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

SUMMARY: We are proposing revised permit eligibility requirements for

surface coal mining operations under the Surface Mining Control and

Reclamation Act of 1977 (SMCRA or the Act). In particular, we propose

to revise how ownership and control of mining operations is determined

under section 510(c) of the Act so that applicants who are responsible

for unabated violations do not receive new permits. We have designed

this proposal to be effective, fair, and consistent with a 1997

decision by the U.S. Court of Appeals for the D.C. Circuit addressing

ownership and control issues.

In addition, we are proposing other changes to other aspects of our

regulations in response to comments we received when we sought public

participation in developing this proposed rule. Our intent is to

improve, clarify, and simplify current regulations as well as to reduce

duplicative and burdensome permit information requirements.

DATES: Written comments: We will accept written comments on the

proposed rule until 5 p.m., Eastern time, on February 19, 1999.

Public hearings: Upon request, we will hold public hearings on the

proposed rule at dates, times and locations to be announced in the

Federal Register prior to the hearings. We will accept requests for

public hearings until 5 p.m., Eastern time, on January 11, 1999. If you

wish to attend, but not testify at, any hearing, you should contact the

person identified under FOR FURTHER INFORMATION CONTACT before the

hearing date to verify that the hearing will be held. If you wish to

attend and testify at any hearing, you should follow procedures under

I. Public Comment Procedures--Public hearings.

ADDRESSES: If you wish to provide written comment, you may submit your

comments by any one of several methods (see Public Comment Procedures).

We will make comments available for public review during regular

business hours. You may mail or hand-deliver comments to the Office of

Surface Mining Reclamation and Enforcement, Administrative Record, Room

101, 1951 Constitution Avenue, NW, Washington, D.C. 20240. You may also

submit comments to OSM via the Internet at: [email protected].

You may submit a request for a public hearing orally or in writing

to the person and address specified under `FOR FURTHER INFORMATION

CONTACT. We will announce the address, date and time for any hearing in

the Federal Register prior to the hearing. If you are disabled and

require special accommodation to attend a public hearing, you should

contact the person listed under FOR FURTHER INFORMATION CONTACT.

FOR FURTHER INFORMATION CONTACT: Earl D. Bandy, Jr., Office of Surface

Mining Reclamation and Enforcement, Applicant/Violator System Office,

2679 Regency Road, Lexington, Kentucky 40503. Telephone: (606) 233-2796

or (800) 643-9748. E-Mail: [email protected].

SUPPLEMENTARY INFORMATION

Table of Contents

I. Public Comment Procedures

II. Background to Proposed Rules

A. What is the permit-block sanction in the Surface Mining

Control and Reclamation Act?

B. How has OSM implemented the permit-blocking requirement?

C. What is the Applicant/Violator System and how is it used in

permit-blocking?

D. What happened to the regulations OSM issued in 1988 and

1989?

E. What did the Appeals Court say was wrong with OSM's

regulations?

F. What did OSM do in response to the Appeals Court decision?

G. How has OSM met its April 1997 commitment to propose

additional regulations?

H. How does this proposal relate to the Appeals Court decision

and interim final rule?

I. How would these rules help bring about more effective

regulation of mining?

J. What would be the major effects of this proposal?

K. How would conditioning permits based on compliance history

work?

L. What are some examples of how the new rules would treat

different applicants?

M. Would this rule affect other documents that OSM has

published in the past?

N. Would the rule affect State primacy?

O. How does OSM address the information collection burdens of

this rule?

P. What provisions in SMCRA authorize these proposed changes?

III. Discussion of Proposed Rules

IV. Procedural Determinations

I. Public Comment Procedures

Sixty (60) Day Comment Period: In view of the extensive outreach

activity conducted in advance of this rulemaking and in order to

expedite the publication of final rules, we will not extend the comment

period beyond the usual 60 days.

Written comments: Written comments on the proposed rule by mail,

electronically, or in person, should be specific, confined to issues

pertinent to the proposed rule, and explain the reason for any

recommended change. Submit three copies of your comments.

We will consider only those comments sent within the allowed time

period (see DATES). We will log into the administrative record for the

rulemaking all comments sent to the addresses listed above (see

ADDRESSES). Comments delivered to addresses other than those listed

above (see ADDRESSES) may not be logged in.

Comments over the Internet should be in an ASCII file, and you

should avoid using special characters and any form of encryption.

Please also include ``Attn: RIN 1029-AB94'' and your name and return

address in your Internet message. If you do not receive a confirmation

from the system that we have received your Internet message, contact us

directly at 202-208-2847.

Public hearings: We will hold a public hearing on the proposed rule

only upon request. We will announce the time, date, and address for any

hearing in the Federal Register at least 7 days prior to the hearing.

If you are interested in participating at a hearing, you need to

inform Mr. Bandy (see FOR FURTHER INFORMATION CONTACT) by 5:00 p.m.,

Eastern time, on January 11, 1999. If no one has contacted Mr. Bandy to

express an interest in participating in a hearing by that date, we will

not hold a hearing. If only one person expresses an interest, we may

hold a public meeting rather than a hearing and include the results in

the Administrative Record. We will determine the location of the

hearing, if one is held, after reviewing the number of requests

received and the locations desired.

If we hold a hearing, it will be transcribed, and it will continue

until all persons wishing to testify have been heard. To ensure that we

have an accurate record of the hearing, we ask that you provide a

written copy of your testimony to the transcriber at the beginning of

the hearing. We also

[[Page 70581]]

request that you send an advance copy of your testimony to us at the

address specified for submitting written comments (see ADDRESSES).

We will make comments, including names and addresses of commenters,

available in our Administrative Record for public review during regular

business hours.

II. Background to Proposed Rules

In this Background section, we use a question-and-answer format to

provide some of the history of this rulemaking and to explain the

concepts we are introducing in the proposed rule. In Section III,

Discussion of Proposed Rules, we have put together a section-by-section

description of the proposed changes and the effects they would have if

they were to become final rules. The proposed regulatory text is

included in its entirety in the latter portion of this publication.

In 1998, the President ordered Federal agencies to begin writing

public documents, including regulations, in plain language. Today's

proposal introduces some plain language principles into OSM's body of

regulations.

For example, there are numerous references to ``you'' and ``we'' in

this document. In the regulatory text, ``you'' refers to the applicant

for a surface coal mining operation, and ``we'' refers to the

regulatory authority charged with enforcing the requirements in the

regulations. In all but a few States, ``we'' means the State regulatory

authority approved by the Secretary of the Interior to carry out the

Surface Mining Act's requirements within the State's boundaries. In

some cases, however, ``we'' means the Office of Surface Mining

Reclamation and Enforcement (OSM)--the regulatory authority on Indian

Lands and in the few States that do not have an approved State

regulatory program. Where the regulatory text specifically refers to

``OSM'' or ``the State,'' it is usually in reference to separate roles

or responsibilities as the regulatory authority.

While ``we'' means the regulatory authority in the text of the

regulation, it has a different meaning in the introductory text--also

known as the preamble. Because the preamble describes how OSM has

developed the regulation, the use of ``we'' in the preamble always

refers to OSM.

A. What is the Permit-Block Sanction in the Surface Mining Control and

Reclamation Act?

The Surface Mining Control and Reclamation Act of 1977 (SMCRA or

the Act), 30 U.S.C. 1201 et seq., establishes requirements for the

regulation of active surface coal mining and reclamation and for the

restoration of abandoned mine lands. The Act authorizes OSM to review

and approve a State program so that the State may become the regulatory

authority and have primary responsibility to enforce the Act's

requirements within its borders. The Act also contains numerous

provisions governing the permitting of mining operations. One of the

most powerful tools provided in SMCRA is the permit-block sanction in

section 510(c).

Under Section 510(c), the regulatory authority may not issue a

permit for a new operation when another surface coal mining operation

``owned or controlled by the applicant'' is in current violation of

SMCRA. Such violators may have mined coal and left behind unreclaimed,

on-the-ground, environmental problems. They may have forfeited their

surety bonds. Some may owe the government for unpaid Abandoned Mine

Land fees or civil penalty assessments. Still others may have multiple

infractions in all of these areas. Section 510(c)'s intent is to

prohibit the regulatory authority from issuing new permits to

applicants who own or control operations with violations until they

abate the violations for which they are responsible.

As a first step in this process, regulatory authorities must

determine whether an applicant for a surface coal mining permit owns or

controls an operation with a violation. This ownership or control

determination is key to deciding whether an applicant should be held

responsible for violations that do not appear in violation records

under the applicant's name. Because individuals may apply for permits

under different corporate names, it is easy to avoid being linked to

violations at mines that the applicant may have controlled--violations

that they should have abated.

B. How has OSM Implemented the Permit-Blocking Requirement?

Unfortunately, for most of the decade following enactment of SMCRA

in 1977, neither States nor the Federal Government had devised an

effective means of determining ownership and control to effectively

implement section 510(c). While some States had attempted to set up

mechanisms for tracking violators and their controllers, they relied

heavily on the manual interpretation of paper files which were

difficult to access and keep up-to-date. Even if an individual State

had developed an effective method of tracking violators within its

boundaries, it still had to consult with other regulatory authorities

to determine if out-of-State violators were trying to set up operations

locally. These consultations often lacked consistency and relied on

different filing systems and data standards. There was no national or

regional system in place for keeping up with violators who moved from

State to State leaving behind the mining and reclamation problems they

had created.

In 1981, environmental groups sued the Secretary of the Interior

alleging a nationwide failure to enforce section 510(c). The parties

eventually negotiated a settlement (Save Our Cumberland Mountains,

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

which OSM established the computer system now known as the Applicant/

Violator System (AVS). The AVS became the central repository for

violation information, as well as ownership and control information,

enabling regulatory authorities to more effectively implement section

510(c).

During the two years following the settlement, we designed and

built the AVS and negotiated Memoranda of Understanding with each of

the primacy States detailing how States would use the AVS and how they

would assist OSM in maintaining and updating system data. Over the same

period of time, we developed proposed rules to implement section 510(c)

and related sections of SMCRA. We issued those rules in final form in

1988 and 1989 in Title 30, Chapter VII of the Code of Federal

Regulations. They were known as the ``ownership and control'' rule (53

FR 38868 (1988)), the ``permit information'' rule (54 FR 8982 (1989))

and the ``permit rescission'' rule (54 FR 18438 (1989)). Under those

rules, a regulatory authority would deny an application for a surface

coal mining permit if the applicant owned or controlled an operation

that was in violation of the Act, or if others who were in violation

owned or controlled the applicant.

Specifically, the 1988 rule defined ``ownership and control'' at

Sec. 773.5 and required the regulatory authority to review violations

associated with the applicant at Sec. 773.15(b) so that regulatory

authorities could determine who was eligible for a permit. The ``permit

information'' rule published in 1989 described the requirements for the

applicant to provide information on interests at Sec. 778.13 and

violations at Sec. 778.14 needed by the regulatory authority to review

the application. The ``permit information'' rule, while separate from

the original ownership

[[Page 70582]]

and control rule, complemented it by requiring the applicant to supply

the information necessary for the regulatory authority to make a

permitting decision. The ``permit rescission'' rule, also published in

1989, included requirements at Secs. 773.20, 773.21, and 843.21 for

dealing with improvidently issued permits `` those permits that must be

rescinded due to the existence of a violation that would have prevented

issuance of the permit had the regulatory authority been aware of it.

C. What is the Applicant/Violator System and how is it Used in Permit-

Blocking?

The AVS is a computerized system containing two large banks of

data. One bank houses information on owners and controllers of mining

operations. As part of the permit application requirements, companies

and individuals provide this information to the regulatory authority,

which then loads the information in the AVS. The other bank houses

information on violations, including failure to pay required fees and

penalties, which we get primarily from regulatory authorities and our

own financial management records.

Under current regulations, the regulatory authority checks the AVS

during the review of each application for a mining permit. The AVS

automatically compares the ownership and control information with the

violation information to determine if links exist between the applicant

and any outstanding violations. If the applicant is linked to certain

violations in the AVS, OSM recommends to the regulatory authority that

it deny the application unless the applicant submits proof that the

violation has been corrected, is being corrected, or is being appealed

through proper channels. By matching permit applicants to outstanding

violations that they own or control, the AVS helps regulatory

authorities implement section 510(c) faster, easier, and more reliably

than was possible before AVS.

D. What Happened to the Regulations OSM Issued in 1988 and 1989?

The National Mining Association (NMA) and National Wildlife

Federation filed suit challenging the validity of all three sets of

OSM's rules implementing section 510(c). On August 31, 1995, the U.S.

District Court for the District of Columbia upheld the three challenged

rules in their entirety. See National Wildlife Fed'n v. Babbitt, Nos.

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

National Wildlife Fed'n v. Babbitt, Nos. 89-1130, 89-1167

(consolidated) (D.D.C. Aug. 31, 1995); National Wildlife Fed'n v.

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

The NMA appealed the ruling and, on January 31, 1997, the U.S.

Court of Appeals for the D.C. Circuit reversed the district court's

decision. See National Mining Ass'n v. Department of Interior, 105 F.3d

691 (D.C. Cir. 1997) (hereinafter NMA v. DOI).

E. What did the Appeals Court Say was Wrong With OSM's Regulations?

The Appeals Court held that section 510(c) of SMCRA authorizes OSM

to deny a permit only when ``any surface coal mining operation owned or

controlled by the applicant'' is currently in violation of SMCRA. Thus,

because under OSM's 1988 ownership and control rules the regulatory

authority could also deny a permit when any person who owned or

controlled the applicant was in violation of the Act, the Appeals Court

invalidated OSM's ownership and control rule in its entirety. In

addition, the court held that because OSM's permit information and

permit rescission rules ``are centered on the ownership and control

rule * * *, they too must fall.'' Id. at 696.

Although the Appeals Court found only one aspect of OSM's rules to

be flawed, it invalidated the entire ownership and control rule as well

as the two related sets of regulations, including many provisions which

were not inconsistent with the rationale in the court's decision. At

the same time, nothing in the court's decision eliminated the

responsibility of OSM and State regulatory authorities to implement the

permit-blocking requirements of section 510(c) and the requirement in

section 507(b) of the Act to collect certain permit information. This

meant that OSM and the States faced the prospect of making permitting

decisions as required in the Act without any regulations to support

those decisions. The Appeals Court's action created a great deal of

uncertainty among State regulatory authorities about how to continue to

meet their responsibility to determine who was eligible to receive a

permit.

F. What did OSM do in Response to the Appeals Court Decision?

Immediately following the Appeals Court decision, we made

adjustments in our process for responding to regulatory authorities'

requests for permit recommendations. In each case, before we

recommended that a permit be denied based on the AVS check, we

determined if the recommendation would be consistent with the court's

decision. In those cases where it would have been inconsistent--those

where the recommendation would be based on the violations of those who

owned or controlled the applicant--we informed the regulatory authority

that we could no longer recommend that it deny the permit.

Soon after the Appeals Court decision, we formed a team of

Department of the Interior employees with experience in ownership and

control issues. We instructed the team to evaluate the court's decision

and determine what we needed to do to comply with it. As a first step,

to remove the uncertainty created by the decision, and to ensure there

would be no lapse in approved State programs, we published interim

final rules (the IFR) on an emergency basis on April 21, 1997 (62 FR

19451). The IFR were consistent with the rationale in the Appeals Court

decision. The rules did not authorize the regulatory authority to deny

permits because of outstanding violations of an applicant's owners and

controllers.

We determined that we had ``good cause'' to publish the IFR without

notice and comment because of the need to have regulations in place. At

the same time, we committed to propose further rulemaking ``in

accordance with standard notice and comment procedures.''

G. How has OSM Met its April 1997 Commitment to Propose Additional

Regulations?

In June of 1997, our ownership and control team met with State

regulatory authorities to discuss rulemaking options. As a result of

those discussions, further deliberations within the Department of the

Interior, and input from citizens and the regulated industry, we

decided to take full advantage of the opportunity to re-evaluate all

aspects of the ownership and control rules and related regulations, to

propose improvements, to clarify requirements, and to reduce

unnecessary burdens wherever possible.

On October 29, 1997, we issued an Advance Notice of Proposed

Rulemaking in the Federal Register our intent to propose rules, hold

public meetings and solicit comments from all interested parties on a

wide range of topics related to ownership and control. 62 FR 56,139

(1997). Also on October 29, OSM Director Kathy Karpan held a press

conference to announce a new and innovative rulemaking process that

would include extensive public outreach and consideration of any

suggestions that could improve the ownership and control rules.

Representatives from the coal industry, environmental groups, State

[[Page 70583]]

regulatory authorities, the press, and a congressional authorizing

subcommittee with responsibility for OSM's programs participated in the

Director's press conference. The Director promised a ``no-holds-

barred'' approach in which all aspects of OSM's ownership and control

rules would be open for discussion. Though the task was considerable,

the goal was simple: develop the best possible rules that would be

fair, effective and legally defensible.

The Ownership and Control Team conducted the Director's public

outreach initiative from October 29, 1997, through January 16, 1998.

The Team invited about 900 people and organizations to participate and

provided everyone with a topics paper to elicit ideas, comments, and

suggestions on possible regulatory changes. Seventy people attended

seven public meetings held in different locations throughout the U.S.

We offered to meet separately with any person or group requesting a

meeting. Based upon such a request, members of the Team met with the

National Mining Association. We also held individual discussions with

several environmental advocates. In addition to holding the public

meetings, the team received written comments.

At the conclusion of the outreach, the team began developing

rulemaking options and recommendations to present to the Director on

dozens of regulatory provisions related to ownership and control. As

the team developed proposed rule language, members continued

discussions with our State partners and kept them informed of the

team's progress, including holding a formal States-OSM meeting to

discuss the results of the outreach. Today's proposal is the

culmination of months-long review, analysis and deliberation that

fulfills our commitment in the IFR to proposed further rules with full

public notice and opportunity for comment.

H. How Does This Proposal Relate to the Appeals Court Decision and

Interim Final Rule?

This proposal is consistent with the IFR and the January 31, 1997,

Appeals Court decision in that it would not authorize the denial of

permits based on outstanding violations of an applicant's owners and

controllers. However, it goes farther in reflecting our decision to

take full advantage of the opportunity to re-evaluate all aspects of

the ownership and control rules, propose improvements, clarify

requirements, and reduce any unnecessary burdens placed on States and

the regulated industry. It also reflects suggestions and ideas

presented to us during the public outreach period.

In addition to ensuring that the current proposal is consistent

with the scope of section 510(c) as described by the Appeals Court, we

have looked to the court's decision for guidance in interpreting other

aspects of SMCRA and implementing regulations. For example, the court

explained that, while we may only block permits based on the violation

histories of operations owned or controlled by the applicant, we have

``leeway in determining who the applicant is'' and may ``pierce the

corporate veil'' when appropriate to identify the ``true applicant.''

NMA v. DOI, 105 F. 3d at 695.

Keeping in mind the Appeals Court's commentary, and in consultation

with our State partners, and fully considering the views expressed

during public outreach, we have evaluated our existing authorities to

determine how we can more effectively address violations of the Act.

While the permit-block sanction authorized in section 510(c) will

continue to be the primary tool for determining who is eligible to

mine, it will be much less effective without the ability to consider

the violations of those who own or control the applicant. This makes it

even more important that we effectively use our other authorities under

SMCRA to deter mining by those who are either unwilling or unable to

meet the obligations of their permits. Indeed, during the public

outreach, some commenters suggested that we make more use of

enforcement authorities already granted under the Act and in

regulations rather than relying so heavily on permit blocking. In this

vein, the Appeals Court noted that ``blocking permits under section

510(c) is not the only regulatory mechanism under SMCRA.'' Id. at 695.

I. How Would These Rules Help Bring About More Effective Regulation of

Mining?

In assessing how we could use available authorities to improve

compliance with SMCRA, we have focused on four key areas: (1) improving

the quality and usefulness of the information gathered during the

permit application process and holding applicants fully accountable for

providing all required information; (2) ensuring that permit

eligibility determinations include consideration of all information

indicating the likelihood of an applicant meeting the obligations of

the permit; (3) verifying, through the increased use of investigations,

that applicants have provided complete and accurate information; and

(4) more effectively using currently available alternative enforcement

capabilities to ensure compliance by those who own, control or direct

mining operations in cases where conventional enforcement mechanisms

prove inadequate. We have concluded that these tools can be used more

effectively to achieve greater overall compliance with SMCRA.

J. What Would be the Major Effects of This Proposal?

The major effects of this proposal are as follows:

Consistent with the January 1997 Appeals Court decision,

regulatory authorities would continue to deny applications for permits

when the applicant has an outstanding violation or when the applicant

owns or controls an operation with an outstanding violation.

An applicant also would not be eligible for a permit if an

owner or controller of the applicant has demonstrated such disregard

for the environment that such person has been barred, disqualified,

restrained, enjoined, or otherwise prohibited from mining by a Federal

or State court.

The controllers of an applicant would be on notice of

their duty to comply with the requirements of the Act and the rules

would require them to attest to this fact.

The regulatory authority would more thoroughly review and

verify violation and ownership and control information.

Uncorrected violations of the Act and Federal and State

regulations that remain uncorrected would be subject to enforcement

actions, including the alternative enforcement mechanisms already

available in regulations.

The regulatory authority would more heavily focus

enforcement resources on those operators who lack a demonstrated

history of compliance and place less emphasis on those who have a

demonstrated history of compliance.

The information the regulatory authority would require

from applicants would more closely conform to the information

requirements of section 507(b) of the Act.

The definitions of ``ownership'' and ``control'' in the

rules would aid both the applicant and the regulatory authority in

identifying all parties with obligations under a permit.

Duplicative and burdensome information requirements that

applicants and regulatory authorities must currently meet would be

eliminated.

The current presumptions that ownership or control exists

would be

[[Page 70584]]

replaced with a requirement that the regulatory authority make a

finding of actual ownership or control.

Regulatory authorities would condition permits to ensure

compliance based on how long the applicant has been mining, whether the

applicant has a successful environmental compliance record, and whether

the applicant has owners or controllers with outstanding violations.

K. How Would Conditioning Permits Based on Compliance History Work?

In this proposal, we introduce the concept of having additional

permit conditions for applicants depending on how well each has

demonstrated a commitment to sound mining and reclamation practices.

Possibly the best predictor of the likelihood that an applicant will

meet the obligations of a permit is the record of how well the

applicant has met them for past operations. Applicants with good

environmental compliance records have earned a greater degree of trust

than those who have not practiced sound mining and reclamation, or who

have limited surface coal mining experience, or who have owners and

controllers linked to outstanding violations. While all permittees

would still be subject to the same on-the-ground mining and reclamation

requirements, we propose that some of the administrative and procedural

requirements or permit conditions would differ depending on the record

of past mining.

Specifically, we propose that regulatory authorities place

additional conditions in the permits of applicants who do not have

established a record of successful environmental compliance. Such

additional conditions also would apply to applicants whose owners or

controllers have links to outstanding violations. Those additional

conditions would include payment of all civil penalties, AML

reclamation fees, and AML audit debts within the 30-days after we

provide specific notice that they are due. These permittees also must

take all possible steps to abate any outstanding violation within the

period set for abatement. And, the permittee must maintain

uninterrupted compliance with all provisions of any abatement plan or

payment schedule or other settlement agreement.

Under our proposal, establishing a record of successful

environmental compliance would be demonstrated if the applicant (1) has

mined and reclaimed under approved permits for at least five years

before the date of application; (2) has no outstanding violations; and

(3) does not have owners or controllers who are linked to any

outstanding violations.

We also propose that the regulatory authority may presume that a

notice of violation existing at the time of application is being

corrected for applicants having established a record of successful

environmental compliance, as long as the period allowed for abatement

of the notice of violation has not yet expired. This presumption would

not apply to applicants who do not have an established record of

successful environmental compliance.

The proposed rule provides that failure to comply with any permit

condition by a permittee who was found not to have established a record

of successful compliance at the time the permit was issued may result

in a regulatory finding that the permittee is unable or unwilling to

comply with the mining and reclamation plan. Further, such a finding

would constitute adequate reason for the regulatory authority to

promptly issue an order for the permittee to show cause why the permit

should not be suspended or revoked.

L. What are Some Examples of how the New Rules Would Treat Different

Applicants?

The following examples illustrate how this rule changes permit

eligibility and permit conditions. Six hypothetical mining companies--

Able, Baker, Austin, Charley, Destiny and Eagle--have applied for

permits to mine. Able, Baker and Austin are denied permits, while

Charley, Destiny and Eagle are issued permits. Charley's and Destiny's

permits have the additional permit conditions described in this

proposed rule, while the permit issued to Eagle does not. Here's why:

1. Able Coal Company has been mining coal for 12 years and has one

outstanding violation from a prior operation. Regardless of Able's

overall compliance record or the number of years the company has been

mining, Able is ineligible for a permit under section 510(c) of SMCRA

until the violation is remedied.

2. Baker Industries has been mining coal for 14 years and has no

outstanding violations; however, a company that Baker controls--

Farthing Coal--does. Under section 510(c), Baker is ineligible for a

permit because it owns or controls an operation with a violation. As

with Able Coal, regardless of Baker's overall compliance record or the

number of years the company has been mining, Baker is ineligible for a

permit under section 510(c) of SMCRA until Farthing's violation is

remedied.

3. Austin Coal has been in operation without compliance problems

for 10 years. Six months ago, Austin was purchased by Owens

Enterprises. John Owens, president of Owens Enterprises, was recently

issued a permanent injunction by a State court prohibiting him from

mining due to numerous environmental problems at a half-dozen Owens

mining operations. Issuing a permit to Austin would be inconsistent

with the state court order in that it would again place John Owens in a

position of control over a mining operation. Austin's application would

be denied.

4. Charley Mining Company has been mining coal for six years

without any compliance problems. However, Charley is controlled by

Fickle Commodities, which has an outstanding violation. Charley would

be eligible for a permit because it does not own or control the

operation with the violation. However, the control that Fickle

exercises over Charley puts Charley at an increased risk of not meeting

all the requirements of its permit. The permit issued to Charley would

be conditioned as described in this proposed rule.

5. Destiny Mining, which began mining operations three years ago,

also has been mining without any compliance problems. Destiny is

controlled by Fathom, Inc., which has no outstanding violations.

Destiny would be eligible for a permit because it does not own or

control any operations with violations. However, despite the good

compliance record of Destiny and the violation-free status of its

controller, the permit issued to Destiny would have to be conditioned

as described in this proposed rule because the company has not yet

accumulated the minimum required five years of successful compliance

experience.

6. Eagle Coal Works also has been mining without any compliance

problems for six years. Eagle is controlled by Frisk Mining, which is

controlled by F&A Enterprises, which is a wholly owned subsidiary of

the Faithful Corporation. None of the owners or controllers--Frisk, F&A

or Faithful--has any outstanding violations. Eagle would be eligible

for a permit because it does not own or control any operations with

violations. Further, because of Eagle's successful compliance record

over a period of at least five years, and the violation-free status of

the three companies that own or control Eagle, the company's permit

would not have the additional permit conditions described in this

proposed rule.

[[Page 70585]]

M. Would This Rule Affect Other Documents That OSM has Published in the

Past?

OSM proposes to incorporate into the regulations the provisions of

the existing Memoranda of Understanding (MOUs) with primacy States

regarding use of the AVS. Thus, requirements for State regulatory

authorities related to ownership and control will be consolidated for

improved clarity and ease of reference. The MOUs have been widely

accepted by the States and OSM as effective mechanisms for working

together in operating and maintaining the AVS.

In addition, as part of today's action, we formally withdraw our

June 28, 1993, proposal (58 FR 34652 et seq.). Our 1993 proposal would

have amended the regulations invalidated by the Appeals Court but, as a

result of the court's decision, has been rendered moot.

N. Would the Rule Affect State Primacy?

In the process of re-evaluating our ownership and control

procedures, and in response to concerns raised during public outreach,

we will be changing the recommendation process that we use in response

to State requests for AVS checks. Currently, when information in the

AVS indicates that the regulatory authority should deny an application,

we review the relevant data to confirm that the recommendation to deny

is based on accurate and recent information. If we do not discover

anything that would call the recommendation into question, we recommend

to the regulatory authority that it deny the permit, except in

instances where the recommendation would be inconsistent with the court

ruling.

A long-standing issue concerning the use of AVS has been our

permitting recommendations to State regulatory authorities. Frequently,

State regulatory authorities were perceived as considering our

recommendations as dictates, rather than as advice, on how States were

to make permitting decisions. While our intent in making

recommendations to States has been to ensure quality control of AVS-

generated information, we believe that a change would help to clarify

our role and the role of the States in permitting. Instead of providing

permit eligibility recommendations, we propose to use AVS to provide a

variety of reports, including ownership and control and violation

reports. State regulatory authorities would then perform their own

analysis of applicants' legal identity information, permit history, and

compliance history and make permitting decisions without an OSM

recommendation.

This revised approach should leave no doubt that it is OSM's

responsibility to operate the AVS and maintain the integrity of the

data in the system, and it is the State's responsibility to decide

whether to issue the permit (of course, OSM would make the permitting

decisions in Federal program States). As with other aspects of the

implementation of approved State programs, this activity would be

subject to our oversight reviews.

Although our policy concerning whether or not to provide

recommendations to regulatory authorities is not established in

regulations, and the change described here would not require any

revision to our regulations, we are mentioning this change here for the

public's information because it arose in large part from the public

outreach process for this rulemaking.

O. How Does OSM Address the Information Collection Burdens of This

Rule?

Sections 773.10, 774.10 and 778.10 address information collection

requirements and the appropriate Office of Management and Budget (OMB)

clearance numbers for each part. We propose to amend these sections by

updating the data in each section and estimating the burden of

complying with the information collection requirements for each

response. The proposal also includes the addresses of OSM and OMB

officials where comments on the information collection requirements may

be sent.

P. What Provisions in SMCRA Authorize These Proposed Changes?

The proposed rules are based on the following sections of SMCRA:

Section 201--Creation of the Office

Section 402--Reclamation Fee

Section 506--Permits

Section 507--Application Requirements

Section 510--Permit Approval or Denial

Section 511--Revision of Permits

Section 518--Penalties

Section 521--Enforcement

III. Discussion of Proposed Rules

This proposal affects the following sections of OSM's current

regulations: Secs. 701.5, 724.5, 773.5, 773.10, 773.15, 773.16, 773.17,

773.18, 773.20, 773.21, 773.22, 773.23, 773.24, 773.25, 774.10, 774.13,

774.17, 778.5, 778.10, 778.13, 778.14, 842.11, 843.5, 843.11, 843.13,

843.21, 843.24, and part 846.

Below is a table listing changes to the rules. We have included it

here to describe briefly where the rules are proposed to be changed,

the nature of the changes, and the intended effect. The table is

arranged in the same sequence as the text of the proposed rule and the

section-by-section description of rule changes, which follows the

table. It is an important cross-reference in identifying provisions

that are proposed to be added, revised, deleted, and moved.

In trying to understand the proposed changes, it is best to start

with the table. For many of the proposed changes, the table will be

sufficient to understand what we are proposing and its intended effect.

For those changes where more explanation is needed, additional

description is included in the discussion of our proposal following the

table. And, to further clarify the proposed changes, we have included

the full text of the regulatory changes at the end of this publication.

BILLING 4310-05-P

[[Page 70586]]

[GRAPHIC] [TIFF OMITTED] TP21DE98.053

[[Page 70587]]

[GRAPHIC] [TIFF OMITTED] TP21DE98.054

[[Page 70588]]

[GRAPHIC] [TIFF OMITTED] TP21DE98.055

[[Page 70589]]

[GRAPHIC] [TIFF OMITTED] TP21DE98.056

[[Page 70590]]

[GRAPHIC] [TIFF OMITTED] TP21DE98.057

BILLING CODE 4310-05-C

Following is the section-by-section description of the proposed

changes to OSM's regulations.

A. Section 701.5--Definitions

We propose ``Applicant/Violator System or AVS'' to mean the

automated information system of applicant, permittee, operator,

violation, and related data OSM maintains to achieve compliance with,

and to implement, the purposes of SMCRA. The amended definition

clarifies the purpose of the computerized system of data and

information in light of the January 31, 1997 Appeals Court decision,

including removing language from the current definition to make it more

consistent with the court's ruling.

We propose ``knowing or knowingly'' to mean that an individual knew

or had reason to know in authorizing, ordering, or carrying out an act

or omission that such an act or omission constituted a violation of the

Act, or a failure or refusal to comply with the Act.

We also propose the related term ``willful or willfully'' to mean

that an individual acted either intentionally, voluntarily or

consciously, and with intentional disregard or plain indifference to

legal requirements in authorizing, ordering or carrying out an action

or omission that constituted a violation of the Act, or a failure or

refusal to comply with the Act.

We propose to define ``knowing'' and ``knowingly'' together, and

``willful'' and ``willfully'' together, and to expand the scope of the

definitions so that they apply to persons in addition to corporate

permittees.

We propose to delete ``willful violation'' from Secs. 701.5 and

843.5. We believe that the definition of ``willful violation'' is

inconsistent with the definition of ``willfully.'' By deleting

``willful violation'' and adding ``willful'' to the definition of

``willfully,'' we intend to make the terms ``willful'' and

``willfully'' consistent in their meaning.

We propose to add ``link to a violation'' to the regulatory

definitions at Sec. 701.5. ``Link to a violation'' is proposed to mean

that a person owning or having the ability to control a proposed

surface coal mining operation has owned or had the ability to control

surface coal mining operations at another site at the time a violation

existed at that operation. In proposing this definition, we emphasize

an important distinction in both coverage and use. It does not cover an

applicant's ownership or control of operations that are in violation of

the Act--a relationship to violations considered in determining permit

eligibility under section 510(c) of the Act. Instead, it covers the

relationship between an applicant and an outstanding violation

[[Page 70591]]

where the two operations share the same controller--a relationship that

we propose should serve as the basis for conditioning a permit once it

is issued. We also propose that a ``link to a violation'' is the basis

for determining the proper means of enforcement to achieve abatement or

correction of an outstanding violation, including alternative

enforcement.

We propose to add ``outstanding violation'' to the regulatory

definitions at Sec. 701.5 to mean a violation notice that remains

unabated or uncorrected beyond the abatement or correction period. The

definition encompasses all violation notices that remain unabated or

uncorrected after all regulatory provisions for abatement or correction

have expired. We propose to define ``outstanding violation'' so that

the regulatory definition coincides with how the term is commonly used

and widely accepted.

We propose ``successful environmental compliance'' to mean having

no outstanding violations and demonstrating consistent abatement and

other correction of violations, payment of civil penalties, and payment

of reclamation fees within the time frames established for abatement

and payment, allowing for administrative due process. We are adding

this definition to Sec. 701.5 to assist regulatory authorities in

making a finding regarding an applicant's or other person's history of

compliance with the Act, State laws, and any other relevant laws,

regulations, or requirements. The definition of ``successful

environmental compliance'', and the provisions proposed at

Secs. 773.15(b)(3), 773.16, and 773.17, are intended to assist

regulatory authorities in making the distinction between persons who

have a record of successful environmental compliance and those who do

not.

We propose ``successor in interest'' to mean a person who applies

to the regulatory authority for approval under a change in an existing

permittee. This change reflects the distinction we propose to make

between those instances of a transfer, assignment, or sale of the

rights granted under a permit that require only approval for a

modification of the existing permit information and where a new permit

is required as a result of a successor in interest.

We intend this change in the definition and the changes in proposed

Sec. 774.17 to be more consistent with the permitting requirements for

a successor in interest in section 506(b) of the Act. Section 506(b) of

the Act requires that the person proposing to continue mining and

reclamation operations under the existing permittee's approved mining

and reclamation plans must apply for a new permit within 30 days of

succeeding to the interests of the existing permittee. The person also

must be able to obtain bond coverage equivalent to the coverage

obtained by the existing permittee.

We propose ``violation notice'' to mean any written notification

from a governmental entity of a violation of the Act or any Federal

regulation issued under the Act, a State program, or any Federal or

State law, or regulation pertaining to air or water environmental

protection in connection with a surface coal mining operation. The

definition includes, but is not limited to: (1) a notice of violation;

(2) an imminent harm cessation order; (3) a failure-to-abate cessation

order; (4) a final order, bill, or demand letter pertaining to a

delinquent civil penalty; (5) a bill or demand letter pertaining to

delinquent reclamation fees; (6) a notice of bond forfeiture where one

or more violations upon which the forfeiture was based have not been

corrected; (7) a notice of bond forfeiture where the cost of

reclamation has exceeded the amount forfeited, or in States with bond

pools, a determination that additional reclamation or reimbursement is

required.

In addition to moving the definition of ``violation notice'' from

Sec. 773.5 to Sec. 701.5, we are proposing several amendments. The

phrase ``delinquent abandoned mine reclamation fees,'' which is in the

current definition, is changed to ``delinquent reclamation fees'' to be

more consistent with language in section 402 of the Act. The definition

also would apply to a notice of bond forfeiture where the cost of

reclamation has exceeded the amount forfeited and, in States with bond

pools, a determination that additional reclamation or reimbursement is

required. This is intended to cover additional circumstances of bond

forfeiture in response to information gathered in the public outreach.

We propose to move the definitions of ``Federal violation notice''

and ``State violation notice'' from Sec. 773.5 to Sec. 701.5.

B. Section 773.5--Definitions

We propose to move each regulatory definition currently contained

in Sec. 773.5, with the exception of ``ownership or control link,''

``owned or controlled'' and ``owns or controls'' to Sec. 701.5. We

propose to eliminate definition the of ``ownership or control link.''

``Ownership or control link'' is too closely associated with the way we

implemented the 1988 ``ownership or control'' and related rules that

the Appeals Court invalidated. Our reasons for proposing to move and

amend the definition of ``owned or controlled'' or ``owns or controls''

to Sec. 778.5 are discussed below, in that section. The net result of

these proposed changes to Sec. 773.5 means is that this section is no

longer required under part 773.

C. Section 773.10--Information Collection

We propose to amend the information collection provision in

Sec. 773.10. Consistent with the Paperwork Reduction Act, we note in

paragraph (a) that the Office of Management and Budget (OMB) has

approved the information collection requirements of this part. The

regulatory authorities will use this information in processing surface

coal mining permit applications. Persons intending to conduct such

operations must respond to obtain a benefit. A Federal agency may not

conduct or sponsor, and a person is not required to respond to, a

collection of information unless it displays a currently valid OMB

control number. The OMB clearance number for this part is 1029-NEW.

In proposed paragraph (b) we estimate that the public reporting

burden for this part will average 34 hours per response, including time

spent reviewing instructions, searching existing data sources,

gathering and maintaining the data needed, and completing and reviewing

the collection of information. Send comments regarding this burden

estimate or any other aspect of these information collection

requirements, including suggestions for reducing the burden, to the

Office of Surface Mining Reclamation and Enforcement, Information

Collection Clearance Officer, Room 210, 1951 Constitution Avenue, NW,

Washington, DC 20240; and the Office of Management and Budget, Office

of Information and Regulatory Affairs, Attention: Interior Desk

Officer, 725 17th Street, NW, Washington, DC 20503. Please refer to OMB

Control Number 1029-NEW in any correspondence.

D. Section 773.15--Review of Permit Applications

At Sec. 773.15, we propose to revise the general requirements to be

consistent with other changes we are proposing today and to include

additional responsibilities for regulatory authorities in reviewing

permit applications. These responsibilities include determining permit

eligibility and requiring information to be accurate and complete. We

also propose to ensure that applicants, and those persons who certify

themselves to be the

[[Page 70592]]

owners and controllers of an applicant, comply with these requirements

in order to obtain a permit for surface coal mining and reclamation

operations.

Paragraph (a)(1) is proposed to be amended by changing the

reference to a hearing in the last sentence from (b)(2) of this section

to part 775. Part 775 provides requirements for administrative and

judicial review of decisions on permits.

Proposed paragraph (a)(3) requires that the regulatory authority

make a determination under proposed Sec. 773.15 as to the eligibility

of every applicant under Sec. 773.16 before an applicant may receive a

permit. Proposed Sec. 773.16 provides for a determination of permit

eligibility and is discussed below.

Proposed paragraph (a)(3)(i) provides that the regulatory authority

must evaluate each application for a permit to determine whether it

contains accurate and complete information to make the finding required

under Sec. 773.15(c)(1).

Proposed paragraph (a)(3)(ii) provides that if, at any time during

the review process, the regulatory authority determines that the

applicant has omitted, or provided inaccurate or incomplete, legal

identity, compliance, or technical information, the regulatory

authority must require the applicant to correct the omission,

inaccuracy, or inconsistency. It also provides that the regulatory

authority may discontinue review of the application until the issue is

resolved. Such failure to provide accurate and complete information

will result in, at a minimum, a delay in the approval of an application

for a permit.

Proposed paragraph (b) requires that the regulatory authority

review each applicant's legal identity information, permit history, and

compliance history. We have restructured and amended the provisions at

Sec. 773.15(b) to enable regulatory authorities to evaluate an

applicant based upon a three-part review. In reviewing the permit

application and deciding whether to place additional conditions on a

permit, the regulatory authority will evaluate the applicant's (1)

legal identity information, (2) permit history, and (3) compliance

history. This evaluation process incorporates the use of investigations

to build a body of findings in the assessment of an applicant's

eligibility.

Proposed paragraph (b)(1), the first part of the permit eligibility

review process, requires the regulatory authority to make an initial

determination whether the applicant's legal identity information

submitted under Sec. 778.13 is accurate and complete based upon the

best information available. Within 30 days after the preliminary

determination that the information is accurate and complete, regulatory

authorities are required to update the relevant records in AVS. The

determination and update of AVS records would have to occur before any

regulatory authority request for applicant compliance reports from AVS

under paragraph (b)(3) in this section. This preliminary determination

should not be confused with the finding the regulatory authority makes

on all information in the permit application under Sec. 773.15(c)(1).

Proposed paragraph (b)(1)(i) requires that, if the regulatory

authority finds that an applicant, permittee, operator, or any owner,

controller, principal, or agent of the applicant, permittee, or

operator has knowingly or willfully concealed information about any

person owning or having the ability to control the applicant,

permittee, or operator, the regulatory authority will follow the

courses of action described in paragraph (b)(1)(i)(A) and (B).

Proposed paragraph (b)(1)(i)(A) requires the regulatory authority

to inform the applicant in writing of the regulatory authority's

finding; request that the applicant, permittee, or operator disclose

all persons owning or having the ability to control the applicant; and

convey to the applicant, permittee, or operator that the information

must be provided to the regulatory authority before it makes a decision

on the application.

Proposed paragraph (b)(1)(i)(B) requires the regulatory authority

to investigate the applicant, permittee, or operator and the

information provided to determine if the request made under paragraph

(b)(1)(i)(A) has been met with full disclosure. This provision is the

first instance where we have incorporated investigation into the review

of permit applications. Investigation is one of the four key elements

of this redesigned approach to our regulatory program, in addition to

permit information, permit eligibility, and alternative enforcement. In

this provision, we intend that the regulatory authority actively

determine whether the applicant, permittee, or operator has complied

with the regulatory authority's request to fully disclose all

relationships under proposed Sec. 778.13.

Proposed paragraph (b)(1)(i)(B)(1) provides that, depending on the

results of the applicant's response to the provision in paragraph

(b)(1)(i)(A) and the investigation under (b)(1)(i)(B), the regulatory

authority may deny approval of the application. We believe that if the

applicant, permittee, or operator fails to comply with the regulatory

authority's request to fully disclose all relationships under proposed

Sec. 778.13, the applicant, permittee, or operator has not complied

with the requirements of Sec. 778.13, and therefore, the application is

incomplete. On that basis, the regulatory authority may elect to deny

approval of the application.

Proposed paragraph (b)(1)(i)(B)(2) provides that, if the regulatory

authority denies the application under paragraph (b)(1)(i)(B)(1), the

regulatory authority may refer the applicant, or owner, controller,

principal, or agent of the applicant, to the Attorney General or

equivalent State office for prosecution under section 518(g) of the Act

and proposed Sec. 846.11 of the regulations.

Proposed paragraph (b)(2), the second part of the permit

eligibility review process, provides for the review of the applicant's

permit history. First, proposed paragraph (b)(2)(i) requires the

regulatory authority to use AVS and any other available databases or

information to review the permit history of the applicant, and that of

any person with the ability to control the applicant. The purpose of

the review is to determine how long they have conducted surface coal

mining operations and whether their conduct is in compliance with

applicable requirements of the Act, Federal regulations and equivalent

State regulations.

Proposed paragraph (b)(2)(ii) provides that an applicant with five

or more years of experience as a permittee or operator of a surface

coal mining operation will not be subject to additional permit

conditions proposed at Sec. 773.18 unless any person with the ability

to control the applicant or the operation is responsible for an

outstanding violation.

In proposed Sec. 773.15, we introduce the concept of considering

past mining experience and placing additional conditions on issued

permits for those applicants lacking successful experience. We propose

that five years is the minimum amount of experience that an applicant

should have in order for a regulatory authority to be reasonably

confident that a surface coal mining and reclamation operation will be

successful and not become a burden to the regulatory authority and the

general public. We propose the experience criterion to provide

regulatory authorities with an indicator of the potential success of a

surface coal mining operation.

Proposed paragraph (b)(2)(iii) provides that, if it appears that

none of the persons identified in the application has any previous

mining experience, the regulatory authority must request that the

applicant affirmatively state that neither the applicant nor any person

owning or having the ability to control

[[Page 70593]]

the proposed operation possesses mining experience. This provision also

requires that the regulatory authority investigate to determine whether

any person other than those identified in the application will control

the proposed operation as either an operator or other controller. As

with paragraph (b)(2)(ii) above, we propose paragraph (b)(2)(iii) to

provide regulatory authorities with an indicator of the potential

success of a surface coal mining operation.

Failed mining operations place increased burdens on State programs

to reclaim such sites. We believe that permittees that fail, and their

owners and controllers, must be required to comply with special

conditions in order to continue to receive approval for additional

permits. We received comments during the public outreach preceding the

development of this proposal that stressed the need for some form of

distinguishing criteria to apply to applicants for permits. It was

suggested that we consider giving an advantage in the permitting

process to applicants with successful compliance records and impose

additional requirements on applicants who do not meet the criteria.

We invite comments on the two criteria proposed here in

Sec. 773.15--five or more years of mining experience and successful

environmental compliance--as well as suggestions for other criteria

that may be used to distinguish among proposed operations that are

likely to be successful and those that are not. We also invite comments

on the criterion proposed in Sec. 773.16--withholding of the

presumption of abatement of a notice of violation--and other

suggestions as to how the distinctions may be implemented. For example,

should the criteria apply to the owners and controllers of applicants

in addition to the applicant itself?

Paragraph (b)(3), the third part of the permit eligibility review

process, provides for the review of an applicant's compliance history.

We propose that this review include a review of violations and an

examination of the applicant's controllers.

Proposed paragraph (b)(3)(i) provides that the regulatory authority

must request a report from AVS on the applicant's history of compliance

with SMCRA for an application for a permit; revision; renewal;

transfer, assignment, or sale of the rights granted under a permit; and

an application from a successor in interest to the rights granted under

a permit. This provision specifies all of the circumstances under which

a review of violations must be conducted and includes each of the

relevant permitting or approval processes. We intend that an applicant

under each of these processes must prove eligible to hold a permit

under the permit eligibility standard of section 510(c) of the Act. In

the case of an application for a renewal of a permit, the burden of

proof to find that an applicant is not eligible under section 510(c)

rests with the regulatory authority, as provided under

Sec. 774.15(c)(2).

Paragraph (b)(3)(i) also would replace OSM's current policy that

requires regulatory authorities to obtain permit eligibility

recommendations on pending applications from AVS through a two-step

process. Currently, the regulatory authority first uses the AVS to

obtain a computer system-generated recommendation of permit

eligibility. Second, to ensure that AVS data is reliable and up-to-

date, OSM reviews the system recommendation and supporting data and

uses AVS to provide a final recommendation to the regulatory authority.

In the future, instead of providing permit eligibility

recommendations, we would use AVS to provide a variety of reports,

including a report on applicants and violations on the operations they

own or control, for use by the regulatory authority in reviewing

applications and permits. Consistent with the principle of State

primacy, regulatory authorities would then perform their own analyses

of an applicant's legal identity information, permit history, and

compliance history, and make permitting decisions based on their

findings without receiving a recommendation from OSM. Our role would be

to administer and operate the AVS and maintain the integrity of the

system data. The State, subject to OSM oversight reviews, would have

full authority in deciding whether to issue a permit. As discussed

below at Sec. 773.15(b)(3)(ii), the AVS report on the compliance

history of the applicant and the AVS report on the applicant's owners

and controllers will be used for distinctly different purposes.

Proposed paragraph (b)(3)(i)(A) provides that the regulatory

authority will rely upon the applicant's compliance history, and the

history of operations owned or controlled by the applicant, to make a

permit eligibility finding under section 510(c) of SMCRA, unless there

is an indication that the history of persons other than the applicant

should be included as well. This provision has been expressly crafted

to reflect the January 31, 1997, ruling in NMA v. DOI. The Appeals

Court ruled that OSM could not apply section 510(c) of the Act to the

individual owners or controllers of an applicant. In other words, OSM

could not deny permits under section 510(c) based upon the violations

of those who controlled the applicant.

In proposed Sec. 773.15, we have provided for regulatory

authorities to obtain compliance history reports on persons in addition

to the applicant for the purposes of determining permit eligibility. As

described in (b)(3)(i)(G) below, when certain persons who own or

control an applicant are, themselves, barred from mining, that

prohibition could be sufficient to warrant denial of the permit

application under provisions other than Sec. 510(c). The regulatory

authority may identify such persons by way of investigation or through

other information available to the regulatory authority.

Proposed paragraphs (b)(3)(i)(B)(1) through (3) provide that if the

applicant, or any surface coal mining operation owned or controlled by

the applicant, has an outstanding violation, the regulatory authority

may not approve the application unless one of the following apply:

the applicant obtains a properly executed abatement plan

or payment schedule that is approved by the regulatory authority with

jurisdiction over the violation;

the violation is in the process of being abated;

the violation is the subject of a good faith

administrative or judicial appeal contesting the validity of the

violation; or

the violation is subject to the presumption of NOV

abatement under proposed Sec. 773.16(b).

In addition, proposed paragraph (b)(3)(i)(C) requires that any

application approved with outstanding violations must be conditioned in

accordance with Sec. 773.17(l).

These provisions describe the actions an applicant must take in

order to obtain approval when the applicant, or an operation owned or

controlled by the applicant, has outstanding violations. ``Outstanding

violation'' is proposed to be defined at Sec. 701.5 and means a

violation notice that remains unabated or uncorrected beyond the

abatement or correction period. A proposed change in the definition of

``violation notice'' will add a new violation type to the more typical

violations under this review process. An applicant will be ineligible

for a permit if the applicant has forfeited a performance bond and has

failed to reimburse the regulatory authority for any costs in excess of

the amount forfeited to achieve full reclamation under the applicable

reclamation standards in Sec. 800.50(d)(1). Similarly, in States with

bond pools--a type of

[[Page 70594]]

bonding where many operators contribute to a combined fund--an

applicant will not be eligible for a permit if a determination is made

that additional reclamation or reimbursement is required beyond any

existing reclamation or the amount contributed to the bond pool by the

applicant. This is intended to provide relief to regulatory authorities

from the harmful effects of bond forfeiture on their programs,

especially from permittees responsible for repeated bond forfeiture. In

instances where States have been required to complete reclamation at an

additional cost to the State, an applicant would not be eligible if it

failed to reimburse the State for the cost of reclamation in excess of

the amount of the performance bond. The provisions proposed here are

based, in part, upon the current regulation at Sec. 773.15(b)(1),

(b)(1)(i), and (b)(1)(ii).

Proposed paragraph (b)(3)(i)(D) is the first of two provisions that

describe circumstances under which an applicant or other person will be

found ineligible to hold a permit. This paragraph provides that OSM

will serve a preliminary finding under 43 CFR Sec. 4.1351 upon an

applicant or operator if (1) the applicant or operator is found to have

owned or controlled mining operations with a demonstrated pattern of

willful violations of the Act and its implementing regulations, and (2)

the violations are of such nature and duration that they result in

irreparable harm to the environment, so as to indicate an intent on the

part of the applicant or operator not to comply with the Act or

implementing regulations.

Proposed paragraph (b)(3)(i)(E) provides that the applicant or

operator may request a hearing under 43 CFR Sec. 4.1350 et seq., with

the Office of Hearings and Appeals within 30 days of receipt of the

preliminary finding. It further provides that, if the applicant or

operator files a request for a hearing under 43 CFR 4.1350 et seq., the

Office of Hearings and Appeals will give written notice of the hearing

to the applicant or operator and must issue a decision within 60 days

of the filing of the request for a hearing.

Proposed paragraph (b)(3)(i)(F) provides that the decision of the

administrative law judge may be appealed to the Interior Board of Land

Appeals under procedures set forth in 43 CFR 4.1271 et seq. within 20

days of receipt of the decision.

We propose this amendment, which is based upon the current

regulation at Sec. 773.15(b)(3), to more fully state the administrative

remedies and due process rights of persons preliminarily found to be

permanently ineligible for a permit. We believe a full description of

the remedies and rights is important because regulatory authorities

should be able to implement the second part of section 510(c) of the

Act to permanently withhold the benefit of a surface coal mining permit

from those persons who have committed the most flagrant violations and

have not made a reasonable attempt to rectify the resulting

environmental damage. However, we also recognize that upholding a

preliminary finding under this proposed provision would have very

serious consequences. We intend to ensure full due process and those

rights are expressly addressed in the implementing regulation.

Proposed paragraph (b)(3)(i)(G) is the second of three provisions

that describe circumstances under which an applicant will be found

ineligible to hold a permit. It provides that an applicant will not be

eligible for a permit if the applicant or anyone proposing to engage in

or carry out operations on the proposed permit has been barred,

disqualified, restrained, enjoined, or otherwise prohibited from mining

under Sec. 773.15(b)(3)(i)(D) or proposed Sec. 846.16 by a Federal or

State court. Proposed Sec. 846.16, civil actions for relief, is

discussed below in part 846.

We cannot deny a permit under section 510(c) of the Act based upon

the violations of an applicant's owners or controllers at other

operations. However, we can and should withhold permit approval if the

person controlling the operation has been barred, disqualified,

restrained, enjoined, or otherwise prohibited from mining by

administrative or judicial decision.

We must seek to protect the benefit to hold a surface coal mining

permit for those persons who have demonstrated compliance with

statutory and regulatory requirements. In cases where a person is

adjudicated to have demonstrated such disregard for the environment

that the person has been barred, disqualified, restrained, enjoined, or

otherwise prohibited from mining, the presence of such a person as an

owner, controller, or agent of an applicant is sufficient basis for

denying the permit. To decide otherwise would result in actions that

would contravene the administrative or judicial decision issued against

such a person.

Paragraph (b)(3)(ii) provides for the examination of the

controllers of the applicant to determine if any controller is

responsible for outstanding violations. The provisions at (b)(3)(ii)

are intended to enable regulatory authorities to compel compliance to

rectify or otherwise resolve outstanding violations. We intend that the

eligibility of its controllers based on outstanding violations will not

impair the eligibility of the applicant. However, we also intend that

regulatory authorities will identify persons who have failed to fulfill

their environmental and debt obligations under the Act and its

implementing regulations.

Proposed paragraph (b)(3)(ii)(A) provides that the regulatory

authority will request a report from AVS to identify whether the owners

or controllers of an applicant are also owners or controllers of a

surface coal mining operation at the time a violation notice was issued

and such violation notice remains outstanding. Unlike the report

required for the applicant, the report required for owners and

controllers will not be used as a basis to determine the eligibility of

the applicant for a permit. Instead, it will be used to identify

whether the owners or controllers of an applicant should be subject to

investigation to determine whether remedial enforcement, including

alternative enforcement actions, are appropriate to compel compliance

with SMCRA and its implementing regulations. This provision establishes

that OSM will no longer provide recommendations regarding the

eligibility of applicants, either from AVS or from our quality

assurance activities. Instead, we will provide reports of organized

information generated from AVS. Regulatory authorities must use this

information to formulate their own determinations.

Proposed paragraph (b)(3)(ii)(B) requires that the appropriate

regulatory authority investigate each person and violation to determine

whether alternative enforcement action is appropriate, as discussed

below under part 846. OSM and the State regulatory authority will make

the appropriate determination or referral for violations under their

jurisdiction and must enter the results of each determination or

referral into the AVS. Paragraph (b)(3)(ii)(B) enables regulatory

authorities to compel the owners and controllers of applicants to

fulfill their environmental and debt obligations where they are found

to be responsible for violations. We believe that regulatory

authorities must still compel compliance from these persons. To

accomplish this, we are amending part 846 to provide for remedies

available to regulatory authorities to compel compliance from the

owners and controllers of applicants who are responsible for

outstanding violations.

[[Page 70595]]

Proposed paragraph (b)(3)(ii)(C) provides that if the regulatory

authority finds that an applicant has less than five years experience

in surface coal mining operations or has owners or controllers that are

linked to outstanding violations, the regulatory authority will

consider the applicant to have insufficient or unsuccessful

environmental compliance and therefore be subject to additional permit

conditions under proposed Sec. 773.18, which is discussed below. We

propose to make clear distinctions between applicants that have

demonstrated successful mining and reclamation experience, compliance

with the Act and regulations, and those applicants that have not. As

indicated above, we are interested in receiving comments specific to

the proposed criteria (less than five years experience; owners or

controllers linked to violations) for distinguishing among applicants

eligible for permit approval in determining which applicants should be

subject to additional permit conditions. We are also interested in

receiving comments on what permit conditions under proposed Sec. 773.18

would be appropriate.

Paragraph (b)(4) is unchanged from the current regulation, except

to correct ``September 30, 1994'' to ``September 30, 2004'' at

Sec. 773.15(b)(4)(i)(C)(1). Paragraphs (c) and (d) are unchanged from

the current regulation.

Proposed paragraph (e) provides for the final compliance review of

an application. It requires that, after an applicant is determined

eligible, but before the permit is issued, the regulatory authority

will review any new information submitted or discovered during the

permit application review. Proposed paragraph (e) further provides

that, no more than three business days before permit issuance, the

regulatory authority must again request a report from AVS on the

applicant's history of compliance to ensure that the applicant is, or

operations owned or controlled by the applicant are, not currently

linked to any outstanding violations. This provision is based, in

principle, on agreements with the States documented in Memoranda of

Understanding (MOU) regarding AVS operation and current OSM policy

regarding the frequency and timing for States to obtain permit

eligibility recommendations prior to making permitting decisions. We

also intend to incorporate other provisions contained in the MOUs that

remain relevant to the regulatory program under this proposal, and

eliminate the need for the MOUs.

This proposal also has the effect of removing the current provision

at Sec. 773.15(b)(2). This regulation refers to the certification of

violation information provided by an applicant under Sec. 778.14. This

certification requirement is proposed to be removed from the

regulations at proposed Sec. 778.14. The current provision also refers

to presumptions. One significant effect of the proposed redesign

approach would be to eliminate the use of presumptions of ownership or

control. We propose to eliminate the concept of the rebuttable

presumption of ownership or control, discussed in more detail at

Sec. 778.5, and the effect of presumptions on permit eligibility,

discussed above at Sec. 773.15(b)(3).

With respect to current Sec. 773.15(b)(2), the regulation is based

upon the presumption of links to violations and is not in conformity

with the conceptual basis of this proposal. The remaining portions of

the current regulation at Sec. 773.15(b)(2) regarding the status of

violations disclosed under Sec. 778.14 and the terms of permit

issuance, have been incorporated into proposed Sec. 773.15(b)(3)(i),

discussed above, and Sec. 773.18, discussed below.

E. Section 773.16--Permit Eligibility Determination

We propose to create Sec. 773.16 to provide for permit eligibility

determinations. These provisions represent the net effect of the

regulatory authority's review of permit applications in the proposed

amendments to Sec. 773.15(b), discussed above in Sec. 773.15.

Proposed paragraph (a) requires that the regulatory authority

determines whether the applicant is eligible based upon the permit and

compliance history of the applicant, operations the applicant owns or

controls, and operations it owned or controlled provided for in

proposed Sec. 773.15(b).

Paragraph (a)(1) further provides that the regulatory authority

will determine whether the application for a permit should be approved

subject to additional permit conditions proposed in Sec. 773.18,

depending upon the applicant's permit and compliance history and the

compliance history of the applicant's owners and controllers. These

permit conditions are in addition to those routinely required of

applicants under Sec. 773.17. These additional conditions would be

required for applicants that either fail to meet either the experience

requirement or whose owners or controllers are found to be responsible

for outstanding violations. We invite comments specifically addressing

the criteria for distinguishing which applicants should be subject to

additional permit conditions and what type of conditions should be

imposed.

Paragraph (a)(2) requires the regulatory authority to send the

applicant written notice if found ineligible. The regulatory authority

will include in the notice the reasons you were found ineligible and

how to challenge a finding on the ability to control a surface coal

mining operation.

Proposed paragraph (b) provides for the presumption of NOV

abatement. The proposed provision states that, in the absence of a

failure-to-abate cessation order, the regulatory authority may presume

that a notice of violation issued under Sec. 843.12 or under a Federal

or State program is being corrected to the satisfaction of the agency

with jurisdiction over the violation where the abatement period for the

notice of violation has not yet expired. Paragraph (b) further provides

that permits approved utilizing the presumption of NOV abatement will

be conditioned as required under proposed Sec. 773.17(l). Paragraph (b)

further provides that the presumption will not apply: (1) if the

abatement period has expired; (2) to applicants subject to additional

permit conditions under proposed Sec. 773.18; (3) where evidence that

the violation is not being abated is either set forth in the permit

application or discovered; or (4) if the notice of violation is issued

for nonpayment of reclamation fees or civil penalties.

Proposed paragraph (b)(3) provides the regulatory authority may not

approve the application unless the applicant meets one of the criteria

addressing the violation under paragraph Sec. 773.15(b)(3)(i)(B).

F. Section 773.17--Permit Conditions

We have established in current regulations permit conditions that

are routinely attached to all approved permits. In this proposal, we

propose to amend paragraphs (h)(1) and (h)(2) and to add new conditions

under paragraphs (i) through (m).

Proposed paragraph (h) provides that within thirty days after a

cessation order is issued under Sec. 843.11, or the State program

equivalent, for operations conducted under the permit, the permittee

must either submit to the regulatory authority updated or corrected

information, current to the date the cessation order was issued, or

notify the regulatory authority in writing that there has been no

change since the submission of such information. This provision applies

except where a stay of the cessation order is granted and remains in

effect.

Proposed paragraph (h)(1) provides that a permittee or operator

must

[[Page 70596]]

provide any new information needed to update or correct information

previously submitted to the regulatory authority under Sec. 778.13(c),

(e), and (g). This amendment is proposed in order to revise the cross-

references to Sec. 778.13. To the extent that provisions at Sec. 778.13

are revised, the cross-references here in Sec. 773.17 are amended.

Proposed paragraph (h)(1)(i) provides that if the information

required in a permit application under Sec. 778.13(c), (e), and (g) has

not been previously submitted to the regulatory authority, it must be

submitted. We propose to amend the current provision such that ``permit

applicant'' is changed to ``permit application''.

We propose to add paragraph (i) to Sec. 773.17. It provides that

the permittee, operator, or another person named in the application as

having the ability to determine the manner in which the surface coal

mining operation would be conducted will be considered the controllers

of the permit.

Paragraph (j) provides that: all controllers are jointly and

severally responsible for compliance with the terms and conditions of

the permit and regulatory program; all controllers are subject to the

jurisdiction of the Secretary of the Interior; and a breach of the

responsibility for compliance with the terms and conditions of the

permit and the regulatory program may result in a controller's

individual liability.

Paragraph (k) provides that regulatory authorities may, at any

time, through investigation, determine that additional persons are

controllers. Paragraph (k) also provides that, after the permit is

issued, if any controllers are identified by the regulatory authority

or added by the permittee or operator, the new controller will be

subject to the requirement to certify under proposed Sec. 778.13(m),

discussed below.

We propose to add this condition to all approved permits to

accomplish several purposes. First, and most notably, all persons named

in an application that have the ability to determine the manner in

which the surface coal mining operation is conducted will be considered

controllers of the permit. Under the redesigned approach, we are

eliminating the use of rebuttable presumptions in the definitions of

ownership and control. The effect of eliminating the use of the

rebuttable presumption is that all persons identified as owners or

controllers, or otherwise identified as having the ability to determine

the manner in which operations are conducted, are all proposed to be

control relationships with respect to the surface coal mining

operation. This means that certification by such persons in an

application will establish their responsibility under the regulatory

program. In addition, persons having the ability to determine the

manner in which surface coal mining operations are conducted, however

they may be identified, are made fully aware that they are subject to

the jurisdiction of the Secretary of the Interior for the purposes of

their compliance with all Federal and State terms and conditions under

which their permit is issued.

Any breach of a controller's responsibility for compliance with the

terms and conditions of the regulatory program may result in individual

liability. We are enabling regulatory authorities to pursue individual

liability through a variety of remedies, including pursuit of the

suspension or revocation of a permit for failure to comply with the

conditions under which a permit is issued, discussed below at proposed

Sec. 846.15.

We propose to add paragraph (l) to Sec. 773.17. It provides that,

as applicable, the permittee or operator must abate or correct any

outstanding violation or payment, absent an administrative or judicial

decision invalidating the violation. This provision conveys to the

owners and controllers of a permittee that issuance of a permit does

not defer the obligation of the permittee or operator to abate or

correct any violation notice that may be outstanding at the time of

permit issuance. This provision applies to applicants that have been

approved for a permit that have also received the benefit of the

presumption of NOV abatement, proposed at Sec. 773.16(b). This

provision is based upon the current regulation at

Sec. 773.20(c)(1)(ii), which is a permit condition. Therefore, we

propose to move the provision from Sec. 773.20(c)(1)(ii) to

Sec. 773.17(l).

We propose to add paragraph (m) to Sec. 773.17. It provides that a

permit will be subject to any other special permit conditions the

regulatory authority determines are necessary to ensure compliance with

the performance standards and regulations.

G. Section 773.18--Additional Permit Conditions

We propose to create Sec. 773.18 to provide for the permit

conditions required of applicants eligible under Sec. 773.15(b) but

that have less than five years experience in surface coal mining

operations or whose controllers are responsible for outstanding

violations and thus, have not demonstrated successful environmental

compliance. These are permit conditions that the regulatory authority

must require of such applicants in addition to the standard permit

conditions provided for in Sec. 773.17. We propose these additional

conditions to enable the regulatory authority to more closely monitor

the operations of permittees with limited surface coal mining

experience and whose owners and controllers have not demonstrated

successful environmental compliance. We believe these permittees are a

higher risk. If their operations are unsuccessful, their reclamation

obligations would default to the regulatory authority. While the higher

risk permittees are entitled to hold a permit under the redesigned

approach, these permittees should be subject to greater scrutiny until

they and their owners and controllers demonstrate their ability to

comply with statutory and regulatory requirements with respect to their

surface coal mining and reclamation operations.

These proposed distinctions among applicants are based on comments

received during the public outreach preceding the development of this

proposal. Certain comments stressed the need for some form of criteria

to distinguish between applicants more likely to succeed and those that

are not. It was suggested that we consider giving an advantage to

applicants with demonstrated successful compliance records in the

permitting process. We invite suggestions for other criteria that may

be used to distinguish between proposed operations that are likely to

succeed and those that are not. Also, we invite comments on how the

proposed criteria should be applied. For example: would the experience

criterion apply to all persons intending to engage in or carry out

surface coal mining operations, including the owners and controllers of

an applicant as well as to the applicant; would the experience

criterion mean five consecutive years; and would the experience of a

parent company count towards the experience of an applicant?

Proposed paragraph Sec. 773.18(a) provides that a permittee's

failure to comply with any additional permit condition provided for in

this section may result in a regulatory finding that the permittee is

unable or unwilling to comply with its mining and reclamation plan.

Paragraph (a) further provides that such a finding constitutes adequate

reason for the regulatory authority to promptly issue an order for the

permittee to show cause why the permit should not be suspended or

revoked under proposed Sec. 846.15.

Proposed paragraph (b) provides that the permittee must pay all

civil penalties assessed under part 845 within 30 days of the date of a

final

[[Page 70597]]

order of the Secretary or State counterpart. While all permitted

operations are expected to pay civil penalties in a timely manner, we

believe that for higher risk operations, untimely payment of civil

penalties is an indicator of the potential lack of success of the

operation.

Proposed paragraph (c) provides that the permittee must take all

possible steps to abate any outstanding violation before the expiration

of the abatement period. As with the payment of civil penalties, all

permitted operations are expected to abate violations in a timely

manner. However, we believe that for higher risk operations, untimely

abatement is another indicator of the potential lack of success of the

operation.

Proposed paragraph (d) provides that the permittee must maintain

continuous and uninterrupted compliance with any provision of an

abatement plan, payment schedule or other settlement agreement. We

readily enter into agreements with permittees, operators, or other

persons to abate violations or to fulfill financial obligations where

they are unable to abate or pay within the required time limits. We

count on the good faith of these persons to adhere to the abatement

plan or payment schedule or other terms of an agreement. In the case of

the higher risk permittee, we believe that a lapse in compliance with

an abatement plan, payment schedule, or other settlement agreement is

yet another indicator of the potential lack of success of the

operation.

H. Section 773.20--Improvidently Issued Permits: General Procedures

Proposed paragraph (a) provides for the permit review. The

provision states that a regulatory authority which has reason to

believe that it improvidently issued a surface coal mining and

reclamation permit must review the circumstances under which the permit

was issued, using the criteria in paragraph (b) of this section.

Paragraph (a) further provides that, when the regulatory authority

finds that the permit was improvidently issued, it must comply with

paragraph (c) of this section. The language is unchanged from the

current regulation.

At paragraph (b), which provides for the review criteria to

determine whether a permit has been improvidently issued, the numerical

identifier (1) in the paragraph is removed. The heading and language of

the current regulation are unchanged.

Paragraph (b)(1)(i) of the current regulation would be re-numbered

(b)(1). The language is unchanged from the current regulation.

Paragraph (b)(1)(i)(A) of the current regulation would be re-

numbered (b)(1)(i) and amended. The phrase ``unabated violation'' would

be changed to ``outstanding violation.'' This change is proposed

because a regulatory definition for ``outstanding violation,'' proposed

at Sec. 701.5, defines a more inclusive set of violations and, as such,

is more applicable to the circumstance described in the provision where

a regulatory authority finds it should not have issued a permit.

Paragraph (b)(1)(i)(B) of the current regulation would be re-

numbered (b)(1)(ii). In addition, we propose to add a provision to

follow (b)(1)(ii) which also describes a circumstance where a

regulatory authority finds it should not have issued a permit.

Therefore, the last word in paragraph (b)(1)(ii) is proposed to be

changed from ``and'' to ``or.''

We propose to add paragraph (b)(1)(iii) to Sec. 773.20 to provide

that the failure of an applicant to disclose in its application any

other relevant information that if properly disclosed at the time of

the initial application would have made the applicant ineligible, is

also cause for a finding that the permit was improvidently issued. We

propose to add this provision to Sec. 773.20 in keeping with the

emphasis placed on permit information. The amendment is also consistent

with the provisions of the MOUs with States regarding AVS operation

that provide for States to require the resolution of inaccurate and

incomplete application information. In this proposal, ``permit

information'' means information required from applicants and

permittees.

Paragraph (b)(1)(ii) in the current regulation would be re-numbered

(b)(2). The language of the provision is unchanged from the current

regulation.

Paragraph (b)(1)(ii)(A) would be re-numbered (b)(2)(i) and amended.

The word ``unabated'' is changed to ``outstanding'' for the same

reasons as stated above in proposed paragraph (b)(1)(i) of this

section.

Paragraph (b)(1)(ii)(B) would be re-numbered (b)(2)(ii). The

language in the provision is unchanged from the current regulation.

Paragraph (b)(1)(iii) would be re-numbered (b)(3). Paragraph (b)(3)

also would be amended. The word ``person'' is changed to ``operation.''

We propose this change because the regulatory definition of ``person''

at Sec. 700.5 includes ``an individual.'' The word ``operation'' is

more in keeping with this proposal's approach to permit eligibility.

Paragraph (b)(2), including paragraphs (b)(2)(i) and (b)(2)(ii),

would be removed from Sec. 773.20. To the extent that Sec. 773.25 is

amended in this proposal and Secs. 773.20(b)(2) and (3) already provide

for the same regulations, we believe the current Sec. 773.20(b)(2) is

an unnecessary duplication of provisions.

We propose to amend paragraph (c) of Sec. 773.20. As discussed

below in the individual provisions within paragraph (c), we propose to

amend existing provisions and to add provisions to address the failure

of an applicant to disclose accurate and complete information. These

revisions address permit information, one of the four key elements of

this proposal.

Proposed paragraph (c)(1) provides that a regulatory authority

which finds that a permit was improvidently issued must use one or more

of the three remedial measures that follow in the succeeding paragraphs

proposed at Secs. 773.20(c)(1)(i) through (c)(1)(iii). Paragraph (c)(1)

is proposed to be amended to remove what we believe to be unnecessary

language from the provision. As a result, proposed paragraph (c)(1) is

more succinct.

Proposed paragraph (c)(1)(i) describes the first remedial measure.

It provides for a plan to abate the violation, or a schedule to pay the

penalty or fee, or that the regulatory authority require the permittee

to correct the inaccurate information or provide the incomplete

information. We propose to amend this provision by removing ``with the

cooperation of the responsible agency, the permittee, and persons owned

or controlled by the permittee'' from the provision. We believe this

language is unnecessary to the provision. Instead, we propose to add

``or require the permittee to correct the inaccurate information or

provide the incomplete information'' at the end of the provision. This

change adds inaccurate or incomplete information to the criteria under

which the regulatory authority may find a permit was improvidently

issued. As with certain other provisions in this proposal, the concept

governing sanctions for providing inaccurate and incomplete information

is based upon provisions contained in the MOUs with State regulatory

authorities regarding the operation of the AVS.

Paragraph (c)(1)(ii) in the current regulation would be removed

from Sec. 773.20. It provides for the imposition of a permit condition

requiring the abatement of the violation or payment of the penalty or

fee. We believe this requirement is more appropriate to the regulations

governing permit conditions. Thus, we have proposed this provision as

Sec. 773.17(j).

Paragraph (c)(1)(iii) in the current regulation would be re-

numbered (c)(1)(ii) and is the second remedial

[[Page 70598]]

measure. Proposed paragraph (c)(1)(ii) is largely a reorganization of

current (c)(1)(iii) and provides that the regulatory authority may

suspend the permit until one or more of three conditions are met. The

three conditions are provided for in proposed paragraph (c)(1)(ii).

Proposed paragraph (c)(1)(ii)(A) provides that permit suspension

will continue until the violation is corrected to the satisfaction of

the regulatory authority or other issuing authority with jurisdiction

over the violation. This provision is essentially a restatement of the

first part of the condition stated in the current paragraph (c)(iii).

Proposed paragraph (c)(1)(ii)(B) provides that permit suspension

will continue until the penalty or fee is paid. This provision is

essentially a restatement of the second part of the condition stated in

the current regulation at paragraph (c)(iii).

Proposed paragraph (c)(1)(ii)(C) provides that permit suspension

will continue until the inaccurate or incomplete information is

corrected or provided. We propose to add paragraph (c)(1)(iii) to be

internally consistent with proposed Secs. 773.20(b)(1)(iii) and

(c)(1)(i) that add inaccurate or incomplete information to both the

reasons for the suspension of a permit and the conditions under which

the suspension could be lifted or terminated.

Paragraph (c)(1)(iv) in the current regulation would be re-numbered

(c)(1)(iii) and is the third remedial measure. Proposed paragraph

(c)(1)(iii) provides that the regulatory authority may rescind the

permit under the provisions in Sec. 773.21, which is also proposed to

be amended. We propose to add the reference to Sec. 773.21 to

specifically reference the permit rescission procedures contained in

that section.

Paragraph (c)(2) of Sec. 773.20 is unchanged from the current

regulation.

I. Section 773.21--Improvidently Issued Permits: Rescission Procedures

We propose to amend the rescission procedures for improvidently

issued permits at Sec. 773.21.

The proposed introductory paragraph at Sec. 773.21 provides that a

regulatory authority which, under Sec. 773.20(c)(1) (iii), elects to

rescind an improvidently issued permit, must serve a notice of proposed

suspension and rescission on the permittee and individuals who have the

ability to control the permittee. The notice must include the reasons

for the regulatory authority's finding under proposed Sec. 773.20(b).

We propose two revisions to the current regulation. We propose to

change the cross-reference from Sec. 773.20(c)(1)(iv) to

Sec. 773.20(c)(1)(iii). We propose to add the phrase, ``and individuals

who have the ability to control the permittee'' to the introductory

paragraph. This proposal is consistent with the redesigned approach

because the individual owners or controllers of an applicant or

permittee that are responsible for outstanding violations will be

treated separately from the applicant or permittee. The notification

provision means that the permittee and the individuals that have the

ability to control the permittee will be served the notice of proposed

suspension and rescission.

Proposed paragraph (a) provides for the automatic suspension and

rescission of a permit. The provision states that, after a specified

period of time, not to exceed 90 days, the permit automatically will

become suspended. Further, not more than 90 days thereafter it would be

rescinded, unless within those periods the permittee submits proof, and

the regulatory authority finds, consistent with the provisions of

Sec. 773.25, that one or more of the provisions in paragraphs (a)(1)

through (a)(4) are met. The current regulation at Sec. 773.21(a) is

unchanged.

Proposed paragraph (a)(1) provides that the regulatory authority

will not suspend or revoke the permit if the finding of the regulatory

authority under Sec. 773.20(b) of this part was erroneous. This

provision is unchanged from the current regulation.

Proposed paragraph (a)(2) provides that the regulatory authority

will not suspend or revoke the permit if the violation has been abated,

the penalty or fee paid, or the information corrected to the

satisfaction of the responsible agency. This provision is proposed to

be amended such that the phrase, ``or the information corrected'' has

been added. As we have previously indicated, the MOUs with States

regarding AVS operation require States to resolve inaccurate and

incomplete application information. Therefore, the amendment proposed

at paragraph (a)(2) is also consistent with our intent to eliminate the

need for the MOUs.

Proposed paragraph (a)(3) provides that the regulatory authority

will not suspend or revoke the permit if the violation, penalty, or fee

is the subject of a good faith appeal, or of an abatement plan or

payment schedule that is being met to the satisfaction of the

responsible agency. This provision in Sec. 773.21 (a)(3) is unchanged

from the current regulation.

Proposed paragraph (a)(4) provides that the regulatory authority

will not suspend or revoke the permit if the permittee and all

operations owned or controlled by the permittee are no longer

responsible for the violation, penalty, or fee, or for providing the

information. In this provision, ``operations'' substitutes for

``persons'' and ``or for providing the information'' is added.

Proposed paragraph (a)(5) provides that the regulatory authority

will not suspend or revoke the permit if the information is subject to

a pending challenge under Sec. 773.24. In this provision, the phrase

``the information is subject to a pending challenge under Sec. 773.24''

is added.

Paragraph (b) provides for the cessation of operations following

permit suspension or rescission and would be amended only slightly from

the current regulation, but it is a meaningful change. The words, ``and

reclamation'' are removed from the activities the permittee must cease

after permit suspension or rescission so that it is clear that

reclamation activities do, in fact, continue following the suspension

or revocation of an improvidently issued permit.

J. Section 773.22--Identifying Entities Responsible for Violations

We propose to withdraw current provisions in Sec. 773.22 in their

entirety and replace them with provisions for identifying entities

responsible for violations. The current provisions in Sec. 773.22 are

centered on presumptions of ownership or control to create links based

on common control between applicants and operations with violations.

Thus, they have no meaning in the proposed redesigned approach to

permit information, permit eligibility, investigation, and alternative

enforcement.

Instead, we propose to use Sec. 773.22 to establish provisions for

regulatory authorities to identify in AVS outstanding violations

attributable to applicants, permittees, and the controllers of surface

coal mining operations. The concept governing the identification of

persons responsible for violations is based upon provisions contained

in the MOUs with State regulatory authorities regarding the operation

of the AVS. By incorporating these provisions into this proposal, we

intend to eliminate the need for the MOUs.

In the introductory paragraph of Sec. 773.22, we propose to make

clear that all persons who own or have the ability to control surface

coal mining operations as a permittee, operator, owner, controller, or

agent have an affirmative duty to comply with the Act, regulatory

program, and approved

[[Page 70599]]

permit. The introductory statement sets the stage for the provisions

that address the alternative to successful environmental compliance. In

Sec. 773.22, we intend to provide for the identification of persons in

AVS that are responsible for violations. In addition, we intend that

OSM and State regulatory authorities are obligated to enter and

maintain in AVS their respective violation information so that the

purposes of the Act may be effectively implemented.

Proposed paragraph (a) provides that OSM or the State regulatory

authority with jurisdiction over the violation will investigate each

outstanding violation of the regulatory program to determine the

identity of those responsible for preventing and correcting the

violation.

Proposed paragraph (b) provides that each owner, controller,

principal, or agent responsible for preventing or ensuring abatement or

correction of the violation will be designated in the AVS as a person

OSM or the State regulatory authority may compel to comply with the Act

and other applicable laws and regulations, as necessary, to correct the

violation. Paragraph (b) is proposed so that persons identified as a

result of the investigation in paragraph (a) are so designated in the

AVS as responsible for the violation.

Proposed paragraph (c) provides that OSM and State regulatory

authorities must enter into AVS all violations issued under the Act or

the regulatory program no more than 30 days after the abatement or

correction period has expired. It further provides that OSM and State

regulatory authorities must maintain the accuracy and completeness of

this information to reflect the most recent changes in status, such as

abatement, correction, termination, and administrative or judicial

appeal. Paragraph (c) is proposed to convey our commitment to maintain

the accuracy and completeness of Federal violation data in AVS and to

require that State regulatory authorities maintain the accuracy and

completeness for State violation data. The integrity of Federal and

State violation data is critical to the effective performance of the

computer system and is therefore critical to our implementation of the

regulatory program.

Proposed paragraph (d) provides that OSM and the State regulatory

authorities must either pursue the appropriate alternative enforcement

action under part 846 against the permittee, operator, or an owner,

controller, or agent, to compel correction of the violation, or make a

determination that referral for alternative enforcement action is not

warranted. Paragraph (d) further provides that the existence of a

performance bond is not the sole basis for a regulatory authority's

determination that alternative enforcement action is not warranted.

Paragraph (d) would enable regulatory authorities, as a result of their

investigation under proposed paragraph (a), to use the proposed

alternative enforcement provisions to make, as appropriate, a

determination under proposed Sec. 846.12, 846.14, or 846.15, or a

referral for prosecution under proposed Sec. 846.11 or 846.16.

K. Section 773.23--Review of Ownership or Control and Violation

Information

We propose to remove the provisions in Sec. 773.23 from our

regulations that provide for the review of ownership or control and

violation information. The current provisions are centered on ownership

or control to create links based on presumptions of common control

between applicants and operations with violations. Insofar as we

propose to revise definitions for ``ownership'' and ``control'' and

eliminate the use of rebuttable presumptions, the current provisions in

this section have no meaning in the proposed redesign.

L. Section 773.24--Procedures for Challenging a Finding on the Ability

to Control a Surface Coal Mining Operation

We propose to revise the provisions at Sec. 773.24 to provide for

challenges to a finding on the ability to control a surface coal mining

operation. We believe that the redesigned approach entitles persons,

under certain conditions, to challenge whether they have the ability to

control a surface coal mining operation. Unlike the current regulations

at Sec. 773.24, the proposed provisions are not centered on the use of

the rebuttable presumption, jurisdiction based upon whether entity

relationships are shown in AVS, ownership or control links, or the

existence of a violation.

To further contribute to the clarity of Sec. 773.24, we propose to

add headings to improve the organization of the provisions. We also

propose to amend the language and to remove references to ``ownership

or control links'' and to add instead ``a finding on the ability to

control a surface coal mining operation.'' The provisions would be

organized under the following headings: (1) who may challenge; (2) how

to submit a written challenge; (3) the issuance of a written decision;

(4) service procedures; (5) the relevant procedures for appeal; and (6)

a limitation on the use of the provisions.

We propose to change the title of Sec. 773.24 from ``Procedures for

challenging ownership or control links shown in AVS'' to ``Procedures

for challenging a finding on the ability to control a surface coal

mining operation.'' The proposed change of the section's title

illustrates the change in the focus of these procedures.

Proposed paragraph (a) provides for who may challenge a finding on

the ability to control a surface coal mining operation. It states that

any person listed as owning or controlling a surface coal mining

operation in a pending permit application, or who OSM or a State

regulatory authority finds as an owner or controller, may, prior to

providing certification under proposed Sec. 778.13(m), challenge the

listing or finding in accordance with paragraphs (b) through (d) of

proposed Sec. 773.25. We propose to change the phrase, ``[a]ny

applicant or other person'' to ``[a]ny person'' for succinctness. The

definition of ``person'' at Sec. 700.5 includes all entities that are

entitled to make use of these procedures.

We propose to amend the current provision to clarify that persons

who wish to challenge a finding on their ability to control a surface

coal mining operation are entitled to do so, either (1) while the

relevant application is pending before the regulatory authority, or (2)

after OSM or the regulatory authority has found that a person has the

ability to control an operation but was not identified to the

regulatory authority either by the applicant or later by the permittee.

We believe that once a person certifies, under proposed Sec. 778.13(m),

to being a controller of the applicant and under the jurisdiction of

the Secretary and the regulatory program, that any attempt to challenge

a finding of control is without merit.

We believe that while an application is pending before the

regulatory authority, a person has sufficient knowledge and opportunity

to challenge its ability to control the proposed operation. In the case

of persons that OSM or the regulatory authority discovers have the

ability to control the operation after a permit is issued, we believe

such persons are entitled to challenge the finding. However, we also

believe that such persons and the permittee are also subject to

investigation, under proposed Sec. 773.15(b)(1)(i), as to the

circumstances surrounding the permittee's failure to disclose the

controller.

Proposed paragraph (b) explains how a person may challenge a

finding on the ability to control a surface coal mining

[[Page 70600]]

operation. It states that any person who wishes to challenge his status

in the application, or a finding that he has or had the ability to

control a surface coal mining operation, must submit a written

explanation of the basis of the challenge to the agency with

jurisdiction over any existing violations, or absent a violation, to

the agency with jurisdiction over the pending application. The written

challenge should be accompanied by supporting evidence and supporting

documents.

Proposed paragraph (c) provides for the agency's written decision

in response to a challenge of a finding on the ability to control a

surface coal mining operation.

Proposed paragraph (c)(1) provides that the agency with

jurisdiction will review any information submitted under paragraph (b)

and will issue a written decision on whether the person filing the

challenge has the ability to control the relevant surface coal mining

operation. Proposed paragraph (c)(1) further provides that the agency

issuing the decision will notify the person and any regulatory

authorities with an interest in the challenge. The agency issuing the

decision is also required to update, as necessary, the relevant

information in AVS. By way of this provision, we intend that the agency

with jurisdiction will issue a written decision, as a matter of record,

on each challenge made under these procedures. In addition, we intend

that each regulatory authority with an interest in the challenge should

receive a copy of the decision. We also intend that the agency issuing

the decision will update AVS, as necessary, should the decision affect

information contained in the computer system. In keeping with our

commitment to maintain the integrity of the system's data, we believe

that it is important to require any necessary updates to the

information in AVS under these procedures.

Proposed paragraph (c)(2) requires that the agency issuing the

decision must serve a copy of the decision on the person by certified

mail, or by any means consistent with the rules governing service of a

summons and compliant under Rule 4 of the Federal Rules of Civil

Procedure, or the equivalent State counterpart. Proposed paragraph

(c)(2) further provides that service will be complete upon delivery of

the notice or of the mail and will not be considered incomplete because

of a refusal to accept.

Proposed paragraph (c)(3) provides for the appeals procedures

afforded to persons who use these procedures. We propose that any

person who is or may be adversely affected by a decision under

paragraph (c)(1) may appeal the agency's decision to the Department of

the Interior's Office of Hearings and Appeals within 30 days of service

of the decision in accordance with 43 CFR Sec. 4.1380 et seq., or the

equivalent State counterparts. Paragraph (c)(3) further provides that

the decision will remain in effect during the pendency of an appeal,

unless temporary relief is granted in accordance with 43 CFR

Sec. 4.1386, or the equivalent State counterpart.

Proposed paragraph (d) provides that a permittee or operator may

not use these procedures to challenge their joint and several liability

to pay reclamation fees under section 402 of the Act. We have proposed

this provision to clarify that challenges to the ability to control a

surface coal mining and reclamation operation does not include the

ability to challenge the joint and several liability of permittees and

operators to pay reclamation fees.

M. Section 773.25--Standards for Challenging a Finding or Decision on

the Ability to Control a Surface Coal Mining Operation

We propose to revise the provisions at Sec. 773.25 to provide

standards for challenging a finding on the ability to control a surface

coal mining operation. We propose to change the title of Sec. 773.25

from ``Standards for challenging ownership or control links and the

status of violations'' to ``Standards for challenging a finding or

decision on the ability to control a surface coal mining operation'' to

be consistent with the redesigned approach.

Proposed paragraph (a) provides that the provisions of Sec. 773.25

apply whenever a person exercises a right, under the provisions of

Secs. 773.20, 773.21, or 773.24 or under the provisions of part 775, to

challenge a decision that he or she has the ability to control a

surface coal mining operation. We are amending paragraph (a) to delete

the reference to Sec. 773.23. Section 773.23 would be deleted from our

regulations as unnecessary within the proposed redesign. The phrase,

``ownership or control link'' is deleted because the definition for the

phrase is proposed to be deleted.

Proposed paragraph (b) provides for agency responsibility in these

provisions. Paragraph (b) includes four subparagraphs as follows.

Proposed paragraph (b)(1) provides that the State regulatory

authority which cites a violation must make a decision on a challenge

to a finding of the ability to control surface coal mining operations

with respect to a State-issued citation. The proposed provision is

based upon the current regulation at Sec. 773.25(b)(1)(i). Current

Sec. 773.25(b)(3) assigns exclusive jurisdiction to OSM for challenges

to information shown in AVS.

We propose to change the focus of the challenge procedures to

whether a person has the ability to control a surface coal mining

operation. In addition, we propose to remove the condition that a

challenge involve a pending application. We believe the standards in

proposed Sec. 773.25 should apply regardless of whether an application

is pending.

Proposed paragraph (b)(2) provides that OSM must make a decision on

a challenge to a finding on the ability to control surface coal mining

operations with respect to Federal violation notices. The proposed

provision is based upon the current regulation at Sec. 773.25(b)(2) but

is restated within the context of a challenge of a person's ability to

control a surface coal mining operation.

Proposed paragraph (b)(3) provides that the regulatory authority

that processed the application or that issued the permit must make the

decision on a challenge to a finding on the ability to control a

surface coal mining operation where there is no outstanding violation.

The proposed provision is based upon the current regulation at

Sec. 773.25(b)(2)(ii), but like proposed (b)(2), it is restated within

the context of a challenge of a person's ability to control a surface

coal mining operation.

Proposed paragraph (b)(4) provides that the State or Federal agency

with jurisdiction over the violation determines whether the violation

has been abated or corrected. The proposed provision is based upon the

current regulation at Sec. 773.25(b)(2)(iv) but is amended to

streamline the language of the current provision.

Proposed paragraph (c) provides for the evidentiary standards that

apply under Sec. 773.25. The evidentiary standards are also found at

paragraph (c) in the current regulation.

Proposed paragraph (c)(1) provides that in any formal or informal

review of a challenge to a finding, the responsible agency will issue a

written decision if it determines that the ability to control exists or

existed during the relevant period. We propose to add this provision to

Sec. 773.25 to expressly require a written decision from the

responsible agency.

Proposed paragraph (c)(2) provides that a person challenging a

finding on his or her ability to control the relevant surface coal

mining operation will have the burden of proving by a preponderance of

evidence, with respect

[[Page 70601]]

to any relevant time period, that he or she did not have the ability to

control the surface coal mining operation. Since we propose to remove

the rebuttable presumption and ``ownership or control link'' from the

regulations, we believe that it follows that the requirement for a

prima facie determination in these standards is no longer necessary.

Proposed paragraph (c)(3) provides that in meeting the burden of

proof set forth in paragraph (c)(2), the person challenging the finding

on his or her ability to control the relevant surface coal mining

operation must present reliable, credible, and substantial evidence and

any supporting explanatory materials. Paragraph (c)(3) further provides

that such evidence and materials submitted to the appropriate

jurisdiction may include those described in the paragraphs that follow.

The proposed provision is based upon the current regulation at

Sec. 773.25(c)(2), but it no longer requires the existence of an

ownership or control link for the reasons previously stated in this

section.

Proposed paragraph (c)(3)(i) provides examples of evidence and

materials that may be submitted to the agency responsible for issuing

the written decision under these provisions.

Proposed paragraph (c)(3)(i)(A) provides that such evidence may

include notarized affidavits containing specific facts concerning the

scope of the duties actually performed by the person; the beginning and

ending dates of the person's control of the applicant, permittee,

operator, or violator; and the nature and details of any transaction

creating or severing the ability to control the applicant, permittee,

operator, or violator. The proposed provision is based on the current

regulation at Sec. 773.25(c)(3)(i)(A) but is restated to be consistent

with proposed provisions.

Proposed paragraph (c)(3)(i)(B) provides that such evidence may

include certified copies of corporate minutes, stock ledgers,

contracts, purchase and sale agreements, leases, correspondence, or

other relevant company records. The proposed provision is based on the

current regulation at Sec. 773.25(c)(3)(i)(B) but is restated to be

consistent with the preceding proposed provisions.

Proposed paragraph (c)(3)(i)(C) provides that such evidence may

include certified copies of documents filed with or issued by any

State, Municipal, or Federal governmental agency. The proposed

provision is based on the current regulation at Sec. 773.25(c)(3)(i)(C)

but is restated to be consistent with the preceding proposed

provisions.

Proposed paragraph (c)(3)(i)(D) provides that such evidence may

include an opinion of counsel when supported by (1) evidentiary

materials; (2) a statement by counsel that he or she is qualified to

render the opinion; and (3) a statement that counsel has personally and

diligently investigated the facts of the matter or, where counsel has

not so investigated the facts, a statement that such opinion is based

upon information which has been supplied to counsel and which is

assumed to be true. The proposed provision is based on the current

regulation at Sec. 773.25(c)(3)(i)(C) but is restated to be consistent

with the preceding proposed provisions.

Proposed paragraph (c)(3)(ii) provides that evidence and materials

presented in proceedings before any administrative or judicial tribunal

reviewing the decision of the responsible agency must be admissible

under the rules of the reviewing tribunal. The proposed provision is

unchanged from the current regulation at Sec. 773.25(c)(3)(ii).

Proposed paragraph (d) provides that, following any determination

by a regulatory authority, or any decision by an administrative or

judicial tribunal reviewing such determination, the regulatory

authority will review the information in AVS to determine if it is

consistent with the determination or decision. Paragraph (d) further

provides that if the regulatory authority finds that the information in

AVS is not consistent with the determination or decision, it will

promptly revise the AVS information to reflect the determination or

decision.

N. Section 774.10--Information Collection

We propose to amend the provisions for information collection in

part 774, Revision, Renewal, and Transfer, Assignment or Sale of Permit

Rights. Consistent with the Paperwork Reduction Act, in proposed

paragraph (a) we note that OMB has approved the information collection

requirements of part 774. Paragraph (a) further provides that this

information will be used by regulatory authorities to determine if the

applicant meets the requirements for revision, renewal, transfer, sale,

or assignment of permit rights and that persons must respond to obtain

a benefit. Paragraph (a) further provides that a Federal agency may not

conduct or sponsor, and a person is not required to respond to, a

collection of information unless it displays a currently valid OMB

control number. The OMB clearance number for this part is 1029-NEW.

In proposed paragraph (b), we estimate that the public reporting

burden for this part will average 32 hours per response, including time

spent reviewing instructions, searching existing data sources,

gathering and maintaining the data needed, and completing and reviewing

the collection of information. Paragraph (b) further provides that

comments regarding this burden estimate or any other aspect of these

information collection requirements, including suggestions for reducing

the burden, may be sent to the Office of Surface Mining Reclamation and

Enforcement, Information Collection Clearance Officer, Room 210, 1951

Constitution Avenue, NW, Washington, DC 20240; and the Office of

Management and Budget, Office of Information and Regulatory Affairs,

Attention: Interior Desk Officer, 725 17th Street, NW, Washington, DC

20503. Please refer to OMB Control Number 1029-NEW in any

correspondence.

We propose to amend Sec. 774.10 to indicate the authority under

which we may require collection of information for part 774. This

section conforms to OMB requirements to publish the estimated time

needed to collect information under certain regulatory provisions. We

invite comments on the estimated average number of hours required to

fulfill the information collection requirements under part 774.

O. Section 774.13--Permit Revisions

We propose to create a paragraph (e) at Sec. 774.13 to provide for

a permittee to report certain ownership or control changes to the

regulatory authority. Proposed paragraph (e) requires a permittee to

report changes of officers, owners, or other controllers where the

permittee is not required to obtain the approval of the regulatory

authority for the change under proposed Sec. 774.17(a)(2). Changes of

persons under proposed Sec. 774.13(e) would not be subject to the

certification provision under proposed Sec. 778.13(m). However, a

permittee must report such a change to the regulatory authority within

60 days after it occurs.

P. Section 774.17--Transfer, Assignment, or Sale of Permit Rights

We propose to amend the provisions at Sec. 774.17, regarding

transfer, assignment, or sale of permit rights. The proposed revisions

include a reorganization of the provisions in this section and various

amendments to the regulatory language. We have found that there is

great variance among the State regulatory authorities in the

implementation of their counterparts to these regulations. In this

proposal, we

[[Page 70602]]

intend to further clarify the use of these regulations, including

distinguishing among those instances where a new permit is required and

those that only require approval for modification of the existing

permit information.

In proposed Sec. 774.17, we have incorporated the effect of the

change in the definition of ``successor in interest'' proposed in

Sec. 701.5. We believe that the proposed definition and the

corresponding procedural changes proposed here in Sec. 774.17(d)

conform more to the statutory requirements for a successor in interest

at section 506(b) of SMCRA. Section 506(b) of SMCRA covers the

conditions under which a successor in interest may continue mining

operations on an approved permit. Section 506(b) requires that the

successor in interest obtain bond coverage and apply for a new permit

within 30 days of succeeding to the interest of an existing permittee.

The procedural change incorporates additional requirements, notably the

permit eligibility requirements proposed at Secs. 773.15 and 773.16,

and the information and certification requirements proposed at

Secs. 778.13 and 778.14.

The proposed heading at paragraph (a), and paragraphs (a)(1) and

(a)(2) that follow are newly-proposed provisions. As indicated above,

we propose to add these provisions to Sec. 774.17 to further clarify

who must obtain approval of a transfer, assignment, or sale of permit

rights.

Proposed paragraph (a) contains two significant changes. First, it

seeks to resolve the identity of the applicant in the case of a

transfer, assignment, or sale of permit rights. We believe that the

permittee has the obligation to obtain the approval of a transfer,

assignment, or sale of permit rights whenever there is a change in

ownership or other effective control over the right to conduct surface

coal mining operations under a permit issued by the regulatory

authority. Second, although all changes in legal identity or

identification of interests require notification to the regulatory

authority under proposed Sec. 774.13(e), only those changes that

require certification under proposed Sec. 778.13(m) will require

written approval from the regulatory authority under this section.

Proposed paragraph (a)(1) provides that the permittee is always the

applicant for a transfer, assignment, or sale of rights granted under a

permit. The proposed provision further provides that the permittee has

the burden of establishing that the application for transfer,

assignment, or sale of permit rights complies with the requirements of

the regulatory program.

Proposed paragraph (a)(2) provides that the permittee must obtain

approval of a transfer, assignment, or sale of permit rights. We

believe that a change or addition of an operator, officer, owner,

controller, permittee, or other person on a permit constitutes a change

of the rights granted under that permit. The permittee must obtain

approval of any transaction for a transfer, assignment, or sale of

permit rights, by which the rights granted under a permit are

transferred, assigned, or sold for any length of time, to a person not

identified on the currently approved permit. The requirement for

approval only applies for those whom certification under proposed

Sec. 778.13(m) will be required.

Proposed paragraph (b) specifies what information is required in

the application for a transfer, assignment, or sale. We propose to

create a heading for paragraph (b) to identify these provisions.

Proposed paragraph (b) provides that the permittee must provide the

regulatory authority with an application for approval of the proposed

transfer, assignment, or sale. As proposed, the application must

include the information specified in the four paragraphs that follow.

This provision is proposed as a consolidation and amendment to the

current regulation at Secs. 774.17(b), (b)(1), and (b)(3).

Proposed paragraph (b)(1) provides that the name and address of the

existing permittee and the relevant permit number must be provided in

the application. This provision is proposed as an amendment to the

current regulation at Sec. 774.17(b)(1)(i). The phrase, ``or other

identifier'' is proposed to be deleted because we believe that for the

transfer, assignment, or sale of rights granted under a permit, an

identifier other than the permit number is irrelevant.

Proposed paragraph (b)(2) provides that a brief description of the

proposed action requiring approval must be provided in the application.

This provision is in the current regulations at Sec. 774.17(b)(1)(ii).

The proposed language is unchanged from the current provision.

Proposed paragraph (b)(3) provides that the legal, financial,

compliance, and related information and violation information required

under Secs. 778.13 and 778.14 for the person(s) proposed to receive

permit rights by way of transfer, assignment, or sale must be provided

in the application. This provision is the current regulation at

Sec. 774.17(b)(1)(iii) and is proposed to be amended. We propose to

amend `` Part 778'' to ``Secs. 778.13 and 778.14.'' We propose to amend

``applicant for approval'' to ``person(s) proposed to receive permit

rights by way of.'' The latter change is proposed to be internally

consistent within the context of the provisions proposed in paragraph

(a).

Paragraph (b)(4) provides that the application contain the bonding

company's written acceptance of those proposed to gain permit rights.

Paragraph (b)(4) is proposed as a new provision. This change is based

on comments received from bonding companies during the outreach phase

of this rulemaking.

The proposed heading and provisions for proposed paragraph (c) are

newly-created. This section explains how the regulatory authority will

review and approve applications for a transfer, assignment, or sale of

permit rights. We are proposing that, as with all other permitting

processes, approval of a transfer, assignment, or sale of permit rights

should require a written finding by the regulatory authority and should

be subject to the permit eligibility review requirements proposed in

Secs. 773.15 and 773.16. We propose to remove prior approval from the

requirements under these procedures. Based upon our experience with

this regulation, we believe that to require prior written approval of a

transfer, assignment, or sale of permit rights is unnecessary. In most

cases the change would have already occurred prior to the request for

regulatory authority approval. The provisions in paragraph (c) also

reflect the incorporation of concepts in related provisions proposed at

part 846 into the procedures for transfer, assignment, or sale of

permit rights.

Proposed paragraph (c)(1) provides that the regulatory authority

must issue a written finding either approving or denying the transfer,

assignment, or sale.

Proposed paragraph (c)(2) provides that the regulatory authority

must evaluate each proposed transfer, assignment, or sale to determine

whether a new permit or bond is required pursuant to the regulatory

program requirements.

Proposed paragraph (c)(3) provides that the regulatory authority

must add the conditions specified in proposed Sec. 773.18 to the

permit, if the transfer, assignment, or sale is to owners or

controllers responsible for outstanding violations.

Proposed paragraph (c)(4) provides that the regulatory authority

must not approve the transfer, assignment, or sale if applicant is

ineligible for a permit under proposed Secs. 773.15(b)(2) or 773.16.

[[Page 70603]]

Proposed paragraph (c)(5) provides that the regulatory authority

must not approve the transfer, assignment, or sale if the proposed

recipient is enjoined or otherwise prohibited from mining under

Sec. 846.16 or by a Federal or State court.

Proposed paragraph (d) provides for the procedures governing a

successor in interest. The provisions in paragraph (d) and paragraphs

that follow are based upon the current regulations at Secs. 774.17(c),

(d), and (f). However, the proposed provisions in paragraph (d) also

reflect revisions based on what we believe conforms more with the

requirements of section 506(b) of SMCRA.

Proposed paragraph (d)(1) requires a successor in interest to apply

for and obtain a new permit in instances where the current permittee

gives up all rights granted under the existing permit. It further

requires that an existing permittee cannot give up all of its rights

granted under a permit until the successor in interest is approved by

the regulatory authority. Section 506(b) of the Act requires that a

successor in interest obtain a new permit. We therefore propose to add

this requirement in these procedures.

Proposed paragraph (d)(2) consists of the requirements a successor

in interest must meet to continue operations under the existing permit.

Paragraph (d)(2) is largely based upon the current regulation at

Secs. 774.17(d) and (f). In order to continue operations, all of the

requirements must be met.

Proposed paragraph (d)(2)(i) provides that the existing permittee

must first obtain written approval of the transfer, assignment, or sale

to allow for the successor to continue operations for the 30 days

pending submittal of a new permit application. The transfer,

assignment, or sale application from the permittee and the items

required from the successor under (d)(2)(i) can be submitted at the

same time and processed simultaneously by us. The application and

information may have to be submitted and processed rapidly to allow for

continued uninterrupted operations.

Proposed paragraph (d)(2)(i)(A) requires that the successor submit

the legal, financial, compliance, and related information and violation

information required under Secs. 778.13 and 778.14.

Proposed paragraph (d)(2)(i)(B) requires that the successor submit

a performance bond, or proof of other guarantee, or obtain the bond

coverage of the original permittee, as required by Subchapter J.

Proposed paragraph (d)(2)(i)(C) requires the successor submit a

signed and notarized written statement assuming the liability and

reclamation responsibilities of the existing permit.

Proposed paragraph (d)(2)(ii) provides that we will review the

information submitted by the successor under paragraph (d)(2)(i)(A) of

this section using the criteria in Secs. 773.15(b)(2) and 773.16 of

this Subchapter.

Paragraph (d)(2)(iii) provides the requirements that if the

successor receives preliminary written approval, they may conduct

mining operations for up to 30 days.

Proposed paragraph (d)(2)(iii)(A) requires that the successor must

conduct the surface coal mining and reclamation operations in full

compliance with the Act and the regulatory program.

Proposed paragraph (d)(2)(iii)(B) provides that the successor must

conduct the surface coal mining and reclamation operations under the

terms and conditions of the existing permit and any additional terms or

conditions that may be imposed by us.

Proposed paragraphs (d)(2)(i)(C), (d)(2)(iii)(A), and

(d)(2)(iii)(B) are based on the current provision at Sec. 774.17(f).

They have been separated here for clarity. The language in the proposed

provisions is basically unchanged from the current regulation.

Proposed paragraph (d)(2)(iii)(C) provides that the successor must

meet any other requirement specified by the regulatory authority.

Proposed paragraph (d)(2)(iii)(D) provides that the successor in

interest must submit an application for a new permit within 30 days of

succeeding to the interests of an existing permittee.

Proposed paragraph (d)(2)(iv) provides that if the successor

submits a complete permit application within 30 days of succeeding to

the existing permittee's interest and meets the other requirements

under paragraph (d)(2(iii), then the successor can continue operations

until we make the decision to either approve or deny the application

for a permit. If we deny the successor's permit application, then the

successor must cease operations.

Proposed paragraph (d)(3) is amended from the current provision at

Sec. 774.17(b)(2). The change means that the advertisement requirements

will only apply to a successor in interest. Persons subject to a

transfer, assignment, or sale of rights granted under a permit will no

longer be required to advertise such a change.

Proposed paragraph (d)(4) is based upon the current provision at

Sec. 774.17(c). The effect of incorporating this requirement into

paragraph (d) is that public participation is limited to situations

involving a successor in interest.

Proposed paragraph (d)(5) provides that the previous permittee will

not be released from responsibilities for any affected area or

disturbed area of the permit unless the successor engages in surface

coal mining operations which affect or disturb previously affected or

disturbed areas and the regulatory authority approves the successor's

application for a new permit. Paragraph (d)(5) further provides that,

until the successor's application for a new permit is approved, both

the previous permittee and its successor will be responsible for

violations created after the successor begins surface coal mining

operations, but prior to the approval of the new permit. We propose to

add this provision to ensure that the permit is protected under the

regulations until the successor is approved as the new permittee. We

believe that it is extremely important that both the previous permittee

and the successor understand their environmental obligations under

these regulations.

Proposed paragraph (d)(6) provides that the successor in interest's

replacement bond should not form the basis for the release of the

previous permittee's bond. We propose to add this provision to be

consistent with the requirements for the release of a performance bond

under Sec. 800.40. We believe that bond release is a separate

consideration from the eligibility of a successor and the issuance of a

new permit. Therefore, the previous permittee would remain under the

Secretary's jurisdiction until the permitted operation has been

substantially re-disturbed or affected by the successors' operations.

The regulatory authorities will continue to pursue compliance from the

correct party that it finds responsible for creating any violations on

the permitted area.

Proposed paragraph (e) provides for the notification procedures

that apply to Sec. 774.17. Proposed paragraph (e)(1) provides that the

regulatory authority must notify the permittee and the successor, the

new operator, or other person gaining permit rights and commenters of

its findings. This provision is based upon the current provision at

Sec. 774.17(e)(1) and is amended to be consistent with other proposed

provisions in Sec. 774.17.

Proposed paragraph (e)(2) provides that the person must immediately

provide notice to the regulatory authority when the transfer,

assignment, or sale of permit rights is complete. The proposed language

is based upon the current provision at Sec. 774.17(e)(2).

[[Page 70604]]

Proposed paragraph (e)(3) provides that the regulatory authority

must update the relevant records in the AVS with the approved transfer,

assignment, or sale or successor in interest information within 30 days

of approval. We propose this mechanism to ensure that the information

in AVS is current.

Q. Section 778.5--Applicability and Definitions

We propose to amend and reorganize the current definition of

``owned or controlled'' and ``owns or controls.'' We propose separate

definitions for ``ownership'' and ``control'' and would move the

definitions from Sec. 773.5 to Sec. 778.5. We believe that the proposed

concepts of ownership or control are similar to the current definition,

but that reorganizing ``ownership'' and ``control'' into separate

definitions will improve clarity and provide a greater understanding of

the various circumstances that meet the definitions.

We have concluded that we should clarify the definitions and better

define who must be disclosed in an application. This change would more

appropriately support the permit information requirements of our

regulations in part 778, which in turn, support the requirements under

section 507 of the Act.

This proposal will eliminate the use of the rebuttable presumption

as it is applied to the current definition of ``owned or controlled''

and ``owns or controls'' and as it is used in various procedures that

we propose to amend. A rebuttable presumption is where OSM's current

definition of ``owns or controls'' presumes that a type of

relationship, an officer for example, is able to control the surface

coal mining operation. In our example, an officer may challenge or

rebut the presumption of control under existing procedures at

Secs. 773.24 and 773.25.

We believe that the emphasis on accurate and complete information

and the mechanisms for investigation and alternative enforcement

reflected in this proposal render the rebuttable presumption

unnecessary under this proposal's redesigned approach to permit

information and permit eligibility. Those persons that certify in an

application under proposed Sec. 778.13(m) that they have the ability to

control the operation and are under the Secretary's jurisdiction for

compliance have established the basis of their responsibility. In this

proposal at Sec. 773.15(b), we have given regulatory authorities the

ability to identify persons who have the ability to control the surface

coal mining operation that have not been identified in an application.

However, we have retained amended procedures for persons to challenge a

finding on their ability to control a surface coal mining operation at

Sec. 773.24 in order to protect the due process rights of such persons.

Taken together, we believe these amendments eliminate the need of the

rebuttable presumption of ownership or control. Accordingly, we propose

to create new Sec. 778.5 and to provide for the separate definitions of

``ownership'' and ``control'' in this new section within part 778,

which provides for the information required from applicants and

permittees.

We propose ``ownership'' to mean holding an interest in a sole

proprietorship, being a general partner in a partnership, owning 50

percent or more of the stock in a corporation, or having the right to

use, enjoy, or transmit to others the rights granted under a permit.

We propose ``control'' to mean to own, manage, or supervise surface

coal mining and reclamation operations, as either a principal or an

agent, such that the person has the ability, alone or in concert with

others, to influence or direct the manner in which surface coal mining

and reclamation operations are conducted.

We do not propose to provide an exhaustive list of persons who

would be covered under the proposed definition of ``control.'' However,

we propose to include in the regulation at Sec. 778.5, that persons who

engage in or carry out surface coal mining and reclamation operations

as an owner or controller, include, but are not limited to: (1) the

president, other officers, directors, agent or person performing

functions similar to a director; (2) those persons who have the ability

to direct the day-to-day business of the surface coal mining operation;

(3) the permittee or an operator, if different from the permittee; (4)

partners in a partnership, the general partner in a limited

partnership, or the participant(s), member(s), or manager(s) of a

limited liability company; (5) persons owning the coal (through lease,

assignment, or other agreement) and retaining the right to receive, or

direct delivery of, the coal; (6) persons who make the mining

operations possible by contribution (to the permittee or operator) of

capital or other resources necessary for mining to commence or to

continue operations at the site; (7) persons who control the cash flow

or can cause the financial or real property assets of a corporate

permittee or operator to be employed in the mining operation or

distributed to creditors; and (8) persons who cause operations to be

conducted in anticipation of their desires or who are the animating

force behind the conduct of operations.

At (6), examples of resources include a personal guarantee to

obtain the reclamation bond, the assumption of responsibility for the

liability insurance, a captive coal supply contract, and mining

equipment.

At (8), ``persons who cause operations to be conducted in

anticipation of their desires'' is consistent with the holding in S & M

Coal Co. and Jewell Smokeless Coal Co. v. OSMRE, 79 IBLA 350 (1984).

Also at (8), ``persons who are the animating force behind the conduct

of operations'' is consistent with the holding in Citronelle-Mobile

Gathering, Inc. v. Herrington, 826 F.2d 16 (Temp. Emer. Ct. App. 1987),

cert. denied sub nom Chamberlain v. United States, 108 S.Ct. 327

(1987).

Those who engage in or carry out surface coal mining operations by

owning or controlling the manner in which mining operations are

conducted are clearly within the Secretary's regulatory jurisdiction

under sections 506(a) and 510(c) of SMCRA. However, not everyone who

``engages in or carries out surface coal mining operations'' under

section 506(a) of the Act needs to be identified in an application. The

proposed definitions of ``ownership'' and ``control'' create a clear

distinction between employees of mining operations and those who

``engage in or carry out mining operations'' by owning, controlling, or

influencing the manner in which mining operations are conducted. A

broad class of persons, including employees, falls under the

jurisdiction of the Secretary of the Interior. However, as proposed

under this redesigned regulatory concept, we would only require a

permit application to identify those who engage in or carry out mining

operations as owners or controllers, and not employees per se.

Requiring the disclosure in an application of all those who engage in

or carry out surface coal mining operations as owners or controllers is

critical under the redesigned approach.

There is a valid reason for making this regulatory distinction

between the different types of persons and business entities who engage

in or carry out mining operations. Employees, as opposed to the owners

and controllers of mining operations, have few responsibilities under

the Act other than to refrain from intentional violations. See section

518(e) of SMCRA. On the other hand, persons who can influence the

manner in which mining operations are conducted have much broader

duties and responsibilities under the Act. Therefore, it is more

important that those who can directly control or

[[Page 70605]]

indirectly influence mining operations be identified in a permit

application.

The failure of the current regulation to require the identification

in an application of persons who own, control, or influence mining

operations has resulted in regulatory authorities expending significant

resources to investigate and identify those who have breached their

responsibilities under the Act. Additionally, many persons who engage

in or carry out mining operations by owning or controlling mining

operations do so without a clear understanding of their personal

responsibilities under SMCRA. All persons who engage in or carry out

mining operations as owners or controllers should recognize that

breaches of their personal duties and obligations place their personal

assets at risk under SMCRA, its implementing regulations, and the case

law interpreting those statutory and regulatory provisions. The

proposed definitions of ``ownership'' and ``control'' will put those

persons and entities who fall within the definitions on express notice

that they have personal duties and obligations under SMCRA.

R. Section 778.10--Information Collection

We propose to amend the provisions for information collection in

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

Financial, Compliance, and Related Information. Consistent with the

Paperwork Reduction Act, in proposed paragraph (a) we note that OMB has

approved the information collection requirements of part 778. Section

507(b) of SMCRA is the authority for regulatory authorities to require

that persons applying for a permit to conduct surface coal mining and

reclamation operations must submit certain information regarding the

applicant and affiliated entities, their compliance status and history,

property ownership and other property rights, right of entry, liability

insurance, the status of unsuitability claims, and proof of publication

of a newspaper notice. Paragraph (a) further provides that the

regulatory authority uses this information to ensure that all legal,

financial and compliance requirements are satisfied prior to issuance

of a permit and the persons seeking to conduct surface coal mining

operations must respond to obtain a benefit. Paragraph (a) finally

provides that a Federal agency may not conduct or sponsor, and a person

is not required to respond to, a collection of information unless it

displays a currently valid OMB control number and that the OMB

clearance number for this part is 1029-0034.

In proposed paragraph (b), we estimate that the public reporting

and record keeping burden for this part averages 25 hours per response,

including time spent reviewing instructions, searching existing data

sources, gathering and maintaining the data needed, and completing and

reviewing the collection of information. Send comments regarding this

burden estimate or any other aspect of these information collection and

record keeping requirements, including suggestions for reducing the

burden, to the Office of Surface Mining Reclamation and Enforcement,

Information Collection Clearance Officer, 1951 Constitution Avenue, NW,

Washington, DC 20240; and the Office of Management and Budget, Office

of Information and Regulatory Affairs, Attention: Interior Desk

Officer, 725 17th Street, NW, Washington, DC 20503. Please refer to OMB

Control Number 1029-0034 in any correspondence.

We propose to amend Sec. 778.10 to indicate the authority under

which we may require collection of information for part 778. This

section conforms to OMB requirements to publish the estimated time

needed to collect information under certain regulatory provisions. We

invite comments on the estimated average number of hours required to

fulfill the information collection requirements under part 778.

S. Section 778.13--Legal Identity and Identification of Interests

We propose to amend the provisions governing the required

disclosure of information by applicants. We tried to provide for the

complete range of information regulatory authorities may require from

applicants. At Sec. 778.13, we first propose to amend the title of the

section to ``legal identity and identification of interests.'' We

propose this change to clarify that the information requirements of

Sec. 778.13 include both the information that identifies various

interests of an applicant and the legal identity of the applicant. The

change also emphasizes the importance of full disclosure of the

applicant's identity and the identity of those who engage in or carry

out surface coal mining operations as owners and controllers to the

review of an application under the provisions of proposed

Secs. 773.15(b)(1) and (b)(3)(ii).

We also propose in Sec. 778.13 to make the disclosure of the

information required in Sec. 778.13 easier for applicants that have

existing or previous permits by using the technology afforded by AVS.

Those applicants may provide the information required under Sec. 778.13

by certifying that the information contained in AVS at the time of

application is accurate and complete. This provision substantially

reduces the information collection burden for such applicants.

Moreover, we expect regulatory authorities may also reduce their review

of the certified information under Sec. 778.13.

We also propose to amend the provisions at Sec. 778.13 to require

applicants to disclose the identity of any operator, known at the time

of application, that is different from the applicant. We propose that

the applicant provide not only the identity of the operator, but of

those who engage in or carry out surface coal mining operations as the

operator's owners and controllers. The entire Sec. 778.13 is proposed

here, including parts of the regulation that we are not proposing to

change, so that the section may be viewed in its entirety. As discussed

below, there are certain individual provisions for which no substantial

changes is proposed, but that have been re-numbered to accommodate

additional provisions.

We propose in the introductory paragraph of Sec. 778.13 that an

application must contain the information specified in proposed

paragraphs (a) through (n), unless the applicant has existing permits,

in which case certification under proposed paragraph (o) also applies.

Proposed paragraph (a) requires that an application contain a

statement as to whether the applicant is a corporation, partnership,

single proprietorship, association, or other business entity. This

provision is unchanged from the current regulation.

Proposed paragraph (b) requires that an application contain the

name, address, telephone number, and taxpayer identification number of

(1) the applicant, (2) the applicant's resident agent who will accept

service of process, (3) the operator (if different from the applicant),

(4) person(s) responsible for submitting the Coal Reclamation Fee

Report (OSM-1) and for remitting the reclamation fee payment to OSM,

and (5) the identity of all other persons who will engage in or carry

out surface coal mining operations as an owner or controller on the

permit.

We propose three amendments in paragraph (b). First, we would

delete reference to the voluntary submission of social security numbers

for individuals. Instead, we will require a taxpayer identification

number for each person identified in the provision. We would amend this

provision under the authority of the Debt Collection

[[Page 70606]]

Improvement Act of 1996. The effect of this statute is that if a person

wishes to conduct business with the Federal Government, then the person

must supply its taxpayer identification number. Taxpayer identification

number means the social security number for individuals and the

employer identification number for businesses.

Second, we propose to amend ``resident agent'' to ``resident agent

who will accept service of process.'' We propose this change because we

believe the principal function of a resident agent is to receive

communications for a company that is domiciled in a State apart from

where it conducts business. We also believe that it is important not to

confuse a company's resident agent with those individuals who both

represent the interests of the company and have the ability to control

the company, and who are therefore agents of the company.

Third, we would require the identity of all persons who will engage

in or carry out surface coal mining operations as owners or controllers

on the proposed permit. We believe that the applicant has the

responsibility to provide this information.

As indicated by way of the provisions proposed below in paragraphs

(c), (e), (f), (g), and (m), there are certain inescapable obligations

on the part of the applicant and those persons who propose to engage in

or carry out surface coal mining operations. One such obligation is the

full disclosure of persons having the ability to control the surface

coal mining and reclamation operation. Therefore, the regulatory

authority should have the ability to take certain actions if persons

having the ability to control the operation are not identified in an

application or later by the applicant or permittee, but instead, are

later discovered by OSM or the State regulatory authority.

We propose that OSM and the regulatory authority take such actions

against the permittee, persons identified in the application, and

persons not identified in the application, for failure to fully

identify the applicant or permittee. They should be subject to a range

of sanctions, including those provided for in section 521(c) of the Act

and proposed at Sec. 846.16.

Proposed paragraph (c) requires that the information required in

paragraphs (c)(1), (c)(2), and (c)(3).

Proposed paragraph (c)(1)(i) requires each person's name, address,

and taxpayer identification number. We propose to amend the current

provision to delete the language for the voluntary submission of an

individual's social security number. As explained above ``taxpayer

identification number

This text is long and has been trimmed here. Open the source document for the complete record.