the objectives set forth in Title IV of SMCRA. These

requirements, however, have been removed from the final rules based on

the comments received.

Several commenters objected to the detailed requirements set forth

in proposed Sec. 874.14(c) regarding alternative funding sources for

water projects. They state that the statutory language in Section

403(b) and its legislation history do not provide any basis for this

financial information. If a State chooses to fund a water project

involving water supplies predominantly contaminated prior to August 3,

1977, and that condition is a hazard to human health and safety, OSM,

they believe, should have no discretion to disapprove it. The

availability of other funding sources is irrelevant to the inquiry.

Some commenters objected further by stating that OSM has no

authority to require documentation that the water supply is a public

health hazard. Many of the typical mine drainage pollution constituents

such as iron, manganese and sulphur are considered secondary

recommended water quality parameters. They believe that it is almost

impossible to establish a direct health hazard without extensive

research that might take years to accumulate at a significant expense.

Water supply loss and quantitative diminution, as well as qualitative

damage to ground supplies, should be accorded the highest priorities

for abatement, giving particular emphasis to the loss of or damage to

private water wells where no public water supply system is available as

an alternative source of water. The

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