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

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: December 19, 2000 (Volume 65, Number 244)]
[Rules and Regulations]
[Page 79581-79672]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19de00-16]

[[Page 79581]]

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Part III

Department of the Interior

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Office of Surface Mining Reclamation and Enforcement

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30 CFR Parts 701, 724, et al.

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

[[Page 79582]]

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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

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

RIN 1029-AB94

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

AGENCY: Office of Surface Mining Reclamation and Enforcement, Interior.

ACTION: Final rule.

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SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement
(OSM), are publishing final rules to amend application and permit
information requirements and to redesign permit eligibility criteria
under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or
the Act), as amended. In this final rule, we are also amending related
provisions in our regulations to incorporate changes for internal
consistency. This rule fulfills our April 21, 1997, commitment to
undertake new rulemaking, including public notice and comment, on
ownership and control and related regulatory issues in the wake of the
January 31, 1997, decision of the United States Court of Appeals for
the District of Columbia Circuit.
This final rule also reflects the findings in another decision of
the United States Court of Appeals. On May 28, 1999, the appeals court
issued a ruling shortly after the initial close of the comment period
for the proposed rule upon which this final rulemaking is based. We
later found it advisable to reopen and extend the comment period in
order to seek public comment on the effects of the May 1999 decision.
As a result, we modified the provisions in this final rule in order to
be consistent with the 1999 decision. Thus, this final rule is fully
consistent with both court decisions.

EFFECTIVE DATE: January 18, 2001.

FOR FURTHER INFORMATION CONTACT: Earl D. Bandy, Jr., Office of Surface
Mining Reclamation and Enforcement, Applicant/Violator System (AVS)
Office, 2679 Regency Road, Lexington, Kentucky 40503. Telephone: (859)
260-8427 or (800) 643-9748. Electronic Mail: ebandy@osmre.gov.
Additional information concerning OSM, this rule, and related documents
may be found on OSM's Internet home page (Internet address: http://
www.osmre.gov) and on our AVS Office's Internet home page (Internet
address: http://www.avs.osmre.gov).

SUPPLEMENTARY INFORMATION:

Table of Contents

I. What events precipitated this rulemaking?
II. How did we obtain and consider public input to assist in
developing this final rule?
III. How does the final rule differ stylistically from the proposed
rule?
IV. Derivation Table
V. What general comments did we receive on the proposed rule and how
have we addressed these comments in this final rule?
A. Withdraw the proposal
B. Compliance with the Administrative Procedure Act
C. Public participation
D. Oversight
E. Plain language
F. Other general comments
VI. In what sections did we propose revisions, what specific
comments did we receive, and how have we addressed these comments in
this final rule?
A. Section 701.5--Definitions
B. Section 724.5--Definitions
C. Section 773.5--Definitions
D. Section 773.10--Information collection
E. Section 773.15--Review of permit applications
F. Section 773.16--Permit eligibility determination
G. Section 773.17--Permit conditions
H. Section 773.18--Additional permit conditions
I. Section 773.20--Improvidently issued permits: General
procedures
J. Section 773.21--Improvidently issued permits: Rescission
procedures
K. Section 773.22--Identifying entities responsible for
violations
L. Section 773.23--Review of ownership or control and violation
information
M. Section 773.24--Procedures for challenging a finding on the
ability to control a surface coal mining operation
N. Section 773.25--Standards for challenging a finding or
decision on the ability to control a surface coal mining operation
O. Section 774.10--Information collection
P. Section 774.13--Permit revisions
Q. Section 774.17--Transfer, assignment, or sale of permit
rights
R. Section 778.5--Definitions
S. Section 778.10--Information collection
T. Section 778.13--Legal identity and identification of
interests
U. Section 778.14--Violation information
V. Section 842.11--Federal inspections and monitoring
W. Section 843.5--Definitions
X. Section 843.11--Cessation orders
Y. Section 843.21--Procedures for improvidently issued State
permits
Z. Section 843.24--Oversight of State permitting decisions with
respect to ownership or control or the status of violations
AA. Part 846--Alternative enforcement
BB. Miscellaneous cross-references
VII. What effect will this rule have in Federal program States and
on Indian lands?
VIII.How will this rule affect State programs?
IX. Procedural Mattersy
A. Executive Order 12866: Regulatory Planning and Review
B. Regulatory Flexibility Act
C. Small Business Regulatory Enforcement Fairness Act
D. Unfunded Mandates Reform Act of 1995
E. Executive Order 12630: Takings
F. Executive Order 13132: Federalism
G. Executive Order 12988: Civil Justice Reform
H. Paperwork Reduction Act
I. National Environmental Policy Act of 1969 and Record of
Decision

I. What Events Precipitated This Rulemaking?

The National Mining Association (NMA) and the National Wildlife
Federation filed suit challenging the validity of three of OSM's rules
implementing section 510(c) of SMCRA, 30 U.S.C. 1260(c). These rules
are generally known as the 1988 ownership and control rule, the 1989
permit information rules and the 1989 improvidently issued permits
rule, which is also referred to as the permit rescission rule. In
separate decisions dated August 31, 1995, the U.S. District Court for
the District of Columbia upheld the three challenged rules in their
entirety. See National Wildlife Federation v. Babbitt, Nos. 88-3117,
88-3464, 88-3470 (consolidated) (D.D.C. Aug. 31, 1995); National
Wildlife Federation v. Babbitt, Nos. 89-1130, 89-1167 (consolidated)
(D.D.C. Aug. 31, 1995); National Wildlife Federation v. Babbitt, Nos.
89-1751, 89-1811 (consolidated) (D.D.C. Aug. 31, 1995).
NMA appealed the rulings and, on January 31, 1997, the U.S. Court
of Appeals for the District of Columbia Circuit reversed the district
court's decisions and invalidated the three sets of rules on narrow
grounds. See National Mining Association v. U.S. Department of the
Interior, 105 F.3d 691 (D.C. Cir. 1997) (NMA v. DOI I). The appeals
court held that the clear language of section 510(c) of SMCRA, 30
U.S.C. 1260(c), authorizes regulatory authorities to deny a permit only
on the basis of violations of ``any surface coal mining operation owned
or controlled by the applicant.'' NMA v. DOI I, 105 F.3d at 693-94.
Because OSM's 1988 ownership and control rule also allowed regulatory
authorities to deny a permit on the basis of violations of any person
who owned or controlled the applicant, the appeals court invalidated
that rule in its entirety. In addition, the court held that because
OSM's permit information and permit rescission rules

[[Page 79583]]

were ``centered on the ownership and control rule * * *, they too must
fall.'' Id. at 696.
While the court of appeals identified only one specific defect with
the 1988 and 1989 rules, it nonetheless invalidated the three sets of
rules in their entirety. This had the effect of invalidating many
provisions of the regulations to which the court expressed no specific
objection. At the same time, nothing in the court's decision eliminated
the responsibility of OSM and State regulatory authorities to implement
the permit eligibility requirements of section 510(c), 30 U.S.C.
1260(c). This meant that OSM and the States faced making permitting
decisions required by the Act without any regulations to flesh out the
statutory directive. The appeals court's action created a gap in the
regulatory program and a great deal of uncertainty among State
regulatory authorities about how to continue to meet their
responsibilities to determine who was eligible to receive a permit
under section 510(c), 30 U.S.C. 1260(c).
Following the appeals court's decision, we made adjustments in our
process for responding to regulatory authorities' requests for
permitting recommendations from our Applicant/Violator System (AVS). In
each case, before we offered a permitting recommendation to support the
system recommendation, we determined if the recommendation would be
consistent with the court's decision. In those cases where it would
have been inconsistent, i.e., where the recommendation would be based
on the violations of those who owned or controlled the applicant, we
informed the regulatory authority that we could no longer recommend
that it deny the permit.
As an initial regulatory step to remove the uncertainty created by
the decision and to ensure there would be no lapse in permitting
provisions under approved State programs, we published an interim final
rule (IFR) on an emergency basis on April 21, 1997. See 62 FR 19451
(1997). We published the IFR to implement the Court of Appeals'
decision in NMA v. DOI I and to close the regulatory gap created by
that decision. In the IFR, we removed the portions of the 1988 and 1989
rules which were inconsistent with the appeals court's interpretation
of SMCRA in NMA v. DOI I. Most significantly, the IFR did not authorize
OSM to deny permits based on outstanding violations of an applicant's
owners and controllers. Because the emergency publication of the IFR
did not include public notice and opportunity for comment, we stated in
the preamble to the IFR that we intended to replace the IFR through
rulemaking conducted in accordance with standard notice and comment
procedures under the Administrative Procedure Act. In honoring this
commitment, we published proposed rules on December 21, 1998. See 63 FR
70580 (1998).
In June 1997, NMA filed suit in the U.S. District Court for the
District of Columbia, challenging the IFR on broad grounds. On June 15,
1998, the district court issued a decision upholding the IFR in its
entirety. National Mining Association v. Babbitt, No. 97-1418 (AER)
(D.D.C. June 15, 1998).
On May 28, 1999, the U.S. Court of Appeals for the District of
Columbia Circuit issued its decision in NMA's appeal of the district
court's ruling. National Mining Association. v. U.S. Department of the
Interior, 177 F.3d 1 (D.C. Cir. 1999) (NMA v. DOI II). The court agreed
with OSM that section 510(c) of SMCRA, 30 U.S.C. 1260(c), allows an
applicant to be held accountable for violations cited at operations
that the applicant owns or controls, including ``limitless downstream
violations'' at operations indirectly owned or controlled by an
applicant through intermediary entities. Id. at 4-5. The court agreed
with NMA, however, that ``[f]or violations of an operation that the
applicant `has controlled' but no longer does, * * * the Congress
authorized permit-blocking only if there is `a demonstrated pattern of
willful violations' '' under section 510(c) of SMCRA. Id. at 5.
Next, the court addressed NMA's challenge to certain of the IFR's
presumptions of ownership or control. At 30 CFR 773.5(b)(1) through
(6), the IFR contains six separate presumptions of ownership or
control. If subject to one of the presumptions, the applicant (or other
person subject to the presumption) could attempt to rebut the
presumption by demonstrating that he or she ``does not in fact have the
authority directly or indirectly to determine the manner in which the
relevant surface coal mining operation is conducted.'' 30 CFR 773.5(b).
NMA challenged four of these presumptions, which applied when a person:
(1) was an officer or director of an entity (Sec. 773.5(b)(1)); (2) had
the ability to commit the financial or real property assets or working
resources of an entity (Sec. 773.5(b)(3)); (3) was a general partner in
a partnership (Sec. 773.5(b)(4)); or (4) owned 10 through 50 percent of
an entity (Sec. 773.5(b)(5)). NMA did not challenge the presumptions
pertaining to being the operator of a surface coal mining operation
(Sec. 773.5(b)(2)) or owning or controlling coal to be mined by another
person and having the right to receive such coal after mining or having
authority to determine the manner in which that person or another
person conducts a surface coal mining operation (Sec. 773.5(b)(6)).
Therefore, the court did not rule on their validity. NMA v. DOI II, 177
F.3d at 6 n.6.
In addressing NMA's challenge to the presumptions, the court
described a general standard for evaluating the validity of rebuttable
presumptions and then applied that standard to the four rebuttable
presumptions challenged by NMA. The court found two of the challenged
ownership or control presumptions--having the ability to control the
assets of an entity and being a general partner in a partnership--to be
``well-grounded.'' Id. at 7. However, the court agreed with NMA that
OSM cannot presume that officers and directors or 10 through 50 percent
shareholders are controllers of mining operations. Id. at 6.
On the applicability of the 5-year statute of limitations at 28
U.S.C. 2462, the court agreed with OSM that the section 2462
limitations period does not apply to violations when determining permit
eligibility under section 510(c) of SMCRA, 30 U.S.C. 1260(c). Id. at 7-
8. However, the court agreed with NMA that the rule was impermissibly
retroactive in its effect to the extent it authorized permit denials
based on indirect control in cases where both the assumption of
indirect control and the violation occurred before November 2, 1988,
the effective date of OSM's 1988 ownership and control rule. Id. at 8.
NMA also challenged the IFR's permit application information
provisions, which required like our previous rules, an applicant to
submit information in addition to the information expressly required by
sections 507 and 510(c) of SMCRA, 30 U.S.C. 1257 and 1260(c). The court
agreed with OSM that SMCRA's information requirements ``are not
exhaustive'' and that OSM can require the submission of additional
information ``needed to ensure compliance with the Act.'' Id. at 9.
Finally, on NMA's challenge to the IFR's suspension and rescission
provisions relative to improvidently issued permits, the court agreed
with OSM that section 201(c) of SMCRA, 30 U.S.C. 1211(c), expressly
authorizes OSM to suspend or rescind improvidently issued permits. In
addition to that express authority, the court also found that OSM
retained ``implied'' authority to suspend or rescind improvidently
issued permits ``because of its express authority to deny permits in
the first instance.'' Id. at 9. However, the court decided that OSM

[[Page 79584]]

may only order cessation of State-permitted operations in accordance
with the procedures established under section 521 of SMCRA, 30 U.S.C.
1271. Specifically, OSM may order immediate cessation of a State-
permitted operation if the operation poses an ``imminent danger to the
health or safety of the public, or is causing, or can reasonably be
expected to cause significant, imminent environmental harm * * *''
SMCRA section 521(a)(2), 30 U.S.C. 1271(a)(2). Absent these
circumstances, OSM may order cessation of a State-permitted operation
only in accordance with section 521(a)(3), which includes the
requirements to: (1) Provide a notice of violation to the permittee or
his agent; (2) establish an abatement period; (3) provide opportunity
for a public hearing; and (4) make a written finding that abatement of
the violation has not occurred within the abatement period. Id. at 9-
10; SMCRA at section 521(a)(3), 30 U.S.C. 1271(a)(3).

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

In June of 1997, a team of Department of the Interior employees met
with State regulatory authorities to discuss rulemaking options. We
also sought input from citizens and the regulated industry.
Subsequently, we decided to reevaluate all aspects of our regulations
pertaining to ownership and control and related issues.
On October 29, 1997, we published an Advance Notice of Proposed
Rulemaking in the Federal Register. In the notice, we committed to hold
public meetings and solicit comments from all interested parties on a
wide range of topics related to ownership and control, with the
ultimate goal of proposing new rules. See 62 FR 56139 (1997).
We conducted outreach from October 29, 1997, through January 16,
1998. We invited approximately 900 people and organizations to
participate in the outreach effort. We provided them with an issue
paper to use as the basis to elicit ideas, comments, and suggestions on
potential regulatory topics and issues. Seventy people attended seven
public meetings held in different locations throughout the United
States. We also received written comments from some parties. During the
outreach period, we offered to meet separately with any person or group
wanting such a meeting. As a result of our offer, members of the team
also met with an industry association and held individual discussions
with several environmental advocates.
At the conclusion of the outreach, the team began to develop
rulemaking options on many regulatory provisions related to ownership
and control. The team continued its discussions with State regulatory
authorities to keep them informed of our progress. A meeting with the
States was held January 28 through 30, 1998, to discuss the results of
the outreach.
We published a proposed rule for public review and comment on
December 21, 1998 (63 FR 70580). We originally scheduled the comment
period to close on February 19, 1999. In response to requests, we
reopened the comment period from February 23, 1999 to March 25, 1999
(64 FR 8763); from March 31, 1999 to April 15, 1999 (64 FR 15322); and
from May 4, 1999 to May 10, 1999 (64 FR 23811). On June 7, 2000, we
reopened and extended the comment period to July 7, 2000 (65 FR 36097)
in order to obtain input from the public on the effects of NMA v. DOI
II.
During the comment period, we received separate requests from two
State associations, an industry association, and representatives of
several environmental organizations to meet with the team to ask
questions about the proposal. We met with representatives of the two
State associations, the industry association, and the representatives
from environmental organizations (via a telephone conference call). A
summary of each meeting is recorded in the Administrative Record for
this rulemaking.
We received 103 comment documents specific to the proposed rule: 18
from private citizens, 36 from companies and associations affiliated
with the coal mining industry, 31 from environmental advocates and
organizations, and 18 from Federal, State, and local government
entities and associations. Since no one requested a public hearing, we
did not hold a hearing. In developing the final rule, we considered all
comments that were germane to the proposed rule. In this preamble, we
discuss how we modified certain concepts and provisions in response to
comments and the NMA v. DOI II decision. We also explain the
disposition of those comments that did not result in a change from the
proposed rule.

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

On June 1, 1998, the President issued an Executive Memorandum
requiring the use of plain language in all proposed and final
rulemaking documents published after January 1, 1999. The memorandum
provides the following description of plain language.
Plain language requirements vary from one document to another,
depending on the intended audience. Plain language documents have
logical organization, easy-to-read design features, and use:
Common, everyday words, except for necessary technical
terms;
You and other pronouns;
The active voice; and
Short sentences.
On June 10, 1998, the Office of the Secretary of the Interior
issued a memorandum requiring the immediate use of plain language in
proposed and final rulemaking documents. We met this requirement by
incorporating plain language principles to an even greater extent in
this final rule than in the proposed rule.
The plain language principles, to the extent they were used in the
proposed rule, generated a substantial number of comments. We address
two of the comments here regarding the use of pronouns. One commenter
asked, regarding proposed Sec. 846.1, if ``we'' means only OSM, and
whether this means the States do not have to use alternative
enforcement or only have to use it on Federal lands. Another commenter
asked, regarding proposed Sec. 774.13(e), does ``us'' mean OSM if a
State has not yet adopted a counterpart? In this preamble, ``we'',
``our'', and ``us'' refer to OSM, unless otherwise stated. In our rule
language the pronouns ``we'', ``our'' and ``us'' refer to both the
Federal and State regulatory authorities, or whichever one applies in
the specific situation, generally OSM for Federal programs or the State
regulatory authority for an approved State program, unless otherwise
indicated.
We also note that we use several terms with respect to the temporal
aspect of this rulemaking. In this rulemaking, we refer to
``previous,'' ``existing,'' ``proposed,'' and ``final'' rules and
regulations. ``Previous'' regulations are those that, once this
rulemaking is effective, will no longer exist. ``Existing'' regulations
are those that are unaffected by this rulemaking. ``Proposed''
regulations are those provisions we published in our December 21, 1998,
proposed rule. ``Final'' rule and ``final'' regulations refer to this
rulemaking, including existing regulations that are redesignated in
this rulemaking.
The rest of the comments we received on plain language issues are
discussed in section V.E. of this preamble.

IV. Derivation Tables

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

[[Page 79585]]

which sections our final provisions were proposed (if applicable) and
where our previous, analogous provisions existed (if applicable). When
two asterisks (**) appear in the ``proposed rule'' column, it means we
retained an existing section or provision, verbatim (or nearly verbatim
if only plain language principles were applied), but redesignated the
section or provision in this final rule for organizational purposes.
Three asterisks (***) in the ``proposed rule'' column means the final
provision was not proposed, but that we added the provision: (1) In
response to comments, or (2) in response to the decision in NMA v. DOI
II, or (3) because a provision proposed to be removed is continued in
this final rulemaking, or (4) because the provision is needed for
internally consistency with other adopted provisions.

Part 701
------------------------------------------------------------------------
Final rule Proposed rule Previous regulations
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Sec. 701.5................. Sec. [as indicated Sec. [as indicated
below]. below].
Applicant/Violator System or Sec. 701.5 Sec. 773.5
AVS. Applicant/Violator Applicant/Violator
System or AVS. System or AVS.
Control or controller....... Sec. 778.5(a)(1) Sec. 773.5 Owned or
through (a)(8) and controlled and Owns
778.5(b)(2) Control. or controls.
Knowing or knowingly........ Sec. 701.5 Knowing Sec. 724.5 and
or knowingly. 846.5 Knowingly.
Own, owner, or ownership.... Sec. 778.5(b)(1) Sec. 773.5 Owned or
Ownership. controlled and Owns
or controls.
Successor in interest*...... Sec. 701.5 Sec. 701.5
Successor in Successor in
interest. interest.
Violation................... Sec. 701.5 Sec. 773.5
Violation notice. Violation notice.
Violation, failure or Sec. 846.5 Sec. 724.5 and
refusal. Violation, failure, 846.5 Violation,
or refusal. failure or refusal.
Violation notice............ Sec. 701.5 Sec. 773.5
Violation notice. Violation notice.
Willful or willfully........ Sec. 701.5 Willful Sec. 724.5 and
or willfully. 846.5 Willfully.
Willful violation is removed Willful violation Sec. 701.5 Willful
proposed to be violation.
removed.
------------------------------------------------------------------------
* Successor in interest is unchanged from the previous definition.

Final Part 724
------------------------------------------------------------------------
Final rule Proposed rule Previous regulations
------------------------------------------------------------------------
Sec. 724.5 is removed...... Sec. [as indicated Sec. 724.5
below]. Definitions.
Sec. 701.5 Knowing Knowingly.
or knowingly.
Sec. 846.5 Violation, failure,
Violation, failure, or refusal
or refusal..
Sec. 701.5 Willful Willfully.
or willfully.
------------------------------------------------------------------------

Final Part 773
----------------------------------------------------------------------------------------------------------------
Final rule Proposed rule Previous regulation
----------------------------------------------------------------------------------------------------------------
Sec. 773.3...................... Sec. 773.10............. Sec. 773.10.
(a)............................ (a).................... (a).
(b)............................ (b).................... (b).
Sec. 773.4...................... (**)..................... Sec. 773.11.
Sec. 773.5...................... (**)..................... Sec. 773.12.
Sec. 773.6...................... (**)..................... Sec. 773.13.
Sec. 773.7...................... (**)..................... Sec. 773.15.
(a)............................ (**)..................... Sec. 773.15(a)(1).
(b)............................ (**)..................... Sec. 773.15(a)(2).
Sec. 773.8...................... (***).................... ..................................................
(a)............................ Secs. 773.15(b)(1), ..................................................
(b)(2) and (b)(3).
(b)............................ Sec. 773.15(b)(1)....... Sec. 773.22(d).
(b)(1)......................... Sec. 773.15(b)(1)....... Sec. 773.22(d).
(b)(2)......................... Sec. 773.22(c).......... Sec. 773.23(a)(2).
(c)............................ Sec. 773.22(c).......... Sec. 773.22(d).
Sec. 773.9...................... Sec. 773.15(b).......... Sec. 773.22.
(a)............................ Sec. 773.15(b)(1)....... Sec. 773.22(a).
(b)............................ Sec. 773.15(a)(3)....... ..................................................
Sec. 773.10..................... Sec. 773.15(b)(2)....... Sec. 773.22(a).
(a)............................ Sec. 773.15(b)(2)(i).... Sec. 773.22(a).
(b)............................ Secs. 773.15(a)(3) and Sec. 773.22(b).
(b)(2)(ii).
(c)............................ Sec. 773.15(b)(2)(iii).. Sec. 773.22(b).
Sec. 773.11..................... Sec. 773.15(b)(3)....... Sec. 773.23.
(a)............................ Sec. 773.15(b)(3)....... Sec. 773.23(a).
(a)(1)......................... Sec. 773.(b)(3)(i)(A)... Sec. 773.23(a)(1).
(a)(2)......................... Sec. 773.15(b)(3)(i)(A). Sec. 773.23(a).
(a)(3)......................... Sec. 773.15(b)(3)(i)(A). Secs. 773.23(a)(1) and (b).
(a)(4)......................... Sec. 773.15(b)(3)(i)(A). Secs. 773.159(b)(1) and 773.23(a).
(b)............................ Secs. 773.15(a)(3) and Sec. 773.23(a).
(b)(3)(i)(A).
Sec. 773.12..................... Sec. 773.16............. Sec. 773.15(b).
(a)............................ Sec. 773.16(a).......... Sec. 773.15(b)(1).
(a)(1)......................... Sec. 773.15(b)(3)(i)(B). Sec. 773.15(b)(1).

[[Page 79586]]

(a)(2)......................... (***).................... ..................................................
(a)(3)......................... (***).................... ..................................................
(b)............................ (***).................... ..................................................
(c)............................ Sec. 773.15(b)(i)(D).... Sec. 773.15(b)(3).
(d)............................ Sec. 773.15(e).......... Sec. 773.15(e).
(e)............................ Sec. 773.16(a)(2)....... ..................................................
Sec. 773.13..................... (**)..................... Sec. 773.15(b)(4).
(a)............................ (**)..................... Secs. 773.15(b)(4) and (b)(4)(i)(B).
(a)(1)......................... (**)..................... Sec. 773.15(b)(4)(i)(A).
(a)(2)......................... (**)..................... Sec. 773.15(b)(4)(i)(C).
(a)(2)(i)...................... instruction #8.d......... Sec. 773.15(b)(4)(i)(C)(1).
(a)(2)(ii)..................... (**)..................... Sec. 773.15(b)(4)(i)(C)(2).
(b)............................ (**)..................... Sec. 773.15(b)(4)(ii).
(b)(1)......................... (**)..................... Sec. 773.15(b)(4)(ii)(A).
(b)(2)......................... (**)..................... Sec. 773.15(b)(4)(ii)(B).
(b)(3)......................... (**)..................... Sec. 773.15(b)(4)(ii)(C).
Sec. 773.14..................... Sec. 773.16(b).......... Secs. 773.15(b)(1) and (b)(2).
(a)............................ Sec. 773.16(b).......... Secs. 773.15(b)(1) and (b)(2).
(a)(1)......................... Secs. 773.16(b) and Secs. 773.15(b)(1) and (b)(2).
(b)(1)(ii).
(a)(2)......................... Sec. 773.15(b)(3)(i)(C). ..................................................
(b)............................ Secs. 773.16(b)......... Sec. 773.15(b)(2).
(b)(1)......................... (***).................... Sec. 773.15(b)(2).
(b)(2)......................... Secs. 773.16(b)(3) and ..................................................
773.15(b)(3)(i)(B)(1).
(b)(3)......................... (***).................... ..................................................
(b)(3)(i)...................... (***).................... ..................................................
(b)(3)(ii)..................... (***).................... ..................................................
(b)(4)......................... Sec. 773.15(b)(3)(i)(B)( Sec. 773.15(b)(1)(ii).
2).
(c)............................ Sec. 773.20(b).......... Sec. 773.20(a) and (b).
(c)(1)......................... Sec. 773.16(b)(2)(iii).. Sec. 773.20(b)(1)(ii)(A).
(c)(2)......................... Secs. 773.20(b)(2)(ii) Sec. 773.20(b)(1)(ii)(B).
and (b)(3).
(c)(3)......................... Sec. 773.15(b)(3)(i)(B)( Sec. 773.15(b)(1)(ii).
2).
(c)(4)......................... (***).................... ..................................................
Sec. 773.15..................... (**)..................... Sec. 773.15(c).
(a)............................ (**)..................... Sec. 773.15(c)(1).
(n)............................ Sec. 773.15(a)(3)....... ..................................................
Sec. 773.21..................... Sec. 773.20............. Sec. 773.20.
(a)............................ Secs. 773.20(a) and Secs. 773.20(a) and (b)(1)(i).
(b)(1).
(b)............................ Sec. 773.20(b).......... Sec. 773.20(b).
(b)(1)......................... Sec. 773.20(b)(3)....... Sec. 773.20(b)(2)(ii).
(b)(2)......................... Sec. 773.20(b)(2)(i).... Sec. 773.20(b)(1)(ii)(A).
(b)(3)......................... Sec. 773.20(b)(2)(i).... Sec. 773.20(b)(1)(ii)(A).
(c)............................ Sec. 773.21............. Sec. 773.21.
(c)(1)......................... Sec. 773.21............. Sec. 773.21.
(c)(2)......................... (***).................... ..................................................
(d)............................ Secs. 773.21(a)(1) thru Secs. 773.21(a) and (a)(1) thru (a)(4).
(a)(5).
(e)............................ (***).................... Secs. 773.20(b)(2) and (b)(2)(i).
Sec. 773.22..................... Secs. 773.20 and 773.21. Secs. 773.20 and 773.21.
(a)............................ Sec. 773.21............. Sec. 773.20(c)(2).
(a)(1)......................... Sec. 773.21(a).......... Sec. 773.20(a).
(a)(2)......................... (***).................... ..................................................
(b)............................ Sec. 773.21(a).......... Sec. 773.21(a).
(c)............................ Sec. 773.21(a).......... Sec. 773.21(a).
(d)............................ (***).................... ..................................................
(e)............................ Sec. 773.20(c)(2)....... Sec. 773.20(c)(2).
(f)............................ Sec. 773.20(c)(2)....... Sec. 773.21.
(g)............................ (***).................... ..................................................
(h)............................ Sec. 773.20(c)(2)....... Sec. 773.20(c)(2).
Sec. 773.23..................... Sec. 773.21(a).......... Sec. 773.21(a)(2).
(a)............................ Sec. 773.21(a)(2)....... Sec. 773.21(a)(4).
(a)(1)......................... Sec. 773.21(a)(4)....... Sec. 773.21(a)(1).
(a)(2)......................... Sec. 773.21(a)(1)....... Sec. 773.21(a)(3).
(a)(3)......................... Sec. 773.21(a)(3)....... Sec. 773.21(a)(3).
(a)(4)......................... Sec. 773.21(a)(3)....... Sec. 773.21(b).
(a)(5)......................... Sec. 773.21(b).......... Sec. 773.21(b).
(a)(6)......................... Sec. 773.21(a)(5)....... ..................................................
(b)............................ (***).................... ..................................................
(c)............................ Sec. 773.21(b).......... Sec. 773.21(b).
(c)(1)......................... Sec. 773.21(b).......... Sec. 773.21(b).
(c)(2)......................... (***).................... ..................................................
(d)............................ Sec. 773.20(c)(2)....... Sec. 773.20(c)(2).
Sec. 773.24 is removed.......... Sec. 773.24............. Sec. 773.24.
Sec. 773.25..................... Sec. 773.24(a).......... Sec. 773.24(a)(1).

[[Page 79587]]

(a)............................ Sec. 773.24(a).......... Sec. 773.24(a)(1).
(b)............................ Sec. 773.24(a).......... ..................................................
(c)............................ Sec. 773.24(a).......... Sec. 773.24(a)(1).
Sec. 773.26..................... Sec. 773.24(b).......... Sec. 773.24(b).
(a)............................ Sec. 773.24(b).......... Sec. 773.24(b).
(a)(1)......................... Sec. 773.25(b)(2)....... Sec. 773.24(b).
(a)(2)......................... Sec. 773.25(b)(3)....... Sec. 773.24(b).
(b)............................ Sec. 773.24(d).......... ..................................................
(c)............................ Secs. 773.25(b)(1) and Secs. 773.25(b)(1) and (ii).
(b)(2).
(d)............................ (***).................... ..................................................
Sec. 773.27..................... Sec. 773.25(c).......... Sec. 773.25(c)(1).
(a)............................ Sec. 773.25(c)(2)....... Sec. 773.25(c)(1)
(a)(1)......................... Sec. 773.25(c)(2)....... Sec. 773.25(c)(1)(i)
(a)(2)......................... Sec. 773.25(c)(2)....... Sec. 773.25(c)(1)(i).
(b)............................ Sec. 773.25(c)(3)....... Sec. 773.25(c)(2).
(c)............................ Sec. 773.25(c)(3)(i).... Sec. 773.25(c)(2).
(c)(1)......................... Sec. 773.25(c)(i)(A).... Sec. 773.25(c)(2)(i)(A).
(c)(2)......................... Sec. 773.25(c)(i)(B).... Sec. 773.25(c)(2)(i)(B).
(c)(3)......................... Sec. 773.25(c)(3)(i)(C). Sec. 773.25(c)(2)(i)(C).
(c)(4)......................... Sec. 773.25(c)(3)(i)(D). Sec. 773.25(c)(2)(i)(D).
(c)(4)(i)...................... Sec. 773.25(c)(3)(i)(D). Sec. 773.25(c)(2)(i)(D).
(c)(4)(ii)..................... Sec. 773.25(c)(3)(i)(D). Sec. 773.25(c)(2)(i)(D).
(c)(4)(iii).................... Sec. 773.25(c)(3)(i)(D). Sec. 773.25(c)(2)(i)(D).
Sec. 773.28..................... Sec. 773.24(c).......... Sec. 773.24(c).
(a)............................ Sec. 773.24(c)(1)....... Sec. 773.24(c).
(b)............................ Sec. 773.24(c)(2)....... Sec. 773.24(d)(2)(i).
(b)(1)......................... Sec. 773.24(c)(2)....... Sec. 773.24(d)(2)(i).
(b)(12......................... Sec. 773.24(c)(2)....... Sec. 773.24(d)(2)(i).
(c)............................ Sec. 773.24(c)(2)....... Sec. 773.24(d)(2)(i).
(d)............................ (***).................... ..................................................
(e)............................ Sec. 773.24(c)(3)....... Sec. 773.24(d)(2)(ii).
(f)............................ Sec. 773.25(d).......... Sec. 773.24(d).
----------------------------------------------------------------------------------------------------------------
** Section/provision redesignation only. This section was not redesignated in the proposed rule.
*** This section/provision was added at the final rule stage. A more detailed explanation of this notation
appears at the beginning of section IV.B. of this preamble.

Final Part 774
----------------------------------------------------------------------------------------------------------------
Final rule Proposed rule Previous regulation
----------------------------------------------------------------------------------------------------------------
Sec. 774.1...................... * * *.................... Sec. 774.1.
Sec. 774.9...................... Sec. 774.10............. Sec. 774.10.
(a)............................ (a).................... (a).
(b)............................ (b).................... (b).
Sec. 774.10..................... ( * * ).................. Sec. 774.11.
Sec. 774.11..................... Sec. 773.22............. ..................................................
(a)............................ Sec. 773.22(d).......... Sec. 773.15(b)(1).
(a)(1)......................... Sec. 773.15(b)(2)(i).... Sec. 773.15(b)(1).
(a)(2)......................... Sec. 773.22(c).......... Sec. 773.15(b)(1).
(a)(3)......................... Secs. 774.13(e) and Secs. 773.15(b)(1) and 773.22(d).
774.17(a)(2).
(a)(4)......................... Sec. 773.22(c).......... Sec. 773.15(b)(1).
(b)............................ Secs. 773.22(a) and Sec. 773.22(d).
773.25(d).
(c)............................ Sec. 773.15(b)(3)(i)(D). Sec. 773.15(b)(3).
(c)(1)......................... Sec. 773.15(b)(3)(i)(D)( Sec. 773.15(b)(3).
1).
(c)(2)......................... Sec. 773.15(b)(3)(i)(D)( Sec. 773.15(b)(3).
2).
(d)............................ Sec. 773.15(b)(3)(i)(E). Sec. 773.15(b)(3).
(e)............................ Secs. 773.17(k) and Sec. 773.25(d).
773.25(d).
(f)............................ Secs. 773.15(b)(1)(i), ..................................................
(b)(1)(i)(A),
(b)(1)(i)(B), and
773.17(k).
(f)(1)......................... Sec. 773.17(k).......... ..................................................
(f)(2)......................... Secs. 773.25(d)......... Sec. 773.25(d).
(f)(3)......................... Sec. 778.13(c)(3)....... Sec. 778.13(c).
(f)(3)(i)...................... Sec. 778.13(c)(3)....... Sec. 778.13(c).
(f)(3)(ii)..................... Secs. 773.17(k) and ..................................................
778.13(m).
(g)............................ Secs. 773.17(k) and ..................................................
773.24.
Sec. 774.12..................... Secs. 773.17(h), and Sec. 773.17(h).
774.13(e).
(a)............................ Sec. 773.17(h).......... Sec. 773.17(h).
(b)............................ * * *.................... ..................................................
(c)............................ Secs. 774.13(e) and Sec. 774.17(a).
774.17(a)(2).
(c)(1)......................... Secs. 774.13(e) and Sec. 774.17(a).
774.17(a)(2).

[[Page 79588]]

(c)(2)......................... Secs. 774.13(e), Sec. 778.13(c)(3).
774.17(a)(2), and
778.13(c)(1)(iii).
----------------------------------------------------------------------------------------------------------------
* * Section/provision redesignation only. This section/provision was not redesignated in the proposed rule.
* * * This section/provision was added at the final rule stage. A more detailed explanation of this notation
appears at the beginning of IV.B. of this preamble.

Final Part 778
----------------------------------------------------------------------------------------------------------------
Final rule Proposed rule Previous regulation
----------------------------------------------------------------------------------------------------------------
Sec. 778.8...................... Sec. 778.10............. Sec. 778.10.
(a)............................ Sec. 778.10(a).......... Sec. 778.19(a).
(b)............................ Sec. 778.10(b).......... Sec. 778.10(b).
Sec. 778.9...................... Sec. 778.13(o).......... ..................................................
(a)............................ Sec. 778.13(o).......... ..................................................
(a)(1)......................... Sec. 778.13(o).......... ..................................................
(a)(2)......................... Sec. 778.13(o).......... ..................................................
(a)(3)......................... Sec. 778.13(o).......... ..................................................
(b)............................ (* * *).................. ..................................................
(c)............................ Sec. 778.13(p).......... ..................................................
(d)............................ Secs. 778.13(1) and Secs. 778.13(k) and 778.14(d).
778.14(d).
Sec. 778.11..................... Sec. 778.13............. 778.13.
(a)............................ Sec. 778.13............. Sec. 778.13.
(a)(1)......................... Sec. 778.13(a).......... Sec. 778.13(a).
(a)(2)......................... Secs. 778.13(b)(1) and Sec. 778.13(b).
(b)(3).
(b)............................ Sec. 778.13(b).......... Sec. 778.13(b).
(b)(1)......................... Sec. 778.13(b)(1)....... Sec. 778.13(b)(1)
(b)(2)......................... Sec. 778.13(b)(2)....... Sec. 778.13(b)(2).
(b)(3)......................... Sec. 778.13(b)(3)....... ..................................................
(b)(4)......................... Sec. 778.13(b)(4)....... Sec. 778.13(b)(3).
(c)............................ Sec. 778.13(c)(3)....... Sec. 778.13(c).
(c)(1)......................... Sec. 778.13(c)(3)(i).... Sec. 778.13(c).
(c)(2)......................... Sec. 778.13(c)(3)(ii)... Sec. 778.13(c).
(c)(3)......................... Sec. 778.13(c)(3)(iii).. Sec. 778.13(c).
(c)(4)......................... Sec. 778.13(c)(3)(v).... Sec. 778.13(c)
(c)(5)......................... Sec. 778.13(c)(3)(iv)... Sec. 778.13(c).
(d)............................ Sec. 778.13(m).......... ..................................................
(e)............................ Sec. 778.13(c)(1)....... Sec. 778.13(c).
(e)(1)......................... Sec. 778.13(c)(1)(i).... Sec. 778.13(c)(1).
(e)(2)......................... Secs. 778.13(c)(1)(ii) Secs. 778.13(c)(2) and (c)(3).
and (iii).
(e)(3)......................... Sec. 778.13(c)(1)(iii).. Sec. 778.13(c)(3).
Sec. 778.12..................... Secs. 778.13(e), (f), Sec. Sec. 778.13(d), (e), and (f).
and (g).
(a)............................ Sec. 778.13(e).......... Sec. 778.13(d).
(b)............................ Sec. 778.13(f).......... Sec. 778.13(e).
(c)............................ Sec. 778.13(g).......... Sec. 778.13(d) and (f).
(c)(1)......................... Sec. 778.13(g).......... Sec. 778.13(f)(1).
(c)(2)......................... Sec. 778.13(g).......... Sec. 778.13(f)(1).
(c)(3)......................... Sec. 778.13(g).......... Sec. 778.13(f)(1).
(c)(4)......................... Sec. 778.13(g).......... Sec. 778.13(f)(1).
(c)(5)......................... 778.13(g)................ Sec. 778.13(f)(2).
Sec. 778.13..................... Sec. 778.13(h), (i), Secs. 778.13(g), (h), (i), and (j).
(j), and (k).
(a)............................ Sec. 778.13(h).......... Sec. 778.13(g).
(a)(1)......................... Sec. 778.13(h).......... Sec. 778.13(g).
(a)(2)......................... Sec. 778.13(h).......... Sec. 778.13(g).
(a)(3)......................... Sec. 778.13(h).......... Sec. 778.13(g).
(b)............................ Sec. 778.13(i).......... Sec. 778.13(h).
(c)............................ Sec. 778.13(k).......... Sec. 778.13(j)
(d)............................ Sec. 778.13(j).......... Sec. 778.13(i).
Sec. 778.14..................... Sec. 778.14............. Sec. 778.14.
(a)............................ Secs. 778.14 and Secs. 778.14 and 778.14(a).
778.14(a).
(a)(1)......................... Sec. 778.14(a)(1)....... Sec. 778.14(a)(1)
(a)(2)......................... Sec. 778.14(a)(2)....... Sec. 778.14(a)(2).
(b)............................ Sec. 778.14(b).......... Sec. 778.14(b).
(b)(1)......................... Sec. 778.14(b)(1)....... Sec. 778.14(b)(1).
(b)(2)......................... Secs. 778.14(b)(1) and Secs. 778.14(b)(1) and (b)(4).
(b)(4).
(b)(3)......................... Sec. 778.14(b)(2)....... Sec. 778.14(b)(2).
(b)(4)......................... Sec. 778.14(b)(3)....... Sec. 778.14(b)(3).
(b)(5)......................... Secs. 778.14(b)(4) and Secs. 778.14(b)(4) and (b)(5).
(b)(5).
(c)............................ Sec. 778.14(c).......... Sec. 778.14(c).
(c)(1)......................... Sec. 778.14(c)(1)....... Sec. 778.14(c)(1).
(c)(2)......................... Sec. 778.14(c)(1)....... Sec. 778.14(c)(1).
(c)(3)......................... Sec. 778.14(c)(1)....... Sec. 778.14(c)(1).

[[Page 79589]]

(c)(4)......................... Sec. 778.14(c)(1)....... Sec. 778.14(c)(1).
(c)(5)......................... Sec. 778.14(c)(2)....... Sec. 778.14(c)(2).
(c)(6)......................... Sec. 778.14(c)(3)....... Sec. 778.14(c)(3).
(c)(7)......................... * * *.................... Sec. 778.14(c).
(c)(8)......................... Sec. 778.14(c)(5)....... Sec. 778.14(c)(5).
----------------------------------------------------------------------------------------------------------------
** Section/provision redesignation only. This section/provision was not redesignated in the proposed rule.
*** This section/provision was added at the final rule stage. A more detailed explanation of this notation
appears at the beginning of IV.B. of this preamble.

Final Part 842
----------------------------------------------------------------------------------------------------------------
Final rule Proposed rule Previous regulation
----------------------------------------------------------------------------------------------------------------
Sec. 842.11:
(e)(3)(i)...................... proposed to be removed... Sec. 842.11(e)(3)(i).
----------------------------------------------------------------------------------------------------------------

Final Part 843
----------------------------------------------------------------------------------------------------------------
Final rule Proposed rule Previous regulation
----------------------------------------------------------------------------------------------------------------
Sec. 843.5...................... proposed to be removed... Sec. 843.5.
Sec. 843.11
(g)............................ Sec. 843.11(g).......... Sec. 843.11(g).
Sec. 843.13..................... proposed as Sec. 846.14. Sec. 843.13.
Sec. 843.21..................... Sec. 843.21............. Sec. 843.21.
(a)............................ Sec. 843.21(a).......... Sec. 843.21(a).
(a)(1)......................... Sec. 843.21(a).......... Sec. 843.21(a).
(a)(2)......................... (***)....................
(b)............................ Sec. 843.21(b).......... Sec. 843.21(b).
(b)(1)......................... Sec. 843.21(b)(1)....... Sec. 843.21(b)(1).
(b)(2)......................... Sec. 843.21(b)(2)....... Sec. 843.21(b)(2).
(b)(3)......................... Secs. 843.21(d)(1)(ii) Sec. 843.21(d).
and (d)(4).
(c)............................ Sec. 843.21(c).......... Sec. 843.21(c).
(c)(1)......................... Sec. 843.21(c).......... Sec. 843.21(c)(1).
(c)(2)......................... (***)....................
(c)(3)......................... (***)....................
(d)............................ Secs. 843.21(d) and Sec. 843.21(b).
(d)(1)(i).
(e)............................ Sec. 843.21(d)(1)....... Sec. 843.21(d).
(e)(1)......................... Sec. 843.21(d)(2)....... Sec. 843.21(d).
(e)(2)......................... Sec. 843.21(d)(2)(i).... Sec. 843.21(d).
(f)............................ Sec. 843.21(e).......... Sec. 843.21(e).
(f)(1)......................... Sec. 843.21(e)(1)....... Sec. 843.21(e)(1).
(f)(2)......................... Sec. 843.21(e)(2)....... Sec. 843.21(e)(2).
(f)(2)(i)...................... Sec. 843.21(e)(2)(i).... Sec. 843.21(e)(2)(i).
(f)(2)(ii)..................... (***)....................
(f)(2)(iii).................... Sec. 843.21(e)(2)(ii)... Sec. 843.21(e)(2)(ii).
(f)(2)(iv)..................... Sec. 843.21(e)(2)(ii)... Sec. 843.21(e)(2)(ii).
(f)(2)(v)...................... (***)....................
(g)............................ Sec. 843.21(f).......... Sec. 843.21(f).
----------------------------------------------------------------------------------------------------------------
*** This section/provision was added at the final rule stage. A more detailed explanation of this notation
appears at the beginning of IV.B. of this preamble.

Final Part 846
----------------------------------------------------------------------------------------------------------------
Final rule Proposed rule Previous regulation
----------------------------------------------------------------------------------------------------------------
Sec. 846.1 is unchanged......... Sec. 846.1.............. Sec. 846.1.
Sec. 846.5 is removed........... Sec. 846.5.............. Sec. 846.5.
Sec. 846.12 is unchanged........ Sec. 846.12(a).......... Sec. 846.12.
Sec. 846.14 is unchanged........ Sec. 846.12(b).......... Sec. 846.14.
Sec. 846.17 is unchanged........ Sec. 846.12(c).......... Sec. 846.17.
Sec. 846.18 is unchanged........ Sec. 846.12(d).......... Sec. 846.18.
----------------------------------------------------------------------------------------------------------------

Final Part 847
----------------------------------------------------------------------------------------------------------------
Final rule Proposed rule Previous regulation
----------------------------------------------------------------------------------------------------------------
Part 847......................... (***)....................
Sec. 847.1...................... Sec. 846.1..............

[[Page 79590]]

Sec. 847.2...................... (***)....................
(a)............................ Sec. 846.1..............
(b)............................ Sec. 773.22(d)..........
(c)............................ (***)....................
(d)............................ (***)....................
Sec. 847.11..................... Secs. 846.11 and
846.11(a).
(a)............................ Sec. 846.11(a)(1).......
(b)............................ Sec. 846.11(a)(2).......
(b)(1)......................... Sec. 846.11(a)(2)(i)....
(b)(2)......................... Sec. 846.11(a)(2)(ii)...
(c)............................ Sec. 846.11(a)(3).......
Sec. 847.16..................... Sec. 846.16.............
(a)............................ Sec. 846.16(a)..........
(a)(1)......................... Sec. 846.16(a)(1)(i)....
(a)(2)......................... Sec. 846.16(a)(1)(ii)...
(a)(3)......................... Sec. 846.16(a)(1)(iii)..
(a)(4)......................... Sec. 846.16(a)(1)(iv)...
(a)(5)......................... Sec. 846.16(a)(1)(v)....
(a)(6)......................... Sec. 846.16(a)(1)(vi)...
(b)............................ Sec. 846.16(a)(2).......
(c)............................ Sec. 846.16(b)..........
(d)............................ Sec. 846.16(c) .........
----------------------------------------------------------------------------------------------------------------
** Section/provision redesignation only. This section/provision was not redesignated in the proposed rule.
*** This section/provision was added at the final rule stage. A more detailed explanation of this notation
appears at the beginning of IV.B. of this preamble.

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

A. Withdraw the Proposal

Several commenters suggested that we withdraw the proposed rule and
rewrite it using the ``precise language'' of the Act. We appreciate the
concerns of these commenters. However, section 501(b) of the Act
requires that we adopt regulations that not only implement the Act, but
also ``are written in plain, understandable language.'' Furthermore,
the courts have held in previous litigation concerning SMCRA that we
have a duty to either flesh out the requirements or explain why it is
unnecessary to do so.
A commenter recommended withdrawing the proposed rule because ``the
added burdens are not justified by the rate of non-compliance, which
OSM's own figures show is low.'' The commenter said we should
``simplify, rather than complicate, the permitting process and the
limited non-compliance problems that do exist.'' The low rate of
noncompliance is partially the result of the ownership and control and
AVS-related regulations that have been in force since 1988. Moreover,
in this final rule we are simplifying the permitting process to clarify
the scope of the review and who is eligible for a permit under section
510(c) of the Act, 30 U.S.C. 1260(c).
A commenter said the proposed rule must be withdrawn because it
does not adequately respond to or incorporate comments provided in
response to the Advance Notice of Proposed Rulemaking. The commenter
said two organizations sent comments to OSM urging that OSM retain the
requirement that imputes primary responsibility for compliance on those
entities which own or control permit applicants and have outstanding
unresolved violations of SMCRA or other environmental laws. The
commenter said the agency's response to these comments has been wholly
unsatisfactory.
We disagree. The commenter asks that we devise a compliance and
permit eligibility scheme that the court has ruled to be unlawful.
Under NMA v. DOI I, we cannot ``block'' applicants under section 510(c)
based upon the outstanding violations of an applicant's owners and
controllers. However, we can and must determine responsibility for
outstanding violations and use all enforcement provisions available
under the Act to achieve compliance from persons responsible for
outstanding violations. Nothing in NMA v. DOI I or NMA v. DOI II
changes this statutory requirement.
The same commenter also said the proposed rule fails to require
that States (and OSM in Federal program states) use common law
mechanisms to disregard corporate forms where applicants seek to apply
for permits on behalf of owners and controllers who would be barred in
their own right. Common law mechanisms exist independently from the
enforcement provisions under SMCRA and are always available for a
regulatory authority's use when circumstances warrant.
The same commenter also said the proposed rule fails to address
coal exploration operations. We included coal exploration among the
subjects in our solicitation for ideas and suggestions to be considered
in the development of the proposed rule. States opposed requiring
review under section 510(c) of SMCRA, 30 U.S.C. 1260(c), for coal
exploration permits. These comments persuaded us not to address coal
exploration, in the context of section 510(c), in this rulemaking.

B. Compliance With the Administrative Procedure Act

One commenter claimed that we provided no explanations for the
proposed rule and that we thus had violated the Administrative
Procedure Act (APA) by denying interested parties the opportunity to
provide meaningful comments. Other commenters, expressed similar APA
concerns.
We disagree with the various criticisms of our proposed rule with
respect to the APA. First, the proposed rule did not deny interested
parties the opportunity to provide meaningful comment. We provided the
proposed rule language and an extensive preamble, explaining the
subjects and issues involved. We received 103 written comments on the
proposed rule, totaling over 800 pages of comments. We extended the
comment period four

[[Page 79591]]

times in response to requests for extensions, including a reopening to
accept comments on the effects of the NMA v. DOI II decision. See
section II of this preamble. Before the development of the proposed
rule, we provided public notice of our intent to propose a rule. We
conducted both informal outreach and an extensive formal public
outreach to gather ideas, suggestions, and concepts to consider in the
development of the proposed rule. We hosted and attended meetings with
the major groups of parties interested in this rulemaking. Taken
together, these activities provided more than sufficient opportunity
for input into this rulemaking. Not only have we fully complied with
the APA, we actively reached out to bring all affected parties into
this rulemaking process.
Commenters said the proposed rule is a radical departure from past
ownership and control rules. They also said the 60-day comment period
was ``woefully inadequate'' to allow meaningful public participation,
and that OSM's advance pronouncement that no extensions of the comment
period would be considered was arbitrary and capricious. In fact, we
extended the comment period on the proposed rule three times in
response to requests for extensions and reopened the comment period to
allow for comments on the effects of NMA v. DOI II on the proposed
rule. The final comment period totaled 140 days.

C. Public Participation

Several commenters suggested that citizens should have rights in
the permitting process and related matters. These commenters also said
OSM should expressly allow citizens to petition the agency to take
enforcement action where citizens have a reason to believe that a
violation exists, whether or not the State regulatory authority has
taken action. Another commenter also expressed concerns about the
citizen complaint process, and said it is important that citizens
continue to be part of the SMCRA process so that they can voice
concerns about inadequate data collection and tracking of violators by
OSM.
We support public participation in regulatory processes, as
required by the Act. Citizens have the right to voice their concerns
regarding any aspect of a regulatory program. This final rule
strengthens public participation in processes related to permit
eligibility determinations. We further address public participation as
it applies to this rulemaking, in our responses to comments received on
specific sections of the proposed rule. See, e.g., sections VI.M. and
Y. of this preamble.
Further, our existing regulations emphasize the role of the public
under SMCRA. The provisions for public participation in permit
processing were found at previous 30 CFR 773.13 and existing 30 CFR
part 775, which includes the ability of persons who have an interest
which is or may be adversely affected to raise ownership and control
issues during the permitting process and to request a hearing on the
reasons for a permitting decision. Previous 30 CFR 773.13 is
redesignated 30 CFR 773.6 in this final rule. Additional provisions
pertaining to public participation and access to public records are
found at existing 30 CFR 842.11, 842.12, and 842.16 and final
Sec. 843.21.
We also made AVS available to the public to increase public access
to the computer system. AVS software is provided free of charge and can
be ordered from the AVS Office in Lexington, Kentucky, by calling,
toll-free, 1-800-643-9748. The software can also be downloaded from the
AVS Office's Internet home page (Internet address: http://
www.avs.osmre.gov). Citizens may also use the traditional method of
visiting Federal and State offices to view application, permit,
violation, ownership and control challenge, and enforcement records.
A commenter said that the public often has important information
concerning ownership and control and that the Congress was very clear
in demanding a public role in administrative and judicial processes,
including the permitting process. According to the commenter, the
proposed rule reflects a limited, insular, two-way relationship between
the regulatory authority (we) and the applicant (you) that excludes
affected citizens (us) because there is no pronoun for the general
public.
We have and will continue to ensure that public participation is
considered in all facets of the regulatory program. We heard very
clearly the concerns expressed during the public outreach regarding
citizen participation in regulatory processes. To the extent possible,
we address those concerns in this rulemaking. We are always willing to
accept information from citizens which may bear upon our
responsibilities, or the responsibilities of the regulated industry,
under the Act. Both our existing regulations and the provisions we
adopt today expressly require us to consider information provided by
the public, when appropriate.

D. Oversight

A commenter said that the proposal has serious implications for the
States in terms of OSM's oversight of permitting decisions and all
facets of the regulatory program. The commenter said States are most
concerned about oversight expectations in the quantity of application
information and the level of detail that should be devoted to
investigations. Two commenters asked what oversight States can expect
since AVS will not make permitting recommendations. The same commenters
asked if oversight will be consistent and whether States will be
``taken to task'' over their permitting decisions during oversight. In
contrast, another commenter said the proposed rule will result in
inadequate oversight because OSM plans to cease providing permitting
recommendations. Other commenters said oversight should be consistent
and that OSM should adopt uniform review criteria. Two commenters asked
whether the oversight reviews required for this final rule would be
left to the OSM regional offices. These commenters suggested that the
determinations required under the proposed rule would require OSM to
give discretion and flexibility to States.
Our oversight obligations under the Act and regulations will not
diminish as a result of these rules. To facilitate oversight of AVS,
OSM's Directive REG-8, ``Oversight of State Regulatory Programs,''
provides that OSM will monitor States' responses to complaints and
requests for assistance and services and each year will review a sample
of one or more specified State activities, including permit eligibility
determinations. We prepare an oversight findings report for each review
and the findings report is summarized in the annual report for each
State.
Concerning the level of detail that should be devoted to
investigation, in this final rule we leave that decision principally to
the regulatory authorities. We are not adopting specific references to
investigations in part 773 in these final rules. However, we expect
that regulatory authorities will investigate when circumstances
warrant.
We previously provided permit eligibility recommendations to, among
other things, assist in expediting the States' permitting processes. We
are aware that the purpose of the recommendations was sometimes
misinterpreted as a mandate. We also know that many States benefitted
from the recommendations and some expressed their appreciation.
However, the States now possess sufficient technology as well as
familiarity with

[[Page 79592]]

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

E. Plain Language

``Shall'' Is the Language of the Act
We received numerous comments on the use of plain language
principles in the proposed rule and our failure to use the word
``shall.'' Some commenters argued that the word ``shall'' is the
language of the Act and that no other word is sufficient as the
language of command. However, the guidance on plain language principles
prohibits use of ``shall'' in rulemaking. The Department has provided
two guidance documents on plain language, Writing User-Friendly
Regulations and Writing Readable Regulations, by Thomas A. Murakowski.
The regulations in this final rule are consistent with plain language
principles. We use ``must'' instead of ``shall'' as the language of
command. Where the Act or regulations provides for a mandatory action,
we use ``must.'' Where previous regulations used ``shall'' to indicate
a future action, we use ``will.'' When an action is not mandatory, we
use ``may,'' except that the use of ``may not,'' is equivalent to a
mandatory prohibition.
Changing ``shall'' to ``may'' Undermines Mandatory Enforcement of the
Act
Many commenters said that changing ``shall'' to ``may'' undermines
mandatory enforcement under the Act and that ``may'' is an unacceptable
substitute. Some of the commenters said the change gives regulatory
authorities the option not to enforce the regulations.
The absence of the word ``shall'' does not compromise obligations
under our regulations or the obligations of the States and the industry
to comply with the Act and regulatory requirements. To the contrary, we
believe using the word ``shall'' creates confusion in the minds of
readers. We are not alone in this belief. In his book, Plain English
for Lawyers, Richard C. Wydick, Professor of Law at the University of
California at Davis, has this to say about the word ``shall'':

When you draft rules * * * be precise in using words of
authority.* * * The biggest troublemaker is shall. Sometimes lawyers
use it to impose a duty: ``The defendant shall file an answer within
30 days.* * *'' Other times lawyers use it to express future action
(``the lease shall terminate * * *'') or even an entitlement (``the
landlord shall have the right to inspect * * *''). Drafting experts
have identified several additional shades of meaning shall can
carry. To make matters worse, many lawyers do not realize how
slippery shall is, so they use it freely, unaware of the booby traps
they are laying for their readers * * *. In recent years * * * many
U.S. drafting authorities have come around to the British
Commonwealth view: don't use shall for any purpose--it is simply too
unreliable.\1\

\1\ Richard C. Wydick, Plain English for Lawyers, Durham, 1998,
pp. 66-67.
---------------------------------------------------------------------------

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

------------------------------------------------------------------------
We use the word * * * to indicate that * * *
------------------------------------------------------------------------
must...................................... an action is mandatory.
will...................................... an action will occur in the
future.
may....................................... an action could occur, but
is not mandatory.
may not................................... not taking the specified
action is mandatory.
------------------------------------------------------------------------

Any change in meaning that the reader may perceive because we used
the words in the table is due solely to the former use of the imprecise
word ``shall'' to indicate that an action must, will, or may occur.
Plain Language Attempt is Unsuccessful
Several commenters said our attempt to use plain language
principles in the proposed rule was unsuccessful and inconsistent with
President Clinton's June 1, 1998, memorandum. The commenters also
claimed that we failed to follow the recommendations of the Federal
Register Document Drafting Handbook because we used more than three
paragraph levels within a section. The commenters said we should create
more sections instead of using more than three paragraph levels.
Our use of plain language principles in the proposed rule was
consistent with the President's June 1, 1998, memorandum. However, we
acknowledge that the proposed rule did not fully conform with plain
language principles. This final rule, more fully uses plain language
principles.
Most notably, in this final rule, we reorganized parts 773 and
portions of parts 774 and 778 to accommodate fuller use of plain
language principles. We divided lengthy sections into smaller, more
numerous but more concise, sections; eliminated duplicate provisions;
streamlined provisions, incorporated tables; and eliminated excessive
paragraph levels within sections. The guidance provided to us regarding
plain language is not optional. Rather, we are expected to adhere to
the guidance, unless specific circumstances allow for variance within
the rule language structure.
Use of Pronouns
Several commenters expressed concern over our use of pronouns in
the proposed rule. Some of these commenters said that the use of ``we''
and ``you'' is confusing. These commenters also said that ``you''
should always mean the person to whom the regulation applies because
industry will claim that ``you'' only means the applicant and that all
other uses of ``you'' are irrelevant. Other commenters said the use of
plain language implies that there are only two sides represented in the
regulations--industry and regulators--and that there is no pronoun used
to represent citizens.
The guidance documents on plain language that we previously cited
in this section of the preamble provide explicit instructions on the
use of personal pronouns. According to the guidance, the use of
personal pronouns ``straightens out sentences and saves words.'' As
with the preferred use of ``shall,'' we must use pronouns in our
regulations unless we are avoiding a grammatical fracture or
redundancy, or to make a distinction between or among the subjects that
make up ``we'' or ``you.''
We acknowledge that our use of pronouns in the proposed rule
sometimes may have been confusing. We eliminate that confusion in this
final rule. Within the Department's restrictions, we always use ``we''
to mean OSM and the State regulatory authorities, unless otherwise
stated. We always use ``you'' to mean whoever must comply with the
regulation. Therefore, ``you'' almost always means an applicant or
permittee, as applicable. For example, when we use the phrase, ``you,
the applicant,'' it clarifies that ``you'' means ``the applicant''
whenever ``you'' appears in the provisions of that section.
We elected not to define ``we'' or ``you'' generically in these
regulations because the antecedent for these pronouns varies in our
regulations. Instead, we specified the meaning of ``we'' or ``you'' in
each section of this final rule. As more of our regulations are
converted to plain language, we will incorporate greater use of ``we''
and ``you.''
A commenter called the use of pronouns an informal, quasi-
conversational style. This commenter

[[Page 79593]]

also said our use of ``you'' and ``we'' does not conform to the
guidance in the Federal Register Document Drafting Handbook.
Our use of ``we'' and ``you'' conforms to the guidance in the
Federal Register Document Drafting Handbook. For example, the Handbook
says we must use ``you'' to designate ``whoever must comply.'' (October
1998 Revision at MRR-1) This is how we used ``you'' in the proposed
rule and how we use it in this final rule.

F. Other General Comments

A commenter expressed concern that the proposed rule will result in
permit-specific eligibility determinations instead of entity or
company-specific eligibility determinations and that this result is a
step backward. Permit eligibility is inherently application or permit
specific because violations are specific to a particular operation. The
permit block sanction of section 510(c) applies only to the extent that
a person remains responsible for that violation.
A commenter claimed that the proposed rules establish complex
processes for determining eligibility and meeting information
disclosure requirements. The commenter also claimed that ``owners'' and
``controllers'' are newly created categories that would be targeted for
novel enforcement tools such as ``blocking permits where a permit
applicant is an owner or controller of an operation with an outstanding
violation,'' ``permanent ineligibility'' for a permit, ``special permit
conditions,'' and ``joint and several liability for violations of
permits to an extent not contemplated by the Act.''
The review process and eligibility determination are not complex
and, in fact, have been simplified in this final rule. A regulatory
authority will review applicant, operator, and ownership or control
information; permit history information; and compliance information to
arrive at an eligibility determination under section 510(c) of the Act,
30 U.S.C. 1260(c). A finding of permit eligibility is the end-product
of a regulatory authority's review under section 510(c) of the Act, 30
U.S.C. 1260(c). This final rule also attempts to make information
disclosure requirements clearer by organizing the requirements for
providing applicant, operator, and ownership and control information;
permit history; property interests; and violation information into
separate, more easily understood sections. An applicant also may
certify as to which parts of this information already in AVS are
accurate and complete. See final Sec. 778.9(a).
We disagree that ``owners'' and ``controllers'' are newly created
categories. These designations are clearly anticipated under section
510(c) of SMCRA, 30 U.S.C. 1260(c), which uses the phrase ``owned or
controlled.'' We also disagree that the final rule creates ``novel
enforcement tools.'' We are not adopting the provisions concerning
joint and several liability or special permit conditions. Under the
final rule, the section 510(c) permit block sanction applies only to
the extent authorized under NMA v. DOI I and NMA v. DOI II.
Commenters said they agreed with OSM that ``scofflaws'' should not
be allowed to abandon one mining operation with uncorrected violations
and uncompleted reclamation only to obtain permits for new operations
``through subterfuge or abusive manipulation of corporate entities.''
However, the commenters said, AVS relied upon massive information-
gathering and mechanical name-linking and that this approach caused
paperwork delays for legitimate operators. The commenters claimed the
proposed rule would not reduce the burdens for legitimate operators
``to any significant level'' and that it ``does violence'' to a number
of established legal principles and threatens new confusion, delays,
and litigation.
We disagree that our regulations cause either massive information-
gathering or delays in permitting for legitimate operators. Further, in
NMA v. DOI II, the court ruled that we and the States may require
information from permit applicants in excess of the information
requirements specifically stated in the Act so long as the information
is necessary to ensure compliance with the Act. Id., 177 F.3d at 9. The
information requirements in this final rule are, necessary to ensure
compliance with the Act, including the permit block sanction of section
510(c).
A commenter expressed appreciation for OSM's efforts to propose
regulations that are consistent with NMA v. DOI I. However, the
commenter said the proposed rule appears more cumbersome and burdensome
than the previous regulations, would require much additional effort to
administer, and may detract from ensuring good reclamation in the
field.
Our principal goal in this rulemaking is to adopt revised or new
regulations that improve our implementation of SMCRA and with NMA v.
DOI I and NMA v. DOI II. We have streamlined procedures and reduced
burdens to the extent that we could do so while still retaining our
ability to fully implement the permit block sanction of section 510(c).
We relied upon the input of many sources, including our State partners,
in developing the proposed and final rules. We disagree that the
changes in our regulations, will detract from or inhibit good
reclamation. On the contrary, we believe the provisions that allow a
regulatory authority to better know an applicant will contribute to a
more accurate forecast of whether an applicant, as a permittee, will be
able to complete its reclamation and other statutory and program
obligations.
Several commenters expressed concern that the changes in the
proposed rule represent a weakening of the Federal rules and appeared
to give unauthorized options to regulatory authorities relative to
required enforcement actions. Some opposed the proposed rule changes
because, they said, SMCRA requires OSM and the States to take
enforcement action against every violation, that is, ``when you see a
violation, you write a violation.'' These commenters asserted that
SMCRA has a mandatory enforcement system that does not allow discretion
when considering enforcement actions. We agree that violations, when
known to a regulatory authority, must be cited. Nothing in this
rulemaking alters that principle.
Several commenters asserted that the proposed rule weakens Federal
protections, undercuts those State requirements that may exceed Federal
requirements, and allows owners and controllers to engage in sham
business arrangements to contravene section 510(c) of SMCRA. We believe
this final rule strengthens the ability of regulatory authorities to
take a variety of actions both inside and outside the permitting
process to ensure compliance with SMCRA. The rule strengthens the
information disclosure requirements for applicants and operators. It
also clarifies the post-permit issuance obligations of regulatory
authorities and permittees with respect to submitting new information,
updating AVS, and other matters. It also emphasizes other enforcement
provisions that may be used if applicants, permittees, operators, and
other persons subject to the regulations fail to comply. Taken
together, these revisions not only clarify and emphasize our ability to
enforce section 510(c), 30 U.S.C. 1260(c), but other SMCRA provisions
as well.
Another commenter said the proposed rule would not adequately
address the regulatory gap left by the appeals court decision in NMA v.
DOI I. The commenter claimed the industry has used the gap to continue
to profit from past non-compliance of contract miners. The commenter
said the proposed rule

[[Page 79594]]

would not require States to use all available procedures to bar owners
and controllers from receiving new permits or to prosecute them. We
disagree. The permit eligibility criteria and related procedures in the
final rule are as restrictive as the rationale in the NMA v. DOI I and
II decisions will allow.
A commenter said the proposal fails to address how to prevent new
permit-related damage by entities who are owned or controlled by
violators since section 510(c) of SMCRA can no longer be used. The
commenter stated that, instead of lowering compliance requirements,
regulatory authorities should adjust performance bonds to address the
risk of default on reclamation obligations. This final rule does not
reduce compliance requirements. Furthermore, section 509(a) of the Act
and 30 CFR 800.14(b) already require that the amount of the bond be
sufficient to assure completion of the reclamation plan if the work has
to be performed by the regulatory authority in the event of forfeiture.

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

A. Section 701.5--Definitions

We proposed to make several changes to our regulatory definitions.
We intended that the proposed changes would result in clearer and more
useful regulatory definitions. One commenter said the definitions were
satisfactory as proposed. Based upon our review of the comments and
further deliberation, we modify most of the proposed definitions in
this final rule. Each proposed definition is discussed below. Comments
on a proposed definition and modifications adopted in this final rule
are included in the discussion of each proposed definition.
Applicant/Violator System or AVS
We proposed to revise the definition for Applicant/Violator System
or AVS and to move the definition to Sec. 701.5. We received no
comments on the proposed definition. The final rule modifies the
proposed definition to clarify that AVS assists in implementing the
Act. It is clearly not the only tool we use to implement the purposes
of the Act. AVS is among several automated systems and other mechanisms
that we rely upon to assist in implementing the Act. We modified the
final definition to remove any potential confusion on this point.
``Control or controller'' and ``Own, Owner, or Ownership''
Section 510(c) of SMCRA, 30 U.S.C. 1260(c), provides that a surface
coal mining permit will not be issued when a surface coal mining
operation ``owned or controlled by the applicant'' is currently in
violation of SMCRA or other laws pertaining to air or water quality.
However, the Act does not define the phrase ``owned or controlled.'' We
first defined the phrase in the 1988 ``ownership or control'' rule. 53
FR 38868 (October 3, 1988). In that rule, the concepts of ownership and
control were defined together through a series of statuses or
relationships under which OSM would either ``deem'' or ``presume''
ownership or control. See, e.g., previous Sec. 773.5. In the proposal
underlying this final rule, we proposed to define ``ownership'' and
``control'' separately, eliminate presumptions of ownership or control,
and provide examples to support the proposed definitions of ownership
and control. See proposed Secs. 778.5(a) and (b).
After the close of the comment period for the proposed rule, the
D.C. Circuit issued its decision in NMA v. DOI II. 177 F.3d 1 (D.C.
Cir. 1999). The court struck down two of the six presumptions of
ownership or control in our previous ownership or control definitions
at 30 CFR 773.5, and upheld two of the six. The court did not address
the remaining two presumptions or the categories of ``deemed''
ownership or control, since these provisions were not challenged. The
court's ruling on presumptions had no direct effect on our proposed
definitions of ownership and control, since we had already proposed to
eliminate all presumptions of ownership or control, including those
invalidated by the court. Like the proposal, this final rule does not
contain rebuttable presumptions.
The court also upheld our ability to deny permits based on indirect
ownership or control. We retained a similar provision in this final
rule. However, since the ability to deny permits based on indirect
ownership or control, or ``downstream'' relationships, pertains more to
how the definitions are applied than to the definitions themselves, we
addressed the applicability of the court's holding in the discussion of
permit eligibility determinations in section VI.E. of this preamble. At
this point, however, we note that this final rule continues our prior
ability to deny permits based on both direct ownership or control and
indirect ownership or control through intermediary entities. We also
retained the ability to ascertain ownership or control at all levels of
a corporate chain through any combination of relationships establishing
ownership or control under the definitions we adopt today. For example,
if Company A owns Company B under our definition of ownership, Company
A also owns all entities and operations which Company B owns or
controls, and so on.
In this final rule, we retained the basic approach and substance of
the proposed rule. However, based on comments, guidance from the court,
and further deliberation, we made certain modifications which clarify
the scope and applicability of the definitions and examples.
We moved the definitions and examples from proposed Sec. 778.5 to
final Sec. 701.5. This will improve the organization by having all of
our definitions in one section; this modification also emphasizes the
general applicability of the definitions throughout 30 CFR parts 773,
774, and 778 and Sec. 843.21 of our regulations (except as noted
otherwise). We also modified the defined terms, from ``ownership'' and
``control'' to ``own, owner, or ownership'' and ``control or
controller'', to clarify that the definitions encompass all forms of
the words ``own'' and ``control,'' including both the verb and noun
forms.
We retained the approach of defining ownership and control
separately, to emphasize that section 510(c) uses the disjunctive
phrase ``owned or controlled.'' This is significant in that section
510(c) requires permit denials when the applicant either owns or
controls an operation with current violations. We moved the proposed
examples of ownership or control to follow one of the categories of
control--see final paragraph (5) of the definition--since the examples
are more appropriately viewed as examples of control, rather than
ownership. In this final rule, the examples are used to indicate when a
person may, but does not necessarily, have ``the ability, alone or in
concert with others, to determine, indirectly or directly, the manner
in which a surface coal mining operation is conducted.'' Since the
focus of the inquiry is on who controls an entity or mining operation,
in this preamble we use the phrase ``examples of control'' to refer to
this regulatory provision. Thus, our final definition of control
contains categories of ``deemed'' control (paragraphs (1) through (5))
and examples of control (paragraphs (5)(i) through (5)(vi)).
Our final definition of ``own, owner, or ownership'' is largely the
same as our proposed definition of ``ownership,'' except that we moved
the ``general

[[Page 79595]]

partner'' criterion from this definition to the definition of ``control
or controller'' in final Sec. 701.5 and eliminated the phrase ``or
having the right to use, enjoy, or transmit to others the rights
granted under a permit.'' We also added language to clarify that the
final definition does not apply to ownership of real property, such as
under final Sec. 778.13 of this rule and 30 CFR Sec. 778.15 of the
existing rule. The final definition of ``own, owner, or ownership''
includes being a sole proprietor or possessing or controlling in excess
of 50 percent of the voting securities or other instruments of
ownership of an entity (i.e., majority ownership). We added the term
``controlling'' based on the reality that sometimes persons who do not
technically own stock (or other instruments of ownership) nonetheless
have the ability to control the stock, either by holding the voting
rights associated with the stock or other arrangement with the owner of
record. Under this definition, if the predicate facts are present--
i.e., a person is a sole proprietor or majority shareholder--then the
person is an owner. Our rationale for the greater than 50 percent
threshold is explained below in our responses to comments. Also, while
a sole proprietor is subsumed within the category of majority
ownership, we decided to retain that criterion for the sake of clarity.
We also reiterate that the definition we adopt today encompasses both
direct ownership and indirect ownership through intermediary entities.
Thus, if Company A owns 51 percent of Company B, and Company B owns 51
percent of Company C, Company A owns Company C. However, if Company A
owns 49 percent of Company B, and Company B owns 51 percent of Company
C, Company A does not own Company C, since Company A does not own
Company B. In summary, if an entity owns another entity, it also owns
all entities the other entity owns or controls.
We defined ``control or controller'' in terms of a series of
specific relationships and statuses, which are individually enumerated,
rather than the more general definition of control in the proposal. In
our experience, since we first promulgated definitions of ownership and
control in 1988, the relationships and statuses identified in the
``deemed'' portion of the definition (paragraphs (1) through (5)) will
always constitute control, assuming the predicate facts are true. For
example, if someone is a permittee, that fact alone, without further
inquiry, demonstrates control under the definition. By contrast, in the
examples of control listed in paragraphs (5)(i) through (5)(vi) of the
definition, even if the predicate facts are true, that person may or
may not be a controller, depending on the particular circumstances.
Thus, a 20 percent shareholder of a corporation may be a controller,
but only if that person also has ``the ability, alone or in concert
with others, to determine, indirectly or directly, the manner in which
a surface coal mining operation is conducted.'' See final paragraph (5)
of the definition. We provide the examples to identify statuses and
relationships which, in our experience since 1988, often indicate
actual control. Regulatory authorities and the regulated industry
should consider the examples, and any other relevant factors or
information, in meeting their responsibilities under this final rule.
However, we stress that these examples do not give rise to a
presumption of control and do not necessarily constitute control.
Finally, as with our definition of ``own, owner, or ownership'', the
definition of ``control or controller'' we adopt today encompasses both
direct control and indirect control through intermediary entities. For
example, if Company A controls Company B, Company A also controls all
entities which Company B owns or controls.
Consistent with the view expressed in the preceding paragraph, we
incorporated some of the proposed examples into the deemed categories
of control because the person will always be a controller if the
predicate facts are true. For example, we decided to move the examples
encompassing permittees and operators from the proposed examples to the
``deemed'' portion of the final definition. We also moved the ``general
partner in a partnership'' criterion from the proposed definition of
``ownership'' to the final definition of ``control or controller.''
Finally, based on comments, guidance from the court decisions, and
further deliberation, we added two new examples of control. See final
examples (5)(iii) and (5)(iv).
One other general point we emphasize is that our definition of
``control or controller'' includes the ability to control as well as
the exercise of control. The reason is simple: The failure to exercise
one's ability to control in order to prevent or to abate violations is
as damaging to the environment or as dangerous to the public as
actively causing violations. As such, paragraph (5) of the definition
specifically provides that those who have the ability to determine the
manner in which a surface coal mining operation is conducted, not just
those who actually exercise control, are encompassed within our final
definition of ``control or controller.'' When we use the term ``actual
control'' in this preamble, we are referring to both the exercise of
control and the ability to control.
Comments on the Proposed Definition of ``Ownership''
A commenter said the Congress intended that new permits should not
be issued to an applicant who has an ownership relationship to a
violation. The commenter said the proposed rule appears to make
ownership irrelevant. The commenter suggested that all references to
control should also include references to ownership. The thrust of the
comment is that ``ownership alone, or control alone, are sufficient to
impute responsibility.'' Another commenter said that proposed
Secs. 778.5(b)(1) and (b)(2) refer to ``owner'' and ``controller''
separately as though they have different meanings, while proposed
Sec. 778.5(a) defines ``owner or controller'' without distinguishing
between the two.
We agree that an applicant's ownership of an operation with a
current violation, standing alone, renders the applicant ineligible for
a permit under section 510(c) of the Act, 30 U.S.C. 1260(c). As
explained above, because section 510(c) uses the disjunctive phrase
``owned or controlled'' (emphasis added), we retained our proposed
approach of defining ownership and control separately to give
independent meaning to the two terms. This is significant in that
section 510(c) requires permit denials when the applicant either owns
or controls an operation with current violations. In the proposal, we
made it clear that either ownership or control of operations with
violations could form the basis of a permit denial. See, e.g., proposed
Secs. 773.15(b)(3)(i)(A) and (B); 773.16(a). When appropriate, this
final rule references ownership and control concepts together to
emphasize the statutory requirement of section 510(c). Also, we
clarified that the examples pertain to control, and not to ownership.
This final rule emphasizes that the scope of permit denials under
section 510(c) does not depend solely on the presence of control. Mere
ownership, without control, can provide a basis for a permit denial. As
such, a person who is an owner under the definition we adopt today
cannot successfully challenge such ownership by demonstrating a lack of
ability to control. The only way to successfully challenge ownership is
to demonstrate that the predicate facts indicating

[[Page 79596]]

ownership are not true, i.e., the person is not a sole proprietor or
majority shareholder.
The same commenter said that the 10 percent threshold of ownership
in section 507 of the Act, 30 U.S.C. 1257, should also be the threshold
of ownership under our definition because, under certain circumstances,
10 percent ownership ``gives effective control to an entity.'' Another
commenter agreed, making the same argument relative to section 507 of
the Act, 30 U.S.C. 1257. The commenter claims, in substance: (1) The
greater than 50 percent threshold is ``too restrictive for any
meaningful application'' of SMCRA provisions; (2) few, if any, coal
companies have a 50 percent owner; and (3) owners of substantial means
in the company should be on notice of their ownership obligations to
encourage compliance.
We disagree that the greater than 50 percent threshold is too
restrictive and that the 10 percent threshold referenced in section 507
of the Act, 30 U.S.C. 1260(c), is appropriate. As noted, the Act does
not define the term ``owned.'' Congress, in using that term, did not
indicate if it meant partially owned or wholly owned. Thus, arguments
can be made that as little as a few shares of stock all the way to 100
percent ownership, or anywhere in between, should constitute ownership.
We adopted the greater than 50 percent threshold because greater than
50 percent ownership will usually confer control. However, we emphasize
that a regulatory authority need not demonstrate actual control to deny
a permit based on our definition of ownership.
We agree that even as little as 10 percent ownership may constitute
effective control of an entity. Indeed, in striking down our previous
presumption of ownership or control based on 10 through 50 percent
ownership of an entity, the court of appeals, in NMA v. DOI II, noted
that as little as 10 percent ownership ``may, under specific
circumstances, confer control.* * * '' 177 F.3d at 6-7. As such, we
adopted the 10 through 50 percent criterion as an example which may
constitute control. See final paragraph (5)(iii). For ownership of 50
percent or less, it is appropriate to tie such ownership to control.
Under paragraph (5) of the definition of ``control or controller,'' a
regulatory authority attempting to sustain a finding of control based
on 10 through 50 percent ownership must also demonstrate that that
person has the ability to determine the manner in which mining is
conducted. At paragraph (5)(iii), we also introduced the concept of
``relative percentage'' of ownership as an example of possible control.
For example, a person may own only 20 percent of an entity, but may
nonetheless be the greatest single owner of the entity. In that
context, what may seem like a relatively small percentage of ownership
may in fact confer actual control. Finally, while we note that less
than 10 percent ownership is not likely to confer control, if a 10
percent shareholder does in fact control an entity, the applicant is
required to identify the person in a permit application. Also, in
identifying owners or controllers which are not disclosed by the
applicant, a regulatory authority has leeway under paragraph (5) of the
control definition to establish that even such minimal ownership
constitutes control.
A commenter suggested that we change the portion of the proposed
definition of ``ownership'' regarding percentage of ownership to ``more
than 50 percent or controlling interest in the stock.'' In substance,
this commenter believes that a controlling interest of less than 50
percent is sufficient to impute ownership.
We disagree. The final definition of ownership includes
``possessing or controlling in excess of 50 percent of the voting
securities or other instruments of ownership of an entity.'' A person
must own or control greater than 50 percent of the instruments of
ownership in order to fall within our definition of ownership. If a
person is the greatest single owner, but owns less than 50 percent,
that is an indicator of actual control under paragraph (5)(iii) of our
definition of control or controller, but it does not constitute
ownership under this final rule.
Several commenters suggested that we delete the last part of the
proposed definition: ``or having the right to use, enjoy, or transmit
to others the rights granted under a permit.'' These commenters said
that the phrase could ``result in improper interpretations'' by
regulatory authorities. Alternatively, they agreed that it is
unnecessary because it is clear that an owner possesses these rights.
We agree with the latter comment. Therefore, we removed the phrase from
the final definition of ``own, owner, or ownership.''
A commenter said that the proposed definition of ownership was
``without any consistent context,'' and that, ``[f]or the purposes of
section 510(c), ownership means one thing--ownership of the mine
operation.'' The commenter continued: ``The definition here does not
even reference [a] mine operation.'' Another commenter said: ``[t]hese
paragraphs do not specify `owner or controller' of what: no operation
is referred to in this section, only violations.''
We disagree that the proposed definition was without consistent
context. However, we modified the proposed definition of ``ownership''
for the sake of simplification. Our definitions of ownership and
control are not restricted to the implementation of section 510(c);
rather, as explained above, the definitions also relate to the permit
application requirements of section 507 and its implementing
regulations. As such, while the definitions are of obvious importance
to our implementation of section 510(c), we see no particular reason to
define ownership or control exclusively in terms of that one section of
the Act. At the same time, our definition of ownership is fully
consistent with section 510(c).
As explained in more detail in section VI.F. of this preamble, we
disagree with the argument that ownership of an entity does not equate
to ownership of that entity's surface coal mining operations. Indeed,
this argument was advanced and rejected in NMA v. DOI II. Under this
final rule, as well as our previous rules, if a parent company owns or
controls a subsidiary, the parent company is also a de facto owner or
controller of the subsidiary's operations. The commenter's statement
that under section 510(c) ownership means ownership of the mine
operation begs the question: What does ``ownership'' mean? We answered
that question by adopting a definition of ``own, owner, or ownership''
in this final rule. We chose to define the term and apply it in a
manner which encompasses both direct ownership and indirect ownership
through intermediary entities.
Finally, a commenter suggested, in substance, that we add ``may''
to the definition of ``ownership'' to clarify that the proposed factors
do not always constitute ownership. We decline to adopt this
commenter's suggestion. Our final definition of ``own, owner, or
ownership'' comprises only two specific circumstances, which always
constitute ownership. If the predicate facts are true, then the person
is an owner. As such, there is no need to add ``may'' to the
definition.
Comments on the Proposed Definition of ``Control''
Our final definition of control includes five categories of persons
who are deemed to be controllers. Four of the five categories were
proposed as examples of ownership or control; we

[[Page 79597]]

will address comments on the proposed examples in the relevant section
below.
The one category that was not proposed as an example is paragraph
(5) of the final control definition, which identifies as controllers
those persons ``having the ability, alone or in concert with others, to
determine, indirectly or directly, the manner in which a surface coal
mining operation is conducted.'' We modified and adopted this criterion
from paragraph (b)(2) of the definition of control in proposed
Sec. 778.5. This provision is carried forward, in substance, from the
``deemed'' portion of our definition at previous Sec. 773.5. In
addition to the specific factors establishing control--e.g., being a
permittee, operator, etc.--it is important to retain a general category
which allows regulatory authorities and the regulated industry to
identify persons who have the ability to control a surface coal mining
operation, regardless of their official title, label, or status. This
will also allow regulatory authorities to consider specific facts
pertaining to a relationship--such as the existence of personal
relationships, informal agreements, and the mining histories of the
parties in question--in determining whether control is present. In the
absence of such a provision, persons could easily use creative titles
or business arrangements to evade regulation.
Several commenters objected to the repeated use of the term
``controller'' in the proposed rule language. They said the use of the
term ``controller'' is a new term or concept that represents an
expansion of OSM's authority under section 510(c) of SMCRA, 30 U.S.C.
1260(c). Two of these commenters asked that we define ``controller'' in
Sec. 701.5 or stop using the term in the regulations. Other commenters
noted that the proposed rule uses the terms ``ownership'' and
``control'' several times before defining them in Sec. 778.5. Several
of these commenters preferred that the term be eliminated but said that
if it is used, it should only refer to an applicant.
We agree that ``control'' should be defined in Sec. 701.5; for the
reasons stated above we adopted this modification. Also, while the
proposed definition of ``control'' encompassed the noun form of the
word--``controller''--we modified the defined term to control or
controller to remove any confusion. The modifications we adopted add to
the clarity of the definition.
The term ``controller,'' as used in the proposal and this final
rule, is not a new term or concept. The statuses and relationships
which constituted control and the examples of control in the proposed
rule were largely imported from the valid portions of our previous
regulations. This final rule carries forward many of the control
concepts contained in the valid portions of our previous regulations
and the proposal. Further, as previously noted, since ``control'' is
not defined in the Act, it is important for us to define the term so
that we may adequately implement section 510(c) and other sections of
the Act. We also disagree that ``controller'' should be used to refer
only to an applicant. Persons other than applicants routinely own or
control mining operations. To arbitrarily restrict the definition only
to applicants would circumvent the plain meaning and intent of the Act.
Various commenters said the proposed definition of ``control'' was
inconsistently used, over-broad, ambiguous, and inherently
contradictory. These commenters also said the proposed definition
contradicted the proposed definition of ``ownership,'' expanded the
base for assignment of potential liabilities, and exceeded statutory
authority. These and other commenters also suggest that the proposed
definition was vague, and that the final definition should be clear and
concise. One commenter said the vagueness of the proposal dooms its
application as unlawful because it fails to provide fair notice of what
is expected prior to any sanctions or deprivation of rights. Another
commenter echoed the objection stating that because the proposed
definition of ``control'' is vague, it could mean delays in permitting,
as well as penalties and other sanctions, for failure to disclose all
controllers in applications. The commenter said: ``Before the applicant
is subjected to this sanction, it should be afforded an ample and
complete opportunity to understand, clearly and concisely, the types of
entities and relationships that OSM expects to be disclosed when the
applicant submits its application.''
We disagree with these commenters. First, we are well within our
statutory authority to define the terms ownership and control, which
are not defined in the Act. Our final definition of ``control or
controller'' is reasonable and fully consistent with section 510(c) of
the Act, 30 U.S.C. 1260(c), as well as the two rulings of the D.C.
Circuit in the NMA litigation. Second, as stated previously, the
definition is logical, consistent, and well supported by our experience
implementing SMCRA since its enactment in 1977. Also, this final rule
substantially improves upon the proposal in terms of conciseness and
clarity. We find nothing ``inherently contradictory'' about either the
proposal or the final rule.
Also, this final rule does not expand ``the base for assignment of
potential liabilities,'' as the commenters assert. As we stress
throughout this preamble, the ownership or control definitions and
permit eligibility aspects of this rule do not purport to hold a person
personally liable for another person's violations. Rather, the
definitions of ownership or control are relevant to, among other
things, the information submission requirements for applicants and
permittees, the section 510(c) compliance review obligations of
regulatory authorities, regulatory authorities' findings of ownership
and control, and challenges to ownership or control listings or
findings. Despite the view of some commenters, denial of a permit does
not equate to personal liability. True, the ownership and control
information we receive may assist us in initiating enforcement actions
under SMCRA, but that is entirely consistent with and appropriate under
the Act. Indeed, the NMA v. DOI II court expressly upheld our right to
require submission of information ``needed to ensure compliance with
the Act.'' 177 F.3d at 9.
One of the commenters said the proposed definition of ``control''
is inconsistent with the way control information is used to determine
permit eligibility. The commenter also asked whether a controller
controls the operation as a whole, or just a part of an operation.
There is no precise correlation between the permit information
disclosure requirements of the final rule and the section 510(c) permit
eligibility determination required under final Sec. 773.12. That is,
the Act and our regulations require the submission of specific
information, which the D.C. Circuit has ruled cannot form the basis of
our permit eligibility determinations. For example, while we must still
require certain information pertaining to persons who own or control
the applicant, we may no longer routinely consider that information in
the section 510(c) permit eligibility process. However, we have no
authority to delete information disclosure requirements imposed by
other sections of the Act. Furthermore, the information required by the
Act and this final rule is pertinent to other statutory obligations
beyond permit eligibility determinations, such as enforcement actions,
including individual civil penalty assessments.
With regard to whether a controller controls the entire operation,
or just a portion thereof, the answer is twofold.

[[Page 79598]]

For the most part, the persons identified in the deemed portion of the
definition (paragraphs (1) through (5)), as well as the examples of
control in paragraphs (5)(i) through (vi), will control the entire
operation. However, we recognize that some persons will have control
over a significant aspect of an operation, but not necessarily the
entire operation. In light of this reality, and in response to several
comments, we modified the proposal in key respects. As to the
information submission requirements in final Sec. 778.11(c)(5), we now
allow applicants to identify the ``portion or aspect of the surface
coal mining operation'' which their owners and controllers own or
control. Further, in the final challenge procedures at Secs. 773.25
through 773.28, we allow persons to challenge their alleged ownership
or control ``of an entire surface coal mining operation, or any portion
or aspect thereof.'' These requirements and procedures will allow
regulatory authorities to link the proper persons to violations, as
intended by section 510(c), and allow persons to challenge an ownership
or control listing or finding by demonstrating that they do not own or
control a particular portion or aspect of the operation. In our view,
this approach properly takes into account the reality of ownership and
control relationships in the coal mining industry.
Another commenter said the central focus in identifying control
relationships should remain ``the capability of an entity to direct or
affect the compliance status of the operations and activities of the
nominal applicant, i.e., to direct which reserves are to be mined, to
design or control the manner of operation, to direct the flow of coal,
etc.'' We agree that these are important factors in determining
control; they are encompassed in paragraph (5) of the final definition
of control.
A commenter noted that the proposed definition included those who
``own, manage, or supervise'' and asked if it is our ``intent to
require the listing of mine management personnel responsible for day-
to-day operating decisions at a mine.'' The commenter said that ``these
are the people most often responsible for the causation and abatement
of violations.''
The final definition of ``control or controller'' does not include
the phrase, ``own, manage, or supervise.'' We also did not adopt the
proposed example relating to persons who direct the day-to-day business
of the surface coal mining operation. See proposed Sec. 778.5(a)(2). If
these persons are controllers, they will be covered under final
paragraph (5) of the definition. We do not necessarily disagree with
the commenter that mine management personnel are ``the people most
often responsible for the causation and abatement of violations.''
However, these persons may not always be controllers of a surface coal
mining operation. Instead, the controllers may be the persons who
direct mine management personnel. Nonetheless, depending on the size of
a company, the number of operators and employees at a site, or the
delegation of authority within a company, mine management or other
personnel may in fact have the ability to determine the manner in which
a surface coal mining operation is conducted. The initial onus is on
the applicant to identify its owners or controllers, consistent with
the final definitions. See final Sec. 778.11(c)(5). Regulatory
authorities then have the authority to identify owners or controllers
who might not have been disclosed. See final Sec. 774.11(f).
A commenter objected to what the commenter called an ``ability to
control standard.'' The commenter suggested that the standard should be
actual control and not ability to control or influence. As explained
above, we retained the ``ability to control'' concept at paragraph (5)
of the final definition of ``control or controller.'' In our view, it
is the power or authority to control, and not the exercise of control,
which is the primary determinant of ``actual control.'' As previously
explained, when we use the term ``actual control'' in this preamble, we
are referring to both the exercise of control and the ability to
control. The failure to exercise one's ability to control, when such
control could be exercised, in order to prevent or to abate violations
is of the same nature as an action causing a violation.
We also note that we removed the term ``influence'' from the
definition of control. However, one of the examples of control refers
to persons who contribute capital or other working resources and
substantially influence the conduct of a surface coal mining operation.
This example is discussed below.
The same commenter also said that the ability to control should be
limited to the elements of an agency relationship ``established between
the applicant and other persons.'' We disagree that ``control'' should
be so narrowly defined. The definition we adopt today includes relevant
agents of an applicant or permittee and all other persons who can
determine the manner in which a surface coal mining operation is
conducted. Our definition is reasonable and consistent with section
510(c) of SMCRA, 30 U.S.C. 1260(c).
A commenter suggested, in substance, that we add ``may'' to the
definition of ``control'' to clarify that the factors in the proposed
definition do not always constitute control. As stated above, our final
definition of ``control or controller'' consists of a series of
statuses or relationships which always constitute control (paragraphs
(1) through (5)), and a series of examples in paragraphs (5)(i) through
(5)(vi) which may constitute control. Use of the word ``may'' is
appropriate when referring to the examples of control in paragraph (5),
but it would be inappropriate in the other portions of the definition,
since the identified statuses and relationships will, and do,
constitute control in all cases.
Comments on the Proposed Examples of (Ownership or) Control
The proposed rule provided examples of ownership or control. See
proposed Sec. 778.5(a). In this final rule, we modified the proposed
examples and moved them to the definition of ``control or controller''
to emphasize that they are more properly viewed as examples of control,
not ownership. The examples now pertain only to paragraph (5) of the
definition, which refers to a ``person having the ability, alone or in
concert with others, to determine, indirectly or directly, the manner
in which a surface coal mining operation is conducted.'' With respect
to the conduct of surface coal mining operations, this criterion is the
essence of ``control.'' Thus, when we refer to ``examples of control,''
we are referring to the examples enumerated in paragraphs (5)(i)
through 5(vi) of the final control definition. The list of examples is
not exhaustive; a regulatory authority retains flexibility to consider
any and all facts or circumstances which may indicate that a control
relationship exists.
General Comments on the Proposed Examples of Control
A commenter suggested that we adopt the first sentence in proposed
paragraph (a): ``This part applies to any person who engages in or
carries out mining operations as an owner or controller,'' but not
adopt any of the eight proposed examples. The commenter said we should
eliminate the examples and, ``in the spirit of primacy,'' leave it up
to the regulatory authorities to determine who is an owner or
controller. The commenter said the list of examples contains broad,
vague, and potentially confusing definitions, and that ``definitions
for `ownership' and

[[Page 79599]]

`control' at [proposed] Sec. 778.5(b)(1) and (2) provide [regulatory
authorities with] sufficient guidance.''
We agree that the definitions of ``own, owner, or ownership'' and
``control or controller'' stand alone, but the examples are useful for
both the regulated industry and regulatory authorities to consider in
determining who may be controllers under paragraph (5) of the final
definition of control. We derived the examples from our experience in
implementing SMCRA since 1977 and from comments received on the
proposed rule. We see no reason not to pass on the benefit of our
experience, via the examples of control, to persons who have
responsibilities under this final rule. We also note that regulatory
authorities providing comments on the proposed examples of control did
not raise concerns regarding State primacy.
A commenter said that OSM proposed eight categories of
``conclusively deemed `owners or controllers.' '' The commenter argued
that ``no manager or supervisor other than the mine manager [should] be
considered a controller.'' Finally, the commenter also asserted that
requiring permittees to notify the regulatory authority under proposed
Sec. 774.13(e) each time there was a change in personnel or in the
ownership or control structure would impose a significant burden.
As explained above, we clarified that the examples at paragraphs
(5)(i) through (vi) of the final control definition do not conclusively
establish control. In addition, we did not adopt proposed
Sec. 774.13(e), which would have required updates of certain
information, including changes of officers and directors, under the
requirements for permit revisions. Instead, we adopted a notification-
only process in final Sec. 774.12 that is not subject to the
application, notice, and public participation requirements for permit
revisions. We disagree with the commenter's assessment that only a mine
manager should be considered a controller; other managers and
supervisors may well be controllers, depending on their
responsibilities and conduct. Neither do we agree that the mine manager
is always a controller. The definition we adopt today reasonably
identifies persons who control a surface coal mining operation.
The same commenter expressed concern regarding OSM's attempt to
distinguish between employees of mining operations and those who engage
in or carry out mining operations. The commenter said its own
``participatory management style'' has `` `pushed down' responsibility
for many activities, including reclamation and environmental
compliance, to the lowest possible level.''
A business entity is free to adopt any management model it desires.
However, persons meeting the definition of ownership or control cannot
escape their responsibilities under the Act simply because they choose
unique management styles or ``push down'' their responsibilities to
lower management levels. As explained above, the lower level employees
to whom the commenter refers will not routinely be ``controllers''
under the regulatory definition. However, if these employees do in fact
have the ability to determine the manner in which mining is conducted,
then they have the authority and responsibility normally accorded to
higher level managers. In such cases, they should be held accountable
to exercise their authority and execute their responsibilities in
ensuring that mining and reclamation are conducted in accordance with
the requirements of the permit. However, the fact that subordinate
employees may exercise control does not allow higher level managers,
who have the ability to control those employees, to escape their status
as controllers.
A commenter said that ``the `control' parameters exceed the scope
of SMCRA and violate the spirit, if not the letter, of (NMA v. DOI I),
by allowing OSM to expand `ownership and control' beyond the plain
meaning and common legal interpretation of those terms.''
We disagree. We adopted limited and succinct definitions of
``control or controller'' and ``own, owner, or ownership,'' which are
consistent with section 510(c) and other provisions of the Act. Also,
neither the final definition of ``control or controller'' nor the
supporting examples violates the D.C. Circuit's rulings in NMA v. DOI I
or NMA v. DOI II. In NMA v. DOI I, the court did not invalidate the
definition of ownership or control itself, just the application of the
definition in the permit eligibility context. NMA v. DOI I, 105 F.3d at
694. The NMA v. DOI II court did rule specifically on our previous
definition, but only in terms of our use of rebuttable presumptions.
NMA v. DOI II, 177 F.3d at 5-7. In this final rule, we eliminated the
use of rebuttable presumptions. Further, the court did not rule on any
of the deemed categories of ownership or control, including paragraph
(a)(3) of the definition at previous Sec. 773.5, which defined
ownership or control, among other things, as: ``[h]aving any other
relationship which gives one person authority directly or indirectly to
determine the manner in which an applicant, an operator, or other
entity conducts surface coal mining operations.'' We retained the
substance of the previous (a)(3) category in paragraph (5) of the final
definition of ``control or controller.''
A commenter said that the proposed rule: (1) Created newly defined
persons and entities, (2) identified them as ``owners'' and
``controllers'' and (3) created ``novel enforcement tools'' that focus
on the owners and controllers. The commenter also said OSM lacks the
authority to extend the use of the terms ``owner'' and ``controller''
beyond section 510(c) of SMCRA, 30 U.S.C. 1260(c). We disagree. Neither
the proposed rule, nor this final rule, creates newly defined persons
or entities. Rather, we define ``own, owner, or ownership'' and
``control or controller'' in a manner which is fully consistent with
section 510(c) of the Act (30 U.S.C. 1260(c)), the decisions of the
D.C. Circuit in the NMA litigation, and fundamental tenets of corporate
law. Also, we did not create ``novel enforcement tools.'' The
enforcement provisions we adopt today at final part 847 are derived
from the plain language of, and are fully consistent with, the Act.
Finally, we also disagree that ``owner'' and ``controller'' are terms
that must be confined to section 510(c), 30 U.S.C. 1260(c). As the D.C.
Circuit expressly held, SMCRA's information requirements at section
507(b), 30 U.S.C. 1257(b), ``are not exhaustive,'' and OSM may require
the submission of additional information ``needed to ensure compliance
with the Act.'' NMA v. DOI II, 177 F.3d at 9. Under this rationale, the
court upheld our previous information disclosure requirements, which
required applicants to disclose information--including ownership and
control information--beyond the requirements expressly set out in
section 507, 30 U.S.C. 1257; this final rule carries forward much of
our previous information provisions. As explained elsewhere in this
preamble, the ownership and control information we require applicants
to submit pursuant to final Sec. 778.11(c)(5), (d), and (e) is
necessary to enforce both section 510(c), and other provisions of the
Act.
Several commenters claim that the proposed rule disregards the
corporate form to impose personal liability on officers, directors, and
shareholders (including parent corporations) of a corporation. Several
of these commenters cited the decision in United States v. Bestfoods,
524 U.S. 51 (1998), in support of their contention.
We disagree. Nothing in the permit eligibility provisions of this
rule or in section 510(c) of the Act renders a

[[Page 79600]]

person legally liable or responsible for another person's outstanding
violations. A finding of ownership or control under section 510(c) and
this rule does not require a person subject to the finding to abate any
violations (though he or she may be directly liable for abatement under
other provisions of the Act). The permit eligibility aspect of this
rule is not a direct enforcement mechanism brought to bear against
owners or controllers since the permit eligibility provisions, which
rely on the definitions of ``own, owner, or ownership'' and ``control
or controller,'' cannot lead to an injunction or judgment against
owners or controllers. They may, however, result in permit
ineligibility pursuant to section 510(c)'s mandate that a permit
``shall not be issued'' if an operation owned or controlled by the
applicant is currently in violation of the Act or other applicable
laws. We also stress that owners or controllers may be subject to
direct enforcement actions, as appropriate, under other provisions of
the Act and our regulations.
United States v. Bestfoods assessed the standards to determine the
financial liability of parent companies for the actions of their
subsidiaries under the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA). Unlike the provisions at
issue in Bestfoods, our definition and the associated rules do not
impose personal financial liability on officers, directors, or
shareholders. It instead, determines when persons are eligible to
receive permits under section 510(c) of SMCRA. Being ineligible to
receive a permit based on ownership or control of operations with
outstanding violations is not the same as being personally liable for
the debts or wrongs of a corporation. As such, Bestfoods is simply not
applicable to this rulemaking. Indeed, in NMA v. DOI II, which was
decided after the decision in Bestfoods, the court upheld rules which
allowed parent companies to be denied permits based on the violations
of their subsidiaries. NMA v. DOI II, 177 F.3d at 4-5. The final rule
adheres to this principle.
In a similar vein, two commenters said it is a misconception that
persons who own or control a corporate permittee or operator thereby
``engage in or carry out'' the surface coal mining operations owned by
that permittee or operator. In substance, these commenters believe
that, under Bestfoods, ownership or control of an entity does not
equate to ownership or control of the entity's operations.
Again, we disagree. This argument was presented and rejected in NMA
v. DOI II, which was decided after the decision in Bestfoods. The court
expressly upheld our previous regulations, which allowed for permit
denials when an applicant indirectly owned or controlled ``downstream''
operations through ownership or control of ``intermediary entities.''
As such, the court expressly endorsed rules which allowed for permit
denials based on ownership or control of entities, rather than direct
ownership or control of operations. NMA v. DOI II, 177 F.3d at 4-5. The
final rule adheres to this principle.
A commenter said that ``any suggestion that section 506 and section
510(c) together allow the agency to attribute the responsibilities of
one who holds a permit (the ``permittee'') to anyone the agency deems
as an owner or controller of mining operations is simply arbitrary.''
The permit eligibility aspects of this rule do not impose personal
liability or responsibility on owners or controllers to abate or
correct violations at operations they own or control, although they may
be liable for abatement under other provisions of the Act and our
implementing regulations. The preamble to this rule and the underlying
proposed rule explain the rationale for each category of ownership and
control.
A commenter asked the meaning of ``engages in or carries out.'' The
commenter said that the language of the proposed rule does not
distinguish between employees and those ``who OSM describes, under the
amorphous phrase, as persons `who engage in or carry out mining
operations.''' In an effort to simplify and clarify our final ownership
and control definitions, we are not adopting the phrase ``engages in or
carries out'' in the final regulatory language. The final definitions
identify those persons who must be disclosed in permit applications as
owners or controllers of the applicant.
Another commenter said that the proposed examples capture people
who do not engage in or carry out surface coal mining operations, and
thus fall outside the jurisdictional reach of SMCRA. The commenter said
our definition should focus on actual control. The definition we adopt
today does focus on actual control, which includes both the ability to
control and the exercise of control.
Elimination of the Rebuttable Presumption for Ownership or Control
Paragraph (b) of our prior definition of ownership or control
listed six relationships which were ``presumed to constitute ownership
or control.'' 30 CFR 773.5 (1997). The presumption could have been
rebutted if the person subject to the presumption could demonstrate
that he/she in fact ``does not have the authority directly or
indirectly to determine the manner in which the relevant surface coal
mining operation is conducted.'' Id. Once a regulatory authority made a
prima facie showing that the presumption applied because the person fit
into one of the enumerated categories, the burden shifted to the person
to disprove that he or she was an owner or controller. Our rationale
for shifting the burden rested on our belief that the person subject to
the presumption was most likely to have access to the information
regarding the nature of the relationship and thus should bear the
burden of producing evidence demonstrating a lack of control.
In our 1998 proposed rule, we proposed to eliminate rebuttable
presumptions from our ownership and control definitions. See 63 FR
70604 for an explanation of our rationale. After the proposal was
published, the NMA v. DOI II court struck down two of the previous
rule's presumptions pertaining to officers and directors and 10 through
50 percent owners of entities. This ruling provided further impetus to
move forward with our proposed elimination of presumptions.
Our final rule emphasizes that applicants have the burden to
identify all owners or controllers in a permit application (see final
Sec. 778.11(c)(5)), which must be accurate and complete before a permit
can be issued. SMCRA section 510(b)(1), 30 U.S.C. 1257(b)(1); final 30
CFR Secs. 778.9(b) and 777.15(a). Further, if we find that there has
been a knowing withholding of information required under 30 CFR part
778, including ownership or control information, we will refer the
evidence to the Attorney General for prosecution under final 30 CFR
847.11(a)(3) and section 518(g) of the Act, 30 U.S.C. 1268(g). See also
final 30 CFR 773.9(d). Also, regulatory authorities have the ability to
later identify owners or controllers who were not disclosed in the
permit application. The proposed provisions, taken together, will
ensure that all owners and controllers are properly identified.
A commenter opposed eliminating the rebuttable presumptions, noting
that rebuttable presumptions are an evidentiary tool used to shift the
burden of producing information to the individual or individuals most
likely to have access to information. The commenter also said OSM had
not sufficiently justified eliminating the presumptions ``since the
underlying questions of whether control exists or

[[Page 79601]]

not, and whether ownership exists or not, will still be required to be
adjudicated.'' According to the commenter, the absence of presumptions
of ownership or control would increase the burden on the agency to
demonstrate the existence of the relationship. The commenter stated
that the permit applicant should bear that responsibility under section
507(b) of the Act.
Consistent with the commenter's observation that persons subject to
our previous presumptions were most likely to have access to pertinent
information, applicants are also most likely to possess the knowledge
and information necessary to determine their owners and controllers.
Thus, this rule requires applicants to identify all owners and
controllers and list them in the permit application. As explained
above, the information submitted by applicants must be accurate and
complete. If applicants properly identify all owners and controllers in
a permit application, there is no additional burden on regulatory
authorities. However, if an applicant fails to disclose an owner or
controller, and a regulatory authority attempts to identify an owner or
controller under final Sec. 774.11(f), the regulatory authority will
appropriately bear the initial burden of establishing the existence of
the ownership or control relationship. The rule does not alter the
burdens and responsibilities that section 507 of the Act assigns to
permit applicants.
Another commenter stated that we should not eliminate the two
presumptions that were not challenged by the National Mining
Association, or the two presumptions on which we prevailed. The
commenter suggested that as to the two presumptions which were
invalidated, the court of appeals did not preclude regulatory
authorities from making a finding that a 10 through 50 percent
shareholder, officer, or director in fact owns or controls a violating
entity.
The commenter presented no new arguments in favor of retaining the
presumptions. Therefore, for the reasons set forth in the preamble to
the proposed rule, the final rule does not include presumptions.
However, we agree with the commenter that the court of appeals did not
preclude regulatory authorities from making findings of fact with
regard to persons covered by the invalidated presumptions. Nothing in
the final rule precludes regulatory authorities from doing so. We also
added final Sec. 774.11(f) to allow regulatory authorities to make
findings of ownership or control if the applicant fails to disclose all
required ownership or control information in its application, or to
update the information as necessary.
Proposed Sec. 778.5(a)
Proposed Sec. 778.5(a) stated that ``this part applies to any
person who engages in or carries out mining operations as an owner or
controller,'' and provided examples of owners or controllers to support
the definitions of ``ownership'' and ``control'' at proposed
Sec. 778.5(b). Several commenters said that we should clarify that the
persons identified in the examples ``are not automatically considered
owners and controllers.'' We agree. As explained above, this final rule
clarifies that the categories at paragraphs (5)(i) through (vi) of the
final definition of ``control or controller'' are merely examples of
those persons who could have control, they are not deemed categories of
control.
Proposed Sec. 778.5(a)(1)--Officers, Directors, and Agents
Our first example of owners or controllers was ``the president,
other officers, directors, agents or persons performing functions
similar to a director.'' We retained the substance of this provision as
an example of control at paragraph (5)(i) of our final definition of
``control or controller.'' While we anticipate that the president of a
business entity will almost always control the entity, a president will
not necessarily do so in every instance. Therefore, we included
presidents as an example of persons who may control an entity rather
than classify presidents as ``deemed'' controllers.
Two commenters said that our statement in the preamble to the
proposed rule that we do not intend for all employees to be identified
in a permit application is inconsistent with our proposal ``to define
`owner or controller' to include agents'' and our ``acknowledg[ment]
that all employees are `agents.' '' According to the commenters, if
agents are owners or controllers, and if all employees are agents, then
the proposal would have required all employees to be identified in the
application as owners or controllers. These commenters also said that
``the class of employees who actually engage in mining operations would
include the very employees with the least ability to control the
permittee's decisions concerning mining operations: equipment
operators, pumpers, truck drivers, drillers, etc.''
We did not intend for every employee to be identified in an
application. The final definition of ``control or controller'' lists
agents are an example of persons who may have actual control. This rule
does not require all agents or employees to be disclosed in a permit
application, only those agents and employees who meet our final
definition. As a general matter, our final definition does not
encompass the specific employees identified by the commenters--
``equipment operators, pumpers, truck drivers, drillers, etc.''--since
these individuals typically do not have the ability to determine the
manner in which a surface coal mining operation is conducted. Rather,
these employees are typically under the supervision of, or take orders
from, management personnel who do possess the ability to control the
operation. However, should the responsibilities, duties, or actions of
these employees meet the definition of ``control or controller,'' then
they must be disclosed as, or may be found to be, controllers under
final Secs. 778.11(c)(5) and 774.11(f), respectively.
A commenter asked for an explanation of the phrase ``functions
similar to a director.'' A corporate board of directors controls and
manages the business affairs of the corporation in accordance with
applicable State law, articles of incorporation, and corporate by-laws.
The board of directors has ultimate decision-making authority with
respect to significant corporate matters. The will of the board is
usually manifested by a majority vote of the directors. A person, such
as a director, cannot escape being a controller under this final rule
by asserting that he or she is a member of a group, e.g., a board of
directors, and can only exercise authority collectively with the group.
At final paragraph (5), we clarify that a controller is a person who
has the ability, alone or in concert with others, to determine the
manner in which a surface coal mining operation is conducted. Thus, if
a director votes with the majority of the board, we cannot foresee an
instance in which that director is not a controller of that particular
aspect of the corporation's operations. However, a director who
dissents with regard to a particular course of action--or can otherwise
prove that he or she took meaningful actions to prevent or abate a
violation--likely is not a controller as to that aspect of the
operation.
The phrase ``functions similar to a director,'' which we borrow
from section 507(b)(4) of the Act, 30 U.S.C. 1257(b)(4), clarifies that
a person may have the functional power, but not the official title, of
a director. In essence, a person who, alone in or concert with others,
exercises final managerial control or authority over the affairs of a
business entity--be it a corporation or

[[Page 79602]]

other entity--performs a function similar to a director.
Proposed Sec. 778.5(a)(2)--Day-to-Day Activities
Our second example pertained to those ``persons who have the
ability to direct the day-to-day business of the surface coal mining
operation.'' We are not adopting this example because it is subsumed
within final paragraph (5) of the control definition.
Proposed Sec. 778.5(a)(3)--Permittees and Operators
Our third example encompassed permittees and operators. We decided
to include permittees and operators in the deemed portion of the final
control definition at paragraphs (1) and (2), respectively. There is no
time when a permittee does not control its entire surface coal mining
and reclamation operation. In addition, experience has demonstrated
that there is no time when an operator does not control its own conduct
on a surface coal mining and reclamation operation. However, we
recognize that non-permittee operators will not necessarily control the
entire operation. The final challenge procedures at Secs. 773.25
through 773.28 allow persons, including operators who are listed as or
found to be controllers, to challenge their alleged ownership or
control ``of an entire surface coal mining operation, or any portion or
aspect thereof.'' There were no specific comments on the proposed third
example.
Proposed Sec. 778.5(a)(4)--Partnerships and Limited Liability Companies
Our fourth example pertained to ``[p]artners in a partnership, the
general partner in a limited partnership, or the participants, members,
or managers of a limited liability company.'' Based in part on guidance
from the D.C. Circuit in NMA v. DOI II, we moved the general partner in
a partnership criterion to the deemed portion of the control definition
at final paragraph (3). We retained the remainder of the proposed
provision as an example of control at final paragraph (5)(ii).
With regard to our previous definition identifying general partners
in a partnership as presumptive owners or controllers, the D.C. Circuit
stated: ``As for subsection (4)'s presumption that control vests in
each general partner, it naturally flows from `the tenet of partnership
law that a general partner has control of partnership affairs as
against the outside world.' '' NMA v. DOI II, 177 F.3d at 7 (citations
omitted). While the court was ruling in terms of a presumption of
control, and not a category of deemed control, the court's statement
clearly supports our inclusion of general partners of a partnership in
the deemed portion of our control definition. Our experience in
administering SMCRA also bears out this reality.
On the other hand, partners in a partnership and participants,
members, or managers of a limited liability corporation will not always
control the business entity, though they certainly might. Therefore, we
included these persons as examples of potential controllers in
paragraph (5)(ii) of the final definition.
A commenter said limited liability companies should not be treated
in the same manner as limited partnerships, since, unlike limited
partners, the individuals in a limited liability company do not retain
the capability to make decisions. The commenter also said OSM should
``re-evaluate the historic policy of allowing new permits to be issued
based only on the evaluation of the general partner in a partnership.''
Another commenter suggested that members of a limited liability company
are often passive investors who ``have little to do with the functional
operation of any company, let alone a mining company'' and ``know
little or nothing about the mining industry, let alone having any
control over an operation.''
The final rule defines owners or controllers of business entities
or mining operations without any regard to the particular form of the
business entity. Hence, we treat partners in a partnership and members
of a limited liability company similarly to the extent that we include
them as examples of persons who may control an entity. Under paragraph
(5) of our final definition, control determinations rest upon a
person's ability to determine the manner in which a surface coal mining
operation is conducted, not the type of business entity or the person's
title. It is incorrect to say that OSM's ``historic policy'' included
only an examination of general partners in a partnership. While not
specifically mentioned in a deemed or presumed category of ownership or
control, regulatory authorities certainly had flexibility to determine
whether other persons had authority to determine the manner in which a
surface coal mining operation was conducted. See previous Sec. 773.5,
at paragraph (a)(3) of the ownership or control definition. Finally, we
do not fully agree with the commenter's generalization that the
members, managers, or participants in limited liability companies are
merely passive investors with little involvement with a company's
operations and little or no knowledge of the mining industry. If that
statement is true in a given instance, then the person is highly
unlikely to be a controller under our definition any way.
Proposed Sec. 778.5(a)(5)--Contract Mining
Our fifth example pertained to ``persons owning the coal (through
lease, assignment, or other agreement) and retaining the right to
receive or direct delivery of the coal.'' We retained the substance of
this provision as an example at paragraph (5)(v) of the final control
definition. Under the final rule, persons who own or control the coal
to be mined by another person through lease, assignment, or other
agreement and have the right to receive or direct delivery of the coal
after mining are potential controllers. The circumstance described in
this example is generally referred to as ``contract mining,'' wherein
an entity (generally referred to as a ``contract miner'' or ``captive
contractor'') obtains a SMCRA permit in its own name, mines the coal
belonging to another person (the owner or lessor), and must deliver the
mined coal to that person or pursuant to that person's directions. The
obligation to deliver the coal to the owner/lessor is often referred to
as a ``captive coal supply contract.'' Generally, persons who have the
ability to control contract miners are controllers who should be barred
from receiving new permits under section 510(c) of the Act, 30 U.S.C.
1260(c), if they fail to prevent or correct violations. Further, most
coal lessors who retain the right to receive the mined coal will be
controllers because they have typically chosen to structure their
relationship with an operator so as to retain the ability to control
the mining operation.
Several judicial and administrative decisions support our inclusion
of the contract mining example. For example, in United States v. Rapoca
Energy Co., 613 F. Supp. 1161 (1985) (``Rapoca''), OSM sued under
section 402(a) of the Act, 30 U.S.C. 1232(a), to collect reclamation
fees from the Rapoca Energy Company, which had contracted with others
to mine the coal it owned. The issue was ``whether a large coal company
that contracts with independent companies to produce coal that it owns
or leases is an `operator' responsible for the payment of [such]
fees.'' Id. at 1163. Finding that Rapoca was liable for payment of the
fees, the court stated:

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

[[Page 79603]]

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

Id. at 1164.
Similarly, in S & M Coal Co. and Jewell Smokeless Coal Co. v.
Office of Surface Mining Reclamation and Enforcement, 79 IBLA 350
(1984) (``S & M Coal''), the Department of the Interior's Office of
Hearings and Appeals (``OHA'') held a lessor of coal liable for
violations at a mining site even though the coal produced at that site
was mined by another party pursuant to an oral contract. In reaching
its decision, OHA noted that the lessor's employees took an active part
in the planning and engineering functions in support of the mining
operations. OHA also held that while the amount of control actually
exercised is indicative of the relationship between the owner of the
coal and the company or individual extracting the coal, the
determination regarding exercise of control should not solely be based
on past exercise of control and that it is important to determine the
extent that a party can exercise control.
Several commenters said that the example should be deleted because
it is ``unfair and discriminates against a coal company simply because
it owns minerals, leases them, and happens to be in the business of
selling coal.'' These and other commenters said, in substance, that
retaining a right of first refusal to purchase coal from a third party,
in an arm's length transaction, is not sufficient to establish control.
Another commenter supported the example, agreeing that entities with an
economic interest in the coal should be considered controllers to the
extent that the entity does or can exercise control over, or derive
benefits from, the mining operation.
We did not delete the contract mining example. Because owners or
lessors of coal are not always ``controllers'' of contract mining
operations, we included contract mining as an example of control in
paragraph (5)(v) of the definition, rather than incorporating it into
the deemed portion of the final definition of ``control or
controller.'' However, when an owner or lessor of coal controls salient
features of an operation performed by a contractor, a determination of
control over the coal mining operation is justified and should be
established. Our extensive experience evaluating and analyzing contract
mining arrangements supports a conclusion that leasing coal combined
with the right to receive or direct delivery of the coal generally
establishes control. As to rights of first refusal, we agree that
retaining such a right, in an arm's length transaction based on market
conditions, will not, in and of itself, always establish control.
However, a regulatory authority certainly has the authority to examine
the particular circumstances to ascertain whether there are other
indicators of control.
Another commenter said that:

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

We disagree. The terms of a contract may establish the rights of the
parties among themselves, but these terms are not a conclusive
determination of the responsibilities of the parties under SMCRA. A
contract in which an owner or lessor of coal purports to contract away
the obligation to comply with SMCRA does not mean that the owner or
lessor is not a controller under section 510(c) of the Act, 30 U.S.C.
1260(c). Again, what is relevant under this rule is whether the owner
or lessor has the ability to determine the manner in which a surface
coal mining operation is conducted.
Proposed Sec. 778.5(a)(6)--Contribution of Capital or Other Resources
Our sixth example pertained to ``[p]ersons who make the mining
operations possible by contribution (to the permittee or operator) of
capital or other resources necessary for mining to commence or for
operations to continue at the site'' We retained the substance of this
provision as an example at paragraph (5)(vi) of our final definition of
``control or controller.'' Under this final rule, persons who
contribute capital or other working resources under conditions that
allow that person to substantially influence the manner in which a
surface coal mining operation is or will be conducted are potential
controllers. We agree with commenters who suggested that influence is
not equivalent to control; however, contribution of capital or other
resources, coupled with substantial influence over the manner in which
the surface coal mining operation is conducted, may be tantamount to
control.
Numerous commenters said that OSM should not ``extend the
`ownership or controller' definition to utilities that have a captive
coal supply contract.'' We deleted direct reference to captive coal
supply contracts in this example. However, if a utility has a captive
coal supply contract whereby it contributes capital to the operation,
substantially influences the conduct of the operation, and can direct
delivery of the coal, the utility is, in all likelihood, a controller
under paragraph (5) of the final definition. That paragraph includes
all persons and entities with the ability to control the manner in
which the surface coal mining operation is conducted. A captive coal
supply contract is typically indicative of a contract mining scenario,
and may be covered under the contract mining example, which we discuss
more fully above.
Numerous commenters said that OSM should not ``extend the
`ownership or controller' definition to mining equipment rental and
leasing companies.'' One asked if equipment dealers who provide credit
in exchange for a security interest are controllers of the mining
operation. Another said that equipment leasing is a valid arm's-length
contract.
We adopted a subparagraph within the final example to clarify that
providing mining equipment in exchange for the coal to be extracted is
a factor which may indicate control. However, under paragraph
(5)(vi)(A) of the final definition, equipment dealers who sell or lease
equipment in arm's length transactions, but do not receive the mined
coal, will not be routinely encompassed within the definition of
``control or controller.'' To be classified as a controller, the person
must have the ability to determine the manner in which the surface coal
mining operation is conducted.
Three commenters said a family member or friend who provides a
personal guarantee to obtain a reclamation bond should not be
considered an owner or controller. Depending upon the circumstances of
the guarantee, and the nature of the guarantor's relationship to the
surface coal mining operation, a family member or friend may in fact be
a controller. Again, the focus is on that person's ability to determine
the manner in which the relevant surface coal mining operation is
conducted.
Taking an opposing view, another commenter said that, in addition
to personal guarantees to obtain a reclamation bond, the provision
should also include ``any type of guarantor on an indemnity agreement
to get a reclamation bond.'' The commenter also said any person ``or
other entity who guarantees a bond should be listed under this
provision.'' We decline to specifically add the language suggested by
the commenter because persons who guarantee a bond generally do not
have

[[Page 79604]]

the ability to determine the manner in which a surface coal mining
operation is conducted. However, final paragraph (5)(vi) could
encompass such persons, provided that they also substantially influence
the conduct of the mining operation.
One commenter said this example should be deleted because none of
the circumstances in the example ``necessarily mean[s] that an entity
can exercise control over the day-to-day operations at a mine site.''
We agree that the examples do not constitute de facto control. The
persons identified in the examples will only be controllers if, in
addition to meeting the criteria in the examples, they also have the
ability to determine the conduct of the mining operation.
A commenter asked if banks, other lending institutions, third
parties that have never been to the mine, construction companies who
lease equipment, limited liability partners in a leasing company, and
utilities that receive 100 percent of a mine's production are all
controllers. The commenter expressed concern that if all these entities
are controllers, they all would then be required ``to submit signed,
notarized certifications stating that they assume personal financial
and criminal liability for a mine's transgressions.'' Other commenters
said OSM should not ``extend the `ownership or controller' definition
to banks or any other lending institutions or to some individual who
makes an arm's-length loan to a coal operator without any other
`control'.''
As to banks, lending institutions, and individuals who make arm's
length loans, we revised the example in paragraph (5)(vi) of the final
definition to include only these persons who contribute capital or
other working resources under conditions that allow that person to
substantially influence the manner in which the mining operation is
conducted. Therefore, the mere act of lending money will not render a
person a controller. Our previous discussion of other comments
addresses the other scenarios posited by the commenters. Neither the
proposed rule nor this final rule requires controllers to certify to
personal financial or criminal liability.
Proposed Sec. 778.5(a)(7)--Persons Who Can Commit Financial or Real
Property Assets
Our seventh example pertained to persons ``who control the cash
flow or can cause the financial or real property assets of a corporate
permittee or operator to be employed in the mining operation or
distributed to creditors.'' We retained the substance of this provision
and, based in part on guidance from the D.C. Circuit in NMA v. DOI II,
moved it to the deemed portion of the definition of ``control or
controller'' at paragraph (4). Final paragraph (4) includes as
controllers persons having the ability to, directly or indirectly,
commit the financial or real property assets or working resources of an
applicant, permittee, or operator. This language largely mirrors one of
our previous rebuttable presumptions of control. With regard to that
presumption, the D.C. Circuit said:

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

NMA v. DOI II, 177 F.3d at 7 (citations omitted). While the court was
ruling in terms of a presumption of control, and not a category of
deemed control, the court's statement clearly supports our decision to
include these persons in the deemed portion of our final control
definition. Our experience in administering SMCRA also supports this
action.
One commenter said the proposed example was vague. We disagree. The
language in this final rule closely resembles and is consistent with
the provision upheld by the D.C. Circuit, which found ``nothing
strained'' about that provision.
A commenter asked if, under the proposed example, the following
persons are ``controllers'': chief accountant; payroll clerk;
customers, by virtue of paying their bills; coal company customers; a
bankruptcy court ``authorized to disperse the assets of a company''; or
a land agent who secures leases. As previously discussed, under
paragraph (5)(vi) of the final definition, none of the listed persons
would be considered controllers unless they have the ability to
determine the manner in which a surface coal mining operation is
conducted. The relevant inquiry is whether the person in question has
the ability to commit the assets of a business entity in furtherance of
the mining operation.
Proposed Sec. 778.5(a)(8)
Our final proposed example pertained to ``[p]ersons who cause
operations to be conducted in anticipation of their desires or who are
the animating force behind the conduct of operations.'' We received
many comments that said proposed Sec. 778.5(a)(8) was ``difficult to
understand and would be difficult to implement.'' We did not adopt this
example because the concepts that we intended to convey in the proposed
example are adequately captured in paragraph (5) of the final
definition of ``control or controller.''
Final Paragraphs (5)(iii) and (5)(iv)--10 Through 50 Percent Ownership,
Interlocking Directorates and Commonality of Officers
As explained above, we added two examples of control to this final
rule. We addressed the first of these examples--10 through 50 percent
ownership of an entity--in our responses to comments on our proposed
definition of ownership. We added the second example--``an entity with
officers or directors in common with another entity, depending upon the
extent of overlap''--since interlocking directorates and commonality of
officers tend to indicate that a control relationship may exist between
two entities. However, as with our other examples, the mere existence
of the factual scenario--e.g., interlocking directorates--does not
necessarily mean there is a control relationship. A person is not a
controller under paragraph (5) of the final definition unless that
person has the ability to determine the manner in which a surface coal
mining operation is conducted.
``Federal Violation Notice'' and ``State Violation Notice''
We proposed to revise the definitions of Federal violation notice
and State violation notice. Several commenters said Federal violation
notice should specifically mean a Federal surface coal mining violation
notice and that State violation notice should specifically mean a
surface coal mining violation notice.
Upon further review, we determined that there is no need to define
these terms. The definitions of ``violation'' and ``violation notice''
adopted in 30 CFR 701.5 of this final rule are sufficient. The
commenters' concern is addressed in the context of the rules in which
these terms are used. They include only violations in connection with a
surface coal mining operation. Therefore, we are not adopting
definitions for Federal violation notice or State violation notice and
will remove these terms from our regulations.
Knowing or Knowingly
We proposed to replace the definition of knowingly in Secs. 724.5
and 846.5 with a new definition of ``knowing or knowingly'' in 30 CFR
701.5. The final

[[Page 79605]]

definition of ``knowing or knowingly'' reflects the proposed rule,
although we revised the text of the definition to read: ``knowing or
knowingly'' means ``that a person who authorized, ordered, or carried
out an act or omission knew or had reason to know that the act or
omission would result in either a violation or a failure to abate or
correct a violation.''
We revised the definition to ensure that its applicability would
not be restricted to ``violation, failure or refusal'' as that term is
defined in 30 CFR 701.5. We removed redundant language. In addition, we
replaced the word ``individual'' with ``person.'' The Act and our
regulations define person in a manner that includes both individuals
and business entities, as is appropriate in the context in which the
Act and regulations employ this term. See 30 CFR 700.5 and SMCRA at
section 701(19), 30 U.S.C. 1291(19).
Two commenters addressed the proposed definition. Both objected to
the ``knowing'' standard being applied to ``administrative''
violations, violations which the commenters describe as those that do
not cause environmental harm. One of the commenters observed that
``knowingly'' and ``willfully'' were originally associated with the
issuance of individual civil penalties to the officers and directors of
corporate entities.
The ``knowing'' standard appears in sections 518(e), 518(f), and
518(g) of the Act, 30 U.S.C. 1268(e), 1268(f), and 1268(g). There is
nothing in any of these sections that would support a regulatory
authority's use of this criterion to distinguish among violations when
applying the ``knowing'' standard. Nor do we perceive the need to make
such a distinction among violations of the Act and our regulations.
We agree that the ``knowing'' standard has been more visibly
associated with individual civil penalties and corporate permittees. On
February 8, 1988, at 53 FR 3664 et seq., we adopted initial and
permanent regulatory program provisions for individual civil penalties
at 30 CFR parts 724 and 846. These regulations included definitions for
``knowingly'' and ``willfully.'' However, the ``knowing'' standard is
employed in sections 518(e) and (g) of the Act, 30 U.S.C. 1268(e) and
(g), not just in the individual civil penalty provisions of section
518(f), 30 U.S.C. 1268(f). Hence, the final rule broadens the
applicability of the ``knowing'' standard because the standard is not
exclusive to an individual civil penalty that may be assessed under
section 518(f) of the Act, 30 U.S.C. 1268(f).
Link To a Violation
We proposed to add a definition of link to a violation to
Sec. 701.5. After considering the comments on the proposed definition
and upon further deliberation, we are not adopting the proposed
definition because the term is too closely associated with a previously
defined term, ownership or control link, and the previous concept of
presumptive ownership or control. The final rule does not use the term
``links'' and it eliminates the concept of presumptions.
Outstanding Violation
We proposed to add a definition for outstanding violation.
Commenters expressed confusion about the meaning of this term and
questioned its consistency with section 510(c) of the Act, 30 U.S.C.
1260(c). Upon further deliberation, we are not adopting the definition
in this rulemaking.
Instead, when expiration of an abatement or correction period has
significance, we use the phrase, ``violation that is unabated or
uncorrected beyond its abatement or correction period.'' Under this
final rule, the phrases ``outstanding violation'' and ``unabated or
uncorrected violations'' are used interchangeably. The term
``outstanding violation'' means any violation that is unabated or
uncorrected.
Successful Environmental Compliance
We proposed to add a definition of successful environmental
compliance. However, we are not adopting the proposed rules that would
have used this term. Since the term successful environmental compliance
does not appear in the final rule, we are not adopting this proposed
definition.
Successor in Interest
We proposed to revise the definition for successor in interest. A
commenter said the term should be more thoroughly defined in terms of
what is required in proposed Sec. 774.17. Another commenter argued
that, ``[t]he proposed definition fails to capture the language or the
intent of the term used in the Act and the Congressional Record.'' The
same commenter also said the definition alters the expressed intent of
the Congress that there should be a brief but reasonable opportunity
for a successor to continue the active mining operation while becoming
the permittee.
After considering the comments on our proposed revision of
Sec. 774.17, we decided that transfer, assignment, or sale of permit
rights and successor in interest issues require further study. As a
result, we are not adopting either the proposed changes to those
provisions, or the proposed revision of the definition of successor in
interest.
Violation and Violation Notice
We proposed to revise the definition of violation notice. The
proposed revision included a notice of bond forfeiture when the cost of
reclamation exceeded the amount forfeited, or in States with bond
pools, a determination that additional reclamation or reimbursement is
required.
After considering the comments we received and the changes we made
to other provisions of the proposed rule, we decided to adopt
definitions of both violation and violation notice. We moved most
elements of our previous and proposed definitions of violation notice
to the new definition of violation.
In this final rule, we redefine violation notice to mean ``any
written notification from a regulatory authority or other governmental
entity, as specified in the definition of violation in this section.''
The final rule defines violation as that term is used in the
context of the permit application information or permit eligibility
requirements of sections 507 and 510(c) of the Act, 30 U.S.C. 1257 and
1260(c), and related regulations. The definition specifies that the
term violation includes: (1) A failure to comply with an applicable
provision of a Federal or State law or regulation pertaining to air or
water environmental protection, as evidenced by a written notification
from a governmental entity to the responsible person, and (2) a
noncompliance for which OSM or a State regulatory authority has
provided one or more of the following types of notices: (i) A notice of
violation under 30 CFR 843.12; (ii) a cessation order under 30 CFR
843.11; (iii) a final order, bill, or demand letter pertaining to a
delinquent civil penalty assessed under 30 CFR part 845 or 846; (iv) a
bill or demand letter pertaining to delinquent reclamation fees owed
under 30 CFR part 870; or (v) a notice of bond forfeiture under 30 CFR
800.50 when (A) one or more violations upon which the forfeiture was
based have not been abated or corrected; (B) the amount forfeited and
collected is insufficient for full reclamation under 30 CFR
800.50(d)(1), the regulatory authority orders reimbursement of the
additional reclamation costs, and the person has not complied with the
reimbursement order; or (C) the site is covered by an alternative
bonding system approved under 30 CFR 800.11(e), that system requires
reimbursement of any reclamation costs incurred by the system above
those covered by any site-

[[Page 79606]]

specific bond, and the person has not complied with the reimbursement
requirement or paid any associated penalties.
With respect to notices of bond forfeiture, we recognize that the
violation review criteria in the preamble to the previous rule at 54 FR
18440-41, (April 28, 1989) states that OSM and most States would only
consider the first situation to be a violation notice. That is, there
would have to be an unabated or uncorrected violation underlying a bond
forfeiture before a notice of bond forfeiture could be considered a
violation or a violation notice. However, the two new conditions under
which a notice of bond forfeiture will be considered a violation or
violation notice are appropriate because each of these situations
involves (1) a failure to comply with requirements of the Act or
regulatory program, and (2) a separate notification to the person who
forfeited the bond or defaulted on the reclamation obligations.
Several commenters suggested that references to bond forfeitures,
State bond pools, and cost of reclamation should be removed from the
examples. For the reasons discussed above, we do not find adopting this
suggestion to be appropriate. We revised these portions of the
definition for clarity.
A commenter said the definition should include permit revocation
orders and bond forfeiture notices in situations in which someone other
than the permittee or its controllers ultimately abates or corrects the
violation. The commenter said that abatement by a third party should
not clear those responsible for the violation.
We agree only to the extent that an unabated or uncorrected
violation (including unpaid fees or penalties) still exists or that a
person has failed to comply with a cost reimbursement order from a
regulatory authority. In terms of permit eligibility under section
510(c) of the Act, 30 U.S.C. 1260(c), the critical element is whether
some type of violation remains unabated or uncorrected. In this
context, the Act provides no basis for making distinctions based on the
party completing the reclamation or abating or correcting the
violation.
A commenter said that including bond forfeitures in the proposed
definition of violation notice blurs what constitutes a notice of
violation. For the reasons discussed above, we do not agree.
Another commenter argued that ``if there is an unanticipated change
in circumstances, no `violation' is involved until there has been a
refusal or failure to comply with the notice.'' We disagree. The Act
does not make the distinction that the commenter advocates.
Furthermore, except for remining operations under section 510(e), the
Act's permit eligibility requirements do not distinguish between
violations resulting from unanticipated changes in circumstances and
violations resulting from other situations.
Several commenters said the proposed definition of violation notice
was too broad, and that orders, bills or demand letters for penalties
and notices of bond forfeiture are already defined and have sanctions
for failure to abate. We revised the definition to add more specificity
and to restrict SMCRA-related violations to the circumstances under
which a person receives the types of notice listed in the second
paragraph of the definition.
One commenter agreed that the definition should not include bills
or demand letters for delinquent reclamation fees. The commenter stated
that OSM sometimes issues these bills and letters in error and that the
Act does not mandate that we classify delinquencies as violations.
Delinquent payment of reclamation fees is a statutory violation under
section 402 of the Act, 30 U.S.C. 1232. Timely payment of reclamation
fees and the penalty for delinquent payment is provided for under
section 402(e) of the Act, 30 U.S.C. 1232(e). In addition, 30 CFR
773.17(g) establishes payment of reclamation fees owed under 30 CFR
part 870 as a condition of permit issuance. We see no reason to treat
this type of violation in a manner that differs from the treatment
afforded to other violations.
A commenter also said that including unliquidated debt as a
``violation notice'' without requiring a notice of violation ``blurs
State obligations and raises potential due process claims regarding
notice of the remaining debt and opportunity-to-defend, that are better
left avoided.'' As discussed at length in the preamble to the previous
definition of ``violation notice'' published on October 28, 1994 (59 FR
54352), we disagree. No due process issues are raised in the definition
of violation or violation notice. Everyone who receives one of the
notifications listed in the definition of violation has the opportunity
to take action to seek administrative or judicial review of the
violation at that time.
This final rule demonstrates our enhanced emphasis on accurate and
complete information. However, the final definition of violation does
not include the failure to provide accurate and complete information,
as originally proposed. We address this problem in other ways. For
example, we will not grant a permit to an applicant who fails to
provide accurate and complete information in an application. The
applicant also may be subject to alternative enforcement action under
section 518(g) of the Act, 30 U.S.C. 1268(g). In addition, when we
discover a failure of this nature after a permit is issued, we may
issue a notice of violation or, as appropriate, initiate other actions
that may ultimately result in permit suspension or rescission.
Violation, Failure or Refusal
We originally proposed to retain the existing definition of
violation, failure or refusal in Sec. 846.5. We received no comments on
this proposal.
In this final rule, for organizational reasons, we are moving the
definition of violation, failure or refusal from Secs. 724.5 and 846.5
to Sec. 701.5 to consolidate our definitions. We are revising the
language of the definition to confine its applicability to parts 724
and 846, as it is in the existing rules. We are also making a few non-
substantive changes in wording to improve syntax and clarity and to
remove redundant verbiage.
Willful or Willfully
We proposed to replace the definition of willful in Secs. 724.5 and
846.5 with a similarly worded definition of ``willful or willfully'' in
30 CFR 701.5. The final rule reflects the proposed rule, with the
changes discussed below. We are defining ``willful or willfully'' to
mean ``that a person who authorized, ordered or carried out an act or
omission that resulted in either a violation or the failure to abate or
correct a violation acted: (1) intentionally, voluntarily, or
consciously; and (2) with intentional disregard or plain indifference
to legal requirements.''
We revised the text of the definition for clarity and consistency
with the term's broader applicability under the proposed and final
rules. Most significantly, we replaced the phrase ``a violation of the
Act, or a failure or refusal to comply with the Act,'' which could have
been interpreted as limiting the scope of the definition to a
violation, failure or refusal, as that term is defined in 30 CFR 701.5,
with the phrase, ``a violation or the failure to abate or correct a
violation.'' In addition, we replaced the word ``individual'' with
``person.'' The Act and our regulations define person in a manner that
includes both individuals and business entities, as is appropriate in
the context in which the Act and regulations employ this

[[Page 79607]]

term. See 30 CFR 700.5 and section 701(19) of SMCRA, 30 U.S.C.
1291(19).
Several commenters said that the definition should recognize but
not apply to ``administrative'' violations, which, the commenters said,
do not cause environmental harm. One said administrative violations
must not be considered ``willful'' when determining a pattern of
violations.
The ``willful'' standard appears in sections 510(c), 518(e),
518(f), and 521(a)(4) of the Act; 30 U.S.C. 1260(c), 1268(e), 1268(f),
and 1271(a)(4). There is nothing in any of these sections that would
support a regulatory authority's use of this criterion to distinguish
among violations when applying the ``willful'' standard. Nor do we
perceive the need to make such a distinction among violations of the
Act and our regulations.
A commenter objected to the phrase ``or any Federal or State law or
regulation applicable to surface coal mining operations'' in the
proposed rule. In this final rule, we replaced the phrase ``or any
Federal or State law or regulation applicable to surface coal mining
operations'' with language that refers to a violation or the failure to
abate or correct a violation. The context in which the term is used
will determine the meaning of ``violation'' and the scope of the
definition.
The same commenter further asserted that the proposed definition is
inconsistent with section 518 of SMCRA, 30 U.S.C. 1268, which,
according to the commenter, does not encompass every failure or refusal
to comply with the Act or any Federal or State law or regulation
applicable to surface coal mining operations. We do not agree with the
commenter's characterization of the scope of section 518 of the Act.
Furthermore, as discussed above, the Act also uses this term in
sections 510(c) and 521(a)(4), 30 U.S.C. 1260(c) and 1271(a)(4).
Section 510(c), specifically includes State violations.
Willful Violation
We proposed to remove the definition of willful violation from
Secs. 701.5 and 843.5.
A commenter argued that removing ``willful violation'' would
``improperly merge'' ``willfully'' and ``willful violation,'' which are
distinct terms that the Act uses in different contexts. According to
the commenter, the ``willful'' in ``willful violation'' in section
510(c) of the Act, 30 U.S.C. 1260(c), means that a person ``intends the
result that actually occurs.''
We agree that context establishes meaning. However, we disagree
that either term is used in a unique manner under SMCRA. As we stated
above in the discussion of willful or willfully, the ``willful''
standard is employed four times in SMCRA, including section 510(c), 30
U.S.C. 1260(c). The previous definition of ``willful violation'' is
inconsistent with how ``willful'' is used in sections 518 and 521 of
SMCRA, 30 U.S.C. 1268 and 1271. The phrase ``willful violation''
appears only in section 510(c), where it is one criterion for permanent
permit ineligibility.
In section 510(c), ``willful'' modifies ``violation'' in the same
manner that ``demonstrated'' modifies ``pattern'' and ``irreparable''
modifies ``damage.'' The violations that would result in a finding of
permanent permit ineligibility are not simply violations, they are
willful violations. The type of pattern that must be determined is a
demonstrated pattern. The damage that must result from the demonstrated
pattern of willful violations must be irreparable damage.
We conclude that the previously defined term is now unnecessary.
The new definition of ``willful or willfully'' includes an element of
intent. There is no need to find that a person ``intends the result
that actually occurs.'' Therefore, we are removing willful violation
from Secs. 701.5 and 843.5.

B. Section 724.5--Definitions

In this final rule, Sec. 724.5 is removed from our regulations.
We proposed to replace the definitions of knowingly and willfully
in Sec. 724.5 with the definitions of ``knowing or knowingly'' and
``willful or willfully'' in 30 CFR 701.5. A commenter asked if the
change was proposed because of unresolved bond forfeitures under the
initial regulatory program. Our proposal had nothing to do with
unresolved bond forfeitures. (The initial regulatory program did not
require any bonds.) Instead, it arose from a desire to consolidate our
definitions in Sec. 701.5 to the extent possible.
The final rule replaces knowingly with ``knowing or knowingly'' and
willfully with ``willful or willfully.'' As proposed, we are placing
the final definitions in Sec. 701.5 after them in Sec. 724.5. In this
final rule, we are also moving the definition of violation, failure or
refusal previously in Sec. 724.5 to Sec. 701.5. The net result of these
changes is that Sec. 724.5 is removed from our regulations.

C. Section 773.5--Definitions

We proposed to either move or remove the definitions from previous
Sec. 773.5 and remove this section from our regulations. There were no
comments on our proposal, which we adopted in revised form in this
final rule.
We adopted certain definitions from previous Sec. 773.5 in revised
form at Sec. 701.5 while removing the definitions of ownership or
control link, Federal violation notice, and State violation notice.
Section 773.5 remains a part of our regulations since we redesignated
previous Sec. 773.12 as Sec. 773.5

D. Section 773.10--Information Collection

In this final rule, the provision we adopted from proposed
Sec. 773.10 is found at Sec. 773.3.
We proposed to revise the information collection burden for part
773. We reorganized part 773. As a result, previous Sec. 773.10 is
redesignated new Sec. 773.3. Final Sec. 773.3 contains the information
collection requirements for part 773 and the Office of Management and
Budget (OMB) clearance number.
In this final rule, Sec. 773.3(a) is revised to show that the new
OMB clearance number for this part is 1029-0115. Section 773.3(b) is
revised to adjust the estimated public reporting burden from 34 hours
to 36 hours. The estimate represents the average response time. For
unchanged provisions in the regulations, our revised estimates are
based on updated estimates developed in May 2000 using more current
information.
Summary of Comments and Adjustments to Burden Estimates
We considered information from the individuals who commented on
information collection aspects of the proposed rule. In general,
commenters stated that the estimated information collection burden
related to the proposed rule was too low. Commenters generally did not
mention any specific rule change which was underestimated or any
specific number of hours that would alter the OSM estimate.
A commenter stated that the burden hours for part 773 should be 50,
instead of 34 hours. To reduce information requirements, we are not
adopting some of the proposed changes in this final. We also increased
estimates of burden hours for the remaining requirements.
A commenter stated that the time burden in Sec. 773.10 differed
from what was proposed in parts 774 and 778 and requested information
on how these numbers were derived and a clarification of average
reporting burden.
We receive approval from the OMB to collect information based on
each ``part'' in the Code of Federal Regulations (CFR). There is a
different burden associated with responding to

[[Page 79608]]

each part in the CFR since each requires different types of information
from respondents (citizens, coal companies, State and Indian regulatory
authorities). We also request approval from OMB based on the average
burden hours per respondent, not the total burden. The total hours
divided by the number of potential respondents equals the average
burden hour estimate per respondent. For further information regarding
our compliance with the Paperwork Reduction Act and OSM's information
collection calculations, please contact OSM's Information Collection
Clearance Officer identified under Secs. 773.3(b), 774.9(b), and
778.8(b).
A commenter suggested that OSM lacked authority under SMCRA to
collect much of the information required in the proposed rule. Our
response to this comment relies on the decision in NMA v. DOI II. The
court spoke directly on this issue saying that the information
requirements contained in SMCRA are not exhaustive. So as long as the
information required under our regulations is necessary to implement
the Act, we are justified in requiring it. As explained elsewhere in
this preamble, all of the information we obtain under this final rule
is indeed necessary to enforce the Act.
Lastly, some commenters continue to assume that because OSM
continues to require certain information, it will necessarily use that
information to make permit eligibility determinations on surface coal
mining permit applications. The commenters said this would be
inconsistent with the court decision.
While we cannot use all of the information we obtain under this
rule to make permit eligibility determinations under section 510(c) of
the Act, 30 U.S.C. 1260(c), we are expressly required to obtain some of
the information under section 507 of the Act, 30 U.S.C. 1257. Other
information we obtain is necessary to enforce other aspects of the Act.
The information we require will allow us and regulatory authorities to
implement the purposes of the Act, including permitting, compliance,
and enforcement provisions. As we have said, this is consistent with
the decision in NMA v. DOI II.

E. Section 773.15--Review of Permit Applications

In this final rule, the provisions proposed at Sec. 773.15 are
found at Secs. 773.8 through 773.15 and 774.11(c) through (e).
We proposed to revise certain aspects of previous Sec. 773.15. In
the proposed rule, we, among other things: (1) Provided for separate
review of the legal identity, permit, and compliance information
provided in applications; (2) separated permit eligibility
determinations under section 510(c) of the Act from the application
review process; (3) proposed to distinguish among applicants based upon
surface coal mining experience and successful environmental compliance
criteria; and (4) proposed the use of investigations to ensure
compliance with certain statutory and regulatory provisions. The
preamble of the proposed rule also provided notice that we would cease
providing AVS and OSM recommendations to State regulatory authorities
to assist in permitting decisions. See also OSM System Advisory
Memorandum #20 (discontinuance of AVS and OSM permitting
recommendations), a copy of which is in the administrative record for
this rulemaking and on our Applicant/Violator System Office Internet
home page (Internet address: www.avs.osmre.gov).
In this final rule, we modified the proposed revisions and
reorganized them into smaller sections. As a result, part 773 is
entirely reorganized and re-numbered. As part of the reorganization of
part 773, some of the previous sections we did not propose for revision
are also re-numbered. The new designations for these sections are
incorporated in the derivation tables in section IV.B. of this
preamble. We also modified certain proposed provisions to comply with
the effects of the ruling of the D.C. Circuit in NMA v. DOI II; this
final rule also conforms to the D.C. Circuit's holding in NMA v. DOI I.
As explained previously, in NMA v. DOI I, the appeals court held
that the clear language of section 510(c), 30 U.S.C. 1260(c), of SMCRA
authorizes regulatory authorities to deny a permit only on the basis of
violations of ``any surface coal mining operation owned or controlled
by the applicant.'' NMA v. DOI I, 105 F.3d at 693-94. In contrast,
OSM's 1988 ownership and control rule also allowed regulatory
authorities to deny a permit on the basis of violations of any person
who owned or controlled the applicant. In the IFR, published in 1997,
we cured the defect identified by the court of appeals by requiring
regulatory authorities to deny permits based on section 510(c) of the
Act only when the applicant owned or controlled an operation with a
current violation, and not when a person with a current violation owned
or controlled the applicant. In Sec. 773.12(a) and (b) of this final
rule, we retain the substance of this IFR provision.
In NMA v. DOI II, the court of appeals agreed with OSM that section
510(c) of SMCRA allows OSM to deny permits based on violations cited at
operations that the applicant owns or controls, including ``limitless
downstream violations'' at operations indirectly owned or controlled by
an applicant through intermediary entities. Id. at 4-5. (A further
discussion of ``direct'' versus ``indirect'' ownership or control
appears below, in this section.) In final Secs. 773.11, 773.12(a) and
773.12(b), we retain the substance of the existing provision (30 CFR
773.15(b)(1)), and proposed Secs. 773.15(b)(3)(i)(A) & (B) and
773.16(a), which allow OSM to deny permits to applicants who are
currently in violation and to applicants who--directly or indirectly--
own or control operations that are currently in violation. OSM may
consider violations at operations which are ``limitless[ly]
downstream,'' so long as ownership or control (as defined in final
Sec. 701.5) by the applicant is present.
The court agreed with NMA that ``[f]or violations of an operation
that the applicant ``has controlled'' but no longer does, * * * the
Congress authorized permit-blocking only if there is ``a demonstrated
pattern of willful violations''' under section 510(c) of SMCRA. Id. at
5. As such, in order to deny a permit under section 510(c) of the Act,
the violation must be outstanding (i.e., unabated or uncorrected) and
the applicant must own or control the operation with a violation at the
time of application. If the ownership or control relationship has been
terminated, OSM may not deny a permit (absent a pattern of willful
violations), even if the violation remains current. NMA v. DOI II, 177
F.3d at 5. However, if a person is himself a violator, severing an
ownership or control relationship will not make the person eligible for
a permit. OSM may not base permit eligibility on past ownership or
control except in instances of a ``demonstrated pattern of willful
violations of [the] Act of such nature and duration with resulting
irreparable damage to the environment as to indicate an intent not to
comply with the provisions of [the] Act.'' SMCRA section 510(c). As
proposed, Secs. 773.15(b)(3)(i)(A) and (B) and 773.16(a) would have
allowed permit eligibility determinations to be based on past ownership
or control. In final Secs. 773.11, 773.12(a) and 773.12(b), we modified
the proposed language to clarify that permit eligibility must be based
on operations which the applicant or operator currently owns or
controls. However, OSM may still consider past ownership or control of
operations with violations in determining whether there

[[Page 79609]]

is a pattern of willful violations under section 510(c) of the Act and
final Sec. 774.11(c), except where constrained by the appeals court's
retroactivity holding (discussed below).
On the applicability of the five-year statute of limitations at 28
U.S.C. 2462, the court agreed with OSM that the section 2462
limitations period does not apply to violations when determining permit
eligibility under section 510(c) of SMCRA. Id. at 7-8. Thus, except
where constrained by the appeals court's retroactivity holding
(discussed below), OSM may deny permits to applicants who own or
control an operation with a current violation, regardless of when the
violation first occurred. On this point, since the court of appeals
ratified the approach contained in the proposed rule, no modification
was necessary in this final rule. Subject to the retroactivity holding,
as reflected in final Secs. 773.12(a) and (b), final Secs. 773.12(a)
and (b) allow OSM to deny permits based on violations at operations
which the applicant currently owns or controls, regardless of when the
violation was first cited.
With regard to retroactivity, the court found that the IFR, at 30
CFR 773.15(b)(1), is impermissibly retroactive to the extent it
authorizes permit denials under section 510(c) of the Act based on
indirect control in cases where both the assumption of indirect control
and the violation occurred before November 2, 1988, the effective date
of OSM's 1988 ownership and control rule. NMA v. DOI I, 177 F.3d at 8-
9. The court explained that the 1988 ownership and control rule imposed
a `` `new disability,' permit ineligibility, based on `transactions or
considerations already past. * * *' '' Id. at 8.
Specifically, the court held that the IFR is retroactive ``insofar
as it block [sic] permits based on transactions (violations and
control) antedating November 2, 1988, the [1988] ownership and control
rule's effective date.'' Id. Thus, under the court's reasoning, the IFR
is retroactive only when both ``transactions''--the violation and the
assumption of indirect ownership or control--occurred before November
2, 1988. Indeed, the court explained that the IFR is not retroactive to
the extent it allows permit denials when an applicant acquires control
of an ongoing (i.e., unabated or uncorrected), pre-rule violation on or
after the effective date of the 1988 ownership and control rule. Id. at
n.12. This is so because one of the relevant transactions--assumption
of control--will have occurred on or after November 2, 1988; thus, the
applicant would be on notice of the requirements of the 1988 rule. By
this same logic, the IFR also is not retroactive when the assumption of
control occurred before November 2, 1988, but the relevant violation
occurred or occurs on or after November 2, 1988. At bottom, if either
of the relevant transactions occurred or occurs on or after November 2,
1988, OSM may continue to deny permits under section 510(c) without
running afoul of the court's retroactivity holding.
The court's reasoning turns on the fact that permit denials based
on indirect control, though reasonable, were first clearly provided for
in the 1988 ownership and control rule. Id. In this regard, the court
explains, the 1988 ownership and control rule imposed a ``new
disability'' and ``change[d] the legal landscape.'' Id. (quotation
omitted). However, even under the most restrictive reading of section
510(c), after enactment of SMCRA in 1977, OSM could always deny permits
based on violations by the applicant's ``own, directly [owned or]
controlled operations'' (id.) (emphasis added); indeed, the statutory
language of section 510(c) expressly mandates permit denials in these
circumstances.
As such, under the court's ruling, OSM may continue to require
permit denials based on an applicant's own violations or direct
ownership or control of operations with pre-rule violations, even when
the applicant acquired ownership or control before promulgation of the
1988 ownership and control rule. For purposes of the final rule we are
adopting today, and consistent with the NMA v. DOI II decision, an
entity directly owns or controls another entity if it owns greater than
50 percent of the entity or actually controls the entity, and there is
not an intermediary entity between the two. For example, if company A
owns greater than 50 percent of company B, and there is no intermediary
entity between the two, company A directly owns company B. If company A
owns 50 percent or less of company B, but actually controls company B,
and there is no intermediary entity between the two, company A directly
controls company B. However, even if there is an intermediary entity,
ownership and control will also be deemed direct if there is 100
percent ownership at each level of the corporate chain between two
entities. For example, if company A owns 100 percent of company B, and
company B owns 100 percent of company C, company A will be deemed to
directly own and control company C, its wholly owned subsidiary.
While, in general, it is the presence of an intermediary entity,
and not the percentage of ownership, which makes ownership or control
indirect, we are adopting the ``greater than 50 percent'' threshold
because greater than 50 percent ownership will usually confer control.
The 50 percent threshold is also consistent with the definition of own,
owner, or ownership we are adopting today in final Sec. 701.5 and the
position we have taken since 1988 that greater than 50 percent
ownership is deemed to constitute ownership or control. See previous
Sec. 773.5(a) (this category of deemed ownership or control was not
challenged by the National Mining Association). As such, as of the
enactment of SMCRA in 1977, an applicant would be on notice that, at a
minimum, it could be denied a permit if it owned greater than 50
percent of an entity with a current violation. In the case of wholly
owned subsidiaries, any intermediaries will be disregarded since they
are subject to total control by the parent company; in this instance,
it is clear that the parent company will directly own, and have the
ability to directly control, the entity at the bottom of the corporate
chain.
Under the court's notice-derived rationale, OSM may also continue
to deny permits based on indirect ownership or control of an operation
with a current violation--even if both of the relevant transactions
occurred before November 2, 1988--so long as there was a basis to deny
under established law at the time of the assumption of indirect
ownership or control or at the time of the violation (whichever is
earlier), independent of the provisions of the 1988 ownership or
control rule. To the extent that such authority to deny permits based
on indirect relationships existed before November 2, 1988, the 1988
ownership or control rule cannot be said to have ``imposed a new
disability'' or ``changed the legal landscape.'' Rather, the applicant
would have been on notice that certain relationships to operations with
current violations could result in a permit denial.
We modified proposed Sec. 773.15(b)(3)(i)(B) to conform it to the
court's retroactivity holding. Final Sec. 773.12(a) and (b) incorporate
the substance of the above discussion.
Other modifications to the proposed rule are discussed in
connection with our responses to comments received with respect to the
relevant proposed provisions.
General Comments on Proposed Sec. 773.15
Several commenters, including those who commented on the effects of
the NMA v. DOI II decision, expressed concern that OSM does not see
that an

[[Page 79610]]

ineligibility determination based upon ``upstream'' violations is still
possible. The commenters said: (1) The corporate form should not be
used to perpetuate a fraud; (2) a corporate charter can be revoked; and
(3) the decision in NMA v. DOI I specifically indicates how to
determine the applicant. Other commenters raised similar concerns.
We agree that the corporate form should not be used to perpetrate a
fraud. With respect to revocation of corporate charters, State
regulatory authorities already have sufficient authority, under State
laws, to seek revocation of corporate charters under appropriate
circumstances.
We also agree that regulatory authorities have leeway to identify
the true applicant, and to consider the violations of such person under
the permit eligibility review of final Sec. 773.12 and section 510(c)
of the Act. We chose not to define the phrase ``true applicant'' at
this time because regulatory authorities already have the authority and
flexibility to determine the true applicant, based on the particular
facts and circumstances of each case.
In NMA v. DOI I, the court of appeals explained that, as a general
rule, OSM may not deny a permit based on violations of persons who own
or control the applicant. However, the court explained: ``OSM has
leeway in determining who the `applicant' is. As appellant concedes,
OSM has the authority, in instances where there is subterfuge, to
pierce the corporate veil in order to identify the real applicant.''
NMA v. DOI I, 105 F.3d at 695. Below, we briefly describe several
tools, which exist independently of this rulemaking--State and Federal
corporate veil piercing and case law interpreting section 521(c) of
SMCRA, 30 U.S.C. 1260(c)--which may assist regulatory authorities in
identifying the true applicant.
The court of appeals identified corporate veil piercing as a means
of identifying the ``true applicant.'' There are, generally speaking,
two bodies of veil-piercing case law: State and Federal. However, the
purpose of the State common law veil-piercing mechanism, which is
typically employed as a method for imposing personal liability on
shareholders of a corporation, does not precisely match the purpose and
intent of this rulemaking. In promulgating the permit eligibility
provisions of this final rule, we in no way intend to seek to impose
personal liability on shareholders, or owners or controllers, for the
wrongs or debts of a corporate permittee. Nor do we intend to alter the
common law principles of corporate separateness and limited liability
to a greater extent than SMCRA itself provides. Rather, the permit
eligibility provisions we adopt today are designed to determine who is
eligible to receive a permit under section 510(c) of SMCRA.
Despite the fact that the permit eligibility aspects of this rule
do not impose personal liability on individuals for the debts or wrongs
of a corporation, the body of State veil-piercing case law may, in
certain instances, provide a useful analytical construct to assist
regulatory authorities in identifying the true applicant. For example,
in instances where State veil-piercing case law would allow the
corporate form to be disregarded to impose personal liability on a
person, it stands to reason that the person may be the true applicant,
such that his violations become relevant to the permit eligibility
determination under final Sec. 773.12 and section 510(c) of the Act.
Federal veil-piercing, which serves a broader purpose than the
imposition of personal liability for corporate debts or wrongs, is more
closely aligned with the purpose of the permit eligibility provisions
of this final rule; as such, it provides a better paradigm than State
common law veil piercing for identifying the true applicant. Federal
veil-piercing case law has developed to the extent that:

The general rule adopted in the federal cases is that ``a
corporate entity may be disregarded in the interests of public
convenience, fairness and equity.'' In applying this rule, federal
courts will look closely at the purpose of the federal statute
[involved] to determine whether the statute places importance on the
corporate form, an inquiry that usually gives less respect to the
corporate form than does the strict common law alter ego doctrine *
* *.

Alman v. Danin, 801 F.2d 1, 3 (1st Cir. 1986) (quoting Town of
Brookline v. Gorsuch, 667 F.2d 215, 221 (1st Cir. 1981); internal
citations omitted). Under federal veil-piercing case law, if a person
elects the corporate form to evade the requirements of SMCRA, it is in
the interests of ``public convenience, fairness and equity'' to
disregard the corporate form and consider the violations of the person,
as the true applicant, in making a permit eligibility determination
under final Sec. 773.12 and section 510(c) of the Act.
Section 521(c) of SMCRA, 30 U.S.C. 1271(c), like veil piercing,
allows for the imposition of personal liability in certain instances.
The criteria for determining who is a section 521(c) ``agent,'' as they
have developed in the case law, may assist regulatory authorities in
their efforts to identify the true applicant. For example, in the case
of United States v. Dix Fork Coal Co., 692 F.2d 436 (6th Cir. 1982),
the U.S. Court of Appeals for the Sixth Circuit found an individual
directly liable for the violations of a corporation under section
521(c) of SMCRA, 30 U.S.C. 1271(c), which, under specified
circumstances, allows the United States to institute a civil action for
relief against a permittee or his ``agent.'' In that case, the
individual--Wilford Niece--was neither an officer nor director of the
corporation (Dix Fork), but was delegated ``responsibility [for]
ensuring compliance with the Act throughout the mining operation by Dix
Fork.'' Id. at 439. Borrowing from the definition of ``agent'' in the
Coal Mine Health and Safety Act, 30 U.S.C. 801 et seq., the court
explained:

[A section 521] ``agent'' includes that person charged with the
responsibility for protecting society and the environment from the
adverse effects of the surface coal mining operation and
particularly charged with effectuating compliance with environmental
performance standards during the course of a permittee's mining
operation.

Id. at 440. In finding Mr. Niece directly liable for Dix Fork's
violations, the court explained that:

The intervening corporate structure of Dix Fork is insufficient,
given the aggravating circumstances of this case, to shield Wilford
Niece from the affirmative obligations necessary to rectify the
environmental hazard which would not have manifested but for the
assets and decisions of Wilford Niece. * * *
Refusal of the federal forum to implement affirmative
obligations on Niece as an agent would permit circumvention of the
Act through the establishment of a sham corporation.

Id. at 441. Since SMCRA itself disregards the corporate form to impose
personal liability on section 521(c) agents for the wrongs of a
corporation, it is reasonable to conclude that a section 521(c) agent
may be the true applicant, such that his violations should be
considered during the permit eligibility review under final Sec. 773.12
and section 510(c) of the Act.
The tools identified above are not intended to be exhaustive. There
may well be other mechanisms or procedures available to regulatory
authorities to identify the true applicant. In most cases, the nominal
applicant (the person whose name appears on the permit application)
will also be the true applicant. Certainly, not all owners or
controllers of an operation are susceptible to veil piercing or other
corporate avoidance mechanisms; as such, not all owners or controllers
are true applicants. However, if the regulatory authority has reason to

[[Page 79611]]

believe that the nominal applicant is not the true applicant, the
regulatory should conduct an investigation to determine the identity of
the true applicant. In short, each regulatory authority should consider
the totality of circumstances in determining whether the nominal
applicant is also the true applicant.
Proposed Sec. 773.15(a)(3)
We proposed to add paragraph (a)(3) to the general requirements in
previous Sec. 773.15. That provision would have required the regulatory
authority to evaluate whether the permit application contained accurate
and complete information and allowed the regulatory authority to stop
review until any issues as to the accuracy and completeness of
information were resolved.
Based upon comments and our further deliberations, we are not
adopting proposed Sec. 773.15(a)(3) because it is duplicative.
Commenters had varying opinions on the proposed revisions. Some said
stopping the review would hasten correction of the information. One
said the provision is unnecessary and redundant. This commenter said a
regulatory authority already has the obligation to make a written
finding for application approval ``and is under no obligation to
proceed with an incomplete application.'' Two commenters expressed
their belief that more time and resources would be required to
determine that an application is accurate and complete before the
review actually begins. Another commenter said that the ownership and
control information should be reviewed for administrative completeness
then entered into AVS. One commenter said the practice of providing a
checklist instead of written findings should be eliminated in the final
rule.
We agree, in part, with most of these comments. By our longstanding
practice, at least since 1983, a regulatory authority is under no
obligation to continue to process an administratively incomplete
application. See, e.g., final Sec. 773.6(a)(1) (redesignated from
previous Sec. 773.13(a)(1)) and existing Sec. 701.5 (definition of
administratively complete application). We also included an
administrative completeness requirement in final Sec. 773.8(a) of this
rule. Further, final Secs. 773.8(b) and (c) require the regulatory
authority to enter into AVS, and update, the ownership and control and
violation information an applicant submits under final Secs. 778.11,
778.12(c), and 778.14. Final Sec. 773.15(a), which continues a
provision which has also been in place since at least 1983 (see
previous Sec. 773.15(c)(1)), requires the applicant to affirmatively
demonstrate, and the regulatory authority to find, that the application
is accurate and complete before a permit is issued. In this final rule,
at Sec. 773.15(a), we made a technical revision to previous
Sec. 773.15(c)(1), changing the phrase ``complete and accurate'' to
``accurate and complete,'' to match the statutory phrase used in
section 510(b)(1) of the Act. Finally, at final Sec. 773.15(n), we
added a requirement for the regulatory authority to make a written
finding that the applicant is eligible to receive a permit based on the
reviews under Secs. 773.8 through 773.14 of this final rule. A
checklist, without sufficient detail, will not satisfy the written
finding requirement of final Sec. 773.15(n).
Proposed Sec. 773.15(b)
We proposed to revise certain provisions of previous
Sec. 773.15(b). In general, we proposed to:
Reorganize the section to encompass, among other things, a
three-part review of permit application information (see proposed
Secs. 773.15(b)(1) through (3))
Revise our previous criteria for determining permit
eligibility under section 510(c) of the Act (see proposed
Sec. 773.15(b)(3)(i); see also proposed Sec. 773.16)
Revise the circumstances under which an applicant with an
outstanding violation could receive a permit (see proposed
Sec. 773.15(b)(3)(i)(B) and (C); see also proposed Sec. 773.16(b))
Revise our previous regulations pertaining to patterns of
willful violations under section 510(c) of the Act (see proposed
Sec. 773.15(b)(3)(i)(D) through (F))
Require regulatory authorities to investigate an
applicant's owners or controllers to determine if they are responsible
for outstanding violations and whether alternative enforcement actions
are appropriate
Impose special conditions on permits issued to applicants
that did not have at least five years of mining experience or whose
owners or controllers had not demonstrated successful environmental
compliance (see proposed Secs. 773.15(b)(2) and (b)(3)(ii)(C))
As explained in more detail below, we reorganized and modified the
provisions proposed in Sec. 773.15(b). In this final rule, we:
Adopted the three-part review of permit application
information (see final Secs. 773.8 through 773.11)
Consolidated and adopted provisions related to permit
eligibility under section 510(c) of the Act (see final Sec. 773.12)
Adopted provisions whereby an applicant with an
outstanding violation can receive a ``provisionally issued'' permit
under certain circumstances (see final Sec. 773.14, discussed in
section VI.F. of this preamble)
Adopted provisions relating to patterns of willful
violations under section 510(c) of the Act (see final Sec. 774.11(c)
through (e), discussed in section VI.K. of this preamble)
Did not adopt specific reference to investigations of an
applicant's owners or controllers (though, under final Sec. 774.11(b),
if we discover that a person owns or controls an operation with an
unabated or uncorrected violation, we will determine whether an
enforcement action is appropriate)
Did not adopt the five-year experience and successful
environmental compliance criteria or additional permit conditions based
on the applicant's mining experience and the compliance histories of
the applicant's owners or controllers
General Comments on Proposed Sec. 773.15(b)
A commenter said that OSM's rules should be altered only as
necessary to fill the regulatory gap created by NMA v. DOI I and should
recapture the linkages between permit applicants and their owners and
controllers who are responsible for outstanding violations. The
commenter said there is ample authority in SMCRA outside of section
510(c) to deny a permit to an applicant where an owner or controller of
the applicant is responsible for an outstanding violation.
As mentioned above, this final rule fully complies with the D.C.
Circuit's decision in NMA v. DOI I. In light of the fact that the NMA
v. DOI II decision was issued after our proposed rule was published,
modifications were required to conform this final rule to that decision
as well. As previously noted, we reopened the comment period for this
rulemaking in order to obtain public comments on the effects of the NMA
v. DOI II decision. Further, rather than merely fill the ``gaps''
perceived by the commenter, we took the opportunity to improve upon
other aspects of our previous regulations. This final rule is in full
compliance with the court decisions, and also makes our previous
procedures more efficient and effective.
We disagree that we should recapture linkages between applicants
and their owners and controllers who are responsible for outstanding
violations during the permit eligibility review required under section
510(c) of the Act. The NMA v. DOI I decision was clear on the point
that we may no longer

[[Page 79612]]

routinely consider the violations of an applicant's owners or
controllers during the section 510(c) compliance review. Nonetheless,
as explained above, regulatory authorities have the authority, in
appropriate circumstances, to identify the true applicant.
One commenter said the plain language of SMCRA does not limit
permit ineligibility to current ownership or control of operations with
violations. Other commenters, including those who commented on the
effects of the NMA v. DOI II decision, said the final rule should only
allow permit denials based on violations at operations which the
applicant owns or controls at the time of application. One commenter
said the court's ruling affects provisions in addition to the proposed
permit eligibility provisions. Finally, a commenter expressed concern
that, after the NMA v. DOI II decision, a permittee could fraudulently
transfer a permit with a violation to a shell or dummy corporation and
become permit eligible again.
Under NMA v. DOI II, as explained above, we may no longer routinely
consider an applicant's past ownership or control of a violation during
the permit eligibility review process. We may, however, consider such
past ownership or control in determining whether there has been a
pattern of willful violations under section 510(c) of the Act and
Sec. 774.11(c) of this final rule (which accommodates the appeals
court's retroactivity holding). We modified the permit eligibility
criteria of final Sec. 773.12 accordingly, and have also modified all
other proposed provisions affected by the court's ruling. As to
fraudulent transfers to shell or dummy corporations, we are confident
that regulatory authorities will not approve such transfers under
existing 30 CFR 774.17 or the equivalent State counterparts. Also, as
explained above, if a person is himself a violator, severing an
ownership or control relationship will not make the person eligible.
A commenter said OSM should delete all ``administrative
procedures'' imposed on itself and on State regulatory authorities--
such as the proposed procedures for checking and recording data. The
same commenter said OSM should also delete all references to
investigations and referrals for prosecution, as well as any references
to the review of outstanding violations of any person other than the
applicant, persons the applicant owns or controls, or the alter ego of
the applicant. The commenter said regulatory authorities do not need
regulations for the procedures they will follow to check and record
data; rather, these procedures should be left to policies and
directives.
For the most part, we decline to adopt this commenter's
suggestions. We do not believe the provisions of this section are so
easily dismissed as ``administrative procedures.'' Rather, the
procedures we adopt today are integral parts of the regulatory program
to implement the provisions of SMCRA. Further, the procedures we adopt
today provide necessary guidelines to regulatory authorities as to how
to properly meet their responsibilities under these regulations.
We note, as indicated above, that we are not adopting direct
reference to investigations in these provisions. The three proposed
provisions in part 773 which referenced investigations are discussed
more fully below at proposed Sec. 773.15(b)(1)(i)(B).
Finally, a review of other outstanding violations, for example
those of the applicant's or permittee's owners and controllers, may
have utility outside of the permit eligibility context. For example, a
review of the outstanding violations of an applicant's owners and
controllers may reveal that enforcement actions are appropriate to
remedy the violations. Also, the review under final Sec. 773.11
requires an examination of the operator's compliance history, since an
operator's violations may bear on the section 510(c) permit eligibility
review under final Sec. 773.12.
A commenter said that the sanctions for failing to identify owners
and controllers--potential permit denial and referral for prosecution--
are too stringent, in light of the fact that the standards for
identifying owners and controllers are, in the commenter's view,
ambiguous and uncertain.
It is appropriate to require applicants to disclose their owners
and controllers in the first instance, based on the definitions of own,
owner, or ownership and control or controller we are adopting today in
final Sec. 701.5. These definitions are sufficiently clear to put
applicants on notice of the information which is required in a permit
application. We removed the reference to criminal prosecution in these
provisions. In most instances, if an applicant fails to provide
required permit application information, the applicant simply will not
receive a permit. However, there may be instances where prosecution for
knowingly withholding or providing false information is warranted under
final Sec. 847.11(a)(3).
Several commenters suggested that it would be in the public
interest for regulatory authorities to issue press releases to local
newspapers when investigating ``AVS violations.'' They maintain that
such press releases would heighten public awareness.
We do not believe that issuing press releases under such
circumstances would be in the public interest. Announcing the pendency
of an investigation before its conclusion could unfairly attach a
stigma to a company or an individual who is ultimately vindicated. It
could also compromise the integrity of the investigation. Balancing any
advantage to be gained by such press releases against the potential to
compromise the rights of the person being investigated or the integrity
of the investigation, we conclude that the latter concerns
substantially outweigh any perceived benefit. Nonetheless, the results
of our investigations--i.e., written findings on ownership and control
under final Sec. 774.11(f)(1)--will be entered into AVS. See final
Sec. 774.11(f)(2). Also, under final Sec. 773.28(d), the result of any
challenge to a finding on ownership or control will be posted on AVS
and on OSM's Applicant/Violator System Office Internet home page
(Internet address: www.avs.osmre.gov).
Several commenters asked if there is a penalty for States if they
do not use AVS. AVS is a tool we developed specifically to assist
States in implementing section 510(c) of the Act. After more than 13
years of successful operation, regulatory authorities now routinely use
AVS to implement a variety of provisions under SMCRA. Given the
efficiencies gained by using AVS, as opposed to independently and
arduously compiling the information contained in AVS, it is highly
unlikely that any State would choose to discontinue using AVS.
Nonetheless, under our previous regulations, and the regulations we
adopt today (see final Secs. 773.9, 773.10 and 773.11), State
regulatory authorities are required to use AVS during the section
510(c) permit eligibility review process. If they fail to do so, they
are subject to OSM's general oversight authority.
One commenter said that AVS ``is an essential part of OSM's
regulatory program.'' Another expressed concern that the proposed rule
would weaken the effectiveness of AVS. This commenter also said the
computer system gives small communities a way to identify corporate
officials and investors who fail to abate violations or forfeit
performance bonds. We agree that AVS is an essential part of our
regulatory program and that it is an equally powerful tool for the
public at large and the regulated industry alike. We want to assure the
commenter that this rulemaking will not compromise

[[Page 79613]]

the integrity of the information contained in AVS in any way.
Two commenters asked how the final rule will affect existing
permits. One of the commenters also asked: (1) what will happen to the
current data in AVS for controllers; and (2) how will previous
ownership or control links or links to violations discovered during
bond forfeiture investigations be affected.
The provisions adopted in this final rule will become effective for
Federal programs 30 days after the publication date of this final rule,
and will apply prospectively. The rule will not affect existing
permits, but will apply to Federal permitting as applications are
received for new permits, renewals, revisions, transfers, assignments
or sales. The rule will become effective in primacy States after we
approve amendments to State programs, and will apply in the manner
outlined above for Federal programs. This final rule will not affect
the existing information shown in AVS, though it will affect how that
information is used by regulatory authorities.
Proposed Sec. 773.15(b)(1)
We proposed to revise previous Sec. 773.15(b)(1) to provide for a
three-part review of the information which applicants must provide
under part 778. We adopted a general section to precede the three
specific reviews, final Sec. 773.8, and adopted the three specific
reviews at final Secs. 773.9 through 773.11.
We proposed that the review of an applicant's legal identity
information would require an initial determination of whether
information disclosed under previous Sec. 778.13 is accurate and
complete (proposed (b)(1)). We further proposed that after the
preliminary determination, we would update the relevant records in AVS
(proposed (b)(1)(i)). If we found that an applicant, operator, owner,
controller, principal, or agent had knowingly or willfully concealed
information about an owner or controller, we would: inform the
applicant of the finding and request full disclosure (proposed
(b)(1)(i)(A)), investigate to determine if full disclosure was made
(proposed (b)(1)(i)(B)), and, if appropriate, deny the permit (proposed
(b)(1)(i)(B)(1)) and refer the finding for prosecution under section
518(g) of the Act, 30 U.S.C. 1268(g), (proposed (b)(1)(i)(B)(2)). We
modified the proposed revisions in this final rule. The proposed
revisions, as modified, are at Secs. 773.8 and 773.9 of this final
rule.
We adopted final Sec. 773.8 to provide general requirements which
precede the three-part review of permit application information. At
final Sec. 773.8, we changed the proposed phrase ``accurate and
complete'' to ``administratively complete,'' in response to comments,
to highlight that the reviews of information are to commence after an
application is found to be administratively complete. We recognized
that a determination that an application is administratively complete
occurs after an application is received but before we determine that
the information is accurate and complete, based on a detailed
examination of the information the applicant submits. A finding that
the information is accurate and complete is part of the written
findings required under final Sec. 773.15(a). At final Secs. 773.8(b)
and (c), we adopted a provision requiring the regulatory authority to
enter into AVS, and update, the ownership or control and violation
information an applicant submits under final Secs. 778.11, 778.12(c),
and 778.14.
At final Sec. 773.9, we adopted the proposed review of the
applicant's ``legal identity information.'' For clarity, and to match
the heading at final Sec. 778.11, we changed the section heading to
``Review of applicant, operator, and ownership and control
information.'' The final provision provides that the regulatory
authority will rely upon the applicant, operator, and ownership and
control information an applicant submits under final Sec. 778.11,
information from AVS, and any other available information, to review
the applicant's and operator's business structure and ownership and
control relationships. This review is required before making a permit
eligibility determination under final Sec. 773.12.
A commenter said that proposed Sec. 773.15(b)(1) meant that all
information must be found accurate and complete before an application
is administratively complete. We modified the final rule language, as
indicated, to require the reviews of information under final
Secs. 773.9 through 773.11 to proceed on the basis of an
administratively complete application. See final Sec. 773.8(a). The
determination that an application is accurate and complete will come at
a later stage of the permit application review process. See final
Sec. 773.15(a).
Several commenters asked OSM to clarify: (1) what is to be checked
to determine accuracy and completeness; (2) how should States verify
information provided in an application and to what depth and detail;
and (3) how far above the applicant should ownership and control
information be provided.
As indicated above, we changed ``accurate and complete'' to
``administratively complete.'' The term ``administratively complete
application,'' and the requirement that an applicant must submit an
administratively complete application before permit processing begins,
have been in place since at least 1983. See previous Sec. 773.13(a)(1)
and existing Sec. 701.5 (definition of administratively complete
application). Under our longstanding practice, as well as under this
final rule at Sec. 773.8, an application is administratively complete
when the regulatory authority determines that it contains information
addressing each application requirement and all information necessary
to initiate processing and public review. On the other hand, under
final Sec. 773.15(a), a determination of accuracy and completeness will
occur before a permitting decision is made and will require written
findings by the regulatory authority. This process, too, has been in
place since at least 1983. See previous Sec. 773.15(c)(1). When making
a finding that an application is accurate and complete, rather than
merely determining that information and responses have been provided,
the regulatory authority must examine the veracity of submitted
information. We leave it to the regulatory authorities to determine how
this requirement is best implemented under their programs. However, in
making a finding that an application is accurate and complete, a
regulatory authority is expected to review all information supplied in
the permit application, pertinent information in AVS, and all other
reasonably available information. As for the extent of ownership and
control information required to be provided for persons ``above the
applicant,'' we note that under final Sec. 778.11(c)(5) and (d), an
applicant is required to submit the information required by final
Sec. 778.11(e) for all persons who own or control the applicant and the
operator, according to the definitions of own, owner, or ownership and
control or controller which we adopt today in final Sec. 701.5.
A commenter said review of an applicant's legal identity will
lengthen the permit review process and could require additional staff
and resources to accomplish the required reviews and investigations.
As indicated above, at final Sec. 773.9, we changed that heading to
``Review of applicant, operator, and ownership and control
information,'' to more accurately reflect the nature of the review.
Also, we removed direct references to investigations in this section,
such that investigations will not be routinely required. Rather, while
we fully expect investigations to be conducted when

[[Page 79614]]

warranted, investigations as proposed in part 773 are at the discretion
of the regulatory authority. This should substantially alleviate the
staff burden perceived by the commenter. As to the review of applicant,
operator, and ownership and control information under final Sec. 773.9,
this final rule, in large part, continues requirements and practices
which were previously in effect, and thus should not lengthen the
review process or require additional staff and resources.
A commenter asked OSM to explain the term ``other reasonably
available information.'' The commenter said that an application
probably contains information more up-to-date than State databases,
which are updated only once a year.
In final Secs. 773.9 through 773.11, we use the phrase ``other
available information'' instead of the proposed phrase ``other
reasonably available information.'' However, the change was editorial
in nature and does not change the scope of information the regulatory
must consider. The phrase ``other available information'' is derived
from section 510(c) of SMCRA, which requires regulatory authorities to
consider the section 510(c) schedule of information submitted by the
applicant, as well as ``other information available.'' Under final
Secs. 773.9 through 773.11, we intend that the phrase means information
that may be obtained from State and Federal sources--such as AVS--
without extraordinary effort. The term also encompass information
supplied to the regulatory authority by the public.
Numerous commenters all said ``OSM should require States to
validate their information before entry into AVS and should require the
States to enter corrections in a timely manner.'' Final Sec. 773.15(a)
requires regulatory authorities to make a written finding that a permit
application is accurate and complete. As explained above, when making a
finding of accuracy and completeness, the regulatory authority must
examine the veracity of information submitted by the applicant. In
doing so, we expect regulatory authorities to consider all reasonably
available information, including information already contained in AVS.
We also note, however, that most of the information contained in AVS is
supplied to regulatory authorities by applicants and permittees, who
have the burden of providing accurate and complete information. We also
agree that States should enter all data into AVS, including any
corrections, in a timely manner.
Several other commenters said ``information should be required and
entered into AVS at the time of permit application with a notation
indicating that it will be updated before permit issuance, and that the
information should be updated by the applicant and input at the time of
final permit review and issuance.''
We modified several proposed provisions based on our modifications
to proposed Sec. 773.15(b)(1). Our modifications accomplish the intent
of the commenters. Final Sec. 773.8(b) requires the regulatory
authority to enter into AVS permit application information relating to
ownership and control and violations. Final Sec. 773.8(c) requires the
regulatory authority to update this information in AVS after it
verifies any additional information submitted or discovered during a
permit application review. Final Sec. 778.9(d) requires an applicant,
after permit approval but before permit issuance, to update, correct,
or indicate that no change has occurred in the permit application
information submitted under final Secs. 778.11 through 778.14. Finally,
Sec. 773.12(d), which is modified and adopted from proposed
Sec. 773.15(e), provides that after a regulatory authority approves a
permit, it will not issue the permit until the applicant complies with
the information update and certification requirement of final
Sec. 778.9(d). After the applicant completes the update and
certification, Sec. 778.9(d) requires a regulatory authority, no more
than five business days before permit issuance, to again request a
compliance history report from AVS to determine if there are any
unabated or uncorrected violations which affect the applicant's permit
eligibility.
Proposed Sec. 773.15(b)(1)(i)
We proposed to revise previous Sec. 773.15(b) to provide for a
finding whether any applicant or operator, or any owner, controller,
principal, or agent of an applicant or operator, has knowingly or
willfully concealed information about any owner or controller of the
proposed operation. We did not adopt this provision in part 773 because
it is duplicative of the provisions of final Sec. 847.11(a)(3).
Several commenters asserted that denial of an incomplete
application is mandatory when an applicant has not fully complied with,
for example, sections 506, 507, 508, and 510 of SMCRA. 30 U.S.C. 1256,
10 U.S.C. 1257, 30 U.S.C. 1258 and 30 U.S.C. 1260. The commenters also
said: ``To the extent that OSM proposes to make elective the rejection
of the application by the agency where it is demonstrated that the
applicant has failed to disclose information, the proposal falls short
of the mark.'' The commenter noted the applicant is obligated to file
accurate and complete information and that ``[n]on-disclosure which is
intentional or which with reasonable diligence should have been
avoided, should be the basis of . . . for referral by the agency for
possible criminal prosecution for fraud or violation of the False
Claims Act.''
We agree with the commenters' premise, but not with their
conclusion. We agree that an applicant is initially obliged to file an
administratively complete application and ultimately bears the burden
of demonstrating that the application is accurate and complete. Absent
a demonstration by the applicant that the application is accurate and
complete, we agree that no permit may be issued by a regulatory
authority. However, we disagree that a regulatory authority should
immediately proceed to criminal prosecution in all instances of
nondisclosure of required information. As mentioned above, the most
common outcome for failing to provide accurate and complete information
will be permit denial. However, if an applicant knowingly conceals or
fails to provide material information, prosecution may be appropriate
under final Sec. 847.11(a)(3) and section 518(g), 30 U.S.C. 1268(g), of
the Act. See section VI.AA. of this preamble.
A commenter said that making a finding that persons have knowingly
and willfully concealed information from an application could be
difficult without extensive administrative and legal research. The
commenter also said that ``[c]onducting such research within statutory
and regulatory time-frames mandated for permit reviews could require
staff to spend less time on reviewing the technical, scientific, and
regulatory adequacy of proposed operations.''
We expect the occurrence of knowing withholding of information to
be relatively rare, and this rule does not require regulatory
authorities to conduct an investigation of all applicants to determine
whether information has been knowingly withheld. As such, the research
to which the commenter refers should not substantially interfere with
the regulatory authorities' other application review obligations.
However, under final Sec. 773.15(a), the regulatory authority must find
that the information submitted by the applicant is accurate and
complete. If a regulatory authority encounters evidence of wrongdoing
or misconduct, the regulatory authority is obligated, under

[[Page 79615]]

SMCRA, to evaluate the circumstances and to take appropriate action
under the Act.
A commenter objected to ``the inclusion of operators'' in proposed
Sec. 773.15(b)(1)(i). The commenter said including operators is both
unnecessary and impermissible. The commenter said ``[i]f the operator
is an agent of a permittee or an applicant, the operator will fall
within the SMCRA provisions concerning agents. If not, the operator is
outside the scope of SMCRA in this context.'' In final Secs. 773.9
through 773.11, we modified the proposal to clarify that the regulatory
authority will review the information the applicant submits under part
778. However, the applicant must provide information about its
operator. We expect that the applicant will exercise due diligence to
verify the accuracy and completeness of any information it receives
from its operator. Ultimately, all of the information an applicant
provides, including information pertaining to its operator, must be
accurate and complete.
Proposed Sec. 773.15(b)(1)(i)(A)
We proposed that following a finding of concealed information, we
would inform an applicant or operator in writing of the finding to
provide an opportunity to supply the undisclosed information before a
permitting decision was made. There were no comments on this provision.
We did not adopt this proposed provision because it unnecessarily
duplicates existing procedures.
Proposed Sec. 773.15(b)(1)(i)(B)
We proposed to provide for investigations as to whether an
applicant's or operator's response to a finding of nondisclosure was
satisfactory. All comments on proposed Sec. 773.15(b)(1)(i)(B)
addressed the proposed use of investigations to determine if an
applicant provided full disclosure in response to a regulatory
authority's written notification of a finding of less than full
disclosure of owners and controllers. All comments on investigations
proposed in Secs. 773.15(b)(1)(i)(B), (b)(2)(iii), and (b)(3)(ii)(B)
will be discussed together here.
Investigations
All comments on investigation, except one, variously questioned the
reason for including this mechanism in the proposed revisions of
previous Sec. 773.15. Some commenters expressed concern that during
oversight, OSM and State regulatory authorities would disagree with the
conduct and results of investigations. Several commenters were
concerned that additional staff and funding would be required to
conduct the investigations. One commenter said that a mandate to
investigate the information in every application is burdensome and that
a State regulatory authority would, in fact, investigate when there was
reason to believe that an application did not contain full disclosure.
Some commenters asked about the scope and level of detail necessary to
perform an investigation. One commenter said the final rule should
clarify that a regulatory authority will conduct an investigation
related to these provisions at its discretion. Several commenters
expressed support for including investigations in the provisions and
suggested that OSM or the State regulatory authority publish notices in
local newspapers when an investigation is being conducted in order to
increase public participation.
In response to these comments, we did not adopt the three
provisions that made direct reference to mandatory investigations
during the permit review process. Regulatory authorities already have
the authority and discretion to perform an investigation, comprehensive
review, examination or evaluation when they have reason to believe
information in an application is not accurate or complete, or has been
intentionally concealed. However, a regulatory authority's permitting
decisions and all actions attendant to such a decision are subject to
OSM's general oversight authority. In addition, for reasons explained
above, we reject the suggestion to publish notification of a regulatory
authority's investigations. Any benefit to be gained by such
publication is outweighed by the countervailing concerns relating to
the rights of the person being investigated and the integrity of the
investigation.
Proposed Sec. 773.15(b)(1)(i)(B)(1)
We proposed that, depending upon an applicant's or operator's
response under proposed Sec. 773.15(b)(1)(i)(A) and the results of our
investigation under proposed Sec. 773.15(b)(1)(i)(B), we ``may'' deny
an application. We did not adopt this proposed provision. We decided
that the proposed provision is an unnecessary revision because
sufficient provisions already exist supporting the proposition that a
regulatory authority is under no affirmative obligation to issue a
permit when the application is not accurate and complete.
Proposed Sec. 773.15(b)(1)(i)(B)(2)
We proposed that if we found knowing or willful concealment of
ownership or control information, we would refer the finding to the
Attorney General or equivalent State office for prosecution under
section 518(g) of the Act and proposed Sec. 846.11. We did not adopt
this provision because it is duplicative.
Four commenters supported including a regulatory provision for
referral for prosecution under section 518(g) of the Act. Three of the
commenters said that the threat of being convicted on criminal charges
will motivate coal companies to tell the truth in their applications
for permits. We agree that it is appropriate to incorporate a
regulatory provision implementing section 518(g) in this rulemaking,
and have done so at final Sec. 847.11.
Proposed Sec. 773.15(b)(2) and (b)(2)(i)
We proposed Sec. 773.15(b)(2) to provide for the review of an
applicant's permit history, which comprises the second part of the
three-part review of the information required from applicants under
part 778. At paragraph (b)(2)(i), we proposed to use AVS and any other
available information to review the permit history of the applicant as
well as the permit history of any persons with the ability to control
the applicant. We intended that the review would determine the extent
of mining experience of the applicant and persons who own or control
the applicant and whether previous mining was conducted in compliance
with applicable requirements. We modified the proposed provisions in
this final rule. Within the reorganization of part 773, the section is
adopted as final Sec. 773.10. We received no comments specific to
proposed Sec. 773.15(b)(2)(i).
Final Sec. 773.10 provides for a review of ``permit history.''
Under final Sec. 773.10(a), the regulatory authority will rely upon the
permit history information the applicant submits, information in AVS,
and any other available information to review the permit histories of
the applicant and the operator. This review is required before a
regulatory authority makes a section 510(c) permit eligibility
determination under final Sec. 773.12. Under final Sec. 773.10(b) the
regulatory authority will also determine whether the applicant,
operator, and their owners and controllers have previous mining
experience. If none of these persons has prior mining experience, the
regulatory authority may conduct an additional review under final
Sec. 774.11(f) to determine if someone else controls the mining
operation and was not disclosed under Sec. 778.11(c)(5).

[[Page 79616]]

Proposed Sec. 773.15(b)(2)(ii)
At paragraph (b)(2)(ii), we proposed that if an applicant had five
or more years mining experience, the applicant would not be subject to
additional permit conditions, as proposed at Sec. 773.18, unless a
controller of the applicant was linked to an outstanding violation. We
specifically invited comments on the five-years experience and
successful environmental compliance criteria.
Several commenters supported the five years experience and
successful environmental compliance criteria to distinguish among
applicants. Two of these commenters said the five-years criterion
should be clarified to mean five consecutive years of surface coal
mining experience. One commenter said that the experience criterion
should be applied only to the applicant, not to the owners and
controllers of the applicant. Another commenter said the five-year
threshold should be applied only to the applicant, unless an
investigation ``should prove that someone else is the true applicant.''
A group of commenters said that past performance can be a predictor of
future performance. However, these last commenters also said that the
proposal fails to address the core problem, which is how to prevent new
permit-related damage by entities who are owned or controlled by
violators, given that section 510(c) can no longer be used. These
commenters suggested that if the intent of the proposed criteria was to
reduce the risk posed by applicants with no mining experience or a
history of unsuccessful compliance, perhaps performance bonds could be
adjusted to address the increased risk.
Many more commenters opposed the five-years experience criterion.
Numerous commenters all said mergers and name changes could create a
new entity that would be unfairly subject to the criterion. Two
commenters said that applicants identified in proposed
Sec. 773.15(b)(2)(ii) as subject to additional permit conditions differ
from the persons identified in proposed Sec. 773.18. Another said that
existing State laws and regulations are sufficient to effect
environmental compliance without additional permit conditions or
monitoring. Two commenters asked if OSM relied upon statistical data to
develop the five-year criterion. Numerous commenters said the five-year
experience criterion is not authorized under the Act. Several
commenters asserted that the experience criterion is inconsistent with
the ruling in NMA v. DOI I. Several commenters said that ``all
permittees should be subject to obligations to pay bills on time, to
reclaim expeditiously, and to maintain proper compliance records. The
agency cannot pick and choose who gets breaks from mandatory
obligations.''
Another commenter asserted that SMCRA establishes the only
permissible criteria for issuing and conditioning a permit to an
applicant. In the commenter's view, our proposed criteria are not
authorized by the Act. This commenter also said that there are other
factors more relevant to an operation's financial and compliance
success but even those factors are ``not part of the statutory calculus
for a decision whether to issue or condition a permit. In any event,
the statute directly addresses performance risk by requiring for every
surface coal mining operation a reclamation bond payable to the
regulatory authority and `conditioned upon faithful performance of all
requirements of the Act.' ''
Based on the comments received on this provision and our further
deliberations, we are not adopting the proposed five-years experience
and successful environmental experience criteria. There are no
references to either in the regulatory language of this final rule.
However, in final Sec. 773.10(c), if neither the applicant or operator,
nor any of their owners or controllers identified under final
Sec. 778.11(c)(5), has any previous mining experience, we may conduct
an additional review to determine if another person with mining
experience owns or controls the operation but was not disclosed under
final Sec. 778.11(c)(5). We also note that amendments to the existing
bonding regulations, as alluded to by several commenters, may provide
an adequate means of reducing the risk posed by applicants or
permittees with little or no mining experience. However, bonding is
outside the scope of this rulemaking.
Proposed Sec. 773.15(b)(2)(iii)
All comments received on proposed paragraph (b)(2)(ii) addressed
the proposed use of investigations. All comments on the proposed use of
investigations have been discussed above at proposed
Sec. 773.15(b)(1)(i)(B), the first instance in proposed Sec. 773.15
where the use of investigations was proposed.
Proposed Sec. 773.15(b)(3)
We proposed to revise Sec. 773.15(b)(3) to provide for the review
of an applicant's compliance history, the third part of the review of
an application. We modified and adopted this provision at final
Sec. 773.11, ``Review of permit history.'' Final Sec. 773.11(a)
requires a regulatory authority to rely upon the compliance, or
violation, history information the applicant submits to review the
compliance histories of the applicant, operator, and their owners and
controllers. Under final Sec. 773.11(b), this review must occur before
a regulatory authority makes a section 510(c) permit eligibility
determination under final Sec. 773.11(b).
Proposed Sec. 773.15(b)(3)(i)
We proposed paragraph (b)(3)(i) to provide that a regulatory
authority must request a compliance history report from AVS for every
application for a new permit, revision, renewal, transfer, assignment,
or sale of permit rights. In this final rule, we modified the proposed
provision to require regulatory authorities to obtain an AVS report
before making a section 510(c) permit eligibility, whenever such a
determination is required under our regulations, under final
Sec. 773.12.
General Comments on Proposed Sec. 773.15(b)(3)(i)
Two commenters said the provisions proposed for the review of
compliance history are not consistent with section 510(c) of SMCRA.
First, they said permit revisions are exempt from a permit eligibility
determination under section 510(c). One said that applications for
permit renewals are also exempt. This commenter said proposed paragraph
(b)(3) should be entirely deleted.
We disagree that permit revisions and renewals are exempt from the
requirements of section 510(c). Section 510 refers generally to
applications for permits and revisions. It is, therefore, reasonable to
conclude that the term ``applicant'' in section 510(c) encompasses
applicants for permits as well as revisions. Moreover, the term
``permit'' in section 510(c) does not exclude applications for permit
revisions or renewals. It is reasonable to conclude that the
requirements of section 510(c) apply with equal force not only to
applications for new permits, but also to applications for permit
revisions and renewals. In sum, while we did not include specific
references to revisions, renewals, and transfers in the final rule
language, we intend that a regulatory authority may evaluate all
permitting actions for eligibility under section 510(c).
Permitting Recommendations
In the proposed rule, we provided notice that we would cease
providing AVS and OSM recommendations to regulatory authorities on
pending applications and other actions subject to permit eligibility
determinations. We

[[Page 79617]]

provided official notice of the termination of permitting
recommendations on October 29, 1999. See AVS System Advisory Memorandum
#20. In the proposed rule, we explained that the AVS report which
regulatory authorities are required to obtain under final Sec. 773.11
(proposed Sec. 773.15(b)(3)(i)) would replace OSM's current policy,
which included providing permitting recommendations. After reviewing
the comments received on the elimination of permitting recommendations,
we will continue the practice of not providing recommendations, under
the rationale we articulated in the proposed rule:

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.

63 FR 70580, 70593. We do note, however, that even when we were
providing recommendations, the State regulatory authorities retained
the ultimate authority to render a permitting decision.
Three commenters supported our decision to cease providing
permitting recommendations. These commenters said the decision
supported State primacy and that States should make their own
permitting decisions. We supported the principle of State primacy in
the past, and continue to do so, as evidenced by many provisions
adopted in this final rule. For example, in addition to eliminating
permitting recommendations, we provided that State regulatory
authorities are to apply their own ownership and control rules to
outstanding violations in other jurisdictions, including Federal
violations, when deciding challenges to ownership or control listings
and findings (see final Secs. 773.25 through 773.28).
Our decision to cease providing permitting recommendations was also
based upon the ever-increasing sophistication among State users of AVS.
States have fully integrated the use of AVS into their programs. In
addition, all information used in AVS data processing has been
completely automated for several years. This has resulted in an
exceptionally high degree of accuracy of the information contained in,
and the reports generated by, AVS. The need for OSM to routinely check
the quality of system outputs has continuously decreased, as has the
need for OSM and State collaboration to resolve discrepancies.
Our role in maintaining and managing the computer system will
continue. Nonetheless, the above-mentioned factors have brought us to
the conclusion that it is appropriate to cease providing permitting
recommendations. We remain committed to maintaining the integrity of
AVS data and will continue to provide a variety of support services to
State and Federal users, as well as to the industry and the general
public.
Many commenters opposed or expressed concern regarding our decision
to cease providing permitting recommendations. One commenter said that
providing AVS and OSM recommendations is consistent with the Congress'
view of OSM's role in primacy States. One commenter said: (1) AVS is an
OSM system that can only be operated and maintained by OSM; (2) ceasing
permitting recommendations will result in second-guessing State
decisions during oversight; and (3) ``OSM should continue to use the
data in its AVS system to provide permit eligibility decisions.''
Another commenter said that if OSM provides only raw data, some States
may ignore violations in other States. Another commenter expressed
concern about resolving data discrepancies.
We appreciate these concerns, but decline to reinstate permitting
recommendations. Our response to these commenters is largely the same
as our previous responses regarding recommendations. We do note that
under this final rule, as with the previous rules, States are required
to consider all violations, both State and Federal, during the section
510(c) compliance review (unless the violations are subject to one of
the exceptions for remining (final Sec. 773.13) or provisionally issued
permits (final Sec. 773.14)). If a State fails to consider all
violations, it is subject to our general oversight authority. We also
note our strong intent not to routinely second guess State permitting
decisions; we will use our oversight to respond to egregious
situations. So long as State permitting decisions are reasonable under
the approved State program, we will not disturb the State decision-
making process.
In the area of data discrepancies, the agency with jurisdiction
over a violation is the first place to attempt to resolve any
discrepancy. We are always prepared to receive any requests regarding
Federal violations and to assist any State should the need arise.
Proposed Sec. 773.15(b)(3)(i)(A)
At paragraph (b)(3)(i)(A), we proposed that a permit eligibility
determination under section 510(c) would be based upon the compliance
history of the applicant and operations owned or controlled by the
applicant, unless there was an indication that the history of persons
other than the applicant should also be included. Proposed
Sec. 773.15(b)(3)(i)(A), as modified, along with proposed
Sec. 773.16(a), as modified, is adopted in final Sec. 773.12.
In final Sec. 773.12, we clarified that we will consider an
operator's compliance history, when the operator is different than the
applicant, during the section 510(c) compliance review. As explained in
section VI.A. of this preamble, there is no time when an applicant/
permittee does not control its entire surface coal mining operation. As
such, the permittee will always control the operator, at least to the
extent that the permittee selects, and can ultimately fire, the
operator. Since the operator is effectively ``downstream'' from the
applicant/permittee, it is consistent with section 510(c) to consider
the operator's compliance history, i.e., whether the operator has any
outstanding violations, during the section 510(c) compliance review.
While reviewing the operator's compliance history was subsumed in the
proposed provision, which would have required regulatory authorities to
consider violations at all operations owned or controlled by the
applicant, we decided to add specific reference to the operator to
avoid any confusion. If we could not consider an operator's violations
during the compliance review, operators could create violations at
multiple sites and remain in the business by associating with ``clean''
applicants. The Act cannot be read to support such a result. The
provision will also encourage applicants to hire ``clean'' operators.
A commenter asked that we explain which ``other persons'' we are
referring to in proposed Sec. 773.15(b)(3)(i)(A). The commenter said
that without explanation, ``the regulations allow far too much leeway
to the agency issuing the permit.'' By ``persons other than [the
applicant],'' we intended to clarify that persons other than applicants
for new permits may be subject to a section 510(c) permit eligibility
determination. However, we decided that the reference to ``other
persons'' is unnecessary in

[[Page 79618]]

final Sec. 773.12 because other rule provisions already provide the
circumstances under which a section 510(c) compliance review is
required.
One commenter said that ``State law governs the analysis for
piercing the corporate veil'' so that ``a Federal rule that attempts to
displace State corporate law would be particularly intrusive and
unjustified.'' This rule does not displace State corporate law to a
greater extent than provided for in SMCRA. Further, as explained above,
State common law pertaining to piercing the corporate veil is not the
exclusive tool to determine the true applicant. It is true that
corporations are creatures of State law; however, the corporate form
cannot be used to evade the requirements of a Federal statute, such as
SMCRA. To the extent that SMCRA is inconsistent with State corporate
law principles, federal law prevents the provisions of SMCRA from being
subverted by State law.
A commenter asked if the rule would allow for permit denial based
only on the applicant's violations, or would it also allow for denial
based on violations indirectly owned or controlled by the applicant.
This final rule, like the provisions in the IFR, allows for permit
denials based on ``limitless downstream violations'' at operations
which the applicant owns or controls through intermediary persons or
entities. This provision was expressly upheld in NMA v. DOI II. 177
F.3d at 4-5. Thus, during a section 510(c) compliance review under
final Sec. 773.12, we may consider not only the applicant's own,
directly owned or controlled violations, but also violations at
operations which the applicant indirectly owns or controls through
intermediary persons or entities. This provision is subject to the
court's retroactivity holding, as embodied in final Sec. 773.12(a) and
(b).
Proposed Sec. 773.15(b)(3)(i)(B)
In paragraph (b)(3)(i)(B), we proposed that if an applicant or any
surface coal mining operation owned or controlled by the applicant has
an outstanding violation, the application may not be approved unless:
(1) the regulatory authority with jurisdiction over the violation
approves a properly executed abatement plan or payment schedule; or (2)
the violation is being abated or is the subject of a good faith
administrative or judicial appeal, contesting the validity of the
violation; or (3) the violation is subject to the presumption of NOV
abatement under proposed Sec. 773.16(b).
We modified and reorganized the proposed provision. We consolidated
all proposed provisions describing permit eligibility into final
Sec. 773.12. We moved proposed provisions regarding appeals, abatement
plans, and payment schedules to final Sec. 773.14. Section 773.14
governs the circumstances under which a permit may be provisionally
issued, when an applicant or operator has outstanding violations. The
adopted provisions of final Sec. 773.14 are described below in the
discussion of proposed Sec. 773.16 at section VI.F. of this preamble.
In final Sec. 773.12, we also changed the proposal's use of the
past tense ``owned or controlled'' to the present tense ``own or
control'' in order to conform the proposed provision to the ruling in
NMA v. DOI II. In other words, the adopted language clarifies that we
may no longer consider unabated or uncorrected violations at operations
formerly, but no longer, owned or controlled by the applicant during
the section 510(c) compliance review. We may, however, consider past
ownership or control in determining if there has been a pattern of
willful violations under final Sec. 774.11(c) and section 510(c) of the
Act.
Finally, we modified the proposed language to conform to the NMA v.
DOI II court's ruling on retroactivity. Under this final rule, we may
no longer deny a permit when an applicant assumed indirect ownership or
control of an operation before November 2, 1988, and that operation has
an outstanding violation which was cited before November 2, 1988,
unless there was an established basis, independent from our 1988
ownership or control rule, to deny the permit at the time of the
assumption of indirect ownership or control or at the time of violation
(whichever is earlier).
A commenter who provided comments on the effect of the NMA v. DOI
II decision said that under the court's retroactivity holding, our pre-
1988 regulations only pertained to the applicant's violations. Another
commenter said that the court's ruling ``did not prohibit imposition of
permit blocks for direct ownership or control of violators whose
violations occurred before [November 2, 1988].''
We agree with the latter comment. As explained above, the court
found that the previous rule was impermissibly retroactive to the
extent it required permit denials based on indirect control and
transactions which occurred before November 2, 1988. Thus, the rule was
not retroactive to the extent it required permit denials based on pre-
rule transaction in instances involving direct control. Final
Sec. 773.12(a)(1) requires permit denial when the applicant directly
owns or controls an operation with an unabated or uncorrected
violation, regardless of when the ownership or control was established
or when the violation occurred. The distinction between direct and
indirect control is discussed more fully above.
A commenter said that proposed Sec. 773.15(b)(3)(i)(B) appears to
address an ``outstanding violation,'' but subparagraphs (B)(2) and
(B)(3) appear to address only notices of violation. The commenter is
correct that the proposal treated ``outstanding violations'' and
``notices of violation'' differently. We proposed to define outstanding
violation to mean a violation notice that remains unabated or
uncorrected beyond the abatement or correction period. As such, a
notice of violation for which the abatement period has not expired
would not have been an outstanding violation under the proposal. As
previously explained, we are not adopting the proposed definition of
outstanding violation. As such, the phrase ``outstanding violation''
will continue to have its plain meaning--i.e., a violation that is
unabated or uncorrected. Thus, under the final rule, an NOV is an
outstanding violation, even if the abatement period has not expired. We
also clarify that, under section 510(c) of the Act and our longstanding
policy, regulatory authorities must consider notices of violation--and
any other outstanding violations--during the section 510(c) compliance
review (though the applicant may be eligible for a permit under final
Secs. 773.13 or 773.14).
Two commenters asked if the phrase ``may not approve'' in proposed
Sec. 773.15(b)(3)(i)(B) means that the regulatory authority has the
discretion not to approve an application. The commenters said that if
OSM is granting discretion to regulatory authorities in this matter,
then it should be made clear in the final rule. In this final rule,
denying a permit under Sec. 773.12 is not discretionary. If a person is
ineligible for a permit under final Sec. 773.12, and does not meet the
criteria of Secs. 773.13 and 773.14, the regulatory authority must deny
the application.
Several commenters opposed the presumption in proposed
Sec. 773.15(b)(3)(i)(B) that a violation is being abated ``merely
because there is an abatement plan.'' They said the presumption should
be that the violation exists until it is abated, ``not merely promised
to be abated.'' These commenters also opposed the use of appeals to
defer a finding of a violation. The commenters asked, ``when is a
violation final enough to block issuance of a new permit?''
The proposed amendment provided for permit approval if an approved
abatement plan or payment schedule is

[[Page 79619]]

in place to correct a violation which remains unabated beyond the
abatement period, or the violation is subject to a good faith appeal,
at the time a permitting decision is made. In our view, the presence of
an abatement plan or payment schedule demonstrates a good faith effort
to correct a violation. We conclude that this current practice should
continue. We also conclude that it is appropriate to provisionally
issue a permit when a violation is subject to a good faith appeal.
However, under final Sec. 773.14(c), if a permittee, operator, or other
person fails to comply with an abatement plan or payment schedule, or
if a court affirms the existence of a violation properly attributable
to the applicant, then a regulatory authority should pursue other means
to compel compliance, and must institute procedures to suspend or
rescind the provisionally issued permit. See section VI.F. for a
detailed discussion of provisionally issued permits.
Proposed Sec. 773.15(b)(3)(i)(C)
At proposed paragraph (b)(3)(i)(C), we proposed that any
application approved with outstanding violations must be conditioned
under Sec. 773.17(j). Because we are not adopting proposed
Sec. 773.17(j), we also are not adopting proposed (b)(3)(i)(C). There
were no comments on this proposed provision. Permits which are issued
when there are outstanding violations properly attributable to the
applicant under section 510(c) must be provisionally issued in
accordance with final Sec. 773.14.
Proposed Sec. 773.15(b)(3)(i)(D), (E), and (F)
We preserved the substance of these proposed provisions at final
Secs. 773.12(c) and 774.11(c) through (e). In proposed subparagraphs
(b)(3)(i)(D), (E), and (F), we provided that OSM will serve a
preliminary finding of permanent permit ineligibility under 43 CFR
4.1351 when we find that an applicant or operator owned or controlled
mining operations with a demonstrated pattern of willful violations of
the Act and its implementing regulations, and the violations are of
such nature and duration that they result in irreparable damage to the
environment so as to indicate an applicant or operator's intent not to
comply with the Act or implementing regulations. We further proposed
that a person would be able to request a hearing under 43 CFR 4.1350
through 4.1356 with the Office of Hearings and Appeals within 30 days
of receiving a preliminary finding under paragraph (3)(i)(D) of this
proposed section. If a request for a hearing is filed, the Office of
Hearings and Appeals would give written notice of the hearing to an
applicant or operator and issue a decision within 60 days of the filing
of the request for a hearing. We further proposed that a person may
appeal the decision of the administrative law judge to the Interior
Board of Land Appeals under procedures in 43 CFR 4.1271 through 4.1276
within 20 days after receipt of a decision. The provisions were based
upon previous Sec. 773.15(b)(3) and were proposed with only minor, non-
substantive changes from the previous provisions. As mentioned, we
adopted the provisions, without substantive modification, in final
Secs. 773.12(c) and 774.11(c) through (e).
A commenter asserted that the finding would require an
investigation and extensive staff resources. These are not new
provisions. The proposed provision at Sec. 773.15(b)(3)(i)(D) and the
final provisions at Sec. 774.11(c) through (e) are derived from
previous Sec. 773.15(b)(3), which implements the ``pattern of willful
violations'' aspect of section 510(c) of SMCRA. There are no
substantive changes from the previous provisions, except that we
modified the provision to conform it to the appeals court's
retroactivity holding. We note that compliance with the provisions is
not discretionary, as they are necessary to implement section 510(c)'s
mandate. As such, although an investigation requiring staff resources
may be required in certain instances, this result is unavoidable under
the Act.
A commenter who provided comments on the effect of the NMA v. DOI
II decision suggested that the rule require regulatory authorities to
evaluate past ownership or control of operations in violation and make
a written finding if there is a pattern of willful violations.
Consistent with NMA v. DOI II, final Sec. 774.11(c) requires regulatory
authorities to consider past ownership or control in determining
whether there has been a pattern of willful violations under section
510(c). However, we adopted language in final Sec. 774.11(c) to comply
with the court of appeals' retroactivity holding. Thus, when
determining whether there is a pattern of willful violations, we will
only consider ownership and control relationships and violations which
would make, or would have made, the applicant ineligible under final
Sec. 773.12, which incorporates the substance of the court's
retroactivity holding. Final Sec. 774.11(c) also requires regulatory
authorities to serve a preliminary finding of permanent permit
eligibility if such a pattern exists.
A commenter said the ``use of the word `irreparable' should be
replaced with `material damage.' Irreparable is not the only damage
which should not be tolerated. Property owners have to put up with all
kinds of illegal damages because they are not significant enough.
Material damage may affect many more properties than irreparable
damage.'' We note that section 510(c) of the Act uses the term
``irreparable damage.''
Proposed Sec. 773.15(b)(3)(i)(G)
We proposed subparagraph (b)(3)(i)(G) to provide that a person is
not eligible for a permit if the person 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
by a Federal or State or court.
We are not adopting the proposed provision. We decided that there
are sufficient existing authorities to allow regulatory authorities to
avoid violating court orders or injunctions or aiding and abetting
enjoined individuals in violating injunctions. For example, if an owner
or controller of an applicant is enjoined by a court from engaging in
surface coal mining operations, granting a permit to the applicant may
be viewed as violating the injunction. Even if the regulatory authority
processing the permit application is not technically bound by the
injunction, granting a permit may nonetheless be viewed as aiding and
abetting an enjoined individual in violating an injunction. Because the
specific terms of an injunction will be outlined in the court's order,
the regulatory authority must decide, on a case by case basis, whether
the order prevents it from issuing a permit.
Proposed Sec. 773.15(b)(3)(ii)
We proposed subparagraph (b)(3)(ii) to provide for an examination
of an applicant's controllers. We proposed to ask for an AVS report to
show if an applicant's owners or controllers owned or controlled a
surface coal mining operation when a violation notice was issued and if
the violation is outstanding. We further proposed to investigate each
person and violation to determine whether alternative enforcement
action under proposed part 846 is appropriate and to enter into AVS the
results of each determination or referral. We further proposed that if
an applicant has less than five years experience, or has owners or
controllers that are linked to outstanding violations, we would
consider the applicant to have insufficient or unsuccessful
environmental compliance and, if approved for a permit, subject such
applicant to additional permit conditions under proposed Sec. 773.18.

[[Page 79620]]

In this final rule, we are not adopting direct references to
investigations, the five-years experience criterion, the successful
environmental compliance criterion, or additional permit conditions. We
adopted the remaining provisions, as modified, at final Sec. 774.11(b).
Under final Sec. 774.11(b), if we discover that any person owns or
controls an operation with an unabated or uncorrected violation, we
will determine if an enforcement action is appropriate under parts 843,
846, or 847. We must enter the results of any enforcement action in
AVS. See also the description of final Sec. 774.11(b) in section VI.K.
of this preamble.
A commenter said the proposed provision seems to be inconsistent
with the ruling in NMA v. DOI I, ``especially if the applicant is part
of a large corporate family where the same individuals hold officer
positions in several of the companies.'' The commenter suggested that
outstanding violations should be considered only if they were issued to
the applicant or any operation owned or controlled by the applicant.
The commenter further said that ``[v]iolations at other operations of
an applicant's parent or sister companies must not be considered if
their only connection to the applicant is a common individual officer
or ``controller.'' To do so would have the same result as the previous
regulation which denied permits if anyone owning or controlling the
applicant had outstanding violations. This concept was disallowed by
the court decision in NMA v. DOI [I].''
The provisions adopted at final Sec. 774.11(b) are unrelated to
permit eligibility determinations. Rather, the final regulations at
Sec. 774.11 provide that regulatory authorities may determine whether
enforcement actions are appropriate under 30 CFR 843.13 and parts 846
and 847, which implement sections 518 and 521 of the Act. The ruling in
NMA v. DOI I does not alter our statutory authority to pursue
enforcement actions under sections 518 and 521.
Proposed Sec. 773.15(b)(4)
We proposed to revise previous Sec. 773.15(b)(4) by correcting the
date in previous subparagraph (b)(4)(i)(C)(1) to read ``September 30,
2004.'' In the reorganization of part 773, we moved the provisions in
previous paragraph (b)(4) to a separate section, final Sec. 773.13. We
adopted the date correction at final Sec. 773.13(a)(2)(i) and also
modified and reorganized the prior provisions for increased clarity.
The substance of the final provision is unchanged.
Final Secs. 773.15(a) and (n)
Under the reorganization of part 773 in this final rule, the
provisions in previous Sec. 773.15(c) are placed in a separate section.
The section appears at final Sec. 773.15. In this final rule, we also
adopted two amendments at final Sec. 773.15. In final Sec. 773.15(a),
we made a technical revision to previous Sec. 773.15(c)(1), changing
the phrase ``complete and accurate'' to ``accurate and complete,'' to
match the statutory phrase used in section 510(b)(1) of the Act. We
added final Sec. 773.15(n) to require a written finding based upon the
results of the reviews under Secs. 773.8 through 773.14.
Proposed Sec. 773.15(e)
We proposed to revise paragraph (e) of previous Sec. 773.15 to
require regulatory authorities to obtain an AVS compliance report no
more than three days before a permit is issued. Our intent was to
ensure, immediately before permit issuance, that no new violations have
been cited at operations which the applicant or operator owns or
controls since the initial section 510(c) compliance review.
We modified the proposed provision in the final rule. The final
provision, at Sec. 773.12(d), provides that after a regulatory
authority approves a permit, it will not issue the permit until the
applicant complies with the information update and certification
requirement of final Sec. 778.9(d). After the applicant completes the
update and certification, Sec. 778.9(d) requires a regulatory
authority, no more than five business days before permit issuance, to
again request a compliance history report from AVS to determine if
there are any unabated or uncorrected violations which affect the
applicant's permit eligibility.
We increased the proposed three days to five days in response to
comments on the proposed provision. The final compliance history report
should be obtained close to the anticipated date of the permitting
decision. Five days provides a better opportunity to review the
compliance report and resolve any discrepancies that arise before a
final permitting decision is made. The purpose of the second compliance
history report is to make sure that the applicant and operator, and
operations they own or control, continue to be in compliance. If there
are compliance problems identified in the second report, or otherwise
known, they must be resolved before a permit may be issued. We added
the provision requiring the final compliance history report to be
obtained after the applicant complies with the information update and
certification requirement of final Sec. 778.9(d) to ensure that the
regulatory authority's permitting decision is based on the most current
information.

F. Section 773.16--Permit Eligibility Determination

The provisions that we proposed at Sec. 773.16 are found at
Secs. 773.12 and 773.14 of this final rule.
Under proposed Sec. 773.16, permit eligibility determinations would
be based upon the permit and compliance history of the applicant,
operations which the applicant currently owns or controls, and
operations the applicant owned or controlled in the past. If you were
eligible for a permit, proposed Sec. 773.16(a)(1) would have required
us to determine whether additional permit conditions should be imposed
under Sec. 773.18. Proposed Sec. 773.16(a)(2) required written notice
of a finding of ineligibility. That notice also would have contained
guidance as to how to challenge a finding on the ability to control the
surface coal mining operation. Proposed Sec. 773.16(b) provided for a
``presumption of NOV abatement'' and set forth criteria for the
presumption.
In developing this final rule, we modified the proposed rule based
upon the NMA v. DOI II decision concerning our previous rules and the
comments we received on proposed Secs. 773.15 and 773.16. (Section VI.E
of this preamble contains a detailed discussion of the court decision.)
We did not adopt the proposed provisions pertaining to additional
permit conditions. We adopted proposed Sec. 773.16(a) in modified form
as final Sec. 773.12. We also adopted proposed Secs. 773.15(b)(3)(i)(B)
and (C) and 773.16(b) in modified form as final Sec. 773.14
(provisionally issued permits).
Final Sec. 773.12--Permit Eligibility Determination
We added Sec. 773.12 to this final rule as a part of the
reorganization of part 773. Final Sec. 773.12 contains a modified form
of provisions proposed as Secs. 773.15(b)(3) and 773.16(a).
Paragraphs (a) and (b). Paragraphs (a) and (b) of final Sec. 773.12
require that the regulatory authority determine whether the applicant
is eligible for a permit under section 510(c) of the Act, based upon a
review of compliance, permit history, and ownership and control
information under 30 CFR 773.9 through 773.11. Specifically, paragraph
(a) states that--

Except as provided in Secs. 773.13 and 773.14 of this part, you
are not eligible for a permit

[[Page 79621]]

if we find that any surface coal mining operation that--
(1) You directly own or control has an unabated or uncorrected
violation;
(2) You or your operator indirectly own or control, regardless
of when the ownership or control began, has an unabated or
uncorrected violation cited on or after November 2, 1988; or
(3) You or your operator indirectly own or control has an
unabated or uncorrected violation, regardless of the date the
violation was cited, and your ownership or control was established
on or after November 2, 1988.

The November 2, 1988 cutoff date in paragraphs (a)(2) and (3)
reflects the decision in NMA v. DOI II, which prohibited us from
applying the permit block sanction for actions that occurred before the
effective date of our first ownership and control rules. In final
paragraph (b), we clarify that the ban on retroactive application does
not apply to situations in which there was an established legal basis,
independent of authority under section 510(c) of the Act, to deny the
permit at the time that the applicant or operator assumed indirect
ownership or control or at the time the violation was cited, whichever
is earlier.
Except for the addition of paragraph (b) and the November 2, 1988
cutoff date, final Sec. 773.12(a) and (b) do not differ significantly
in substance from the corresponding provisions in Sec. 773.15(b)(1) of
our previous rule.
Paragraph (c). Paragraph (c) of final Sec. 773.12 provides that the
regulatory authority may not issue a permit to an applicant if the
applicant or operator is permanently ineligible to receive a permit
under Sec. 774.11(c). This provision is discussed more fully in
sections VI.E. and K. of this preamble.
Paragraph (d). Paragraph (d) of final Sec. 773.12 requires that,
after approving the application, the regulatory authority refrain from
issuing the permit until the applicant complies with the information
update and certification requirement of 30 CFR 778.9(d). Paragraph (d)
also requires that, after that update, but no more than five business
days before permit issuance, the regulatory authority again request a
compliance history report from AVS to ensure that the applicant remains
eligible for a permit. Except for the addition of the 5-day timeframe,
this paragraph is substantively identical to previous Sec. 773.15(e).
We added the 5-day limitation to ensure that the final compliance
review occurs reasonably close to the date of permit issuance.
Paragraph (e). Paragraph (e) of final Sec. 773.12 requires that the
regulatory authority send the applicant written notice of any decision
finding the applicant ineligible for a permit. Paragraph (e) further
provides that the notice must contain the reason for the ineligibility
determination and apprise the applicant of his or her appeal rights
under 30 CFR part 775 and 43 CFR 4.1360 through 4.1369. We are adding
these provisions to ensure that any adversely affected applicant is
aware of the decision, the reasons for the decision, and the steps that
must be taken to procure administrative review of the decision.
Disposition of comments pertaining to the permit eligibility
criteria of proposed Sec. 773.16(a). A commenter said that reference to
owners and controllers of the applicant in proposed Sec. 773.16(a)(1)
should be deleted. In the permit eligibility criteria at Sec. 773.12 of
this final rule, we are not adopting the proposed reference to ``owners
and controllers of the applicant.'' Likewise, we are not adopting the
imposition of additional permit conditions based on the compliance
history of an applicant's owners and controllers. As previously
explained, at final Sec. 773.12, we limit the permit eligibility review
to an examination of whether the applicant and the operator have any
outstanding violations or own or control any operations with
outstanding violations.
A commenter said that proposed paragraph (a) fails to clearly
provide that a permit block under section 510(c) can only occur on the
basis of outstanding violations at operations the applicant presently
owns or controls. As previously explained, we modified the proposal to
conform it to the decision in NMA v. DOI II; in the process, we
eliminated the commenter's concern. During the section 510(c)
compliance review, we may only consider violations at operations which
the applicant or operator presently owns or controls.
A commenter asserted that a parent company which owns or controls a
subsidiary does not necessarily own or control the operations of the
subsidiary. The commenter said that actual control of the operations is
the only circumstance in a parent/subsidiary relationship that should
lead to permit ineligibility for the parent company if the subsidiary
has an outstanding violation.
We disagree. This argument was advanced and rejected in NMA v. DOI
II. If the parent company owns or controls the subsidiary under the
definitions we adopt today, the parent company, de facto, also owns or
controls the subsidiary's operations. In upholding our previous
construction of section 510(c), which, on this point, we import into
this final rule, the D.C. Circuit explained that our view is
``consistent with, if not mandated by, the statutory language which, as
noted, applies to any violating operations `controlled by the
applicant,' not only those directly owned by him. Accordingly, the
agency's construction must be upheld.'' NMA v. DOI II, 177 F.3d at 5.
Thus, in Sec. 773.12 of this final rule, we retained the ability to
deny permits based on both direct and indirect ownership or control
(including both the exercise of control and the ability to control) of
operations with current violations, subject to the court's
retroactivity holding. See also our response to similar comments in
sections VI.A. and E. of this preamble.
A commenter said that we correctly state that the appeals court [in
NMA v. DOI I] found only one aspect of our rules to be flawed. However,
the commenter also said that we should not alter other aspects of ``a
permit block system which has been substantially successful in holding
corporations accountable for the damage caused by their contract
miners, but instead [should focus] on assuring that the full gamut of
regulatory powers are employed to prevent those who have violated State
or Federal environmental laws or this Act from obtaining new permits
through indirect means.''
As discussed throughout this preamble, we believe that there are
sound reasons for the assorted modifications that we are making to the
rules implementing the permit block sanction of section 510(c) of the
Act. We targeted our outreach efforts to identifying how our rules
could be improved in their entirety, not just how our rules should be
revised as a result of NMA v. DOI I. One of the new rules that we are
adopting (part 847) emphasizes use of the alternative enforcement
mechanisms provided in sections 518(e), 518(g), and 521(c) of the Act.
See section VI.AA. of this preamble.
Several commenters said that OSM apparently believes ownership is
irrelevant to permit eligibility determinations, and that eligibility
is based only on ownership to the extent it reflects the ability to
control. One commenter further said that ``[o]wnership itself should be
a basis for [a permit eligibility determination], otherwise it
insulates individuals that own but purposefully do not control.''
We agree that ownership in and of itself can form the basis for
denying a permit. However, we note that both the proposal (see, e.g.,
proposed Secs. 773.15(b)(3) and 773.16(a)) and final Sec. 773.12
properly identify ownership and control as independent bases for permit
denials under section 510(c). Thus, under this final rule, if an

[[Page 79622]]

applicant owns an operation with a violation, under the definition of
``own, owner, or ownership'' in final Sec. 701.5, he or she will not be
eligible for a permit unless he or she qualifies for a provisionally
issued permit under final Sec. 773.14). Further, under the challenge
procedures we adopt today at final Secs. 773.25 through 773.27, an
applicant may only successfully challenge a listing or finding that he
owns an operation by proving by a preponderance of the evidence that he
does not own, or did not own, the relevant operation; in this
situation, a demonstration of the lack of control of an operation will
be of no avail.
Several commenters said that ``OSM should clarify the proper forum
and procedures to challenge erroneous permit blocks. The permit
applicant should not be punished for improper actions or inactions of
regulatory bodies.'' We respond to this comment, and similar comments,
in section VI.N., infra.
We invited comments on the criteria to identify which applicants
should be subject to additional permit conditions and what types of
conditions should be imposed. 63 FR 70580, 70595. Commenters did not
provide comments in the context of proposed Sec. 773.16. Commenters
did, however, provide comments in response to this invitation with
respect to proposed Secs. 773.15 and 773.18. We address those comments
in section VI.E. of this preamble.
Final Sec. 773.14--Provisionally Issued Permits
We added Sec. 773.14 to this final rule as part of the
reorganization of part 773. Final Sec. 773.14 is a modification of
provisions in previous Sec. 773.15(b)(1) and (2), proposed
Secs. 773.15(b)(3)(i)(B) and (C), and proposed Sec. 773.16(b). Instead
of using the term ``conditionally issued permits'' as in the previous
and proposed rules, the final rule substitutes the term ``provisionally
issued permits'' to clarify that permits issued under final Sec. 773.14
are not the same as permits issued with conditions under 30 CFR 773.17.
Paragraph (a). Paragraph (a) of final Sec. 773.14 explains that
this section applies to applicants who own or control a surface coal
mining and reclamation operation with either--
(1) A notice of violation issued under Sec. 843.12 or the State
regulatory program equivalent for which the abatement period has not
yet expired; or
(2) A violation that remains unabated or uncorrected beyond the
abatement or correction period.
Paragraph (b). Paragraph (b) of final Sec. 773.14 identifies the
circumstances under which a regulatory authority may find an applicant
eligible for a permit even though an outstanding violation would
otherwise make the applicant ineligible for a permit under 30 CFR
773.12 and section 510(c) of the Act. Specifically, final paragraph (b)
states that--

We, the regulatory authority, may find you eligible for a
provisionally issued permit if you demonstrate that one or more of
the following circumstances exists with respect to all violations
listed in paragraph (a) of this section--
(1) For violations meeting the criteria of paragraph (a)(1) of
this section, you certify that the violation is being abated to the
satisfaction of the regulatory authority with jurisdiction over the
violation, and we have no evidence to the contrary.
(2) As applicable, you, your operator, and operations that you
or your operator own or control are in compliance with the terms of
any abatement plan (or, for delinquent fees or penalties, a payment
schedule) approved by the agency with jurisdiction over the
violation.
(3) You are pursuing a good faith--
(i) Challenge to all pertinent ownership or control listings or
findings under Secs. 773.25 through 773.27 of this part; or
(ii) Administrative or judicial appeal of all pertinent
ownership or control listings or findings, unless there is an
initial judicial decision affirming the listing or finding and that
decision remains in force.
(4) The violation is the subject of a good faith administrative
or judicial appeal contesting the validity of the violation, unless
there is an initial judicial decision affirming the violation and
that decision remains in force.

In general, final Sec. 773.14(b) is substantively identical to the
corresponding provisions in Secs. 773.15(b)(1) and (2). However, there
is one significant exception. We added paragraph (b)(3) to the final
rule in response to comments that our challenge procedures for
ownership and control listings or findings failed to provide due
process by way of a pre-deprivation hearing. To address these concerns,
and in the interest of equity, the final rule allows issuance of a
provisional permit when a person is in the process of challenging an
ownership or control listing or finding. Our rules have always included
a similar provision for good faith administrative and judicial appeals
of the validity of a violation. We see no reason not to extend this
opportunity to persons who are pursuing good faith challenges to, or
administrative or judicial review of, ownership or control listings or
findings.
This paragraph of the final rule will afford additional due process
protection to adversely affected applicants while presenting little
risk of environmental harm. The applicant must meet all other permit
application approval and issuance requirements before receiving a
provisionally issued permit. In addition, the provisional permittee
must comply with all performance standards. If he or she fails to do so
while pursuing a challenge or appeal of all pertinent ownership or
control listings and findings, the regulatory authority must take all
appropriate enforcement measures, including issuance of an imminent
harm cessation order when applicable.
Furthermore, addition of this provision does not abrogate the
permit eligibility provisions of section 510(c) of the Act. It merely
delays their implementation until a judicial decision affirms the
validity of a violation or an ownership or control listing or finding.
An applicant whose challenges and appeals are ultimately unsuccessful
will be ineligible to receive a permit from that time forward until the
violation causing the ineligibility is corrected or until the applicant
ceases to be responsible for that violation.
Paragraph (c). Paragraph (c) of final Sec. 773.14 provides that the
regulatory authority must immediately initiate procedures under
Secs. 773.22 and 773.23 to suspend or rescind a provisionally issued
permit if--
(1) Violations included in final Sec. 773.14(b)(1) are not abated
within the specified abatement period;
(2) The applicant, operator, or operations that the applicant or
operator owns or controls do not comply with the terms of an abatement
plan or payment schedule mentioned in final Sec. 773.14(b)(2);
(3) In the absence of a request for judicial review, the
disposition of a challenge and any subsequent administrative review
referenced in final Sec. 773.14(b)(3) or (4) affirms the validity of
the violation or the ownership or control listing or finding; or
(4) The initial judicial review decision referenced in final
Sec. 773.14(b)(3)(ii) or (4) affirms the validity of the violation or
the ownership or control listing or finding.
We added this new paragraph to ensure that regulatory authorities
take action to suspend or rescind provisionally issued permits as
improvidently issued when the conditions justifying provisional
issuance cease to exist. As this rule makes clear, a provisional
permittee is not entitled to, nor is there any need for, the initial
review and finding requirements of Sec. 773.21 normally applicable to
improvidently issued permit proceedings. The initial permit

[[Page 79623]]

application review procedures leading to issuance of a provisional
permit effectively replace the initial review and finding requirements
of Sec. 773.21. Therefore, the final rule requires that the regulatory
authority proceed directly to Sec. 773.22 and propose to suspend or
revoke the permit.
Under the previous rule at Sec. 773.15(b)(1)(ii), the permittee had
30 days from the date that the initial judicial review decision
affirmed the validity of the violation to submit proof that the
violation was being corrected to the satisfaction of the agency with
jurisdiction over the violation. In contrast, final Sec. 773.14(c)
requires that the regulatory authority initiate action to suspend or
revoke the permit as improvidently issued if the disposition of
challenges or administrative or judicial appeals affirms the violation
or ownership or control listing or finding. We made this change to
ensure prompt implementation of the section 510(c) permit block
sanction once the validity of a violation or ownership or control
listing or finding is affirmed on appeal. (The previous rule did not
specify what action the regulatory authority must take if the permittee
did not submit the required proof within 30 days.) Under Sec. 773.23 of
the final rule, the permittee still has ample opportunity to submit
proof of corrective action and thus avoid permit suspension or
revocation. Final Sec. 773.22(b) requires 60 days notice for a proposed
suspension, while final Sec. 773.22(c) requires 120 days notice for a
proposed rescission.
Disposition of Comments on Presumption of NOV Abatement
In the proposed rule, we provided that the presumption that a
notice of violation (NOV) is being corrected--the ``presumption of NOV
abatement''--was not available to applicants who were subject to
additional permit conditions under proposed Sec. 773.18 because their
owners or controllers were linked to violations. We invited comments on
withholding the presumption of NOV abatement based on this criterion,
and also sought suggestions as to other criteria which could be used to
withhold the benefit of the presumption. 63 FR 70580, 70593. In this
final rule, we are not adopting the ``additional permit conditions'' of
proposed Sec. 773.18. We also decided not to distinguish between
applicants who can and cannot obtain the benefit of the presumption of
NOV abatement. Rather, all applicants may obtain the benefit of the
presumption, provided that they meet the requirements of final
Sec. 773.14.
Several commenters argued that the presumption of NOV abatement is
unlawful because it is inconsistent with section 510(c) of SMCRA. The
commenters said the law requires submission of proof that an NOV is
being corrected to the satisfaction of the regulatory authority or
agency with jurisdiction over the violation and that there is no
discretion on this point.
We disagree with these commenters. The provisionally issued permit
provisions that we adopt at Sec. 773.14 today continue, in substance,
our previous use of the presumption and are a reasonable implementation
of section 510(c). We extensively explained the basis for the
presumption in the preamble to our 1994 AVS Procedures rule. 59 FR
54306, 54322-54324 (October 28, 1994). We continue to rely, in part, on
the same rationale for purposes of this rulemaking. In short, based on
our experience, we firmly believe that the efficiencies gained by use
of the presumption far outweigh any perceived reduction in
environmental harm that might result from its elimination.
Further, we note that the certification requirement in final
Sec. 773.14(b)(1) satisfies section 510(c)'s proof requirement that an
applicant who owns or controls operations that are currently in
violation submit ``proof that such violation has been corrected or is
in the process of being corrected to the satisfaction of the regulatory
authority, department, or agency which has jurisdiction over such
violation * * *.'' An applicant's certification that the violation is
in fact being abated, with attendant consequences for failure to comply
with the certification, constitutes adequate proof under section
510(c). To that extent, the use of the term ``presumption'' in
connection with this provision is a misnomer; under this final rule,
regulatory authorities cannot simply ``presume'' that an NOV is being
abated, but must require the requisite certification before a permit
may be provisionally issued.
In NMA's challenge to the AVS Procedures rule, the U.S. District
Court for the District of Columbia stated: ``The Court finds the
``certification of abatement'' requirement consistent with SMCRA and a
rational way to enforce the Act's requirements.'' National Mining
Assoc. v. Babbitt, 43 Env't Rep. Cas. (BNA) 1097, 1109 (D.D.C. 1996),
appeal docketed, No. 96-5274 (D.C. Cir). As the court explained,
``certification provides state-of-mind insurance to the regulatory
authority by giving it recourse against the applicant who does not
correct a NOV.'' Id. at 1110. Similar recourse is available in final
Sec. 773.14(c).
When there is an unabated or uncorrected violation and the
abatement or correction period has expired, final Sec. 773.14(b)(2)
establishes prerequisites for provisional permit issuance that
similarly satisfy the proof requirement. The presence of an approved
abatement plan or payment schedule, and confirmation of compliance with
the plan or schedule, represents a good faith effort to correct the
violation and constitutes more than adequate proof that the violation
is being abated. Finally, the criteria Secs. 773.14(b)(3) and (4),
which allow issuance of a provisional permit when the violation or
ownership or control listing or finding is the subject of a good faith
challenge or administrative or judicial appeal, have adequate support
in the legislative history of section 510(c), as discussed at 44 FR
15024-25 (March 13, 1979).
The National Wildlife Federation and Kentucky Resources Council,
Inc. also filed a complaint challenging our 1994 AVS procedures rule.
In that action, plaintiffs claimed, among other things, that the
presumption of NOV abatement failed to satisfy section 510(c)'s proof
requirement. Ultimately, the parties filed a joint motion for voluntary
dismissal of the action, based on our agreement to ``reopen the issues
and regulatory language complained of in this lawsuit for public
comment, and to reevaluate the position of the agency with respect to
those matters complained of in this case,'' including the presumption
of NOV abatement. By order of September 15, 1997, the court granted the
joint motion. This rulemaking, in conjunction with our 1998 proposed
rule, fulfils the commitment we made in the joint motion. We carefully
considered all the comments received on our proposal to continue the
use of the presumption of NOV abatement. As explained above, we decided
to retain the presumption, confident that it is consistent with section
510(c) of the Act. However, we revised the previous rules by providing
that we will immediately propose to suspend or revoke a provisionally
issued permit under final Secs. 773.22 and 773.23 if a person fails to
comply with its terms. See final Sec. 773.14(c). This change should
increase the probability that a notice of violation will be abated.
Three commenters expressed concern over the resources required to
monitor the notices of violation issued to permittees with less than
five years experience in surface coal mining operations. As explained
elsewhere in this preamble, we are not adopting the experience
criterion. Therefore, no additional resources will be required to

[[Page 79624]]

monitor NOVs issued to permittees with less than five years of
experience.
One commenter said that proposed Sec. 773.16(b) would eliminate the
presumption of NOV abatement. Final Sec. 773.14 clearly provides that
the presumption of NOV abatement is still available.
A commenter said:

An outstanding violation is to be defined as one where the
abatement period has expired without corrective action. A portion of
the presumption [of NOV abatement] includes an abatement period
which has not expired. It is unclear how a regulatory authority can
presume the abatement period has not expired when the presumption
process is triggered by a violation for which the abatement period
has already expired.

The commenter is incorrect that the proposed presumption of NOV
abatement is ``triggered by a violation for which the abatement period
has already expired.'' Proposed Sec. 773.16(b)(1)(ii) clearly said,
``we may presume an NOV is being corrected to the satisfaction of the
agency with jurisdiction over the violation if the abatement period for
the notice of violation has not yet expired.'' 63 FR 70580, 70619.
Indeed, the primary basis for use of the provision is that the
abatement period has not expired. See proposed Sec. 773.16(b)(1)(ii)
and final Sec. 773.14(b)(1). However, we note that final Sec. 773.14(b)
also pertains to violations which remain unabated or uncorrected beyond
the abatement or correction period. To receive a provisionally issued
permit when there is such a violation, a person must be eligible under
Sec. 773.14(b)(2) through (4).
A commenter said that if there is no failure-to-abate cessation
order, then the abatement period for an NOV has not expired. We
disagree. The fact that a failure-to-abate cessation order has not been
issued does not mean that the abatement period has not expired.
Three commenters expressed support for the presumption of NOV
abatement. One said the presumption ``is clearly supported by the Act.
Section 521(a)(3) expressly sets forth that the NOV will provide `a
reasonable time' for the abatement of the violation.'' We agree that
the presumption is supported by section 510(c) of the Act, but not by
section 521(a)(3). Providing a reasonable time for abatement does not
mean that the NOV is not a violation when written; nor is it the same
thing as presuming a violation is being abated within the time period
allotted for abatement. We retained the presumption because it is
beneficial to State regulatory authorities and industry, will not
likely result in harm to the environment, and because it is authorized
by section 510(c) of the Act.
Two commenters said the presumption of NOV abatement ``supports the
concept of all violations being entered into AVS, then updated as to
[whether they are] abated or not.'' The commenters questioned the need
for the States to perform, as they see it, duplicate data entry. They
said, ``[we] really do not think our State is going to deny a permit
because the applicant may owe a penalty in another State. This
situation would be overridden under today's AVS recommendation.''
These commenters are mistaken. First, they are incorrect as to the
effect of the presumption on violation data in AVS. Use of the NOV
presumption is continued from previous regulations. It has not meant,
nor does it now mean, that all notices of violation must be entered
into AVS. Rather, under final Secs. 773.8(b)(2) , 773.8(c), and
774.11(a)(2), regulatory authorities must enter into AVS only those
violations which are unabated or uncorrected after the abatement or
correction period has expired. Second, the commenters are incorrect
regarding the effect ``a penalty in another State'' has on permit
eligibility. Unless a person is eligible under final Secs. 773.13 or
773.14, final Sec. 773.12 and section 510(c) do not allow issuance of a
permit if the applicant owns or controls an operation with a current
violation; that violation may be anywhere in the United States. AVS
helps to implement this statutory requirement. The recommendation
process we previously used would not result in the outcome alleged by
these commenters.
Finally, a commenter said that proposed Sec. 773.16(b)(2)(iv) must
be deleted because we may not issue a notice of violation for non-
payment of abandoned mine land fees or civil penalties. We are not
adopting proposed Sec. 773.16(b)(2)(iv). Under this final rule, the
presumption of NOV abatement is available for all NOVs, including those
written for non-payment of reclamation fees. Under 30 CFR 773.17(g),
every permit must contain a condition requiring payment of reclamation
fees. Failure to adhere to this permit condition is enforceable under
30 CFR 843.12, which authorizes issuance of an NOV for noncompliance
with a permit condition.

G. Section 773.17--Permit Conditions

In this final rule, the provisions we adopt from proposed
Sec. 773.17 are found at Secs. 774.11 and 774.12.
Proposed Sec. 773.17(h)
We proposed to revise existing Sec. 773.17(h), which requires
permittees to provide or update ownership and control information, or
indicate that there is no change in the information, within 30 days of
receiving a cessation order issued under Sec. 843.11. The proposed rule
would have revised the cross-references in Sec. 773.17(h) to be
consistent with the proposed revisions to the application information
requirements in proposed Sec. 778.13 and to clarify that the updated
application information should be based upon the information provided
to the regulatory authority in a permit application. We received no
comments on proposed Sec. 773.17(h).
As part of our reorganization of part 773, we are recodifying the
provisions in previous and proposed Sec. 773.17(h) in revised form at
final Sec. 774.12(a). Section VI.P. of this preamble discusses final
Sec. 774.12(a) more fully in the context of proposed Sec. 774.13(e).
Proposed Sec. 773.17(i)
This new paragraph would have provided that the regulatory
authority would assume that the permittee, the operator, and any other
person named in the application as having the ability to determine the
manner in which a surface coal mining operation is conducted is a
controller. We are not adopting this provision because final
Sec. 778.11 already requires disclosure of applicant, operator, and
ownership and control information. Therefore, proposed Sec. 773.17(i)
is unnecessary.
Proposed Sec. 773.17(j)
We proposed to add paragraph (j) to Sec. 773.17 to state that all
controllers are jointly and severally responsible for compliance with
the terms and conditions of the permit and are subject to the
jurisdiction of the Secretary of the Interior. Several commenters
opposed proposed Sec. 773.17(j) as lacking sufficient basis in SMCRA.
After further evaluation, we agree. Therefore, we are not adopting
proposed Sec. 773.17(j).
Proposed Sec. 773.17(k)
We proposed to add paragraph (k) to Sec. 773.17 to allow the
regulatory authority to identify, at any time, any controller that the
permittee did not previously identify to the regulatory authority. We
are not adopting proposed Sec. 773.17(k) as a permit condition, but we
are adopting it in revised form as a stand-alone provision at final
Sec. 774.11(f). Under that final rule, the regulatory authority may
identify any owner or controller of an applicant or operator not
disclosed in a permit

[[Page 79625]]

application. Section VI.K. of this preamble more fully discusses final
Sec. 774.11(f) in the context of proposed Sec. 773.22.
Some commenters opposed proposed Sec. 773.17(k) as an unusual
determination that sounded like a presumption, did not provide an
opportunity to challenge a finding of control, and did not obligate the
regulatory authority to provide any explanation of the basis for the
determination.
The proposed rule did not involve a presumption. However, in
response to the commenters' concerns, we added a requirement in final
Sec. 774.11(f) that the regulatory authority make a written finding
explaining the basis for the determination. We also added language
specifying that a person has the right to challenge the finding under
final Secs. 773.25 through 773.27. We discuss final Sec. 774.11 more
fully in section VI.K. of this preamble in the context of proposed
Sec. 773.22.
Proposed Sec. 773.17(l)
We proposed to add paragraph (l) to Sec. 773.17 to require
permittees and operators to abate or correct any outstanding violation
or payment, unless an administrative or judicial decision invalidates
the violation. There were no comments on this proposal. However, we are
not adopting the proposed rule because part 843 of our existing rules
already requires abatement and correction of violations.
Proposed Sec. 773.17(m)
We proposed to add paragraph (m) to Sec. 773.17 to state that a
permit is subject to any other special permit conditions that the
regulatory authority determines to be necessary to ensure compliance
with the performance standards and regulations. Commenters opposed this
proposed rule as unnecessary. We agree that regulatory authorities
already have the inherent authority to impose any necessary conditions
when issuing a permit. Therefore, we are not adopting proposed
Sec. 773.17(m).

H. Section 773.18--Additional Permit Conditions

In this final rule, we are not adopting any of the provisions
proposed at Sec. 773.18.
We proposed to add Sec. 773.18 to our regulations to provide for
the imposition of additional permit conditions on new permits if the
applicant has less than five years experience in surface coal mining
operations or if the applicant's controllers have not demonstrated
successful environmental compliance. We are not adopting proposed
Sec. 773.18 because we found insufficient basis under SMCRA for
treating these applicants in a manner that differs from the treatment
afforded to other applicants.

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

In this final rule, the provisions proposed at Secs. 773.20 and
773.21 are found at Secs. 773.21 through 773.23. In this section of the
preamble, we discuss the proposed and final provisions collectively,
and do not repeat the discussion in section VI.J. of this preamble. In
section VI.J., we will only discuss the comments received on proposed
Sec. 773.21.
In 1989, we promulgated regulations to establish procedures and
criteria relating to improvidently issued permits. 54 FR 18438 (April
28, 1989). In NMA v. DOI I, which was decided in 1997, the D.C. Circuit
invalidated the 1989 rule on the narrow grounds that it was centered on
the invalidated 1988 ownership or control rule. 105 F.3d at 692, 696.
Prior to that ruling, we revised the procedures in 1994. 59 FR 54325
(October 28, 1994). The 1994 rule provisions were upheld in their
entirety, though the case is currently on appeal to the D.C. Circuit.
National Mining Assoc. v. Babbitt, 43 Env't Rep. Cas. (BNA) 1097, 1111-
17 (D.D.C. 1996), appeal docketed, No. 96-5274 (D.C. Cir). In our 1997
emergency interim final rule (IFR), which was issued after the NMA v.
DOI I decision, we cured the defects noted by the court of appeals and
repromulgated otherwise substantively identical improvidently issued
permits provisions. 62 FR 19450, 19453 (April 21, 1997); previous 30
CFR 773.20 and 773.21.
In our December 21, 1998 proposal, we reproposed previous
Secs. 773.20 and 773.21 in their entirety, with only minor proposed
revisions. 63 FR 70597-98; 70620. The proposed revisions included:
Adding failure to provide information which would have
made the applicant ineligible for a permit to the criteria we use to
determine if a permit was improvidently issued (see proposed
Sec. 773.20(b)(1)(iii); see also related provisions at proposed
Secs. 773.20(c)(1)(i), 773.20(c)(1)(ii)(C), 773.21(a)(2),
773.21(a)(5)). As discussed below, we did not adopt these revisions.
Removing previous Sec. 773.20(c)(1)(ii), which included
imposition of a permit condition requiring abatement or correction of a
violation as one of the remedial measures a regulatory authority could
take relative to an improvidently issued permit. As discussed below, we
deleted this provision as proposed.
Removing previous Sec. 773.20(b)(2), which made the
challenge standards at previous Sec. 773.25 applicable to certain
improvidently issued permit proceedings. As discussed below, we did not
adopt this revision.
After the close of the comment period for the proposed rule, the
D.C. Circuit issued its decision relating to the National Mining
Associations's challenge to the IFR. NMA v. DOI II, 177 F.3d 1 (D.C.
Cir. 1999). The court of appeals upheld the improvidently issued
permits provisions contained in the IFR, stating as follows:

[T]he IFR rescission and suspension provisions reflect a permissible
exercise of OSM's statutory duty, pursuant to section 201(c)(1) of
SMCRA, to ``order the suspension, revocation, or withholding of any
permit for failure to comply with any of the provisions of this
chapter or any rules and regulations adopted pursuant thereto.'' 30
U.S.C. 1211(c). The IIP provisions simply implement the Congress's
general directive to authorize suspension and rescission of a permit
``for failure to comply with'' a specific provision of SMCRA--
namely, section 510(c)'s permit eligibility condition.

Id. at 9. The court also explained: ``In addition, apart from the
express authorization in section [201(c)(1)], OSM retains ``implied''
authority to suspend or rescind improvidently issued permits because of
its express authority to deny permits in the first instance.'' Id.
(citation omitted).
In this final rule, we adopt the basic approach and substance of
the provisions upheld by the court. To the extent the provisions we
adopt today correspond to our previous provisions, we continue to rely
upon the rationales set forth in the preambles to the prior
rulemakings. See 54 FR 18439-62; 59 FR 54325-29; 62 FR 19453. However,
based on comments, the NMA v. DOI II decision, and further
deliberation, we modified the proposal. The most significant
modifications from our previous regulations and the proposed rule are
enhanced due process and public notice provisions. We also applied
plain language principles, reorganized proposed Secs. 773.20 and 773.21
into three sections, and eliminated duplicate text. A discussion of the
proposed and final provisions follows.
Discussion of Proposed Revisions to Previous Secs. 773.20 and 773.21
Proposed Secs. 773.20(b)(1)(iii), 773.20(c)(1)(i), 773.20(c)(1)(ii)(C),
773.21(a)(2), and 773.21(a)(5)
As mentioned above, we proposed adding failure to provide
information which would have made the applicant ineligible for a permit
to the criteria we

[[Page 79626]]

use to determine if a permit was improvidently issued. See proposed
Sec. 773.20(b)(1)(iii). If we found a permit improvidently issued on
this basis, we could require the permittee to correct any inaccurate
information or provide any incomplete information. See proposed
Sec. 773.20(c)(1)(i). Under proposed Sec. 773.20(c)(1)(ii)(C), we could
suspend the permit until the inaccurate or incomplete information was
corrected or provided. Under proposed Secs. 773.21(a)(2) and (a)(5), we
would not suspend or rescind a permit if the inaccurate or incomplete
information was provided or subject to a pending challenge.
We did not adopt these proposed revisions. Under the proposed rule,
we intended to allow failure to submit accurate and complete
information at the time of application for a permit to form the basis
for a finding that a permit was improvidently issued, if disclosure of
the information would have made the applicant ineligible to receive a
permit.
However, upon further review, we determined that we did not have a
sufficient basis to in effect treat failure to supply permit
application information as a violation in the absence of any underlying
outstanding enforcement action concerning the failure to submit that
information. It is an underlying violation, and not a failure to
disclose information, which is the ultimate basis for a finding that a
permit was improvidently issued.
Proposed Withdrawal of Previous Sec. 773.20(c)(1)(ii)
We proposed to remove previous Sec. 773.20(c)(1)(ii), which
included imposition of a permit condition requiring abatement or
correction of a violation as one of the remedial measures a regulatory
authority could take relative to an improvidently issued permit. We
deleted this provision as proposed. We concluded it is unnecessary to
impose a permit condition to achieve abatement or correction under
these provisions. Because this final rule provides ample incentive and
opportunity for abatement, coupled with appropriate sanctions if a
violation is not abated, adding a permit condition is not necessary.
Proposed Withdrawal of Previous Sec. 773.20(b)(2)
We proposed to withdraw previous Sec. 773.20(b)(2), which made the
challenge standards of previous Sec. 773.25 applicable to certain
improvidently issued permit proceedings. As discussed below, we did not
fully adopt the proposed withdrawal. In final Sec. 773.21(e), we
provide that the ownership or control challenge procedures at final
Secs. 773.25 through 773.27 apply when a person is challenging an
ownership or control finding which leads to a determination that a
permit was improvidently issued.
Discussion of Final Rule Provisions
Final Sec. 773.21--Initial review and finding requirements for
improvidently issued permits.
Under final Sec. 773.21(a), if a regulatory authority has reason to
believe a permit was improvidently issued, it must review the
circumstances surrounding permit issuance. Assessing the criteria at
final Secs. 773.21(a) and (b), which are similar to the criteria at
previous Sec. 773.20(b), the regulatory authority will make a
preliminary finding if it determines that the permit was improvidently
issued. The ``reason to believe standard'' is carried forward from
previous Sec. 773.20(a). Under this standard, the regulatory authority
is not required to review all of the permits in its jurisdiction on a
regular basis for improvident issuance. Rather, Sec. 773.21 will apply
if the regulatory has some particular reason to believe a permit was
improvidently issued. The ``reason to believe'' standard would
encompass credible evidence submitted by citizens which may indicate
improvident issuance of a permit.
Section 773.21(b) provides that a permit will only be considered
improvidently issued if the circumstances in paragraphs (b)(1) through
(3) exist. These provisions are substantively identical to previous
Secs. 773.20(b)(1)(ii) and (iii) in that a permit will not be
considered improvidently issued if the permittee is no longer
ineligible for a permit. When a permittee severs its ownership or
control relationship, abates or corrects the violation, or otherwise
becomes eligible to receive a new permit, it is incongruous to suspend
or rescind an existing permit only to issue a new one to the same
permittee upon reapplication.
The concept of a ``preliminary finding,'' as provided for in final
Sec. 773.21(a), is new in this rulemaking. Under final Sec. 773.21(c),
if the regulatory authority makes a preliminary finding of improvident
issuance, it will serve the permittee with written notice of the
finding and provide public notice of the decision. Then, under final
Sec. 773.21(d), the permittee may challenge the preliminary finding by
submitting evidence, within 30 days of receiving the notice, that the
permit was not improvidently issued. Together, these provisions enhance
due process and public notice.
Final Sec. 773.21(e) provides that the ownership or control
challenge procedures at final Secs. 773.25 through 773.27 apply when a
challenge to a preliminary finding of improvident issuance involves
issues of ownership or control. This provision is modified from
previous Sec. 773.20(b)(2). While we proposed to withdraw previous
Sec. 773.20(b)(2), we decided that it is important to have uniform
challenge procedures for issues of ownership or control. Thus, at final
Sec. 773.21(e), we retained the substance of previous
Sec. 773.20(b)(2)(ii), in modified form. However, as explained in
detail in section VI.M. of this preamble, a person may not use the
provisions at Secs. 773.25 through 773.27 to challenge the initial
existence or status of a violation. Only the regulatory authority, or
other agency, with jurisdiction over a violation may resolve issues
pertaining to the initial existence or status of a violation. However,
under final Sec. 773.21(d), a person may submit evidence that the
violation has been abated, or is being abated, to the satisfaction of
the regulatory authority, or other agency, with jurisdiction over the
violation. Likewise, if the initial existence of a violation has been
timely challenged, and the challenger prevailed, evidence of the
outcome may be submitted under final Sec. 773.21(d).
Final Sec. 773.22--Notice Requirements for Improvidently Issued
Permits.
Final Sec. 773.22(a) provides that the regulatory authority will
serve a written notice of proposed suspension or rescission on the
permittee if: (1) the regulatory authority, after considering any
evidence submitted under final Sec. 773.21(d), finds that the permit
was improvidently issued or (2) the permit was provisionally issued
under final Sec. 773.14(b) and one or more of the conditions in
Secs. 773.14(c)(1) through (4) exists. This finding differs from the
preliminary finding under final Sec. 773.21 in that the permittee will
have been given a prior opportunity under final Sec. 773.21(d) to
submit evidence that the permit was not improvidently issued. This
finding also triggers the notice requirements of final Secs. 773.22(b)
and (c) and requires the regulatory authority to take action under
final Sec. 773.23 (see final Sec. 773.22(f)). If, after making a
finding that the permit was improvidently issued, the regulatory
authority decides to suspend the permit, it must provide the permittee
with 60 days notice; if the regulatory authority decides to rescind the
permit, it must provide the permittee with 120 days

[[Page 79627]]

notice. The provisions of final Secs. 773.22(a) through (c) derive from
previous Sec. 773.20(c)(2) and the introductory language of previous
Sec. 773.21. In order to enhance public notice, we added final
Sec. 773.22(d), which requires public posting of the notice of proposed
suspension or rescission.
Final Sec. 773.22(e) is derived from previous Sec. 773.20(c)(2). It
allows the permittee to request administrative review of a notice of
proposed suspension or rescission with the Department of the Interior's
Office of Hearings and Appeals (OHA), or its State counterpart, before
a permit is suspended or rescinded under final Sec. 773.23. Final
paragraph (e) also specifies that a permittee who wishes to appeal a
notice must exhaust available administrative remedies. Final
Sec. 773.22(f) clarifies that after the permittee is served with a
notice of proposed suspension or rescission, the regulatory authority
must take action under final Sec. 773.23. Final Sec. 773.22(g) governs
service of the notice, and final Sec. 773.22(h) provides that the time
periods specified in paragraphs (b) and (c) will remain in effect
during the pendency of any appeal, unless the permittee obtains
temporary relief under the procedures at 43 CFR 4.1376 or the State
regulatory program equivalent. While the time periods are not tolled
during the pendency of an appeal, under final Sec. 773.23(b), we will
not suspend or rescind a permit until there is a final disposition of
any administrative appeals which affirms our finding that the permit
was improvidently issued.
Final Sec. 773.23--Suspension or Rescission Requirements for
Improvidently Issued Permits.
Final Sec. 773.23(a) largely corresponds to previous
Sec. 773.21(a). Under final Sec. 773.23(a), subject to the exception in
final Sec. 773.23(b), the regulatory authority will suspend or rescind
the permit upon expiration of the time specified in final
Sec. 773.22(b) or (c), unless the permittee submits evidence, and the
regulatory authority finds, that suspension or rescission is no longer
warranted under the circumstances enumerated in final
Secs. 773.23(a)(1) through (6). Paragraphs (a)(1) through (6) are
substantively identical to previous Secs. 773.21(a)(1) through (4),
except that we have modified some of the language and terminology for
consistency with plain language principles and other provisions of this
final rule. We added paragraph (a)(6) and modified paragraph (a)(4) for
consistency with the new eligibility standards for provisionally issued
permits under final Sec. 773.14(b). It is appropriate to forestall
suspension or rescission under these circumstances because the
permittee would no longer be ineligible to receive a permit under 30
CFR 773.12 or 773.14 and section 510(c) of the Act.
Under final Sec. 773.23(b), if the permittee requests
administrative review of a notice of proposed suspension or rescission
under final Sec. 773.22(e), we will not suspend or rescind the permit
until there is a final administrative disposition which affirms our
finding that the permit was improvidently issued. As discussed more
fully below, we added this provision in response to comments raising
due process concerns.
Final Sec. 773.23(c)(1) is partially new, and partially derived
from previous Sec. 773.21(b). When a regulatory authority suspends or
rescinds a permit, final Sec. 773.23(c)(1) requires the regulatory
authority to issue a written notice to the permittee, requiring the
permittee to cease all surface coal mining operations under the permit.
Final Sec. 773.23(c)(2) requires the regulatory authority to publicly
post the notice. Final Sec. 773.23(d) allows the permittee to request,
at its election, either administrative or judicial review of a permit
suspension or rescission. The suspension or rescission will remain in
effect during the pendency of any administrative or judicial appeals.
We added final Secs. 773.23(b) through (d) to enhance due process and
public notice.
Responses to Comments on Proposed Section 773.20
A commenter said that once an abatement or payment plan is entered
into, completion of the abatement or payment plan should become a
permit condition. The commenter also said that the regulatory authority
should stay the rescission of the permit only if an abatement plan is
executed and the plan is imposed as a condition on the improvidently
issued permit.
As mentioned above, the remedies for an improvidently issued permit
will no longer include imposition of a permit condition requiring
abatement of the violation. However, if we do not suspend or rescind an
improvidently issued permit because the permittee enters into an
abatement plan or payment schedule, we may suspend or rescind the
permit under final Sec. 773.23 if the abatement plan or payment
schedule is not being met to the satisfaction of the agency with
jurisdiction over the violation (unless one of the other criteria of
Sec. 773.23 precludes suspension or rescission). In the face of permit
suspension or rescission, these final provisions provide ample
incentive to permittees to cause violations to be abated or corrected.
Permit conditions are unnecessary to achieve this result.
A commenter said that the public should be given explicit rights to
request enforcement action against permits that have been improvidently
issued and to appeal a decision by the regulatory authority not to take
action.
As indicated above, these final provisions enhance the public's
notice of decisions by the regulatory authority concerning
improvidently issued permits. The final provisions require the
regulatory authority to provide public notice at three specific
decision points: (1) when the regulatory authority makes a preliminary
finding that a permit was improvidently issued (see final
Sec. 773.21(c)(2)); (2) when the regulatory authority finds that a
permit was improvidently issued and serves the permittee with a notice
of proposed suspension or rescission (see final Sec. 773.22(d)); and
(3) when the regulatory authority suspends or rescinds a permit (see
final Sec. 773.23(c)(2)). Further, under the ``reason to believe''
standard under in final Sec. 773.21(a), a regulatory authority will
receive and consider information from concerned citizens pertaining to
improvidently issued permits. Such information, if credible, may well
inform a regulatory authority's decision as to whether a permit was
improvidently issued. Finally, citizens can continue to assert their
interests under the existing provisions at 30 CFR 842.11 and 842.12.
The provisions we adopt today provide for ample public notice, and
thereby expand the opportunity for public participation under our
existing regulations.
The same commenter said that the proposed provisions create an
essentially meaningless standard of review to determine if a permit was
improvidently issued. According to the commenter, the scope of review
to determine whether a permit was improvidently issued is limited to
the ``violations review criteria'' of the regulatory program at the
time of permit issuance. The commenter objected to ``OSM's deferral''
to State regulatory authorities to determine which types of violations
would be ``the subject of the permit block for improvidently issued
permits.'' The commenter also said that any violation of the Act should
be the basis for determining if a permit has been improvidently issued.
We disagree with this characterization of the proposal, but note
that we modified the proposed provision to which the commenter objects.
In final

[[Page 79628]]

Sec. 773.21(a), we replaced the phrase ``violations review criteria''
at previous Sec. 773.20. Under final Sec. 773.21(a), a permit will be
considered improvidently issued, if, among other things, the permit
should not have been issued under the ``permit eligibility criteria of
the applicable regulations implementing section 510(c) of the Act in
effect at the time of permit issuance'' because the permittee or
operator owned or controlled a surface coal mining operation with an
unabated or uncorrected violation. Under the final provision, the
regulatory authority must consider all violations, as the term
violation is defined in final Sec. 701.5. Thus, regulatory authorities
do not have discretion to determine which violations may be considered
when making a determination whether a permit was improvidently issued.
A commenter expressed concern regarding proposed
Sec. 773.20(b)(1)(i). Under the proposed provision, a permit would be
considered improvidently issued if there was an outstanding violation
under the violations review criteria at the time the permit was issued.
The commenter said the proposed provision seemed to conflict with
proposed Secs. 773.15(b)(3)(i)(B) and (C), which proposed to allow
conditional approval of permits when applicants are linked to
outstanding violations.
Under this final rule, a permit will only be found to be
improvidently issued if, among other things, the permit should not have
been issued under the permit eligibility criteria of the regulations
implementing section 510(c) of the Act at the time of permit issuance.
See final Sec. 773.21(a). Under Sec. 773.12(a) of this final rule, a
person who owns or controls an operation with an outstanding violation
may nonetheless be eligible for a permit under final Sec. 773.13 or a
provisionally issued permit under final Sec. 773.14. Thus, if a person
with outstanding violations was eligible for a permit under final
Secs. 773.13 or 773.14 at the time of permit issuance, a permit will
not be considered to be improvidently issued at the time of issuance.
However, under final Secs. 773.14(c) and 773.22(a)(2), a provisionally
issued permit will be considered improvidently issued, and we will
initiate suspension or rescission procedures, if one or more of the
circumstances in Secs. 773.14(c)(1) through (4) exists.
Several commenters expressed concern about OSM oversight of State
permitting decisions in the context of improvidently issued permits.
Our oversight relative to improvidently issued State permits is
governed, in part, by final Sec. 843.21. Final Sec. 843.21 is fully
discussed in section VI.Y. of this preamble. In NMA v. DOI II, the
court of appeals upheld our ability to suspend or revoke State-issued
permits, but found that our previous regulations did not comply with
the procedures established under section 521(a)(3) of SMCRA. NMA v. DOI
II, 177 F.3d at 9. Final Sec. 843.21 is fully consistent with the NMA
v. DOI II decision.
A commenter said that the provisions should be revised so that the
regulatory authority does not suspend or revoke a permit ``unless and
until a plan for correcting the problem has been attempted but
failed.'' Other commenters said that a permittee or operator should not
be allowed to enter into an abatement plan to forestall a finding of
improvident issuance or suspension or rescission of a permit. These
commenters said allowing a permittee to forestall suspension or
rescission by entering into an abatement plan encourages fraud at the
permit application stage because the operator knows if he gets caught,
he can later negotiate an abatement plan and mining can continue,
without penalty.
Under final Sec. 773.21, if the violation is the subject of an
abatement plan or payment schedule that is being met to the
satisfaction of the agency with jurisdiction over the violation, the
permit will not be considered improvidently issued because the
permittee would no longer be ineligible to receive a permit. See final
Sec. 773.21(b)(3). Further, under final Sec. 773.23(a)(5), we will not
suspend or rescind an improvidently issued permit if, after a finding
of improvident issuance under final Sec. 773.22(a), the violation
becomes subject to an abatement plan or payment schedule. However, we
may proceed to suspension or rescission if the abatement plan or
payment schedule fails. The ultimate intent of these provisions is not
to suspend or rescind permits, but to accomplish abatement of
violations. However, a regulatory authority has no obligation to enter
into an abatement plan or payment schedule, especially if it has reason
to believe that a person will not comply with the plan or schedule. The
discretion lies with the regulatory authority to determine whether the
person is acting in good faith. We are confident that regulatory
authorities will not encourage or reward fraudulent activity by
entering into abatement plans with bad actors, but will instead proceed
with suspension or rescission, and use any other enforcement tools
available to compel compliance.
A commenter said our proposed improvidently issued permits
provisions are ``not only unauthorized but are grossly inconsistent
with the [Act].'' We received this comment before the decision in NMA
v. DOI II. As explained above, the D.C. Circuit upheld our
substantively similar previous rules, holding that they were expressly
authorized by section 201(c)(1) of the Act. 177 F.3d at 9. ``Apart from
the express authorization in section [201(c)(1)],'' the court
explained, ``OSM retains `implied' authority to suspend or rescind
improvidently issued permits because of its express authority to deny
permits in the first instance.'' Id. (citation omitted).
Finally, a commenter objected to our reference in proposed
Sec. 773.20(b)(3) to ``operations'' being responsible for violations.
The commenter stated that an operation is not a legal entity and
therefore cannot be responsible for violations. We have recast the
final provisions from responsibility for violations to ownership or
control of operations to eliminate confusion. Thus, under this final
rule, a permit will only be considered improvidently issued if, among
other things, the permittee or the operator continues to own or control
the operation with an unabated or uncorrected violation and the
violation would cause the permittee to be ineligible under the permit
eligibility criteria in our current regulations. See final
Secs. 773.21(b)(1) and (b)(3). These provisions do not impose personal
liability on owners or controllers of permittees or operators.

J. Section 773.21--Improvidently Issued Permits: Rescission Procedures

In this final rule, the provisions proposed at Secs. 773.20 and
773.21 are found at Secs. 773.21 through 773.23. In this section of the
preamble, we discuss the comments received on proposed Sec. 773.21. We
discuss the proposed and final improvidently issued permits provisions,
collectively, in section VI.I. of this preamble.
Several commenters asked for an explanation of proposed
Sec. 773.21(a)(4), which would provide that a permit would not be
suspended or rescinded if the permittee and operations owned or
controlled by the permittee are no longer responsible for the
violation, penalty, or fee, or the obligation to provide required
information. Three commenters asked how the permittee can be
responsible for a violation at one point in time and later relieved of
that responsibility. One commenter stated:

This implies that if an applicant has successfully transferred,
assigned or sold a previously held permit, he/she will no longer

[[Page 79629]]

be liable for any violations associated with that former permit.
Although we understand that the new permittee to whom the former
permit was transferred, assigned or sold is now responsible for any
outstanding violations, penalties or fees and for appropriate
corrective action, some states prefer to hold the original
permittee/violator responsible for those violations, regardless of
the new permittee's responsibilities until the matter is adequately
resolved.

Another of these commenters stated that the proposed provision seemed
to allow for a ``liability dump.''
We agree with the substance of these comments. If a person severs
an ownership or control relationship to an operation with an
outstanding violation, but remains directly responsible for the
violation, the person is not eligible to receive a new permit.
Likewise, if a person is directly responsible for a violation, he or
she cannot avoid a finding that a permit was improvidently issued under
the criteria of final Sec. 773.21, or forestall suspension or
rescission of a permit under final Sec. 773.23, by severing an
ownership or control relationship to the operation with the violation.
Further, a regulatory authority may take appropriate enforcement action
against a person who continues to be directly responsible for a
violation under applicable law.
A commenter supported our proposal to remove the words ``and
reclamation'' from previous 30 CFR 773.21(b). In proposed
Sec. 773.21(b), we removed this phrase to clarify that after permit
suspension or rescission, required reclamation activities must
continue. The substance of proposed Sec. 773.21(b) is adopted at final
Sec. 773.23(b)(1). Under that section, upon suspension or recission of
a permit, all surface coal mining operations must cease; required
reclamation must continue.
A commenter objected to the proposed provisions for permit
suspension or rescission. In substance, the commenter stated that the
proposal denied due process because it improperly allowed permit
suspension or rescission without a prior hearing. The commenter also
claimed that the opportunity to request a hearing, as proposed, did not
provide due process because the effect of the suspension notice would
not be automatically stayed pending appeal and the permit would be
automatically suspended after a specified period of time, regardless of
whether an appeal was filed. The commenter expressed the view that
under Darby v. Cisneros, 509 U.S. 137 (1993), exhaustion of
administrative remedies is not required under the Administrative
Procedure Act if the effect of the suspension or rescission notice is
not stayed pending appeal. The commenter also stated that the temporary
relief which may be granted under existing 43 CFR 4.1376 is not an
adequate substitute for a pre-deprivation hearing.
The final improvidently issued permits provisions at Secs. 773.21
through 773.23 fully comport with due process. As explained above, in
section VI.I. of this preamble, the key modifications from the proposed
provisions are enhanced due process and public notice. Under final
Sec. 773.21, if a permit meets the criteria of paragraphs (a) and (b),
the regulatory authority will make a preliminary finding that a permit
was improvidently issued. The permittee will then have an opportunity
to challenge the preliminary finding under final Sec. 773.21(d).
If, after considering any evidence submitted by the permittee, the
regulatory authority finds that the permit was in fact improvidently
issued, the regulatory authority will issue a written notice of
proposed suspension or rescission. See final Sec. 773.22(a). The notice
will provide 60 days notice if the regulatory authority decides to
suspend the permit, and 120 days notice if the regulatory authority
decides to rescind the permit. See final Secs. 773.22(b) and (c).
If the permittee wishes to appeal a notice of proposed suspension
or rescission, it must first exhaust administrative remedies. See final
Sec. 773.22(e). However, in response to the comment pertaining to
Darby, the decision will not remain in effect while the permittee
exhausts administrative remedies. Under final Sec. 773.23(b), if the
permittee requests administrative review, we will not suspend or
rescind a permit until after a permittee exhausts administrative
remedies and the administrative body affirms that the permit was
improvidently issued. Section 773.23(b) also ensures that the permittee
will have a meaningful opportunity for a hearing before a permit
suspension or rescission.
Finally, if a permit is ultimately suspended or rescinded under
final Sec. 773.23, the permittee may seek administrative or judicial
review. See final Sec. 773.23(d). In response to the comment pertaining
to Darby, we decided not to require permittees to exhaust
administrative remedies before seeking judicial review of a permit
suspension or rescission. Thus, the permit suspension or rescission
will remain in effect during the pendency of any appeals. Together, the
foregoing provisions provide ample due process to permittees by way of
meaningful opportunities for pre- and post-suspension or rescission
hearings.

K. Section 773.22--Identifying Entities Responsible for Violations

In this final rule, the provisions we adopt from proposed
Sec. 773.22 are found at Secs. 774.11 and 847.2.
We proposed to revise and redesignate previous Sec. 773.22 and add
a new Sec. 773.22, which would have required regulatory authorities to
identify entities responsible for violations, enter and maintain that
information in AVS, and consider taking alternative enforcement action
when appropriate.
We are not adopting Sec. 773.22 as it was proposed. Instead, we
have incorporated a revised version of proposed Sec. 773.22(b), (c),
and (d) into new Sec. 774.11. Final Sec. 774.11 has its origins in
provisions that we proposed at Secs. 773.15(b)(3)(i)(D), (E) and (F),
(b)(3)(ii); 773.17(k); 773.22(b), (c), and (d); and 774.13(e). From
proposed Sec. 773.22, it incorporates the timely entry and update of
violation information in AVS (proposed Secs. 773.22(b) and (c)) and the
use of alternative enforcement actions to compel the abatement or
correction of violations (proposed Sec. 773.22(d)).
Proposed Sec. 773.22(d) would have also provided that the existence
of a performance bond cannot be used as the sole basis for a
determination that alternative enforcement action is not warranted. We
are adopting this provision as final Sec. 847.2(b). We received one
comment on proposed Sec. 773.22(d), which we discuss in Part VI.AA. of
this preamble in connection with final Sec. 847.2(b).
We are not adopting the introductory statement in proposed
Sec. 773.22, which provided that a person who owns or controls a
surface coal mining operation has an affirmative duty to comply with
the Act, the regulatory program, and any approved permit, because it
does not add any meaningful value to our existing regulations. We are
also not adopting proposed Secs. 773.22(a) and (b) insofar as we
proposed to determine the identity of persons responsible for
outstanding violations and to designate in AVS owners, controllers,
principals, and agents as persons we could compel to abate or correct a
violation. We determined that we have insufficient basis under SMCRA to
automatically ascribe personal liability or responsibility to persons
listed in an application for a permit, including owners and
controllers.

[[Page 79630]]

Final Sec. 774.11--Post-Permit Issuance Information Requirements for
Regulatory Authorities and Other Actions Based on Ownership, Control,
and Violation Information
Final Sec. 774.11(a) provides that, for purposes of future permit
eligibility determinations and enforcement actions, the regulatory
authority must enter into AVS: (1) Permit records within 30 days after
a permit is issued or a subsequent change to a permit is made; (2)
unabated or uncorrected violations within 30 days after the abatement
or correction period for the violation expires; (3) changes of
ownership and control within 30 days after a regulatory authority
receives notice of a change; and (4) changes in violation status within
30 days after abatement, correction, or termination of a violation, or
a decision from an administrative or judicial tribunal. Under final
Sec. 774.11(a), regulatory authorities must update and maintain these
records in AVS. Final Sec. 774.11(a), which codifies the use and
maintenance of AVS, is based upon provisions proposed at
Secs. 773.22(b), (c), 774.13(e), and 774.14(e). An accurate and
complete nationwide database such as AVS is critical to effective and
efficient implementation of the permit block sanction of section 510(c)
of the Act.
Final Sec. 774.11(b) provides that if, at any time, the regulatory
authority discovers a person who owns or controls a surface coal mining
operation for which there is an unabated or uncorrected violation, the
regulatory authority will determine whether alternative enforcement
action is appropriate under part 843, 846 or 847. Final Sec. 774.11(b)
further requires that a regulatory authority must enter the results of
each enforcement action, including administrative and judicial review
decisions, into AVS. Final Sec. 774.11(b) is derived from proposed
Secs. 773.15(b)(3)(ii) and 773.22(d). This provision emphasizes a
regulatory authority's continued obligation to use all available
enforcement mechanisms to compel the abatement or correction of
unabated and uncorrected violations.
Final Sec. 774.11(c) requires that a regulatory authority serve a
preliminary finding of permanent permit ineligibility under section
510(c) of the Act, 30 U.S.C. 1260(c), on an applicant or operator if
the applicant or operator: (1) controls or has controlled mining
operations with a demonstrated pattern of willful violations under
section 510(c) of the Act and (2) the violations are of such nature and
duration with such resulting irreparable damage to the environment as
to indicate the applicant's or operator's intent not to comply with the
Act, its implementing regulations, the regulatory program, or permit.
Final Sec. 774.11(c) further requires that, in making a finding of
permanent permit ineligibility, the regulatory authority will only
consider control relationships and violations which would make, or
would have made, an applicant or operator ineligible for a permit under
final Secs. 773.12(a) and (b). This provision is consistent with NMA v.
DOI II.
Consistent with section 510(c) of the Act, final Sec. 774.11(d)
provides for a hearing under 43 CFR 4.1350 through 4.1356 on a
preliminary finding of permanent permit ineligibility. Final
Sec. 774.11(d) is based upon proposed Sec. 773.15(b)(3)(i)(E) and (F)
and previous Sec. 773.15(b)(3). Final Sec. 774.11(d) is modified from
the proposed rule in that we decided not to unnecessarily reiterate the
OHA appeals procedures.
Final Sec. 774.11(e) requires that the regulatory authority enter
the results of a finding of permanent permit ineligibility and any
hearing on such a finding into AVS.
Final Sec. 774.11(f) provides that the regulatory authority may
identify a person who owns or controls an entire surface coal mining
operation or any relevant portion or aspect of such operation at any
time. Final Sec. 774.11(f) enables regulatory authorities to discover
owners or controllers of an operation that the applicant has failed to
list in an application as required under final Secs. 778.11(c)(5) and
(d). As explained elsewhere in this preamble, ownership or control of
an applicant, permittee, or operator is tantamount to owning or
controlling the operation, or relevant portion or aspect of the
operation.
In addition, final Sec. 774.11(f) provides that when a regulatory
authority identifies such a person, the regulatory authority will: (1)
issue a written finding describing the nature and extent of ownership
or control; (2) enter the results of the finding into AVS; and (3)
require the person to disclose his or her identity under
Sec. 778.11(c)(5) and certify as a controller under Sec. 778.11(d), if
appropriate. Final Sec. 774.11(f) is based upon proposed
Sec. 773.17(k). We are adopting final Sec. 774.11(f) to enable a
regulatory authority to identify any owner or controller of an
applicant, permittee, or operator that has not been disclosed under the
requirements under final Sec. 778.11(c)(5) and (d) to disclose owners
and controllers in a permit application.
Final Sec. 774.11(f) is modified from proposed Sec. 773.17(k) to be
consistent with the application information requirements at final
Sec. 778.11(c)(5) where an owner or controller may be listed in an
application as owning or controlling a portion or aspect of a proposed
surface coal mining operation. As we indicate below in this preamble in
the discussion of final Sec. 778.11(c)(5), it is important that an
applicant have the ability to disclose in an application those owners
and controllers that own or control only a portion or aspect of a
proposed surface coal mining operation as well as the entire proposed
operation. In implementing final Sec. 774.11(f), this means a
regulatory authority may identify a previously undisclosed owner or
controller that owns or controls only a portion or aspect of a surface
coal mining operation.
Final Sec. 774.11(f) is also modified from proposed Sec. 773.17(k)
to require that the results of any finding made under the provision be
entered into AVS.
Paragraph (g) provides that any person whom a regulatory authority
finds to be an owner or controller under final Sec. 774.11(f) may
challenge the finding using the provisions of final Secs. 773.25,
773.26 and 773.27, which provide the procedures for challenging an
ownership or control listing or finding.
Comments on Proposed Sec. 773.22
Commenters on proposed Sec. 773.22 opposed mandatory
investigations, holding individuals responsible for the violations of
corporate permittee, the elimination of permitting recommendations,
designating specific persons as those responsible for correcting
violations, and use of the term ``agent.'' Commenters opposing proposed
Sec. 773.22 expressed the same concerns regarding proposed
Secs. 773.15, 773.17, 773.24, 773.25, and 778.5. These comments are
addressed in sections VI.A., VI.E., VI.G., VI.M., and VI.N. of this
preamble.

L. Section 773.23--Review of Ownership or Control and Violation
Information

We proposed to remove previous Sec. 773.23 from our regulations,
based on our conclusion that it was centered on ownership or control
links and based on presumptions of control between applicants and
operations with violations. We received no comments on our proposal to
remove these provisions. Since our final rule does not incorporate
either presumptions of ownership or control or links to violations
based upon presumptions of ownership or control, we are removing
previous Sec. 773.23 as proposed. However, under final Secs. 773.8
through 773.11, a regulatory authority must review all applicant,
operator, and

[[Page 79631]]

ownership and control information; permit history information; and
compliance history (violation) information before making a permit
eligibility determination under final Sec. 773.12.
In reorganizing part 773 in this final rule, we have used the
section number ``773.23'' for other purposes.

M. Section 773.24--Procedures for Challenging a Finding on the Ability
To Control a Surface Coal Mining Operation

In this final rule, the provisions we adopt from proposed
Secs. 773.24 and 773.25 are found at Secs. 773.25 through 773.28.
We proposed to revise previous Sec. 773.24 to provide for
challenges to a finding on the ability to control a surface coal mining
operation. We modified this section from the proposed rule. We
reorganized two sections, proposed as Secs. 773.24 and 773.25, into
four sections in this final rule and modified the provisions based on
comments. The provisions are adopted at final Secs. 773.25 through
773.28. A description of these final provisions follows, including
discussion of the modifications from the proposed rule. Discussion of
these final provisions will not be repeated in the discussion of
comments received on proposed Sec. 773.25 in section VI.N. of this
preamble.
Sec. 773.25 Who may challenge ownership or control listings and
findings
Section 773.25 provides that any person listed in a permit
application or in the Applicant/Violator System (AVS) as an owner or
controller, or found to be an owner or controller under Secs. 773.21 or
774.11(f), of an entire surface coal mining operation, or any portion
or aspect thereof, may challenge the listing or finding under
Secs. 773.26 and 773.27. Any applicant or permittee affected by an
ownership or control listing also may initiate such a challenge. This
section is modified from proposed Sec. 773.24(a). We modified the
proposed provision in this final rule by adding that any person listed
in AVS may challenge such listing, regardless of whether there is a
pending permit application. This modification is consistent with
Sec. 773.24(a) of our previous regulations. We also clarified that
permit applicants and permittees affected by ownership or control
decisions also may initiate ownership or control challenges. We decided
that a person listed as or found to be an owner or controller may use
these procedures at any time. This modification will enhance due
process by allowing additional opportunities for challenges. Consistent
with the modification to Sec. 778.11(c)(5), which allows for
identification of controllers of specific portions or aspects of an
operation, and in response to comments, we decided to allow persons to
challenge their ownership or control of portions or aspects of an
entire surface coal mining operation. Finally, in order to enhance due
process, we are not adopting the requirement that a challenge must
occur before certification under Sec. 778.11(d). This will allow
persons who certify as to their ownership or control of an operation to
in effect ``de-certify'' if they can demonstrate that circumstances
have changed so that they no longer own or control the operation.
Final Sec. 773.26 How To Challenge an Ownership or Control Listing or
Finding
Final Sec. 773.26(a) is modified from proposed Sec. 773.24(b).
Proposed Sec. 773.24(b) provided that ownership or control challenges
were to be made to the agency with jurisdiction over existing
violations. This meant that if there were multiple existing violations
in different jurisdictions (State or Federal), the challenger had to
initiate separate challenges in each jurisdiction. In response to
comments, we modified final Sec. 773.26(a) to provide that in order to
challenge an ownership or control listing or finding, a challenger must
submit a written explanation of the basis for the challenge, along with
any evidence or explanatory materials, to the regulatory authority with
jurisdiction over a pending permit application or permit, rather than
to the agency with jurisdiction over an existing violation. This
modification will greatly simplify the provisions by allowing ownership
and control challenges to proceed in one forum.
Final Sec. 773.26(b) is modified from proposed Sec. 773.24(d) and
provides that the provisions of final Secs. 773.27 and 773.28 apply
only to challenges to ownership or control listings or findings. We
simplified the provision by clarifying that the procedures are limited
to challenges to ownership or control listings or findings; no person
may use these provisions to challenge any other liability or
responsibility under any other provision of the Act or its implementing
regulations.
Final Sec. 773.26(c) provides that when the challenge concerns a
violation under the jurisdiction of a different regulatory authority,
the regulatory authority with jurisdiction over the permit application
or permit must consult the regulatory authority with jurisdiction over
the violation and the AVS Office to obtain additional information. We
added paragraph (c) to complement final Sec. 773.26(a). Since the
regulatory authority with jurisdiction over a pending permit
application or an issued permit will be deciding ownership or control
challenges, it is likely that the regulatory authority will not have
access to all information regarding violations in other jurisdictions.
As such, it is important for the regulatory authority deciding the
challenge to consult with these other jurisdictions to obtain necessary
background information on violations in order to make an informed
decision on a challenge.
Final Sec. 773.26(d) provides that a State regulatory authority
with responsibility for deciding an ownership or control challenge may
request an investigation by OSM's AVS Office. Like final
Sec. 773.26(c), we added this provision to assist State regulatory
authorities in deciding challenges. This provision is especially
relevant when a State regulatory authority does not have adequate
access to the pertinent information. Under this provision, a State
regulatory authority may ask us for assistance, by way of
investigation, whenever it believes that it does not have adequate
information to render an informed decision on a challenge. However, the
ultimate responsibility to decide the challenge and issue a written
decision rests with the State regulatory authority.
Final Sec. 773.27 Burden of Proof for Ownership or Control Challenges
Final Sec. 773.27(a) provides that when a listing or finding of
ownership or control of a surface coal mining operation is challenged,
the challenger must prove, by a preponderance of the evidence, that the
challenger does not, or did not, own or control that operation.
Paragraph (a) is modified from proposed Sec. 773.25(c)(2). At
paragraphs (a)(1) and (a)(2) of final Sec. 773.27, we provide that a
person may challenge current or past ownership or control. Challenging
past ownership or control may be relevant when a challenger is
contesting a finding that a permit was improvidently issued under final
Sec. 773.21(b). For clarity, in this final rule, we organized the
provisions for burden of proof, called evidentiary standards in the
proposed rule, into a separate section. We retained the ``preponderance
of the evidence'' standard in this final rule.
Final Sec. 773.27(b) provides that a challenger must meet its
burden of proof by presenting reliable, credible, and substantial
evidence and any explanatory materials to the regulatory authority
deciding the challenge.

[[Page 79632]]

Paragraph (b) is modified from proposed Sec. 773.25(c)(3). We added to
the provision that any evidence or supporting materials presented in
connection with the challenge will become part of the permit file, an
investigation file, or another public file. This addition is in
response to comments that we should expand the public's access to
decisions made under these provisions. The addition is also consistent
with existing regulations regarding the availability of records. If the
challenger requests, we will hold as confidential any information which
is not required to be made available to the public under Secs. 840.14
or 842.16, as applicable.
Final Sec. 773.27(c) provides some examples of materials a
challenger may submit in an effort to satisfy the requirements of
paragraph (b). Paragraph (c) is adopted from proposed
Sec. 773.25(c)(3)(i). Subparagraph (c)(1) is slightly modified from
proposed Sec. 773.25(c)(3)(i)(A). Subparagraph (c)(2) is adopted as
proposed in Sec. 773.25(c)(3)(i)(B). Subparagraph (c)(3) is adopted as
proposed in Sec. 773.25(c)(3)(i)(C). Subparagraph (c)(4) is adopted
from proposed Sec. 773.25(c)(3)(i)(D). There are no substantive changes
between final paragraph (c) and the proposed provision.
We did not adopt proposed Sec. 773.25(c)(3)(ii) because it is
unnecessary. This proposed provision stated that evidence and
supporting material presented before any administrative or judicial
tribunal reviewing a decision by a regulatory authority may include any
evidence admissible under the rules of such tribunal. We removed this
provision because the rules of the tribunal will set forth the evidence
that the tribunal may receive; as such, the proposed provision was
superfluous.
Final Sec. 773.28 Written Agency Decision on Challenges to Ownership
or Control Listings or Findings
Final Sec. 773.28(a) provides that the regulatory authority
deciding the challenge will review and investigate any evidence or
information a challenger submits under Sec. 773.27 and issue a written
decision within 60 days of receipt of the challenge. Paragraph (a) also
requires the written decision to state whether the challenger owns or
controls the relevant surface coal mining operation, or owned or
controlled that operation, during the relevant time period. For
clarification and simplification, and to avoid redundancy, we merged
proposed Secs. 773.25(a), 773.25(b)(1) through (3) and 773.25(c)(1), as
well as the first sentence of proposed Sec. 773.24(c)(1), and
incorporated them into final Sec. 773.28(a). The regulatory authority
referenced in final Sec. 773.28(a) is the agency which will decide the
challenge in accordance with final Sec. 773.26(a).
Paragraph (b) of final Sec. 773.28 provides that the regulatory
authority will promptly provide the challenger with a copy of the
decision by either certified mail or any means consistent with the
rules governing service of a summons and complaint under Rule 4 of the
Federal Rules of Civil Procedure, or the equivalent State regulatory
program counterparts. Paragraph (b) is adopted from the notification
procedures in the second sentence of proposed Sec. 773.24(c)(1) and the
first sentence of proposed Sec. 773.24(c)(2). In response to comments,
we removed the requirement that the regulatory authority directly
notify regulatory authorities with an interest in the challenge; the
proposed requirement was too subjective, and regulatory authorities
will receive ample notice through AVS and our AVS Office's Internet
home page (Internet address: www.avs.osmre.gov).
Paragraph (c) of final Sec. 773.28 provides that service of the
decision on a challenger is complete upon delivery and is not
incomplete if delivery is refused. Paragraph (c) is adopted from the
second sentence in proposed Sec. 773.24(c)(2).
Paragraph (d) of final Sec. 773.28 provides that the regulatory
authority will post all decisions made under this section on AVS and on
the AVS Office Internet home page (Internet address:
www.avs.osmre.gov). This provision is added to the final rule in
response to comments that we should expand the public's access to
decisions made under these provisions. Public notice of a decision, and
the availability of the records supporting the decision, adopted in
final Sec. 773.27(b), are the appropriate places to expand such
accessibility. Public posting of the decisions will also accomplish
notice to regulatory authorities.
Paragraph (e) of final Sec. 773.28 provides that any person who
receives a written decision--i.e., the challenger--and who wishes to
appeal that decision, must exhaust administrative remedies under the
procedures at 43 CFR 4.1380 through 4.1387, or the equivalent State
regulatory program counterparts, before seeking judicial review. For
clarity and simplification, we modified paragraph (e) from proposed
Sec. 773.24(c)(3), and added specific mention of the requirement to
exhaust administrative remedies. Also, we are not adopting the proposed
provision which would allow ``any person who is or may be adversely
affected'' by a decision to appeal the decision. As explained below,
there are ample public participation provisions in our other
regulations.
Finally, paragraph (f) of final Sec. 773.28 provides that,
following a written decision by the regulatory authority responsible
for deciding the challenge, or any decision by a reviewing
administrative or judicial tribunal, the regulatory authority will
review the information in AVS to determine if it is consistent with the
decision. Paragraph (f) further provides that if the information in AVS
is not consistent with the decision, the regulatory authority will
promptly revise the information in AVS to reflect the decision.
Paragraph (f) is adopted from proposed Sec. 773.25(d) and the second
sentence of proposed Sec. 773.24(c)(1).
We are not adopting proposed Sec. 773.25(b)(4) because it is
unnecessary. Proposed Sec. 773.25(b)(4) provided that the agency with
jurisdiction over a violation will determine whether the violation has
been abated or corrected. While this statement is correct, it is not
necessary to include it in the regulatory language pertaining to
ownership or control challenges. While this final rule makes clear that
the regulatory authority responsible for deciding an ownership or
control challenge will apply its ownership or control rules to
violations both inside and outside its jurisdiction, only the agency
with jurisdiction over a violation can properly make decisions
regarding the initial existence or current status of the violation.
In response to comments, we are also not adopting the last sentence
of proposed Sec. 773.24(c)(3), which would have provided that our
written decision would remain in effect during the pendency of an
appeal, unless the challenger obtained temporary relief. Instead, as
explained in greater detail in section VI.F. of this preamble, we are
allowing applicants to obtain provisional permits during the pendency
of ownership or control challenges and appeals. See final Sec. 773.14.
Thus, our ownership or control findings are in effect stayed or
inoperative while a challenger exhausts administrative remedies and
during the pendency of any subsequent judicial review. Allowing
provisional permits under these circumstances enhances due process.
General Comments on Proposed Sec. 773.24
One commenter said the procedures for challenging an ownership or
control

[[Page 79633]]

listing or finding, or alternately our proposed revisions to the
existing challenge procedures, are not needed. This commenter did not
offer a reason for the objection. The challenge procedures, in general,
are definitely needed for several reasons, but most importantly to
afford due process to the regulated industry. Furthermore, the specific
revisions we adopted in this final rule are necessary in light of the
fact that the nature of the challenges has changed from rebuttals of
presumptions of ownership or control to challenges to listings and
agency findings of actual, rather than presumed, ownership or control.
In contrast, another commenter expressed support for the intent of
due process behind the proposed challenge provisions. We agree with the
comment and underscore that it is critically important that persons
either disclosed as an owner or controller, or later found by a
regulatory authority to be an owner or controller, have the opportunity
to challenge such a listing or finding.
A commenter said the provisions proposed in Sec. 773.24 unlawfully
preclude persons from challenging the underlying violation to which
they are linked and for which they will be held responsible. Expressing
a contrary view, another commenter stated that a challenge to an
ownership or control link should not include a challenge to the
underlying fact of the violation.
In this final rule, we removed the ability to challenge directly
both the current status of a violation (i.e., whether the violation has
been abated, is in the process of being abated, etc.) and the initial
existence or validity of a violation (i.e., whether a violation existed
at the time it was cited) in the context of ownership or control
challenges. Only the regulatory authority, or other agency, with
jurisdiction over a violation can make determinations regarding the
initial existence or current status of a violation. Of course, if a
person is challenging an ownership or control listing or finding
because he or she is ineligible for a permit under section 510(c) of
the Act, 30 U.S.C. 1260(c), and final Sec. 773.12--i.e., he or she owns
or controls an operation with a current violation--the person may
submit evidence from the regulatory authority, or other agency, with
jurisdiction over the violation that the violation never existed in the
first instance or has been abated or corrected. If a person can
demonstrate, in this manner, that he or she does not own or control an
operation with a current violation, he or she would become eligible for
a permit under section 510(c) and final Sec. 773.12.
We removed the ability to challenge the existence of a violation at
the time it was cited because there is a prime regulatory interest in
finality of agency actions. Allowing the initial existence of a
violation to be challenged at any time, in an open-ended process, is
neither required by law nor desirable. For example, if a challenge to
the existence of a violation is raised years after the fact, it might
be difficult, if not impossible, for an agency to obtain all pertinent
evidence relating to the violation at the time it was cited. Witnesses
might be unlocatable, or even deceased, or their memories may have
understandably faded; documentary evidence might be lost or destroyed;
and evidence of ``on the ground'' violations might be lost due to the
passage of time and changes in physical conditions.
Furthermore, if the existence of a violation has been litigated to
conclusion by an affected party, or the right to challenge the
existence of a violation has been waived, we see no reason to provide
for additional challenges covering the same subject matter. It is not
necessary to allow persons who failed to exercise a prior opportunity
to challenge the existence of the violation to initiate such a
challenge in the context of an ownership or control challenge. Our
existing regulations provide that a person issued a Federal notice of
violation or cessation order, ``or a person having an interest which is
or may be adversely affected by the issuance, modification, vacation or
termination of a notice or order, may request review of that action * *
* within 30 days after receiving notice of the action.'' 30 CFR 843.16
(emphasis added). If ownership or control consequences attach or may
attach to a person as a result of the issuance of a notice of violation
or cessation order, that person ``is or may be adversely affected by
the issuance,'' such that they would have the right, and it would be
incumbent on them, to challenge the issuance under the available
procedures. If the persons affected by the issuance of a notice of
violation do not initiate a challenge, or fail to obtain a favorable
decision on such a challenge, then it is fair to assume that the
violation did in fact exist when cited.
Likewise, in the event that someone initiating an ownership or
control challenge did not have the opportunity to challenge the
underlying existence of the violation, the persons legally responsible
for the violation will have had ample opportunity and sufficient
motivation to challenge the violation if they believe it was improperly
cited. If the persons who are legally responsible for the violation do
not initiate a challenge, or fail to obtain a favorable decision on
such a challenge, then it is fair to state that the violation did in
fact exist when cited.
In sum, we emphasize that the ownership or control challenges
provided for in this final rule do not exist so that a person may
challenge anew the initial existence of a violation. At the same time,
the rights of owners and controllers are well protected by the ability
to challenge an ownership or control listing or finding under the
procedures we adopt today.
A commenter said the final rule should make clear that the
documents submitted by a person initiating a challenge and relied upon
by regulatory authorities for their decisions are public records and
should be made a part of the permit file. We agree with the commenter
that documents submitted to challenge an ownership or control listing
or finding should normally be considered public records and, as such,
should be readily available for public review. Based on this comment,
we added the requirement in final Sec. 773.27(b) that any materials
presented in connection with a challenge will become part of the permit
file, an investigation file, or another public file. However, the
location and manner in which the records are retained is at the
discretion of the regulatory authority, as identified in final
Sec. 773.26(a). We also added a provision allowing a challenger to
request that any confidential information not be placed in a public
file. We will hold as confidential any information which is not
required to be made available to the public under Secs. 840.14 or
842.16, as applicable.
A commenter said proposed Sec. 773.24 confuses responsibility for
liability and for permit blocking. To paraphrase, the commenter states
that the proposed rule assumes that any owner or controller is the
alter ego of the applicant and therefore liable for the applicant's
violations. In the commenter's view, holding owners or controllers
liable for a violation negates the need for ``an elaborate scheme of
permit blocking.'' We disagree with the commenter for at least two
reasons. First, neither the proposed rule nor the rule adopted today
presumes that an owner or controller is the alter ego of the applicant
or a permittee, though an owner or controller may in fact, in the
circumstances of a given case, be an alter ego. And, while an owner or
controller may, in certain circumstances, be personally liable for the
violations of an operation under sections 518 and 521 of the Act, 30

[[Page 79634]]

U.S.C. 1268 and 30 U.S.C. 1271, neither the challenge procedures, nor
any other provision of the final rule adopted today, gives rise to such
an assumption. If a person is found to be personally liable for a
violation under the Act, that person has ample opportunity to challenge
that finding outside of the ownership or control challenge procedures.
The pertinent parts of this final rule establish when a person owns or
controls the relevant surface coal mining operation, as contemplated by
section 510(c) of the Act; the challenge procedures afford due process
by allowing a person to challenge an ownership or control listing or
finding. Second, this final rule does not create an ``elaborate permit-
blocking scheme.'' Rather, this rule implements section 510(c) of the
Act in a manner fully consistent with the NMA v. DOI I and NMA v. DOI
II decisions.
Two commenters asked how a person is notified of a regulatory
authority's initial determination that they have the ability to
control. A person found to be an owner or controller will be notified
by the regulatory authority making the finding. In this final rule, we
modified the proposed provision to clarify that the regulatory
authority must make a written finding of ownership or control. See
final Sec. 774.11(f); see also final Sec. 773.22(a). The regulatory
authority will then notify the person subject to the finding of the
determination.
A commenter said the challenge provisions are unlawful because they
fail to provide due process, by way of an opportunity for hearing or
appeal, ``prior to the imposition of sanctions including permit blocks
and conditions based on the [ownership or control] finding, or before
the inclusion of the finding or determination in the AVS.''
We disagree that the proposed ownership or control challenge
procedures would deny due process, for largely the same reasons
explained in the preamble to OSM's Applicant/Violator System Procedures
rule (AVS Procedures rule). 59 FR 54306, 54312-16 (1994). The AVS
Procedures rule, which contained predecessor ownership or control
challenge procedures, was upheld in court against all due process
challenges, including an argument similar to the one advanced by the
commenter. National Mining Assoc. v. Babbitt, 43 Env't Rep. Cas. (BNA)
1097, 1111-17 (D.D.C. 1996), appeal docketed, No. 96-5274 (D.C. Cir).
To the extent relevant, we continue to rely on the due process
discussion set forth in the preamble to the AVS Procedures rule in
support of this rulemaking.
Nonetheless, we modified the final rule to address the commenter's
concerns. Most significantly, as explained in greater detail in section
VI.F. of this preamble, we decided to allow issuance of a provisional
permit when a person is challenging or appealing an ownership or
control listing or finding. Under final Sec. 773.14, an applicant who
owns or controls an operation with a violation may be eligible for a
provisional permit if it is challenging or appealing all pertinent
ownership or control listings or findings. However, if an ownership or
control listing or finding is ultimately upheld in favor of the
regulatory authority, the provisionally issued permit will be
considered improvidently issued, and the regulatory authority must
initiate suspension or rescission procedures under final Secs. 773.22
and 773.23. See final Sec. 773.14(c). Thus, under the procedures we
adopt today, any negative consequence, or ``sanction,'' flowing from an
ownership or control listing or finding--i.e., a permit block or permit
suspension or rescission--will only arise after an applicant has had a
full and meaningful opportunity to challenge the listing or finding
both administratively and judicially. It is also important to emphasize
that a person may initiate an ownership or control challenge at any
time. See final Sec. 773.25.
While our modification allowing for provisional permits is alone
sufficient to address the due process concerns expressed by the
commenter, we note that there are numerous other provisions in this
final rule and our existing rules, including provisions which are
available before a permit denial, which safeguard the interests of
applicants. First, section 513(b) of the Act, 30 U.S.C. 1263(b), allows
any person having an interest which is or may be adversely affected by
a proposed application to file written objections and seek an informal
conference before a permitting decision. Second, under final
Sec. 773.25, any person listed or found as an owner or controller, or
any applicant affected by such listing or finding, may challenge an
ownership or control listing or finding at any time, including before a
permitting decision (if the listing or finding occurs before a
permitting decision). Third, existing 43 CFR 4.1380 provides for review
of OSM's written ownership and control decisions by OHA. Under the OHA
procedures at 43 CFR 4.1386, a party may seek temporary relief from
OSM's decision upon a showing that, among other things, the petitioner
is likely to prevail on the merits of the claim. Finally, if the
ownership or control finding results in a permit denial, existing 30
CFR part 775 allows the ``the applicant, permittee, or any person with
an interest which is or may be adversely affected'' to seek
administrative, and ultimately judicial, review of the permitting
decision. Given that applicants may now receive provisional permits
while they are appealing ownership or control listings or findings,
coupled with the ample recourse an applicant has, both before and after
a permitting decision, the risk of an erroneous permit denial is
virtually nonexistent.
We do note that under this final rule, we will continue to enter
ownership or control findings promptly into AVS. See final
Sec. 774.11(f)(2). When OSM makes a finding that someone who is not
listed in the permit application, or subsequently identified by the
permittee, is an owner or controller of the operation, there is a
strong governmental and public interest in listing that information in
AVS as soon as possible so it may be of use to the various regulatory
authorities in carrying out their permitting responsibilities under
section 510(c) of the Act. Section 510(c), among other things, prevents
violators from receiving new permits so that they will not be able to
cause environmental harm at new sites. If OSM or a State regulatory
authority had to wait until after a challenge or hearing, and a
potentially lengthy appeal to the court of last resort, to list the
information in AVS, another regulatory authority may issue a permit to
a person who is not entitled to receive one under section 510(c). At a
minimum, the permitting authority must have access to the most current
and complete information when it makes its permitting decision. The
most efficient way to achieve that result is to enter ownership or
control findings promptly into AVS.
However, since an applicant may now receive a provisional permit
during the pendency of a merits challenge or appeal, there will not be
any ``sanction'' or negative consequence flowing from the entry of the
finding into AVS unless and until the finding is ultimately upheld. If
a finding entered into AVS is ultimately upheld, then any negative
consequences will be due to the conduct of the person found to be an
owner or controller, or the conduct of operations the person owns or
controls. On the other hand, allowance of a provisional permit ensures
that there will not be a ``sanction'' to a person subject to an
erroneous finding of ownership or control.
We also take this opportunity to emphasize that AVS is an
informational

[[Page 79635]]

database, which contains, among other things, information pertaining to
all owners and controllers of all applicants and all permittees,
regardless of whether there are outstanding violations. Thus, the mere
entry of an ownership or control relationship into AVS is not punitive
and may not have any adverse consequences. For example, if a person is
identified in AVS as an owner or controller of an operation, there is
no adverse permitting consequence unless that operation has a current
violation. Even then, under this rule, an applicant will be eligible
for a provisional permit if it challenges, in good faith, its ownership
or control of the operation.
Each regulatory authority uses the information in AVS, along with
other reasonably available information, to determine permit eligibility
under its own ownership and control rules. OSM's interest is in
maintaining the integrity of the information in the system--both in
terms of accuracy and completeness--so that OSM and the States may make
informed and appropriate permitting decisions, consistent with final
Sec. 773.12 and section 510(c) of the Act. So long as the information
is accurate and complete, any negative consequences flowing from being
listed in AVS will not be created by OSM, but by the person owning or
controlling an operation with an outstanding violation and/or the
person who created the violation. In short, it is a person's conduct,
and not identification in AVS, which creates any adverse consequences.
In sum, the procedures we adopt today, in conjunction with existing
procedures, strike the appropriate balance between due process and
OSM's and the public's interest in prompt entry of ownership and
control information into AVS.
Several commenters expressed their concerns regarding citizens'
participation under these provisions. One commenter said the public
should be afforded the same rights of review regarding OSM's ownership
and control decisions as exist generally for permit decisions. Another
commenter said that we should not weaken citizens' participation in AVS
matters. Another said there is a lack of public notice concerning any
challenge to a finding of the ability to control and a lack of ability
to participate, by comment or intervention, in such proceedings.
According to the commenter, this lack of notice and public involvement
is inconsistent with the Act.
The rule we adopt today increases the opportunity for public
participation in ownership or control challenges, particularly through
enhanced notice of ownership or control decisions. We expressly adopted
additional notice procedures so that the public will be informed of all
written decisions concerning ownership or control challenges. See final
Sec. 773.28(d). Further, all records supporting an ownership or control
decision, excluding any confidential information, will be made
available to the public under final Sec. 773.27(b).
Of course, citizens can pursue other avenues of redress if they
believe the ownership or control challenge procedures are insufficient
to protect their interests. Indeed, the rule we adopt today does
nothing to disturb the public's role in the permitting process under 30
CFR 773.13 and 30 CFR part 775, including the ability of persons who
have an interest which is or may be adversely affected to raise
ownership or control issues during the permitting process and to
request a hearing on the reasons for a permitting decision. Additional
provisions pertaining to public participation and access to records are
found at existing 30 CFR 842.11, 842.12, and 842.16 and final
Sec. 843.21. For example, if a person disagrees with an ownership or
control finding, he can request a Federal inspection of any relevant
permit under 30 CFR 842.12. If OSM denies an inspection request, the
person may seek review under 30 CFR 842.15, and may ultimately appeal
to OHA under 43 CFR part 4.
Also, as mentioned previously, AVS is available to the public to
increase public access to ownership or control information in the
system. AVS software is provided free of charge and can be ordered from
the AVS Office in Lexington, Kentucky, by calling, toll-free, 1-800-
643-9748. The software can also be downloaded from the AVS Office's
Internet home page on the Internet (Internet address: http://
www.avs.osmre.gov).
It should also be noted that section 510(c) of the Act, 30 U.S.C.
1260(c), itself requires regulatory authorities to consider ``other
information available'' when determining whether a permit may be
granted based on ownership or control considerations. If the public
supplies information to the regulatory authority with jurisdiction over
an application, the regulatory authority must consider it as
``available information'' in making a permitting decision.
In short, OSM recognizes the Act's requirements for public
participation in the permitting process, including ownership or control
matters. The rule we adopt today, in conjunction with existing
procedures, will provide more immediate, wider, and economical access
to persons with an interest in ownership or control challenges.
Together, notice of a decision, access to the records underlying that
decision, and our existing public participation procedures provide an
appropriate measure of public participation in ownership or control
challenges.
We also note that the National Wildlife Federation and Kentucky
Resources Council, Inc., filed a complaint challenging our 1994 AVS
Procedures rule. In that action, plaintiffs claimed, among other
things, that the 1994 provisions did not provide for adequate public
participation and notice relative to ownership or control
determinations. Ultimately, the parties filed a joint motion for
voluntary dismissal of the action, based on our agreement to ``reopen
the issues and regulatory language complained of in this lawsuit for
public comment, and to reevaluate the position of the agency with
respect to those matters complained of in this case,'' including the
role of the public in ownership and control determinations. By order of
September 15, 1997, the court granted the joint motion. In this
rulemaking, we fulfilled the commitment we made in the joint motion by
reopening the issues complained of in the lawsuit, and reevaluating our
position relative to those issues. We carefully considered all the
comments received on our proposed ownership or control challenge
procedures. As explained above, in this final rule, we expand public
access to written decisions concerning ownership or control challenges,
and provide for public access to the records underlying such decisions.
In terms of our ownership or control challenge procedures, these
provisions represent an appropriate level of public participation and
notice, given the ample public participation provisions which exist in
our other regulations.
One commenter said that there is a lack of clarity regarding the
right to challenge ownership or control when a regulatory authority's
finding of control is necessitated by the applicant's nondisclosure of
required permit application information. Any challenge, this commenter
explained, should occur in the context of a civil or criminal
prosecution for fraud under section 518 of the Act. We disagree that a
regulatory authority should immediately initiate civil proceedings or
proceed to criminal prosecution in all instances of nondisclosure of
required information, from the most benign to the most egregious.
However, we fully intend to pursue these actions when they are
warranted.

[[Page 79636]]

Another commenter said that the refocusing of the challenge to
whether the person has the current ability to control is inappropriate.
The question, according to the commenter, is whether the applicant
owned or controlled other operations which have current violations, not
whether the current ability to control continues. After the NMA v. DOI
II decision, we may no longer deny a permit to an applicant who has
relinquished its ownership or control of an operation with a still-
existing violation. NMA v. DOI II, 177 F.3d at 5. The court did hold,
however, that OSM may continue to deny permits based on an applicant's
past ownership or control of an operation with a violation (whether or
not abated) when determining whether there is ``a demonstrated pattern
of willful violations'' under section 510(c) of the Act. Id. Absent the
requisite ``pattern of willful violations,'' the court held that a
permit denial based on past ownership or control ``contravenes the
statute and cannot be upheld.'' Id.
Proposed Sec. 773.24(a)
Proposed Sec. 773.24(a) addressed who may challenge a finding on
the ability to control a surface coal mining operation. 63 FR 70580,
70621.
A commenter said that it is not clear that a permit applicant can
challenge a listing under the proposed provisions. We did not intend to
exclude applicants or permittees from being able to challenge an
ownership or control listing or finding. See 63 FR 70599. We modified
the language in this final rule to clarify that an applicant or
permittee who is affected by an ownership or control listing or finding
may indeed challenge the listing or finding in accordance with these
final challenge procedures. See final Sec. 773.25(c). However, if an
applicant or permittee is initiating a challenge with regard to an
ownership or control relationship initially disclosed by the applicant
or permittee, we do not expect the challenge to be premised on the
argument that the person listed by the applicant or permittee was not
an owner or controller in the first instance. An applicant or
permittee, having identified a person as an owner or controller, should
not prevail in a challenge by claiming the person was not an owner or
controller at the time the information was submitted to the regulatory
authority. Rather, a challenge initiated by an applicant or permittee,
concerning a listing made by the applicant or permittee, should be
limited to changed circumstances, like the fact that the person listed
by the applicant or permittee as an owner or controller has
relinquished ownership or control of the operation.
Several commenters submitted comments pertaining to the timing of
ownership or control challenges and the consequences of certifying
under proposed Sec. 778.13(m) or being found to be an owner or
controller after permit issuance. Under proposed Sec. 773.24(a), an
ownership or control challenge had to be initiated ``before
certification under [proposed] Sec. 778.13(m).'' Proposed
Sec. 778.13(m) would have required all owners or controllers to certify
as to their ability to control the operation.
Another commenter, without explanation, suggested that we remove
the ``before certification'' requirement. One commenter pointed out
that if a regulatory authority made a finding of ownership or control
after certification, the person subject to the finding could not
challenge the finding since it would have occurred after certification.
Another commenter opined that if a person ``fails to challenge the
listing [by an applicant or regulatory authority] * * * prior to
issuance of the permit, the person is forever deemed to be [an] owner/
controller.'' This same commenter noted that if a person was listed or
found to be an owner or controller after permit issuance, the person
would ``be placed in jeopardy through no action of his own, but merely
by the action of others (applicant or [regulatory authority]) without
there ever being any burden of proof [borne] by the applicant or
[regulatory authority].''
Another commenter said that there could be lengthy delays in permit
issuance if a person chose to challenge a listing or finding before
permit issuance; on the other hand, if the person did not challenge
before permit issuance, they would waive their right to do so at a
later time. Finally, a commenter stated that the proposed rule required
all listed owners or controllers to challenge their ownership or
control before permit issuance or else they would all have to certify.
The commenter also stated that requiring successful challenges and/or
certification by all owners or controllers before permit issuance would
be particularly burdensome to large corporations with many owners or
controllers. As such, the commenter suggested we delete the provision
in its entirety.
These comments were all well-taken. In this final rule, we are not
adopting the ``before certification'' language in final Sec. 773.25. As
such, any person either listed as or found to be an owner or controller
may challenge such listing or finding at any time, either before, or
after, permit issuance. The adopted provision will reduce perceived
delays in permit issuance, since a challenge can be initiated after
permit issuance.
Removal of the ``before certification'' requirement also alleviates
the concern that a person may ``be placed in jeopardy through no action
of his own * * * without there ever being any burden of proof [borne]
by the applicant or [regulatory authority].'' We note that both
regulatory authorities and applicants do bear a burden of proof. If a
regulatory authority makes a finding of ownership or control, it bears
the initial burden of demonstrating ownership or control; only then
does the burden shift to the challenger to prove by a preponderance of
the evidence that he or she does not or did not own or control the
operation. (The burden of proof is discussed in more detail in section
VI.N. of this preamble.) As to being listed as an owner or controller,
we note that the applicant has the burden to provide accurate and
complete information in a permit application. Despite these burdens of
proof, there is obviously a possibility that a person will be
erroneously listed or found as an owner or controller. However, any
perceived jeopardy can be eliminated by a successful challenge; in
fact, these challenge procedures were developed largely for this
reason.
Finally, since we modified the certification requirement at final
Sec. 778.11(d) to require certification by only one individual, and
have modified the challenge procedures to allow for challenges at any
time, including after permit issuance, we removed the perceived burden
for large corporations. While corporations must still list all of their
owners or controllers under final Sec. 778.11(c)(5), only one
controller must certify under final Sec. 778.11(d), and any listed
owner or controller may initiate a challenge after permit issuance.
Another commenter alluded to the timing issue, but in a slightly
different context. This commenter raised the concern that after permit
issuance, a person who controls a small portion of an operation (and is
therefore listed as a controller), but has no control over areas where
a violation occurs, would not be able to use the challenge procedures.
The commenter said ``the only avenue of appeal would be the
administrative court system.''
As stated above, we addressed the commenter's concern about being
able to challenge after permit issuance by removing the ``before
certification'' language. In response to this comment, we also modified
final Sec. 773.25(a) to allow a person to challenge their ability

[[Page 79637]]

to control a specific portion or aspect of an operation. For example,
under the commenter's hypothetical, the controller of a small portion
of an operation could initiate a challenge and attempt to prove that he
does not or did not control another aspect of the operation. We also
modified final Sec. 778.11(c)(5) to allow applicants to identify the
particular portion or aspect of the operation owned or controlled by
each owner or controller.
Proposed Sec. 773.24(b)
Proposed Sec. 773.24(b) addressed how to challenge a finding on the
ability to control a surface coal mining operation. 63 FR 70621.
A commenter said the proposal conflicts with the allocation of
authority under SMCRA by balkanizing the process whereby a person will
have to seek determinations in different State and Federal forums for
the same questions related to a finding or decision on control.
We agree that the proposal dispersed the challenge procedures. For
example, under the proposal, if an applicant was applying for a permit
in State X, but was not eligible for a permit based on ownership or
control of operations with violations in States Y and Z, he would have
to initiate challenges in States Y and Z (to the agencies with
jurisdiction over the violations). We modified the procedures in final
Sec. 773.26(a) to provide that in order to challenge an ownership or
control listing or finding, a challenger must submit a written
explanation of the basis for the challenge to the regulatory authority
with jurisdiction over a pending permit application or permit, rather
than to the agency with jurisdiction over an existing violation. As
explained above, this modification will greatly simplify the provisions
by allowing ownership and control procedures to proceed in one forum.
The regulatory authority hearing the challenge will apply its own
ownership and control rules in deciding the challenge, subject only to
OSM's general oversight authority. Consistent with the concept of State
primacy, it is appropriate for the regulatory authority with
jurisdiction over an application or permit to decide ownership or
control challenges, since that regulatory authority has the greatest
interest in whether or not mining should commence or continue within
its jurisdiction. However, when a regulatory authority is deciding a
challenge which involves questions pertaining to violations in other
jurisdictions, it is important for that regulatory authority to consult
and coordinate with the regulatory authority with jurisdiction over the
violation and our AVS Office; we require such consultation in final
Sec. 773.26(c).
At the same time, we must stress that a regulatory authority
deciding an ownership or control challenge has no authority to make
determinations relating to the initial existence or current status of a
violation, or a person's responsibility for a violation, in another
jurisdiction. Rather, all questions as to the existence or status of
the violation must be addressed to the regulatory authority, or other
agency, with jurisdiction over the violation, providing the challenger
is not foreclosed from initiating such a challenge under the applicable
regulations. As such, if a challenger has violations in different
jurisdictions which are affecting his permit eligibility, and wishes to
contest the initial existence or status of those violations, and is not
foreclosed from doing so, he must do so with the regulatory
authorities, or other agencies, with jurisdiction over the violations;
this is consistent with the concept of State primacy embodied in the
Act. It is also consistent with section 510(c) of the Act, which
requires a permit applicant to prove that any violation it owns or
controls has ``been corrected * * * to the satisfaction of the
regulatory authority * * * which has jurisdiction over such
violation.''
In sum, the procedure we are adopting today enhances State primacy
by allowing each regulatory authority to apply its own ownership or
control rules when deciding ownership or control challenges pertaining
to applications and permits within its jurisdiction. The rule also
underscores that each regulatory authority is properly responsible for
deciding issues pertaining to the existence or status of a violation
within its jurisdiction and ultimately permit eligibility.
Proposed Sec. 773.24(c)
Proposed Sec. 773.24(c) addressed the written decision, service,
and appeals procedures under the provisions for challenge a listing or
finding of ownership or control. 63 FR 70580, 70621.
Proposed Sec. 773.24(c)(1) would have required the regulatory
authority issuing a written decision on an ownership or control
challenge to notify the challenger and ``any regulatory authorities''
with an interest in the challenge. A commenter said OSM should clarify
the term ``regulatory authorities,'' as used in proposed
Sec. 773.24(c)(1), to mean only ``SMCRA regulatory authorities.'' Four
commenters asked OSM to clarify how a regulatory authority discovers
and notifies all regulatory authorities with an interest in the
challenge. One asked if ``regulatory authorities with an interest in
the challenge'' includes ``air and water authorities'' and at what
point in the permitting process must the decision and notification
occur.
At the outset, we note that the term ``regulatory authority'' is
defined in the Act, at section 701(22), to include only regulatory
authorities administering SMCRA. As such, the term regulatory
authorities in Sec. 773.24(c)(1) encompassed only SMCRA regulatory
authorities, and not ``air and water authorities.'' However, these
comments are largely moot because, as explained above, we modified the
notification requirements such that the regulatory authority does not
have to directly notify regulatory authorities with an interest in an
ownership or control challenge. The proposed requirement was too
subjective. Both SMCRA and non-SMCRA regulatory authorities, as well as
the general public, will receive ample notice of ownership or control
decisions through the posting of those decisions on AVS and our AVS
Office's Internet home page under final Sec. 773.28(d). This
modification will eliminate any concerns about identifying and
notifying interested regulatory authorities.
Finally, we note that a decision does not necessarily occur during
the permitting process, though a regulatory authority may receive an
ownership or control challenge during the permitting process. The
written decision requirement for ownership or control challenges is not
triggered by the permitting process, but by receipt of a challenge
under these provisions. Notification to the challenger, and posting of
the decision on AVS and the Internet, must occur after the written
decision, in accordance with the provisions we adopt today.
Two commenters, concerned about potential delays in the permitting
process, said there should be a time limit for issuing a written
decision under the ownership or control challenge provisions. One of
the commenters suggested 30 days, while the other said 15 days is
adequate to make a decision.
While in the past we elected not to set a time limit for regulatory
authorities to decide ownership or control challenges (see 59 FR 54306,
54332-33), we modified the proposal to require regulatory authorities
to decide ownership or control challenges within 60 days of receipt of
a challenge and any evidence submitted by the challenger. See final
Sec. 773.28(a). Our experience

[[Page 79638]]

since the promulgation of similar ownership or control challenge
procedures in 1994, and the fact that OSM and State regulatory
authorities have become increasingly sophisticated in processing these
challenges, leads us to conclude that the imposition of a 60 day time
limit is practical.
Another commenter objected to there being no time limits for the
agency to reach a decision at the ``ALJ or IBLA levels.'' To the extent
the commenter meant to refer to the lack of a time limit for a written
decision in the proposed ownership or control challenge procedures, our
response is as above. If the commenter truly meant to refer to OHA's
regulations, no response is necessary, as those provisions are not at
issue in this rulemaking. We note, however, that OHA's provisions for
review of written ownership or control decisions do in fact contain
specific time limits for filing of requests for review, answers or
responsive motions, hearings, and decisions. 43 CFR 4.1380 through
4.1387.
A commenter said that the OHA appeal procedures referenced in
proposed paragraph (c)(3)--43 CFR 4.1380 through 4.1387--were not
designed to address what the commenter calls ``expanded control
findings'' and thus, do not apply. The commenter also said that the OHA
procedures are woefully inadequate to provide due process.
We disagree. The referenced OHA procedures, captioned ``Review of
Office of Surface Mining Written Decisions Concerning Ownership and
Control,'' are broad enough to encompass appeals of written ownership
or control decisions under this final rule. While some of the
terminology in the OHA provisions does not precisely match the
terminology in this final rule, the substance of the OHA appeals
procedures readily accommodates the review of ownership or control
decisions contemplated by these final challenge procedures.
Nonetheless, in light of this rulemaking, OHA is currently determining
whether or not it will be necessary to modify its procedural rules. The
existing OHA procedures are more than adequate in the interim, and will
in fact apply until such time as they are revised or replaced.
As to the commenter's other concern about the OHA provisions--that
they do not provide due process--no response is necessary, as those
provisions are not at issue in this rulemaking. We note, however, that
the OHA provisions, coupled with the provisions of this final rule,
afford ample due process to the regulated industry.
The same commenter, citing Darby v. Cisneros, 509 U.S. 137 (1993)
and Coteau Properties Co. v. Babbitt, 53 F.3d 1466 (8th Cir. 1995),
said that we cannot ``require exhaustion of administrative remedies
unless the effect of the [ownership or control] finding or decision is
automatically stayed pending appeal.''
Under this final rule, ownership or control findings are in effect
stayed while a challenger exhausts administrative, as well as judicial,
remedies. This is so because an applicant may receive a provisional
permit under final Sec. 773.14 during the pendency of an ownership or
control challenge under final Secs. 773.25 through 773.27, or any
subsequent administrative or judicial appeal. See final
Sec. 773.14(b)(3). Thus, the potential effect of an ownership or
control finding--i.e., permit blocking under section 510(c)--is stayed
while a challenger pursues both administrative and judicial remedies.
As such, we can properly require exhaustion of administrative remedies
before a challenger seeks judicial review. We have added a mandatory
exhaustion requirement to final Sec. 773.28(e).
Proposed Sec. 773.24(d)
Proposed Sec. 773.24(d) addressed the limitations under these
provisions. 63 FR 70580, 70621. We did not receive any comments on this
proposed provision. We slightly modified the proposed provision, in
final Sec. 773.26(b), to provide that no person may use these
provisions to challenge their liability or responsibility under any
other provision of the Act or its implementing regulations; in the
proposal, we only referenced liability for reclamation fees assessed
under Title IV of SMCRA. This modification is appropriate in order to
emphasize that these procedures apply only to ownership or control
challenges, and may not be used as a secondary source to challenge
liability or responsibility under the other provisions of SMCRA or its
implementing regulations.

N. Section 773.25--Standards for Challenging a Finding or Decision on
the Ability To Control a Surface Coal Mining Operation

In this final rule, the provisions proposed at Secs. 773.24 and
773.25 are found at Secs. 773.25 through 773.28.
We proposed to revise previous Sec. 773.25 to provide standards for
challenging a finding or decision on ownership of or the ability to
control a surface coal mining operation. 63 FR 70580, 70600. We
modified proposed Sec. 773.25 in this final rule. The details of the
modifications are set forth in the discussion of proposed Sec. 773.24,
in preceding section VI.M. of this preamble. Section VI.M. includes a
discussion of the final ownership or control challenge provisions at
Secs. 773.25 through 773.28.
General Comments on Proposed Sec. 773.25
A commenter found the provisions ``puzzling.'' The commenter
questioned why we need a rebuttal mechanism if regulatory authorities
are no longer allowed to make presumptions of control. The commenter
asked, if all controllers certify as to their ability to control, then
``how can they back-pedal and decide later that they don't?''
First, the challenge procedures we adopt today are not, strictly
speaking, a rebuttal mechanism. Despite the fact that OSM can no longer
rely on presumptions to make a prima facie case of ownership or
control, we may still, at any time, make findings of ownership or
control under Secs. 774.11(f) and 773.21. Thus, while the challenge
provisions are no longer centered on presumptions of ownership or
control, it remains important for any owner or controller to be able to
challenge an ownership or control listing or finding. Should a person
disagree with a regulatory authority finding that the person owns or
controls a surface coal mining operation, then the person should have
the right to challenge that finding.
Further, as stated in section VI.M., above, we modified the
certification requirement at final Sec. 778.11(d) to require
certification by only one individual; thus, not all owners or
controllers will have knowingly certified to their status. Still,
applicants must list all of their owners or controllers under
Sec. 778.11(c). Thus, persons will be listed as an owners or
controllers in a permit application, even though they are not required
to certify. Under these circumstances, it is important to allow these
persons to initiate challenges. On the other hand, if a person has
certified as to control of an operation, or the applicant is initiating
a challenge with regard to a listing made by the applicant in a permit
application, we expect that any challenge will involve changed
circumstances, and will not contest the validity of the certification
or listing in the first instance. In other words, a person or
applicant, having knowingly certified or made a listing, should not be
able to ``back-pedal,'' as the commenter put it, and claim that the
certification or listing was incorrect in the first instance. At the
same time, it is

[[Page 79639]]

desirable to create a mechanism whereby a person or applicant can
attempt to demonstrate that circumstances have changed since the
certification or listing, such that a person is no longer an owner or
controller of the operation.
Another commenter said the proposed regulation fails to provide
meaningful standards for contesting an ownership or control finding,
and that the proposed evidentiary standards are not substitutes for
concrete standards for how one can successfully prove an error in a
regulatory authority's finding.
We disagree. When OSM makes a finding on ownership or control, the
written decision will contain an explanation of the basis for the
finding. In bringing a challenge, there is really only one meaningful
standard: A person bears the burden of proving by a preponderance of
evidence, that he does not, or did not, own or control the relevant
surface coal mining operation, under the ownership or control
definitions we adopt today at final Sec. 701.5. These definitions are
sufficiently clear to allow for a meaningful challenge. The proof
provided by the challenger should address the specific items in the
finding with which the person takes issue. By not limiting the
challenge to ``concrete'' criteria, the challenger is given substantial
leeway to present any and all evidence which may be germane to the
challenge. At the same time, regulatory authorities are not faced with
having to reverse a listing or finding when a challenger meets a
technical standard, but there are nonetheless indicia of ownership or
control. This approach allows challengers to present, and regulatory
authorities to consider, all the pertinent facts of each case,
including the peculiar operating structure of a given entity. Further,
providing ``concrete'' standards would mean attempting to anticipate
every circumstance that would precipitate a challenge; this is not
feasible. Finally, we also note that our 1994 AVS Procedures rule,
which did not contain detailed standards for rebutting presumptions of
ownership or control, was upheld in court against a challenge which was
similar to this comment. National Mining Assoc. v. Babbitt, 43 Env't
Rep. Cas. (BNA) 1097, 1115-16 (D.D.C. 1996), appeal docketed, No. 96-
5274 (D.C. Cir).
Proposed Sec. 773.25(a)
We proposed paragraph (a) to state when the challenge standards
apply. 63 FR 70580, 70621. We did not receive comments on this proposed
provision. However, we are not adopting proposed Sec. 773.25(a) because
it would be a duplicate regulatory provision. Applicability is
addressed at final Sec. 773.25.
Proposed Sec. 773.25(b)
As proposed, paragraph (b) described which regulatory authorities
are responsible for deciding ownership or control challenges. 63 FR
70580, 70621. As explained above, in section VI.M. of this preamble, we
modified this provision in this final rule by incorporating it into
final Sec. 773.26, which, in conjunction with final Sec. 773.28,
identifies the regulatory authorities responsible for deciding
ownership or control challenges.
A commenter said that it is conceivable that there will be
inconsistent determinations made regarding ownership or control if
there are both Federal and State violations. The commenter asserted
that ownership or control decisions can only be made by the agency with
the application before it and that the decision on abatement of a
violation is the only appropriate decision for another agency (when
another agency issued the violation).
We agree. As we explained in detail in the discussion of proposed
Sec. 773.24(b) in section VI.M., above, under this final rule, the
regulatory authority with jurisdiction over a pending permit
application or permit will apply its ownership and control rules to all
outstanding violations, if any. Only a regulatory authority, or other
agency, with jurisdiction over a violation will decide issues
pertaining to the initial existence or status of the violation.
Nonetheless, there is still potential for inconsistent decisions among
different regulatory authorities, since regulatory authorities likely
will not have identical ownership and control regulations. To the
extent there are inconsistent ownership or control decisions based on
the same violations, such a result is consistent with the primacy
scheme established by SMCRA itself.
Three commenters questioned proposed Sec. 773.25(b)(3), which
provided that the regulatory authority which processed the permit
application or which issued the permit will decide challenges not
associated with violations. The commenters asked what administrative or
judicial venues are available to an applicant to resolve disagreements
if the information supplied by one regulatory authority to another is
wrong and the incorrect information results in a permit denial. The
commenters also stated that OSM should require regulatory authorities
to validate their information before entry into AVS, specify the
administrative and judicial venues in which erroneous permit blocks can
be challenged, and specify that application review can continue during
the pendency of ownership or control appeals.
We note that we incorporated proposed Sec. 773.25(b)(3) into final
Sec. 773.26(a), such that the regulatory authority with jurisdiction
over an application or permit will now decide all ownership and control
challenges, regardless of the existence or non-existence of a
violation. The challenge procedures we adopt today are designed to
resolve questions of ownership or control. Questions as to the
correctness of any other information contained in AVS, such as
information required to be submitted in permit applications or
information pertaining to the existence or status of violations, should
be addressed to the regulatory authority which was responsible for
entering that information into AVS. An applicant may or may not have
recourse depending on whether the time to challenge such information
has lapsed under the applicable regulations. However, we are confident,
and our experience bears out, that in the case of truly incorrect
information, such as information inaccurately loaded into AVS,
regulatory authorities which loaded the information will work with the
applicant and other persons to see that the information is corrected.
Regulatory provisions are not necessary to accomplish this goal.
Likewise, additional regulatory language is not needed to require
regulatory authorities to validate information before loading it into
AVS. First, much of the information in AVS originates with applicants
themselves, under our permit application information requirements;
applicants are required to provide accurate and complete information.
Further, under final Sec. 773.15(a), regulatory authorities are
required to find that an application is accurate and complete. Finally,
there is ample opportunity to challenge other data in AVS, such as
ownership or control findings, under existing rules and the rules we
adopt today.
As to the appropriate administrative or judicial venues in which to
challenge ``erroneous permit blocks,'' the rule we adopt today, at
final Sec. 773.26(a), clearly identifies how and to whom to submit
challenges regarding ownership or control listings and findings.
Further, if an ownership or control finding results in a permit denial,
existing 30 CFR part 775 provides for administrative and judicial
review of the permitting decision. The appropriate forums in

[[Page 79640]]

which to initiate such challenges are identified in the regulations.
Finally, it is not necessary to provide rule language specifying
that application review can continue during the pendency of ownership
or control appeals. There is nothing in our regulations which suggests
that application review must be suspended during the pendency of
ownership or control appeals. As such, we expect that regulatory
authorities will continue to process applications while appeals are
pending, unless there is an independent provision of law which requires
application review to be put on hold.
Proposed Sec. 773.25(c)
We proposed paragraph (c) to provide for the evidentiary standards
in the challenge procedures. 63 FR 70580, 70621. In this final rule,
parts of proposed Sec. 773.25(c) have been adopted in final
Sec. 773.27. Proposed Sec. 773.25(c)(1) has been modified and
incorporated into final Sec. 773.28. Proposed Sec. 773.25(c)(2) is
modified and adopted at final Sec. 773.27(a). Proposed
Sec. 773.25(c)(3) is modified and adopted at final Sec. 773.27(b).
Proposed Sec. 773.25(c)(3)(i) is modified and adopted at final
Sec. 773.27(c). As explained in the discussion of final Sec. 773.27(c),
in section VI.M. of this preamble, we are not adopting proposed
Sec. 773.25(c)(3)(ii) because it is unnecessary.
We received numerous comments on the proposed rule's burden of
proof allocation for ownership or control challenges. In this final
rule, as in the proposal, the ultimate burden of proof in ownership or
control challenges is on the challenger, rather than the regulatory
authority.
Two commenters approved of the proposed burden of proof allocation.
In substance, the commenters said it was appropriate that the burden of
proof is on the person challenging a regulatory finding and the
preponderance of the evidence standard is appropriate.
One commenter said the regulatory authority, not the challenger,
should bear the ultimate burden of proof. Another said that the burden
of proof in ownership or control challenges should always lie with the
regulatory authority, especially since under the proposed rule, in the
commenter's view, ``to find that an individual is a controller is to
also find that he is responsible for misdeeds committed by the mining
company.''
Two commenters said it was inappropriate to place a preponderance
of the evidence standard on the challenger, while the agency does not
have to make a prima facie showing of ownership or control. Similarly,
another commenter stated that there is never any burden of proof borne
by the regulatory authority.
Two commenters, citing Director, OWCP v. Greenwich Collieries, 512
U.S. 267, 278-281 (1994), said the Administrative Procedure Act (APA)
governs the burden of proof for these procedures, and places the
ultimate burden of persuasion on the regulatory authority. One said the
proposal,

violates the APA's allocation of the burden of proof. The APA places
the burden of proof (both the burden of going forward with proof and
the ultimate burden of persuasion) on the proponent of the rule,
i.e., the finding, made by the regulatory authority.

Since the above-identified comments all pertain to the challenger's
burden of proof, as well as the regulatory authority's burden of proof,
we will address all burden of proof comments together.
First, we want to remove any confusion about the determination
which is required by a regulatory authority when it makes an ownership
or control finding. Under final Sec. 774.11(f), the regulatory
authority must make a written finding of ownership or control. Although
the preamble to the proposed rule indicated that the regulatory
authority does not have to make a prima facie determination, we meant
the regulatory authority no longer has to make a prima facie
determination with regard to rebuttable presumptions, since the
proposed rule did not employ the rebuttable presumption mechanism.
However, we want to make clear that in making a finding under final
Sec. 774.11(f), the regulatory authority must indeed make a prima facie
determination of ownership and control, based on the evidence available
to the regulatory authority. In making a prima facie determination, the
finding should include evidence of facts which demonstrate that the
person subject to the finding meets the definition of own, owner, or
ownership or control or controller in Sec. 701.5 of this final rule.
As to the applicability of the APA, and the import of the Supreme
Court's decision in Greenwich Collieries, we begin with the threshold
observation that the burden of proof in formal adjudications under the
APA does not constrain OSM's informal adjudications, such as the
challenges provided for in this final rule. Secondly, even if the APA
applies to informal adjudications, SMCRA itself expressly excepts
ownership or control challenges from the APA's burden of proof
provisions. Finally, even if the APA's burden of proof provisions are
applicable to these final challenge procedures, the burden shifting
mechanism we adopt today is consistent with the APA and Greenwich
Collieries.
Section 556(d) of the APA provides, in pertinent part: ``Except as
otherwise provided by statute, the proponent of a rule or order has the
burden of proof.'' 5 U.S.C. 556(d) (emphasis added). SMCRA provides
otherwise, and thus exempts ownership or control challenges from the
APA's burden of proof requirements. Section 510(a) of SMCRA, 30 U.S.C.
1260(a), provides that ``[t]he applicant for a permit, or revision of a
permit, shall have the burden of establishing that his application is
in compliance with all the requirements of the applicable State or
Federal program,'' including section 510(c) of SMCRA. Similarly, under
section 510(b), the applicant bears the ultimate burden of proving
compliance with all requirements of SMCRA, including section 510(c),
and of State and Federal programs. See also National Mining Assoc. v.
Babbitt, 43 Env't Rep. Cas. at 1108. Finally, section 510(c) prohibits
permit issuance until the applicant proves that there are no
outstanding violations at operations owned or controlled by the
applicant, or that any violations are in the process of being
corrected. See also id. (We also note that section 510(c) is silent as
to how an applicant may prove that he does not own or control a surface
coal mining operation; the burden of proof allocation in this final
rule is a reasonable construction of the statute, and appropriately
implements section 510(c).) These sections clearly establish that the
ultimate burden of proof in ownership or control challenges is properly
borne by a permit applicant. Also, the burden of proof we adopt today
appropriately applies to both applicant and non-applicant challengers,
since the primary purpose of ownership or control findings, and
therefore challenges, is to evaluate both present and future
eligibility for permits. See, e.g., National Mining Assoc. v. Babbitt,
43 Env't Rep. Cas. at 1108.
Greenwich Collieries clarified that ``burden of proof'' means the
ultimate ``burden of persuasion.'' 512 U.S. at 276. Under the
procedures we adopt today, OSM bears the burden of going forward with
evidence to establish ownership or control (i.e., OSM must make a prima
facie determination). The burden then shifts to the challenger to
prove, by a preponderance of the evidence, that he does not, or did
not, own or control the relevant surface coal mining operation. If OSM
does not match that evidence, the challenger will prevail. The ultimate

[[Page 79641]]

burden of persuasion is properly borne by the applicant because SMCRA
requires as much, but also because the challenger is most likely to be
in possession of evidence to counter the regulatory authority's prima
facie case. Under these circumstances, it is appropriate to require the
challenger to produce the evidence which it has access to in attempting
to rebut OSM's prima facie finding. This burden shifting mechanism is
fully consistent with both the APA and Greenwich Collieries. We also
note that a similar burden of proof allocation, contained in our 1994
AVS Procedures rule, was upheld against industry challenge after the
decision in Greenwich Collieries. See National Mining Assoc. v.
Babbitt, 43 Env't Rep. Cas. at 1108-09.
A commenter said that the lack of a reference in the challenge
procedures to the ``standards'' for determining who is an owner or
controller suggests that the ``standards'' elsewhere in the proposed
rule are rebuttable presumptions which may be challenged. We disagree.
The only issue in an ownership or control challenge is whether or not
the challenger owns or controls, or owned or controlled, the relevant
surface coal mining operation under the definitions of own, owner, or
ownership or control or controller contained in Sec. 701.5 of this
final rule.
A commenter said the provision regarding submission of opinions of
counsel as evidence in ownership or control challenges should be
stricken. The commenter said that it is obvious that an attorney would
be willing to sign statements supporting the cause of his client and
that a statement ``simply saying that this person is or is not a
controller is not worthy evidence.'' We retained this provision, first
adopted in the 1994 AVS Procedures rule, because it has continued
efficacy. In this final rule, we rely upon the rationale for the
opinion of counsel provision as stated in the 1994 rule. See 59 FR
54306, 54342-43.
Proposed Sec. 773.25(d)
We proposed Sec. 773.25(d) to require regulatory authorities to
update AVS, as necessary, upon an agency determination pertaining to
ownership or control or the issuance of a decision by a reviewing
tribunal. 63 FR 70580, 70621. We did not receive comments on this
proposed provision. We slightly modified the proposed provision and
adopted it at final Sec. 773.28(f).

O. Section 774.10--Information Collection

In this final rule, the provision proposed as Sec. 774.10 is found
at Sec. 774.9.
We proposed to revise the information collection burden for part
774. We are redesignating Sec. 774.10 as new Sec. 774.9 which contains
the information collection requirements for part 774 and the Office of
Management and Budget (OMB) clearance number. For our response to
comments on general information collection, see the discussion under
proposed Sec. 773.10 which appears in section VI.D. of this preamble.
In this final rule, Sec. 774.9(a) is revised to show the new OMB
clearance number for this part is 1029-0116. The provision under
Sec. 774.9(b) is revised to adjust the estimated public reporting
burden from 32 hours to 8 hours. The estimate represents the average
response time. The reduction in burden is predominantly due to a
calculation error on the provisions in the proposed rule. The proposed
rule inadvertently provided the total burden hours for each response,
as if respondents were always to prepare a permit revision, permit
renewal, a transfer, assignment or sale of permit rights all at the
same time, not the average burden per respondent to complete the
requirements of part 774. In addition, new Secs. 774.11 and 774.12 are
added in this final rule. Section 774.11 requires regulatory
authorities to identify entities responsible for violations, maintain
information in AVS, and take enforcement actions based upon ownership,
control, and violation information. Section 774.11 is based on
provisions proposed in Secs. 773.15, 773.22, and 774.13. Section 774.12
requires permittees to provide new or updated information to regulatory
authorities. Section 774.12 is based on provisions proposed in
Secs. 773.17 and 774.13. The estimate represents the average response
time.
Summary of Comments and Adjustments to Burden Estimates
We considered information from the individuals who commented on
information collection aspects of the proposed rule. In general,
commenters stated that the estimated information collection burden
related to the proposed rule was too low. Commenters generally did not
mention any specific rule change which was underestimated or any
specific number of hours that would alter the OSM estimate.
A commenter stated that the burden hours for part 774 should be 50,
instead of 32 hours. We compared the commenter's estimate with other
data collected from industry sources and found them inconsistent. In
performing the comparison, we took into account the addition of new
Secs. 774.11 and 774.12. As such, we did not accept the comment.

P. Section 774.13--Permit Revisions

In this final rule, the provision we adopt from proposed
Sec. 774.13(e) is found at Sec. 774.12(c).
We proposed to add paragraph (e) to existing 30 CFR 774.13 to
require a permittee to report to the regulatory authority any change of
an owner or controller where the officer, owner, or other controller is
not identified in the current permit and is not subject to the
certification requirements for owners and controllers under proposed
Sec. 778.13(m). A change of an officer, owner, or other controller
meeting these criteria would have to be reported within 60 days of the
change and approved as a permit revision.
We are not adopting the proposal to add paragraph (e) to
Sec. 774.13. Instead, we added new Sec. 774.12, which is also based
upon the ownership and control information update requirements of
proposed Sec. 773.17(h).
Final Sec. 774.12--Post-permit Issuance Information Requirements for
Permittees
Final Sec. 774.12(a) provides that, within 30 days after the
issuance of a cessation order under Sec. 843.11, or its State
regulatory program equivalent, a permittee must provide or update all
the information required under Sec. 778.11. Final Sec. 774.12(b)
provides that a permittee does not have to submit this information if a
court of competent jurisdiction grants a stay of the cessation order
and the stay remains in effect. These provisions of the final rule are
substantively identical to previous Sec. 773.17(h).
Final Sec. 774.12(c) provides that, within 60 days of any addition,
departure, or change in position of any person identified in the permit
application as an owner or controller of the applicant or operator
under final Secs. 778.11(c) or (d), the permittee must provide the
information required under final Sec. 778.11(e). That information
includes, for each owner or controller, the person's name, address, and
telephone number; the person's position title, relationship to the
applicant, percentage of ownership, and location in the organizational
structure; and the date the person began functioning in the relevant
position. Final Sec. 774.12(c) is based upon proposed Sec. 774.13(e).
Requiring timely updates of this information will enable the regulatory
authority to make more accurate and timely permit eligibility
determinations under section 510(c) of the Act.

[[Page 79642]]

Disposition of Comments on Proposed Sec. 774.13(e)
A commenter said proposed Sec. 774.13(e) is unnecessary because
there is no reason to report changes of individuals unless they are the
alter ego of the applicant. We disagree. Maintaining the accuracy and
completeness of ownership and control information for existing permits
is critical to making accurate permit eligibility decisions under
section 510(c) of the Act.
Several commenters said that the proposed rule would impose a
tremendous burden because it would require reporting of changes in
surface and mineral owners for the permit and adjacent areas. The
commenters asserted that it is unnecessary to notify a regulatory
authority of those changes if the persons involved do not control the
manner in which mining and reclamation operations are conducted. As
noted above, we are not adopting the rule as proposed. Final
Sec. 774.12 does not require any reporting of changes in surface or
mineral ownership unless that change alters the ownership or control
status of the persons involved.
Commenters suggested that we should only require updates of
ownership and control information either annually or at the time of
mid-term permit review (every two and a half years). We decline to
adopt the commenters' suggestions because the recommended update
intervals are too infrequent for maintenance of the reasonably accurate
and complete database needed to ensure accurate section 510(c) permit
eligibility determinations.
One commenter claimed that a permittee may not learn of an
ownership change until a long time after it occurs. We believe that
permittees will always either be aware of, or be in a position to be
aware of, changes in ownership or control at the time that the change
occurs.
One commenter opposed categorizing these information updates as
permit revisions. The final rule does not classify these updates as
permit revisions.
Commenters asked if a permittee's failure to comply with the 60-day
reporting requirement would require a notice of violation. Since this
rule applies only to permits that have already been issued, failure to
comply would subject to the permittee to enforcement action under part
843 of our rules. We have no basis for distinguishing between a failure
to comply with this reporting requirement and a failure to comply with
any other reporting requirement applicable to permittees, such as water
monitoring.
Several commenters requested clarification as to who would be
subject to proposed Sec. 774.13(e) and whether proposed Sec. 774.17
would include changes in certified officers and directors. Both the
proposed and final rules clearly place the responsibility for
submitting the information updates on the permittee. Final Sec. 774.12
requires reporting of all changes in owners and controllers.
A commenter asked under what circumstances and authority regulatory
authorities could investigate reported and unreported changes. The
commenter said the ability of States to thoroughly investigate multi-
State entities is limited and that States would likely have to rely on
assistance from the AVS Office.
A regulatory authority may investigate any circumstance, including
changes of ownership or control information, at any time the regulatory
authority believes the circumstances warrant. The AVS Office has
assisted, and will continue to assist, State regulatory authorities
with investigations at a variety of levels.

Q. Section 774.17--Transfer, Assignment, or Sale of Permit Rights

We proposed to revise the provisions for the transfer, assignment,
or sale of permit rights in Sec. 774.17 to distinguish between those
instances when a new permit would be required and those instances
requiring only approval of a change to existing permit information. We
also proposed to revise the definition of successor in interest.
We are not adopting the proposed revisions to Sec. 774.17. Because
of the numerous comments we received on the proposed revisions, we
decided to further study issues and considerations regarding the
transfer, assignment, or sale of permit rights.

R. Section 778.5--Definitions

As proposed, Sec. 778.5 would have included definitions and
examples of ownership and control. Instead of creating this new
section, we are adopting revised versions of the proposed definitions
in final Sec. 701.5. The definitions in the final rule also incorporate
revised versions of the proposed examples. See the discussion of ``own,
owner, or ownership'' and ``control or controller'' in section VI.A. of
this preamble.

S. Section 778.10--Information Collection

In this final rule, the section we adopt from proposed Sec. 778.10
is found at Sec. 778.8.
We proposed to revise the information collection burden for part
778. We are redesignating previous Sec. 778.10 as new Sec. 778.8 which
contains the information collection requirements for part 778 and the
Office of Management and Budget (OMB) clearance number.
In this final rule, Sec. 778.8(a) is revised to show the new OMB
clearance number for this part is 1029-0117. The provision under
Sec. 778.8(b) is revised to adjust the estimated public reporting
burden from 48 hours to 27 hours. The revision is the result of
reductions in use and in programmatic changes. The estimate represents
the average response time.

Summary of Comments and Adjustments to Burden Estimates

We considered information from the individuals who commented on
information collection aspects of the proposed rule. In general,
commenters stated that the estimated information collection burden
related to the proposed rule was too low. Commenters generally did not
mention any specific rule change which was underestimated or any
specific number of hours that would alter the OSM estimate.
A commenter stated that the burden hours should be 600 hours,
instead of 25 hours, for part 778. We compared the commenter's estimate
with other data collected from industry sources and found them too
inconsistent to use in the estimate. While we might otherwise be
inclined to incorporate an estimate larger than the one published in
the proposed rule, we have not in this instance because the discrepancy
is so large. As such, the comment was not accepted. Instead, the
estimated burden hours in this final rule remain approximately the same
as proposed.

T. Section 778.13--Legal Identity and Identification of Interests

The regulations we adopt from proposed Sec. 778.13 are found at
Secs. 778.9, 778.11, 778.12, and 778.13. We proposed to revise previous
Sec. 778.13 to emphasize the importance of full disclosure of ownership
and control information.
We originally adopted regulations on this subject in Secs. 778.13
and 778.14 of our 1979 rules, which we substantially revised in 1989.
See 44 FR 15021 (March 13, 1979) and 54 FR 8982 (March 2, 1989). In NMA
v. DOI I, the U.S. Court of Appeals for the D.C.

[[Page 79643]]

Circuit invalidated the 1989 permit information rule, including
Secs. 778.13 and 778.14, on the narrow grounds that it was centered on
the invalidated 1988 ownership or control rule. 105 F.3d at 692, 696.
In our 1997 IFR, which we adopted in response to the NMA v. DOI I
decision, we cured the defects noted by the Court and repromulgated
Secs. 778.13 and 778.14 in a form that contained few other substantive
changes from the 1989 rule. See 62 FR 19450, 19453-54 (April 21, 1997).
The National Mining Association challenged the IFR, arguing it was
ultra vires because it required submission of permit application
information not expressly required under sections 507(b) and 510(c) of
the Act. The U.S. Court of Appeals upheld the permit information
requirements in the IFR, stating:

This court has already held, however, `that the Act's explicit
listings of information required of permit applicants [in sections
507 and 508] are not exhaustive, and do not preclude the Secretary
from requiring the states to secure additional information needed to
ensure compliance with the Act.' In re Permanent Surface Mining
Regulation Litig., 653 F.2d 514 (D.C. Cir.) (en banc), cert. denied,
454 U.S. 822, 102 S.Ct. 106, 70 L.Ed.2d 93 (1981). Because section
510 is by its terms no more exhaustive than sections 507 and 508, we
conclude the Secretary may require schedule information not
specifically listed in any of the cited provisions of the Act.

NMA v. DOI II, 177 F.3d 1, 9 (D.C. Cir. 1999).
The information submission requirements in this final rule are
similar to the requirements previously upheld by the Court of Appeals.
To the extent that the provisions we adopt today correspond to
provisions in our previous rules, we continue to rely upon the
rationales set forth in the preambles to the prior rulemakings. See 44
FR 15021-25 (March 13, 1979); 54 FR 8982-90 (March 2, 1989); 59 FR
54347-49 (October 28, 1994); 62 FR 19452-54 (April 21, 1997).
Summary of Rule Changes
The regulations we are adopting today differ from both the previous
and proposed regulations in that the final regulations reflect greater
use of plain language principles and clarify that the identity,
ownership and control, and permit history information requirements
pertinent to a permit applicant or permittee also apply to an operator.
The most significant new provisions of this final rule: (1) Require
that the natural person who will have the greatest level of effective
control over the entire proposed surface coal mining operation certify
as to his or her ability to control the proposed operation; (2) allow
applicants to identify the specific portion(s) or aspect(s) of an
operation that their owners and controllers own or control; (3) allow
an applicant having other active permits to use AVS to provide required
permit application information if the applicant certifies that all of
the relevant part of the information already in AVS is accurate,
complete, and up-to-date; and (4) allow a regulatory authority to
establish a central file for permittees with multiple permits to
eliminate duplicate information in permit files.
Final Sec. 778.9 Certifying and Updating Existing Permit Application
Information
This new section includes two provisions intended to reduce the
paperwork and information collection burden on applicants and
regulatory authorities. Originally proposed as Sec. 778.13(o), final
Sec. 778.9(a) allows permit applicants to (1) certify that existing
information in AVS is accurate and complete and (2) include the
certification in an application instead of submitting duplicate
information separately for each new application. Final Sec. 778.9(c),
which we proposed as Sec. 778.13(p), allows regulatory authorities to
establish a central file for an applicant instead of keeping duplicate
information for each application and permit.
Final Sec. 778.9(b) requires permit applicants to swear or affirm
that the information provided in an application is accurate and
complete. We are adding this provision in response to comments to
emphasize the importance of disclosure of accurate and complete
application information.
Final Sec. 778.9(d) consolidates the requirements of previous
Secs. 778.13(k) and 778.14(d) without making any substantive changes to
the previous rules. Section 778.9(d) specifies that, after an
application is approved but before a permit is issued, an applicant
must update, correct, or indicate that no change has occurred in the
information provided under final Secs. 778.9 and 778.11 through 778.14.
Final Secs. 778.11 through 778.14 contain applicant identity, operator
identity, ownership and control, permit history, property interest, and
violation information requirements.
Final Sec. 778.11 Providing Applicant, Operator, and Ownership and
Control Information
We moved those portions of previous and proposed Sec. 778.13 that
pertain to the identity of the applicant, operator, owners,
controllers, and other persons with a role in the proposed surface coal
mining operation to new Sec. 778.11. Except for the changes noted above
under the heading ``Summary of Rules Changes'' and the modifications
discussed below, final Sec. 778.11 is substantively identical to
previous Secs. 778.13(a), (b), and (c).
The proposed rule would have replaced the provisions in previous
Sec. 778.13 for voluntary submission of social security numbers and
mandatory submission of employer identification numbers with a
requirement for submission of taxpayer identification numbers.
Commenters objected to the proposed requirement as burdensome and
challenged its legality. In response, Secs. 778.11 and 778.12 of this
final rule require taxpayer identification numbers only for permit
applicants, permittees, and operators. Thus, this final rule is
consistent with 31 U.S.C. 7701(c), which requires that applicants for a
Federal permit, recipients of a Federal permit, and persons who owe
fees to a Federal agency furnish their taxpayer identification numbers.
Final Sec. 778.11(c)(5) is a new provision that allows an applicant
to identify which of its owners or controllers own or control only a
portion or aspect of the proposed surface coal mining operation. We
made this change because some of an applicant's owners and controllers
may have responsibilities only for distinct portions or aspects of an
operation. However, if an applicant elects to identify owners and
controllers that only own or control a portion or aspect of a proposed
operation, the applicant must account for ownership and control of all
portions or aspects of the proposed operation in the application. In
addition, when an owner or controller ceases to own or control a
portion or aspect of an operation, the permittee must update the permit
within 60 days of the change to identify the replacement owner or
controller. See final Sec. 774.12(c).
Final Sec. 778.11(d) is a new provision. It requires that the
natural person with the greatest level of effective control over the
entire proposed surface coal mining operation certify, under oath, that
he or she controls the proposed operation. Proposed as Sec. 778.13(m),
the certification requirement would have extended to all of an
applicant's owners and controllers. However, in response to comments
and upon further deliberation, the final rule applies the certification
requirement only to the natural person with the greatest level of
effective control over the entire proposed surface coal mining
operation.
We are not adopting the portion of proposed Sec. 778.13(m) that
would require owners and controllers to certify that they would be
under the

[[Page 79644]]

jurisdiction of the Secretary for compliance purposes. A certification
of this nature cannot and would not expand jurisdiction beyond the
limits already established by the Act and regulatory program.
Therefore, it is unnecessary.
We also are not adopting the portion of proposed Sec. 778.13(m)
that would have extended the information disclosure requirements of
final Sec. 778.11 to ``all other persons who will engage in or carry
out surface coal mining operations as an owner or controller on the
permit.'' Since final Sec. 778.11(c)(5) already requires disclosure of
information concerning persons who own or control either an applicant
or an operator, the proposed rule is unnecessary. The definitions of
``own, owner, and ownership'' and ``control or controller'' in final
Sec. 701.5 will suffice to identify those persons subject to the
application information disclosure requirements of Sec. 778.11.
We are also not adopting in part 778 the portion of proposed
Sec. 778.13(c)(1)(iii) that would have required, in part, that a
permittee submit the date of departure of an owner or controller
whenever a cessation order was issued. Proposed Sec. 778.13(c)(1)(iii)
was substantively identical to previous Sec. 778.13(c)(3). Instead, the
final rule incorporates the requirement for a permittee to provide the
date of departure for an owner or controller into new Sec. 774.12(a),
which contains information update requirements for permittees.
Final Sec. 778.12 Providing Permit History Information
We are adding new Sec. 778.12 to require the disclosure of the
mining and permit history of an applicant, operator, and certain other
persons with a role in the proposed surface coal mining operation.
Final Sec. 778.12 is substantively identical to previous
Secs. 778.13(d) through (f), with the exception of the changes
previously noted above under the heading ``Summary of Rule Changes''
and the modifications discussed below.
Proposed Sec. 778.13(e) would have required that an applicant
provide all names under which the partners or principal shareholders of
the applicant and operator operate or previously operated a surface
coal mining and reclamation operation in the United States within the
five years preceding the date of application. We are adopting a revised
version of this proposed rule as final Sec. 778.12(a). To increase
consistency with section 507(b)(4) of the Act, 30 U.S.C. 1257(b), we
are extending this requirement to the applicant and replacing the term
``surface coal mining and reclamation operation'' with ``surface coal
mining operation.'' Like the final rule, the Act applies this
requirement to the applicant, and it does not require information
concerning reclamation operations. We are extending this requirement to
the operator and the operator's partners or principal shareholders for
internal consistency with other regulations. Hence, this final rule
requires that an applicant must provide all names under which the
applicant, the operator, the applicant's partners or principal
shareholders, and the operator's partners or principal shareholders
operate or previously operated a surface coal mining operation in the
United States within the five-year period preceding the date of the
application.
Final Sec. 778.12(a) also differs from previous Sec. 778.13(d) in
that, like section 507(b)(4) of the Act, it requires only a list of
names under which these persons operate or previously operated a
surface coal mining operation. The final rule does not include the
permit identification information that the previous rule required. As
discussed below, we will require permit identification information only
for those surface coal mining operations specified in final
Sec. 778.12(c).
Proposed Sec. 778.13(g) would have required detailed permit history
information about permits for surface coal mining operations held by
the applicant or the operator during the five years preceding the date
of the application. The corresponding provisions of previous
Sec. 778.13(d) and (f) required detailed permit history information for
all surface coal mining operations either: (1) currently owned or
controlled by the applicant (previous Sec. 778.13(f)), or (2) currently
or previously owned or controlled by the applicant or the applicant's
partners or principal shareholders within the five years preceding the
date of the application (previous Sec. 778.13(d)). After evaluating the
comments received, we are adopting a middle course to ensure that we
receive sufficient information to make an informed permit eligibility
decision under section 510(c) of the Act while otherwise minimizing
information collection burdens on permit applicants. Accordingly,
Sec. 778.12(c) of the final rule requires detailed permit history
information for all surface coal mining operations that the applicant
or operator: (1) currently owns or controls, or (2) owned or controlled
during the five-year period preceding the date of application. For the
same reason, we also decided to retain the substance of previous
Sec. 778.13(f)(2), which the proposed rule would have eliminated. We
are codifying this provision as final Sec. 778.12(c)(5). Like previous
Sec. 778.13(f)(2), final Sec. 778.12(c)(5) requires that the permit
history of each operation include the permittee's and operator's
relationship to the operation, including the percentage of ownership
and location in the organizational structure.
As we proposed, we are eliminating the requirement in previous
Sec. 778.13(f)(1) for submission of the date each MSHA identification
number was issued. In our experience, this information has no practical
value in implementing SMCRA.
Final Sec. 778.13 Providing Property Interest Information
This section of the final rule requires the disclosure of mineral
and surface ownership information for the proposed permit and adjacent
areas. Final Sec. 778.13 is derived from proposed Secs. 778.13(h)
through (k) and is substantively identical to the property interest
information requirements in previous Secs. 778.13(g) through (j).
Proposed Sec. 778.13(n) Is Not Adopted
Proposed Sec. 778.13(n) would have required that an applicant
submit the information required under proposed Secs. 778.13 and 778.14
in any format we prescribe. We are not adopting this provision because
existing Sec. 777.11(a)(3) already requires an applicant to submit all
permit application information in any format that the regulatory
authority prescribes. We see no purpose in duplicating this requirement
in part 778. We also see no need for a counterpart to previous
Sec. 778.13(l), which, to facilitate data entry into AVS, required that
an applicant submit the information required under proposed
Secs. 778.13 and 778.14 in any format that OSM prescribed. Section
773.8 of this final rule adds a new requirement that the regulatory
authority enter all application data into AVS. Hence, there is no
longer a need for a rule specifying that application information be
submitted in an OSM-prescribed format. As the agency responsible for
data entry, the regulatory authority should have the flexibility to
prescribe whatever format it deems appropriate.
General Comments on Proposed Sec. 778.13
One commenter expressed support for continuing to require
disclosure of the persons who own or control an applicant and other
information in the permit application process. However, the commenter
also expressed concern that the proposed rule weakens

[[Page 79645]]

responsibility for providing accurate and complete information. We
disagree. Nothing in the proposed rule altered the requirement of
previous Sec. 773.15(c)(1), now final Sec. 773.15(a), that an
application be complete and accurate. However, to provide additional
assurance, we have added Sec. 778.9(b), which requires that applicants
swear or affirm that the information in a permit application is
accurate and complete. In addition, under part 847 of this final rule,
if a regulatory authority determines that an applicant has
intentionally omitted information from an application, that person may
be prosecuted under section 518(g) of the Act, 30 U.S.C. 1268(g), for
knowingly making a false statement or a knowing failure to provide
required information. See final Sec. 847.11(a)(3).
A commenter asked whether a contract operator who is also the
applicant is subject to information disclosure requirements. All
applicants are subject to the same information disclosure requirements
under part 778.
One commenter encouraged us to continue to require ``upstream''
information. The final rule does so, partly because section 507(b) of
the Act mandates collection of most of this information, and partly
because regulatory authorities use this information for other purposes
under the Act, including alternative enforcement and future permit
eligibility determinations should an owner or controller of a permittee
later become an applicant.
Another commenter argued that the information requirements of
proposed Secs. 778.13 and 778.14 vastly exceed the information Congress
authorized the agency to collect in sections 507 and 510(c) of the Act.
We acknowledge that our rules require more information than is
expressly required under the statutory provisions cited by the
commenter. However, under section 201(c)(2) of the Act, we have the
authority to adopt ``such rules and regulations as may be necessary to
carry out the purposes and provisions of this Act.'' We are not limited
to the specific permit application requirements of section 507 and
510(c) of the Act. See NMA v. DOI II, 177 F.3d at 9. The information
required by our final rule will assist us in determining permit
eligibility under section 510(c) of the Act, which prohibits issuance
of a permit to any person who owns or controls an operation with an
outstanding violation. There is no limitation on the scope of that
prohibition, even though section 510(c) only requires a schedule of
violation notices received during the previous 3 years. We also need
the information in our final rule to assist us in evaluating the
accuracy and completeness of other permit applications, and, when
appropriate, identifying the persons that may be subject to alternative
enforcement actions. For example, we need identifying information about
persons who own or control the applicant or operator to verify the
applicant's statement under section 507(b)(5) of the Act as to
``whether the applicant, any subsidiary, affiliate, or persons
controlled by or under common control with the applicant'' has ever
forfeited a mining bond or had a mining permit suspended or revoked
within the 5-year period preceding the date of application.
One commenter asserted that the proposed rule disregarded the
purposes of the Act's permit application information requirements. We
disagree. Section 102(d) of SMCRA states that the purposes of the Act
is to ``establish a nationwide program to protect society and the
environment from adverse effects of surface coal mining operations.''
Collecting the information needed to implement the permit block
sanction of section 510(c) and pursue alternative enforcement is fully
consistent with this purpose.
A commenter expressed concern about the liability of a person who
prepares or signs an application. Except as specifically provided in
Sec. 847.11(a)(3) of this rule or another provision of our existing
regulations or the Act, we are not ascribing any form of liability to
anyone who prepares or signs an application.
The commenter also expressed concern about the liability of persons
erroneously listed in an application as owners or controllers. Any
person listed as an owner or controller in an application may challenge
that listing under final Secs. 773.25, 773.26, and 773.27.
One commenter noted that NMA v. DOI II (177 F.3d at 5) allows us to
consider past ownership and control of operations with violations when
determining a pattern of willful violations under section 510(c) of the
Act, 30 U.S.C. 1260(c). To facilitate this determination, the commenter
suggested that the final rule require submission of information on past
ownership or control relationships.
We are not adopting the commenter's suggestion. Under final
Sec. 773.8(b) and (c), a regulatory authority must enter and update
ownership and control information and violation information provided in
permit applications into AVS. We retain this information in AVS as
application history and, once a permit is issued, as permit history.
Because regulatory authorities have been entering this information for
over a decade, the AVS data base, combined with new information
submitted in a permit application, should enable a regulatory authority
to determine past ownership or control relationships when necessary.
Another commenter suggested that, based on the retroactivity
holding in NMA v. DOI II, we should revise our information disclosure
regulations to require applicants to report ownership or control
relationships and violations with reference to whether the
relationships and violations occurred before or after November 2, 1988,
the effective date of the October 3, 1988, ``ownership and control''
rule. We see no need to make the suggested change. Final
Secs. 778.11(e) and 778.14(c) require that an applicant provide dates
associated with ownership or control relationships and violations. AVS
contains an historical record of these dates. Hence, regulatory
authorities will have the information needed to make permit eligibility
determinations using whatever cutoff date applies.
A commenter stated that because NMA v. DOI II invalidated our
previous rule's presumption of ownership or control for officers and
directors, we should only require information for presidents, not for
other officers and directors. We disagree. Under section 507(b)(1) and
(4) of the Act, 30 U.S.C. 1257(b)(1) and (4), each permit application
must include information about officers, directors and principal
shareholders. In addition, the court's invalidation of the previous
presumption does not mean that officers and directors are never owners
or controllers. Furthermore, a regulatory authority may need this
information to determine ownership or control relationships and
eligibility for alternative enforcement actions under parts 843, 846,
and 847 of our rules or the State program equivalents.
One commenter stated that the proposed rules improperly confused
the terms ``owner'' and ``controller'' with the person carrying out the
mining operation. According to the commenter, under the NMA v. DOI
decision, the obligations of these two entities should be kept
separate. We disagree. The court did not address this issue. However,
as discussed elsewhere in this preamble, we are not adopting proposed
Sec. 778.13(b)(5), which would have specifically required information
about any person ``who will engage in or carry out surface coal mining
operations as an owner or controller on the permit.'' We have also
eliminated the ``engage in or

[[Page 79646]]

carry out'' terminology from the certification requirements of final
Sec. 778.11(d), which we proposed as Sec. 778.13(m). These
modifications should eliminate any confusion. The operative principle
is whether a person meets the criteria in the ownership and control
definitions in Sec. 701.5 of this rule.
Comments on Proposed Sec. 778.13(b)
Numerous commenters objected to the requirement in proposed
Sec. 778.13(b) for disclosure of taxpayer identification numbers,
especially when that number is a social security number. One commenter
stated that the preamble to the proposed rule incorrectly characterized
31 U.S.C. 7701 as providing a basis for this requirement. Several
commenters urged us to require that social security numbers be kept
confidential, both for privacy reasons and because State regulatory
authorities would have a difficult time convincing people to divulge
their social security numbers on an application that is open to public
inspection and review. Another commenter said the Social Security
Administration does not allow social security numbers to be used for
this purpose.
We disagree with the commenters' assertions that we lack the
authority to require submission of taxpayer identification or social
security numbers. The Debt Collection Improvement Act of 1996 revised
31 U.S.C. 7701 to read--

Sec. 7701. Taxpayer Identifying Number

(a) In this section--
* * * * *
(2) ``taxpayer identifying number'' means the identifying number
required under section 6109 of the Internal Revenue Code of 1986 (26
U.S.C. 6109).
* * * * *
(c)(1) The head of each Federal agency shall require each person
doing business with that agency to furnish to that agency such
person's taxpayer identifying number.
(2) For purposes of this subsection, a person shall be
considered to be doing business with a Federal agency if the person
is--
* * * * *
(B) an applicant for, or recipient of, a Federal license,
permit, right-of-way, grant, or benefit payment administered by the
agency or insurance administered by the agency;
* * * * *
(D) assessed a fine, fee, royalty or penalty by the agency; * *
*

Persons who apply for or receive permits for which we are the
regulatory authority lie within the scope of 31 U.S.C. 7701(c)(2)(B)
because those permits are Federal permits. Furthermore, under 30 CFR
773.17(g), all SMCRA permittees have an obligation to ensure payment of
the Federal reclamation fees required under 30 CFR part 870. Therefore,
all permit applicants and permittees under both State and Federal
regulatory programs approved under SMCRA lie within the scope of 31
U.S.C. 7701(c)(2)(D). Operators of coal mining operations lie within
the scope of 31 U.S.C. 7701(c)(2)(D) because section 402 of SMCRA and
30 CFR part 870 provide that those operators have an obligation to pay
Federal reclamation fees. Hence, operators, permit applicants, and
permittees for surface coal mining operations under both State and
Federal regulatory programs under SMCRA are subject to 31 U.S.C.
7701(c)(1), which requires submission of a taxpayer identifying number.
To ensure consistency with 31 U.S.C. 7701(c), we have modified final
Secs. 778.11 and 778.12 to provide that the application need only
include taxpayer identification numbers for permit applicants,
permittees, and operators.
The Internal Revenue Code specifies that ``the identifying number
of an individual (or his estate) shall be such individual's social
security account number.'' 26 U.S.C. 6109(a). See also 26 U.S.C.
6109(d), which restates this requirement. As noted in the preamble of
the proposed rule, a taxpayer identification number means an employer
identification number for businesses and a social security number for
individuals. 63 FR 70605-06, December 21, 1998.
With respect to privacy concerns, we note that, under the previous
rules, many individuals voluntarily supplied their social security
numbers to regulatory authorities to ensure that they would not be
confused with other individuals who have the same name. In addition,
when we made on-line access to AVS available to the general public, we
modified the system to ensure that only regulatory authorities are able
to view social security numbers when accessing AVS via the Internet.
Several commenters requested clarification on how to address
``foreigners who serve as directors of U.S. companies who may not have
social security numbers.'' One commenter asked if social security
numbers for individual owners or controllers are required if the
application includes an employer identification number for the company.
As discussed above, the final rule requires taxpayer identification
numbers only for the applicant or permittee and the operator, not
individual directors, owners, or controllers.
Another commenter stated that the proposed rule confuses
operations, which are not legal entities, with the legal entities which
conduct them. Specifically, the commenter noted that the entity
conducting a mining operation would have a taxpayer identification
number, but the operation itself would not. We acknowledge that the
wording of both the previous and proposed provisions was ambiguous. The
final rule at Sec. 778.12(c)(2) eliminates this ambiguity by clearly
specifying that the application must include the taxpayer
identification numbers for the permittee and operator.
Comments on Proposed Sec. 778.13(c)
One commenter opposed requiring the same information from both
applicants and their owners and controllers. The commenter asserted
that identification of the owners and controllers of an applicant is
sufficient to determine permit eligibility should the current applicant
have an unabated violation. As previously discussed, we use the
application information concerning owners and controllers for purposes
other than determining permit eligibility under Secs. 773.12 through
773.14 of this rule and section 510(c) of the Act.
One commenter suggested that proposed Sec. 778.13(c)(1)(iii) be
revised to require that a person's date of departure be included at the
time the application is submitted, instead of only when a cessation
order is issued. We are not adopting this suggestion because the
departure would not have occurred at the time of permit application.
However, we are adopting a new provision at Sec. 774.12(c) to require
that additions, departures, or changes in the position of any person
identified in Sec. 778.11(c) be reported to the appropriate regulatory
authority within 60 days of the change. Routine updates, including
departure dates, may be reported as soon as a change occurs.
Proposed Sec. 778.13(c)(2) would have limited the information
required from publicly traded corporations. One commenter supported the
proposed provision. Other commenters opposed any reduction in the
information required from publicly held corporations because this
information would allow for a more thorough review. After further
analysis, we are not adopting the proposed rule because we could not
find sufficient support in the Act for differential treatment of
publicly traded corporations. Under the final rule, corporate
applicants are subject to the same information disclosure requirements
regardless of

[[Page 79647]]

whether the corporation is privately held or publicly traded.
One commenter noted that the list of persons for whom information
must be submitted in a permit application differs from the list of
persons in the proposed ownership and control definitions. We did not
intend these lists to be identical. Section 507(b)(4) of the Act, 30
U.S.C. 1257(b)(4), requires permit application information concerning
certain persons even if they are not owners or controllers under our
final definitions of ``own, owner, or ownership'' and ``control or
controller.''
Another commenter asked why proposed Sec. 778.13(c)(3)(v) required
identification of entities that own between 10 and 50 percent of the
stock of a corporation since these stockholders are not necessarily
owners or controllers. Like the previous and proposed rules, final
Sec. 778.11(c)(4) includes this requirement because section 507(b)(4)
of SMCRA, 30 U.S.C. 1257(b)(4), mandates the collection of this
information.
Numerous commenters said that we should revise proposed
Sec. 778.13(c)(3)(v) to limit its scope to persons who directly own the
applicant itself, rather than including persons farther upstream, such
as a person who owns the owner of the applicant. We are not adopting
this suggestion. The ownership information we require under
Sec. 778.11(c)(4), the final rule's counterpart to the proposed
provision, may be useful, for example, in assessing permit application
accuracy and completeness, in identifying persons subject to the
permanent permit block sanction under section 510(c) of the Act, or
other enforcement actions, and future permit eligibility
determinations.
Several commenters suggested that the final rule should include a
dilution formula to determine the percentage of ownership for
``upstream'' owners and minimize the information collection burden by
restricting reporting requirements to persons who actually own 10
percent or more of the applicant after application of the formula. We
asked for input on the dilution formula concept during the public
outreach preceding the development of our proposed rule. Since we
received little support for this concept, we did not propose a formula.
The commenters presented no new arguments in favor of this concept.
Therefore, we are not adopting their suggestion. Final
Sec. 778.11(c)(4) requires information concerning all persons who own
10 to 50 percent of an applicant. If a person owns an entity, that
person also owns all entities owned by the first entity.
One commenter opposed ``any effort to restrict responsibility for
owners of operations to [those who have] more than 10 percent
ownership.'' Ten percent ownership is the information reporting
threshold established by section 507(b)(4) of the Act. However, if a
person owning less than 10 percent of an entity is nonetheless a
controller of that entity under the definition of ``control or
controller'' in final Sec. 701.5, final Sec. 778.11 requires that an
applicant report information pertaining to that person as well.
Comments on Proposed Sec. 778.13(d)
Proposed Sec. 778.13(d) would have provided that an applicant need
not report the identity of any corporate owner not licensed to do
business in any State or territory of the United States. One commenter
expressed support for the proposed provision on the basis that it would
eliminate unnecessary information in AVS. The commenter also asked if
these entities would be removed from AVS once a final rule is adopted,
and if not, would they be considered in permit eligibility
determinations. After further analysis, we are not adopting the
proposed rule because the Act provides little if any support for
excluding this information. In addition, adopting the proposed
exclusion would compromise the accuracy and completeness of information
in AVS.
Comments on Proposed Sec. 778.13(g)
One commenter expressed support for eliminating the requirement to
provide the date of issuance for the MSHA identification number. We are
eliminating this requirement as proposed.
Comments on Proposed Sec. 778.13(h) and (i)
Two commenters requested that the timeframes in proposed
Sec. 778.13(h) and (i) be extended from 30 to 90 days because of the
extensive research needed to document the name and address of each
legal or equitable owner of record within and adjacent to the proposed
permit area. Since neither the previous regulations nor the proposed
rules contained any timeframes for preparation of a permit application,
we are not adopting this suggestion.
Comments on Proposed Sec. 778.13(m)
Proposed Sec. 778.13(m) would have required that, before permit
approval, the persons who will engage in or carry out surface coal
mining operations as owners or controllers of the proposed operation
must certify that they have the ability to control the operation and
that they are under the jurisdiction of the Secretary for the purposes
of compliance with the terms and conditions of the permit and the
requirements of the regulatory program.
Numerous commenters opposed this proposal, especially its
application to all owners and controllers. In response to these
comments, Sec. 778.11(d) of this final rule requires only that the
natural person with the greatest level of effective control over the
entire proposed surface coal mining operation submit a certification in
the application, under oath, that he or she controls the proposed
operation. Identifying this person is of greater value than requiring
that all owners and controllers certify as to their ability to control
the proposed surface coal mining operation. Every surface coal mining
operation should have one individual who is responsible for everything
that occurs with respect to that operation. We anticipate that this
individual normally will be the president of the applicant or a person
who holds an equivalent office. However, depending on the
circumstances, the individual may be someone else.
Many commenters also opposed proposed Sec. 778.13(m) because it
appeared to ascribe personal liability for compliance to the person
providing the certification. One commenter expressed concern that the
certification would serve as a personal guarantee of the permittee's
obligations. The commenter questioned the legal basis for demanding
such a guarantee as a prerequisite for permit issuance. Another
commenter argued that the certification provision improperly assigned
the responsibilities of the applicant or permittee to the owner or
controller.
We are not adopting that part of proposed Sec. 778.13(m) that would
have required owners and controllers to certify that they were subject
to the jurisdiction of the Secretary of the Interior. This portion of
the proposed rule was related to proposed Sec. 773.17(j), which would
have assigned joint and several liability for compliance to all owners
and controllers and made them subject to the Secretary's jurisdiction.
However, as discussed elsewhere in this preamble, we decided not to
adopt that provision. Therefore, the final rule does not ascribe any
personal liability to the person who provides the certification. That
person's liability is limited to whatever liability the person already
has under other provisions of law or regulation, such as the individual
civil penalty provisions of 30 CFR part 846 and corporate and common
law governing personal liability for the

[[Page 79648]]

applicant's actions or inaction. We acknowledge that certification
cannot expand the Secretary's jurisdiction beyond the limits
established by the Act.
Several commenters argued that the certification should be required
at the time that a violation occurs, rather than at the time of
application for a permit. We disagree. A regulatory authority needs
this information at the time of application so that it is readily
available when a violation occurs. Applicants are generally more
willing to identify owners and controllers than are permittees in
violation.
One commenter found the certification provision confusing because,
according to the commenter, proposed Secs. 773.17(i), 773.22, and
773.25 use the terms ``owner'' and ``controller'' in an inconsistent
manner and establish three different standards of ownership and
control, in addition to the definitions of those terms proposed at
Sec. 778.5. We disagree with the commenter's characterization of the
proposed rule (and, by extension, this final rule). In Sec. 701.5 of
this final rule, we define ``own, owner, or ownership'' and ``control
or controller.'' These definitions establish the standards for
ownership and control that apply throughout relevant portions of the
final rule, even as similar definitions of similar terms applied
throughout relevant portions of the proposed rule. We find no
inconsistencies in the use of these terms in our rules nor do our rules
differ in terms of the standards for ownership and control.
Commenters asserted that the final rule must include a provision
for decertification to ensure that a certified controller who leaves an
operation would not remain subject to the permit block sanction for
violations associated with an operation over which he or she no longer
has control. We see no need to add the requested provision. Under final
Sec. 774.12(c), a permittee must update the permit within 60 days of
the date that the person certified under final Sec. 778.11(d) leaves or
changes positions. And under final Sec. 774.11(a), the regulatory
authority must enter the updated information into AVS within 30 days of
the date that the permittee submits it. These provisions should
adequately address the situation about which the commenter expressed
concern. Further, any owner or controller, including a certifying
controller, may use the challenge procedures at final Secs. 773.25
through 773.27 to challenge any ownership or control listing or finding
which they believe to be in error.
Several commenters expressed concern that certification would lead
to penalties for ``honest mistakes, innocent omissions, and possibly
even deliberate actions that have absolutely no impact on the
environment.'' This comment overlooks the fact that, under the permit
eligibility provisions of section 510(c) of the Act, the operative
question is whether those mistakes, omissions, or deliberate actions
resulted in a violation that has not been abated or corrected or is not
in the process of being abated or corrected. The reasons for those
violations do not matter in this context.
One commenter stated that there is no need for certification if all
officers are deemed controllers. Neither the proposed nor the final
rules classify all officers as deemed controllers. Instead, they list
officers as an example of persons who may be controllers depending upon
the extent to which they direct or influence the operation. See the
definition of ``control or controller'' in Sec. 701.5 of this final
rule.
A commenter stated that the certification requirement causes
uncertainty ``when linking the applicant to the outstanding violations
of its controllers.'' We disagree. This rulemaking is consistent with
the NMA v. DOI I decision in that the unabated or uncorrected
violations of the owners and controllers of an applicant in no way
obstruct the applicant's ability to obtain a permit. The certification
requirement for the natural person with the greatest level of effective
control over the entire proposed surface coal mining operation is an
application information requirement. It is independent of the
determination of permit eligibility for an applicant.
Comments on Proposed Sec. 778.13(o)
Several commenters supported adoption of proposed Sec. 778.13(o),
which provided that a permit applicant may certify that information
already in AVS is accurate and complete, either in whole or in part,
instead of resubmitting the information for each new application. The
commenters said the provision would reduce the burden on both the
applicant and the regulatory authority. For this reason, we are
adopting the proposed provision as final Sec. 778.9(a) in this rule.
One commenter objected to proposed Sec. 778.13(o) on the basis that
it shifted the responsibility for submitting accurate and complete
information from the applicant to the regulatory authority. We
disagree. Both the proposed and final rules clearly provide that the
applicant must certify that the information in AVS is accurate and
complete.
The same commenter also argued that paper records are needed to
facilitate public review. Again, we disagree. The public has access to
AVS, so the lack of paper records should not foreclose the opportunity
for the public to review electronic records or to obtain printouts of
those records.
Another commenter suggested that, in the case of a corporate
applicant, one official should be able to certify that AVS information
is accurate and complete. The proposed and final rules do not
differentiate between corporate and other applicants. In both cases,
the rules require that an applicant certify that the information in AVS
is accurate and complete. If corporate bylaws allow one official to
provide this certification for the corporation, then only that
official's certification is required with respect to AVS information.
Comments on Proposed Sec. 778.13(p)
Numerous commenters supported adoption of proposed Sec. 778.13(p),
which provided that regulatory authorities may establish a central file
to house identity information instead of keeping duplicate information
in each application or permit file. We are adopting the proposed
provision as final Sec. 778.9 in this rule.
One commenter suggested that the applicant should be responsible
for creating a central file and submitting it to the regulatory
authority for review and approval. The commenter said that after this
approval an applicant would no longer be required to submit the same
information with each application. In keeping with the principles of
State primacy, both the proposed and final rules allow the regulatory
authority to decide whether and how to establish a central file. We do
not see any merit in restricting regulatory authority flexibility by
mandating a particular method in this final rule. However, creation of
a central file does not relieve an applicant of the responsibility, as
a part of each application, to either certify that the information in
AVS is accurate and complete or update that information as needed, as
required by Sec. 778.9(a) of this final rule.
Another commenter expressed concern that State regulatory
authorities are not as diligent as the AVS Office when it comes to
maintaining the accuracy of the records in their systems. The commenter
stated that industry must not be held responsible for information in
State files that is not as current as the information in AVS. This
comment lies beyond the scope of this rulemaking. In taking actions
under this final rule, we will rely upon the most

[[Page 79649]]

current and accurate information available.

U. Section 778.14--Violation Information

The regulations we adopt from proposed Sec. 778.14 are found at
final Sec. 778.14.
At the beginning of section VI.T. of this preamble, we provide a
summary of the history of--and, in part, the rationale for--the
provisions described in Secs. 778.9, 778.11, 778.12, and 778.13 of this
final rule. That discussion also applies to the provisions we are
adopting in final Sec. 778.14.
The permit application information requirements at proposed
Sec. 778.14 appear in modified form in final Sec. 778.14, with the
exception of proposed Sec. 778.14(d), which we are adopting as final
Sec. 778.9(d). In general, the final rule differs from both the
previous and proposed rules in that this final rule reflects greater
use of plain language principles and clarifies that the violation and
other information requirements of Sec. 778.14 pertinent to a permit
applicant also apply to the operator of a proposed surface coal mining
operation.
Changes From Previous Sec. 778.14
In addition to the general changes described above, final
Sec. 778.14 differs substantively from previous Sec. 778.14 in the
following respects.
In final Sec. 778.14(a)(2), we are limiting the reporting
of past bond forfeitures to those that occurred in the five-year period
preceding the date of submission of the application. Section 507(b)(5)
of the Act, 30 U.S.C. 1257(b)(5), requires this information only for
that period and we see no compelling reason to require data from prior
years as part of this rule.
In final Sec. 778.14(b)(1), we are eliminating the
requirement at previous Sec. 778.14(b)(1) to submit dates of permit
issuance. Providing the permit number and the name of the regulatory
authority that issued the permit is sufficient to identify permits that
have been suspended or revoked or for which a bond has been forfeited.
In final Sec. 778.14(c)(1), as proposed, we are
eliminating the requirement for submission of the date an MSHA
identification number was issued. We find this information to be of no
practical value for SMCRA implementation purposes.
In final Sec. 778.14(c)(2), we are adding a requirement
for submission of the identification number for each violation notice.
The previous rule implied this requirement, but, because of the
importance of the violation notice identification number for tracking
purposes, we decided to include an express requirement in the final
rule.
In final Sec. 778.14(c)(8), we are no longer requiring
that applicants submit information about the actions being taken to
abate all violations listed under paragraph (c). Instead, we are
limiting this requirement to violations not covered by the
certification provision of paragraph (c)(7). That paragraph, like
previous paragraph (c), allows an applicant to certify that, for
violations included in notices of violation issued under Sec. 843.12 or
a State program equivalent, the violation is being abated to the
satisfaction of the agency with jurisdiction over the violation,
provided that the abatement period has not expired. There is no reason
to require a description of corrective actions for violations covered
by the certification since, in the absence of information to the
contrary, the certification alone satisfies the eligibility
requirements for a provisionally issued permit, as specified in
Sec. 773.14(b) of this final rule.
These changes are necessary or appropriate to improve consistency
with the Act or other regulations or to respond to commenters' concerns
about both the adequacy and extent of the information required under
this section.
With the exception of the items discussed above and in this
paragraph, final Sec. 778.14 is identical, in substance, to previous
Sec. 778.14. New Sec. 778.9(d) consolidates the procedurally identical
requirements of previous Sec. 778.13(k) and Sec. 778.14(d) (proposed as
Secs. 778.13(l) and 778.14(d), respectively) without making any
substantive changes to those provisions. As we also indicate above in
section VI.T. of this preamble, final Sec. 778.9(d) specifies that,
after an application is approved but before a permit is issued, an
applicant must update, correct, or certify that no change has occurred
in the information previously submitted under Secs. 778.9 and 778.11
through 778.14.
The proposed rule would have eliminated the requirement that an
applicant certify that violations are in the process of being abated.
We are not adopting the proposed change. Final Sec. 778.14(c)(8)
retains the certification requirement because of its utility in
determining whether an applicant, may be eligible for a provisionally
issued permit under final Sec. 773.14(b).
Comments on Proposed Sec. 778.14
Commenters asserted that we have authority to collect only the
information specified in sections 507(b)(5) and 510(c) of the Act, 30
U.S.C. 1257(b)(5) and 30 U.S.C. 1260(c). Specifically, commenters
stated that we must limit the scope of Sec. 778.14(c) to include only
violations at operations owned or controlled by the permit applicant
and then only if the violation notices were received during the three-
year period preceding the date of application, since that is the only
information that section 510(c) requires. We disagree. As discussed at
length in the preamble to the 1989 version of the rule, we have ample
authority under other provisions of the Act to adopt these regulations.
See 54 FR 8986-87, March 2, 1989. Section 201(c)(2) authorizes the
Secretary to ``promulgate such rules and regulations as may be
necessary to carry out the purposes and provisions of this Act.''
Section 517(b)(1)(E) requires that a permittee ``provide such other
information relative to surface coal mining and reclamation operations
as the regulatory authority deems reasonable and necessary.'' In In re:
Permanent Surface Mining Regulation Litigation, 653 F.2d 514, 527 (D.C.
Cir. 1981), the U.S. Court of Appeals held that the Act's explicit
listings of permit information were not exhaustive and did not preclude
the Secretary from requiring additional information needed to ensure
compliance with the Act. The court held that both sections 201(c)(2)
and 501(b) of the Act provide adequate authority for the Secretary to
require submission of additional information. The court referenced and
reaffirmed that holding in NMA v. DOI II, 177 F.3d at 9. Because the
section 510(c) permit block sanction applies on the basis of all
outstanding violations, not just violations incurred during the 3-year
period preceding the date of application, we need the additional
information we require in Sec. 778.14 to assist in making permit
eligibility determinations. We also need this information to evaluate
application accuracy and completeness.
A commenter said that proposed Sec. 778.14(c) violates the holding
in NMA v. DOI II by requiring submission of violation information for
operations the applicant no longer owns or controls. In this final
rule, we are not adopting that part of proposed Sec. 778.14(c) that
would have required information concerning outstanding violation
notices received for any surface coal mining operation that the
applicant owned or controlled. In this final rule, the requirement
applies only to unabated or uncorrected violation notices received in
connection with surface coal mining and reclamation operations that the
applicant or operator owns or controls at the time an application is
submitted. However, section 510(c) of SMCRA expressly requires
applicants to list all

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violation notices received during the three-year period preceding the
date of an application. This requirement, which we are adopting as part
of final Sec. 778.14(c), must be met regardless of whether the
applicant still owns or controls the operations that incurred those
violations.
Several commenters argued that the information requirements in
Secs. 778.14(a) and (b) concerning permit suspensions and revocations
and bond forfeitures from persons under common control with the
applicant are inconsistent with NMA v. DOI I. The commenters are
mistaken. Nothing in the cited court decision prohibits collection of
this information. Section 507(b)(5) of SMCRA, 30 U.S.C. 1257(b)(5),
expressly requires submission of ``a brief explanation of the facts
involved'' for permit suspensions and revocations and bond forfeitures
experienced by ``the applicant, any subsidiary, affiliate, or persons
controlled by or under common control with the applicant.'' Our
regulations appropriately flesh out this statutory requirement by
requiring only the information relevant to identifying the
circumstances of a permit suspension, revocation, or bond forfeiture
and their bearing on permit eligibility.
Several commenters claimed that the proposed rule was flawed
because it failed to address the requirement in section 510(c) of SMCRA
to disclose violations of other environmental protection laws relating
to air or water quality. Commenters also stated that noncompliance with
this requirement is widespread, that inaccurate and incomplete
disclosure of this information by applicants is the rule rather than
the exception, that we have failed to enforce this provision for the
past 22 years, and that we have failed to execute interagency
agreements concerning the loading, listing, and cross-referencing of
violations of State and Federal air and water laws by surface coal
mining operations. The commenters said disclosure of air and water
quality violations should b