Use of the Applicant/Violator Computer System (AVS) in Surface Coal Mining and Reclamation Permit Approval; Standards and Procedures for Ownership and Control Determinations

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

establishes new regulations to require regulatory authorities to use

OSM's Applicant/Violator Computer System (AVS) and other information

sources to identify ownership or control links between permit

applicants and violators.

The regulations establish the procedures, standards, and type of

proof required to challenge ownership or control links and to disprove

violations.

OSM also amends a number of regulations affecting blocking of

permits, abatement of notices of violation, improvidently issued

permits, and permit application information.

The regulations reduce the possibility of violators receiving and

retaining permits in violation of the permit approval provisions of

SMCRA. Finally, the rules establish enhanced due process procedures for

the regulated community.

EFFECTIVE DATE: November 28, 1994.

ADDRESSES: Office of Surface Mining Reclamation and Enforcement, U.S.

Department of the Interior, 1951 Constitution Avenue, NW., Washington,

DC 20240.

FOR FURTHER INFORMATION CONTACT: Russell Frum, Acting Chief, Applicant/

Violator System Office, Office of Surface Mining Reclamation and

Enforcement, U.S. Department of the Interior, 1849 C Street NW.,

Washington, DC 20240. Telephone: 202-208-4655.

SUPPLEMENTARY INFORMATION:

I. Background.

II. Rules Adopted and Responses to Public Comments.

III. Procedural Matters.

I. Background

Section 510(c) of the Surface Mining Control and Reclamation Act of

1977 (SMCRA or the Act) and 30 CFR part 773 establish certain

requirements for permits and permit processing. These requirements

include the identification of ownership or control links between permit

applicants and individuals or entities who are responsible for unabated

violations of certain Federal or State laws and rules. See 30 CFR

773.5; 30 CFR 773.15(b). The purpose of such inquiry is to determine

whether a permit applicant is linked to unabated violations of the Act

and related air and water quality requirements. See 30 CFR 773.15(b).

In the event that a permit applicant is so linked, the regulatory

authority may not issue a permit to the applicant unless the applicant

submits proof that the violation has been or is in the process of being

corrected to the satisfaction of the agency that has jurisdiction over

the violation. In the alternative, the applicant may establish that the

violation is the subject of a good faith, direct, administrative or

judicial appeal which contests the validity of the violation. Id. In

the event that a permit applicant is so linked and proof of the

violation's correction or good faith appeal is not submitted, issuance

of a permit to the applicant may constitute improvident issuance and

may subject the permittee to certain remedial measures including

suspension or rescission of the permit. See 30 CFR 773.20 and 30 CFR

773.21.

Under a court order in the case of Save Our Cumberland Mountains,

Inc. et al. v. Clark, No. 81-2134 (D.D.C. January 31, 1985) (Parker,

J.), the Secretary of the Interior was required to improve the

enforcement and implementation of Section 510(c) of SMCRA, and to

establish a computerized Applicant/Violator System (``AVS'') to match

permit applicants and their owners and controllers with current

violators of SMCRA. OSM has developed such a computer system to enable

OSM and State regulatory authorities to comply effectively with the

responsibilities prescribed by Section 510(c) of SMCRA and 30 CFR part

773.

On January 24, 1990, OSM and DOI entered into a Settlement

Agreement attempting to resolve litigation with Save Our Cumberland

Mountains (``SOCM'') and other plaintiffs. The Settlement Agreement was

approved by the U.S. District Court on September 5, 1990, and became

effective, by its own terms, on that date. See Memorandum of the Court,

Save Our Cumberland Mountains, Inc., et al., v. Lujan, No. 81-2134

(D.D.C. September 5, 1990). That Settlement Agreement contained

provisions whereby OSM agreed to propose rules to implement Section

510(c) of SMCRA and the AVS. Accordingly, on September 6, 1991, OSM

proposed rules whose purpose was:

to require that, prior to issuing permits to applicants, regulatory

authorities consider complete ownership and control information in

conducting the analysis mandated by section 510(c) of SMCRA and 30

CFR 773.15(b). The proposed rules would mandate the use of AVS as a

critical component of the ownership and control information

consideration process.

See Proposed Rule, Use of the Applicant/Violator Computer System in

Surface Coal Mining and Reclamation Permit Approval, 56 FR 45780, 45781

(September 6, 1991). While the proposal of the rules fulfilled certain

provisions of OSM's Settlement Agreement with SOCM, OSM indicated that:

it must be emphasized that OSM independently believes that the

proposal and public consideration of such rules are important to

assist OSM in implementing its duties under Section 510(c) of SMCRA

and duties imposed by regulations such as 30 CFR 773.15. The

proposed rules should be viewed as proposals that OSM would have

made regardless of any litigation or settlement.

Id. Subsequently, on March 16, 1992, the U.S. Court of Appeals (D.C.

Cir.) vacated the District Court's approval of the Settlement Agreement

with SOCM. Save Our Cumberland Mountains, Inc., et al., v. Lujan, No.

90-5374, Slip. Op. (U.S. Court of Appeals, D.C. Cir., May 22, 1992). In

its decision, the Court noted that ``nothing'' in the Court's opinion

precluded OSM's maintenance and improvement of the AVS as agency

policy. Id., at page 22.

As OSM indicated at the time of its proposal of September 1991,

these rules are important and appropriate--independent of any

litigation or settlement. OSM continues to be committed to the

maintenance and improvement of the AVS as a matter of agency policy and

believes that the publication of final rules is now necessary to the

effective implementation of section 510(c) of the Act and the

implementation of the AVS. OSM's commitment to AVS is in accord with

the position recently expressed by the Senate Appropriations Committee:

Regarding the AVS, the Committee joins the House in commending

OSM for improvements made to the system. The Committee has

consistently supported development and implementation of the AVS

because the AVS is essential to effective enforcement of the Surface

Mining Control and Reclamation Act of 1977 [SMCRA].

Report of the Senate Appropriations Committee, Senate Report No. 103-

114, at page 47 (July 28, 1993). Accordingly, OSM has determined to go

forward with the final rules published today without regard to the

course of litigation between OSM and SOCM or any other person. OSM has

reviewed the proposed rules in light of the comments that have been

made with a view towards serving the agency's commitment to protecting

the environment, to implementing SMCRA, and ultimately, to serving the

public interest.

These final rules incorporate the AVS into the Federal regulations

and mandate the use of the system by State and Federal surface mining

regulatory authorities. At the same time that these rules strengthen

the enforcement of Section 510(c), they also establish a detailed set

of procedural pathways to assure the protection of due process for the

regulated community.

Public Participation

As indicated above, OSM published proposed rules on September 6,

1991. The proposed regulations were available for public comment until

November 20, 1991. Comments were received from members of the regulated

community, representatives of environmental advocacy groups,

representatives of State regulatory authorities, and various citizens.

While a total of 20 commenters submitted written comments, most

comments can be grouped into three major categories which are captioned

below. After the discussion of these three major issues, this preamble

will then provide a section-by-section discussion of the final rules.

II. Rules Adopted and Responses to Public Comments

A. Summary of Rules Adopted

These final rules include the following provisions:

Part 701--Permanent Regulatory Program

Section 701.5 is amended to delete the definition of ``Violation

notice.''

Part 773--Requirements for Permits and Permit Processing

The Table of Contents is amended to include new section numbers

773.22, verification of ownership or control application information;

773.23, review of ownership or control and violation information;

773.24, procedures for challenging ownership or control links shown in

AVS; and 773.25, standards for challenging ownership or control links

and the status of violations.

Section 773.5 is amended to include definitions of ``Applicant/

Violator System'' or ``AVS.'' The terms are defined to mean the

computer system maintained by OSM to identify ownership or control

links involving permit applicants, permittees, and persons cited in

violation notices. The regulation is further amended to include

definitions of ``Federal violation notice,'' ``Ownership or control

link,'' ``State violation notice,'' and ``Violation notice.''

A ``Federal violation notice'' is defined to include a violation

notice issued by OSM or by another agency or instrumentality of the

United States.

An ``ownership or control link'' is defined as any relationship

included in the definition of ``owned or controlled'' or ``owns or

controls'' in 30 CFR 773.5 or in the violations review provisions of 30

CFR 773.15(b). It includes any relationship presumed to constitute

ownership or control under 30 CFR 773.5(b) unless such presumption has

been successfully rebutted under sections 773.24 and 773.25 of this

rule or under the provisions of 30 CFR part 775 and Sec. 773.25 of this

rule. It also includes an identity between persons, e.g., an applicant

and a violator.

A ``State violation notice'' is defined as a violation notice

issued by a State regulatory authority or by another agency or

instrumentality of State government.

``Violation notice'' is defined as any written notification from

any governmental entity advising of violations of the Act or any other

laws which would form the basis for a regulatory authority to deny

issuance of a permit in accordance with the criteria contained in

Sec. 773.15(b) of the regulations. The type of written notification is

broadly defined to include a letter, memorandum, legal or

administrative pleading, or other written communication. Consistent

with the provisions of Sec. 773.15(b), the term includes notification

of a violation of the Act, any Federal rule or regulation promulgated

pursuant thereto, a State program, or any Federal or State law, rule,

or regulation pertaining to air or water environmental protection in

connection with a surface coal mining operation. It includes, but is

not limited to, a notice of violation; an imminent harm cessation

order; a failure-to-abate cessation order; a final order, bill, or

demand letter pertaining to a delinquent civil penalty; a bill or

demand letter pertaining to delinquent abandoned mine reclamation fees;

and a notice of bond forfeiture, where one or more violations upon

which the forfeiture was based have not been corrected.

Section 773.10 is revised to include the new sections of the AVS-

related rules that result in information collection requirements. The

revision provides an estimate of the average public reporting burden of

four and one-half hours per response for the collection of information

under part 773 as such part is revised by these final rules. The

section also lists the addresses for OSM and OMB where comments on the

information collection requirements may be sent.

Paragraph 773.15(b)(1) is amended to require the regulatory

authority to review all reasonably available information concerning

violation notices and ownership or control links involving the

applicant. Such information would include that obtained pursuant to

Sec. 773.22 (verification of ownership or control application

information); Sec. 773.23 (review of ownership or control and violation

information); Sec. 778.13 (identification of interests); and

Sec. 778.14 (violation information).

The net effect of referencing such provisions in Sec. 773.15(b)(1)

is to assure that the regulatory authority makes a decision with

respect to permit issuance or denial based upon complete information

relating to ownership, control, and violations. Such complete

information includes the mandated use of AVS.

Furthermore, in accordance with Sec. 773.23, the regulatory

authority will follow the procedures and standards set forth in

Secs. 773.24 and 773.25 in deciding whether to issue the permit under

Sec. 773.15(b).

OSM has also decided to amend 30 CFR 773.15(b)(1) to provide that,

in the absence of a failure-to-abate cessation order (FTACO), a

regulatory authority may presume that a notice of violation (NOV) is

being corrected to the satisfaction of the agency with jurisdiction

over the violation where the abatement period for such notice of

violation has not yet expired and where the permit applicant has

provided certification in his or her permit application that such

violation is in the process of being abated to the satisfaction of the

agency with jurisdiction over the violation. In addition, OSM has also

amended 30 CFR 773.15(b)(2) to provide that any permits issued incident

to such presumption and certification will be conditionally issued

based upon successful completion of the necessary abatement.

Section 773.20 is amended by the insertion of a new paragraph

(b)(2), which makes the provisions of proposed Sec. 773.25, standards

for challenging ownership or control links and the status of

violations, applicable when a regulatory authority makes determinations

with respect to improvidently issued permits. In this context,

Sec. 773.25 is applicable when a regulatory authority determines

whether a violation, penalty, or fee existed at the time that it was

cited, remains unabated or delinquent, has been corrected, is in the

process of being corrected, or is the subject of a good faith appeal,

and whether any ownership or control link between the permittee and the

person responsible for the violation, penalty, or fee existed, still

exists, or has been severed.

The insertion of the language referring to Sec. 773.25 has the

effect of assuring that the standards, responsibilities, and procedures

created by proposed Sec. 773.25 are consistently applied to permit

issuance and to determinations regarding improvident permit issuance.

Such an approach enhances the fairness of the permitting process and

the prospect for the uniform enforcement of nationwide minimum

standards. In one respect, however, the improvident permit issuance

process will differ from the permit issuance process. In the

improvident permit issuance process, prior to permit suspension or

rescission, the permittee will be able to challenge the existence of

the violation at the time it was cited. In the permit issuance process,

prior to permit denial, the applicant will not be able to challenge the

existence of the violation at the time it was cited.

OSM has also renumbered certain provisions of the regulation at 30

CFR 773.20(c). Among such provisions, renumbered paragraph (c)(1)(iv),

which authorizes the regulatory authority to use rescission as one of

the remedial measures for improvident permit issuance, deletes a

specific reference contained in the former 30 CFR 773.20(c)(4) to the

rescission procedures of 30 CFR 773.21.

The reason for this deletion is that OSM today establishes a prior

notice and a common appeal procedure for both permit suspensions and

permit rescissions with respect to improvidently issued permits. The

former regulation governing permit suspensions at 30 CFR 773.20(c)(3)

did not impose any specific requirements for prior notice, opportunity

to be heard, or right of appeal for the permittee whose permit is to be

suspended. See 54 FR 18450 (1989). In contrast to this, regulations

governing permit rescissions at 30 CFR 773.21 contained specific

requirements for prior notice to a permittee and an explicit right of

appeal. OSM has now provided for greater consistency in its procedures

governing suspension and rescission of permits.

Accordingly, OSM amends 30 CFR 773.20 to add a new paragraph (c)(2)

which requires that a regulatory authority which decides to suspend a

permit must provide at least 30 days' prior written notice to the

permittee. In the event that the regulatory authority decides to

rescind a permit, it must provide notice in accordance with the

provisions of 30 CFR 773.21. The amendment further provides that a

permittee be given the opportunity to request administrative review of

the notice under Office of Hearings and Appeals, (OHA) rule 43 CFR

4.1370 et seq., where OSM is the regulatory authority, or under the

State program equivalent, where the State is the regulatory authority.

The regulation further allows for enhanced due process protection

and fairness by providing that temporary relief from the regulatory

authority's decision is available in accordance with the provisions of

OHA rule 43 CFR 4.1376 or the State program equivalent. In the absence

of such temporary relief, the regulatory authority's decision remains

in effect during the pendency of appeal.

OSM has retained the language in paragraph 773.20 which addresses

the situation which occurs when a permit is issued in reliance upon the

presumption that an NOV is being abated in the absence of a cessation

order and a cessation order is, in fact, issued with respect to the

violation. In such an event, a regulatory authority is required to find

that the permit has been improvidently issued.

OSM amends paragraph (a) of 30 CFR 773.21 to make the provisions of

Sec. 773.25, standards for challenging ownership or control links and

the status of violations, applicable when a regulatory authority

invokes the automatic suspension and rescission procedures of 30 CFR

773.21. The rationale for such amendment is the same as that discussed

above with respect to similar language contained in Sec. 773.20.

Further, OSM deletes former paragraph (c) of 30 CFR 773.21 which

provides for appeals of rescission notices. As discussed above,

rescission appeal procedures are incorporated in 30 CFR 773.20.

Section 773.22 is a new section and mandates an inquiry whose focus

is to assure that the regulatory authority develops complete and

accurate information as to the identification of the applicant and all

owners or controllers of the applicant prior to making a determination

on a permit application and enters such information promptly into the

AVS. Accordingly, this section focuses on verification of ownership or

control application information. Such accurate and complete information

enables the regulatory authority to make an informed decision as to

whether the applicant is linked to a surface coal mining and

reclamation operation in violation of the Act or other any other

environmental law within the terms of 30 CFR 773.15(b)(1).

Paragraph (a) of Sec. 773.22 imposes a duty upon a regulatory

authority to review the information provided in the permit application,

pursuant to 30 CFR 778.13(c) and 778.13(d), to determine whether the

information provided, including the identification of the operator and

all owners and controllers of the operator, is complete and accurate.

In making such determination, the regulatory authority is required to

compare information provided in the application with information

contained in manual and automated data sources. Manual sources for

review include the regulatory authority's own enforcement and

inspection records and State corporation commission or tax records, to

the extent they contain information concerning ownership or control

links. Automated data sources include the regulatory authority's own

computer systems, if any, and the AVS.

Paragraph (b) of Sec. 773.22 provides that, if it appears from

information provided in the application pursuant to paragraphs (c) and

(d) of Sec. 778.13 that none of the persons identified in the

application has had any previous mining experience, the regulatory

authority has to inquire of the applicant and investigate whether

anyone other than those persons identified in the application will own

or control the mining operation as either an operator or as another

type of owner or controller.

Paragraph (c) of Sec. 773.22 provides that if, after conducting the

information review described above, the regulatory authority identifies

any potential omission, inaccuracy, or inconsistency in the ownership

or control information provided in the application, it must contact the

applicant prior to making a final determination with respect to the

application. The applicant is then required to resolve the potential

omission, inaccuracy, or inconsistency through submission of an

amendment to the application or a satisfactory explanation which

includes credible information sufficient to demonstrate that no actual

omission, inaccuracy, or inconsistency exists. The regulation also

contains a reference to required action by the regulatory authority in

accordance with Sec. 843.23, sanctions for knowing omissions or

inaccuracies in ownership or control and violation information, or the

State program equivalent, where appropriate. As will be described more

fully below, OSM is deferring action at this time with respect to

proposed Sec. 843.23. Such proposed section will be considered as part

of a subsequent rulemaking. OSM has, however, retained the reference to

proposed Sec. 843.23 in final Sec. 773.22 in the event that proposed

Sec. 843.23 is ultimately adopted. Nevertheless, OSM has made no

decision with respect to the adoption of proposed Sec. 843.23 and the

retention of such reference does not mean that OSM will ultimately

adopt proposed Sec. 843.23 as a final rule.

Paragraph (d) of Sec. 773.22 requires that, upon completion of the

information review mandated by Sec. 773.22, the regulatory authority

promptly enter into or update all ownership or control information on

AVS.

Section 773.23 is a new section which delineates the regulatory

authority's review obligations with respect to a permit application

after the regulatory authority has completed the process of verifying

ownership or control application information as described in proposed

Sec. 773.22.

Paragraph (a) of Sec. 773.23 requires the regulatory authority to

review all reasonably available information concerning violation

notices and ownership or control links involving the applicant to

determine whether the application can be approved under the provisions

of 30 CFR 773.15(b). With respect to ownership or control links

involving the applicant, such information includes all information

obtained under proposed Sec. 773.22 and 30 CFR 778.13. With respect to

violation notices, such information includes all information obtained

under Sec. 778.14, information obtained from OSM, including information

shown in the AVS, and information obtained from the regulatory

authority's own records concerning violation notices.

In substance, the regulation assures that the regulatory authority

considers complete ownership, control, and violation information in

making the decision required by 30 CFR 773.15(b)(1) with respect to a

permit application.

Paragraph (b) of Sec. 773.23 provides the course of action which a

regulatory authority is required to take if the review conducted

pursuant to paragraph (a) of the section discloses any ownership or

control link between the applicant and any person cited in a violation

notice.

Thus, paragraph (b)(1) of Sec. 773.23 requires that the regulatory

authority notify the applicant of such link and refer the applicant to

the agency with jurisdiction over the violation notice.

Paragraph (b)(2) of Sec. 773.23 requires that the regulatory

authority not approve the permit application unless and until it

determines that all ownership or control links between the applicant

and any person cited in a violation notice are erroneous or have been

rebutted, or the regulatory authority determines that the violation to

which the applicant has been linked has been corrected, is in the

process of being corrected, or is the subject of a good faith appeal,

within the meaning of 30 CFR 773.15(b)(1) or the State program

equivalent. The determinations to be made by the regulatory authority

under paragraph (b)(2) of the regulation are made in accordance with

the provisions of Sec. 773.24, procedures for challenging ownership or

control links shown in AVS, and Sec. 773.25, standards for challenging

ownership or control links and the status of violations, or their State

program equivalents.

Paragraph (c) of Sec. 773.23 requires that, following the

regulatory authority's decision on the application or following the

applicant's withdrawal of the application, the regulatory authority is

required to promptly enter all relevant information related to the

decision or withdrawal into AVS. The regulatory authority's decision

could include unconditional issuance, conditional issuance, or denial

of the permit. The requirement that all relevant information be

promptly entered into AVS is intended to insure that AVS is continually

updated to reflect the most current information available with respect

to permit applicants. A critical source of such information is the

regulatory authority.

Section 773.24 is a new section that establishes the procedures to

be followed if a person wishes to challenge an ownership or control

link between a person and any other person shown on AVS. The procedures

to be followed by both OSM and the challenger are included. The section

provides procedures for direct appeals of such links to OSM by persons

who have been so linked. The section also provides for challenges

concerning the status of violations to which persons shown on AVS have

been linked. The section further provides the opportunity for those

persons making a challenge to obtain a temporary relief from any

adverse use of the challenged link or violation information during the

pendency of such challenge.

Paragraph (a)(1) of Sec. 773.24 provides that an applicant or

anyone else shown in AVS is an ownership or control link to any person

could challenge such a link in accordance with the provisions of

paragraphs (b) through (d) of Sec. 773.24 and in accordance with the

provisions of Sec. 773.25. Paragraph (a)(1) of Sec. 773.24 provides,

however, that such challenge is not available if the challenger is

bound by a prior administrative or judicial decision with respect to

the link.

Paragraph (a)(1) of Sec. 773.24 provides that challenges of

ownership or control links shown on AVS are made before OSM.

Paragraph (a)(2) of Sec. 773.24 provides that an applicant or

anyone else shown in AVS in an ownership or control link to a person

cited in a Federal violation notice seeking to challenge the status of

such violation may do so in accordance with the provisions of

paragraphs (b) through (d) of Sec. 773.24 and in accordance with the

provisions of Sec. 773.25, which are discussed in detail below. The

procedures applicable are similar to those described in paragraph

(a)(1) of Sec. 773.24.

The ``status of the violation'' means whether the violation remains

outstanding, has been corrected, is in the process of being corrected,

or is the subject of a good faith, direct administrative or judicial

appeal to contest the validity of the violation. See 30 CFR

773.15(b)(1)(i)-(ii). This usage is carried forward into paragraphs (b)

and (c) of Sec. 773.24 and into the provisions of paragraph (b)(1)(iv)

of Sec. 773.25. The process for challenging the status of a Federal

violation is a Federal process and such challenges will be made before

OSM.

In challenging the current status of a violation under Sec. 773.24

or 773.25, a person will not be able to challenge the existence of the

violation at the time it was cited unless the challenge is made by a

permittee within the context of the improvidently issued permit process

or by an applicant after permit denial. In general, the existence of

the violation will have been established by prior administrative or

judicial proceedings involving the person cited in the violation

notice, or by such person's failure to exhaust its available remedies

in a timely manner.

Paragraph (a)(2) of Sec. 773.24 provides, in language similar to

that contained in paragraph (a)(1) of the regulation, that the

opportunity to challenge the status of a violation is not available to

any person who ``is bound by a prior administrative or judicial

determination concerning the status of the violation.''

Paragraph (a)(3) of Sec. 773.24 provides that any applicant or

person shown in AVS to be linked by ownership or control to a person

cited in a State violation notice may challenge the status of the

violation before the State that issued the violation notice. The

challenge must be made in accordance with the State's program

equivalents to paragraphs (b) through (d) of Sec. 773.24 and

Sec. 773.25. Again, the challenge may not involve the existence of the

violation at the time it was cited, and is not available if the

challenger is bound by a prior administrative or judicial determination

with respect to status of the violation.

Paragraph (b) of Sec. 773.24 requires that any applicant or other

person seeking to challenge ownership or control links shown in AVS or

the status of Federal violations must submit to OSM a written

explanation of the basis for his or her challenge and provide relevant

evidentiary materials and supporting documents. The information must be

submitted to the Chief of OSM's AVS Office in Washington, DC.

Paragraph (c) of Sec. 773.24 provides that, in response to a

challenge made under paragraph (b) of that section, OSM must make a

written decision with respect to the ownership or control link and/or

with respect to the status of the violation.

Paragraph (d)(1) of Sec. 773.24 provides that, if OSM has

determined that the ownership or control link has been shown to be

erroneous or has been rebutted and/or that the violation covered by the

violation notice has been corrected, is in the process of being

corrected, or is the subject of a good faith appeal, OSM is required to

provide notice of its determination to the permit applicant or other

person challenging the link or the status of the violation. If an

application is pending, OSM must also notify the regulatory authority

before whom the application is pending. Further, OSM is required to

correct information contained in AVS to reflect the determination which

has been made.

Paragraph (d)(2) of Sec. 773.24 provides that, if OSM has

determined that the challenged ownership or control link has not been

shown to be erroneous and has not been rebutted, and that the violation

remains outstanding, OSM must provide notice of its determination to

the permit applicant or other person challenging the link or the status

of the violation. If an application is pending, OSM must also notify

the regulatory authority before whom the application is pending.

Further, OSM is required to update information contained in AVS, if

necessary, to reflect OSM's determinations.

Paragraph (d)(2)(i) of Sec. 773.24 provides that OSM must serve a

copy of its decision with respect to a challenge upon the applicant or

other challenger by certified mail, or by any other means consistent

with the rules governing service of a summons and complaint under Rule

4 of the Federal Rules of Civil Procedure. The regulation provides that

service is complete upon tender of the notice or of the mail and is not

deemed incomplete by virtue of a challenger's refusal to accept the

notice or mail.

Paragraph (d)(2)(ii) of Sec. 773.24 provides that the applicant or

other challenger can appeal OSM's decision to the Department of the

Interior's Office of Hearings and Appeals (OHA) within 30 days of such

decision in accordance with OHA regulations at 43 CFR 4.1380 et seq.

Paragraph (d)(2)(ii) further provides that OSM's decision remains in

effect unless temporary relief was granted in accordance with OHA

regulations at 43 CFR 4.1386. The filing of an appeal will not

automatically suspend the use of the information in AVS during the

pendency of such appeal. The challenger must explicitly seek such

relief in appeal proceeding before OHA.

Section 773.25 is a new section which establishes standards for

challenges to ownership or control links and for challenges to the

status of violations. The section allocates responsibilities between

OSM and State regulatory authorities for resolving issues related to

ownership and control and provides the standards for evidence to

resolve such issues.

Paragraph (a) of Sec. 773.25 provides that provisions of

Sec. 773.25 are applicable to any challenge concerning an ownership or

control link to any person or the status of any violation covered by a

violation notice when such challenge is made under the provisions of 30

CFR 773.20 and 30 CFR 773.21 (improvidently issued permits);

Secs. 773.23 (the regulatory authority's review of ownership or control

and violation information), and 773.24 (procedures for challenging

ownership or control links shown in AVS); or 30 CFR part 775

(administrative and judicial review of permitting decisions).

Paragraph (b) of Sec. 773.25 provides the basic allocation of

responsibility among regulatory authorities to make decisions with

respect to ownership or control and with respect to the status of

violations.

Paragraph (b)(1)(i) of Sec. 773.25 provides that the regulatory

authority before which an application is pending has responsibility for

making decisions with respect to the ownership or control relationships

of the application.

Paragraph (b)(1)(ii) of Sec. 773.25 provides that the regulatory

authority that issued a permit has responsibility for making decisions

with respect to the ownership or control relationships of the permit.

Paragraph (b)(1)(iii) of Sec. 773.25 provides that the State

regulatory authority that issued a State violation notice has

responsibility for making decisions with respect to the ownership or

control relationships of the violation.

Paragraph (b)(1)(iv) of Sec. 773.25 provides that the regulatory

authority that issued a violation notice, whether State or Federal, has

responsibility for making decisions concerning the status of the

violation covered by the notice.

The ``status'' of the violation means whether the violation remains

outstanding, has been corrected, is in the process of being corrected,

or is the subject of a good faith appeal, within the meaning of 30 CFR

773.15(b)(1).

Paragraph (b)(2) of Sec. 773.25 provides that OSM has

responsibility for making decisions with respect to the ownership or

control relationships of a Federal violation notice.

Paragraph (b)(3)(i) of Sec. 773.25 provides that with respect to

information shown on AVS, the responsibilities of State regulatory

authorities to make decisions with respect to ownership or control

links are subject to the plenary authority of OSM.

Paragraph (b)(3)(ii) of Sec. 773.25 provides that with respect to

information shown on AVS relating to the status of a violation and with

respect to ownership or control information which has not been entered

into AVS by a State, the authority of a State regulatory authority is

subject to OSM's oversight authority under 30 CFR parts 773, 842, and

843.

Paragraph (c) of Sec. 773.25 establishes evidentiary standards

applicable to the formal and informal review of ownership or control

links and the status of violations.

Paragraph (c)(1) of Sec. 773.25 provides that in any formal or

informal review of an ownership or control link or of the status of a

violation covered by a violation notice, the agency responsible for

making a decision is required to first make a prima facie determination

or showing that the link exists, existed during the relevant period,

and/or that the violation remains outstanding. A prima facie

determination is made when the agency is reviewing the evidence itself,

in an informal process; a prima facie showing is made when the agency's

determination is the subject of a formal administrative or judicial

review process. When the agency makes such a determination or showing,

the person seeking to challenge the link or the status of the violation

then has the burden of proving the necessary elements of his or her

challenge to the link or to the status of the violation by a

preponderance of the evidence.

Under paragraph (c) of Sec. 773.25, a challenger of a link has to

prove at least one of three proposed conclusions by a preponderance of

the evidence to succeed in his or her challenge.

First, under paragraph (c)(1)(i) of Sec. 773.25, a challenger could

prove that the facts relied upon by the responsible agency to establish

ownership or control under the definition of ``owned or controlled'' or

``owns or controls'' in 30 CFR 773.5 do not or did not exist or that

the facts relied upon to establish a presumption of ownership or

control under the definition of ``owned or controlled'' or ``owns or

controls'' in 30 CFR 773.5 do not or did not exist.

Paragraph (c)(1)(ii) of Sec. 773.25 provides that a person subject

to a presumption of ownership or control under the definition of

``owned or controlled'' or ``owns or controls'' in 30 CFR 773.5 could

rebut such presumption by demonstrating that he or she does not or did

not in fact have the authority directly or indirectly to determine the

manner in which surface coal mining operations are or were conducted.

Paragraph (c)(1)(iii) of Sec. 773.25 provides that a challenger

could prove that the violation covered by a violation notice did not

exist, has been corrected, is in the process of being corrected, or is

the subject of a good faith appeal within the meaning of 30 CFR

773.15(b)(1). Paragraph (c)(1)(iii) further provides, however, that a

person challenging the status of a violation would not be able to

challenge the existence of the violation at the time it was cited under

the provisions of Sec. 773.24 unless such challenger is a permittee

acting within the context of Secs. 773.20-773.21 of this part. In any

circumstance, a person who had failed to take timely advantage of a

prior opportunity to challenge the violation notice or who was bound by

a previous administrative or judicial determination concerning the

existence of the violation would also be precluded from making a

challenge to the existence of the violation at the time it was cited in

any proceeding.

Paragraph (c)(2) of Sec. 773.25 describes the type of evidence that

a person challenging an ownership or control link or the status of a

violation has to present to meet the burden of proof by a preponderance

of the evidence. The regulation provides that the evidence presented be

probative, reliable, and substantial. See 5 U.S.C. 556(d).

Paragraph (c)(2) of Sec. 773.25 provides a list of examples of such

evidence for proceedings before the ``responsible agency'' (the agency

with responsibility for making a decision with respect to a challenge)

and for proceedings before administrative or judicial tribunals

reviewing the decisions of the responsible agency. The list of the

types of acceptable evidence is intended to be illustrative, not

exhaustive. It is expected that regulatory authorities will add to this

list as they develop experience in making determinations under the

regulation.

Paragraph (c)(2)(i) of Sec. 773.25 focuses upon proceedings before

the responsible agency. The list of examples includes documents which

are likely to be truthful and which have certain indicators of

reliability which go beyond the mere assertions of the individual

presenting the evidence.

Paragraph (c)(2)(i)(A) of the section provides that a challenger

may submit affidavits setting forth specific facts concerning the scope

of responsibility of the various owners or controllers of an applicant,

a permittee, or any person cited in a violation notice; the duties

actually performed by such owners or controllers; the beginning and

ending dates of such owners' or controllers' affiliation with the

applicant, permittee, or person cited in a violation notice; and the

nature and details of any transaction creating or serving an ownership

or control link; or specific facts concerning the status of the

violation.

Paragraphs (c)(2)(i)(B) and (c)(2)(i)(C) of section 773.25 each

look to official certification as the basis for the reliability of a

submitted document. Paragraph (c)(2)(i)(B) allows for the submission of

copies of certain types of documents if they are certified. Such

documents include copies of corporate minutes, stock ledgers,

contracts, purchase and sale agreements, leases, correspondence or

other relevant company records. Paragraph (c)(2)(i)(C) allows for

submission of certified copies of documents filed with or issued by any

State, municipal, or Federal governmental agency.

Paragraph (c)(2)(i)(D) of final Sec. 773.25 provides for a

challenger's submission of an opinion of counsel in support of his or

her position. Such opinion would be appropriate for submission when it

is supported by evidentiary materials; when it is rendered by an

attorney who certifies that he or she is qualified to render an opinion

of law; and when counsel states that he or she has personally and

diligently investigated the facts of the matter or where counsel states

that such opinion is based upon information which has been supplied to

counsel and which is assumed to be true.

Paragraph (c)(2)(ii) of Sec. 773.25 provides that, when the

decision of the responsible agency is reviewed by an administrative or

judicial tribunal, the challenger could present any evidence to such

tribunal which is admissible under the rules of the tribunal. Under the

regulation, however, the evidence submitted still has to be probative,

credible, and substantial.

Paragraph (d) of Sec. 773.25 provides for the review and revision

of information in AVS to reflect determinations made by regulatory

authorities in response to challenges of ownership or control links or

the status of violations. Paragraph (d) provides that, following any

determination by a State regulatory authority or other State agency, or

following any decision by an administrative or judicial tribunal

reviewing such determination, the State regulatory authority shall

review the information in AVS to determine if the information in AVS is

consistent with the determination or decision. If it is not consistent,

the State regulatory authority is required to promptly inform OSM and

request that the AVS information be revised to reflect the

determination or decision.

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

Financial, Compliance, and Related Information

Paragraph (c) of 30 CFR 778.14 is amended to require a permit

applicant to disclose ``all violation notices'' received by the

applicant within the preceding three years. In addition, the

introductory language of the provision is amended to require the

disclosure of all outstanding violation notices for any surface coal

mining operation that is deemed or presumed to be owned or controlled

by either the applicant or by any person who is deemed or presumed to

own or control the applicant under definitions of ``owned or

controlled'' or ``owns or controls'' under 30 CFR 773.5.

The regulation previously required the applicant to disclose

violations of a number of various laws listed in 30 CFR 778.14(c). Use

of the amended definition of ``violation notice'' adopted today as part

of 30 CFR 773.5 obviates the need for listing each of these violations

in 30 CFR 778.14.

The regulation also previously required that the applicant provide

only a list of unabated cessation orders and unabated air and water

quality violation notices received prior to the date of the application

by any surface coal mining and reclamation operation owned or

controlled by either the applicant or by any person who owns or

controls the applicant. With respect to this list, the previous

regulation did not require that an applicant list notices of violation

received or unpaid penalties or fees incurred by any surface coal

mining operation owned or controlled by the applicant or by any person

who owns or controls the applicant.

Paragraph (c) of Sec. 778.14 is now amended to require an applicant

to disclose all outstanding violation notices received by any surface

coal mining operation that is deemed or presumed to own or control the

applicant.

In addition, OSM has amended paragraph (c) of Sec. 778.14 to

provide that for each notice of violation issued pursuant to 30 CFR

843.12 or under a Federal or State program for which the abatement

period has not expired, the applicant must certify that such notice of

violation is in the process of being abated to the satisfaction of the

agency with jurisdiction over the violation.

Part 840--State Regulatory Authority: Inspection and Enforcement

Paragraph (b) of 30 CFR 840.13 is amended to include a reference to

Sec. 843.23, a proposed rule. As has been explained previously, OSM has

deferred action on adopting proposed Sec. 843.23 at this time. The

reference, however, to that section has been placed in Sec. 840.13 in

the event that proposed Sec. 843.23 is adopted. The use of such

reference does not mean, however, that OSM will ultimately adopt

proposed Sec. 843.23.

Part 843--Federal Enforcement

OSM amends the Table of Contents of 30 CFR part 843 to add

Sec. 843.24, oversight of State permitting decisions with respect to

ownership or control of the status of violations.

Former Sec. 843.10 is deleted since part 843 did not contain any

information collection requirements which require approval by the

Office of Management and Budget under 44 U.S.C. 3507. The references to

Secs. 843.14(c) and 843.16 formerly in Sec. 843.10 did not represent

information collection requirements. The requirement in Sec. 843.14(c)

for OSM to furnish copies of notices and orders to the State regulatory

authority and to any person having an interest did not require OMB

approval because the obligation to provide the information is imposed

upon OSM and not upon the State or upon a member of the public. Section

843.16 merely informs the public of the right to file an application

for review and request a hearing under 43 CFR part 4.

Section 843.24 is a new section which provides standards for OSM's

oversight of State permitting decisions with respect to ownership or

control or the status of violations.

Paragraph (a) of Sec. 843.24 establishes the bases which require

OSM to take action under the provisions of paragraphs (b) and (c) of

proposed Sec. 843.24. Paragraph (a) provides that OSM is required to

take action whenever it determines, through its oversight of the

implementation of State programs, that a State has issued a permit

without complying with the State program equivalents of proposed

Secs. 773.22 (verification of ownership or control application

information), 773.23 (review of ownership or control and violation

information), 773.24 (procedures for challenging ownership or control

links shown in AVS), 773.25 (standards for challenging ownership or

control links and the status of violations), and Sec. 843.23. As has

been explained previously, OSM has deferred action on adopting proposed

Sec. 843.23 at this time. The reference, however, to that proposed rule

has been placed in Sec. 843.24 in the event that Sec. 843.23 is

adopted. The use of such reference does not mean, however, that OSM

will ultimately adopt proposed Sec. 843.23.

If, as a result of determination made under paragraph (a) of

Sec. 843.24, OSM has reason to believe that the State has issued a

permit improvidently within the meaning of 30 CFR 773.20, paragraph (b)

of Sec. 843.24 requires OSM to initiate action under 30 CFR 843.21.

Paragraph (c) of Sec. 843.24 provides for remedial actions by OSM

against a State which knowingly fails to comply with the regulations

relating to ownership or control and violation information during the

permit application process.

B. General Comments

Numerous comments were made which addressed various issues with

respect to the overall rulemaking. While such comments also invoked

particular sections of the proposed rules, these comments asserted

several central themes which went beyond particular sections of the

rulemaking even through specific sections of the proposed rulemaking

were referenced as areas of concern by the commenters. Accordingly, OSM

has decided to address these central issues in this portion of the

preamble. Within the context of such discussion, particular sections of

the proposed and final rules will be referred to as necessary.

Nevertheless, in these responses, OSM focuses upon central issues which

appear to be of overarching concern to the commenters.

Due Process

Industry commenters asserted that the proposed rules violated due

process and the underlying principles of the Act. These commenters

further argued that OSM's proposed rules violated due process

principles because they did not allow for a permit conditioned upon the

outcome of an appeal of an ownership or control link, upon the

challenge of the status of the violation, or upon the challenge of the

existence of the violation at the time it was cited. They also asserted

that because OSM did not allow for de novo challenges of the existence

of violations by owners or controllers, the proposed rules violated due

process principles.

OSM disagrees with these commenters' characterizations. The

proposed rules and the rules which have been adopted today provide

detailed procedures to assure that those wishing to contest ownership

or control links and the status of violations may do so. Further, the

proposed and final rules provide that decisions on these matters are

made based upon credible evidence and fair processes. Those seeking to

challenge the existence of violations have the opportunity to do so,

incident to permit denial, in accordance with currently existing rules

which predate this rulemaking. See Preamble to Requirements for Surface

Coal Mining and Reclamation Permit Approval; Ownership and Control;

Final Rule, 53 FR 38868 at page 38885 (``Due Process Provided.'')

(October 3, 1988). In addition, today's final rules clarify that

permittees may make such challenges within the context of the

improvidently issued permit process. The procedures provided in today's

final rules supplement current rules contained at 30 CFR part 773 to

provide more than sufficient due process to protect the limited

property interest a permit applicant has in the expectancy of a permit

to engage in surface coal mining operations.

OSM does not believe that principles of due process mandate, as a

necessary condition precedent to the denial of a permit to an owner or

controller of a violator, that the agency provide a full, formal, de

novo hearing on the merits of an ownership or control link, the

existence of the violation at the time it was cited, and the status of

the violation--followed by an exhaustive appeal on each of these

matters to the court of last resort. Instead, the final rules adopted

today provide due process commensurate with the limited interest of a

permit applicant--the expectancy of permit issuance. OSM's position is

consistent with the agency's earlier statements relating to the

sufficiency of due process and the protection of property rights

provided by the ownership and control rules and the AVS. See Preamble

to Requirements for Surface Coal Mining and Reclamation Permit

Approval; Ownership and Control; Final Rule, 53 FR 38868 at page 38885

(October 3, 1988).

Moreover, in the cases of Pittston Co. v. Lujan, No. 92-1606 (4th

Cir.) and No. 91-0006-A (W.D. Va.), National Wildlife Federation v.

Lujan, No. 88-3117 (D.D.C.), and Save Our Cumberland Mountains, Inc. v.

Lujan, No 81-2134 (D.D.C.), coal industry interests advanced similar

due process arguments attacking the agency's ownership and control

rules published at 53 FR 38868 et seq. on October 3, 1988, and the

agency's implementation of AVS and those rules. In the briefs submitted

by the Department of the Interior in those cases, the Department

analyzed relevant case law and carefully explained why the due process

criticisms were not well taken. Copies of these briefs are being placed

in the Administrative Record of this rulemaking. To the extent

relevant, OSM incorporates the arguments advanced by the Department in

those briefs herein by reference.

Further, OSM disagrees with the commenters' view that due process

requires that conditional permits be made available during the tendency

of the appeal of an ownership or control link as a condition precedent

to permit block. The final rules published today provide ample

protection for an owner or controller by providing the opportunity for

an owner or controller to challenge an ownership or control link.

Further, the final rules provide for the Department's Office of

Hearings and Appeals (OHA) to grant temporary relief from a permit

block, where, inter alia, the challenger has a substantial likelihood

of prevailing on the merits of the appeal. OHA is contemporaneously

publishing final rules establishing procedures for the granting of

temporary relief. Under OSM's final rules published today and the OHA

rules, the likelihood of the erroneous deprivation of a permit due to

an erroneous link is minimal. An appellant with a meritorious claim can

get relief. Conditional permits for all appellants, without regard to

the merits of their claims, are unnecessary and unwarranted.

Moreover, the final rules published today provide a measure of

protection commensurate with the very limited interest that a permit

applicant has in his or her application for a permit. An applicant does

not have a right to a permit to mine coal in the same way that he or

she has title to real property or a leasehold interest in a mineral

lease. A permit to mine coal is a privilege granted by the regulatory

authority to those who have complied with the requirements of the Act

and the applicable regulatory program, including the provisions of

Section 510(c) of the Act and the provisions of 30 CFR part 773. Until

an applicant has been found in compliance with the applicable

provisions of the program; until the other provisions governing permit

issuance have been satisfied; and until a permit has been issued, the

applicant has, at most, an expectation which may or may not be

reasonable, depending upon the circumstances, that he or she will

qualify for permit issuance. Such an expectancy is highly speculative,

continent, and limited. Investments based on an expectancy do not

transform the expectancy into a presently vested property right. See

generally Jacobsen v. Hannifin, 627 F.2d 177, 179-80 (9th Cir. 1980).

``To have a property interest in a benefit, a person clearly must have

more than an abstract need or desire for it. He must have more than a

unilateral expectation of it. He must, instead, have a legislation

claim of entitlement to it.'' See also Board of Regents v. Roth, 408

U.S. 564, 577 (1972).

In contrast to this, the agency's interest in and responsibility

for implementing Section 510(c) of the Act is substantial and must be

balanced against the limited property interest of the permit applicant.

OSM's ability to implement the provisions of Section 510(c) of the Act

is critical to the agency's enforcement of the Act. Those provisions of

the Act prevent violators from receiving new permits and, thus, from

injuring the environment at new surface coal mining operations. Those

provisions of the Act encourage abatement of violations and deter

operators and their owners or controllers from committing violations.

Potential applicants fear permit denial in the future. Therefore, such

applicants are motivated to prevent or abate violations in the present.

Thus, OSM has a substantial interest in the successful, credible

implementation of Section 510(c) of the Act.

If conditional permits were allowed during the pendency of a

prolonged appellate process challenging an ownership or control link,

the agency's ability to enforce the provisions of section 510(c) of the

Act and the ownership and control rules would be severely compromised.

Rather than abate the violations of their owned or controlled

operations, it is possible that some applicants would routinely appeal

ownership or control links without regard to the strength of the link

as demonstrated by a full proceeding on the merits. Such applicants

would appeal merely for the purpose of gaining conditional permits.

Depending upon how long the appeals process ran, an operator with a

conditional permit could extract a significant portion of the coal in a

permitted mine and would have no incentive to abate the violations of

the surface coal mining operation to which he had been linked. The Act

does not contemplate such a result; nor does the Constitution require

it.

Further, such a result would provide an unfair competitive

advantage to an unscrupulous operator to the detriment of the interests

of the other members of the coal industry, the majority of whom take

responsibility for environmental reclamation and are responsible

corporate citizens.

Nevertheless, industry commenters have asserted that there is

little likelihood of operators making frivolous or bad faith ownership

or control appeals because they have significant investments in their

surface coal mining operations. While OSM recognizes that this is

probably true for the majority of operators, including those who have

provided comments on the proposed rules, experience has shown that a

small minority of irresponsible operators can create harm

disproportionate to their numbers. In the process, such irresponsible

operators do harm not just to OSM's effective implementation of the

Act, but also to the reputation of the industry as well.

For instance, a marginal operator's significant investment in coal

extraction equipment may mask his/her plan to avoid spending resources

on reclamation. Indeed, there could be a serious economic temptation

for such an operator to protect a significant investment by appealing,

if such appeal would support the continuation of operations.

Accordingly, OSM considers the extent of an applicant's investment in a

surface coal mining operation to be an unreliable indicator of an

applicant's motive in initiating an appeal. Thus, OSM declines to

develop a process requiring the evaluation of operators' good faith

based upon their comparative investments in surface coal mining

operations.

OSM does recognize, however, that a permittee has an interest in

his permit deserving of a higher level of protection than that of an

applicant with respect to an application. A valid permit represents

more than the mere expectancy represented by an application. A current,

valid permit represents legal authorization to conduct surface coal

mining operations in accordance with the terms of such permit. See

section 506 of the Act. Further, a permit carries with it the right of

successive renewal. See section 506(d)(1) of the Act; 30 CFR 774.15.

Thus, a detailed process governing improvidently issued permits has

been established which recognizes this interest. See 30 CFR 773.20;

773.21. In response to concerns asserted by industry with respect to

due process, OSM has amended the regulations governing improvident

permit issuance to provide that a permittee can challenge the existence

of the violation at the time it was cited as part of the improvidently

issued permit process. See 773.20(b)(2). OSM has done this in

recognition of the more substantial interest that a permit represents

in contrast to the limited interest represented by a permit

application.

Industry commenters have further asserted that an owner or

controller must be afforded the opportunity to challenge the validity

of the existence of the violation at the time that it was cited as a

condition precedent to the recommendation of a denial of a permit

application for an owner or controller of the violation. These

commenters argued that owners or controllers may not have had the

opportunity to challenge the validity of the violation which forms the

basis of the permit denial at the time it was cited. They argued that

only the actual violators were cited at that time and that the owners

or controllers would not have received notice in a timely manner to

enable them to challenge the violation then. They further asserted that

a right to contest the merits of a violation after permit denial is not

sufficient to redress the harm caused by permit denial. Rather than

face permit denial, they asserted that coal operators will be forced to

pay the disputed fees or to reclaim land. Accordingly, they asserted

that they should be allowed to challenge the violation prior to any

permit denial.

OSM disagrees with those views. The rights of an owner or

controller are well protected by the ability to challenge the link to

the violation. If the ownership or control link is not well taken, then

the violation is irrelevant as a basis for permit block. If the link is

meritorious, the owner or controller would have been well-positioned to

have had knowledge in fact of the citations, if he or she desired such

knowledge, see, e.g., 30 CFR 843.15(d), and to have compelled the

controlled surface coal mining operation to abate the violation or to

challenge the violation in a timely manner. See, e.g., 30 CFR

843.16(a). Accordingly, if an ownership or control link is well taken,

the owner or controller has already had an opportunity to challenge the

violation or to abate the violation through the controlled entity.

Under these circumstances, OSM does not believe that an owner or

controller is entitled to an additional opportunity to challenge the

existence of a violation before the regulatory authority can deny

issuance of a permit.

Even so, the final rules promulgated today would not prohibit the

challenge of the existence of the violation. Such a challenge, however,

must be made at the time of permit denial, rather than before, by

persons who are not bound by prior administrative or judicial

proceedings with respect to the existence of the violation or who have

not had a prior opportunity to challenge the existence of the

violation. This is entirely consistent with OSM's position as expressed

in the preamble to the ownership and control rules published in 1988.

See Preamble to Requirements for Surface Coal Mining and Reclamation

Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page

38885 (October 3, 1988).

Additionally, within the context of today's final provisions

amending the regulations governing improvident permit issuance, OSM has

made explicit that a permittee may challenge the existence of the

violation at the time it was cited. A permittee may make such challenge

if the challenge is not otherwise precluded by a permittee's previous

failure to take advantage of a prior opportunity to challenge or by a

prior administrative or judicial determination concerning the existence

of the violation. See Secs. 773.20 and 773.25.

Nevertheless, the industry commenters questioned whether the

ability to challenge a violation after permit denial is illusory

because OSM may attempt to argue that the owner or controller failed to

take advantage of a prior opportunity to challenge the violation at the

time that it was issued or that the challenger was bound by a prior

administrative or judicial determination. This is not OSM's intent.

Each specific case must be evaluated on its merits. In general, a

challenge would be precluded only when the facts indicate that a

potential challenger has already had the opportunity to challenge and

has squandered it, or when the potential challenger is bound by a prior

determination. The purpose of this portion of the proposed rules and

the final rules as adopted is to eliminate multiple repetitive

opportunities for challenge for those who have already had a

substantive opportunity to challenge, either directly or through a

controlled entity. It is not OSM's intention to assert these defenses

to a challenge unless such defenses are supported by the facts of a

particular case.

Industry commenters argued that a State's decision to deny a permit

based upon violation information contained in AVS is also not subject

to challenge. OSM disagrees. The existence of the violation at the time

it was cited, along with any other bases for permit denial, may be

challenged in a proceeding under 30 CFR part 775, or the equivalent

State programs, subject to the defenses discussed above. To the extent

that a regulatory authority has based its permit denial decision upon

violation information contained in AVS, that information would be an

integral part of the challenge proceeding. When administrative and

judicial tribunals consider appeals of permit denials, it is probable

that evidence related to violations which form the basis of a permit

denial will be relevant to the tribunal. OSM will work with State

regulatory authorities to provide supporting documentation if required

for appeals of State permitting decisions. OSM anticipates that State

regulatory authorities will similarly cooperate with OSM and with each

other in making such evidence related to violation information

available to administrative and judicial tribunals.

Industry commenters also asserted that the proposed rules, along

with the ownership and control rules promulgated in 1988, deny due

process in that they retroactively impose responsibilities for

violations upon owners and controllers. Again, OSM must reject this

characterization of the effect of the proposed rules and 1988 ownership

and control rules. OSM must further reject this characterization with

respect to the final regulations adopted today. The ownership and

control rules published in 1988, the AVS-related proposed rules

published in September, 1991, and the final rules published today

subject the owners or controllers of violations to permit denial for

currently outstanding violations, rather than past, abated violations.

This obligation follows the clear mandate of section 510(c) of the Act

which requires the denial of permits when ``any surface coal mining

operation owned or controlled by the applicant is currently in

violation'' of the Act or other laws cited.

Moreover, the presumptions of ownership and control provided by 30

CFR 773.5 and the final rules merely reflect the reality that owners or

controllers have the authority, by reason of their control at the time

that the violations are committed or during any period when the

violations remained outstanding, to be aware of violations, to compel

their controlled entities to undertake timely challenges of violations,

and to compel their controlled entities to abate violations of the Act.

Under these circumstances, there is no retroactive application of

responsibility.

Moreover, the clear provisions of section 507(b)(4) of the Act

require, in substance, that permit applicants identify most of those

people who are considered owners or controllers for purposes of section

510(c) of the Act and 30 CFR 773.15 and 773.5. As OSM observed in the

preamble to the ownership and control rules published in 1988:

The legislative history of section 507(b)(4) includes the

statement that ``[t]he information required by [section 507(b)(4)]

is a key element of the operator's affirmative demonstration that

the environmental protection provisions of the Act can be met as

stipulated in Section 510 and includes: (1) Identification of all

parties, corporations, and officials involved to allow

identification of parties ultimately responsible * * *.'' H.R. Rep.

No. 94-896, 94th Cong., 2nd Sess. 111 (1976). (Emphasis added.) See

also S. Rep. No. 94-28, 94th Cong., 1st Sess. 206 (1975).

See Preamble to Requirements for Surface Coal Mining and Reclamation

Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page

38875 (October 3, 1988).

With the ownership and control rules published in October of 1988

and with these final rules published today, OSM is simply implementing

sections 510(c) and 507(b)(4) of the Act. None of these provisions

impose retroactive responsibilities.

Finally, related to their due process concerns, industry commenters

argued that the proposed rules also violate the Act by not providing

conditional permits during the appeal of ownership or control links,

the current status of the violation, or the existence of the violation

at the time it was cited. They pointed to the provisions of current 30

CFR 773.15(b)(2) which allow for a permit to be conditioned upon a good

faith, direct administrative or judicial appeal to contest the validity

of the current violation as indicative of the agency's longstanding

recognition that such an appeal is consistent with the Act.

OSM disagrees with the commenters' analysis and rejects the view

that OSM's historic interpretation of the Act requires that owners or

controllers be entitled to permits conditioned upon the appeals of

ownership or control links, the status of the violation, or the

existence of the violation at the time that it was cited.

OSM's regulation at 30 CFR 773.15(b)(2) does not constitute the

agency's recognition that all appeals form the basis for conditional

permits. Such a blanket interpretation would negate the clear mandate

of the provisions of section 510(c) of the Act and of 30 CFR

773.15(b)(1) which require the denial of permits to applicants who own

or control surface coal mining operations in current violation of the

Act. As has been discussed previously in this preamble, the issuance of

permits conditioned upon the appeal of ownership or control links

thwarts the effective implementation of section 510(c) of the Act. OSM

has never interpreted its regulations to allow for such a result.

Contrary to commenters' assertions, the regulation at 30 CFR

773.15(b)(2) only allows a limited exception for good faith, direct

administrative or judicial appeals contesting the validity of the

violation as the basis for conditional issuance. An appeal of an

ownership or control link which tests a person's relationship to a

violator or to a violation does not test the validity of the underlying

violation. To the extent that the provisions of a State program allow

for conditional issuance based upon the appeal of an ownership or

control link, those provisions must be considered less effective than

comparable Federal provisions. See 30 CFR parts 730 and 732.

Moreover, in many instances, the existence of ownership or control

links in AVS may be readily discovered by the presumed controllers, and

the accuracy of those links administratively challenged prior to the

actual denial of a permit by a regulatory authority. An appeal

challenging the current status of a violation does not constitute a

direct challenge to the validity of the violation at the time that it

was cited. Instead, it would test whether the violation is currently

abated or not.

An appeal as to the existence of the violation at the time it was

cited could constitute a challenge as to the validity of the violation.

Nevertheless, there is nothing in the Act or OSM's regulations which

requires that such an appeal, undertaken by an owner or controller of a

violator after standard appeal times have run, be the basis for

conditional issuance. Conditional issuance is particularly

inappropriate when the controller's ability to compel the controlled

entity to act is taken into account. A controller has the capacity to

force the controlled entity to abate or to appeal and would have had

such rights at the time that the violation was cited. Thus, a timely

appeal of the violation, directly made through administrative or

judicial tribunals, could have been made at that time.

One commenter argued that due process protection in the proposed

rules should be enhanced. In substance, this commenter asserted that it

is unfair to deny permits to applicants or to subject active permits to

treatment as improvidently issued permits where the applicants or

permittees are subjectively unaware of their ownership or control links

to violators or of the import of such relationships. Accordingly, this

commenter proposed that such persons should have extended opportunities

for ``corrections and questions'' without the risk of permit denial or

revocation.

OSM appreciates the commenter's suggestion, but does not believe

that further proposed rules are needed or that amendments to the final

rules should be made to reflect the commenter's proposal. The AVS

Office will work with anyone at any time, including when there is no

pending permitting action, to answer questions and make appropriate

corrections to ownership and control information in the database. Data

in the system is available on-line to any interested party, and the AVS

Office will provide print-outs of AVS data on request. The AVS Office

will also provide training to interested parties on the use of the

system. The AVS Office routinely works with major companies to insure

that their ownership and control information in the system is kept

current. Given all these factors, there is no ``risk of permit denial''

necessarily involved in the resolution of an ownership and control

link.

Furthermore, applicants and permittees are deemed to be aware of

the law. The ownership and control rules were published in October,

1988. Since that time, applicants and permittees could reasonably be

expected to be aware of the regulations and could have acted to cure

any outstanding violations or to resolve any erroneous links in the AVS

which would form the basis for a permit denial or revocation. Thus, any

``unfair surprise'' to applicants or permittees posited by the

commenter is not an actual problem. Accordingly, it is entirely

legitimate to deny permits to such applicants or permittees when they

are linked to violations.

Further, permit applicants are required to provide full ownership

and control information at the time of permit application. See 30 CFR

778.13; 778.14. Permittees are required to update relevant ownership

and control information in a timely manner. See 30 CFR 774.17. Thus,

the proposed remedy offered by the commenter is already a requirement

of the rules. Finally, in the unlikely event that a person has been

unfairly subjected to permit denial by the process, that person could

still seek temporary relief from OHA in accordance with procedures

governing such relief provided by OHA's and OSM's regulations.

Primacy

Industry and State commenters asserted a number of concerns

relating to the impact of the proposed rules upon the primacy of

States.

In general, industry commenters argued that the proposed rules and

the AVS itself impermissibly substitute Federal authority for State

authority in the permitting process. They argued that, under the

principle of State primacy, once a State's program has been approved by

OSM, the State should have sole authority for making decisions with

respect to permit issuance, including the determination of ownership

and control matters. They asserted that requiring a State to query the

AVS before making a permitting decision takes the decision out of the

hands of the State and transfers substantive control of the decision to

OSM which controls the content of the AVS. As evidence of this Federal

control, industry commenters cited, with disapproval, provisions of the

proposed rules which provide that challenges of ownership and control

information on the AVS must be made to OSM.

OSM disagrees. First, in the cases of National Wildlife Federation

v. Lujan, No. 88-3117 (D.D.C.), and Save Our Cumberland Mountains, Inc.

v. Lujan, No. 81-2134 (D.D.C.), coal industry interests advanced

similar primacy arguments attacking the agency's ownership and control

rules published in 1988. OSM responded to those arguments in detail

demonstrating that the ownership and control rules support State

programs, rather than undermine them. Copies of these briefs are being

placed in the Administrative Record of this rulemaking. OSM

incorporates the arguments advanced by the Department in those briefs

herein by reference.

Similarly, the purpose of AVS is to assist, rather than to

undermine, the States in the exercise of their primary authority for

the implementation of their approved programs. The provisions of

section 510(c) of the Act require that the regulatory authority deny a

permit to an applicant where ``information available'' to the

regulatory authority indicates that any surface coal mining operation

owned or controlled by the applicant is currently in violation'' of the

Act or certain other governmental laws. See section 510(c) of the Act.

In a State which has an approved program to regulate surface coal

mining operations pursuant to section 503 of the Act, neither OSM nor

AVS decides whether or not to issue a permit to an applicant in that

State. The State regulatory authority is the decisionmaker.

Contrary to the commenter's assertions, however, the Federal

government has an ongoing role in this system of State primacy. The Act

and Federal regulations require that OSM assist the States in the

implementation of their programs under the Act and that OSM provide

oversight of the State regulatory authorities' activities. See sections

102(g), 201(c), 503, 504, 505, and 521 of the Act; 30 CFR parts 732,

733, and 842.

Consistent with the State's role as primary decisionmaker, the AVS

is a tool, developed by the Federal government in concert with the

States, which provides information in a convenient mode, readily

accessible to State regulatory authorities. It is a source of relevant

``information available'' of the type which the State regulatory

authority is required by the Act to consider when the State regulatory

authority decides whether to issue a permit to conduct surface coal

mining operations. Absent AVS, a State regulatory authority would have

to laboriously contact other State regulatory authorities for violation

and ownership and control information or would have to simply reply

upon the voluntary disclosure of information supplied by applicants or

by public-spirited citizens. That OSM has taken the lead in developing

the AVS and in proposing to require to use of AVS through rulemaking is

consistent with the Federal government's role to assist and to oversee

the State regulatory authorities. Even then, the content of AVS is the

product of the efforts of both State regulatory authorities and OSM

working together to incorporate into AVS ownership and control and

violation information developed through their regulatory programs.

Accordingly, a State's authority to make a decision with respect to

a permit application is primary and is unimpaired by anything in the

proposed rules and by the State's use of AVS. To the extent that the

rules support OSM's oversight of the State's decisions, such oversight

is mandated by and consistent with the provisions of the Act and the

regulations cited above.

To the extent that the proposed rules provide that challenges of

information already on AVS be made to OSM, such provisions do not

impair primacy. Instead, the rules recognize that the Federal

government is uniquely situated to maintain the accuracy and integrity

of a nationwide database that will be used by many States. To be sure,

each of the State regulatory authorities has a valuable contribution to

make to the quality of AVS information. Yet, the individual States may

have differing perspectives on ownership and control issues. The

potential for inconsistency is significant--particularly with respect

to ownership and control decisions relating to multistate companies

with complex organizational structures. Also, potential challengers of

such information need, if possible, a single point at which they can

challenge ownership or control information which will be used in many

States and which, absent such a locus, could subject them to

inconsistent outcomes. Such a role for OSM is consistent with the role

for the agency envisioned by SMCRA. See sections 201(c)(9) and

201(c)(12) of SMCRA.

Further, it must be recognized that the decision to deny a permit

because an operator is linked to a violation through ownership or

control can be an unpopular one, subjecting a local economy to stress.

An operator may claim that he ``has been put out of business'' by the

State regulatory authority. This is one area where the Federal

government can assist the States by accepting the responsibility of

maintaining ownership and control information which may ultimately lead

to permit denials in the various States. Federal acceptance of such a

role helps to assure the integrity, consistency, and accuracy of

ownership and control information on the AVS. It is also consistent

with one of the purposes of the Act which is ``to insure that

competition in interstate commerce among sellers of coal produced in

different States will not be used to undermine the ability of the

several States to improve and maintain adequate standards of coal

mining operations within their borders.'' See section 101(g) of the

Act.

Finally, even with the State using information on AVS as part of

its information gathering incident to making a determination with

respect to a permit application, the State retains the authority,

subject to Federal oversight, to decide whether to issue the permit or

not. Appeals of such a decision are made to the appropriate State

reviewing tribunal, in accordance with the provisions of the State

program. Also, the final rules published today make clear that the

State regulatory authority which issues a permit has responsibility,

subject to OSM's oversight, for determining the ownership or control

relationships of the permit. See Sec. 773.25(b)(1)(ii). Contrary to

commenters' assertions, the State's use of AVS does not transmute the

process into a Federal proceeding.

To the extent that a State denies a permit based upon information

in AVS indicating that the applicant is linked through ownership or

control to an outstanding violation of the Act, such denial is made

based upon the mandate of section 510(c) as implemented by the

applicable State program, rather than some extraordinary Federal

intervention in the State's process. A State regulatory authority

denying a permit based upon ownership or control information shown in

AVS would be obligated under the Act to take the same action based upon

a phone call, letter, or other communication from another regulatory

authority advising of an applicant's ownership or control of a surface

coal mining operation in current violation of the Act.

Further, it must be emphasized that the cooperation of all

regulatory authorities, including the States and OSM, is necessary to

facilitate the implementation of section 510(c) of the Act. Information

on violations wherever they have occurred is needed by each regulatory

authority considering a permit application to ensure true compliance

with the provisions of section 510(c) of the Act. It is unreasonable,

ineffective, and inefficient for each regulatory authority to attempt

to develop such information by itself. It is both reasonable and

prudent for OSM to fulfill this role. See sections 201(c)(9) and

201(c)(12) of SMCRA.

Industry commenters further asserted that the proposed rules will

have the effect of ``Balkanizing'' (i.e., dispersing) regulatory

authorities' permitting decisions. They were especially concerned about

the provisions of Sec. 773.26 of the proposed rules which allocated

responsibility to particular regulatory authorities to make decisions

with respect to ownership or control relationships.

Proposed Sec. 773.26 allocated responsibility among the respective

regulatory authorities such that the regulatory authority before which

an application is pending would have had authority for making decisions

with respect to the ownership or control relationships of the

applicant; the regulatory authority that issued a permit would have had

authority for making decisions with respect to the ownership or control

relationships of the permittee; the State regulatory authority that

issued a State violation notice would have had authority for making

decisions with respect to the ownership or control relationships of

persons cited in the violation; and the regulatory authority that

issued a violation notice, whether State or Federal, would have had

authority for making decisions concerning the status of the violation

covered by the notice. The proposed rule provided that these

allocations of authority were subject to OSM's oversight.

In substance, the industry commenters asserted that the provisions

of this proposed section would impermissibly weaken the authority of

the State regulatory authority before whom a permit application is

pending. They asserted that the allocations of authority contained in

the proposed rule would create confusion and delay in the permitting

process.

OSM disagrees with these comments. The interaction between the

Federal government and the States described above does not constitute a

``balkanization'' of the permit application process. Nor will such

interaction lead to confusion in the permit application process. Such

interaction is consistent with the mandate of SMCRA to implement

section 510(c) within a context of State primacy supported by Federal

oversight. The proposed rules and the final rules adopted today attempt

to establish a road map which is consistent with SMCRA for the making

of decisions with respect to ownership or control and for the

development of information to be used in AVS.

First, the allocations of responsibility are consistent with the

requirements of the Act. The provisions of section 510(c) of the Act

mandate a separation of decisionmaking in the permit application

process which commenters might characterize as ``balkanization.'' The

provisions of section 510(c) of the Act are very explicit in stating

that permits shall be denied to applicants who own or control surface

coal mining operations with outstanding violations of the Act ``until

the applicant submits proof that such violation has been corrected or

is in the process of being corrected to the satisfaction of the

regulatory authority, department, or agency which has jurisdiction over

such violation.''

Thus, the Act contemplates that the State regulatory authority

before which an application is pending could require information from

another State regulatory authority with respect to violations issued by

the other State regulatory authority before issuing a permit.

Further, the Act is equally specific in establishing a mandated

role for the Federal government to oversee the States in the

implementation of their State regulatory programs. See sections

201(c)(1); 503; 504; 505; and 521 of the Act. Thus, to the extent that

the proposed rules and the final rules adopted today envision the

exercise of Federal oversight, such a role is responsive to the

provisions of SMCRA.

Moreover, while the proposed rule and the final rule, modified and

renumbered as Sec. 773.25, will be compared and discussed in more

detail below in this preamble, it is appropriate to offer some

responses at this point since these critical comments refer to the

issue of relationships between governments. These comments invoke

issues of State primacy. Contrary to commenters' assertions, the rules

in question allocate responsibility in a manner which is supportive of,

and consistent with, State primacy.

For instance, the final rule provides that a State regulatory

authority which issues a violation has responsibility, subject to OSM

oversight, for identifying the ownership and control relationships of

the violation. See 30 CFR 773.25(b)(1)(iii). The State regulatory

authority which issues a violation has the greatest interest, among

those regulatory authorities with an interest in the ownership and

control relationships of that violation, in seeing that the persons

responsible for the violation abate the violation. Such abatement

directly improves the environmental quality of the State which issues

the violation. Accordingly, the State which issued a violation should

have the first opportunity, subject to Federal oversight, to identify

the owners or controllers of the violation. Well before OSM made its

proposals in September, 1991, which form the basis for today's final

rules, both SMCRA and Federal regulations recognized that a violation

had to be corrected to the satisfaction of the agency that has

jurisdiction over the violation, before a permit could be issued by a

regulatory authority. See section 510(c) of SMCRA; 30 CFR

773.15(b)(1)(i).

Moreover, today's final provisions further recognize the relative

access to ownership and control information that the interested

regulatory authorities have at each stage of the process. The

regulatory authority which issued the violation is in the best position

to investigate and to develop all of the relevant facts about the

violation, including the identification of those responsible for the

violation. The violation was committed within the jurisdiction of the

regulatory authority which issued the violation. That regulatory

authority has access to the actors on the ground at the surface coal

mining operation and would be able to question them to identify

ownership and control information.

A similar analysis can be offered in support of affording the

agency before which an application is pending responsibility for

identifying the ownership and control of the application. This

regulatory authority has the applicant before it and can inquire of the

applicant directly with respect to any ownership and control

information contained in the application. Thus, the regulatory

authority before which an application is pending has responsibility,

subject to Federal oversight, to decide the ownership and control

relationships of the application. See 30 CFR 773.25(b)(1)(i).

A regulatory authority which has issued a permit has ongoing

authority for the permittee's surface coal mining operations on the

permitted site. Thus, this regulatory authority has responsibility,

subject to Federal oversight, to decide the ownership and control

relationships of the permit. See 30 CFR 773.25(b)(1)(ii).

Moreover, OSM recognizes that the industry commenters are deeply

troubled by any use of the AVS in the permit application process and

any application of OSM's ownership or control rules as contained at 30

CFR 773.5 and 773.15(b)(1). Nevertheless, OSM has accepted the mandate

of Congress to develop and implement the AVS because ``the AVS is

essential to effective enforcement of the Surface Mining Control and

Reclamation Act of 1977 [SMCRA].'' See Report of the Senate

Appropriations Committee, Senate Report No. 103-114, at page 47 (July

28, 1993). Thus, the allocation of responsibilities for the various

regulatory authorities contained in the proposed rules and the final

rules adopted today also attempt to reflect the pragmatic realities of

implementing a national computer system.

Once a decision has been made to go forward with a national

computer system to aid the enforcement of section 510(c) of SMCRA,

certain pragmatic realities must be recognized. First, information will

be coming to the computer system from many sources. As each State

regulatory authority analyzes ownership and control information

contained in permit applications and reports such information to AVS,

such information is incorporated into AVS. A national computer system

requires centralized management and maintenance to assure the accuracy

and consistency of information. Centralized management provides a focus

of responsibility when inaccuracies or technical problems are

identified. Accordingly, the Federal government, acting through OSM,

has responsibility for such system management. At the same time, the

States are primary actors in the permit application process and

critically important actors in the development and the support of AVS.

With respect to AVS, the States play a critical role in using the

computer system as an information resource in the permit application

process and in supplying information to AVS gleaned from the permit

application process and other research.

Consistent with the need for centralized management of the

database, OSM has such a role with respect to the AVS and the

information contained therein. As will be discussed below in the

discussion of specific sections of the final rules, one of the changes

made from the September, 1991, proposal was to place language in the

final rule clarifying OSM's plenary role with respect to the content of

ownership or control information in the AVS. See 30 CFR

773.25(b)(3)(i). OSM will also have sole responsibility over the

ownership and control relationships incident to Federal violations. See

30 CFR 773.25(b)(2). Further, OSM will exercise oversight over State

regulatory authorities' activities. See 30 CFR 773.25(b)(3)(ii). This

role provided for OSM under the final rule, consistent with that

proposed under the proposed rule, recognizes that, under the Act, while

the States are subject to Federal oversight, OSM is not subject to the

oversight of State regulatory authorities.

The industry commenters asserted that the proposed rules will

create confusion and conflict among the States with the potential for

conflicting decisions on ownership and control by multiple State

regulatory authorities and OSM. Again, OSM disagrees with the

commenters' characterization of the effect of the rules. As indicated

above, the proposed rules and the final rules clearly allocate

responsibility among the various regulatory agencies. The regulatory

authority before which an application is pending decides whether or not

to issue a permit.

OSM retains the authority to oversee the decision of the State.

Indeed, OSM's role as controller of information already on AVS and as

overseer of State ownership or control decisions will reduce, not

create, confusion and conflict by establishing one final authority to

make decisions in cases where disagreements among States might occur

about information already on AVS.

Accordingly, the rules do not inappropriately disperse

decisionmaking among State and Federal regulatory authorities with

respect to ownership and control. Further, prior to the publication of

these final rules, OSM's AVS Office and the States have worked well

together to implement AVS and the ownership and control regulations

promulgated in 1988. To the extent that there have been disagreements

between OSM's AVS Office and the State regulatory counterparts, such

disagreements have been addressed expeditiously and resolved in a

collegial and cooperative manner.

Some commenters expressed concern that the proposed rules did not

sufficiently address the issues of conflicts between the States and OSM

and between the States themselves on matters of ownership and control.

OSM believes that these issues will be addressed adequately by the

provisions of 30 CFR 773.25. That section is based upon proposed

Sec. 773.26 and establishes the relative responsibilities of agencies

responsible for making ownership and control decisions. As noted

previously, this regulation is discussed in detail below. Within the

framework of State primacy, OSM will exercise its oversight role to

review State ownership or control decisions, in response to citizen

complaints or as otherwise appropriate, to assure the integrity of the

AVS. See 30 CFR 773.12; 842.11; and 843.21.

One commenter asserted, in substance, that the proposed rules did

not go far enough in imposing Federal responsibility. This commenter

proposed that all matters relating to ownership and control under

section 510(c) of the Act should be OSM's responsibility. While OSM

appreciates the commenter's suggestion, OSM must reject this proposal.

As OSM indicated above, the Act establishes a system of State primacy

with Federal oversight and assistance to the States. While it is

understandable that some persons would prefer that the entire

responsibility for permit decisionmaking be shouldered by the Federal

government, such a system would require a significant restructuring of

the statutory framework established by the Act. In contrast to this,

today's final rules address the responsibilities established by section

510(c) of the Act in a manner more consistent with the statutory

framework.

One commenter questioned whether OSM had given adequate

consideration to the implications of the rules upon Federal and State

relations. As the above discussion indicates, OSM has considered, in

detail, the effect of AVS and these rules upon the relationship between

OSM and the State regulatory authorities and believes that the rules

are consistent with the framework for Federal and State relations

established by the Act. Further, as indicated above, the working

relationship between OSM's AVS Office and its State colleagues has been

heretofore very productive and cooperative. OSM believes that State and

Federal cooperation on AVS matters has been, overall, a significant

success. Accordingly, OSM intends to continue to work closely and

cooperatively with State regulatory authorities to resolve issues

related to the implementation of AVS and section 510(c) of the Act.

Citizen Participation

Commenters representing environmental groups criticized the

proposed rules as not containing sufficient provision for citizen

participation. They asserted that citizens should be afforded the

opportunity to add ownership and control links to AVS. They further

argued that citizens should have appeal rights when the regulatory

authority denies their requests to add ownership or control links and

that citizens should have rights of intervention when decisions are

made to sever links. They also urged that citizens should have explicit

rights to request enforcement action with respect to improvidently

issued permits, with respect to other provisions of the rules relating

to ownership and control, and with respect to the imposition of

sanctions.

OSM strongly supports citizen participation and agrees that

opportunities for citizen participation need to be addressed in the

rules governing ownership and control. OSM further agrees that the

proposed rules did not sufficiently address these issues in the

September, 1991, proposal. Under the Administrative Procedure Act,

however, the agency has a responsibility to propose regulations for

public comment, prior to finalizing such regulations. The changes

proposed by commenters would represent significant modifications of the

September, 1991, proposals.

Thus, OSM does not consider it appropriate to incorporate

commenters' proposals into today's final rules without first providing

opportunity for comment to the regulated community, the States, and the

public generally. While OSM could delay finalization of today's rules

to allow for such proposal and for opportunity for comment, OSM does

not believe that the public interest would be served by such delay.

Nevertheless, suggestions made by the commenters are worthy of

further consideration. Accordingly, at some future date, OSM may

present proposals to respond to the concerns expressed by the

commenters. Until such proposals are made, however, the interests of

concerned citizens should be asserted pursuant to the provisions of 30

CFR 773.13, 842.11, 842.12, 843.21 and other regulations providing for

citizen participation, as appropriate. In this respect, if citizens

disagree with a decision of OSM finding that an ownership or control

link does not exist, citizens can challenge such decision by demanding

a Federal inspection of relevant permits affected by such decision in

accordance with the current provisions of 30 CFR 842.12. If OSM rejects

their demand to conduct an inspection, citizens can seek review of such

rejection and the issues related thereto pursuant to 30 CFR 842.15 to

the Director or his designee and, if necessary, to OHA in accordance

with 43 CFR part 4.

Further, OSM's AVS Office will receive and consider ownership or

control information from concerned citizens as part of OSM's ongoing

research activities to incorporate ownership or control and violation

information into the AVS database. Such information is relevant and

will be used by the agency in the making of ownership or control

determinations and for inclusion, upon verification by the agency, into

AVS. OSM strongly encourages concerned citizens, environmental

advocates, and members of the industry to come forward with information

relevant to ownership or control matters. It is in everyone's interest

for the AVS to contain the most complete, comprehensive, and accurate

information possible.

C. Discussion of Final Rules

The following text, which describes the final rules and responds to

the specific public comments that OSM received on the proposed rules,

is organized by the part and section number of the affected provisions.

Grammatical or stylistic changes that do not affect the substance of

the final rules are generally not discussed.

1. Part 701--Permanent Regulatory Program

Section 701.5--Definitions. In the proposed rule, OSM deleted the

definition of ``violation notice'' previously contained in the

regulations and transferred such definition in expanded form to

Sec. 773.5. The final rule is identical to the proposed rule. As

described below, the definition of ``violation notice'' refers to the

types of violations of the Act or other laws which will form the basis

for a regulatory authority to deny a permit application under the

provisions of Sec. 773.15(b).

2. Part 773--Requirements for Permits and Permit Processing

Part 773--The Table of Contents. In the proposed rule, OSM had

included an amendment to the Table of Contents to provide for a

proposed rule governing procedures for the challenge of ownership or

control links prior to entry in AVS. Since OSM has determined not to go

forward with that portion of the proposal, that reference is not

included in the final Table of Contents adopted today. Also, since OSM

has deferred action with respect to the adoption of proposed

Sec. 773.27 to a subsequent rulemaking, that reference has also been

deleted. The final Table of Contents is adopted as described in Summary

of Rules Adopted.

Section 773.5--Definitions. The proposed rule added certain

definitions to Sec. 773.5. Such definitions included the terms

``Applicant/Violator System or AVS,'' ``Federal violation notice,''

``Ownership or control link,'' ``State violation notice,'' and

``Violation notice.'' Such definitions were necessary to an

understanding of the proposed comprehensive regulations relating to the

implementation of AVS.

Industry commenters objected that the proposed definition of

``violation notice'' contained in the regulation was too broad. They

argued that the proposed definition, insofar as it applies to a

``Federal violation notice'' should be explicitly limited to violations

of environmental laws. Further, they asserted that the definition

inappropriately included written communications and demand letters as

``violations.''

OSM disagrees with the commenters' concern over the need for an

explicit limitation for violations of environmental laws in the

definition of a ``Federal violation notice.'' Commenters conceded that

such a limitation is already contained in the proposed definition of

``violation notice.'' The definition of a Federal violation notice is

modified by any limitations contained in the definition of a violation

notice. Accordingly, there is no need for an explicit additional

limitation to address commenters' concerns. It is already clear that it

is limited to violations of environmental laws. Thus, OSM has adopted

the proposed definition of ``Federal violation notice'' as a final

definition without modification.

Further, commenters asserted that the proposed rule inappropriately

expanded the definition of violation notice to include various written

communications and demand letters. They asserted that a demand letter

could somehow preclude a permit applicant from pursuing a good faith

appeal and that a person's ability to challenge the debt would depend

on whether the agency attempted to collect the debt. In substance,

commenters took exception to the prospect of a demand letter being the

basis for a permit denial when the demand letter contains notice of a

delinquent civil penalty and the applicable statute of limitations has

expired precluding further action to collect the debt. They asserted

that the proposed rule impermissibly expands the types of violations

for which a person could be subject to permit block without affording

the person a right of timely challenge.

Again, OSM disagrees with commenters' analysis. First, it must be

emphasized that the type of document is less significant than the

violation of which it provides notice. The document is merely a vehicle

for communicating notice of the substantive violation. The documents

listed in the proposed definition merely recount the possible types of

documents providing notice and do not substantively expand the universe

of violations which would be the basis for permit denial under section

510(c) of the Act and the provisions of 30 CFR 773.15(b). The

substantive violation, rather than the type of document, forms the

basis for a permit denial under the provisions of section 510(c) of the

Act and 30 CFR 773.15(b)(1). Pursuant to those provisions, a regulatory

authority is required to refuse permit issuance where available

information indicates that any surface coal mining operation owned or

controlled by an applicant is currently in violation of the Act or

other indicated laws. Delinquent fees or penalties which have ripened

to the level for which a demand letter is indicated constitute

available information for which an applicant will be held accountable

and which a regulatory authority must take into account in any permit

decision. Contrary to commenters' assertions, the filing of a suit to

collect delinquent reclamation fees or civil penalties is not a

condition precedent to such debts being valid violations or a condition

precedent to such debts being considered the bases for permit denial.

With respect to the commenters' concerns about rights of challenge

incident to demand letters, OSM believes that current quality control

procedures will prevent the entry of unripe violations into the system.

Furthermore, with this final rule and with OHA's rule which is being

contemporaneously published, OSM and OHA have acted to provide a means

for applicants to obtain temporary relief from permit blocks where they

are likely to prevail on the merits. Thus, if a violation has not

actually ripened into the basis for a permit block, temporary relief

could be sought. The discussion of these provisions of the final rule

are contained at the discussion of 30 CFR 773.25 below in this

preamble.

Industry commenters also objected to the prospect that a demand

letter or other notice could contain notice of a delinquent civil

penalty the collection of which is barred by the applicable statute of

limitations. In substance, they argued that such a notice should not be

the basis for a permit denial. OSM disagrees. In 1988, OSM addressed

similar concerns expressed by commenters with respect to the ownership

and control rules. OSM stated, in relevant part, as follows:

Effect of Statute of Limitations on Collection Actions

A commenter asserted that permit blocking cannot occur for any

civil penalty which has not been reduced to judgment within the

applicable statute of limitations in 28 U.S.C. 2462 (barring an

action, suit or proceeding for enforcement of any civil fine,

penalty unless commenced within five years).

OSMRE disagree[s] with the commenter's position. Although the

statute of limitations may provide a defense to suit for collection

of money filed five years following the entry of a final order, it

does not invalidate the final order or cancel the underlying debt,

which will continue to be listed in the Applicant Violator System

and will result in blocking the issuance of a permit.

See Preamble to Requirements for Surface Coal Mining and Reclamation

Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page

38884 (October 3, 1988). The agency considers this position to be sound

and has no intention of changing course. Accordingly, this criticism of

the proposed definition is rejected.

A number of commenters representing industry interests asserted

that the definition of violation contained in the rule was overbroad in

that it potentially included violations of laws other than SMCRA as the

basis for permit denial. These commenters proposed that the rule

incorporate explicit limitations to the effect that only violations

relevant to SMCRA or consistent with the environmental protection

standards of SMCRA be the basis for permit denial.

OSM rejects the commenters' proposals as unnecessary. To the extent

that the final definition of ``violation notice'' describes the type of

violation for which the listed types of notice will be provided, the

final rule is intended to track the language of section 510(c) of the

Act. That provision of the Act states that the basis for permit denial

includes violations of the Act ``and any law, rule or regulation of the

United States, or of any department or agency in the United States

pertaining to air or water environmental protection incurred by the

applicant in connection with any surface coal mining operation * * *''

(Emphasis added.)

Commenters' concerns are already addressed by the Act and the

proposed and final definitions of ``violation notice'' which

incorporate the above-emphasized language of the Act. This language

requires that violations which support permit denial must be those

pertaining to air or water environmental protection incurred in

connection with any surface coal mining operation. Any air or water

environmental protection violations incurred in connection with a

surface coal mining operation would be of a type ``relevant to SMCRA.''

If the violations are committed not in connection with a surface coal

mining operation, they would not be a basis for the denial of a permit

under section 510(c) of the Act. Thus, OSM does not believe that a

change in the proposed rule language to reflect commenters' concern is

needed.

A commenter representing certain State regulatory authorities also

criticized the proposed definition of ``violation notice'' as being too

broad and was concerned that such definition, when read with the

provisions of 30 CFR 778.14(c), would lead to ``nationwide gridlock''

or undue delay in State regulatory authorities' processing of permit

applications.

The proposed definition of ``violation notice'' is designed to

incorporate the full range of violations which would form the basis for

permit denial under section 510(c) of SMCRA. The definition is intended

to implement the statutory definition, not expand such definition. A

more limited definition would be an impermissible constraint upon the

broad language of the Act. Accordingly, OSM rejects the view that the

proposed definition is overbroad.

OSM further disagrees with commenter's view that applicants'

reporting of such violation notices in accordance with the provisions

of 30 CFR 778.14(c) will lead to undue delay in the processing of

permit applications. Applicants must supply complete information with

respect to outstanding violations to enable regulatory authorities to

make informed decisions as to permit issuance as mandated by section

510(c) of the Act and 30 CFR 773.15(b)(1). The reporting of such

information by an applicant may, indeed, lead to permit denial. That,

however, constitutes with the mandates of the Act, not inappropriate

delay or stalemate. OSM is confident that OSM and Sate regulatory

authorities can evaluate and use the information provided by applicants

with respect to outstanding violations in accordance with the

definitions of ``violation'' and ``violation notice'' along with

information contained in AVS to meet the requirements of the Act in a

timely fashion.

The same commenter additionally urged that OSM retain the limited

definition of ``violation notice'' previously contained in 30 CFR 701.5

because such definition is more ``realistic'' in its scope and because

there is a need for such a definition across OSM's regulations, not

just those contained in 30 CFR part 773.

Again, OSM disagrees with commenter's views. The definition of

``violation notice'' previously contained in the regulations did not

identify the types of violations of the Act or other laws which would

form the basis for a regulatory authority to deny a permit under 30 CFR

773.15(b)(1). A fuller definition of the term which would encompass

these types of violations as mandated by section 510(c) of the Act was

necessary for incorporation by reference into a proposed amended

version of 30 CFR 773.15(b)(1). While commenter has asserted that there

is a need for a general definition of the term ``violation notice''

across OSM's regulations, commenter has identified no urgent need for a

universal definition of the term that would outweigh the need to

clarify the provisions of 30 CFR part 773. Further, in the event that

it becomes apparent that the implementation of other regulations have

been somehow significantly compromised by the deletion of the general

definition of ``violation notice'' contained in 30 CFR 701.5, OSM can

address these issues as necessary. Accordingly, OSM must reject the

commenter's position.

Further, a commenter urged that any violations be in a final,

unappealable posture before they can be the basis for permit denial.

OSM disagrees with the commenter's characterization of the current

state of the law and with what the commenter believes ought to prevail.

First, Federal regulations which predate the proposed rules and

today's final rules already provide that permits may be conditionally

issued based upon a good faith, direct administrative or judicial

appeal testing the validity of the underlying violation. See 30 CFR

773.15(b)(1)(ii)-(b)(2). Thus, contrary to commenter's implication,

permits are not necessarily denied while violations are under appeal.

The burden, however, is on a violator to assert appeal rights in good

faith and in a timely manner. There is no legitimate reason to afford

additional appeal rights to people who have squandered their

opportunity to appeal. In the absence of a timely appeal, a violation

should be the basis for denial of a permit, in accordance with the

provisions of section 510(c). In this preamble under the topic

captioned ``Due Process,'' OSM has responded in detail to commenters

who have asserted that permits should be conditioned upon the appeals

of ownership or control links or upon the appeals of the existence of

the violation asserted by owners or controllers of violations after

standard appeal times for the violations have run. As stated in this

preamble, OSM rejects these assertions.

To the extent that the commenter implied that permits should be

issued unconditionally during the pendency of an appeal of a violation,

OSM also rejects this proposal. Under this proposal, a violator could

commit a violation at his or her surface coal mining operation; take a

timely appeal; and then be approved unconditionally for permit issuance

at another site. Following the failure of his or her appeal, he or she

could continue to mine on the new site with no interruption or

termination of his or her rights on the new site. This course of events

violates the provisions of section 510(c) of the Act which mandate that

regulatory authorities deny permits when applicants have current

violations of the Act or other laws. Also, the commenter's proposal is

inconsistent with the provisions of 30 CFR 773.15(b)(1)(ii)-(b)(2)

cited above which allow only conditional issuance, rather than

unconditional issuance, for permits issued to applicants who have

appealed outstanding violations.

In that final rule, OSM has adopted the definitions of ``Federal

violation notice'' and ``violation notice'' as proposed and without any

of the changes requested by commenters.

In the proposed rule, the definition of ``ownership or control

link'' included references to ownership or control ``under paragraph

(b)'' of 30 CFR 773.5. Since the publication date of that proposal, OSM

has proposed changes in the definitions of ``owned or controlled'' or

``owns or controls'' contained at 30 CFR 773.5. See Proposed Rule,

Definitions and Procedures for Transfer, Assignment and Sale of Permit

Rights; Definition of Ownership and Control, 58 FR 34652 et seq. (June

28, 1993). If some of those proposed changes are ultimately adopted,

the reference to ownership or control as defined by ``paragraph (b)''

contained in the proposed definition of ``ownership or control link''

would be inappropriate.

Accordingly, to assure flexibility, OSM has deleted the reference

to ``paragraph (b)'' of 30 CFR 773.5 from the final definition of

``ownership or control link.''

Also, the proposed definition of ``ownership or control link''

indicated that a link included presumptive ownership or control

relationships which had not ``been successfully rebutted under the

provisions of Secs. 773.24 and 773.26 or Secs. 773.25 and 773.26 or

under the provisions of part 775 of this chapter and Sec. 773.26 of

this part.'' As is discussed below in this preamble, OSM has deleted

proposed section 773.25, procedures for challenging ownership or

control links prior to entry in AVS and has renumbered proposed

Sec. 773.26 as final Sec. 773.25, standards for challenging ownership

or control links and the status of violations. The final definition of

``ownership or control link'' has been amended to reflect these

changes.

The final rules are adopted containing the provisions described in

this preamble above at Summary of Rules Adopted.

Section 773.10--Information Collection. The proposed rule would

have revised Sec. 773.10 which contained a list of the existing

information collection requirements in part 773 and also the OMB

clearance number indicating OMB approval of the information collection

requirements. The proposed rule revision would have updated Sec. 773.10

by including the proposed AVS-related rules containing information

collection requirements. The proposed revision provided an estimate of

the average public reporting burden per response of three hours,

including the time for reviewing instructions, searching existing data

sources, gathering and maintaining the data needed, and completing and

reviewing the collection of information. The proposed section also

listed the addresses for OSM and the Office of Management and Budget

(OMB) where comments on the information collection requirements may be

sent.

Industry commenters asserted that the estimate of three hours to

prepare an average response for the collection of information required

was unrealistically low.

OSM disagrees with commenters' assertion. The three hours estimated

burden was an estimated average, rather than a predicted figure for the

burden of a single, typical response. The calculation of an ``average''

response means that there are some responses which may require larger

amounts of time to prepare and that there are also some responses which

may require significantly lesser amounts of time. It is entirely

reasonable to expect that the reporting and information collection

burden of these regulations may vary among entities depending upon the

entities' size and structural complexity.

Further, once companies have researched and compiled their

particular ownership or control information, they have done the basic

research which can be used for future compliance. This basic ownership

or control research will then be readily available to the company and

the company only needs to update such research to reflect changes in

ownership or control for future applications. Once entities and

regulatory authorities develop experience in complying with the

regulations, they will also develop experience in collecting, storing,

retrieving, and reporting the necessary compliance information. A

number of large companies have told OSM that they have already

collected and stored their ownership or control information in a

computerized database or are in the process of doing so. Once such

information has been so stored, it would be readily accessible and

easily retrieved for compliance purposes. Thus, the amount of time

required to prepare a typical response under these regulations should

diminish over time.

Nevertheless, in the final rule adopted today, OSM has recalculated

the estimated time for compliance in accordance with standard

procedures required by the OMB. OSM has concluded that the public

reporting burden for the collection of information required by part 773

as amended by these final regulations is four and one half hours per

response, rather than three hours. The final rule also has been

modified to delete specific references to the particular sections of

part 773 which are relevant for information collection purposes.

Instead, OSM has provided a reference to the collection of information

required by 30 CFR part 773, since this part encompasses all sections

of part 773, including the final rules adopted today, which generate an

information collection obligation.

Section 773.15--Review of permit applications. In the proposed

rule. OSM proposed to amend 30 CFR 773.15(b)(1) to refer to relevant

amended definitions and AVS-related rules as the basis for a regulatory

authority's analysis when reviewing a permit application.

The proposed regulation required the regulatory authority to review

all reasonably available information concerning violation notices and

ownership or control links involving the applicant.

Such information would include that obtained pursuant to

Sec. 773.22 (verification of ownership or control application

information); Sec. 773.23 (review of ownership or control and violation

information); amended Sec. 778.13 (identification of interests); and

amended Sec. 778.14 (violation information).

While those regulations will be discussed in detail later in this

preamble, the net effect of referencing such provisions in

Sec. 773.15(b)(1) was to assure that the regulatory authority makes a

decision with respect to permit issuance or denial based upon complete

information relating to ownership, control, and violations. Such

compete information includes the mandated use of AVS.

The proposed rule would have further added a paragraph (b)(4) to 30

CFR 773.15. This provision would have provided that delinquent civil

penalties for violations cited prior to October 3, 1988, not form the

basis for a permit block against persons linked through ownership or

control to such violations, where reclamation had been completed in

accordance with the provisions of the applicable regulatory program and

where, with respect to each cessation order for which a delinquent

civil penalty exists, such persons had paid $750 of the amount of such

penalty to the regulatory authority which issued such cessation order.

In substance, this regulation proposed a ``safe harbor'' with respect

to owners or controllers of delinquent civil penalties cited prior to

October 3, 1988.

In addition, the proposed amendments to 30 CFR 773.15(b)(1) would

also have deleted the presumption contained in the then current version

of that rule that allows a regulatory authority, in evaluating whether

a surface coal mining operation owned or controlled by a permit

applicant is currently in violation of the law, to presume, in the

absence of a failure to abate cessation order (FTACO), that a notice of

violation (NOV) has been or is being corrected, except where evidence

to the contrary is set forth in the permit application, or where the

notice of violation is issued for non-payment of abandoned mine

reclamation fees or civil penalties.

Further, the proposed amendment to 30 CFR 773.15(b)(1) would have

incorporated by reference the amended definition of ``violation

notice'' and the proposed definition of ``ownership or control link''

contained in proposed Sec. 773.5 by requiring a regulatory authority to

review ``all reasonably available information concerning violation

notices and ownership or control links involving the applicant.'' This

proposed change would have eliminated the need for the detailed list

contained in 30 CFR 773.15(b)(1) of the types of violation information

which a regulatory authority must review as part of the application

review process provided by 30 CFR 773.15(b)(1).

The two issues which generated the most significant comments were

the proposed deletion of the presumption of NOV abatement and the

proposed safe harbor for owners or controllers of surface coal mining

operations with delinquent civil penalties for violations issued prior

to October 3, 1988.

The first of these issues to be addressed is the proposed deletion

of the presumption of NOV abatement. Commenters representing a number

of State regulatory authorities strongly objected to the deletion of

the presumption. They asserted that the elimination of the presumption

would lead to ``nationwide gridlock.'' They asserted that such a rule

provision would lead to automatic appeals of all NOV's; that State

regulatory authorities would have to expend significant resources

tracking the course of NOV's and NOV appeals; that companies operating

before multiple State regulatory authorities would never be able to

definitively prove that NOV's were being abated such that they could be

issued permits; and that such efforts would be a significant waste of

State and Federal resources. They asserted that 80%-85% of all NOV's

are resolved and never ripen into CO's in any event.

Also, commenters representing industry interests strongly

criticized the proposed deletion of the NOV presumption as both

impractical and counterproductive. They asserted that the proposed

deletion of the presumption would be especially burdensome on large

multi-state corporations. They questioned whether such entities would

be able to keep track of the abatement status of the NOV's of their

many operating subsidiaries and contract miners. They further asserted

that most NOV's are routinely and timely abated. They argued that

eliminating the NOV presumption would lead to information overload in

the permit application process; to increased costs and delays in permit

processing; and to increased errors in data collection. They argued

that the deletion of the presumption would require the reallocation of

personnel from enforcement to document processing.

In contrast to the positions of State regulatory authorities and

the industry, one commenter representing environmental advocacy groups

supported the deletion of the NOV presumption, asserting that the

deletion of the presumption would lead to better tracking of the status

of violations and to faster remediation of violations. Another

commenter did concede, however, that it would be difficult for the OSM

to keep AVS accurate and current with respect to violation information

if the presumption of NOV abatement in the absence of an FTACO was

eliminated.

OSM considers the arguments raised by the State regulatory

authorities and by the industry to be persuasive. OSM must give

particular consideration to the concerns expressed by the State

regulatory authorities on this issue. These agencies have the

responsibility of implementing the ownership and control process. If

the State regulatory authorities believe that the complete elimination

of the presumption of NOV abatement will impose a significantly

increased burden upon them for limited environmental return, this

position cannot be discounted. OSM recognizes that there may be a

potential benefit in having multiple jurisdictions tracking the course

of NOV's for purposes of permit issuance. Such multiple supervision

could theoretically encourage prompt abatement. Nevertheless, the

mechanics of implementing such a process through AVS and other means

would be sufficiently complex so as to create significant uncertainty

among permit applicants and regulatory authorities. Such uncertainty

outweighs the benefits of the complete elimination of the presumption

of NOV abatement.

In response to the environmentalists' arguments, OSM recognizes

that there is a theoretical, potential benefit in multiple regulatory

authorities tracking the course of an NOV for purposes of permit

issuance. Under this scenario, a State would deny a permit to an

applicant based upon his or her being linked through ownership or

control to an NOV in another State even though the abatement period for

the NOV had not expired. The threat of permit denial could enhance the

prospect for prompt abatement of that NOV.

Nevertheless, the mechanics of implementing this process with

respect to AVS would be complex and would create such uncertainty as to

outweigh the benefits. Assuming that NOV's whose abatement period had

not yet expired and which had not yet generated FTACO's were loaded

onto AVS, OSM would have to check the status of such NOV's and

continually update such information on AVS. It is unclear whether OSM

would be able to keep up with the changing status of NOV's and

incorporate such information in a timely manner into AVS. This would

add an additional element of uncertainty with respect to the currency

of violation information in AVS. OSM believes it is more desirable to

have information in AVS which is both current and reliable, so that

State regulatory authorities may depend on the system during the permit

application review process.

Further, OSM believes that the decision to retain at least a

limited presumption of NOV abatement is consistent with positions taken

by the Department of the Interior in previous litigation. In litigation

relating to Sec. 773.15(b)(1) and related matters before the U.S.

District Court of the District of Columbia, the Secretary advised the

court that he had decided to reconsider the issue of whether, in the

absence of an FTACO, the regulatory authority may presume that an NOV

has been or is being corrected. The Secretary further advised the court

that he would, if appropriate, engage in further rulemaking on the

subject as expeditiously as possible. See National Wildlife Fed'n v.

Lujan, No. 88-3117-AER (D.D.C.), Memorandum of Points and Authorities

in Support of the Federal Defendants' Cross-Motion for Summary Judgment

and in Opposition to Plaintiffs' Motions for Summary Judgment, at pages

89-90.

As indicated in the preamble to the proposed rule, the proposed

amendment to delete the presumption of NOV abatement represented the

``further rulemaking'' of which the court was advised. However, the

Secretary committed only to reconsider the presumption of NOV

abatement. The Secretary never committed to finalize any proposed rule.

After receiving the States' and industry's comments cited above, OSM

has determined that the complete deletion of the presumption would

impose a significant burden upon the States and provide little

enforcement benefit.

As indicated in the preamble to the September, 1991 proposed rule,

it was, in fact, never OSM's intention to load NOV's (other than

delinquent NOV civil penalties) into the AVS database, given the large

volume of data entry that would be required to keep such violation

information up to date. Id. Thus, even if OSM had completely deleted

the presumption of NOV abatement by adopting the proposed modification

to 30 CFR 773.15(b)(1), there would have been no immediate, direct

impact upon the AVS database. If OSM had eliminated the presumption,

there would have been, however, a significant indirect impact upon AVS.

The States would have been required to spend scarce resources tracking

other States' NOV's, including those whose abatement periods had not

yet expired, for permit application purposes. The States would have had

fewer resources available to focus upon the other information that AVS

believes is more critical to the effective implementation of section

510(c) of the Act, including the development of complete information

with respect to entities' ownership and control. Further, OSM is

committed to making its best effort to provide, through the AVS, a

complete list of violations which are required to be used as the basis

for a permit block.

Accordingly, OSM has determined to retain a presumption of NOV

abatement in 30 CFR 773.15(b)(1). The focus of State regulatory

authorities' concern appears to be the uncertainty incident to NOV's

with abatement periods which have not yet expired. In substance, where

an NOV has been issued and the abatement period has not yet expired, it

is uncertain whether the violation will be ultimately abated or will

ripen into the basis for the issuance of a failure to abate cessation

order. The State regulatory authorities and the coal industry argue

that such uncertainty justifies unconditional permit issuance. The

environmentalists argue that such uncertainty demands permit denial.

While OSM recognizes the needs of the State regulatory authorities, OSM

believes that environmental advocates have also asserted legitimate

concerns about the consequences of a blanket presumption of abatement

for all NOV's. OSM has therefore chosen a middle ground which will

serve to reduce the uncertainty while balancing the concerns of the

various interests.

In response to the comments made to its proposal, OSM has amended

30 CFR 773.15(b)(1) to provide that, in the absence of a failure-to-

abate cessation order, a regulatory authority may presume that a notice

of violation is being corrected to the satisfaction of the agency with

jurisdiction over the violation where the abatement period for such

notice of violation has not yet expired and where the permit applicant

has provided certification in his or her permit application that such

violation is in the process of being corrected to the satisfaction of

the agency with jurisdiction over the violation. Where OSM is

regulatory authority, OSM will incorporate such certification into the

statement of verification currently required in OSM's permit

applications. Any permits issued incident to such certification will be

conditionally issued based upon successful completion of the necessary

abatement.

The above approach balances the concerns of the commenters. A

blanket presumption of abatement for all NOV's--including those whose

abatement period has expired--is inappropriate. It is entirely possible

that there are NOV's with expired abatement periods for which cessation

orders have not yet been written. To presume that such NOV's are abated

is unjustified. At the same time, today's final rule recognizes that,

until the abatement period has expired, diligent operators should have

the opportunity to correct their NOV's in a timely manner without being

subjected to permit denial during the period of abatement if they

certify that such violations are in the process of abatement. State

regulatory authorities can conserve limited resources by having the

benefit of a reasonable presumption of NOV abatement which applies to

those NOV's which are in a true state of uncertainty with respect to

abatement. In considering whether a particular NOV should be the basis

for permit denial, State regulatory authorities will also have the

comfort of certification by the applicant and the protection of

conditional issuance to assure that any representations made with

respect to NOV abatement are actually fulfilled.

OSM recognizes that some large companies may not be aware of all

NOV's whose abatement periods have not expired where such NOV's are

cited against one or more of their many subsidiaries. Nevertheless, OSM

expects that companies will make a good faith effort to track their

NOV's and report such NOV's as part of permit applications. Where a

company has developed a good faith NOV tracking procedure and, in the

diligent exercise of such procedure, has inadvertently failed to report

an NOV whose abatement period has not yet expired, such failure would

not constitute willful nondisclosure by the company. On the other hand,

where a company fails to set up a tracking procedure or where a company

sets up a tracking procedure or corporate structure designed or

intended to shield it from knowledge of NOV's or the ability to track

NOV's this will not excuse a company's failure to accurately report

NOV's in permit applications. Further, OSM expects that any

certifications of ongoing correction provided with respect to NOV's be

based upon truthful information and be submitted in good faith. To the

extent that a company asserts that it cannot certify because it is not

certain whether all violations have been identified, the presumption of

NOV abatement would not apply. OSM recognizes that companies may assert

this argument, but OSM considers the certification necessary to assure

that violations are in the process of being corrected.

As indicated above, the second issue in the proposed rule which

generated significant comments was the proposed safe harbor for the

owners or controllers of delinquent civil penalties for violations

issued prior to October 3, 1988.

Commenters from the coal industry and the States criticized the

safe harbor proposal because it required, as a condition precedent for

safe harbor treatment, that reclamation be completed within 120 days

after the effective date of the rule. These commenters asserted that

this proposed condition limiting the availability of safe harbor

protection was inadequate and insufficiently flexible. They argued that

the proposal did not take into account the time required to perform

reclamation and the potential for reclamation to be effected by

changing events and environmental conditions.

Moreover, commenters representing the environmental community also

criticized the safe harbor provision. These commenters criticized the

proposed $750 settlement amount as arbitrarily and artificially low.

Commenters representing the State regulatory authorities asserted that

the proposed penalty amount provided insufficient flexibility and that

a State regulatory authority should be able to demand a greater penalty

if the circumstances warrant.

While the industry and the States focused upon the limited window

of time available to perform abatement and the environmentalists and

the States questioned the limited penalty amount, all of these

commenters seemed to share the view, subject to their particular and

differing perspectives, that the proposed safe harbor provision was

artificial and unnecessarily rigid.

Upon consideration of the comments, OSM agrees that the proposal

was unnecessarily rigid and has, therefore, not finalized the safe

harbor proposal. Accordingly, regulatory authorities will have the

discretion to review the totality of the facts on a case by case basis

to determine whether a person who is linked, through ownership or

control, to delinquent civil penalties may avoid permit block through

payment of a portion of such penalties. OSM will review the adequacy of

such settlements within the context of OSM's routine oversight of the

State regulatory authorities under 30 CFR parts 732 and 733 and of case

specific complaints and investigations under 30 CFR part 842.

Whether a settlement is adequate will be a function of the entire

context of a particular case. Factors to be considered include, but are

not limited to, whether the settling owner or controller has performed

required reclamation to abate the violations other than the delinquent

civil penalties in a timely manner. The regulatory authority should

also consider the degree to which the facts indicate that the owner or

controller had the authority to exercise control of the violator. If

the owner or controller had such authority, whether it chose to

exercise such authority or not, it is less credible for the owner or

controller to argue that it was unaware of the activities and

violations such that a significant discount in civil penalty amount is

warranted for the owner or controller. In substance, with such

authority, the owner or controller would have had the ability to be

informed of violations in a timely manner if he or she had wanted to be

so informed. The regulatory authority should also consider the size and

solvency of the owner or controller and the impact that the payment of

a reduced amount of the civil penalty will have upon the activities of

that company and other companies similarly situated. Further, the

regulatory authority should consider the impact of the settlement upon

the integrity of the regulatory authority's enforcement program. In

other words, will the proposed settlement encourage companies to

conclude that there is an economic benefit in ignoring the civil

penalties and violations of their owned or controlled entities until

such companies are required to settle by regulatory authorities?

In accordance with the above discussion, OSM has not adopted the

provisions of the proposed rule which would have deleted the

presumption that NOV abatement currently contained in 30 CFR

773.15(b)(1) and which would have created a safe harbor for owners or

controllers with respect to delinquent civil penalties for violations

cited prior to October 3, 1988. In paragraph (b)(1) of the final rule,

OSM has inserted language providing for a presumption of NOV abatement

for NOV's whose abatement periods have not yet expired where the permit

applicants have certified that such NOV's are in the process of being

corrected to the satisfaction of the agency with jurisdiction over the

violation. In the final rule, OSM has also deleted the language

contained in the proposed rule which would have provided the safe

harbor for certain owners or controllers. OSM has otherwise adopted the

provisions of the proposed rule as the final rule.

Section 773.20--Improvidently Issued Permits: General Procedures.

In the proposed rule, OSM proposed to amend paragraph (b)(1)(ii) of 30

CFR 773.20 to delete the reference to the presumption of NOV abatement

contained in 30 CFR 773.15(b)(1). See Proposed Rule, Use of the

Applicant/Violator Computer System in Surface Coal Mining and

Reclamation Permit Approval, 56 FR 45780, 45784-45785 (September 6,

1991). The basis for such deletion was to assure consistency with the

provisions of 30 CFR 773.15(b)(1) which were to be similarly amended.

In the final rule, OSM has reinserted language which addresses the

situation which occurs when a permit is issued in reliance upon the

presumption that an NOV is being abated in the absence of a cessation

order and a cessation order is, in fact, issued with respect to the

violation. In such an event, a regulatory authority is required to find

that the permit has been improvidently issued. The September, 1991,

proposed rule deleted this language to assure consistency with OSM's

proposal to delete the presumption of NOV abatement from the permit

review process of 30 CFR 773.15(b). As described in this preamble in

the discussion relating to 30 CFR 773.15(b), OSM has decided to include

a presumption of NOV abatement for that regulation. To assure

consistency between the treatment of improvidently issued permits and

permit applications, OSM has reinserted language which addresses the

presumption of NOV abatement into 30 CFR 773.20(b)(1)(i)(B). The

agency's reasons for retaining a presumption of NOV abatement are

described fully in the preamble discussion with respect to 30 CFR

773.15(b)(1).

In the proposed rule, OSM also proposed to renumber certain

provisions of the then current 30 CFR 773.20 such that paragraph (b)(2)

would become (b)(1)(ii), paragraph (b)(2)(i) would become

(b)(1)(ii)(A), paragraph (b)(2)(ii) would become (b)(1)(ii)(B), and

paragraph (b)(3) would become (b)(1)(iii). In the final rule, such

renumbering is also adopted.

OSM also proposed to amend the then current 30 CFR 773.20 by

inserting a new paragraph (b)(2), which would have made the provisions

of proposed Sec. 773.26, standards for challenging ownership or control

links and the status of violations, applicable when a regulatory

authority makes determinations with respect to improvidently issued

permits. Proposed Sec. 773.26 would have been applicable when a

regulatory authority determines whether a violation, penalty, or fee

remains unabated or delinquent, has been corrected, is in the process

of being corrected, or is the subject of a good faith appeal, and

whether any ownership or control link between the permittee and the

person responsible for the violation, penalty, or fee existed, still

exists, or has been severed.

The proposed insertion of the language referring to Sec. 773.26

would have had the effect of assuring that the standards,

responsibilities, and procedures created by proposed Sec. 773.26 were

consistently applied to permit issuance and to determinations regarding

improvident permit issuance. OSM took such an approach in the belief

that this would enhance the fairness of the permitting process and the

prospect for the uniform enforcement of nationwide minimum standards.

In the final rule, this approach is adopted. The reference to

Sec. 773.26 is changed, however, to Sec. 773.25 to reflect the

renumbering of that section. Also, as has been indicated previously,

OSM has inserted language in paragraph (b)(2) of final Sec. 773.20 to

clarify that a challenge as to the existence of a violation at the time

it was cited may be made within the context of the improvident permit

issuance process.

OSM further proposed to renumber provisions of the regulation at 30

CFR 773.20(c), which relate to remedial measures for improvidently

issued permits, so that then current paragraph (c) would become (c)(1),

then current paragraph (c)(1) would become (c)(1)(i), then current

paragraph (c)(2) would become (c)(1)(ii), then current paragraph (c)(3)

would become (c)(1)(iii), and then current paragraph (c)(4) would

become (c)(1)(iv). In the final rule, such renumbering is adopted.

Further, proposed renumbered paragraph (c)(1)(iv), which would

authorize the regulatory authority to use rescission as one of the

remedial measures for improvident permit issuance, would have deleted a

specific reference contained in the former 30 CFR 773.20(c)(4) to the

rescission procedures of 30 CFR 773.21.

The reason for such proposed deletion was that OSM sought to

establish a prior notice and common appeal procedure for both permit

suspensions and permit rescissions with respect to improvidently issued

permits. The then current regulation governing permit suspensions at 30

CFR 773.20(c)(3) did not impose any specific requirements for prior

notice, opportunity to be heard, or right of appeal for the permittee

whose permit is to be suspended. See 54 FR 18450 (1989). In contrast to

this, then current regulations governing permit rescissions at 30 CFR

773.21 contained specific requirements for prior notice to a permittee

and an explicit right of appeal. Accordingly, through its proposed

rule, OSM sought to provide for greater consistency in its procedures

governing suspension and rescission of permits. In the final rule, the

proposed change has been adopted.

OSM further proposed to amend 30 CFR 773.20 to add a new paragraph

(c)(2) which would have required that a regulatory authority which

decides to suspend a permit must provide at least 30 days' prior

written notice to the permittee. The proposed rule would have provided

that, in the event that the regulatory authority decides to rescind a

permit, it would provide notice in accordance with the provisions of 30

CFR 773.21. The proposed amendment further provided that a permittee

would be given the opportunity to request administrative review of the

notice under proposed OHA rules 43 CFR 4.1370 et seq., where OSM is the

regulatory authority, or under the State program equivalent, where the

State is the regulatory authority. In the absence of such temporary

relief, the regulatory authority's decision would have remained in

effect during the pendency of appeal.

OSM's proposed rule amendments made no change in the requirement

contained at 30 CFR 773.20(b) that a regulatory authority analyze a

potentially improvidently issued permit ``[U]nder the violations review

criteria of the regulatory program at the time that the permit was

issued.''

A commenter representing one of the State regulatory authorities

criticized the provisions of the proposed rule which would have

required that the regulatory authority provide thirty days' written

notice to the permittee, if the regulatory authority decides to suspend

the permit. This commenter asserted that there may be circumstances

which require the immediate suspension and, possibly, outright

rescission of a permit. This commenter asserted that delay, in the

interests of due process rights, may not serve the public interest.

OSM appreciates the commenter's concerns. It is entirely

conceivable that a permittee could have been issued a permit even

though the permittee was linked, through ownership or control, to a

string of unabated violations at the time of permit issuance. The

permittee could have willfully and fraudulently concealed such links

through some clever scheme or artifice at the time of permit

application. While AVS has reduced the potential for such a scenario to

occur, it remains possible. Such a permit ought to be subject to

immediate suspension.

Nevertheless, OSM must weigh the public interest in preventing

violators from keeping permits against the public interest in assuring

that permittees' due process rights are protected. The remedies of

permit suspension and rescission are serious. Unlike an applicant who

merely has an expectancy in his application to receive a permit to

mine, a permittee has, in fact and as a matter of law, assumed the

rights and responsibilities incident to the permit to engage in surface

coal mining operations. Indeed, OSM's regulations provide that a valid

permit carries with it the right of successive renewal. See 30 CFR

774.15(a). Thus, a permittee has an interest which is deserving of a

higher level of protection than the interest of an applicant.

Further, the provisions of 30 CFR 773.21 previously provided for

notice to the permittee only prior to a proposed permit suspension and

rescission. Thus, a permittee got prior notice of a suspension only if

the suspension was the precursor to a subsequent rescission. If the

regulatory authority did not intend the suspension of a permit to be

followed by the permit's rescission, there was no requirement for prior

notice. Also, the provisions of 30 CFR 773.21 provided appeal rights

for a notice of suspension and rescission. There were no similar appeal

rights in 30 CFR 773.20 with respect to suspension. In substance,

permit suspension had the potential of being a harsher punishment than

permit rescission by reason of these procedural differences. These were

anomalies that OSM wanted to correct.

Accordingly, the final version of 30 CFR 773.20(c)(2) provides for

notice prior to permit suspension; for administrative review of the

notice of suspension under 43 CFR 4.1370 et seq. or under the State

program equivalent; for a common appeal procedure for both permit

suspensions and permit rescissions with respect to improvidently issued

permits and for the regulatory authority's decision to remain in effect

during the pendency of an appeal, unless temporary relief has been

granted in accordance with 43 CFR 4.1376 or the State program

equivalent. States can be more stringent with respect to providing less

prior notice, but they are responsible for the legal consequences of

such actions.

Industry commenters objected to OSM's assertion of any role in

revoking or setting aside improvidently issued permits based upon the

totality of their objections to the AVS, the ownership and control

rules, and the proposed rules. These reasons included the proposed

rules' alleged deficiencies with respect to due process, State primacy,

dispersion of authority for permit decisionmaking, and all other

objections asserted by industry commenters.

OSM disagrees with the commenters' views, including their view that

OSM has no legitimate role in the improvidently issued permit process.

OSM has an essential role to play, both as a regulatory authority and

as an agency of the Federal government overseeing the States' programs.

OSM incorporates by reference its previous responses to industry

commenters in this preamble which address the commenters' concerns.

Further, in the preamble to the rules governing improvidently issued

permits, OSM has explained the legal basis for the improvidently issued

permit rules and the rationale for OSM's role with respect to the

implementation of such rules in relation to the States. See Preamble to

30 CFR 773.20, 773.21, and 843.21; Final Rule, 54 FR 18438 et seq.,

especially see pages 18458-18461 (April 28, 1989). OSM also

incorporates these explanations by reference.

Environmentalist commenters criticized the portions of 30 CFR

773.20 which provide that the test for evaluating whether a permit was

improvidently issued is ``the violations review criteria of the

regulatory program at the time the permit was issued.'' See 30 CFR

773.20(b). These commenters asserted that OSM should clearly spell out

the violations review criteria, rather than rely upon the individual

regulatory programs' criteria at the time of permit issuance as the

applicable standards. These commenters criticized the provisions of

OSM's regulations as being contrary to the Act and cited in support

portions of their brief filed in the case of National Wildlife

Federation v. Lujan, No. 88-3117 (D.D.C.).

OSM disagrees with the commenters' position. As indicated above,

OSM's proposed rule did not propose substantive changes to this

provision of the regulation. In the preamble to the improvidently

issued permit rules cited above, OSM explained its rationale for using

the violations review criteria of the regulatory program at the time

the permit was issued as the standard for improvident issuance. See

Preamble to 30 CFR 773.20, 773.21, and 843.21; Final Rule, 54 FR 18438,

18440-18441 (April 28, 1989).

Further, in the case of National Wildlife Federation v. Lujan, No.

88-3117 (D.D.C.), and Save Our Cumberland Mountains, Inc. v. Lujan, No.

81-2134 (D.D.C.), environmental advocates advanced similar arguments

with respect to the agency's improvidently issued permit rules and the

provisions of the rules applying the violations review criteria of the

regulatory program at the time of permit issuance. In the briefs

submitted by the Department of the Interior in those cases, the

Department analyzed relevant statutory language and legislative history

and carefully explained why the environmental advocates' criticisms

were not well taken. Copies of these briefs are being placed in the

Administrative Record of this rulemaking. OSM incorporates the

arguments advanced by the Department in those briefs herein by

reference.

Environmental commenters also criticized other portions of 30 CFR

773.20 for which OSM did not propose any substantive amendments as part

of the September, 1991, proposed rules. The commenters asserted that

OSM should clarify that the remedial measures available to a regulatory

authority to cure an improvidently issued permit require that the

regulatory authority impose both an abatement plan and a permit

condition incorporating such plan before an improvidently issued permit

is considered resolved. They asserted that the provisions of 30 CFR

773.20(c) inappropriately allow the regulatory authority to choose

whether to require a permit condition or an abatement plan.

OSM disagrees with the commenters that a rule amendment is needed.

The provisions of the regulation require that the regulatory authority

``use one or more'' of the listed remedial measures including requiring

the implementation of an abatement agreement; conditioning the permit

upon abatement of outstanding violations within a reasonable period of

time; suspension of the permit; or rescission of the permit. This

provision affords the regulatory authority the opportunity to exercise

discretion, in light of the circumstances, to make a reasoned choice as

to the appropriate remedy. In the preamble to the improvidently issued

permit rule, OSM stated, in relevant part, as follows:

This section * * * includes four alternative remedial measures

because of the diversity of circumstances under which a regulatory

authority might find that a permit was improvidently issued, and the

resulting need to apply a remedy that not only is administratively

appropriate, but also is fair and equitable to the permittee * * *.

OSMRE believes that the term [``improvidently issued''] reflects

the severity of the problem involved when a regulatory authority

should not have issued a permit, while at the same time not

foreclosing reasonable flexibility in the adoption of appropriate

remedial measures * * *.

[T]he rule affords the regulatory authority reasonable

discretion to consider the circumstances involving a particular

improvidently issued permit and to fashion an appropriate remedy * *

*.

Although the rule does not require a regulatory authority to use

any particular one of the four remedial measures, OSMRE intends that

the measure or measures used will be commensurate with the

circumstances under which a permit was improvidently issued.

(Emphasis added.) See 54 FR 18438, 18447-18448 (April 28, 1989).

Certainly, it could be reasonable, depending upon particular

circumstances, for a regulatory authority to require both a plan of

abatement and a permit condition implementing such plan. The agency has

previously rejected the view, however, that there is only one correct

option or options from the alternative remedies provided in the

improvidently issued permit rule which is or are appropriate for all

circumstances. Id. The provisions of the regulation afford the

regulatory authority the opportunity to tailor a remedy ``package''

appropriate for the particular circumstances under which a permit was

improvidently issued. The goals of any such remedy are ``to correct the

defect in the permit and achieve a state of compliance.'' Id., at

18447. If either a permit condition or an abatement agreement could

reasonably be expected to accomplish these goals under the

circumstances, then either would be sufficient to resolve the

improvidently issued permit. In the event that it becomes apparent that

selected remedial measures are not effective, each of the remedies

affords leverage to the regulatory authority to compel compliance. Such

choices are appropriately made by the regulatory authority, subject to

OSM's oversight under 30 CFR 843.21. At this time, OSM sees no reason

to amend the regulation to rou

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