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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A98-33620

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** December 21, 1998
- **Citation:** 63 FR 70580

## Text

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.

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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 de

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-33620. Public record. Not legal advice.