[Federal Register Volume 59, Number 208 (Friday, October 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26554]


[Federal Register: October 28, 1994]


      
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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, 773, 778, 840, and 843



Applicant/Violator Computer System (AVS); Standards and Procedures for 
Ownership and Control Determinations; Final Rule



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Office of Hearings and Appeals



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43 CFR Part 4



Hearings and Appeals Procedures; Special Rules Applicable to Surface 
Coal Mining; Final Rule
DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Parts 701, 773, 778, 840, and 843

RIN 1029-AB34


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

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

ACTION: Final rule.

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SUMMARY: The Office of Surface Mining Reclamation and Enforcement (OSM) 
establishes new regulations to require regulatory authorities to use 
OSM's Applicant/Violator Computer System (AVS) and other information 
sources to identify ownership or control links between permit 
applicants and violators.
    The regulations establish the procedures, standards, and type of 
proof required to challenge ownership or control links and to disprove 
violations.
    OSM also amends a number of regulations affecting blocking of 
permits, abatement of notices of violation, improvidently issued 
permits, and permit application information.
    The regulations reduce the possibility of violators receiving and 
retaining permits in violation of the permit approval provisions of 
SMCRA. Finally, the rules establish enhanced due process procedures for 
the regulated community.

EFFECTIVE DATE: November 28, 1994.

ADDRESSES: Office of Surface Mining Reclamation and Enforcement, U.S. 
Department of the Interior, 1951 Constitution Avenue, NW., Washington, 
DC 20240.

FOR FURTHER INFORMATION CONTACT: Russell Frum, Acting Chief, Applicant/
Violator System Office, Office of Surface Mining Reclamation and 
Enforcement, U.S. Department of the Interior, 1849 C Street NW., 
Washington, DC 20240. Telephone: 202-208-4655.

SUPPLEMENTARY INFORMATION:

I. Background.
II. Rules Adopted and Responses to Public Comments.
III. Procedural Matters.

I. Background

    Section 510(c) of the Surface Mining Control and Reclamation Act of 
1977 (SMCRA or the Act) and 30 CFR part 773 establish certain 
requirements for permits and permit processing. These requirements 
include the identification of ownership or control links between permit 
applicants and individuals or entities who are responsible for unabated 
violations of certain Federal or State laws and rules. See 30 CFR 
773.5; 30 CFR 773.15(b). The purpose of such inquiry is to determine 
whether a permit applicant is linked to unabated violations of the Act 
and related air and water quality requirements. See 30 CFR 773.15(b). 
In the event that a permit applicant is so linked, the regulatory 
authority may not issue a permit to the applicant unless the applicant 
submits proof that the violation has been or is in the process of being 
corrected to the satisfaction of the agency that has jurisdiction over 
the violation. In the alternative, the applicant may establish that the 
violation is the subject of a good faith, direct, administrative or 
judicial appeal which contests the validity of the violation. Id. In 
the event that a permit applicant is so linked and proof of the 
violation's correction or good faith appeal is not submitted, issuance 
of a permit to the applicant may constitute improvident issuance and 
may subject the permittee to certain remedial measures including 
suspension or rescission of the permit. See 30 CFR 773.20 and 30 CFR 
773.21.
    Under a court order in the case of Save Our Cumberland Mountains, 
Inc. et al. v. Clark, No. 81-2134 (D.D.C. January 31, 1985) (Parker, 
J.), the Secretary of the Interior was required to improve the 
enforcement and implementation of Section 510(c) of SMCRA, and to 
establish a computerized Applicant/Violator System (``AVS'') to match 
permit applicants and their owners and controllers with current 
violators of SMCRA. OSM has developed such a computer system to enable 
OSM and State regulatory authorities to comply effectively with the 
responsibilities prescribed by Section 510(c) of SMCRA and 30 CFR part 
773.
    On January 24, 1990, OSM and DOI entered into a Settlement 
Agreement attempting to resolve litigation with Save Our Cumberland 
Mountains (``SOCM'') and other plaintiffs. The Settlement Agreement was 
approved by the U.S. District Court on September 5, 1990, and became 
effective, by its own terms, on that date. See Memorandum of the Court, 
Save Our Cumberland Mountains, Inc., et al., v. Lujan, No. 81-2134 
(D.D.C. September 5, 1990). That Settlement Agreement contained 
provisions whereby OSM agreed to propose rules to implement Section 
510(c) of SMCRA and the AVS. Accordingly, on September 6, 1991, OSM 
proposed rules whose purpose was:

to require that, prior to issuing permits to applicants, regulatory 
authorities consider complete ownership and control information in 
conducting the analysis mandated by section 510(c) of SMCRA and 30 
CFR 773.15(b). The proposed rules would mandate the use of AVS as a 
critical component of the ownership and control information 
consideration process.

See Proposed Rule, Use of the Applicant/Violator Computer System in 
Surface Coal Mining and Reclamation Permit Approval, 56 FR 45780, 45781 
(September 6, 1991). While the proposal of the rules fulfilled certain 
provisions of OSM's Settlement Agreement with SOCM, OSM indicated that:

it must be emphasized that OSM independently believes that the 
proposal and public consideration of such rules are important to 
assist OSM in implementing its duties under Section 510(c) of SMCRA 
and duties imposed by regulations such as 30 CFR 773.15. The 
proposed rules should be viewed as proposals that OSM would have 
made regardless of any litigation or settlement.

Id. Subsequently, on March 16, 1992, the U.S. Court of Appeals (D.C. 
Cir.) vacated the District Court's approval of the Settlement Agreement 
with SOCM. Save Our Cumberland Mountains, Inc., et al., v. Lujan, No. 
90-5374, Slip. Op. (U.S. Court of Appeals, D.C. Cir., May 22, 1992). In 
its decision, the Court noted that ``nothing'' in the Court's opinion 
precluded OSM's maintenance and improvement of the AVS as agency 
policy. Id., at page 22.
    As OSM indicated at the time of its proposal of September 1991, 
these rules are important and appropriate--independent of any 
litigation or settlement. OSM continues to be committed to the 
maintenance and improvement of the AVS as a matter of agency policy and 
believes that the publication of final rules is now necessary to the 
effective implementation of section 510(c) of the Act and the 
implementation of the AVS. OSM's commitment to AVS is in accord with 
the position recently expressed by the Senate Appropriations Committee:

    Regarding the AVS, the Committee joins the House in commending 
OSM for improvements made to the system. The Committee has 
consistently supported development and implementation of the AVS 
because the AVS is essential to effective enforcement of the Surface 
Mining Control and Reclamation Act of 1977 [SMCRA].

Report of the Senate Appropriations Committee, Senate Report No. 103-
114, at page 47 (July 28, 1993). Accordingly, OSM has determined to go 
forward with the final rules published today without regard to the 
course of litigation between OSM and SOCM or any other person. OSM has 
reviewed the proposed rules in light of the comments that have been 
made with a view towards serving the agency's commitment to protecting 
the environment, to implementing SMCRA, and ultimately, to serving the 
public interest.
    These final rules incorporate the AVS into the Federal regulations 
and mandate the use of the system by State and Federal surface mining 
regulatory authorities. At the same time that these rules strengthen 
the enforcement of Section 510(c), they also establish a detailed set 
of procedural pathways to assure the protection of due process for the 
regulated community.

Public Participation

    As indicated above, OSM published proposed rules on September 6, 
1991. The proposed regulations were available for public comment until 
November 20, 1991. Comments were received from members of the regulated 
community, representatives of environmental advocacy groups, 
representatives of State regulatory authorities, and various citizens. 
While a total of 20 commenters submitted written comments, most 
comments can be grouped into three major categories which are captioned 
below. After the discussion of these three major issues, this preamble 
will then provide a section-by-section discussion of the final rules.

II. Rules Adopted and Responses to Public Comments

A. Summary of Rules Adopted

    These final rules include the following provisions:
Part 701--Permanent Regulatory Program
    Section 701.5 is amended to delete the definition of ``Violation 
notice.''
Part 773--Requirements for Permits and Permit Processing
    The Table of Contents is amended to include new section numbers 
773.22, verification of ownership or control application information; 
773.23, review of ownership or control and violation information; 
773.24, procedures for challenging ownership or control links shown in 
AVS; and 773.25, standards for challenging ownership or control links 
and the status of violations.
    Section 773.5 is amended to include definitions of ``Applicant/
Violator System'' or ``AVS.'' The terms are defined to mean the 
computer system maintained by OSM to identify ownership or control 
links involving permit applicants, permittees, and persons cited in 
violation notices. The regulation is further amended to include 
definitions of ``Federal violation notice,'' ``Ownership or control 
link,'' ``State violation notice,'' and ``Violation notice.''
    A ``Federal violation notice'' is defined to include a violation 
notice issued by OSM or by another agency or instrumentality of the 
United States.
    An ``ownership or control link'' is defined as any relationship 
included in the definition of ``owned or controlled'' or ``owns or 
controls'' in 30 CFR 773.5 or in the violations review provisions of 30 
CFR 773.15(b). It includes any relationship presumed to constitute 
ownership or control under 30 CFR 773.5(b) unless such presumption has 
been successfully rebutted under sections 773.24 and 773.25 of this 
rule or under the provisions of 30 CFR part 775 and Sec. 773.25 of this 
rule. It also includes an identity between persons, e.g., an applicant 
and a violator.
    A ``State violation notice'' is defined as a violation notice 
issued by a State regulatory authority or by another agency or 
instrumentality of State government.
    ``Violation notice'' is defined as any written notification from 
any governmental entity advising of violations of the Act or any other 
laws which would form the basis for a regulatory authority to deny 
issuance of a permit in accordance with the criteria contained in 
Sec. 773.15(b) of the regulations. The type of written notification is 
broadly defined to include a letter, memorandum, legal or 
administrative pleading, or other written communication. Consistent 
with the provisions of Sec. 773.15(b), the term includes notification 
of a violation of the Act, any Federal rule or regulation promulgated 
pursuant thereto, a State program, or any Federal or State law, rule, 
or regulation pertaining to air or water environmental protection in 
connection with a surface coal mining operation. It includes, but is 
not limited to, a notice of violation; an imminent harm cessation 
order; a failure-to-abate cessation order; a final order, bill, or 
demand letter pertaining to a delinquent civil penalty; a bill or 
demand letter pertaining to delinquent abandoned mine reclamation fees; 
and a notice of bond forfeiture, where one or more violations upon 
which the forfeiture was based have not been corrected.
    Section 773.10 is revised to include the new sections of the AVS-
related rules that result in information collection requirements. The 
revision provides an estimate of the average public reporting burden of 
four and one-half hours per response for the collection of information 
under part 773 as such part is revised by these final rules. The 
section also lists the addresses for OSM and OMB where comments on the 
information collection requirements may be sent.
    Paragraph 773.15(b)(1) is amended to require the regulatory 
authority to review all reasonably available information concerning 
violation notices and ownership or control links involving the 
applicant. Such information would include that obtained pursuant to 
Sec. 773.22 (verification of ownership or control application 
information); Sec. 773.23 (review of ownership or control and violation 
information); Sec. 778.13 (identification of interests); and 
Sec. 778.14 (violation information).
    The net effect of referencing such provisions in Sec. 773.15(b)(1) 
is to assure that the regulatory authority makes a decision with 
respect to permit issuance or denial based upon complete information 
relating to ownership, control, and violations. Such complete 
information includes the mandated use of AVS.
    Furthermore, in accordance with Sec. 773.23, the regulatory 
authority will follow the procedures and standards set forth in 
Secs. 773.24 and 773.25 in deciding whether to issue the permit under 
Sec. 773.15(b).
    OSM has also decided to amend 30 CFR 773.15(b)(1) to provide that, 
in the absence of a failure-to-abate cessation order (FTACO), a 
regulatory authority may presume that a notice of violation (NOV) is 
being corrected to the satisfaction of the agency with jurisdiction 
over the violation where the abatement period for such notice of 
violation has not yet expired and where the permit applicant has 
provided certification in his or her permit application that such 
violation is in the process of being abated to the satisfaction of the 
agency with jurisdiction over the violation. In addition, OSM has also 
amended 30 CFR 773.15(b)(2) to provide that any permits issued incident 
to such presumption and certification will be conditionally issued 
based upon successful completion of the necessary abatement.
    Section 773.20 is amended by the insertion of a new paragraph 
(b)(2), which makes the provisions of proposed Sec. 773.25, standards 
for challenging ownership or control links and the status of 
violations, applicable when a regulatory authority makes determinations 
with respect to improvidently issued permits. In this context, 
Sec. 773.25 is applicable when a regulatory authority determines 
whether a violation, penalty, or fee existed at the time that it was 
cited, remains unabated or delinquent, has been corrected, is in the 
process of being corrected, or is the subject of a good faith appeal, 
and whether any ownership or control link between the permittee and the 
person responsible for the violation, penalty, or fee existed, still 
exists, or has been severed.
    The insertion of the language referring to Sec. 773.25 has the 
effect of assuring that the standards, responsibilities, and procedures 
created by proposed Sec. 773.25 are consistently applied to permit 
issuance and to determinations regarding improvident permit issuance. 
Such an approach enhances the fairness of the permitting process and 
the prospect for the uniform enforcement of nationwide minimum 
standards. In one respect, however, the improvident permit issuance 
process will differ from the permit issuance process. In the 
improvident permit issuance process, prior to permit suspension or 
rescission, the permittee will be able to challenge the existence of 
the violation at the time it was cited. In the permit issuance process, 
prior to permit denial, the applicant will not be able to challenge the 
existence of the violation at the time it was cited.
    OSM has also renumbered certain provisions of the regulation at 30 
CFR 773.20(c). Among such provisions, renumbered paragraph (c)(1)(iv), 
which authorizes the regulatory authority to use rescission as one of 
the remedial measures for improvident permit issuance, deletes a 
specific reference contained in the former 30 CFR 773.20(c)(4) to the 
rescission procedures of 30 CFR 773.21.
    The reason for this deletion is that OSM today establishes a prior 
notice and a common appeal procedure for both permit suspensions and 
permit rescissions with respect to improvidently issued permits. The 
former regulation governing permit suspensions at 30 CFR 773.20(c)(3) 
did not impose any specific requirements for prior notice, opportunity 
to be heard, or right of appeal for the permittee whose permit is to be 
suspended. See 54 FR 18450 (1989). In contrast to this, regulations 
governing permit rescissions at 30 CFR 773.21 contained specific 
requirements for prior notice to a permittee and an explicit right of 
appeal. OSM has now provided for greater consistency in its procedures 
governing suspension and rescission of permits.
    Accordingly, OSM amends 30 CFR 773.20 to add a new paragraph (c)(2) 
which requires that a regulatory authority which decides to suspend a 
permit must provide at least 30 days' prior written notice to the 
permittee. In the event that the regulatory authority decides to 
rescind a permit, it must provide notice in accordance with the 
provisions of 30 CFR 773.21. The amendment further provides that a 
permittee be given the opportunity to request administrative review of 
the notice under Office of Hearings and Appeals, (OHA) rule 43 CFR 
4.1370 et seq., where OSM is the regulatory authority, or under the 
State program equivalent, where the State is the regulatory authority.
    The regulation further allows for enhanced due process protection 
and fairness by providing that temporary relief from the regulatory 
authority's decision is available in accordance with the provisions of 
OHA rule 43 CFR 4.1376 or the State program equivalent. In the absence 
of such temporary relief, the regulatory authority's decision remains 
in effect during the pendency of appeal.
    OSM has retained the language in paragraph 773.20 which addresses 
the situation which occurs when a permit is issued in reliance upon the 
presumption that an NOV is being abated in the absence of a cessation 
order and a cessation order is, in fact, issued with respect to the 
violation. In such an event, a regulatory authority is required to find 
that the permit has been improvidently issued.
    OSM amends paragraph (a) of 30 CFR 773.21 to make the provisions of 
Sec. 773.25, standards for challenging ownership or control links and 
the status of violations, applicable when a regulatory authority 
invokes the automatic suspension and rescission procedures of 30 CFR 
773.21. The rationale for such amendment is the same as that discussed 
above with respect to similar language contained in Sec. 773.20.
    Further, OSM deletes former paragraph (c) of 30 CFR 773.21 which 
provides for appeals of rescission notices. As discussed above, 
rescission appeal procedures are incorporated in 30 CFR 773.20.
    Section 773.22 is a new section and mandates an inquiry whose focus 
is to assure that the regulatory authority develops complete and 
accurate information as to the identification of the applicant and all 
owners or controllers of the applicant prior to making a determination 
on a permit application and enters such information promptly into the 
AVS. Accordingly, this section focuses on verification of ownership or 
control application information. Such accurate and complete information 
enables the regulatory authority to make an informed decision as to 
whether the applicant is linked to a surface coal mining and 
reclamation operation in violation of the Act or other any other 
environmental law within the terms of 30 CFR 773.15(b)(1).
    Paragraph (a) of Sec. 773.22 imposes a duty upon a regulatory 
authority to review the information provided in the permit application, 
pursuant to 30 CFR 778.13(c) and 778.13(d), to determine whether the 
information provided, including the identification of the operator and 
all owners and controllers of the operator, is complete and accurate. 
In making such determination, the regulatory authority is required to 
compare information provided in the application with information 
contained in manual and automated data sources. Manual sources for 
review include the regulatory authority's own enforcement and 
inspection records and State corporation commission or tax records, to 
the extent they contain information concerning ownership or control 
links. Automated data sources include the regulatory authority's own 
computer systems, if any, and the AVS.
    Paragraph (b) of Sec. 773.22 provides that, if it appears from 
information provided in the application pursuant to paragraphs (c) and 
(d) of Sec. 778.13 that none of the persons identified in the 
application has had any previous mining experience, the regulatory 
authority has to inquire of the applicant and investigate whether 
anyone other than those persons identified in the application will own 
or control the mining operation as either an operator or as another 
type of owner or controller.
    Paragraph (c) of Sec. 773.22 provides that if, after conducting the 
information review described above, the regulatory authority identifies 
any potential omission, inaccuracy, or inconsistency in the ownership 
or control information provided in the application, it must contact the 
applicant prior to making a final determination with respect to the 
application. The applicant is then required to resolve the potential 
omission, inaccuracy, or inconsistency through submission of an 
amendment to the application or a satisfactory explanation which 
includes credible information sufficient to demonstrate that no actual 
omission, inaccuracy, or inconsistency exists. The regulation also 
contains a reference to required action by the regulatory authority in 
accordance with Sec. 843.23, sanctions for knowing omissions or 
inaccuracies in ownership or control and violation information, or the 
State program equivalent, where appropriate. As will be described more 
fully below, OSM is deferring action at this time with respect to 
proposed Sec. 843.23. Such proposed section will be considered as part 
of a subsequent rulemaking. OSM has, however, retained the reference to 
proposed Sec. 843.23 in final Sec. 773.22 in the event that proposed 
Sec. 843.23 is ultimately adopted. Nevertheless, OSM has made no 
decision with respect to the adoption of proposed Sec. 843.23 and the 
retention of such reference does not mean that OSM will ultimately 
adopt proposed Sec. 843.23 as a final rule.
    Paragraph (d) of Sec. 773.22 requires that, upon completion of the 
information review mandated by Sec. 773.22, the regulatory authority 
promptly enter into or update all ownership or control information on 
AVS.
    Section 773.23 is a new section which delineates the regulatory 
authority's review obligations with respect to a permit application 
after the regulatory authority has completed the process of verifying 
ownership or control application information as described in proposed 
Sec. 773.22.
    Paragraph (a) of Sec. 773.23 requires the regulatory authority to 
review all reasonably available information concerning violation 
notices and ownership or control links involving the applicant to 
determine whether the application can be approved under the provisions 
of 30 CFR 773.15(b). With respect to ownership or control links 
involving the applicant, such information includes all information 
obtained under proposed Sec. 773.22 and 30 CFR 778.13. With respect to 
violation notices, such information includes all information obtained 
under Sec. 778.14, information obtained from OSM, including information 
shown in the AVS, and information obtained from the regulatory 
authority's own records concerning violation notices.
    In substance, the regulation assures that the regulatory authority 
considers complete ownership, control, and violation information in 
making the decision required by 30 CFR 773.15(b)(1) with respect to a 
permit application.
    Paragraph (b) of Sec. 773.23 provides the course of action which a 
regulatory authority is required to take if the review conducted 
pursuant to paragraph (a) of the section discloses any ownership or 
control link between the applicant and any person cited in a violation 
notice.
    Thus, paragraph (b)(1) of Sec. 773.23 requires that the regulatory 
authority notify the applicant of such link and refer the applicant to 
the agency with jurisdiction over the violation notice.
    Paragraph (b)(2) of Sec. 773.23 requires that the regulatory 
authority not approve the permit application unless and until it 
determines that all ownership or control links between the applicant 
and any person cited in a violation notice are erroneous or have been 
rebutted, or the regulatory authority determines that the violation to 
which the applicant has been linked has been corrected, is in the 
process of being corrected, or is the subject of a good faith appeal, 
within the meaning of 30 CFR 773.15(b)(1) or the State program 
equivalent. The determinations to be made by the regulatory authority 
under paragraph (b)(2) of the regulation are made in accordance with 
the provisions of Sec. 773.24, procedures for challenging ownership or 
control links shown in AVS, and Sec. 773.25, standards for challenging 
ownership or control links and the status of violations, or their State 
program equivalents.
    Paragraph (c) of Sec. 773.23 requires that, following the 
regulatory authority's decision on the application or following the 
applicant's withdrawal of the application, the regulatory authority is 
required to promptly enter all relevant information related to the 
decision or withdrawal into AVS. The regulatory authority's decision 
could include unconditional issuance, conditional issuance, or denial 
of the permit. The requirement that all relevant information be 
promptly entered into AVS is intended to insure that AVS is continually 
updated to reflect the most current information available with respect 
to permit applicants. A critical source of such information is the 
regulatory authority.
    Section 773.24 is a new section that establishes the procedures to 
be followed if a person wishes to challenge an ownership or control 
link between a person and any other person shown on AVS. The procedures 
to be followed by both OSM and the challenger are included. The section 
provides procedures for direct appeals of such links to OSM by persons 
who have been so linked. The section also provides for challenges 
concerning the status of violations to which persons shown on AVS have 
been linked. The section further provides the opportunity for those 
persons making a challenge to obtain a temporary relief from any 
adverse use of the challenged link or violation information during the 
pendency of such challenge.
    Paragraph (a)(1) of Sec. 773.24 provides that an applicant or 
anyone else shown in AVS is an ownership or control link to any person 
could challenge such a link in accordance with the provisions of 
paragraphs (b) through (d) of Sec. 773.24 and in accordance with the 
provisions of Sec. 773.25. Paragraph (a)(1) of Sec. 773.24 provides, 
however, that such challenge is not available if the challenger is 
bound by a prior administrative or judicial decision with respect to 
the link.
    Paragraph (a)(1) of Sec. 773.24 provides that challenges of 
ownership or control links shown on AVS are made before OSM.
    Paragraph (a)(2) of Sec. 773.24 provides that an applicant or 
anyone else shown in AVS in an ownership or control link to a person 
cited in a Federal violation notice seeking to challenge the status of 
such violation may do so in accordance with the provisions of 
paragraphs (b) through (d) of Sec. 773.24 and in accordance with the 
provisions of Sec. 773.25, which are discussed in detail below. The 
procedures applicable are similar to those described in paragraph 
(a)(1) of Sec. 773.24.
    The ``status of the violation'' means whether the violation remains 
outstanding, has been corrected, is in the process of being corrected, 
or is the subject of a good faith, direct administrative or judicial 
appeal to contest the validity of the violation. See 30 CFR 
773.15(b)(1)(i)-(ii). This usage is carried forward into paragraphs (b) 
and (c) of Sec. 773.24 and into the provisions of paragraph (b)(1)(iv) 
of Sec. 773.25. The process for challenging the status of a Federal 
violation is a Federal process and such challenges will be made before 
OSM.
    In challenging the current status of a violation under Sec. 773.24 
or 773.25, a person will not be able to challenge the existence of the 
violation at the time it was cited unless the challenge is made by a 
permittee within the context of the improvidently issued permit process 
or by an applicant after permit denial. In general, the existence of 
the violation will have been established by prior administrative or 
judicial proceedings involving the person cited in the violation 
notice, or by such person's failure to exhaust its available remedies 
in a timely manner.
    Paragraph (a)(2) of Sec. 773.24 provides, in language similar to 
that contained in paragraph (a)(1) of the regulation, that the 
opportunity to challenge the status of a violation is not available to 
any person who ``is bound by a prior administrative or judicial 
determination concerning the status of the violation.''
    Paragraph (a)(3) of Sec. 773.24 provides that any applicant or 
person shown in AVS to be linked by ownership or control to a person 
cited in a State violation notice may challenge the status of the 
violation before the State that issued the violation notice. The 
challenge must be made in accordance with the State's program 
equivalents to paragraphs (b) through (d) of Sec. 773.24 and 
Sec. 773.25. Again, the challenge may not involve the existence of the 
violation at the time it was cited, and is not available if the 
challenger is bound by a prior administrative or judicial determination 
with respect to status of the violation.
    Paragraph (b) of Sec. 773.24 requires that any applicant or other 
person seeking to challenge ownership or control links shown in AVS or 
the status of Federal violations must submit to OSM a written 
explanation of the basis for his or her challenge and provide relevant 
evidentiary materials and supporting documents. The information must be 
submitted to the Chief of OSM's AVS Office in Washington, DC.
    Paragraph (c) of Sec. 773.24 provides that, in response to a 
challenge made under paragraph (b) of that section, OSM must make a 
written decision with respect to the ownership or control link and/or 
with respect to the status of the violation.
    Paragraph (d)(1) of Sec. 773.24 provides that, if OSM has 
determined that the ownership or control link has been shown to be 
erroneous or has been rebutted and/or that the violation covered by the 
violation notice has been corrected, is in the process of being 
corrected, or is the subject of a good faith appeal, OSM is required to 
provide notice of its determination to the permit applicant or other 
person challenging the link or the status of the violation. If an 
application is pending, OSM must also notify the regulatory authority 
before whom the application is pending. Further, OSM is required to 
correct information contained in AVS to reflect the determination which 
has been made.
    Paragraph (d)(2) of Sec. 773.24 provides that, if OSM has 
determined that the challenged ownership or control link has not been 
shown to be erroneous and has not been rebutted, and that the violation 
remains outstanding, OSM must provide notice of its determination to 
the permit applicant or other person challenging the link or the status 
of the violation. If an application is pending, OSM must also notify 
the regulatory authority before whom the application is pending. 
Further, OSM is required to update information contained in AVS, if 
necessary, to reflect OSM's determinations.
    Paragraph (d)(2)(i) of Sec. 773.24 provides that OSM must serve a 
copy of its decision with respect to a challenge upon the applicant or 
other challenger by certified mail, or by any other means consistent 
with the rules governing service of a summons and complaint under Rule 
4 of the Federal Rules of Civil Procedure. The regulation provides that 
service is complete upon tender of the notice or of the mail and is not 
deemed incomplete by virtue of a challenger's refusal to accept the 
notice or mail.
    Paragraph (d)(2)(ii) of Sec. 773.24 provides that the applicant or 
other challenger can appeal OSM's decision to the Department of the 
Interior's Office of Hearings and Appeals (OHA) within 30 days of such 
decision in accordance with OHA regulations at 43 CFR 4.1380 et seq. 
Paragraph (d)(2)(ii) further provides that OSM's decision remains in 
effect unless temporary relief was granted in accordance with OHA 
regulations at 43 CFR 4.1386. The filing of an appeal will not 
automatically suspend the use of the information in AVS during the 
pendency of such appeal. The challenger must explicitly seek such 
relief in appeal proceeding before OHA.
    Section 773.25 is a new section which establishes standards for 
challenges to ownership or control links and for challenges to the 
status of violations. The section allocates responsibilities between 
OSM and State regulatory authorities for resolving issues related to 
ownership and control and provides the standards for evidence to 
resolve such issues.
    Paragraph (a) of Sec. 773.25 provides that provisions of 
Sec. 773.25 are applicable to any challenge concerning an ownership or 
control link to any person or the status of any violation covered by a 
violation notice when such challenge is made under the provisions of 30 
CFR 773.20 and 30 CFR 773.21 (improvidently issued permits); 
Secs. 773.23 (the regulatory authority's review of ownership or control 
and violation information), and 773.24 (procedures for challenging 
ownership or control links shown in AVS); or 30 CFR part 775 
(administrative and judicial review of permitting decisions).
    Paragraph (b) of Sec. 773.25 provides the basic allocation of 
responsibility among regulatory authorities to make decisions with 
respect to ownership or control and with respect to the status of 
violations.
    Paragraph (b)(1)(i) of Sec. 773.25 provides that the regulatory 
authority before which an application is pending has responsibility for 
making decisions with respect to the ownership or control relationships 
of the application.
    Paragraph (b)(1)(ii) of Sec. 773.25 provides that the regulatory 
authority that issued a permit has responsibility for making decisions 
with respect to the ownership or control relationships of the permit.
    Paragraph (b)(1)(iii) of Sec. 773.25 provides that the State 
regulatory authority that issued a State violation notice has 
responsibility for making decisions with respect to the ownership or 
control relationships of the violation.
    Paragraph (b)(1)(iv) of Sec. 773.25 provides that the regulatory 
authority that issued a violation notice, whether State or Federal, has 
responsibility for making decisions concerning the status of the 
violation covered by the notice.
    The ``status'' of the violation means whether the violation remains 
outstanding, has been corrected, is in the process of being corrected, 
or is the subject of a good faith appeal, within the meaning of 30 CFR 
773.15(b)(1).
    Paragraph (b)(2) of Sec. 773.25 provides that OSM has 
responsibility for making decisions with respect to the ownership or 
control relationships of a Federal violation notice.
    Paragraph (b)(3)(i) of Sec. 773.25 provides that with respect to 
information shown on AVS, the responsibilities of State regulatory 
authorities to make decisions with respect to ownership or control 
links are subject to the plenary authority of OSM.
    Paragraph (b)(3)(ii) of Sec. 773.25 provides that with respect to 
information shown on AVS relating to the status of a violation and with 
respect to ownership or control information which has not been entered 
into AVS by a State, the authority of a State regulatory authority is 
subject to OSM's oversight authority under 30 CFR parts 773, 842, and 
843.
    Paragraph (c) of Sec. 773.25 establishes evidentiary standards 
applicable to the formal and informal review of ownership or control 
links and the status of violations.
    Paragraph (c)(1) of Sec. 773.25 provides that in any formal or 
informal review of an ownership or control link or of the status of a 
violation covered by a violation notice, the agency responsible for 
making a decision is required to first make a prima facie determination 
or showing that the link exists, existed during the relevant period, 
and/or that the violation remains outstanding. A prima facie 
determination is made when the agency is reviewing the evidence itself, 
in an informal process; a prima facie showing is made when the agency's 
determination is the subject of a formal administrative or judicial 
review process. When the agency makes such a determination or showing, 
the person seeking to challenge the link or the status of the violation 
then has the burden of proving the necessary elements of his or her 
challenge to the link or to the status of the violation by a 
preponderance of the evidence.
    Under paragraph (c) of Sec. 773.25, a challenger of a link has to 
prove at least one of three proposed conclusions by a preponderance of 
the evidence to succeed in his or her challenge.
    First, under paragraph (c)(1)(i) of Sec. 773.25, a challenger could 
prove that the facts relied upon by the responsible agency to establish 
ownership or control under the definition of ``owned or controlled'' or 
``owns or controls'' in 30 CFR 773.5 do not or did not exist or that 
the facts relied upon to establish a presumption of ownership or 
control under the definition of ``owned or controlled'' or ``owns or 
controls'' in 30 CFR 773.5 do not or did not exist.
    Paragraph (c)(1)(ii) of Sec. 773.25 provides that a person subject 
to a presumption of ownership or control under the definition of 
``owned or controlled'' or ``owns or controls'' in 30 CFR 773.5 could 
rebut such presumption by demonstrating that he or she does not or did 
not in fact have the authority directly or indirectly to determine the 
manner in which surface coal mining operations are or were conducted.
    Paragraph (c)(1)(iii) of Sec. 773.25 provides that a challenger 
could prove that the violation covered by a violation notice did not 
exist, has been corrected, is in the process of being corrected, or is 
the subject of a good faith appeal within the meaning of 30 CFR 
773.15(b)(1). Paragraph (c)(1)(iii) further provides, however, that a 
person challenging the status of a violation would not be able to 
challenge the existence of the violation at the time it was cited under 
the provisions of Sec. 773.24 unless such challenger is a permittee 
acting within the context of Secs. 773.20-773.21 of this part. In any 
circumstance, a person who had failed to take timely advantage of a 
prior opportunity to challenge the violation notice or who was bound by 
a previous administrative or judicial determination concerning the 
existence of the violation would also be precluded from making a 
challenge to the existence of the violation at the time it was cited in 
any proceeding.
    Paragraph (c)(2) of Sec. 773.25 describes the type of evidence that 
a person challenging an ownership or control link or the status of a 
violation has to present to meet the burden of proof by a preponderance 
of the evidence. The regulation provides that the evidence presented be 
probative, reliable, and substantial. See 5 U.S.C. 556(d).
    Paragraph (c)(2) of Sec. 773.25 provides a list of examples of such 
evidence for proceedings before the ``responsible agency'' (the agency 
with responsibility for making a decision with respect to a challenge) 
and for proceedings before administrative or judicial tribunals 
reviewing the decisions of the responsible agency. The list of the 
types of acceptable evidence is intended to be illustrative, not 
exhaustive. It is expected that regulatory authorities will add to this 
list as they develop experience in making determinations under the 
regulation.
    Paragraph (c)(2)(i) of Sec. 773.25 focuses upon proceedings before 
the responsible agency. The list of examples includes documents which 
are likely to be truthful and which have certain indicators of 
reliability which go beyond the mere assertions of the individual 
presenting the evidence.
    Paragraph (c)(2)(i)(A) of the section provides that a challenger 
may submit affidavits setting forth specific facts concerning the scope 
of responsibility of the various owners or controllers of an applicant, 
a permittee, or any person cited in a violation notice; the duties 
actually performed by such owners or controllers; the beginning and 
ending dates of such owners' or controllers' affiliation with the 
applicant, permittee, or person cited in a violation notice; and the 
nature and details of any transaction creating or serving an ownership 
or control link; or specific facts concerning the status of the 
violation.
    Paragraphs (c)(2)(i)(B) and (c)(2)(i)(C) of section 773.25 each 
look to official certification as the basis for the reliability of a 
submitted document. Paragraph (c)(2)(i)(B) allows for the submission of 
copies of certain types of documents if they are certified. Such 
documents include copies of corporate minutes, stock ledgers, 
contracts, purchase and sale agreements, leases, correspondence or 
other relevant company records. Paragraph (c)(2)(i)(C) allows for 
submission of certified copies of documents filed with or issued by any 
State, municipal, or Federal governmental agency.
    Paragraph (c)(2)(i)(D) of final Sec. 773.25 provides for a 
challenger's submission of an opinion of counsel in support of his or 
her position. Such opinion would be appropriate for submission when it 
is supported by evidentiary materials; when it is rendered by an 
attorney who certifies that he or she is qualified to render an opinion 
of law; and when counsel states that he or she has personally and 
diligently investigated the facts of the matter or where counsel states 
that such opinion is based upon information which has been supplied to 
counsel and which is assumed to be true.
    Paragraph (c)(2)(ii) of Sec. 773.25 provides that, when the 
decision of the responsible agency is reviewed by an administrative or 
judicial tribunal, the challenger could present any evidence to such 
tribunal which is admissible under the rules of the tribunal. Under the 
regulation, however, the evidence submitted still has to be probative, 
credible, and substantial.
    Paragraph (d) of Sec. 773.25 provides for the review and revision 
of information in AVS to reflect determinations made by regulatory 
authorities in response to challenges of ownership or control links or 
the status of violations. Paragraph (d) provides that, following any 
determination by a State regulatory authority or other State agency, or 
following any decision by an administrative or judicial tribunal 
reviewing such determination, the State regulatory authority shall 
review the information in AVS to determine if the information in AVS is 
consistent with the determination or decision. If it is not consistent, 
the State regulatory authority is required to promptly inform OSM and 
request that the AVS information be revised to reflect the 
determination or decision.
Part 778--Permit Applications--Minimum Requirements for Legal, 
Financial, Compliance, and Related Information
    Paragraph (c) of 30 CFR 778.14 is amended to require a permit 
applicant to disclose ``all violation notices'' received by the 
applicant within the preceding three years. In addition, the 
introductory language of the provision is amended to require the 
disclosure of all outstanding violation notices for any surface coal 
mining operation that is deemed or presumed to be owned or controlled 
by either the applicant or by any person who is deemed or presumed to 
own or control the applicant under definitions of ``owned or 
controlled'' or ``owns or controls'' under 30 CFR 773.5.
    The regulation previously required the applicant to disclose 
violations of a number of various laws listed in 30 CFR 778.14(c). Use 
of the amended definition of ``violation notice'' adopted today as part 
of 30 CFR 773.5 obviates the need for listing each of these violations 
in 30 CFR 778.14.
    The regulation also previously required that the applicant provide 
only a list of unabated cessation orders and unabated air and water 
quality violation notices received prior to the date of the application 
by any surface coal mining and reclamation operation owned or 
controlled by either the applicant or by any person who owns or 
controls the applicant. With respect to this list, the previous 
regulation did not require that an applicant list notices of violation 
received or unpaid penalties or fees incurred by any surface coal 
mining operation owned or controlled by the applicant or by any person 
who owns or controls the applicant.
    Paragraph (c) of Sec. 778.14 is now amended to require an applicant 
to disclose all outstanding violation notices received by any surface 
coal mining operation that is deemed or presumed to own or control the 
applicant.
    In addition, OSM has amended paragraph (c) of Sec. 778.14 to 
provide that for each notice of violation issued pursuant to 30 CFR 
843.12 or under a Federal or State program for which the abatement 
period has not expired, the applicant must certify that such notice of 
violation is in the process of being abated to the satisfaction of the 
agency with jurisdiction over the violation.
Part 840--State Regulatory Authority: Inspection and Enforcement
    Paragraph (b) of 30 CFR 840.13 is amended to include a reference to 
Sec. 843.23, a proposed rule. As has been explained previously, OSM has 
deferred action on adopting proposed Sec. 843.23 at this time. The 
reference, however, to that section has been placed in Sec. 840.13 in 
the event that proposed Sec. 843.23 is adopted. The use of such 
reference does not mean, however, that OSM will ultimately adopt 
proposed Sec. 843.23.
Part 843--Federal Enforcement
    OSM amends the Table of Contents of 30 CFR part 843 to add 
Sec. 843.24, oversight of State permitting decisions with respect to 
ownership or control of the status of violations.
    Former Sec. 843.10 is deleted since part 843 did not contain any 
information collection requirements which require approval by the 
Office of Management and Budget under 44 U.S.C. 3507. The references to 
Secs. 843.14(c) and 843.16 formerly in Sec. 843.10 did not represent 
information collection requirements. The requirement in Sec. 843.14(c) 
for OSM to furnish copies of notices and orders to the State regulatory 
authority and to any person having an interest did not require OMB 
approval because the obligation to provide the information is imposed 
upon OSM and not upon the State or upon a member of the public. Section 
843.16 merely informs the public of the right to file an application 
for review and request a hearing under 43 CFR part 4.
    Section 843.24 is a new section which provides standards for OSM's 
oversight of State permitting decisions with respect to ownership or 
control or the status of violations.
    Paragraph (a) of Sec. 843.24 establishes the bases which require 
OSM to take action under the provisions of paragraphs (b) and (c) of 
proposed Sec. 843.24. Paragraph (a) provides that OSM is required to 
take action whenever it determines, through its oversight of the 
implementation of State programs, that a State has issued a permit 
without complying with the State program equivalents of proposed 
Secs. 773.22 (verification of ownership or control application 
information), 773.23 (review of ownership or control and violation 
information), 773.24 (procedures for challenging ownership or control 
links shown in AVS), 773.25 (standards for challenging ownership or 
control links and the status of violations), and Sec. 843.23. As has 
been explained previously, OSM has deferred action on adopting proposed 
Sec. 843.23 at this time. The reference, however, to that proposed rule 
has been placed in Sec. 843.24 in the event that Sec. 843.23 is 
adopted. The use of such reference does not mean, however, that OSM 
will ultimately adopt proposed Sec. 843.23.
    If, as a result of determination made under paragraph (a) of 
Sec. 843.24, OSM has reason to believe that the State has issued a 
permit improvidently within the meaning of 30 CFR 773.20, paragraph (b) 
of Sec. 843.24 requires OSM to initiate action under 30 CFR 843.21.
    Paragraph (c) of Sec. 843.24 provides for remedial actions by OSM 
against a State which knowingly fails to comply with the regulations 
relating to ownership or control and violation information during the 
permit application process.

B. General Comments

    Numerous comments were made which addressed various issues with 
respect to the overall rulemaking. While such comments also invoked 
particular sections of the proposed rules, these comments asserted 
several central themes which went beyond particular sections of the 
rulemaking even through specific sections of the proposed rulemaking 
were referenced as areas of concern by the commenters. Accordingly, OSM 
has decided to address these central issues in this portion of the 
preamble. Within the context of such discussion, particular sections of 
the proposed and final rules will be referred to as necessary. 
Nevertheless, in these responses, OSM focuses upon central issues which 
appear to be of overarching concern to the commenters.
Due Process
    Industry commenters asserted that the proposed rules violated due 
process and the underlying principles of the Act. These commenters 
further argued that OSM's proposed rules violated due process 
principles because they did not allow for a permit conditioned upon the 
outcome of an appeal of an ownership or control link, upon the 
challenge of the status of the violation, or upon the challenge of the 
existence of the violation at the time it was cited. They also asserted 
that because OSM did not allow for de novo challenges of the existence 
of violations by owners or controllers, the proposed rules violated due 
process principles.
    OSM disagrees with these commenters' characterizations. The 
proposed rules and the rules which have been adopted today provide 
detailed procedures to assure that those wishing to contest ownership 
or control links and the status of violations may do so. Further, the 
proposed and final rules provide that decisions on these matters are 
made based upon credible evidence and fair processes. Those seeking to 
challenge the existence of violations have the opportunity to do so, 
incident to permit denial, in accordance with currently existing rules 
which predate this rulemaking. See Preamble to Requirements for Surface 
Coal Mining and Reclamation Permit Approval; Ownership and Control; 
Final Rule, 53 FR 38868 at page 38885 (``Due Process Provided.'') 
(October 3, 1988). In addition, today's final rules clarify that 
permittees may make such challenges within the context of the 
improvidently issued permit process. The procedures provided in today's 
final rules supplement current rules contained at 30 CFR part 773 to 
provide more than sufficient due process to protect the limited 
property interest a permit applicant has in the expectancy of a permit 
to engage in surface coal mining operations.
    OSM does not believe that principles of due process mandate, as a 
necessary condition precedent to the denial of a permit to an owner or 
controller of a violator, that the agency provide a full, formal, de 
novo hearing on the merits of an ownership or control link, the 
existence of the violation at the time it was cited, and the status of 
the violation--followed by an exhaustive appeal on each of these 
matters to the court of last resort. Instead, the final rules adopted 
today provide due process commensurate with the limited interest of a 
permit applicant--the expectancy of permit issuance. OSM's position is 
consistent with the agency's earlier statements relating to the 
sufficiency of due process and the protection of property rights 
provided by the ownership and control rules and the AVS. See Preamble 
to Requirements for Surface Coal Mining and Reclamation Permit 
Approval; Ownership and Control; Final Rule, 53 FR 38868 at page 38885 
(October 3, 1988).
    Moreover, in the cases of Pittston Co. v. Lujan, No. 92-1606 (4th 
Cir.) and No. 91-0006-A (W.D. Va.), National Wildlife Federation v. 
Lujan, No. 88-3117 (D.D.C.), and Save Our Cumberland Mountains, Inc. v. 
Lujan, No 81-2134 (D.D.C.), coal industry interests advanced similar 
due process arguments attacking the agency's ownership and control 
rules published at 53 FR 38868 et seq. on October 3, 1988, and the 
agency's implementation of AVS and those rules. In the briefs submitted 
by the Department of the Interior in those cases, the Department 
analyzed relevant case law and carefully explained why the due process 
criticisms were not well taken. Copies of these briefs are being placed 
in the Administrative Record of this rulemaking. To the extent 
relevant, OSM incorporates the arguments advanced by the Department in 
those briefs herein by reference.
    Further, OSM disagrees with the commenters' view that due process 
requires that conditional permits be made available during the tendency 
of the appeal of an ownership or control link as a condition precedent 
to permit block. The final rules published today provide ample 
protection for an owner or controller by providing the opportunity for 
an owner or controller to challenge an ownership or control link. 
Further, the final rules provide for the Department's Office of 
Hearings and Appeals (OHA) to grant temporary relief from a permit 
block, where, inter alia, the challenger has a substantial likelihood 
of prevailing on the merits of the appeal. OHA is contemporaneously 
publishing final rules establishing procedures for the granting of 
temporary relief. Under OSM's final rules published today and the OHA 
rules, the likelihood of the erroneous deprivation of a permit due to 
an erroneous link is minimal. An appellant with a meritorious claim can 
get relief. Conditional permits for all appellants, without regard to 
the merits of their claims, are unnecessary and unwarranted.
    Moreover, the final rules published today provide a measure of 
protection commensurate with the very limited interest that a permit 
applicant has in his or her application for a permit. An applicant does 
not have a right to a permit to mine coal in the same way that he or 
she has title to real property or a leasehold interest in a mineral 
lease. A permit to mine coal is a privilege granted by the regulatory 
authority to those who have complied with the requirements of the Act 
and the applicable regulatory program, including the provisions of 
Section 510(c) of the Act and the provisions of 30 CFR part 773. Until 
an applicant has been found in compliance with the applicable 
provisions of the program; until the other provisions governing permit 
issuance have been satisfied; and until a permit has been issued, the 
applicant has, at most, an expectation which may or may not be 
reasonable, depending upon the circumstances, that he or she will 
qualify for permit issuance. Such an expectancy is highly speculative, 
continent, and limited. Investments based on an expectancy do not 
transform the expectancy into a presently vested property right. See 
generally Jacobsen v. Hannifin, 627 F.2d 177, 179-80 (9th Cir. 1980). 
``To have a property interest in a benefit, a person clearly must have 
more than an abstract need or desire for it. He must have more than a 
unilateral expectation of it. He must, instead, have a legislation 
claim of entitlement to it.'' See also Board of Regents v. Roth, 408 
U.S. 564, 577 (1972).
    In contrast to this, the agency's interest in and responsibility 
for implementing Section 510(c) of the Act is substantial and must be 
balanced against the limited property interest of the permit applicant. 
OSM's ability to implement the provisions of Section 510(c) of the Act 
is critical to the agency's enforcement of the Act. Those provisions of 
the Act prevent violators from receiving new permits and, thus, from 
injuring the environment at new surface coal mining operations. Those 
provisions of the Act encourage abatement of violations and deter 
operators and their owners or controllers from committing violations. 
Potential applicants fear permit denial in the future. Therefore, such 
applicants are motivated to prevent or abate violations in the present. 
Thus, OSM has a substantial interest in the successful, credible 
implementation of Section 510(c) of the Act.
    If conditional permits were allowed during the pendency of a 
prolonged appellate process challenging an ownership or control link, 
the agency's ability to enforce the provisions of section 510(c) of the 
Act and the ownership and control rules would be severely compromised. 
Rather than abate the violations of their owned or controlled 
operations, it is possible that some applicants would routinely appeal 
ownership or control links without regard to the strength of the link 
as demonstrated by a full proceeding on the merits. Such applicants 
would appeal merely for the purpose of gaining conditional permits. 
Depending upon how long the appeals process ran, an operator with a 
conditional permit could extract a significant portion of the coal in a 
permitted mine and would have no incentive to abate the violations of 
the surface coal mining operation to which he had been linked. The Act 
does not contemplate such a result; nor does the Constitution require 
it.
    Further, such a result would provide an unfair competitive 
advantage to an unscrupulous operator to the detriment of the interests 
of the other members of the coal industry, the majority of whom take 
responsibility for environmental reclamation and are responsible 
corporate citizens.
    Nevertheless, industry commenters have asserted that there is 
little likelihood of operators making frivolous or bad faith ownership 
or control appeals because they have significant investments in their 
surface coal mining operations. While OSM recognizes that this is 
probably true for the majority of operators, including those who have 
provided comments on the proposed rules, experience has shown that a 
small minority of irresponsible operators can create harm 
disproportionate to their numbers. In the process, such irresponsible 
operators do harm not just to OSM's effective implementation of the 
Act, but also to the reputation of the industry as well.
    For instance, a marginal operator's significant investment in coal 
extraction equipment may mask his/her plan to avoid spending resources 
on reclamation. Indeed, there could be a serious economic temptation 
for such an operator to protect a significant investment by appealing, 
if such appeal would support the continuation of operations. 
Accordingly, OSM considers the extent of an applicant's investment in a 
surface coal mining operation to be an unreliable indicator of an 
applicant's motive in initiating an appeal. Thus, OSM declines to 
develop a process requiring the evaluation of operators' good faith 
based upon their comparative investments in surface coal mining 
operations.
    OSM does recognize, however, that a permittee has an interest in 
his permit deserving of a higher level of protection than that of an 
applicant with respect to an application. A valid permit represents 
more than the mere expectancy represented by an application. A current, 
valid permit represents legal authorization to conduct surface coal 
mining operations in accordance with the terms of such permit. See 
section 506 of the Act. Further, a permit carries with it the right of 
successive renewal. See section 506(d)(1) of the Act; 30 CFR 774.15. 
Thus, a detailed process governing improvidently issued permits has 
been established which recognizes this interest. See 30 CFR 773.20; 
773.21. In response to concerns asserted by industry with respect to 
due process, OSM has amended the regulations governing improvident 
permit issuance to provide that a permittee can challenge the existence 
of the violation at the time it was cited as part of the improvidently 
issued permit process. See 773.20(b)(2). OSM has done this in 
recognition of the more substantial interest that a permit represents 
in contrast to the limited interest represented by a permit 
application.
    Industry commenters have further asserted that an owner or 
controller must be afforded the opportunity to challenge the validity 
of the existence of the violation at the time that it was cited as a 
condition precedent to the recommendation of a denial of a permit 
application for an owner or controller of the violation. These 
commenters argued that owners or controllers may not have had the 
opportunity to challenge the validity of the violation which forms the 
basis of the permit denial at the time it was cited. They argued that 
only the actual violators were cited at that time and that the owners 
or controllers would not have received notice in a timely manner to 
enable them to challenge the violation then. They further asserted that 
a right to contest the merits of a violation after permit denial is not 
sufficient to redress the harm caused by permit denial. Rather than 
face permit denial, they asserted that coal operators will be forced to 
pay the disputed fees or to reclaim land. Accordingly, they asserted 
that they should be allowed to challenge the violation prior to any 
permit denial.
    OSM disagrees with those views. The rights of an owner or 
controller are well protected by the ability to challenge the link to 
the violation. If the ownership or control link is not well taken, then 
the violation is irrelevant as a basis for permit block. If the link is 
meritorious, the owner or controller would have been well-positioned to 
have had knowledge in fact of the citations, if he or she desired such 
knowledge, see, e.g., 30 CFR 843.15(d), and to have compelled the 
controlled surface coal mining operation to abate the violation or to 
challenge the violation in a timely manner. See, e.g., 30 CFR 
843.16(a). Accordingly, if an ownership or control link is well taken, 
the owner or controller has already had an opportunity to challenge the 
violation or to abate the violation through the controlled entity. 
Under these circumstances, OSM does not believe that an owner or 
controller is entitled to an additional opportunity to challenge the 
existence of a violation before the regulatory authority can deny 
issuance of a permit.
    Even so, the final rules promulgated today would not prohibit the 
challenge of the existence of the violation. Such a challenge, however, 
must be made at the time of permit denial, rather than before, by 
persons who are not bound by prior administrative or judicial 
proceedings with respect to the existence of the violation or who have 
not had a prior opportunity to challenge the existence of the 
violation. This is entirely consistent with OSM's position as expressed 
in the preamble to the ownership and control rules published in 1988. 
See Preamble to Requirements for Surface Coal Mining and Reclamation 
Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page 
38885 (October 3, 1988).
    Additionally, within the context of today's final provisions 
amending the regulations governing improvident permit issuance, OSM has 
made explicit that a permittee may challenge the existence of the 
violation at the time it was cited. A permittee may make such challenge 
if the challenge is not otherwise precluded by a permittee's previous 
failure to take advantage of a prior opportunity to challenge or by a 
prior administrative or judicial determination concerning the existence 
of the violation. See Secs. 773.20 and 773.25.
    Nevertheless, the industry commenters questioned whether the 
ability to challenge a violation after permit denial is illusory 
because OSM may attempt to argue that the owner or controller failed to 
take advantage of a prior opportunity to challenge the violation at the 
time that it was issued or that the challenger was bound by a prior 
administrative or judicial determination. This is not OSM's intent. 
Each specific case must be evaluated on its merits. In general, a 
challenge would be precluded only when the facts indicate that a 
potential challenger has already had the opportunity to challenge and 
has squandered it, or when the potential challenger is bound by a prior 
determination. The purpose of this portion of the proposed rules and 
the final rules as adopted is to eliminate multiple repetitive 
opportunities for challenge for those who have already had a 
substantive opportunity to challenge, either directly or through a 
controlled entity. It is not OSM's intention to assert these defenses 
to a challenge unless such defenses are supported by the facts of a 
particular case.
    Industry commenters argued that a State's decision to deny a permit 
based upon violation information contained in AVS is also not subject 
to challenge. OSM disagrees. The existence of the violation at the time 
it was cited, along with any other bases for permit denial, may be 
challenged in a proceeding under 30 CFR part 775, or the equivalent 
State programs, subject to the defenses discussed above. To the extent 
that a regulatory authority has based its permit denial decision upon 
violation information contained in AVS, that information would be an 
integral part of the challenge proceeding. When administrative and 
judicial tribunals consider appeals of permit denials, it is probable 
that evidence related to violations which form the basis of a permit 
denial will be relevant to the tribunal. OSM will work with State 
regulatory authorities to provide supporting documentation if required 
for appeals of State permitting decisions. OSM anticipates that State 
regulatory authorities will similarly cooperate with OSM and with each 
other in making such evidence related to violation information 
available to administrative and judicial tribunals.
    Industry commenters also asserted that the proposed rules, along 
with the ownership and control rules promulgated in 1988, deny due 
process in that they retroactively impose responsibilities for 
violations upon owners and controllers. Again, OSM must reject this 
characterization of the effect of the proposed rules and 1988 ownership 
and control rules. OSM must further reject this characterization with 
respect to the final regulations adopted today. The ownership and 
control rules published in 1988, the AVS-related proposed rules 
published in September, 1991, and the final rules published today 
subject the owners or controllers of violations to permit denial for 
currently outstanding violations, rather than past, abated violations. 
This obligation follows the clear mandate of section 510(c) of the Act 
which requires the denial of permits when ``any surface coal mining 
operation owned or controlled by the applicant is currently in 
violation'' of the Act or other laws cited.
    Moreover, the presumptions of ownership and control provided by 30 
CFR 773.5 and the final rules merely reflect the reality that owners or 
controllers have the authority, by reason of their control at the time 
that the violations are committed or during any period when the 
violations remained outstanding, to be aware of violations, to compel 
their controlled entities to undertake timely challenges of violations, 
and to compel their controlled entities to abate violations of the Act. 
Under these circumstances, there is no retroactive application of 
responsibility.
    Moreover, the clear provisions of section 507(b)(4) of the Act 
require, in substance, that permit applicants identify most of those 
people who are considered owners or controllers for purposes of section 
510(c) of the Act and 30 CFR 773.15 and 773.5. As OSM observed in the 
preamble to the ownership and control rules published in 1988:

    The legislative history of section 507(b)(4) includes the 
statement that ``[t]he information required by [section 507(b)(4)] 
is a key element of the operator's affirmative demonstration that 
the environmental protection provisions of the Act can be met as 
stipulated in Section 510 and includes: (1) Identification of all 
parties, corporations, and officials involved to allow 
identification of parties ultimately responsible * * *.'' H.R. Rep. 
No. 94-896, 94th Cong., 2nd Sess. 111 (1976). (Emphasis added.) See 
also S. Rep. No. 94-28, 94th Cong., 1st Sess. 206 (1975).

See Preamble to Requirements for Surface Coal Mining and Reclamation 
Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page 
38875 (October 3, 1988).
    With the ownership and control rules published in October of 1988 
and with these final rules published today, OSM is simply implementing 
sections 510(c) and 507(b)(4) of the Act. None of these provisions 
impose retroactive responsibilities.
    Finally, related to their due process concerns, industry commenters 
argued that the proposed rules also violate the Act by not providing 
conditional permits during the appeal of ownership or control links, 
the current status of the violation, or the existence of the violation 
at the time it was cited. They pointed to the provisions of current 30 
CFR 773.15(b)(2) which allow for a permit to be conditioned upon a good 
faith, direct administrative or judicial appeal to contest the validity 
of the current violation as indicative of the agency's longstanding 
recognition that such an appeal is consistent with the Act.
    OSM disagrees with the commenters' analysis and rejects the view 
that OSM's historic interpretation of the Act requires that owners or 
controllers be entitled to permits conditioned upon the appeals of 
ownership or control links, the status of the violation, or the 
existence of the violation at the time that it was cited.
    OSM's regulation at 30 CFR 773.15(b)(2) does not constitute the 
agency's recognition that all appeals form the basis for conditional 
permits. Such a blanket interpretation would negate the clear mandate 
of the provisions of section 510(c) of the Act and of 30 CFR 
773.15(b)(1) which require the denial of permits to applicants who own 
or control surface coal mining operations in current violation of the 
Act. As has been discussed previously in this preamble, the issuance of 
permits conditioned upon the appeal of ownership or control links 
thwarts the effective implementation of section 510(c) of the Act. OSM 
has never interpreted its regulations to allow for such a result.
    Contrary to commenters' assertions, the regulation at 30 CFR 
773.15(b)(2) only allows a limited exception for good faith, direct 
administrative or judicial appeals contesting the validity of the 
violation as the basis for conditional issuance. An appeal of an 
ownership or control link which tests a person's relationship to a 
violator or to a violation does not test the validity of the underlying 
violation. To the extent that the provisions of a State program allow 
for conditional issuance based upon the appeal of an ownership or 
control link, those provisions must be considered less effective than 
comparable Federal provisions. See 30 CFR parts 730 and 732.
    Moreover, in many instances, the existence of ownership or control 
links in AVS may be readily discovered by the presumed controllers, and 
the accuracy of those links administratively challenged prior to the 
actual denial of a permit by a regulatory authority. An appeal 
challenging the current status of a violation does not constitute a 
direct challenge to the validity of the violation at the time that it 
was cited. Instead, it would test whether the violation is currently 
abated or not.
    An appeal as to the existence of the violation at the time it was 
cited could constitute a challenge as to the validity of the violation. 
Nevertheless, there is nothing in the Act or OSM's regulations which 
requires that such an appeal, undertaken by an owner or controller of a 
violator after standard appeal times have run, be the basis for 
conditional issuance. Conditional issuance is particularly 
inappropriate when the controller's ability to compel the controlled 
entity to act is taken into account. A controller has the capacity to 
force the controlled entity to abate or to appeal and would have had 
such rights at the time that the violation was cited. Thus, a timely 
appeal of the violation, directly made through administrative or 
judicial tribunals, could have been made at that time.
    One commenter argued that due process protection in the proposed 
rules should be enhanced. In substance, this commenter asserted that it 
is unfair to deny permits to applicants or to subject active permits to 
treatment as improvidently issued permits where the applicants or 
permittees are subjectively unaware of their ownership or control links 
to violators or of the import of such relationships. Accordingly, this 
commenter proposed that such persons should have extended opportunities 
for ``corrections and questions'' without the risk of permit denial or 
revocation.
    OSM appreciates the commenter's suggestion, but does not believe 
that further proposed rules are needed or that amendments to the final 
rules should be made to reflect the commenter's proposal. The AVS 
Office will work with anyone at any time, including when there is no 
pending permitting action, to answer questions and make appropriate 
corrections to ownership and control information in the database. Data 
in the system is available on-line to any interested party, and the AVS 
Office will provide print-outs of AVS data on request. The AVS Office 
will also provide training to interested parties on the use of the 
system. The AVS Office routinely works with major companies to insure 
that their ownership and control information in the system is kept 
current. Given all these factors, there is no ``risk of permit denial'' 
necessarily involved in the resolution of an ownership and control 
link.
    Furthermore, applicants and permittees are deemed to be aware of 
the law. The ownership and control rules were published in October, 
1988. Since that time, applicants and permittees could reasonably be 
expected to be aware of the regulations and could have acted to cure 
any outstanding violations or to resolve any erroneous links in the AVS 
which would form the basis for a permit denial or revocation. Thus, any 
``unfair surprise'' to applicants or permittees posited by the 
commenter is not an actual problem. Accordingly, it is entirely 
legitimate to deny permits to such applicants or permittees when they 
are linked to violations.
    Further, permit applicants are required to provide full ownership 
and control information at the time of permit application. See 30 CFR 
778.13; 778.14. Permittees are required to update relevant ownership 
and control information in a timely manner. See 30 CFR 774.17. Thus, 
the proposed remedy offered by the commenter is already a requirement 
of the rules. Finally, in the unlikely event that a person has been 
unfairly subjected to permit denial by the process, that person could 
still seek temporary relief from OHA in accordance with procedures 
governing such relief provided by OHA's and OSM's regulations.
Primacy
    Industry and State commenters asserted a number of concerns 
relating to the impact of the proposed rules upon the primacy of 
States.
    In general, industry commenters argued that the proposed rules and 
the AVS itself impermissibly substitute Federal authority for State 
authority in the permitting process. They argued that, under the 
principle of State primacy, once a State's program has been approved by 
OSM, the State should have sole authority for making decisions with 
respect to permit issuance, including the determination of ownership 
and control matters. They asserted that requiring a State to query the 
AVS before making a permitting decision takes the decision out of the 
hands of the State and transfers substantive control of the decision to 
OSM which controls the content of the AVS. As evidence of this Federal 
control, industry commenters cited, with disapproval, provisions of the 
proposed rules which provide that challenges of ownership and control 
information on the AVS must be made to OSM.
    OSM disagrees. First, in the cases of National Wildlife Federation 
v. Lujan, No. 88-3117 (D.D.C.), and Save Our Cumberland Mountains, Inc. 
v. Lujan, No. 81-2134 (D.D.C.), coal industry interests advanced 
similar primacy arguments attacking the agency's ownership and control 
rules published in 1988. OSM responded to those arguments in detail 
demonstrating that the ownership and control rules support State 
programs, rather than undermine them. Copies of these briefs are being 
placed in the Administrative Record of this rulemaking. OSM 
incorporates the arguments advanced by the Department in those briefs 
herein by reference.
    Similarly, the purpose of AVS is to assist, rather than to 
undermine, the States in the exercise of their primary authority for 
the implementation of their approved programs. The provisions of 
section 510(c) of the Act require that the regulatory authority deny a 
permit to an applicant where ``information available'' to the 
regulatory authority indicates that any surface coal mining operation 
owned or controlled by the applicant is currently in violation'' of the 
Act or certain other governmental laws. See section 510(c) of the Act. 
In a State which has an approved program to regulate surface coal 
mining operations pursuant to section 503 of the Act, neither OSM nor 
AVS decides whether or not to issue a permit to an applicant in that 
State. The State regulatory authority is the decisionmaker.
    Contrary to the commenter's assertions, however, the Federal 
government has an ongoing role in this system of State primacy. The Act 
and Federal regulations require that OSM assist the States in the 
implementation of their programs under the Act and that OSM provide 
oversight of the State regulatory authorities' activities. See sections 
102(g), 201(c), 503, 504, 505, and 521 of the Act; 30 CFR parts 732, 
733, and 842.
    Consistent with the State's role as primary decisionmaker, the AVS 
is a tool, developed by the Federal government in concert with the 
States, which provides information in a convenient mode, readily 
accessible to State regulatory authorities. It is a source of relevant 
``information available'' of the type which the State regulatory 
authority is required by the Act to consider when the State regulatory 
authority decides whether to issue a permit to conduct surface coal 
mining operations. Absent AVS, a State regulatory authority would have 
to laboriously contact other State regulatory authorities for violation 
and ownership and control information or would have to simply reply 
upon the voluntary disclosure of information supplied by applicants or 
by public-spirited citizens. That OSM has taken the lead in developing 
the AVS and in proposing to require to use of AVS through rulemaking is 
consistent with the Federal government's role to assist and to oversee 
the State regulatory authorities. Even then, the content of AVS is the 
product of the efforts of both State regulatory authorities and OSM 
working together to incorporate into AVS ownership and control and 
violation information developed through their regulatory programs.
    Accordingly, a State's authority to make a decision with respect to 
a permit application is primary and is unimpaired by anything in the 
proposed rules and by the State's use of AVS. To the extent that the 
rules support OSM's oversight of the State's decisions, such oversight 
is mandated by and consistent with the provisions of the Act and the 
regulations cited above.
    To the extent that the proposed rules provide that challenges of 
information already on AVS be made to OSM, such provisions do not 
impair primacy. Instead, the rules recognize that the Federal 
government is uniquely situated to maintain the accuracy and integrity 
of a nationwide database that will be used by many States. To be sure, 
each of the State regulatory authorities has a valuable contribution to 
make to the quality of AVS information. Yet, the individual States may 
have differing perspectives on ownership and control issues. The 
potential for inconsistency is significant--particularly with respect 
to ownership and control decisions relating to multistate companies 
with complex organizational structures. Also, potential challengers of 
such information need, if possible, a single point at which they can 
challenge ownership or control information which will be used in many 
States and which, absent such a locus, could subject them to 
inconsistent outcomes. Such a role for OSM is consistent with the role 
for the agency envisioned by SMCRA. See sections 201(c)(9) and 
201(c)(12) of SMCRA.
    Further, it must be recognized that the decision to deny a permit 
because an operator is linked to a violation through ownership or 
control can be an unpopular one, subjecting a local economy to stress. 
An operator may claim that he ``has been put out of business'' by the 
State regulatory authority. This is one area where the Federal 
government can assist the States by accepting the responsibility of 
maintaining ownership and control information which may ultimately lead 
to permit denials in the various States. Federal acceptance of such a 
role helps to assure the integrity, consistency, and accuracy of 
ownership and control information on the AVS. It is also consistent 
with one of the purposes of the Act which is ``to insure that 
competition in interstate commerce among sellers of coal produced in 
different States will not be used to undermine the ability of the 
several States to improve and maintain adequate standards of coal 
mining operations within their borders.'' See section 101(g) of the 
Act.
    Finally, even with the State using information on AVS as part of 
its information gathering incident to making a determination with 
respect to a permit application, the State retains the authority, 
subject to Federal oversight, to decide whether to issue the permit or 
not. Appeals of such a decision are made to the appropriate State 
reviewing tribunal, in accordance with the provisions of the State 
program. Also, the final rules published today make clear that the 
State regulatory authority which issues a permit has responsibility, 
subject to OSM's oversight, for determining the ownership or control 
relationships of the permit. See Sec. 773.25(b)(1)(ii). Contrary to 
commenters' assertions, the State's use of AVS does not transmute the 
process into a Federal proceeding.
    To the extent that a State denies a permit based upon information 
in AVS indicating that the applicant is linked through ownership or 
control to an outstanding violation of the Act, such denial is made 
based upon the mandate of section 510(c) as implemented by the 
applicable State program, rather than some extraordinary Federal 
intervention in the State's process. A State regulatory authority 
denying a permit based upon ownership or control information shown in 
AVS would be obligated under the Act to take the same action based upon 
a phone call, letter, or other communication from another regulatory 
authority advising of an applicant's ownership or control of a surface 
coal mining operation in current violation of the Act.
    Further, it must be emphasized that the cooperation of all 
regulatory authorities, including the States and OSM, is necessary to 
facilitate the implementation of section 510(c) of the Act. Information 
on violations wherever they have occurred is needed by each regulatory 
authority considering a permit application to ensure true compliance 
with the provisions of section 510(c) of the Act. It is unreasonable, 
ineffective, and inefficient for each regulatory authority to attempt 
to develop such information by itself. It is both reasonable and 
prudent for OSM to fulfill this role. See sections 201(c)(9) and 
201(c)(12) of SMCRA.
    Industry commenters further asserted that the proposed rules will 
have the effect of ``Balkanizing'' (i.e., dispersing) regulatory 
authorities' permitting decisions. They were especially concerned about 
the provisions of Sec. 773.26 of the proposed rules which allocated 
responsibility to particular regulatory authorities to make decisions 
with respect to ownership or control relationships.
    Proposed Sec. 773.26 allocated responsibility among the respective 
regulatory authorities such that the regulatory authority before which 
an application is pending would have had authority for making decisions 
with respect to the ownership or control relationships of the 
applicant; the regulatory authority that issued a permit would have had 
authority for making decisions with respect to the ownership or control 
relationships of the permittee; the State regulatory authority that 
issued a State violation notice would have had authority for making 
decisions with respect to the ownership or control relationships of 
persons cited in the violation; and the regulatory authority that 
issued a violation notice, whether State or Federal, would have had 
authority for making decisions concerning the status of the violation 
covered by the notice. The proposed rule provided that these 
allocations of authority were subject to OSM's oversight.
    In substance, the industry commenters asserted that the provisions 
of this proposed section would impermissibly weaken the authority of 
the State regulatory authority before whom a permit application is 
pending. They asserted that the allocations of authority contained in 
the proposed rule would create confusion and delay in the permitting 
process.
    OSM disagrees with these comments. The interaction between the 
Federal government and the States described above does not constitute a 
``balkanization'' of the permit application process. Nor will such 
interaction lead to confusion in the permit application process. Such 
interaction is consistent with the mandate of SMCRA to implement 
section 510(c) within a context of State primacy supported by Federal 
oversight. The proposed rules and the final rules adopted today attempt 
to establish a road map which is consistent with SMCRA for the making 
of decisions with respect to ownership or control and for the 
development of information to be used in AVS.
    First, the allocations of responsibility are consistent with the 
requirements of the Act. The provisions of section 510(c) of the Act 
mandate a separation of decisionmaking in the permit application 
process which commenters might characterize as ``balkanization.'' The 
provisions of section 510(c) of the Act are very explicit in stating 
that permits shall be denied to applicants who own or control surface 
coal mining operations with outstanding violations of the Act ``until 
the applicant submits proof that such violation has been corrected or 
is in the process of being corrected to the satisfaction of the 
regulatory authority, department, or agency which has jurisdiction over 
such violation.''
    Thus, the Act contemplates that the State regulatory authority 
before which an application is pending could require information from 
another State regulatory authority with respect to violations issued by 
the other State regulatory authority before issuing a permit.
    Further, the Act is equally specific in establishing a mandated 
role for the Federal government to oversee the States in the 
implementation of their State regulatory programs. See sections 
201(c)(1); 503; 504; 505; and 521 of the Act. Thus, to the extent that 
the proposed rules and the final rules adopted today envision the 
exercise of Federal oversight, such a role is responsive to the 
provisions of SMCRA.
    Moreover, while the proposed rule and the final rule, modified and 
renumbered as Sec. 773.25, will be compared and discussed in more 
detail below in this preamble, it is appropriate to offer some 
responses at this point since these critical comments refer to the 
issue of relationships between governments. These comments invoke 
issues of State primacy. Contrary to commenters' assertions, the rules 
in question allocate responsibility in a manner which is supportive of, 
and consistent with, State primacy.
    For instance, the final rule provides that a State regulatory 
authority which issues a violation has responsibility, subject to OSM 
oversight, for identifying the ownership and control relationships of 
the violation. See 30 CFR 773.25(b)(1)(iii). The State regulatory 
authority which issues a violation has the greatest interest, among 
those regulatory authorities with an interest in the ownership and 
control relationships of that violation, in seeing that the persons 
responsible for the violation abate the violation. Such abatement 
directly improves the environmental quality of the State which issues 
the violation. Accordingly, the State which issued a violation should 
have the first opportunity, subject to Federal oversight, to identify 
the owners or controllers of the violation. Well before OSM made its 
proposals in September, 1991, which form the basis for today's final 
rules, both SMCRA and Federal regulations recognized that a violation 
had to be corrected to the satisfaction of the agency that has 
jurisdiction over the violation, before a permit could be issued by a 
regulatory authority. See section 510(c) of SMCRA; 30 CFR 
773.15(b)(1)(i).
    Moreover, today's final provisions further recognize the relative 
access to ownership and control information that the interested 
regulatory authorities have at each stage of the process. The 
regulatory authority which issued the violation is in the best position 
to investigate and to develop all of the relevant facts about the 
violation, including the identification of those responsible for the 
violation. The violation was committed within the jurisdiction of the 
regulatory authority which issued the violation. That regulatory 
authority has access to the actors on the ground at the surface coal 
mining operation and would be able to question them to identify 
ownership and control information.
    A similar analysis can be offered in support of affording the 
agency before which an application is pending responsibility for 
identifying the ownership and control of the application. This 
regulatory authority has the applicant before it and can inquire of the 
applicant directly with respect to any ownership and control 
information contained in the application. Thus, the regulatory 
authority before which an application is pending has responsibility, 
subject to Federal oversight, to decide the ownership and control 
relationships of the application. See 30 CFR 773.25(b)(1)(i).
    A regulatory authority which has issued a permit has ongoing 
authority for the permittee's surface coal mining operations on the 
permitted site. Thus, this regulatory authority has responsibility, 
subject to Federal oversight, to decide the ownership and control 
relationships of the permit. See 30 CFR 773.25(b)(1)(ii).
    Moreover, OSM recognizes that the industry commenters are deeply 
troubled by any use of the AVS in the permit application process and 
any application of OSM's ownership or control rules as contained at 30 
CFR 773.5 and 773.15(b)(1). Nevertheless, OSM has accepted the mandate 
of Congress to develop and implement the AVS because ``the AVS is 
essential to effective enforcement of the Surface Mining Control and 
Reclamation Act of 1977 [SMCRA].'' See Report of the Senate 
Appropriations Committee, Senate Report No. 103-114, at page 47 (July 
28, 1993). Thus, the allocation of responsibilities for the various 
regulatory authorities contained in the proposed rules and the final 
rules adopted today also attempt to reflect the pragmatic realities of 
implementing a national computer system.
    Once a decision has been made to go forward with a national 
computer system to aid the enforcement of section 510(c) of SMCRA, 
certain pragmatic realities must be recognized. First, information will 
be coming to the computer system from many sources. As each State 
regulatory authority analyzes ownership and control information 
contained in permit applications and reports such information to AVS, 
such information is incorporated into AVS. A national computer system 
requires centralized management and maintenance to assure the accuracy 
and consistency of information. Centralized management provides a focus 
of responsibility when inaccuracies or technical problems are 
identified. Accordingly, the Federal government, acting through OSM, 
has responsibility for such system management. At the same time, the 
States are primary actors in the permit application process and 
critically important actors in the development and the support of AVS. 
With respect to AVS, the States play a critical role in using the 
computer system as an information resource in the permit application 
process and in supplying information to AVS gleaned from the permit 
application process and other research.
    Consistent with the need for centralized management of the 
database, OSM has such a role with respect to the AVS and the 
information contained therein. As will be discussed below in the 
discussion of specific sections of the final rules, one of the changes 
made from the September, 1991, proposal was to place language in the 
final rule clarifying OSM's plenary role with respect to the content of 
ownership or control information in the AVS. See 30 CFR 
773.25(b)(3)(i). OSM will also have sole responsibility over the 
ownership and control relationships incident to Federal violations. See 
30 CFR 773.25(b)(2). Further, OSM will exercise oversight over State 
regulatory authorities' activities. See 30 CFR 773.25(b)(3)(ii). This 
role provided for OSM under the final rule, consistent with that 
proposed under the proposed rule, recognizes that, under the Act, while 
the States are subject to Federal oversight, OSM is not subject to the 
oversight of State regulatory authorities.
    The industry commenters asserted that the proposed rules will 
create confusion and conflict among the States with the potential for 
conflicting decisions on ownership and control by multiple State 
regulatory authorities and OSM. Again, OSM disagrees with the 
commenters' characterization of the effect of the rules. As indicated 
above, the proposed rules and the final rules clearly allocate 
responsibility among the various regulatory agencies. The regulatory 
authority before which an application is pending decides whether or not 
to issue a permit.
    OSM retains the authority to oversee the decision of the State. 
Indeed, OSM's role as controller of information already on AVS and as 
overseer of State ownership or control decisions will reduce, not 
create, confusion and conflict by establishing one final authority to 
make decisions in cases where disagreements among States might occur 
about information already on AVS.
    Accordingly, the rules do not inappropriately disperse 
decisionmaking among State and Federal regulatory authorities with 
respect to ownership and control. Further, prior to the publication of 
these final rules, OSM's AVS Office and the States have worked well 
together to implement AVS and the ownership and control regulations 
promulgated in 1988. To the extent that there have been disagreements 
between OSM's AVS Office and the State regulatory counterparts, such 
disagreements have been addressed expeditiously and resolved in a 
collegial and cooperative manner.
    Some commenters expressed concern that the proposed rules did not 
sufficiently address the issues of conflicts between the States and OSM 
and between the States themselves on matters of ownership and control. 
OSM believes that these issues will be addressed adequately by the 
provisions of 30 CFR 773.25. That section is based upon proposed 
Sec. 773.26 and establishes the relative responsibilities of agencies 
responsible for making ownership and control decisions. As noted 
previously, this regulation is discussed in detail below. Within the 
framework of State primacy, OSM will exercise its oversight role to 
review State ownership or control decisions, in response to citizen 
complaints or as otherwise appropriate, to assure the integrity of the 
AVS. See 30 CFR 773.12; 842.11; and 843.21.
    One commenter asserted, in substance, that the proposed rules did 
not go far enough in imposing Federal responsibility. This commenter 
proposed that all matters relating to ownership and control under 
section 510(c) of the Act should be OSM's responsibility. While OSM 
appreciates the commenter's suggestion, OSM must reject this proposal. 
As OSM indicated above, the Act establishes a system of State primacy 
with Federal oversight and assistance to the States. While it is 
understandable that some persons would prefer that the entire 
responsibility for permit decisionmaking be shouldered by the Federal 
government, such a system would require a significant restructuring of 
the statutory framework established by the Act. In contrast to this, 
today's final rules address the responsibilities established by section 
510(c) of the Act in a manner more consistent with the statutory 
framework.
    One commenter questioned whether OSM had given adequate 
consideration to the implications of the rules upon Federal and State 
relations. As the above discussion indicates, OSM has considered, in 
detail, the effect of AVS and these rules upon the relationship between 
OSM and the State regulatory authorities and believes that the rules 
are consistent with the framework for Federal and State relations 
established by the Act. Further, as indicated above, the working 
relationship between OSM's AVS Office and its State colleagues has been 
heretofore very productive and cooperative. OSM believes that State and 
Federal cooperation on AVS matters has been, overall, a significant 
success. Accordingly, OSM intends to continue to work closely and 
cooperatively with State regulatory authorities to resolve issues 
related to the implementation of AVS and section 510(c) of the Act.
Citizen Participation
    Commenters representing environmental groups criticized the 
proposed rules as not containing sufficient provision for citizen 
participation. They asserted that citizens should be afforded the 
opportunity to add ownership and control links to AVS. They further 
argued that citizens should have appeal rights when the regulatory 
authority denies their requests to add ownership or control links and 
that citizens should have rights of intervention when decisions are 
made to sever links. They also urged that citizens should have explicit 
rights to request enforcement action with respect to improvidently 
issued permits, with respect to other provisions of the rules relating 
to ownership and control, and with respect to the imposition of 
sanctions.
    OSM strongly supports citizen participation and agrees that 
opportunities for citizen participation need to be addressed in the 
rules governing ownership and control. OSM further agrees that the 
proposed rules did not sufficiently address these issues in the 
September, 1991, proposal. Under the Administrative Procedure Act, 
however, the agency has a responsibility to propose regulations for 
public comment, prior to finalizing such regulations. The changes 
proposed by commenters would represent significant modifications of the 
September, 1991, proposals.
    Thus, OSM does not consider it appropriate to incorporate 
commenters' proposals into today's final rules without first providing 
opportunity for comment to the regulated community, the States, and the 
public generally. While OSM could delay finalization of today's rules 
to allow for such proposal and for opportunity for comment, OSM does 
not believe that the public interest would be served by such delay.
    Nevertheless, suggestions made by the commenters are worthy of 
further consideration. Accordingly, at some future date, OSM may 
present proposals to respond to the concerns expressed by the 
commenters. Until such proposals are made, however, the interests of 
concerned citizens should be asserted pursuant to the provisions of 30 
CFR 773.13, 842.11, 842.12, 843.21 and other regulations providing for 
citizen participation, as appropriate. In this respect, if citizens 
disagree with a decision of OSM finding that an ownership or control 
link does not exist, citizens can challenge such decision by demanding 
a Federal inspection of relevant permits affected by such decision in 
accordance with the current provisions of 30 CFR 842.12. If OSM rejects 
their demand to conduct an inspection, citizens can seek review of such 
rejection and the issues related thereto pursuant to 30 CFR 842.15 to 
the Director or his designee and, if necessary, to OHA in accordance 
with 43 CFR part 4.
    Further, OSM's AVS Office will receive and consider ownership or 
control information from concerned citizens as part of OSM's ongoing 
research activities to incorporate ownership or control and violation 
information into the AVS database. Such information is relevant and 
will be used by the agency in the making of ownership or control 
determinations and for inclusion, upon verification by the agency, into 
AVS. OSM strongly encourages concerned citizens, environmental 
advocates, and members of the industry to come forward with information 
relevant to ownership or control matters. It is in everyone's interest 
for the AVS to contain the most complete, comprehensive, and accurate 
information possible.

C. Discussion of Final Rules

    The following text, which describes the final rules and responds to 
the specific public comments that OSM received on the proposed rules, 
is organized by the part and section number of the affected provisions. 
Grammatical or stylistic changes that do not affect the substance of 
the final rules are generally not discussed.
1. Part 701--Permanent Regulatory Program
    Section 701.5--Definitions. In the proposed rule, OSM deleted the 
definition of ``violation notice'' previously contained in the 
regulations and transferred such definition in expanded form to 
Sec. 773.5. The final rule is identical to the proposed rule. As 
described below, the definition of ``violation notice'' refers to the 
types of violations of the Act or other laws which will form the basis 
for a regulatory authority to deny a permit application under the 
provisions of Sec. 773.15(b).
2. Part 773--Requirements for Permits and Permit Processing
    Part 773--The Table of Contents. In the proposed rule, OSM had 
included an amendment to the Table of Contents to provide for a 
proposed rule governing procedures for the challenge of ownership or 
control links prior to entry in AVS. Since OSM has determined not to go 
forward with that portion of the proposal, that reference is not 
included in the final Table of Contents adopted today. Also, since OSM 
has deferred action with respect to the adoption of proposed 
Sec. 773.27 to a subsequent rulemaking, that reference has also been 
deleted. The final Table of Contents is adopted as described in Summary 
of Rules Adopted.
    Section 773.5--Definitions. The proposed rule added certain 
definitions to Sec. 773.5. Such definitions included the terms 
``Applicant/Violator System or AVS,'' ``Federal violation notice,'' 
``Ownership or control link,'' ``State violation notice,'' and 
``Violation notice.'' Such definitions were necessary to an 
understanding of the proposed comprehensive regulations relating to the 
implementation of AVS.
    Industry commenters objected that the proposed definition of 
``violation notice'' contained in the regulation was too broad. They 
argued that the proposed definition, insofar as it applies to a 
``Federal violation notice'' should be explicitly limited to violations 
of environmental laws. Further, they asserted that the definition 
inappropriately included written communications and demand letters as 
``violations.''
    OSM disagrees with the commenters' concern over the need for an 
explicit limitation for violations of environmental laws in the 
definition of a ``Federal violation notice.'' Commenters conceded that 
such a limitation is already contained in the proposed definition of 
``violation notice.'' The definition of a Federal violation notice is 
modified by any limitations contained in the definition of a violation 
notice. Accordingly, there is no need for an explicit additional 
limitation to address commenters' concerns. It is already clear that it 
is limited to violations of environmental laws. Thus, OSM has adopted 
the proposed definition of ``Federal violation notice'' as a final 
definition without modification.
    Further, commenters asserted that the proposed rule inappropriately 
expanded the definition of violation notice to include various written 
communications and demand letters. They asserted that a demand letter 
could somehow preclude a permit applicant from pursuing a good faith 
appeal and that a person's ability to challenge the debt would depend 
on whether the agency attempted to collect the debt. In substance, 
commenters took exception to the prospect of a demand letter being the 
basis for a permit denial when the demand letter contains notice of a 
delinquent civil penalty and the applicable statute of limitations has 
expired precluding further action to collect the debt. They asserted 
that the proposed rule impermissibly expands the types of violations 
for which a person could be subject to permit block without affording 
the person a right of timely challenge.
    Again, OSM disagrees with commenters' analysis. First, it must be 
emphasized that the type of document is less significant than the 
violation of which it provides notice. The document is merely a vehicle 
for communicating notice of the substantive violation. The documents 
listed in the proposed definition merely recount the possible types of 
documents providing notice and do not substantively expand the universe 
of violations which would be the basis for permit denial under section 
510(c) of the Act and the provisions of 30 CFR 773.15(b). The 
substantive violation, rather than the type of document, forms the 
basis for a permit denial under the provisions of section 510(c) of the 
Act and 30 CFR 773.15(b)(1). Pursuant to those provisions, a regulatory 
authority is required to refuse permit issuance where available 
information indicates that any surface coal mining operation owned or 
controlled by an applicant is currently in violation of the Act or 
other indicated laws. Delinquent fees or penalties which have ripened 
to the level for which a demand letter is indicated constitute 
available information for which an applicant will be held accountable 
and which a regulatory authority must take into account in any permit 
decision. Contrary to commenters' assertions, the filing of a suit to 
collect delinquent reclamation fees or civil penalties is not a 
condition precedent to such debts being valid violations or a condition 
precedent to such debts being considered the bases for permit denial.
    With respect to the commenters' concerns about rights of challenge 
incident to demand letters, OSM believes that current quality control 
procedures will prevent the entry of unripe violations into the system. 
Furthermore, with this final rule and with OHA's rule which is being 
contemporaneously published, OSM and OHA have acted to provide a means 
for applicants to obtain temporary relief from permit blocks where they 
are likely to prevail on the merits. Thus, if a violation has not 
actually ripened into the basis for a permit block, temporary relief 
could be sought. The discussion of these provisions of the final rule 
are contained at the discussion of 30 CFR 773.25 below in this 
preamble.
    Industry commenters also objected to the prospect that a demand 
letter or other notice could contain notice of a delinquent civil 
penalty the collection of which is barred by the applicable statute of 
limitations. In substance, they argued that such a notice should not be 
the basis for a permit denial. OSM disagrees. In 1988, OSM addressed 
similar concerns expressed by commenters with respect to the ownership 
and control rules. OSM stated, in relevant part, as follows:

Effect of Statute of Limitations on Collection Actions

    A commenter asserted that permit blocking cannot occur for any 
civil penalty which has not been reduced to judgment within the 
applicable statute of limitations in 28 U.S.C. 2462 (barring an 
action, suit or proceeding for enforcement of any civil fine, 
penalty unless commenced within five years).
    OSMRE disagree[s] with the commenter's position. Although the 
statute of limitations may provide a defense to suit for collection 
of money filed five years following the entry of a final order, it 
does not invalidate the final order or cancel the underlying debt, 
which will continue to be listed in the Applicant Violator System 
and will result in blocking the issuance of a permit.

See Preamble to Requirements for Surface Coal Mining and Reclamation 
Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page 
38884 (October 3, 1988). The agency considers this position to be sound 
and has no intention of changing course. Accordingly, this criticism of 
the proposed definition is rejected.
    A number of commenters representing industry interests asserted 
that the definition of violation contained in the rule was overbroad in 
that it potentially included violations of laws other than SMCRA as the 
basis for permit denial. These commenters proposed that the rule 
incorporate explicit limitations to the effect that only violations 
relevant to SMCRA or consistent with the environmental protection 
standards of SMCRA be the basis for permit denial.
    OSM rejects the commenters' proposals as unnecessary. To the extent 
that the final definition of ``violation notice'' describes the type of 
violation for which the listed types of notice will be provided, the 
final rule is intended to track the language of section 510(c) of the 
Act. That provision of the Act states that the basis for permit denial 
includes violations of the Act ``and any law, rule or regulation of the 
United States, or of any department or agency in the United States 
pertaining to air or water environmental protection incurred by the 
applicant in connection with any surface coal mining operation * * *'' 
(Emphasis added.)
    Commenters' concerns are already addressed by the Act and the 
proposed and final definitions of ``violation notice'' which 
incorporate the above-emphasized language of the Act. This language 
requires that violations which support permit denial must be those 
pertaining to air or water environmental protection incurred in 
connection with any surface coal mining operation. Any air or water 
environmental protection violations incurred in connection with a 
surface coal mining operation would be of a type ``relevant to SMCRA.'' 
If the violations are committed not in connection with a surface coal 
mining operation, they would not be a basis for the denial of a permit 
under section 510(c) of the Act. Thus, OSM does not believe that a 
change in the proposed rule language to reflect commenters' concern is 
needed.
    A commenter representing certain State regulatory authorities also 
criticized the proposed definition of ``violation notice'' as being too 
broad and was concerned that such definition, when read with the 
provisions of 30 CFR 778.14(c), would lead to ``nationwide gridlock'' 
or undue delay in State regulatory authorities' processing of permit 
applications.
    The proposed definition of ``violation notice'' is designed to 
incorporate the full range of violations which would form the basis for 
permit denial under section 510(c) of SMCRA. The definition is intended 
to implement the statutory definition, not expand such definition. A 
more limited definition would be an impermissible constraint upon the 
broad language of the Act. Accordingly, OSM rejects the view that the 
proposed definition is overbroad.
    OSM further disagrees with commenter's view that applicants' 
reporting of such violation notices in accordance with the provisions 
of 30 CFR 778.14(c) will lead to undue delay in the processing of 
permit applications. Applicants must supply complete information with 
respect to outstanding violations to enable regulatory authorities to 
make informed decisions as to permit issuance as mandated by section 
510(c) of the Act and 30 CFR 773.15(b)(1). The reporting of such 
information by an applicant may, indeed, lead to permit denial. That, 
however, constitutes with the mandates of the Act, not inappropriate 
delay or stalemate. OSM is confident that OSM and Sate regulatory 
authorities can evaluate and use the information provided by applicants 
with respect to outstanding violations in accordance with the 
definitions of ``violation'' and ``violation notice'' along with 
information contained in AVS to meet the requirements of the Act in a 
timely fashion.
    The same commenter additionally urged that OSM retain the limited 
definition of ``violation notice'' previously contained in 30 CFR 701.5 
because such definition is more ``realistic'' in its scope and because 
there is a need for such a definition across OSM's regulations, not 
just those contained in 30 CFR part 773.
    Again, OSM disagrees with commenter's views. The definition of 
``violation notice'' previously contained in the regulations did not 
identify the types of violations of the Act or other laws which would 
form the basis for a regulatory authority to deny a permit under 30 CFR 
773.15(b)(1). A fuller definition of the term which would encompass 
these types of violations as mandated by section 510(c) of the Act was 
necessary for incorporation by reference into a proposed amended 
version of 30 CFR 773.15(b)(1). While commenter has asserted that there 
is a need for a general definition of the term ``violation notice'' 
across OSM's regulations, commenter has identified no urgent need for a 
universal definition of the term that would outweigh the need to 
clarify the provisions of 30 CFR part 773. Further, in the event that 
it becomes apparent that the implementation of other regulations have 
been somehow significantly compromised by the deletion of the general 
definition of ``violation notice'' contained in 30 CFR 701.5, OSM can 
address these issues as necessary. Accordingly, OSM must reject the 
commenter's position.
    Further, a commenter urged that any violations be in a final, 
unappealable posture before they can be the basis for permit denial. 
OSM disagrees with the commenter's characterization of the current 
state of the law and with what the commenter believes ought to prevail.
    First, Federal regulations which predate the proposed rules and 
today's final rules already provide that permits may be conditionally 
issued based upon a good faith, direct administrative or judicial 
appeal testing the validity of the underlying violation. See 30 CFR 
773.15(b)(1)(ii)-(b)(2). Thus, contrary to commenter's implication, 
permits are not necessarily denied while violations are under appeal. 
The burden, however, is on a violator to assert appeal rights in good 
faith and in a timely manner. There is no legitimate reason to afford 
additional appeal rights to people who have squandered their 
opportunity to appeal. In the absence of a timely appeal, a violation 
should be the basis for denial of a permit, in accordance with the 
provisions of section 510(c). In this preamble under the topic 
captioned ``Due Process,'' OSM has responded in detail to commenters 
who have asserted that permits should be conditioned upon the appeals 
of ownership or control links or upon the appeals of the existence of 
the violation asserted by owners or controllers of violations after 
standard appeal times for the violations have run. As stated in this 
preamble, OSM rejects these assertions.
    To the extent that the commenter implied that permits should be 
issued unconditionally during the pendency of an appeal of a violation, 
OSM also rejects this proposal. Under this proposal, a violator could 
commit a violation at his or her surface coal mining operation; take a 
timely appeal; and then be approved unconditionally for permit issuance 
at another site. Following the failure of his or her appeal, he or she 
could continue to mine on the new site with no interruption or 
termination of his or her rights on the new site. This course of events 
violates the provisions of section 510(c) of the Act which mandate that 
regulatory authorities deny permits when applicants have current 
violations of the Act or other laws. Also, the commenter's proposal is 
inconsistent with the provisions of 30 CFR 773.15(b)(1)(ii)-(b)(2) 
cited above which allow only conditional issuance, rather than 
unconditional issuance, for permits issued to applicants who have 
appealed outstanding violations.
    In that final rule, OSM has adopted the definitions of ``Federal 
violation notice'' and ``violation notice'' as proposed and without any 
of the changes requested by commenters.
    In the proposed rule, the definition of ``ownership or control 
link'' included references to ownership or control ``under paragraph 
(b)'' of 30 CFR 773.5. Since the publication date of that proposal, OSM 
has proposed changes in the definitions of ``owned or controlled'' or 
``owns or controls'' contained at 30 CFR 773.5. See Proposed Rule, 
Definitions and Procedures for Transfer, Assignment and Sale of Permit 
Rights; Definition of Ownership and Control, 58 FR 34652 et seq. (June 
28, 1993). If some of those proposed changes are ultimately adopted, 
the reference to ownership or control as defined by ``paragraph (b)'' 
contained in the proposed definition of ``ownership or control link'' 
would be inappropriate.
    Accordingly, to assure flexibility, OSM has deleted the reference 
to ``paragraph (b)'' of 30 CFR 773.5 from the final definition of 
``ownership or control link.''
    Also, the proposed definition of ``ownership or control link'' 
indicated that a link included presumptive ownership or control 
relationships which had not ``been successfully rebutted under the 
provisions of Secs. 773.24 and 773.26 or Secs. 773.25 and 773.26 or 
under the provisions of part 775 of this chapter and Sec. 773.26 of 
this part.'' As is discussed below in this preamble, OSM has deleted 
proposed section 773.25, procedures for challenging ownership or 
control links prior to entry in AVS and has renumbered proposed 
Sec. 773.26 as final Sec. 773.25, standards for challenging ownership 
or control links and the status of violations. The final definition of 
``ownership or control link'' has been amended to reflect these 
changes.
    The final rules are adopted containing the provisions described in 
this preamble above at Summary of Rules Adopted.
    Section 773.10--Information Collection. The proposed rule would 
have revised Sec. 773.10 which contained a list of the existing 
information collection requirements in part 773 and also the OMB 
clearance number indicating OMB approval of the information collection 
requirements. The proposed rule revision would have updated Sec. 773.10 
by including the proposed AVS-related rules containing information 
collection requirements. The proposed revision provided an estimate of 
the average public reporting burden per response of three hours, 
including the time for reviewing instructions, searching existing data 
sources, gathering and maintaining the data needed, and completing and 
reviewing the collection of information. The proposed section also 
listed the addresses for OSM and the Office of Management and Budget 
(OMB) where comments on the information collection requirements may be 
sent.
    Industry commenters asserted that the estimate of three hours to 
prepare an average response for the collection of information required 
was unrealistically low.
    OSM disagrees with commenters' assertion. The three hours estimated 
burden was an estimated average, rather than a predicted figure for the 
burden of a single, typical response. The calculation of an ``average'' 
response means that there are some responses which may require larger 
amounts of time to prepare and that there are also some responses which 
may require significantly lesser amounts of time. It is entirely 
reasonable to expect that the reporting and information collection 
burden of these regulations may vary among entities depending upon the 
entities' size and structural complexity.
    Further, once companies have researched and compiled their 
particular ownership or control information, they have done the basic 
research which can be used for future compliance. This basic ownership 
or control research will then be readily available to the company and 
the company only needs to update such research to reflect changes in 
ownership or control for future applications. Once entities and 
regulatory authorities develop experience in complying with the 
regulations, they will also develop experience in collecting, storing, 
retrieving, and reporting the necessary compliance information. A 
number of large companies have told OSM that they have already 
collected and stored their ownership or control information in a 
computerized database or are in the process of doing so. Once such 
information has been so stored, it would be readily accessible and 
easily retrieved for compliance purposes. Thus, the amount of time 
required to prepare a typical response under these regulations should 
diminish over time.
    Nevertheless, in the final rule adopted today, OSM has recalculated 
the estimated time for compliance in accordance with standard 
procedures required by the OMB. OSM has concluded that the public 
reporting burden for the collection of information required by part 773 
as amended by these final regulations is four and one half hours per 
response, rather than three hours. The final rule also has been 
modified to delete specific references to the particular sections of 
part 773 which are relevant for information collection purposes. 
Instead, OSM has provided a reference to the collection of information 
required by 30 CFR part 773, since this part encompasses all sections 
of part 773, including the final rules adopted today, which generate an 
information collection obligation.
    Section 773.15--Review of permit applications. In the proposed 
rule. OSM proposed to amend 30 CFR 773.15(b)(1) to refer to relevant 
amended definitions and AVS-related rules as the basis for a regulatory 
authority's analysis when reviewing a permit application.
    The proposed regulation required the regulatory authority to review 
all reasonably available information concerning violation notices and 
ownership or control links involving the applicant.
    Such information would include that obtained pursuant to 
Sec. 773.22 (verification of ownership or control application 
information); Sec. 773.23 (review of ownership or control and violation 
information); amended Sec. 778.13 (identification of interests); and 
amended Sec. 778.14 (violation information).
    While those regulations will be discussed in detail later in this 
preamble, the net effect of referencing such provisions in 
Sec. 773.15(b)(1) was to assure that the regulatory authority makes a 
decision with respect to permit issuance or denial based upon complete 
information relating to ownership, control, and violations. Such 
compete information includes the mandated use of AVS.
    The proposed rule would have further added a paragraph (b)(4) to 30 
CFR 773.15. This provision would have provided that delinquent civil 
penalties for violations cited prior to October 3, 1988, not form the 
basis for a permit block against persons linked through ownership or 
control to such violations, where reclamation had been completed in 
accordance with the provisions of the applicable regulatory program and 
where, with respect to each cessation order for which a delinquent 
civil penalty exists, such persons had paid $750 of the amount of such 
penalty to the regulatory authority which issued such cessation order. 
In substance, this regulation proposed a ``safe harbor'' with respect 
to owners or controllers of delinquent civil penalties cited prior to 
October 3, 1988.
    In addition, the proposed amendments to 30 CFR 773.15(b)(1) would 
also have deleted the presumption contained in the then current version 
of that rule that allows a regulatory authority, in evaluating whether 
a surface coal mining operation owned or controlled by a permit 
applicant is currently in violation of the law, to presume, in the 
absence of a failure to abate cessation order (FTACO), that a notice of 
violation (NOV) has been or is being corrected, except where evidence 
to the contrary is set forth in the permit application, or where the 
notice of violation is issued for non-payment of abandoned mine 
reclamation fees or civil penalties.
    Further, the proposed amendment to 30 CFR 773.15(b)(1) would have 
incorporated by reference the amended definition of ``violation 
notice'' and the proposed definition of ``ownership or control link'' 
contained in proposed Sec. 773.5 by requiring a regulatory authority to 
review ``all reasonably available information concerning violation 
notices and ownership or control links involving the applicant.'' This 
proposed change would have eliminated the need for the detailed list 
contained in 30 CFR 773.15(b)(1) of the types of violation information 
which a regulatory authority must review as part of the application 
review process provided by 30 CFR 773.15(b)(1).
    The two issues which generated the most significant comments were 
the proposed deletion of the presumption of NOV abatement and the 
proposed safe harbor for owners or controllers of surface coal mining 
operations with delinquent civil penalties for violations issued prior 
to October 3, 1988.
    The first of these issues to be addressed is the proposed deletion 
of the presumption of NOV abatement. Commenters representing a number 
of State regulatory authorities strongly objected to the deletion of 
the presumption. They asserted that the elimination of the presumption 
would lead to ``nationwide gridlock.'' They asserted that such a rule 
provision would lead to automatic appeals of all NOV's; that State 
regulatory authorities would have to expend significant resources 
tracking the course of NOV's and NOV appeals; that companies operating 
before multiple State regulatory authorities would never be able to 
definitively prove that NOV's were being abated such that they could be 
issued permits; and that such efforts would be a significant waste of 
State and Federal resources. They asserted that 80%-85% of all NOV's 
are resolved and never ripen into CO's in any event.
    Also, commenters representing industry interests strongly 
criticized the proposed deletion of the NOV presumption as both 
impractical and counterproductive. They asserted that the proposed 
deletion of the presumption would be especially burdensome on large 
multi-state corporations. They questioned whether such entities would 
be able to keep track of the abatement status of the NOV's of their 
many operating subsidiaries and contract miners. They further asserted 
that most NOV's are routinely and timely abated. They argued that 
eliminating the NOV presumption would lead to information overload in 
the permit application process; to increased costs and delays in permit 
processing; and to increased errors in data collection. They argued 
that the deletion of the presumption would require the reallocation of 
personnel from enforcement to document processing.
    In contrast to the positions of State regulatory authorities and 
the industry, one commenter representing environmental advocacy groups 
supported the deletion of the NOV presumption, asserting that the 
deletion of the presumption would lead to better tracking of the status 
of violations and to faster remediation of violations. Another 
commenter did concede, however, that it would be difficult for the OSM 
to keep AVS accurate and current with respect to violation information 
if the presumption of NOV abatement in the absence of an FTACO was 
eliminated.
    OSM considers the arguments raised by the State regulatory 
authorities and by the industry to be persuasive. OSM must give 
particular consideration to the concerns expressed by the State 
regulatory authorities on this issue. These agencies have the 
responsibility of implementing the ownership and control process. If 
the State regulatory authorities believe that the complete elimination 
of the presumption of NOV abatement will impose a significantly 
increased burden upon them for limited environmental return, this 
position cannot be discounted. OSM recognizes that there may be a 
potential benefit in having multiple jurisdictions tracking the course 
of NOV's for purposes of permit issuance. Such multiple supervision 
could theoretically encourage prompt abatement. Nevertheless, the 
mechanics of implementing such a process through AVS and other means 
would be sufficiently complex so as to create significant uncertainty 
among permit applicants and regulatory authorities. Such uncertainty 
outweighs the benefits of the complete elimination of the presumption 
of NOV abatement.
    In response to the environmentalists' arguments, OSM recognizes 
that there is a theoretical, potential benefit in multiple regulatory 
authorities tracking the course of an NOV for purposes of permit 
issuance. Under this scenario, a State would deny a permit to an 
applicant based upon his or her being linked through ownership or 
control to an NOV in another State even though the abatement period for 
the NOV had not expired. The threat of permit denial could enhance the 
prospect for prompt abatement of that NOV.
    Nevertheless, the mechanics of implementing this process with 
respect to AVS would be complex and would create such uncertainty as to 
outweigh the benefits. Assuming that NOV's whose abatement period had 
not yet expired and which had not yet generated FTACO's were loaded 
onto AVS, OSM would have to check the status of such NOV's and 
continually update such information on AVS. It is unclear whether OSM 
would be able to keep up with the changing status of NOV's and 
incorporate such information in a timely manner into AVS. This would 
add an additional element of uncertainty with respect to the currency 
of violation information in AVS. OSM believes it is more desirable to 
have information in AVS which is both current and reliable, so that 
State regulatory authorities may depend on the system during the permit 
application review process.
    Further, OSM believes that the decision to retain at least a 
limited presumption of NOV abatement is consistent with positions taken 
by the Department of the Interior in previous litigation. In litigation 
relating to Sec. 773.15(b)(1) and related matters before the U.S. 
District Court of the District of Columbia, the Secretary advised the 
court that he had decided to reconsider the issue of whether, in the 
absence of an FTACO, the regulatory authority may presume that an NOV 
has been or is being corrected. The Secretary further advised the court 
that he would, if appropriate, engage in further rulemaking on the 
subject as expeditiously as possible. See National Wildlife Fed'n v. 
Lujan, No. 88-3117-AER (D.D.C.), Memorandum of Points and Authorities 
in Support of the Federal Defendants' Cross-Motion for Summary Judgment 
and in Opposition to Plaintiffs' Motions for Summary Judgment, at pages 
89-90.
    As indicated in the preamble to the proposed rule, the proposed 
amendment to delete the presumption of NOV abatement represented the 
``further rulemaking'' of which the court was advised. However, the 
Secretary committed only to reconsider the presumption of NOV 
abatement. The Secretary never committed to finalize any proposed rule. 
After receiving the States' and industry's comments cited above, OSM 
has determined that the complete deletion of the presumption would 
impose a significant burden upon the States and provide little 
enforcement benefit.
    As indicated in the preamble to the September, 1991 proposed rule, 
it was, in fact, never OSM's intention to load NOV's (other than 
delinquent NOV civil penalties) into the AVS database, given the large 
volume of data entry that would be required to keep such violation 
information up to date. Id. Thus, even if OSM had completely deleted 
the presumption of NOV abatement by adopting the proposed modification 
to 30 CFR 773.15(b)(1), there would have been no immediate, direct 
impact upon the AVS database. If OSM had eliminated the presumption, 
there would have been, however, a significant indirect impact upon AVS. 
The States would have been required to spend scarce resources tracking 
other States' NOV's, including those whose abatement periods had not 
yet expired, for permit application purposes. The States would have had 
fewer resources available to focus upon the other information that AVS 
believes is more critical to the effective implementation of section 
510(c) of the Act, including the development of complete information 
with respect to entities' ownership and control. Further, OSM is 
committed to making its best effort to provide, through the AVS, a 
complete list of violations which are required to be used as the basis 
for a permit block.
    Accordingly, OSM has determined to retain a presumption of NOV 
abatement in 30 CFR 773.15(b)(1). The focus of State regulatory 
authorities' concern appears to be the uncertainty incident to NOV's 
with abatement periods which have not yet expired. In substance, where 
an NOV has been issued and the abatement period has not yet expired, it 
is uncertain whether the violation will be ultimately abated or will 
ripen into the basis for the issuance of a failure to abate cessation 
order. The State regulatory authorities and the coal industry argue 
that such uncertainty justifies unconditional permit issuance. The 
environmentalists argue that such uncertainty demands permit denial. 
While OSM recognizes the needs of the State regulatory authorities, OSM 
believes that environmental advocates have also asserted legitimate 
concerns about the consequences of a blanket presumption of abatement 
for all NOV's. OSM has therefore chosen a middle ground which will 
serve to reduce the uncertainty while balancing the concerns of the 
various interests.
    In response to the comments made to its proposal, OSM has amended 
30 CFR 773.15(b)(1) to provide that, in the absence of a failure-to-
abate cessation order, a regulatory authority may presume that a notice 
of violation is being corrected to the satisfaction of the agency with 
jurisdiction over the violation where the abatement period for such 
notice of violation has not yet expired and where the permit applicant 
has provided certification in his or her permit application that such 
violation is in the process of being corrected to the satisfaction of 
the agency with jurisdiction over the violation. Where OSM is 
regulatory authority, OSM will incorporate such certification into the 
statement of verification currently required in OSM's permit 
applications. Any permits issued incident to such certification will be 
conditionally issued based upon successful completion of the necessary 
abatement.
    The above approach balances the concerns of the commenters. A 
blanket presumption of abatement for all NOV's--including those whose 
abatement period has expired--is inappropriate. It is entirely possible 
that there are NOV's with expired abatement periods for which cessation 
orders have not yet been written. To presume that such NOV's are abated 
is unjustified. At the same time, today's final rule recognizes that, 
until the abatement period has expired, diligent operators should have 
the opportunity to correct their NOV's in a timely manner without being 
subjected to permit denial during the period of abatement if they 
certify that such violations are in the process of abatement. State 
regulatory authorities can conserve limited resources by having the 
benefit of a reasonable presumption of NOV abatement which applies to 
those NOV's which are in a true state of uncertainty with respect to 
abatement. In considering whether a particular NOV should be the basis 
for permit denial, State regulatory authorities will also have the 
comfort of certification by the applicant and the protection of 
conditional issuance to assure that any representations made with 
respect to NOV abatement are actually fulfilled.
    OSM recognizes that some large companies may not be aware of all 
NOV's whose abatement periods have not expired where such NOV's are 
cited against one or more of their many subsidiaries. Nevertheless, OSM 
expects that companies will make a good faith effort to track their 
NOV's and report such NOV's as part of permit applications. Where a 
company has developed a good faith NOV tracking procedure and, in the 
diligent exercise of such procedure, has inadvertently failed to report 
an NOV whose abatement period has not yet expired, such failure would 
not constitute willful nondisclosure by the company. On the other hand, 
where a company fails to set up a tracking procedure or where a company 
sets up a tracking procedure or corporate structure designed or 
intended to shield it from knowledge of NOV's or the ability to track 
NOV's this will not excuse a company's failure to accurately report 
NOV's in permit applications. Further, OSM expects that any 
certifications of ongoing correction provided with respect to NOV's be 
based upon truthful information and be submitted in good faith. To the 
extent that a company asserts that it cannot certify because it is not 
certain whether all violations have been identified, the presumption of 
NOV abatement would not apply. OSM recognizes that companies may assert 
this argument, but OSM considers the certification necessary to assure 
that violations are in the process of being corrected.
    As indicated above, the second issue in the proposed rule which 
generated significant comments was the proposed safe harbor for the 
owners or controllers of delinquent civil penalties for violations 
issued prior to October 3, 1988.
    Commenters from the coal industry and the States criticized the 
safe harbor proposal because it required, as a condition precedent for 
safe harbor treatment, that reclamation be completed within 120 days 
after the effective date of the rule. These commenters asserted that 
this proposed condition limiting the availability of safe harbor 
protection was inadequate and insufficiently flexible. They argued that 
the proposal did not take into account the time required to perform 
reclamation and the potential for reclamation to be effected by 
changing events and environmental conditions.
    Moreover, commenters representing the environmental community also 
criticized the safe harbor provision. These commenters criticized the 
proposed $750 settlement amount as arbitrarily and artificially low. 
Commenters representing the State regulatory authorities asserted that 
the proposed penalty amount provided insufficient flexibility and that 
a State regulatory authority should be able to demand a greater penalty 
if the circumstances warrant.
    While the industry and the States focused upon the limited window 
of time available to perform abatement and the environmentalists and 
the States questioned the limited penalty amount, all of these 
commenters seemed to share the view, subject to their particular and 
differing perspectives, that the proposed safe harbor provision was 
artificial and unnecessarily rigid.
    Upon consideration of the comments, OSM agrees that the proposal 
was unnecessarily rigid and has, therefore, not finalized the safe 
harbor proposal. Accordingly, regulatory authorities will have the 
discretion to review the totality of the facts on a case by case basis 
to determine whether a person who is linked, through ownership or 
control, to delinquent civil penalties may avoid permit block through 
payment of a portion of such penalties. OSM will review the adequacy of 
such settlements within the context of OSM's routine oversight of the 
State regulatory authorities under 30 CFR parts 732 and 733 and of case 
specific complaints and investigations under 30 CFR part 842.
    Whether a settlement is adequate will be a function of the entire 
context of a particular case. Factors to be considered include, but are 
not limited to, whether the settling owner or controller has performed 
required reclamation to abate the violations other than the delinquent 
civil penalties in a timely manner. The regulatory authority should 
also consider the degree to which the facts indicate that the owner or 
controller had the authority to exercise control of the violator. If 
the owner or controller had such authority, whether it chose to 
exercise such authority or not, it is less credible for the owner or 
controller to argue that it was unaware of the activities and 
violations such that a significant discount in civil penalty amount is 
warranted for the owner or controller. In substance, with such 
authority, the owner or controller would have had the ability to be 
informed of violations in a timely manner if he or she had wanted to be 
so informed. The regulatory authority should also consider the size and 
solvency of the owner or controller and the impact that the payment of 
a reduced amount of the civil penalty will have upon the activities of 
that company and other companies similarly situated. Further, the 
regulatory authority should consider the impact of the settlement upon 
the integrity of the regulatory authority's enforcement program. In 
other words, will the proposed settlement encourage companies to 
conclude that there is an economic benefit in ignoring the civil 
penalties and violations of their owned or controlled entities until 
such companies are required to settle by regulatory authorities?
    In accordance with the above discussion, OSM has not adopted the 
provisions of the proposed rule which would have deleted the 
presumption that NOV abatement currently contained in 30 CFR 
773.15(b)(1) and which would have created a safe harbor for owners or 
controllers with respect to delinquent civil penalties for violations 
cited prior to October 3, 1988. In paragraph (b)(1) of the final rule, 
OSM has inserted language providing for a presumption of NOV abatement 
for NOV's whose abatement periods have not yet expired where the permit 
applicants have certified that such NOV's are in the process of being 
corrected to the satisfaction of the agency with jurisdiction over the 
violation. In the final rule, OSM has also deleted the language 
contained in the proposed rule which would have provided the safe 
harbor for certain owners or controllers. OSM has otherwise adopted the 
provisions of the proposed rule as the final rule.
    Section 773.20--Improvidently Issued Permits: General Procedures. 
In the proposed rule, OSM proposed to amend paragraph (b)(1)(ii) of 30 
CFR 773.20 to delete the reference to the presumption of NOV abatement 
contained in 30 CFR 773.15(b)(1). See Proposed Rule, Use of the 
Applicant/Violator Computer System in Surface Coal Mining and 
Reclamation Permit Approval, 56 FR 45780, 45784-45785 (September 6, 
1991). The basis for such deletion was to assure consistency with the 
provisions of 30 CFR 773.15(b)(1) which were to be similarly amended.
    In the final rule, OSM has reinserted language which addresses the 
situation which occurs when a permit is issued in reliance upon the 
presumption that an NOV is being abated in the absence of a cessation 
order and a cessation order is, in fact, issued with respect to the 
violation. In such an event, a regulatory authority is required to find 
that the permit has been improvidently issued. The September, 1991, 
proposed rule deleted this language to assure consistency with OSM's 
proposal to delete the presumption of NOV abatement from the permit 
review process of 30 CFR 773.15(b). As described in this preamble in 
the discussion relating to 30 CFR 773.15(b), OSM has decided to include 
a presumption of NOV abatement for that regulation. To assure 
consistency between the treatment of improvidently issued permits and 
permit applications, OSM has reinserted language which addresses the 
presumption of NOV abatement into 30 CFR 773.20(b)(1)(i)(B). The 
agency's reasons for retaining a presumption of NOV abatement are 
described fully in the preamble discussion with respect to 30 CFR 
773.15(b)(1).
    In the proposed rule, OSM also proposed to renumber certain 
provisions of the then current 30 CFR 773.20 such that paragraph (b)(2) 
would become (b)(1)(ii), paragraph (b)(2)(i) would become 
(b)(1)(ii)(A), paragraph (b)(2)(ii) would become (b)(1)(ii)(B), and 
paragraph (b)(3) would become (b)(1)(iii). In the final rule, such 
renumbering is also adopted.
    OSM also proposed to amend the then current 30 CFR 773.20 by 
inserting a new paragraph (b)(2), which would have made the provisions 
of proposed Sec. 773.26, standards for challenging ownership or control 
links and the status of violations, applicable when a regulatory 
authority makes determinations with respect to improvidently issued 
permits. Proposed Sec. 773.26 would have been applicable when a 
regulatory authority determines whether a violation, penalty, or fee 
remains unabated or delinquent, has been corrected, is in the process 
of being corrected, or is the subject of a good faith appeal, and 
whether any ownership or control link between the permittee and the 
person responsible for the violation, penalty, or fee existed, still 
exists, or has been severed.
    The proposed insertion of the language referring to Sec. 773.26 
would have had the effect of assuring that the standards, 
responsibilities, and procedures created by proposed Sec. 773.26 were 
consistently applied to permit issuance and to determinations regarding 
improvident permit issuance. OSM took such an approach in the belief 
that this would enhance the fairness of the permitting process and the 
prospect for the uniform enforcement of nationwide minimum standards.
    In the final rule, this approach is adopted. The reference to 
Sec. 773.26 is changed, however, to Sec. 773.25 to reflect the 
renumbering of that section. Also, as has been indicated previously, 
OSM has inserted language in paragraph (b)(2) of final Sec. 773.20 to 
clarify that a challenge as to the existence of a violation at the time 
it was cited may be made within the context of the improvident permit 
issuance process.
    OSM further proposed to renumber provisions of the regulation at 30 
CFR 773.20(c), which relate to remedial measures for improvidently 
issued permits, so that then current paragraph (c) would become (c)(1), 
then current paragraph (c)(1) would become (c)(1)(i), then current 
paragraph (c)(2) would become (c)(1)(ii), then current paragraph (c)(3) 
would become (c)(1)(iii), and then current paragraph (c)(4) would 
become (c)(1)(iv). In the final rule, such renumbering is adopted.
    Further, proposed renumbered paragraph (c)(1)(iv), which would 
authorize the regulatory authority to use rescission as one of the 
remedial measures for improvident permit issuance, would have deleted a 
specific reference contained in the former 30 CFR 773.20(c)(4) to the 
rescission procedures of 30 CFR 773.21.
    The reason for such proposed deletion was that OSM sought to 
establish a prior notice and common appeal procedure for both permit 
suspensions and permit rescissions with respect to improvidently issued 
permits. The then current regulation governing permit suspensions at 30 
CFR 773.20(c)(3) did not impose any specific requirements for prior 
notice, opportunity to be heard, or right of appeal for the permittee 
whose permit is to be suspended. See 54 FR 18450 (1989). In contrast to 
this, then current regulations governing permit rescissions at 30 CFR 
773.21 contained specific requirements for prior notice to a permittee 
and an explicit right of appeal. Accordingly, through its proposed 
rule, OSM sought to provide for greater consistency in its procedures 
governing suspension and rescission of permits. In the final rule, the 
proposed change has been adopted.
    OSM further proposed to amend 30 CFR 773.20 to add a new paragraph 
(c)(2) which would have required that a regulatory authority which 
decides to suspend a permit must provide at least 30 days' prior 
written notice to the permittee. The proposed rule would have provided 
that, in the event that the regulatory authority decides to rescind a 
permit, it would provide notice in accordance with the provisions of 30 
CFR 773.21. The proposed amendment further provided that a permittee 
would be given the opportunity to request administrative review of the 
notice under proposed OHA rules 43 CFR 4.1370 et seq., where OSM is the 
regulatory authority, or under the State program equivalent, where the 
State is the regulatory authority. In the absence of such temporary 
relief, the regulatory authority's decision would have remained in 
effect during the pendency of appeal.
    OSM's proposed rule amendments made no change in the requirement 
contained at 30 CFR 773.20(b) that a regulatory authority analyze a 
potentially improvidently issued permit ``[U]nder the violations review 
criteria of the regulatory program at the time that the permit was 
issued.''
    A commenter representing one of the State regulatory authorities 
criticized the provisions of the proposed rule which would have 
required that the regulatory authority provide thirty days' written 
notice to the permittee, if the regulatory authority decides to suspend 
the permit. This commenter asserted that there may be circumstances 
which require the immediate suspension and, possibly, outright 
rescission of a permit. This commenter asserted that delay, in the 
interests of due process rights, may not serve the public interest.
    OSM appreciates the commenter's concerns. It is entirely 
conceivable that a permittee could have been issued a permit even 
though the permittee was linked, through ownership or control, to a 
string of unabated violations at the time of permit issuance. The 
permittee could have willfully and fraudulently concealed such links 
through some clever scheme or artifice at the time of permit 
application. While AVS has reduced the potential for such a scenario to 
occur, it remains possible. Such a permit ought to be subject to 
immediate suspension.
    Nevertheless, OSM must weigh the public interest in preventing 
violators from keeping permits against the public interest in assuring 
that permittees' due process rights are protected. The remedies of 
permit suspension and rescission are serious. Unlike an applicant who 
merely has an expectancy in his application to receive a permit to 
mine, a permittee has, in fact and as a matter of law, assumed the 
rights and responsibilities incident to the permit to engage in surface 
coal mining operations. Indeed, OSM's regulations provide that a valid 
permit carries with it the right of successive renewal. See 30 CFR 
774.15(a). Thus, a permittee has an interest which is deserving of a 
higher level of protection than the interest of an applicant.
    Further, the provisions of 30 CFR 773.21 previously provided for 
notice to the permittee only prior to a proposed permit suspension and 
rescission. Thus, a permittee got prior notice of a suspension only if 
the suspension was the precursor to a subsequent rescission. If the 
regulatory authority did not intend the suspension of a permit to be 
followed by the permit's rescission, there was no requirement for prior 
notice. Also, the provisions of 30 CFR 773.21 provided appeal rights 
for a notice of suspension and rescission. There were no similar appeal 
rights in 30 CFR 773.20 with respect to suspension. In substance, 
permit suspension had the potential of being a harsher punishment than 
permit rescission by reason of these procedural differences. These were 
anomalies that OSM wanted to correct.
    Accordingly, the final version of 30 CFR 773.20(c)(2) provides for 
notice prior to permit suspension; for administrative review of the 
notice of suspension under 43 CFR 4.1370 et seq. or under the State 
program equivalent; for a common appeal procedure for both permit 
suspensions and permit rescissions with respect to improvidently issued 
permits and for the regulatory authority's decision to remain in effect 
during the pendency of an appeal, unless temporary relief has been 
granted in accordance with 43 CFR 4.1376 or the State program 
equivalent. States can be more stringent with respect to providing less 
prior notice, but they are responsible for the legal consequences of 
such actions.
    Industry commenters objected to OSM's assertion of any role in 
revoking or setting aside improvidently issued permits based upon the 
totality of their objections to the AVS, the ownership and control 
rules, and the proposed rules. These reasons included the proposed 
rules' alleged deficiencies with respect to due process, State primacy, 
dispersion of authority for permit decisionmaking, and all other 
objections asserted by industry commenters.
    OSM disagrees with the commenters' views, including their view that 
OSM has no legitimate role in the improvidently issued permit process. 
OSM has an essential role to play, both as a regulatory authority and 
as an agency of the Federal government overseeing the States' programs. 
OSM incorporates by reference its previous responses to industry 
commenters in this preamble which address the commenters' concerns. 
Further, in the preamble to the rules governing improvidently issued 
permits, OSM has explained the legal basis for the improvidently issued 
permit rules and the rationale for OSM's role with respect to the 
implementation of such rules in relation to the States. See Preamble to 
30 CFR 773.20, 773.21, and 843.21; Final Rule, 54 FR 18438 et seq., 
especially see pages 18458-18461 (April 28, 1989). OSM also 
incorporates these explanations by reference.
    Environmentalist commenters criticized the portions of 30 CFR 
773.20 which provide that the test for evaluating whether a permit was 
improvidently issued is ``the violations review criteria of the 
regulatory program at the time the permit was issued.'' See 30 CFR 
773.20(b). These commenters asserted that OSM should clearly spell out 
the violations review criteria, rather than rely upon the individual 
regulatory programs' criteria at the time of permit issuance as the 
applicable standards. These commenters criticized the provisions of 
OSM's regulations as being contrary to the Act and cited in support 
portions of their brief filed in the case of National Wildlife 
Federation v. Lujan, No. 88-3117 (D.D.C.).
    OSM disagrees with the commenters' position. As indicated above, 
OSM's proposed rule did not propose substantive changes to this 
provision of the regulation. In the preamble to the improvidently 
issued permit rules cited above, OSM explained its rationale for using 
the violations review criteria of the regulatory program at the time 
the permit was issued as the standard for improvident issuance. See 
Preamble to 30 CFR 773.20, 773.21, and 843.21; Final Rule, 54 FR 18438, 
18440-18441 (April 28, 1989).
    Further, in the case of National Wildlife Federation v. Lujan, No. 
88-3117 (D.D.C.), and Save Our Cumberland Mountains, Inc. v. Lujan, No. 
81-2134 (D.D.C.), environmental advocates advanced similar arguments 
with respect to the agency's improvidently issued permit rules and the 
provisions of the rules applying the violations review criteria of the 
regulatory program at the time of permit issuance. In the briefs 
submitted by the Department of the Interior in those cases, the 
Department analyzed relevant statutory language and legislative history 
and carefully explained why the environmental advocates' criticisms 
were not well taken. Copies of these briefs are being placed in the 
Administrative Record of this rulemaking. OSM incorporates the 
arguments advanced by the Department in those briefs herein by 
reference.
    Environmental commenters also criticized other portions of 30 CFR 
773.20 for which OSM did not propose any substantive amendments as part 
of the September, 1991, proposed rules. The commenters asserted that 
OSM should clarify that the remedial measures available to a regulatory 
authority to cure an improvidently issued permit require that the 
regulatory authority impose both an abatement plan and a permit 
condition incorporating such plan before an improvidently issued permit 
is considered resolved. They asserted that the provisions of 30 CFR 
773.20(c) inappropriately allow the regulatory authority to choose 
whether to require a permit condition or an abatement plan.
    OSM disagrees with the commenters that a rule amendment is needed. 
The provisions of the regulation require that the regulatory authority 
``use one or more'' of the listed remedial measures including requiring 
the implementation of an abatement agreement; conditioning the permit 
upon abatement of outstanding violations within a reasonable period of 
time; suspension of the permit; or rescission of the permit. This 
provision affords the regulatory authority the opportunity to exercise 
discretion, in light of the circumstances, to make a reasoned choice as 
to the appropriate remedy. In the preamble to the improvidently issued 
permit rule, OSM stated, in relevant part, as follows:

    This section * * * includes four alternative remedial measures 
because of the diversity of circumstances under which a regulatory 
authority might find that a permit was improvidently issued, and the 
resulting need to apply a remedy that not only is administratively 
appropriate, but also is fair and equitable to the permittee * * *.
    OSMRE believes that the term [``improvidently issued''] reflects 
the severity of the problem involved when a regulatory authority 
should not have issued a permit, while at the same time not 
foreclosing reasonable flexibility in the adoption of appropriate 
remedial measures * * *.
    [T]he rule affords the regulatory authority reasonable 
discretion to consider the circumstances involving a particular 
improvidently issued permit and to fashion an appropriate remedy * * 
*.

    Although the rule does not require a regulatory authority to use 
any particular one of the four remedial measures, OSMRE intends that 
the measure or measures used will be commensurate with the 
circumstances under which a permit was improvidently issued.

(Emphasis added.) See 54 FR 18438, 18447-18448 (April 28, 1989). 
Certainly, it could be reasonable, depending upon particular 
circumstances, for a regulatory authority to require both a plan of 
abatement and a permit condition implementing such plan. The agency has 
previously rejected the view, however, that there is only one correct 
option or options from the alternative remedies provided in the 
improvidently issued permit rule which is or are appropriate for all 
circumstances. Id. The provisions of the regulation afford the 
regulatory authority the opportunity to tailor a remedy ``package'' 
appropriate for the particular circumstances under which a permit was 
improvidently issued. The goals of any such remedy are ``to correct the 
defect in the permit and achieve a state of compliance.'' Id., at 
18447. If either a permit condition or an abatement agreement could 
reasonably be expected to accomplish these goals under the 
circumstances, then either would be sufficient to resolve the 
improvidently issued permit. In the event that it becomes apparent that 
selected remedial measures are not effective, each of the remedies 
affords leverage to the regulatory authority to compel compliance. Such 
choices are appropriately made by the regulatory authority, subject to 
OSM's oversight under 30 CFR 843.21. At this time, OSM sees no reason 
to amend the regulation to routinely require the use of both remedies 
in all circumstances where abatement of a violation is to be undertaken 
as a necessary part of the resolution of an improvidently issued 
permit.
    Section 773.21--Improvidently issued permits: Rescission 
procedures. In the proposed rule, OSM proposed to amend the then 
current regulation at 30 CFR 773.21(a) to make the provisions of 
proposed Sec. 773.26, standards for challenging ownership or control 
links and the status of violations, applicable when a regulatory 
authority invokes the automatic suspension and rescission procedures of 
30 CFR 773.21. The rationale for such amendment is the same as that 
discussed above with respect to similar language contained in 
Sec. 773.20. In substance, that was to assure that the standards, 
responsibilities, and procedures created by proposed Sec. 773.26 were 
consistently applied to permit issuance and to determinations regarding 
improvident permit issuance. OSM proposed such an approach in the 
belief that this would enhance the fairness of the permitting process 
and the prospect for the uniform enforcement of nationwide minimum 
standards.
    Further, OSM proposed to delete paragraph (c) of then current 30 
CFR 773.21 which provided for appeals of rescission notices. Under the 
proposal, rescission appeal procedures were to be incorporated in 30 
CFR 773.20.
    One commenter representing a State regulatory authority asserted 
that the States typically have provisions for the administrative review 
of a regulatory authority's decision to suspend or rescind a permit. 
Accordingly, this commenter questioned why OSM's proposed rules needed 
to include provisions for the appeals of permit rescissions due to 
improvidently issued permits.
    The rationale for providing appeal procedures for permit 
rescissions incident to improvidently issued permits is essentially the 
same as the rationale for providing appeal procedures for permit 
suspensions. In substance, a permittee has, in fact and as a matter of 
law, assumed the rights and responsibilities incident to the permit to 
engage in surface coal mining operations. Indeed, OSM's regulation 
provides that a valid permit carries with it the right of successive 
renewal. See 30 CFR 774.15(a). Thus, a permittee has an interest which 
is deserving of protection. Thus, a permittee whose permit has been 
rescinded is entitled to a review of the decision to rescind.
    Prior to the proposed amendment of September, 1991, then current 30 
CFR 773.21 provided notice and appeal rights with respect to permit 
rescission incident to improvidently issued permits. By proposing to 
amend this rule to achieve a common set of procedural protections for 
permit suspensions and permit rescissions incident to improvidently 
issued permits, it was not OSM's intention to reduce the appellate 
rights previously provided by 30 CFR 773.21 or comparable State 
provisions. Instead, OSM wanted to assure that procedures of review 
were available for both permit suspensions and permit rescissions. The 
absence of such procedures for suspensions was a matter which OSM 
sought to address.
    To the extent that State programs already have adequate appeals and 
notice procedures with respect to permit rescissions incident to 
improvidently issued permits, OSM believes that the proposed rules 
should impose little, if any, additional burden upon such States. Under 
the Act, OSM's responsibility is to establish minimum national 
standards which approved State programs are required to meet. 
Accordingly, individual State programs may exceed OSM's standards. A 
State which has such provisions may respond to any 732 letters OSM 
sends as a result of this rule by affirming that the State already 
interprets its program consistent with this Federal provision.
    For the above reasons, the commenter's position is rejected.
    OSM has decided to adopt the proposed changes as part of the final 
rules. In adopting the proposal, OSM has modified the provisions at 
paragraph (a) of 30 CFR 773.21 to make the provisions of Sec. 773.25, 
standards for challenging ownership or control links and the status of 
violation, applicable when a regulatory authority invokes the automatic 
suspension and rescission procedures of 30 CFR 773.21. The proposed 
rule contained a reference to Sec. 773.26. This change reflects that 
proposed Sec. 773.26 has been renumbered as final Sec. 773.25. OSM has 
made an additional non-substantive change to the introductory paragraph 
of Sec. 773.21 to reflect that Sec. 773.20(c)(4) has been renumbered to 
be Sec. 773.20(c)(1)(iv). Further, OSM deletes former paragraph (c) of 
30 CFR 773.21 which provides for appeals of rescission notices. As 
discussed above, rescission appeal procedures are incorporated in 30 
CFR 773.20.
    Section 773.22--Verification of ownership or control application 
information. OSM proposed Sec. 773.22 to mandate an inquiry whose focus 
was to assure that the regulatory authority develops complete and 
accurate information as to the identification of the applicant and all 
owners or controllers of the applicant prior to making a determination 
on a permit application. Accordingly, the proposed section focused on 
verification of ownership or control application information. Such 
accurate and complete information would enable the regulatory authority 
to make an informed decision as to whether the applicant was linked to 
a surface coal mining and reclamation operation in violation of the Act 
or of any other environmental laws within the terms of 30 CFR 
773.15(b)(1).
    Paragraph (a) of proposed Sec. 773.22 would have imposed a duty 
upon a regulatory authority to review the information provided in the 
permit application, pursuant to 30 CFR 778.13(c) and 778.13(d), to 
determine whether the information provided, including the 
identification of the operator and all owners and controllers of the 
operator, was complete and accurate. In making such determination, the 
regulatory authority would have been required to compare information 
provided in the application with information contained in manual and 
automated data sources. Manual sources for review would have included 
the regulatory authority's own enforcement and inspection records and 
State corporation commission or tax records, to the extent they contain 
information concerning ownership or control links. Automated data 
sources would have included the regulatory authority's own computer 
systems, if any, and the AVS.
    Paragraph (b) of proposed Sec. 773.22 would have provided that, if 
it appeared from information provided in the application pursuant to 
paragraphs (c) and (d) of Sec. 778.13 that none of the persons 
identified in the application had had any previous mining experience, 
the regulatory authority would have been required to inquire of the 
applicant whether anyone other than those persons identified in the 
application would own or control the mining operation as either an 
operator or as another type of owner or controller.
    The proposed rule assumed that, given the complexity of modern coal 
mining operations, it was likely that most applicants would have at 
least someone in an ownership or control capacity who had had previous 
mining experience. If it appeared from the face of an application that 
that was not the case, the regulatory authority would have been 
required to contact the applicant to verify that the applicant had not 
omitted from the application an operator or other owner or controller 
who had such experience. The intent of this proposal was to ensure that 
the regulatory authority obtains information on other, experienced 
persons who may actually be running the operation and should therefore 
have been disclosed as part of the ownership and control data in a 
permit application, but were not.
    Paragraph (c) of proposed Sec. 773.22 provided that if, after 
conducting the information review described above, the regulatory 
authority identified any potential omission, inaccuracy, or 
inconsistency in the ownership or control information provided in the 
application, it would be required to contact the applicant prior to 
making a final determination with respect to the application. The 
applicant would then be required to resolve the potential omission, 
inaccuracy, or inconsistency through submission of an amendment to the 
application or a satisfactory explanation which includes credible 
information sufficient to demonstrate that no actual omission, 
inaccuracy, or inconsistency existed. The regulatory authority was also 
required to take action in accordance with the provisions of proposed 
Sec. 843.23, sanctions for knowing omissions or inaccuracies in 
ownership or control and violation information, or the State program 
equivalent, where appropriate.
    Paragraph (d) of proposed Sec. 773.22 would have required that, 
upon completion of the information review mandated by Sec. 773.22, the 
regulatory authority promptly enter all ownership or control 
information into AVS.
    Industry commenters objected to the provision of the proposed rule 
requiring that the regulatory authority compare information provided in 
the permit application with sources such as State corporation 
commission or tax records. They asserted that such records are 
typically updated only on an annual basis and may be obviously 
inaccurate. They further asserted that requiring the applicant to 
explain discrepancies between information contained in the application 
and the State corporation commission or tax records will lead to 
inappropriate delays in the permit process.
    OSM disagrees with the commenters' criticisms of the proposed 
requirement. The proposed requirement was designed to assure that the 
regulatory authority reviewing an application has complete ownership 
and control information. Such information is necessary to enable the 
regulatory authority to determine whether the application should be 
issued in accordance with the provisions of section 510(c) of the Act 
and 30 CFR 773.15(b)(1).
    Unfortunately, a regulatory authority cannot simply rely upon all 
applicants to supply complete ownership or control information. Some 
applicants may err in good faith, others may conceal information 
knowingly. Accordingly, the regulatory authority must look to other 
sources of information. The information contained in the records of 
State corporation commissions or taxing authorities is a good potential 
source of ownership or control information. Depending upon particular 
State requirements, such information may have been submitted under 
oath. Further, such information is submitted subject to the review of 
State corporation commissions and State taxing authorities. Thus, a 
State regulatory authority reviewing such information has the benefit 
of any efforts made by these other agencies to assure that information 
submitted to them is accurate and complete.
    Moreover, such information is important because it provides a basis 
for inquiry and for comparison with information submitted in the permit 
application. If there are discrepancies between the ownership or 
control information in such records and that submitted in the permit 
application, the applicant should be able to readily explain such 
discrepancies. Thus, if any information previously submitted to State 
taxing authorities or corporation commission has become subsequently 
outdated, this can be explained with minimal inconvenience to an 
applicant and minimal delay in the permit application process. On the 
other hand, if important ownership or control information has been 
omitted from a permit application, the State taxing and corporation 
commission records may be the key to identifying such omissions. In any 
event, the benefits of such information to the regulatory authority 
outweigh the risks identified by the industry commenters.
    A commenter representing State regulatory authorities also asserted 
that these records rarely provide information not contained in previous 
permit applications or in AVS. This commenter also indicated that these 
records are difficult to obtain because tax records are not typically 
available for review by State agencies other than the taxing 
authorities.
    OSM disagrees with the view that these types of records merely 
contain information which is duplicative of information already 
available to the State regulatory authorities through permit 
applications or AVS. While OSM makes every effort to assure that AVS 
contains complete and accurate information with respect to ownership or 
control links, OSM has never asserted that AVS is perfect. Even if AVS 
were a perfectly complete source of such information, new corporations 
are being formed and new applications to conduct surface coal mining 
operations are submitted. AVS must be regularly updated. It is likely 
that there is relevant ownership or control information contained in 
corporation commission and tax records of the various States which is 
not yet reflected on AVS. Thus, there is a need for State regulatory 
authorities to review such information and compare such information 
with permit applications to identify accurate and complete ownership or 
control information. Such information can then be added to the AVS 
database.
    With respect to commenter's concern about the availability of State 
tax and corporation commission records, OSM recognizes that particular 
State laws may limit a State regulatory authority's access to such 
records. The requirement of the proposed regulation was for the 
regulatory authority to review ``reasonably available sources.'' Thus, 
if a State law explicitly forbids the regulatory authority's access to 
State tax information, the information would not be ``reasonably 
available'' for review. In the absence of such explicit prohibition, 
however, State regulatory authorities should review such information. 
OSM encourages State regulatory authorities to work with their sister 
tax and corporation commission agencies to develop information access 
arrangements to the extent permissible under applicable laws. 
Nevertheless, OSM rejects the view that the difficulty of obtaining the 
information justifies withdrawing or amending the proposing regulation.
    The commenter representing State regulatory authorities further 
questioned the requirement contained in paragraph (c)(2) of proposed 
Sec. 773.22 that ``credible information,'' rather that ``credible 
evidence,'' support an applicant's satisfactory explanation of 
omissions, inaccuracies, or inconsistencies with respect to ownership 
or control information in an application. OSM used the term ``credible 
information,'' rather than ``credible evidence'' because this is a 
broader concept than credible evidence. This term would include 
credible evidence which would be admissible at trial. Nevertheless, an 
applicant might be able to provide a satisfactory explanation based 
upon information which would not necessarily be admissible at trial, 
but which is a reliable and believable basis to conclude that no actual 
omission, inaccuracy, or inconsistency exists. Accordingly, the 
language of the proposed regulation was intended to provide flexibility 
to the regulatory authority to consider such information, including 
credible evidence.
    OSM has determined to adopt the proposed rule at Sec. 773.22 as a 
final rule with minor modifications which are now described.
    As indicated above, paragraph (b) of the proposed rule would have 
required that, if it appeared from information provided in the 
application pursuant to paragraphs (c) and (d) of Sec. 778.13, that 
none of the persons identified in the application had any previous 
mining experience, the regulatory authority had to inquire of the 
applicant whether anyone other than those persons identified in the 
application would own or control the mining operation as either an 
operator or as another type of owner or controller. The final rule 
imposes the duty upon the regulatory authority to both inquire of the 
applicant and to investigate.
    In the proposed rule, there may have been an implication that the 
regulatory authority could simply conclude its inquiry in reliance upon 
the applicant's explanation. Such an implication was not intended. 
Accordingly, OSM has added explicit language to paragraph (b) of final 
Sec. 773.22 to insure that, if none of the persons identified in the 
permit application has had any previous mining experience, the 
regulatory authority will not simply rely upon the applicant's 
explanations. Instead, the regulatory authority will go forward to 
investigate whether any persons other than those identified in the 
application will conduct the mining.
    In the final version of Sec. 773.22, OSM has retained language from 
paragraph (c) of the proposed Sec. 773.22 requiring the regulatory 
authority to take action in accordance with the provisions of 
Sec. 843.23 or the State program equivalent. However, OSM has deferred 
action on the adoption of proposed Sec. 843.23 for a later rulemaking. 
See 58 FR 34652 et seq. (June 28, 1993). The reference to that rule has 
been left in final Sec. 773.22 in the event that a final version of 
Sec. 843.23 is adopted. The inclusion of such reference, however, does 
not prejudge whether OSM will ultimately adopt such a rule.
    As indicated above, paragraph (d) of the proposed rule would have 
required that, upon completion of the information review mandated by 
Sec. 773.22, the regulatory authority promptly enter all ownership or 
control information into AVS. OSM has adopted the final version of this 
paragraph to require that, upon completion of its review, the 
regulatory authority enter ownership or control information ``into'' 
AVS. If such information is already on the system, the regulatory 
authority is required to ``update'' such information. Such changes have 
been made to provide better clarity to the rule language.
    Section 773.23--Review of Ownership or Control and Violation 
Information. OSM proposed Sec. 773.23 as a new section which would 
delineate the regulatory authority's review obligations with respect to 
a permit application after the regulatory authority had completed the 
process of verifying ownership or control application information as 
described in Sec. 773.22.
    The provisions of paragraph (a) of proposed Sec. 773.23 would have 
required the regulatory authority to review all reasonably available 
information concerning violation notices and ownership or control links 
involving the applicant to determine whether the application could be 
approved under the provisions of 30 CFR 773.15(b). With respect to 
ownership or control links involving the applicant, such information 
would have included all information obtained under 30 CFR 773.22 and 
778.13. With respect to violation notices, such information would have 
included all information obtained under Sec. 778.14, information 
obtained from OSM, including information shown in the AVS, and 
information obtained from the regulatory authority's own records 
concerning violation notices.
    In substance, the proposed regulation was designed to assure that 
the regulatory authority considers complete ownership, control, and 
violation information in making the decision required by 30 CFR 
773.15(b)(1) with respect to a permit application.
    The provisions of paragraph (b) of proposed Sec. 773.23 were 
proposed to provide the course of action which a regulatory authority 
would be required to take if the review conducted pursuant to paragraph 
(a) of the section disclosed any ownership or control link between the 
applicant and any person cited in a violation notice.
    Thus, paragraph (b)(1) of proposed Sec. 773.23 would have required 
that the regulatory authority notify the applicant of such link and 
refer the applicant to the agency with jurisdiction over the violation 
notice.
    Paragraph (b)(2) of proposed Sec. 773.23 would have required that 
the regulatory authority not approve the permit application unless and 
until it determined that all ownership or control links between the 
applicant and any person cited in a violation notice were erroneous or 
had been rebutted, or the regulatory authority determined that the 
violation to which the applicant had been linked had been corrected, 
was in the process of being corrected, or was the subject of a good 
faith appeal, within the meaning of 30 CFR 773.15(b)(1) or the State 
program equivalent. The determinations to be made by the regulatory 
authority under paragraph (b)(2) of the proposed regulation were to 
have been made in accordance with the provisions of proposed 
Sec. 773.24, procedures for challenging ownership or control links 
shown in AVS, and proposed Sec. 773.26, standards for challenging 
ownership or control links and the status of violations, or their State 
program equivalents.
    Paragraph (c) of proposed Sec. 773.23 would have required that, 
following the regulatory authority's decision on the application or 
following the applicant's withdrawal of the application, the regulatory 
authority be required to promptly enter all relevant information 
related to the decision or withdrawal into AVS. The regulatory 
authority's decision could have included unconditional issuance, 
conditional issuance, or denial of the permit. The requirement that all 
relevant information be promptly entered into AVS was intended to 
insure that AVS was continually updated to reflect the most current 
information available with respect to permit applicants. A critical 
source of such information would be the regulatory authority.
    Commenters representing members of the coal industry criticized the 
provisions of the proposed regulation as being unnecessarily 
duplicative of the provisions of proposed Sec. 773.22 and of 30 CFR 
773.15(b). In support of this position, they pointed to the provisions 
of the proposed regulation which require the review of violation 
information and ownership or control links to determine whether an 
application could be approved. They questioned why the requirements of 
proposed Secs. 773.22 and 773.23 would be imposed as two separate 
stages, rather than as a single stage of the permit application process 
under 30 CFR 773.15(b)(1).
    OSM disagrees with the view that the provisions of proposed 
Secs. 773.22 and 773.23 are duplicative or redundant to each other or 
with respect to the provisions of 30 CFR 773.15(b)(1). Further, OSM 
does not believe that these provisions should be consolidated with the 
provisions of 30 CFR 773.15(b)(1).
    While each of the regulatory sections at issue are part of the 
permit application and review process, the two proposed Secs. 773.22 
and 773.23 represent separate tasks for the regulatory authority. In 
implementing the provisions of proposed Sec. 773.22, the regulatory 
authority would be focusing upon information contained in the permit 
application and attempting to verify such information by comparing it 
with other readily available sources of information. The purpose of 
such activity is to identify complete and accurate information with 
respect to the application, including identification of the person or 
persons who will own or control the surface coal mining operation. In 
implementing the provisions of proposed Sec.  773.23, the regulatory 
authority takes the information gleaned from its research on the 
application and then evaluates whether there are any ownership or 
control links between the applicant and any person cited in a violation 
notice. In this stage, the focus of inquiry is to determine whether the 
permit can be approved in accordance with the provisions of 30 CFR 
773.15(b).
    While both of these stages involve the use of AVS, this does not 
mean that such stages are redundant or duplicative. The AVS should be 
consulted throughout the permit application process to assure that the 
regulatory authority has the most current ownership or control and 
violation information available from OSM and other State regulatory 
authorities. The AVS is an evolving information system which is 
routinely supplemented with new information. The use of AVS in the 
earlier stage, proposed Sec. 773.22, provides an information resource 
for comparison with application ownership or control information and a 
basis for inquiry with the applicant. During the later stage, proposed 
Sec. 773.23, the regulatory authority takes previously developed 
ownership or control information and compares such information with 
outstanding violation information in deciding whether or not to issue 
the permit. The use of AVS in this stage enables the regulatory 
authority to have the benefit of any information which may have been 
subsequently added to AVS by OSM or other State regulatory authorities.
    Further, neither of the provisions of proposed sections are 
redundant with 30 CFR 773.15(b)(1). The provisions of 30 CFR 
773.15(b)(1) do not delineate the means by which a regulatory authority 
may comply with the mandates of section 510(c) of the Act or 30 CFR 
773.15(b)(1). Proposed Secs. 773.22 and 773.23 fill this need. These 
proposed sections provide the specific steps to be taken by a 
regulatory authority to achieve compliance with the provisions of 30 
CFR 773.15(b)(1).
    One industry commenter suggested that all of these provisions 
should be consolidated into a single violations review provision. While 
this is a reasonable alternative, OSM is convinced that the approach 
contained in the proposed rules is a better alternative. The placement 
of the required tasks in separate sections of the regulations, with 
appropriate cross references, better highlights the particular duties 
necessary at each stage of the permit application review process in a 
way which is more likely to support compliance. Also, as the above 
discussion demonstrates, the tasks are sufficiently separable that they 
lend themselves to separate regulatory sections. Such separation, 
however, does not mean that there must be unnecessary delays. A 
regulatory authority can move forward methodically through each 
required task in a timely manner.
    A commenter representing State regulatory authorities criticized 
the provisions of paragraph (b)(2)(ii) of proposed Sec. 773.23 because 
such provision would prohibit the issuance of a permit if there are 
outstanding violations. He asserted that these provisions would 
significantly increase the burden on applicants, because the provisions 
did not incorporate the presumption that an NOV is considered abated 
unless an FTACO has been issued.
    In this preamble, OSM has already addressed the matter of the 
presumption of NOV abatement within the discussion of the amendments to 
30 CFR 773.15(b)(1) which have been adopted today. As indicated, OSM 
has determined to retain a presumption of NOV abatement where the 
abatement period for the NOV has not expired and the applicant has 
provided certification that the violation is in the process of being 
corrected to the satisfaction of the agency with jurisdiction over the 
violation. Since the provisions of proposed Sec. 773.23 incorporate the 
provisions of 30 CFR 773.15(b)(1), such presumption would be similarly 
applied as part of proposed Sec. 773.23. Thus, the substance of 
commenter's concern has been addressed.
    Commenters representing environmental advocacy groups urged that 
paragraph (a) of proposed Sec. 773.23 be clarified with respect to the 
regulatory authority's duty to review the accuracy of ownership or 
control information. They pointed out that there are many additional 
sources of ownership or control information beyond those listed in the 
regulation which a regulatory authority could review. They asserted 
that the regulatory authority should be required to review the sources 
listed in the regulation, the AVS and the regulatory authority's own 
records, at a minimum.
    OSM agrees that there are many potential sources of ownership or 
control information and that the sources for review listed in the 
proposed regulation are those which the regulatory authority should be 
required to review, at a minimum. OSM disagrees, however, that the 
proposed regulation needs to be further clarified or modified. There is 
already language in the proposed regulation which meets the substance 
of commenters' concerns. In paragraph (a) of proposed Sec. 773.23, the 
regulatory authority is required to ``review all reasonably available 
information concerning violation notices and ownership or control links 
involving the applicant * * *.'' (Emphasis added.) In addition, the 
language makes clear that ``[s]uch information shall include'' the 
listed items which follow in paragraphs (a)(1-2) of the proposed 
regulation. The clear meaning of this proposed language is that the 
listed examples are those sources which the regulatory authority must 
review. In addition, the regulatory authority can choose to review 
other sources.
    Commenters representing environmental advocacy groups also urged 
OSM to incorporate standards to demonstrate whether an outstanding 
violation has been corrected or is in the process of being corrected to 
the satisfaction of the agency with jurisdiction over such violation. 
OSM believes that the regulatory authority which issued the violation 
can effectively define the status of such violation with additional 
standards. This regulatory authority is well positioned to determine 
whether the violation which it has issued has been abated or is in the 
process of being abated to its satisfaction. A regulatory authority 
before which a permit application is pending should consult the 
regulatory authority which issued the violation to ascertain the status 
of any violation to which an applicant has been linked through 
ownership or control.
    OSM has determined to adopt the proposed rule as a final rule with 
a small modification which is now described. In adopting the proposal, 
OSM has modified the provisions of paragraph (b)(2) of section 773.23 
to make the provisions of Secs. 773.25, standards for challenging 
ownership or control links and the status of violations, along with 
those contained in Sec. 773.24, applicable when a regulatory authority 
makes a determination whether to approve a permit. The proposed rule 
contained a reference to proposed section 773.26. This change reflects 
that proposed section 773.26 has been renumbered as final Sec. 773.25. 
The rule is otherwise adopted as proposed.
    Section 773.24--Procedures for Challenging Ownership or Control 
Links Shown in AVS. OSM proposed Sec. 773.24 to establish the 
procedures to be followed in the event that the AVS showed an ownership 
or control link between a person and any person cited in a violation 
notice. The proposed section would have provided procedures for direct 
appeals of such links to OSM by persons who had been so linked. The 
proposed section would also have provided for challenges concerning the 
status of violations to which persons shown on AVS had been linked. The 
proposed section would have further provided the opportunity for those 
persons making a challenge to have obtained temporary relief from any 
adverse use of the challenged link or violation information during the 
pendency of such challenge.
    Paragraph (a)(1) of proposed Sec. 773.24 would have provided that 
an applicant or anyone else shown in AVS in an ownership or control 
link to any person cited in a Federal or State violation could have 
challenged such a link in accordance with the provisions of paragraphs 
(b) through (d) of proposed Sec. 773.24 and in accordance with the 
provisions of proposed Sec. 773.26, standards for challenging ownership 
or control links and the status of violations. Paragraph (a)(1) of 
proposed Sec. 773.24 would have provided, however, that such challenge 
would not be available if the challenger was bound by a prior 
administrative or judicial decision with respect to the link.
    In substance, paragraph (a)(1) of proposed Sec. 773.24 would have 
provided that challenges of ownership or control links shown on AVS be 
made before OSM. The theory of the proposed regulation was that, once 
information with respect to particular ownership or control links has 
become part of the AVS and accessible to regulatory authorities across 
the country, the responsibility for the maintenance of such information 
would be a Federal responsibility. Accordingly, the process for 
challenging such information would be a Federal process.
    Paragraph (a)(2) of proposed Sec. 773.24 would have provided that 
an applicant or anyone else shown in AVS in an ownership or control 
link to a person cited in a Federal violation notice would have 
challenged the status of such violation in accordance with the 
provisions of paragraphs (b) through (d) of proposed Sec. 773.24 and in 
accordance with the provisions of proposed Sec. 773.26, standards for 
challenging ownership or control links and the status of violations. 
The procedures applicable would have been similar to those described in 
paragraph (a)(1) of proposed Sec. 773.24.
    Paragraph (a)(2) of proposed Sec. 773.24 would have provided, in 
language similar to that contained in paragraph (a)(1) of the proposed 
regulation, that the opportunity to challenge the status of a violation 
would not be available to any person who was bound by a prior 
administrative or judicial determination concerning the status of the 
violation.
    The ``status of the violation'' would have meant whether the 
violation remained outstanding, had been corrected, was in the process 
of being corrected, or was the subject of a good faith, direct 
administrative or judicial appeal to contest the validity of the 
violation. See 30 CFR 773.15(b)(1)(i)-(ii). This usage was to have been 
carried forward into the provisions of proposed Sec. 773.26, standards 
for challenging ownership or control links and the status of 
violations. Further, the provisions of proposed Sec. 773.26 would have 
limited challenges make to the status of violations under proposed 
Sec. 773.24 to prevent challenges of the existence of the violation at 
the time that it was cited. Again, the process for challenging the 
status of a Federal violation was to have been a Federal process. 
Challenges would have been made before OSM.
    Paragraph (a)(3) of proposed Sec. 773.24 would have provided that 
any applicant or person shown in AVS to have been linked by ownership 
or control to a person cited in a State violation notice could 
challenge the status of such violation before the State that issued the 
violation notice. Such challenge would have to have been made in 
accordance with that State's program equivalents to paragraphs (b) 
through (d) of proposed Sec. 773.24 and proposed Sec. 773.26. Again, 
the provisions of proposed section 773.26 would have been incorporated 
under proposed Sec. 773.24 to prevent challenges as to the existence of 
the violation at the time that it was cited.
    Paragraph (a)(3) of proposed Sec. 773.24 would have provided, in 
language similar to that contained in paragraph (a)(2) of the proposed 
regulation, that the opportunity to challenge the status of a violation 
before a State program would not be available to any person who was 
bound by a prior administrative or judicial determination concerning 
the status of the violation.
    Paragraph (b) of proposed Sec. 773.24 would have required that a 
person seeking to challenge ownership or control links shown in AVS or 
the status of Federal violations submit to OSM a written explanation of 
the basis for his or her challenge and provide relevant evidentiary 
materials and supporting documents. The proposed regulation would have 
required that such information be submitted to the Chief of OSM's AVS 
Office in Washington, DC.
    Paragraph (c) of proposed Sec. 773.24 would have required that OSM 
make a written determination with respect to the ownership or control 
link and/or with respect to the status of the violation. The proposal 
required that, if an ownership or control link had been challenged, OSM 
would then determine whether the link had been shown to be erroneous or 
had been rebutted.
    Paragraph (d)(1) of proposed Sec. 773.24 would have provided that, 
if OSM had determined that the ownership or control link had been shown 
to be erroneous or had been rebutted and/or that the violation covered 
by the violation notice had been corrected, appropriately appealed, or 
otherwise resolved within the terms of 30 CFR 773.15(b)(1) (i)-(ii), 
OSM would be required to have provided notice of its determination to 
the permit applicant or other person challenging the link or the status 
of the violation. Under the proposed regulation, if an application was 
pending, OSM would also have to notify the regulatory authority before 
which the application was pending. Further, OSM would have been 
required to correct information contained in AVS to reflect the 
determination which had been made.
    Paragraph (d)(2) of proposed Sec. 773.24 would have provided that, 
if OSM had determined that the challenged ownership or control link had 
not been shown to be erroneous and had not been rebutted, and that the 
violation remained outstanding, OSM would have been required to provide 
notice of its determination to the permit applicant or other person 
challenging the link or the status of the violation. Under the proposed 
regulation, if an application was pending, OSM would have also been 
required to notify the regulatory authority before whom the application 
was pending. Further, OSM would have been required to update 
information contained in AVS, if necessary, to reflect OSM's 
determinations.
    Paragraph (d)(2)(i) of proposed Sec. 773.24 would have provided 
that OSM be required to serve a copy of its decision with respect to a 
challenge upon the applicant or other challenger by U.S. certified mail 
or by any other means consistent with the rules governing service of a 
summons and complaint under Rule 4 of the Federal Rules of Civil 
Procedure.
    Paragraph (d)(2)(ii) of proposed Sec. 773.24 would have provided 
that the applicant or other challenger could have appealed OSM's 
decision to the Department of the Interior's Office of Hearings and 
Appeals (OHA) within 30 days of such decision in accordance with 
proposed OHA regulations at 43 CFR 4.1380 et seq. Paragraph (d)(2)(ii) 
would have further provided that OSM's decision remained in effect 
unless temporary relief was granted in accordance with OHA regulations 
at 43 CFR 4.1386.
    Paragraph (d)(2)(ii) of proposed Sec. 773.24 would have further 
provided for temporary relief from OSM's decision, if OHA granted such 
relief in accordance with proposed OHA regulations at 43 CFR 4.1386. 
Under the proposed regulation, OSM's decision would have remained in 
effect during the pendency of appeal, unless temporary relief was 
granted.
    Commenters representing the coal industry took exception to the 
provisions of paragraph (a)(2) of the proposed section which would 
preclude an applicant or other person from challenging the status of a 
violation if he or she was ``bound by a prior administrative or 
judicial determination concerning'' the status of the violation. The 
commenters asserted that determining whether a person was ``bound'' by 
a prior determination was vague and susceptible to conflicting 
interpretations. They further asserted that if, by this proposed 
language, OSM intended to apply the doctrines of res judicata or 
collateral estoppel, there was no need to include such language in the 
proposed regulation, since these doctrines would be available as legal 
defenses to OSM in any event. The commenters indicated that their 
objection to this language also applied to the other portions of the 
proposed regulations where similar language imposing such a limit on 
challenges was incorporated.
    OSM disagrees with the commenters' characterization of the rule 
language. The proposed rule language is clear in standing for the 
principle that a person is entitled to his or her challenge opportunity 
before an administrative or judicial tribunal. Nevertheless, a person 
is not entitled to the multiple relitigation of issues which he or she 
has already litigated to conclusion. Accordingly, the proposed rule is 
explicit in requiring that a person who is bound by a prior 
administrative or judicial determination with respect to the status of 
a violation may not relitigate such issue. In determining whether a 
person is bound by a prior determination, traditional principles of res 
judicata and collateral estoppel will apply. Contrary to commenters' 
view, however, it is insufficient to assume that such principles will 
apply as a matter of law and that there is no need to provide an 
explicit limitation in the regulation. Such a limitation is necessary 
to eliminate any ambiguity in the regulation with respect to this issue 
and to assure that judicial and administrative tribunals are not 
clogged with duplicative, repetitive claims by persons who have already 
litigated such claims. The limiting language provides a clear statement 
of OSM's intent and will be adopted as part of the final rule.
    Commenters representing environmental advocacy groups indicated 
approval of the provisions of the proposed regulation which would have 
limited challenges of the existence of the violation at the time it was 
cited. Such commenters did indicate concern, however, that the proposed 
regulation did not provide an explicit time limit for OSM to make its 
decision with respect to a challenge. They urged that the regulation 
incorporate an explicit time limit of 30 days for OSM to make a 
decision to avoid undue delay with respect to the permit application 
process.
    OSM disagrees with the view that the regulation needs to contain an 
explicit time limit for the agency to make a decision with respect to 
challenges of ownership or control links or the status of violations. 
While OSM makes every effort to decide these issues in an expeditious 
manner, the review and determination of an ownership or control link 
can be a complex endeavor, requiring the review of significant amounts 
of complex documentary material. Such a process typically involves a 
dialogue involving the exchange of numerous documents and testimony 
between the agency and the challenger. Such issues may require 
extensive research and investigation by trained specialists. The 
imposition of artificial time limits on the process could create a risk 
that decisions will be inaccurate and that investigations will be 
incomplete.
    Further, there is no risk to the environment during the period of 
challenge. During the period of challenge, the permit is not issued. 
Once a presumption of ownership or control has been established 
pursuant to 30 CFR 773.5 and such presumption is shown on AVS, the 
burden is upon an applicant to rebut the presumption. The regulatory 
authority should not issue the permit until the presumption has been 
rebutted. While an expeditious process is encouraged, the regulatory 
authority should not be rushed in making such a decision. It should 
conduct a thorough investigation and review all of the relevant 
evidence presented. Some challenges can be resolved within 30 days. 
Other challenges may require six months. Imposing an absolute time 
limit disregards the differences that particular cases have with 
respect to factual and legal complexity. Accordingly, OSM must reject 
the commenters' suggestion that a time limit should be incorporated 
into the proposed regulation.
    A commenter representing State regulatory authorities criticized 
the provisions of proposed Sec. 773.24 which would require that 
challenges of ownership or control links shown on AVS be heard before 
OSM. In substance, the commenter was concerned that, for such 
challenges to be meaningfully addressed, OSM would need copies of 
supporting documentation from the States and challengers would be 
referred to the States to review various documents with respect to 
ownership or control relationships and with respect to violations. The 
commenter asserted that the States would have an ``unnecessary burden'' 
to provide duplicate copies of documents to OSM and other participants.
    While OSM appreciates commenter's concern, OSM disagrees that the 
process provided in the proposed rule will impose an unnecessary burden 
upon the States. Under the proposed regulation, OSM is assuming the 
responsibility to entertain challenges to ownership or control 
information shown on AVS. In the absence of OSM's assumption of such 
responsibility, the States would have to hear such challenges. Further, 
regardless of which party assumes responsibility for addressing such 
challenges, that party would have to obtain complete documentation from 
all other parties which might have relevant records. Thus, each State 
would have to provide copies of essential documentation to the 
participants and to whichever regulatory authority was reviewing the 
case, be it OSM or a specific State, to enable the challenges to be 
fairly considered and resolved. It is in the interests of all concerned 
with the process--including OSM, the States, the challengers, and the 
public--that determinations of such challenges are based upon a 
complete administrative record. OSM is confident that the cooperative 
relationship between OSM and the States which has characterized the 
development and implementation of AVS would be carried forward with 
respect to challenges of ownership or control information on AVS made 
before OSM.
    Commenters representing State regulatory authorities also 
questioned whether proposed Sec. 773.24 was inconsistent with other 
provisions of the proposed rules which would allocate responsibility to 
State regulatory authorities to make ownership or control decisions. In 
support of these positions, the commenters cited the provisions of 
proposed Sec. 773.26(b) which they considered to be inconsistent with 
proposed Sec. 773.24. As is noted elsewhere in this preamble, proposed 
Sec. 773.26 is being modified, renumbered, and adopted today as final 
Sec. 773.25. The commenters were concerned that there would be 
confusion in the permit application process if OSM would be the 
deciding agency with respect to ownership or control information on 
AVS.
    OSM disagrees with the commenters' analysis. The provisions of 
proposed Sec. 773.24 were designed to avoid confusion. In substance, 
the proposed rule would provide challengers with a single forum, OSM, 
before which they could contest ownership or control information shown 
on AVS. The alternative to the proposed rule's approach would be for 
challengers to challenge ownership or control links shown on AVS before 
the various States. There is a greater likelihood of inconsistent 
results with multiple jurisdictions making such decisions as opposed to 
a single agency making such decisions. Further, the content of AVS 
would be subject to such inconsistency, since the resolution of 
challenges would have to be reflected in the AVS database. Given that 
AVS is a national database which is used across State lines, there is a 
need for consistency in the decisionmaking which forms the content of 
AVS. Moreover, the approach provided in proposed Sec. 773.24 is 
consistent with that provided in proposed Sec. 773.26(b).
    Paragraph (b)(1)(i) of proposed Sec. 773.26 would provide that the 
regulatory authority before which an application is pending has 
authority for making decisions with respect to the ownership or control 
of the applicant. Paragraph (b)(1)(ii) of proposed Sec. 773.26 would 
provide that the regulatory authority that issued a permit would have 
authority for making decisions with respect to the ownership or control 
of the permittee. As will be discussed below in detail, OSM's final 
regulation adopted as final Sec. 773.25 modifies this language to refer 
to ownership or control of applications, permits, and violations, 
rather than ownership or control of applicants, permittees, and 
violators.
    Under paragraph (b) of proposed Sec. 773.26, the authority of the 
regulatory authority is initial authority, subject to OSM's oversight. 
Under that paragraph of proposed Sec. 773.26, a regulatory authority 
would analyze the facts and make an initial decision with respect to 
the ownership or control links of an applicant or a permittee. Such 
decision would be subject to OSM's oversight. Then, the regulatory 
authority would enter such information into AVS, to the extent 
necessary to update the system. The entry of such information into AVS 
would also be subject to OSM's oversight. Since OSM has ultimate 
authority, through the exercise of oversight, as to the content of the 
ownership or control information on AVS, it is consistent for OSM to be 
the single forum for the challenge of ownership or control information 
shown on AVS as provided by proposed Sec. 773.24. If OSM later amends 
the AVS to reflect a different conclusion with respect to a particular 
ownership or control link than that reached by a State regulatory 
authority, that reflects OSM's exercise of its oversight authority and 
its responsibility for the ownership or control information contained 
in AVS. If a regulatory authority would then consider a subsequent 
application, it would be required to review AVS and to factor the 
information shown in AVS, as amended by OSM, into the regulatory 
authority's decision with respect to the later permit application. 
Thus, proposed Secs. 773.24 and 773.26 are consistent with each other 
and will not lead to confusion in the permit application process.
    A commenter representing State regulatory authorities also proposed 
a revision of proposed Sec. 773.24 such that OSM's decisions made under 
the proposed regulation would be considered preliminary decisions which 
would become final within 30 days thereafter if the person challenging 
the link could show no valid reason why the decision should not become 
final. The commenter asserted that such a provision would enable the 
challenger to provide supplemental information which could lead to a 
corrected final decision and, thus, obviate the need for an appeal to 
OHA.
    OSM appreciates the commenter's suggestion. OSM believes, however, 
that persons should have the opportunity to seek review of the agency's 
decision by OHA as soon as possible upon the agency's determination 
that they are linked, through ownership or control, to violations. In 
the absence of a final agency decision, such review by OHA would not be 
routinely available. Accordingly, the proposed regulation provides for 
a final agency decision which may then be appealed to OHA by a 
challenger. If a challenger has new information which would lead OHA to 
conclude that the challenger is likely to win a reversal of OSM's 
decision, then such information would support temporary relief with 
respect to the decision. On the other hand, where OSM has reviewed 
information submitted and concluded that an ownership or control link 
has been severed, OSM may choose to reserve the right to reopen such 
decision in the event that new information or evidence comes to light 
subsequently. Such reservation of the right to reopen by the agency 
would be necessary to assure that the agency can correct its mistakes 
and assure the accuracy of the AVS. Thus, OSM can supplement the record 
with information discovered subsequent to any decision. Accordingly, 
OSM has determined not to adopt the commenter's proposal.
    In accordance with the above discussion, OSM has decided to adopt a 
final version of Sec. 773.24 which is substantively similar to the 
proposed version. OSM has, however, made some minor modifications to 
the proposed rule which are now described.
    In paragraph (a)(1) of the proposed rule, the rule provided for the 
challenge of links by persons linked to any person cited in a Federal 
or State violation notice. At the time that this proposal was published 
in September, 1991, OSM expected that most challenges would be by 
persons seeking to challenge links to violators to avoid permit blocks. 
In actuality, members of the regulated community have also routinely 
come before OSM seeking to challenge ownership or control links to 
persons who are not violators. The language of the proposal did not 
reflect this reality and was, therefore, too narrow. Further, the 
language was potentially inconsistent with language contained in the 
1988 preamble to OSM's ownership and control rules. In that preamble, 
OSM stated, in relevant part, as follows:

    Procedures to Amend Applicant Violator System Information. In 
addition to the procedures described above, both individuals and 
organizations may seek to amend the information in the Applicant 
Violator System, independent of the existence of a permit 
application if they believe that the records are not accurate, 
relevant, timely or complete.

See Preamble to Requirements for Surface Coal Mining and Reclamation 
Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page 
38879 (October 3, 1988). Accordingly, the final rule broadens the 
proposed language to provide that ``[a]ny applicant or other person 
shown in AVS in an ownership or control link to any person may 
challenge such link'' even if the link is to persons who are not 
violators. OSM intends to protect due process rights and provide an 
efficient avenue to challenge information shown on AVS. The substance 
of paragraph (a)(1) of the rule proposed in September, 1991 is 
otherwise retained.
    Proposed Sec. 773.24 has been further modified to delete references 
in paragraphs (a)(2) and (a)(3) to proposed Sec. 773.26 and substitute 
references to final Sec. 773.25 in the place of the deleted section 
references. This reflects OSM's renumbering of the sections of the 
proposed rule. No substantive change in the rule has been made by such 
modification.
    Paragraph (b) of proposed Sec. 773.24 would have required that a 
person seeking to challenge ownership or control links or the status of 
Federal violations submit to OSM a written explanation of the basis for 
his or her challenge and provide relevant evidentiary materials and 
supporting documents. Proposed paragraph (b) did not explicitly state 
that the process of challenge described in this paragraph applied to 
links shown in AVS. That was OSM's intent, however, as stated in the 
preamble to the proposed rule. Accordingly, OSM has corrected the 
oversight in the rule language by explicitly incorporating this 
language into this final rule.
    Paragraph (c) of proposed Sec. 773.24 has been adopted as proposed. 
This provision requires OSM to make a written determination with 
respect to the ownership or control link and/or with respect to the 
status of the violation. The provision of the rule requires that, if an 
ownership or control link is challenged, OSM then determines whether 
the link has been shown to be erroneous or has been rebutted. While no 
change has been made to the proposed rule, OSM believes that the 
following explanation will be helpful in clarifying the operation of 
the rule.
    Under the rule, a determination that a link is ``erroneous'' means 
that the facts in the case show that no ownership or control 
relationship set forth in 30 CFR 773.5 ever existed. Thus, if an 
individual is shown on AVS as being linked to a corporation by virtue 
of his or her position as an officer of such corporation, see 30 CFR 
773.5(b)(1), evidence demonstrating that such individual is not and has 
never been an officer of the corporation would support a determination 
that an ownership or control link based upon such a relationship is 
erroneous.
    A determination that a link has been ``rebutted'' means that, while 
the facts in the case show that a presumed ownership or control 
relationship as set forth in 30 CFR 773.5(b) exists or existed, 
sufficient evidence has been presented to demonstrate that the ``person 
subject to the presumption [did] * * * not in fact have the authority 
directly or indirectly to determine the manner in which the relevant 
surface coal mining operation [was] conducted * * *.'' See 30 CFR 
773.5(b).
    Accordingly, if the individual in the preceding example was, in 
fact, an officer of the corporation, but did not have authority or 
demonstrated control over the conduct of the surface coal mining 
operation, the presumption of ownership or control would be rebutted.
    The provisions of paragraph (d) of the proposed rule have been 
adopted as proposed. Paragraph (d)(2)(i) of Sec. 773.24 provides that 
OSM is required to serve a copy of its decision with respect to a 
challenge upon the applicant or other challenger by U.S. certified mail 
or by any other means consistent with the rules governing service of a 
summons and complaint under Rule 4 of the Federal Rules of Civil 
Procedure.
    The date of service of the decision will set a date certain from 
which the time for appeals will begin to run. The regulation provides 
that service is complete upon tender of the notice or of the mail and 
is not deemed incomplete by virtue of a challenger's refusal to accept 
the notice or mail. The theory of this provision is to assure that a 
challenger is not able to delay the running of the time for appeal by 
avoiding or refusing service of OSM's decision and then claiming that 
he or she was never served.
    Paragraph (d)(2)(ii) of Sec. 773.24 has been adopted as proposed. 
As provided in the proposed rule, the final version of this paragraph 
provides that the applicant or other challenger can appeal OSM's 
decision to OHA within 30 days of such decision in accordance with OHA 
regulations at 43 CFR 4.1380 et seq.
    As provided in the proposed rule, paragraph (d)(2)(ii) of the final 
regulation provides all challengers to an OSM decision in these matters 
with the opportunity to appeal the decision to OHA.
    The preamble to the ownership or control rules published in 1988 
provided that appeals by individuals from OSM decisions with respect to 
information contained in AVS were made to the Department's Assistant 
Secretary--Policy, Management, and Budget under procedures developed 
under the Privacy Act of 1974. Appeals by entities other than 
individuals were made to OHA. See Preamble to Requirements for Surface 
Coal Mining and Reclamation Permit Approval; Ownership and Control; 
Final Rule, 53 FR 38868 at page 38879 (``Procedures to Amend Applicant 
Violator System Information'') (October 3, 1988).
    In 1993, pursuant to a delegation from the Department's Assistant 
Secretary--Policy, Management and Budget, the authority to decide 
appeals with respect to information contained in AVS was delegated to 
OHA. Consistent with such delegation, OSM believes that a single 
process of appeal for both individuals and entities will promote 
consistency for both the public and the regulated community and that 
such appeal process should be explicitly contained in the final rule. 
As provided in the proposed rule, paragraph (d)(2)(ii) of the final 
rule provides that OSM's decision would remain in effect unless 
temporary relief were granted in accordance with OHA regulations at 43 
CFR 4.1386.
    Paragraph (d)(2)(ii) of Sec. 773.24 provides for temporary relief 
from OSM's decision, if OHA grants such relief in accordance with OHA 
regulations at 43 CFR part 4. Under the final regulation, the period 
during which a person may file a notice of appeal or the actual filing 
of an appeal will not automatically suspend the use of the information 
in AVS during the pendency of such appeal. The challenger will have to 
explicitly seek such relief in appeal proceedings before OHA and be 
granted such relief. See also 43 CFR 4.21(a).
    In considering a request for temporary relief, OHA will apply the 
criteria of Section 525(c) of the Act, 30 U.S.C. 1275(c), to determine 
whether such relief is warranted. See OHA regulations at 43 CFR 4.1386. 
To grant temporary relief under such criteria, OHA will have to find 
that the challenger has a substantial likelihood of prevailing in his 
appeal of the OSM decision and that temporary relief, if granted, will 
not adversely affect the health or safety of the public or cause 
significant, imminent environmental harm to land, air, or water 
resources.
    In determining whether the granting of temporary relief would cause 
significant, imminent environmental harm, OHA will not attempt to 
decide whether a denial of temporary relief will compel the applicant 
or other challenger to abate a violation posing such harm. It is not 
the intent of these rules to force a person to abate a violation even 
if he or she is able to show a substantial likelihood that he or she 
had no ownership or control over the operation that is in violation.
    Instead, OHA will focus its attention upon the compliance history 
of those persons who do appear to have had ownership or control over 
operations in violation, to determine whether the granting of temporary 
relief would pose a risk of significant, imminent environmental harm at 
sites for which new permits could be issued during the pendency of the 
appeal process.
    In accordance with the above discussion, the provisions of the 
proposed rule are adopted with the modifications noted.
    Withdrawal of former proposed Sec. 773.25 which would have provided 
procedures for challenging ownership or control links prior to entry in 
AVS. In the September, 1991 proposal, OSM proposed a rule to provide 
procedures for challenging ownership or control links prior to entry in 
AVS. That proposal which was numbered as proposed Sec. 773.25 
represented OSM's attempt to go beyond the Constitutional requirements 
of due process. The proposal would have prospectively required OSM or a 
State regulatory authority to provide notice to those persons who were 
actively involved in surface coal mining operations and who were linked 
to a violation through ownership or control before such link 
information would be used to subject them to permit denial through AVS. 
Such persons would then have had an opportunity to challenge such 
information. Upon further consideration, OSM has decided to withdraw 
the proposed regulation.
    OSM believes that adequate due process rights to notice and an 
opportunity to be heard are afforded by current practices which permit 
a challenge to ownership or control and violation information after it 
is incorporated into AVS. Such challenges can be made currently both 
within the context of a permit application and independent of such an 
application. OSM believes that these opportunities suffice to pass 
constitutional muster. See Preamble to Requirements for Surface Coal 
Mining and Reclamation Permit Approval; Ownership and Control; Final 
Rule, 53 FR 38868 at page 38885 (``Due Process Provided'') and at page 
38879 (``Procedures to Amend Applicant Violator System Information'') 
(October 3, 1988).
    Further, the Department's OHA is contemporaneously adopting a rule 
providing for temporary relief from an ownership or control link, under 
specified conditions. Such a rule significantly enhances the already 
available due process protections available to the members of the 
regulated community. The risk that someone will be inappropriately 
subjected to a permit block due to an erroneous link is substantially 
mitigated by the temporary relief procedures available before OHA.
    Moreover, the proposed rule would have subjected OSM and State 
regulatory authorities to a substantial paperwork morass as a condition 
precedent to implementing the provisions of Sec. 510(c) of the Act. 
OSM, which has been utilizing procedures similar to those proposed in 
the September, 1991, rule, discovered that the process was taking 
substantial amounts of time and resources to implement. The dialogue 
and paper exchange between the agency and persons debating the proposed 
ownership or control link was a prolonged exercise lasting, in some 
cases, for many months. Also, OSM was finding that most of these 
debates made no difference in the ultimate outcome, except where 
entities refuted the facts which would invoke a link. Typically, the 
ownership or control link was found to be well taken. The prolonged 
debate was preventing accurate information from being incorporated into 
AVS. During the period of the dialogue, the individual or entity 
subject to the ownership or control link was not relieved of the cloud 
of the potential link and the agency was not able to directly implement 
the link. Neither OSM nor the person challenging the link benefited by 
this course of events.
    Further, industry, environmental advocates, and representatives of 
State regulatory authorities were dissatisfied with the proposed rule. 
Industry commenters condemned the proposed rule as providing 
insufficient due process for challengers of ownership or control links. 
Environmental advocates criticized the proposal as deficient in not 
providing a set time frame for OSM to bring ownership or control 
decisions to closure and to incorporate such decisions into AVS. A 
commenter representing State regulatory authorities asserted that the 
proposed rules should either provide for no challenge of an ownership 
or control link prior to permit denial or for conditional issuance of a 
permit pending full challenge of an ownership or control link. As is 
stated above in the portion of this preamble captioned ``Due Process,'' 
OSM is unwilling, for a number of significant reasons, to accept that 
permits may be conditioned upon the appeal of ownership or control 
links. Nevertheless, the criticisms of the commenter representing the 
State regulatory authorities, the industry commenters, and the 
environmental advocacy groups also caused OSM to reconsider the 
proposed rules.
    Given that the incorporation of accurate and complete information 
into AVS in a timely manner is critical to the development and 
implementation of AVS, OSM believes that the needs of these constituent 
groups are addressed more effectively by the provisions of the OHA 
rule. OSM remains committed to developing complete and accurate 
information for entry into AVS, and as part of this process will of 
course consider information submitted by any party which would 
establish or refute facts relevant to an ownership or control link. To 
the extent that a person is injured by an erroneous ownership or 
control link, the OHA temporary relief procedure quickly and 
effectively neutralizes such injury in a timely manner. The 
availability of such a process enables OSM to go forward in an 
expeditious manner to utilize its resources to develop information, 
rather than engage in prolonged paper exchanges; to avoid delay in 
incorporating information into AVS, thus responding to the concerns of 
environmental advocates; and to address effectively the concerns of the 
industry which can invoke an administrative process outside of OSM for 
quick relief if the claims of injury are meritorious. Additionally, by 
enabling challengers to go to OHA more quickly, the focus of the 
challenge procedures shifts to OHA, a forum created to address such 
challenges of agency decisions. Finally, OSM can meet the terms of its 
continuing mandate from Congress to develop and implement the AVS. See 
Report of the Senate Appropriations Committee, Senate Report No. 103-
114, at page 47 (July 28, 1993).
    In appropriate cases, OSM may engage in a dialogue and exchange of 
documents with persons subject to a proposed ownership or control link 
prior to incorporating an ownership or control link into AVS. OSM will 
do this, however, only when OSM believes it needs additional 
information concerning the proposed ownership or control link. In that 
case, such a dialogue would enhance OSM's investigative process and 
assist in the development of relevant information.
    In accordance with the above, OSM has withdrawn this portion of the 
September, 1991, proposal and is renumbering the remaining provisions 
of the final rules presented today to reflect the deletion of former 
proposed Sec. 773.25.
    Section 773.25--Standards for Challenging Ownership or Control 
Links and the Status of Violations. Proposed section 773.26 would have 
established standards for challenges to ownership or control links and 
for challenges to the status of violations. The proposed section would 
have allocated responsibilities between OSM and State regulatory 
authorities for resolving issues related to ownership and control and 
would have provided the substantive criteria for resolving such issues. 
In recognition of OSM's withdrawal of former proposed Sec. 773.25, 
proposed Sec. 773.26 has been renumbered as final rule Sec. 773.25. For 
the reasons discussed below, the final rule also has been modified to 
delete the substantive criteria to resolve ownership or control issues 
previously contained in the proposed rule.
    Paragraph (a) of proposed Sec. 773.26 provided that its provisions 
would have been applicable to any challenge concerning an ownership or 
control link or the status of a violation when such challenge was made 
under the provisions of 30 CFR 773.20 and 30 CFR 773.21 (improvidently 
issued permits); proposed Sec. 773.23 (the regulatory authority's 
review of ownership or control and violation information), proposed 
Sec. 773.24 (procedures for challenging ownership or control links 
shown in AVS), and proposed Sec. 773.25 (procedures for challenging 
ownership or control links prior to entry in AVS); or 30 CFR part 775 
(administrative and judicial review of permitting decisions).
    Paragraph (b) of proposed Sec. 773.26 would have provided the basic 
allocation of authority among regulatory authorities to make decisions 
with respect to ownership or control and with respect to the status of 
violations.
    Paragraph (b)(1)(i) of proposed Sec. 773.26 would have provided 
that the regulatory authority before which an application was pending 
would have had authority for making decisions with respect to the 
ownership or control of the applicant. Such regulatory authority would 
have had responsibility for reviewing information submitted by the 
applicant and other available information to ensure the complete 
identification of the applicant's ownership or control links.
    Paragraph (b)(1)(ii) of proposed Sec. 773.26 would have provided 
that the regulatory authority that issued a permit would have had 
authority for making decisions with respect to the ownership or control 
of the permittee. Such decisions would be necessary in determining 
whether the permit was improvidently issued, pursuant to 30 CFR 773.20. 
The regulatory authority which issued a permit would have done so based 
upon a complete review of ownership or control information.
    Paragraph (b)(1)(iii) of proposed Sec. 773.26 would have provided 
that the State regulatory authority that issued a State violation 
notice would have had authority for making decisions with respect to 
the ownership or control of any person cited in the notice.
    Paragraph (b)(1)(iv) of proposed Sec. 773.26 would have provided 
that the regulatory authority that issued a violation notice, whether 
State or Federal, would have had authority for making decisions 
concerning the status of the violation covered by the notice. The 
``status'' of the violation meant whether the violation remained 
outstanding, had been corrected, was in the process of being corrected, 
or was the subject of a good faith appeal, within the meaning of 30 CFR 
773.15(b)(1).
    Paragraph (b)(2) of proposed Sec. 773.26 would have provided that 
OSM would have authority for making decisions with respect to the 
ownership or control of any person cited in a Federal violation notice.
    Under the allocation principles set forth in paragraphs (b)(1) and 
(b)(2) of the proposed rule, a regulatory authority that was deciding 
whether a permit application should be granted or whether a permit had 
been improvidently issued would have determined for itself the 
ownership or control of the applicant or permittee, but it would have 
deferred to the regulatory authority that issued a violation notice for 
a determination of the ownership or control of the violator. The 
application would be blocked or the permit would be found improvidently 
issued if any owner or controller of the applicant or permittee were 
also an owner or controller of a violator, as determined by the 
respective regulatory authorities.
    Paragraph (b)(3) of proposed Sec. 773.26 would have provided that 
the authority of State regulatory authorities to make decisions with 
respect to ownership or control links or the status of violations would 
have been subject to OSM's oversight authority under 30 CFR parts 733, 
842, and 843. Under paragraph (b)(3) of proposed Sec. 773.26, when OSM 
disagreed with a decision of a State regulatory authority, it would 
have taken action, as appropriate, under proposed Sec. 843.24, 
oversight of State permitting decisions with respect to ownership or 
control of the status of violations.
    Paragraph (c) of proposed Sec. 773.26 would have established 
evidentiary standards applicable to the formal and informal review of 
ownership or control links and the status of violations.
    Paragraph (c)(1) of proposed Sec. 773.26 would have provided that 
in any formal or informal review of an ownership or control link or of 
the status of a violation, the agency responsible for making a decision 
would be required to make first a prima facie determination or showing 
that the link exists or that the violation remains outstanding.
    Under paragraph (c) of proposed Sec. 773.26, a challenger of a link 
to a violation would have had to prove at least one of three proposed 
conclusions by a preponderance of the evidence to succeed in his or her 
challenge.
    First, under paragraph (c)(1)(i) of proposed Sec. 773.26, a 
challenger could have proven that the facts relied upon by the 
responsible agency to establish ownership or control within the terms 
of 30 CFR 773.5(a) or to establish a presumption of ownership or 
control under 30 CFR 773.5(b) do not or did not exist.
    Paragraph (c)(1)(ii) of proposed Sec. 773.26 provided that a person 
subject to a presumption of ownership or control under 30 CFR 773.5(b) 
could have rebutted such presumption by demonstrating that he or she 
does not or did not in fact have the authority directly or indirectly 
to determine the manner in which surface coal mining operations are or 
were conducted. Such demonstration would have been made in accordance 
with the provisions of paragraph (d) of proposed Sec. 773.26.
    Paragraph (c)(1)(iii) of proposed Sec. 773.26 provided that a 
challenger could have proven that the violation covered by a violation 
notice did not exist, had been corrected, was in the process of being 
corrected, or was the subject of a good faith appeal within the meaning 
of 30 CFR 773.15(b)(1).
    Paragraph (c)(2) of proposed section 773.26 described the type of 
evidence that a person challenging an ownership or control link or the 
status of a violation would have had to present to meet the burden of 
proof by a preponderance of the evidence. The proposed regulation 
provided that the evidence presented would have had to have been 
probative, reliable, and substantial. See 5 U.S.C. 556(d).
    Paragraph (c)(2)(i)(A) of proposed Sec. 773.26 provided that a 
challenger could have submitted affidavits setting forth specific facts 
concerning the scope of responsibility of the various owners or 
controllers of an applicant, a permittee, or any person cited in a 
violation notice; the duties actually performed by such owners or 
controllers; the beginning and ending dates of such owners' or 
controllers' affiliation with the applicant, permittee, or person cited 
in a violation notice; and the nature and details of any transaction 
creating or severing an ownership or control link; or specific facts 
concerning the status of the violation.
    Paragraphs (c)(2)(i)(B) and (c)(2)(i)(C) of proposed Sec. 773.26 
looked to official certification as the basis for the reliability of a 
submitted document. Paragraph (c)(2)(i)(B) would have allowed for the 
submission of certified copies of corporate minutes, stock ledgers, 
contracts, purchase and sale agreements, leases, correspondence, or 
other relevant company records. Paragraph (c)(2)(i)(C) would have 
allowed for the submission of certified copies of documents filed with 
or issued by any State, municipal, or Federal governmental agency.
    Paragraph (c)(2)(i)(D) of proposed Sec. 773.26 provided for a 
challenger's submission of an opinion of counsel in support of his or 
her position. Under the proposed rule, such opinion would have been 
appropriate for submission when it was supported by evidentiary 
materials and when it was rendered by an attorney who certified that he 
or she had personally and diligently investigated the facts of the 
matter and that he or she was qualified to render the opinion.
    Paragraph (c)(2)(ii) of proposed Sec. 773.26 provided that, when 
the decision of the responsible agency was reviewed by an 
administrative or judicial tribunal, the challenger could have 
presented any evidence to such tribunal which was admissible under the 
rules of the tribunal. Under the proposed regulation, however, the 
evidence submitted would still have to have been probative, credible, 
and substantial.
    Paragraph (d) of proposed Sec. 773.26 represented OSM's attempt to 
offer substantive standards which would have established what must be 
proved by those seeking to rebut the presumptions of ownership or 
control contained in current Sec. 773.5(b) of this title. Proof of the 
facts set forth in the proposed regulation would have established that 
the presumed owner or controller did not, in fact, have the authority 
directly or indirectly to determine the manner in which the relevant 
surface coal mining operation was conducted, under the provisions of 30 
CFR 773.5(b).
    In general, the proposed standards contained in paragraph (d) of 
proposed Sec. 773.26 would have allowed a presumed owner or controller 
to demonstrate that he or she lacked control over a surface coal mining 
operation by presenting evidence that he or she actually lacked 
authority directly or indirectly to determine the manner in which the 
relevant surface coal mining operation would be conducted. In the 
alternative, with respect to a presumed owner or controller of a 
violator, the proposed standards would have allowed a person to present 
evidence that he or she took all reasonable steps within his or her 
authority to cause the violation to be abated and that such abatement 
was prevented by those in actual control of the mining operation.
    Paragraph (e) of proposed Sec. 773.26 would have provided for the 
review and revision of information in AVS to reflect determinations 
made by regulatory authorities in response to challenges of ownership 
or control links or the status of violations. The proposed provision 
would have provided that, following any determination by a State 
regulatory authority or other State agency, or following any decision 
by an administrative or judicial tribunal reviewing such determination, 
the State regulatory authority would have been required to review the 
information in AVS to determine if such information was consistent with 
the determination or decision. If it were not consistent, the State 
regulatory authority would have been required to promptly inform OSM 
and to request that the AVS information be revised to reflect the 
determination or decision.
    Industry commenters criticized the provisions of paragraphs (a) and 
(b) of proposed Sec. 773.26 as violating due process by not providing 
an owner or controller with the opportunity to challenge the existence 
of the violation at the time it was cited. They further criticized the 
provisions of the proposed rule as violating State primacy. In 
substance, they asserted that the proposed rule ``balkanized'' the 
permit application process by allowing the regulatory authority that 
issued a violation to identify the ownership or control links to the 
violation. They asserted that this provision impermissibly allowed such 
regulatory authority to play a role in the permit application process. 
They further argued that the regulatory authority before which an 
application was pending should be the sole decisionmaker.
    OSM disagrees with these views. OSM has already addressed these 
issues in detail in previous sections of this preamble captioned ``Due 
Process'' and ``Primacy.'' Further, OSM has clarified that a permittee 
may, within the context of the improvident permit issuance process, 
challenge the existence of the violation at the time it was cited. See 
discussion above in this preamble, ``Section 773.20--Improvidently 
Issued Permits: General Procedures.''
    A commenter representing State regulatory authorities took 
exception to the provisions of paragraph (b)(3) of proposed Sec. 773.26 
which would have provided that State determinations of ownership or 
control challenges be subject to OSM's oversight authority. The 
commenter asserted that those provisions were duplicative of other 
provisions of current regulations which provide for OSM's oversight of 
the States such as 30 CFR parts 733, 842, and 843. He further asserted 
that the Act established OSM's oversight power over the States and that 
such power required no reiteration by the proposed regulation.
    In addition, commenters representing State regulatory authorities 
argued that, under a system of State primacy, OSM has no authority to 
act, on a case by case basis, with respect to a particular permit 
decision by a State regulatory program, other than revoking the State's 
approved regulatory program. Thus, they questioned OSM's authority to 
review a State's decision with respect to ownership or control. They 
also argued that, if OSM review of State ownership or control decisions 
was done, this would lead to duplication and disruption in the permit 
application process.
    While these commenters asserted that the provisions of the proposed 
regulation should be deleted, they proposed that, if OSM insisted on 
going forward with the proposed provision or a similar rule providing 
for OSM oversight of State decisions, the final rule should make 
explicit that the initial decision of a State regulatory authority with 
respect to an ownership or control issue would be considered 
presumptively correct. They also proposed that a standard such as 
``gross inadequacy'' should be the standard for OSM to apply to the 
review of the State decision.
    OSM disagrees with the commenters' analysis. First, OSM rejects the 
commenters' view that the proposed regulation is unnecessary since the 
Act and regulations already provide for OSM's oversight of the States. 
The provisions of SMCRA such as sections 201, 503, 504, 505, and 521, 
and the provisions of the Federal regulations at 30 CFR parts 733, 842, 
and 843 do establish a system of State primacy subject to Federal 
oversight. Nevertheless, such provisions do not explicitly address 
every question which could arise in the implementation of the 
relationship between OSM and the States with respect to Sec. 510(c) of 
the Act which, as has been previously discussed in this preamble, 
invokes significant issues of State primacy and Federal oversight. 
Further, the implementation of the AVS also invokes issues of State 
primacy and Federal oversight. Multiple State regulatory authorities 
and OSM will be making ownership or control decisions at various stages 
which are relevant to issues arising under section 510(c) of the Act. 
While the proposed regulation is consistent with the Act and with OSM's 
existing regulations, the proposed regulation's allocation of 
responsibilities among the regulatory authorities who will be making 
ownership or control decisions relevant to section 510(c) of the Act 
has not been previously part of the Federal regulations. The allocation 
of responsibilities provides necessary clarification to the regulated 
community, to regulatory authorities, and to the public. Accordingly, 
OSM must reject the view that the proposed regulation is duplicative of 
current regulations.
    OSM further rejects the view that, under a system of State primacy, 
OSM has no authority to act, on a case by case basis, with respect to a 
particular permit decision by a State regulatory program, other than 
revoking the State's approved regulatory program. A number of 
provisions of the Federal regulations, including 30 CFR 842.11 and 
843.21, are very explicit in providing that OSM can exercise necessary 
oversight authority with respect to a particular permit without 
revoking a State's entire regulatory program. These other provisions 
are consistent with the system of State primacy established by SMCRA. 
The proposed regulation is similarly consistent.
    Moreover, OSM has a particularly strong interest in working to 
assure that ownership or control decisions are made correctly because 
the fruits of such decisionmaking will be incorporated into AVS. As has 
been previously discussed, AVS is used across State lines by the 
various State regulatory authorities and by OSM itself. Accordingly, a 
decision made with respect to an ownership or control link by one State 
regulatory authority has the potential to effect the outcomes of permit 
decisions by many regulatory authorities. Without consistency, there 
would be chaos. Federal oversight in these matters supports consistency 
among the various States in the application of the ownership or control 
rules and the outcomes of the decisions on ownership or control issues. 
Since these State decisions are ultimately incorporated into AVS, OSM's 
oversight supports the quality of the AVS.
    Also, there is no reason to conclude that the exercise of Federal 
oversight, pursuant to the provisions of the proposed regulation, will 
lead to disruption in the permit application process. Paragraph (b)(1) 
of proposed Sec. 773.26 and the provisions of the final regulation 
discussed below are designed to avoid such disruption by allocating 
responsibilities among the various regulatory authorities who each have 
a legitimate interest in the outcome of an ownership or control issue. 
The oversight provisions of paragraph (b)(3) of proposed Sec. 773.26 
are designed to support such allocation of responsibilities in a way 
that is consistent with SMCRA and OSM's implementing regulations.
    OSM further believes that the commenter's proposal that a final 
rule should make explicit that the initial decision of a State 
regulatory authority with respect to an ownership or control issue will 
be considered presumptively correct is adequately addressed. In 
substance, the provisions of paragraph (b)(3) of final Sec. 773.25 
discussed below already provide that State regulatory authorities who 
are issuing violations, considering permit applications, and issuing 
permits with the first opportunity to decide the owners or controllers 
of, respectively, violations, applications, and permits. While the 
first opportunity to make a particular decision is not equivalent to a 
legal presumption in favor of the decision, such an opportunity does 
give a State regulatory authority the chance to define the status quo 
which would be subject to oversight review. OSM declines, however, to 
convert such initial decisionmaking opportunity into a presumption. The 
need for consistency with respect to ownership or control decisions and 
with respect to AVS require that OSM conduct oversight reviews of such 
State decisions as are necessary without the application of a 
presumption favoring the affirmance of such decisions.
    OSM also declines to incorporate a standard such as ``gross 
inadequacy'' or some other criterion as the basis for Federal oversight 
of State ownership or control decisions under paragraph (b)(3) of 
proposed Sec. 773.26. The application of such a standard would limit 
OSM's ability to review State decisions for purposes of protecting the 
consistency and accuracy of information in the AVS. As will be 
discussed with respect to the final rule Sec. 773.25 below, OSM has 
made modifications to proposed Sec. 773.26 to reflect OSM's 
responsibility for the ownership or control information shown on AVS 
and to enable OSM to act to maintain the integrity of the AVS database. 
With respect to oversight incident to particular applications, permits, 
and violations, paragraph (b)(3) of proposed Sec. 773.26 already 
contains references to 30 CFR parts 733, 842, and 843. Final rule 
Sec. 773.25 contains identical references. Each of these parts of Title 
30 of the Code of Federal Regulations contains provisions which have 
explicit criteria and triggering standards for OSM's review and action 
with respect to State decisions. Such criteria and standards are 
incorporated by reference in paragraph (b)(3) of proposed Sec. 773.26 
and would be applied, as appropriate, by OSM. Accordingly, there is no 
need for additional review criteria in OSM's oversight under the 
proposed regulation. As discussed below, final rule Sec. 773.25 adopts 
the same approach.
    A commenter representing environmental advocacy groups questioned 
whether the provisions of paragraph (b) of proposed Sec. 773.26 
sufficiently explained the allocation of responsibilities between OSM 
and State regulatory authorities. The commenter questioned the 
provision of the proposal contained at paragraph (b)(3) which provided 
that State regulatory authorities' authority to make ownership or 
control decisions would be subject to OSM's review as an element of 
State program oversight. The commenter asserted that this provision 
required further clarification as to the respective roles of OSM and 
the State regulatory authorities in the making of ownership or control 
decisions.
    OSM agrees with the commenter's observation that further 
clarification is in order with respect to the allocation of 
responsibilities and authority contained in paragraph (b)(3) of 
proposed Sec. 773.26. Accordingly, OSM has made a change to the final 
rule to clarify that, with respect to information shown on AVS, State 
responsibilities to make decisions with respect to ownership or control 
are subject to OSM's plenary authority.
    Thus, under the final rule, once ownership or control information 
is entered into AVS, OSM will assume control of such data. If OSM 
reviews such information and concludes that it is incorrect, OSM will 
act to correct such ownership or control information and will 
incorporate such corrected information into AVS. The rationale for 
OSM's plenary authority is that AVS is used across State lines by all 
of the State regulatory authorities and the Federal government must act 
to protect the accuracy and integrity of AVS. With respect to the State 
regulatory authority's decision underlying such ownership or control 
information, OSM will further act pursuant to the provisions of final 
Sec. 843.24, which is described in detail below.
    Nevertheless, OSM must reject the view that, because ownership or 
control issues are invoked, OSM must be initially involved in every 
permit application decision made by a State regulatory authority. The 
primary responsibility and authority for making a decision whether to 
issue or deny a permit is with the regulatory authority before which an 
application is pending. The primary responsibility and authority under 
a State regulatory program for issuing a violation is with that State's 
regulatory authority. The primary responsibility for the ongoing 
supervision of a permit is with the State regulatory authority which 
issued the permit. Accordingly, while OSM has changed some of the 
terminology in the final rule for reasons which are discussed below, 
OSM has not changed the basic conceptual framework contained in 
paragraph (b)(3) of proposed section 773.26. That framework is that the 
regulatory authority which is considering an application, which has 
issued a permit, or which has issued a violation has initial authority 
for making decisions with respect to the ownership or control 
relationships respectively invoked by the application, the permit, and 
the violation. OSM has program oversight authority of such decisions 
under 30 CFR parts 733, 842, and 843.
    This commenter further indicated that the provisions of paragraph 
(b)(3) of the proposed section allocated the authority to review State 
decisions with respect to permit applications to OSM, but that OSM 
could exercise such authority only after a permit had been issued, in 
accordance with proposed Sec. 843.24, and that this would cause 
friction between OSM and the States. The commenter proposed that, if 
OSM believed that an ownership or control link had not been made or had 
been severed improperly by a State regulatory authority considering a 
permit application, the permit should not be issued until OSM and the 
State regulatory authority resolved their dispute.
    OSM appreciates the commenter's concern. In any system involving 
Federal oversight of the States, there is the potential for 
disagreements between the States and the Federal government. SMCRA is 
no exception. For instance, the invocation of the improvidently issued 
permit process by OSM, pursuant to 30 CFR 843.21, subjects the State's 
permit application review process to close scrutiny with respect to the 
permit in question. This is one of the remedies provided in proposed 
Sec. 843.24 which paragraph (b)(3) of proposed Sec. 773.26 would make 
applicable. There is potential for stress in this process. To help 
avoid to improvident issuance of permits, however, OSM, through its AVS 
Office, has attempted to be accessible to the States and to work with 
the States have the benefit of OSM's most current opinions with respect 
to particular ownership or control situations. Whether a State 
regulatory authority chooses to avail itself of this service is a 
matter within the discretion of the State regulatory authority which 
has the primary authority to decide whether to issue a permit. 
Principles of State primacy make it inappropriate, however, to mandate 
such consultations with respect to every permit application. 
Accordingly, OSM declines to modify the rule to mandate that OSM 
intervene in the State permit application process to require that the 
State not issue a permit if OSM disagrees with the State's resolution 
of an ownership or control issue.
    Industry commenters criticized the provisions of paragraph (c)(1) 
of proposed Sec. 773.26. They questioned the requirement contained in 
the proposed regulation that a regulatory authority make a prima facie 
determination whether an ownership or control link exists to a 
violation and that such violation remains ``outstanding.'' They 
asserted that the provisions of section 510(c) of the Act require the 
denial of permits for ``unabated'' violations only, not ``outstanding'' 
violations.
    OSM disagrees with the commenters' analysis. The provisions of 
section 510(c) of the Act require that a regulatory authority not issue 
a permit if information available to it indicates that ``any surface 
coal mining operation owned or controlled by the applicant is currently 
in violation of the Act'' or other laws specified. (Emphasis added.) 
Paragraph (c)(1) of proposed Sec. 773.26 requires a prima facie 
determination whether the violation covered by a violation notice 
``remains outstanding.'' A violation which ``remains outstanding'' is 
one which is ``current.'' The plain meaning of these phrases is the 
same. Further, by the use of the words ``remains outstanding'' in the 
proposed regulation, OSM did not intend to change the standard 
established by section 510(c) of the Act. Instead, OSM merely sought, 
as the Federal agency charged with implementing SMCRA, to provide a 
workable phrase defining a current violation.
    Industry commenters further objected to paragraph (c)(1) of 
proposed Sec. 773.26 insofar as such proposal required an applicant to 
demonstrate, by a preponderance of the evidence, that the applicant did 
not own or control the violator within the meaning of the regulations. 
The commenters asserted that the imposition of such a burden of proof 
upon the applicant was inconsistent with section 510(c) of the Act and 
that the use of such an evidentiary burden was only appropriate for 
formal proceedings before tribunals, rather than informal proceedings 
before State regulatory authorities.
    OSM disagrees with commenters' objections. The imposition of such a 
burden of proof is entirely consistent with the provisions of section 
510(c) of the Act which require that, when available information 
indicates that a surface coal mining operation ``owned or controlled by 
the applicant'' is in current violation of the Act or other laws 
listed, the permit not be issued ``until the applicant submits proof 
that such violation has been corrected or is in the process of being 
corrected.''
    Moreover, the statute is silent as to how an applicant may 
demonstrate that he or she does not own or control a surface coal 
mining operation. Under the Act, it is the duty of OSM, the 
administrative agency charged with implementing the Act, to ``publish 
and promulgate such rules and regulations as may be necessary to carry 
out the purposes and provisions of * * * [the] Act.'' See section 
201(c)(2) of the Act.
    Thus, OSM proposed, and today is finalizing, a regulation which 
carries out the purposes of section 510(c) of the Act and places the 
burden of evidence production and persuasion upon the person 
challenging an ownership or control link to a current violation. This 
is consistent with the provisions of that section of the Act which 
clearly place the burden of going forward with proof that a violation 
has been corrected or is in the process of correction upon the 
applicant who owns or controls a surface coal mining operation which is 
in violation of the Act.
    Moreover, in the absence of some means of showing that he or she 
does not own or control a particular surface coal mining operation 
which is in violation of the Act, an applicant who owned or controlled 
such an operation would only be able to receive a permit if he or she 
could produce proof that the current violation was corrected or was in 
the process of correction. As indicated above, consistent with its 
statutory role to propose regulations, OSM has provided the ``means'' 
for an applicant to show that he or she does not control a surface coal 
mining operation by establishing the burden of proof and evidentiary 
standards contained in paragraph (c) of proposed Sec. 773.26.
    Finally, OSM must reject the notion that the burden of proof 
contained in the proposed regulation is inappropriate for use by State 
regulatory authorities. Burdens of proof are used in formal litigation 
before tribunals because they are helpful to the resolution of such 
litigation. Such burdens establish the parameters of what parties to 
litigation must do to prevail in their claims. Similarly, challengers 
of ownership or control links need to know what parameters they need to 
meet in proceedings before regulatory authorities to challenge such 
links. Also, in making decisions with respect to ownership or control 
or with respect to the status of violations, regulatory authorities 
need guidance in assisting their decisionmaking process. In the absence 
of guidance establishing burdens of proof and evidentiary standards, 
the resulting decisions made may be inconsistent and based upon 
uncertain standards. For instance, one regulatory authority may believe 
the any quantity of evidence, including a mere scintilla, is sufficient 
to successfully challenge an ownership or control link to a violation. 
Another regulatory authority may believe that a successful challenge 
requires a challenger to demonstrate that an ownership or control link 
is rebutted beyond any reasonable doubt.
    Thus, OSM's proposed rule has provided a single standard of 
persuasion and production, a preponderance of the evidence, to be 
required for the successful challenge of an ownership or control link. 
OSM believes that such a standard represents a prudent middle ground 
between the possible extremes of burdens of proof requiring a mere 
scintilla of evidence and those requiring proof beyond a reasonable 
doubt. OSM is confident that State regulatory authorities will be able 
to implement such a standard and that it will prove helpful. 
Accordingly, OSM rejects the commenters' assertion that the use of the 
evidentiary burden of production contained in the proposed rule is 
inappropriate for State regulatory authorities.
    Industry commenters further criticized paragraph (c)(1) of proposed 
Sec. 773.26 for requiring, as one of the bases to rebut a presumption 
of ownership or control, proof that the facts relied upon to establish 
such presumption do not or did not exist. The commenters asserted that 
such a test may foreclose a demonstration that the regulatory authority 
which established such presumption reached the wrong legal conclusion, 
notwithstanding the truth of the facts. Further, the commenters 
asserted, in substance, that the provisions of the proposed section 
imply that the challenger would have to disprove all of the facts which 
were considered by the agency which established the presumption of 
ownership or control, not just the relevant facts which support the 
presumption.
    OSM does not agree with commenters' assertions. Paragraph (c)(1) of 
proposed Sec. 773.26 was intended to provide the parameters as to what 
factual demonstration must be made by a challenger of an ownership or 
control link. Accordingly, paragraph (c)(1)(i) of proposed Sec. 773.26 
provision provides for the challenge of a link by proof that the facts 
necessary to invoke the presumption of ownership or control did not or 
do not exist. Nothing in such proof of facts precludes legal arguments 
which could be made, including those questioning the application of the 
presumption under the operative facts. Further, facts relevant to that 
legal issue could be presented under the provisions of paragraph 
(c)(1)(ii) of proposed Sec. 773.26 which provides that a person could 
demonstrate that he or she does not or did not have authority directly 
or indirectly to determine the manner in which surface coal mining 
operations are or were conducted.
    Moreover, under the provisions of the proposed regulation, 
challengers would only have to present proof with respect to factual 
issues which are relevant to the invocation of the presumption of 
ownership or control. If the presumption turns upon certain key factual 
issues, these are the issues upon which the challenge will focus. 
Challengers will not be required to disprove irrelevant facts which may 
have been included in the administrative record of the agency which 
initially established the presumption of ownership or control.
    The industry commenters further objected to paragraph (c)(1)(ii) of 
proposed Sec. 773.26 which provides that a person seeking to challenge 
a presumption could demonstrate that he or she did not have authority 
directly or indirectly to determine the manner in which surface coal 
mining operations were conducted. The commenters questioned whether the 
requirement that a person prove that he or she did not have such 
indirect authority was an attempt by OSM to impermissibly extend the 
reach of the ownership or control regulations to cover persons remote 
from surface coal mining operations.
    OSM denies that the proposed provision represents an attempt to 
impermissibly extend the reach of the ownership or control regulations. 
In fact, the proposed standard was taken from currently operative 
ownership and control regulations. The provisions of paragraph (b) of 
30 CFR 773.5, which have been effective since November 2, 1988, state 
that a person subject to one or more of the presumptions contained in 
paragraph (b) of that regulation is presumed to be an owner or 
controller unless there is a demonstration that ``the person subject to 
the presumption does not in fact have the authority directly or 
indirectly to determine the manner in which the relevant surface coal 
mining operation is conducted.'' (Emphasis added.) This is the same 
standard which is also contained in paragraph (a)(3) of 30 CFR 773.5. 
The purpose of this standard is to enable:

the regulatory authority * * * [to] examine any relationships and 
the facts surrounding them, such as informal agreements, personal 
relationships, and the mining history of the parties in question to 
determine if the relationship results in control over a surface coal 
mining operation. The regulatory authority may also consider any of 
the circumstances surrounding a surface coal mining operation to 
determine control. Such circumstances might include, for example, 
the fact that a person has financed the operation, or owns the 
equipment or the rights to the coal, or directs on-site operations.

See Preamble to Requirements for Surface Coal Mining and Reclamation 
Permit Approval; Ownership and Control; Final Rule, 53 FR 38868 at page 
38870 (October 3, 1988). Further, whether a person is ``remote'' in a 
corporate chain of command is not the issue under the standard. The 
issue is whether the totality of the circumstances indicate that the 
person had the authority to exercise control over the relevant surface 
coal mining operation. Such ``authority'' includes control or the power 
to control. Id., at pages 38870-38871. The resolution of such issues is 
necessary for the regulatory authority's analysis of an ownership or 
control challenge. Accordingly, requiring a person challenging a 
presumption of ownership or control to make such demonstration is 
appropriate.
    Industry commenters proposed that paragraph (c) of proposed 
Sec. 773.26 be modified to provide that a person challenging the 
presumption be able to prove that the agency relied upon incorrect 
facts to support its determination of ownership or control; that the 
person subject to the presumption did not have knowledge of the 
violation, did not authorize the activity that led to the violation, or 
did not have direct authority to determine the manner in which surface 
coal mining operations were conducted; or that the ownership or control 
link has been severed.
    OSM appreciates the commenters' proposal. Nevertheless, OSM will 
not adopt the commenters' proposed modifications for the following 
reasons.
    The provisions of paragraph (c)(1)(i) of proposed Sec. 773.26 
already contain language providing for a challenger's proof that the 
facts relied upon by regulatory authority to make a determination of 
ownership or control did not or do not exist. Such language is 
inclusive of the commenters' proposal that a challenger be allowed to 
submit proof that the agency relied upon incorrect facts to support its 
determination of ownership or control.
    Further, the language contained in OSM's proposed regulation would 
also encompass the commenters' proposal that a challenger be able to 
provide proof that an ownership or control link has been severed. Under 
paragraph (c)(1)(i) of the proposed regulation, such proof would be 
included as evidence that the facts relied upon by the regulatory 
authority to establish ownership or control or a presumption of 
ownership or control did not or do not exist. Whether such proof is 
sufficient to support a successful challenge to an ownership or control 
link will depend upon the facts of each case. OSM must reject the 
implication of commenters' proposal that the severance of a current 
ownership or control link to a violator would relieve a person from 
permit block in all cases. For instance, if a person was an owner or 
controller of a violator during the period in which the violation was 
committed, severance of his or her current ownership or control 
relationship with the company would not relieve him or her of 
responsibility created through the prior ownership or control link.
    OSM must further reject commenters' proposal to the extent that it 
would establish a standard which would enable a challenger of an 
ownership or control link to a violation to challenge the link by proof 
that he lacked knowledge of the violation; that he did not authorize 
the activity which led to the violation; or that he did not have direct 
authority to determine the manner in which surface coal mining 
operations were conducted. Commenters' proposal must be rejected 
because it ignores the control which stems from indirect authority.
    OSM agrees that all of commenters' proposed standards invoke 
factual matters which may be relevant when a regulatory authority 
considers an ownership or control link to a violation. As such, proof 
of each of these matters could be presented within the context of the 
presentation of facts made under paragraph (c) of proposed Sec. 773.26. 
For instance, proof presented that a person had no knowledge of a 
violation; that he or she did not actually authorize a violation; or 
that he or she did not have direct authority for the surface coal 
mining operation may well reflect on the contours of the person's 
responsibilities with a presumptively owned or controlled entity. 
Nevertheless, such facts may also constitute a false shield which has 
been created to conceal the substantive, indirect control that the 
person has over a surface coal mining operation. Commenters' proposal 
is flawed, therefore, because it would enable a challenger to 
successfully challenge an ownership or control link by simply proving 
lack of actual knowledge, actual authority, or direct control, without 
requiring proof that a presumed owner or controller also lacked 
indirect authority over the surface coal mining operation.
    Industry commenters further proposed a modification to paragraph 
(c)(1)(iii) of proposed Sec. 773.26. In OSM's proposal, that paragraph 
prohibited a challenge as to the existence of the violation within the 
context of a challenge to an ownership or control link or a challenge 
to the status of the violation. Commenters proposed changes to allow a 
challenge as to the existence of the violation at the time it was 
cited. For the reasons discussed with respect to this issue in the 
section of this preamble captioned ``Due Process'' and in the previous 
discussion of changes made to final Sec. 773.20, OSM has generally 
rejected commenters' proposal but has accepted such proposal with 
respect to the improvident permit issuance process. Also, at the time 
of permit denial, a permit applicant can appeal any reason for such 
denial including the existence of a violation assuming that the 
applicant is not bound by a prior administrative or judicial 
determination or has not had a prior opportunity to challenge the 
existence of the violation. Accordingly, OSM has amended paragraph 
(c)(1)(iii) of final rule Sec. 773.25 to clarify that a challenge may 
be made by a permittee acting within the context of the improvident 
permit issuance process under Secs. 773.20-773.21. This is in 
recognition of the more significant interest that a permittee has in a 
permit compared to the limited interest that an applicant has in a 
permit application. A permittee's ability to assert such a challenge 
will be limited, however, if he or she had a prior opportunity to 
challenge the violation notice and failed to do so in a timely manner 
or if he or she is bound by a prior administrative or judicial 
determination concerning the existence of the violation.
    A commenter representing State regulatory authorities indicated 
concern that paragraph (c) of proposed Sec. 773.26 contained legal 
terms such as ``prima facie determination,'' proof ``by a preponderance 
of the evidence,'' and ``probative, reliable, and substantial 
evidence'' without providing definitions of such terms. The commenter 
indicated that all of these terms have ``particular legal meanings.'' 
He urged that the proposed regulation be amended to incorporate 
definitions of such terms, ``consistent with their common legal 
meanings.''
    OSM appreciates the commenter's proposal. OSM disagrees, however, 
with commenter's view that the cited terms need formal definition in 
the proposed regulation. As commenter has correctly noted, each of the 
cited terms has a traditional, common legal meaning. In a proceeding to 
challenge an ownership or control link or the status of a violation, 
such terms would have their traditional legal meanings. It is 
anticipated that such meanings will further evolve on a case by case 
basis over time. Finally, with respect to the terms ``probative, 
reliable, and substantial'' as such terms describe evidence, paragraph 
(c)(2) of proposed Sec. 773.26 provides some examples of this type of 
evidence.
    A commenter representing a State regulatory authority criticized 
the provisions of paragraph (c)(2)(ii) of the proposed regulation 
because such provisions would potentially allow a challenger of an 
ownership or control link to present evidence to a tribunal reviewing a 
decision of a regulatory authority which had not previously been 
presented to the regulatory authority. The commenter proposed a 
modification to the regulation such that any evidence presented on 
appeal by a challenger be limited to that which was presented to the 
regulatory authority at the time when the decision being reviewed was 
made. The commenter proposed that evidence which was not reasonably 
available to the challenger at the time of the regulatory authority's 
decision could, however, be presented for the consideration of the 
reviewing tribunal.
    OSM appreciates the commenter's proposal. One legitimate approach 
to the process of such challenges might be to limit the presentation of 
evidence on review to that which had been previously presented to the 
regulatory authority which made the decision which has been subjected 
to review. OSM believes, however, that the better approach is to allow 
the presentation of any evidence admissible under the rules of the 
reviewing tribunal, including evidence which was not previously 
presented to the regulatory authority. This will assure that the review 
of the decision with respect to the ownership or control link or the 
status of a violation is based upon the most complete evidence 
available to all parties participating in the review process. Such a 
review will help assure that all parties have the opportunity to 
present their complete proof with respect to their respective positions 
in what is, substantively, a de novo proceeding. Such complete evidence 
presentation and review may aid the legitimacy and acceptance of any 
final decision made incident to such review.
    Further, OSM disagrees with the view that such a process might 
encourage a challenger to withhold relevant evidence for surprise 
presentation at a subsequent review proceeding. A challenger will have 
sufficient incentive to overcome a presumed ownership or control link 
at the earliest possible time because he or she will want to avoid 
permit blocks or further litigation. Accordingly, he or she can be 
expected to present the best evidence available to make the case in 
favor of overcoming the presumed ownership or control link. Thus, OSM 
must reject the commenter's suggested modification to the proposed 
regulation.
    A number of commenters criticized paragraph (c)(2) of the proposed 
regulation for allowing the use of affidavits in support of a challenge 
to an ownership or control link or to the status of a violation. The 
commenters asserted that such materials contain self-serving statements 
and are unreliable. The commenters further asserted that affidavits 
should not be the basis to overcome a presumption, in the absence of 
additional evidence supporting such affidavits. The commenters proposed 
various modifications to the proposed rule which would require the 
submission of additional information when affidavits are presented in 
support of a challenge to an ownership or control link. In this 
respect, one commenter proposed a ``best evidence'' rule which would 
not allow the presentation of affidavits when there was ``better'' 
documentary evidence available, such as official copies of corporate 
records previously filed with State corporation commissions.
    OSM appreciates the commenters' concern with respect to affidavits. 
Nevertheless, affidavits do have certain indicators of reliability. 
They are made under oath before a government official licensed to 
witness such oaths, a notary public. Further, affidavits are recognized 
as evidence sufficient to support a motion for summary judgment in 
civil litigation. See Rule 56 of the Federal Rules of Civil Procedure. 
Accordingly, OSM continues to consider affidavits as appropriate 
evidence for a regulatory authority's review in the evaluation of a 
challenge to an ownership or control link.
    Nevertheless, OSM agrees that, in most cases, an affidavit 
unsupported by other evidence may be insufficient to overcome a 
presumption of ownership or control. There could be rare circumstances, 
however, where an affidavit by itself could be the basis for rebuttal, 
given the totality of the circumstances involved. Such matters are 
appropriately addressed on a case by case basis, rather than through a 
rule. Under the proposed rule, challengers are encouraged to submit 
additional evidence along with affidavits.
    Accordingly, OSM will not modify the proposed regulation to delete 
the use of affidavits or to require that affidavits only be allowed as 
proof if accompanied by other supporting evidence in every case. Also, 
while OSM agrees that State corporation commissions may be a good 
source of relevant ownership or control information, OSM declines to 
adopt a ``best evidence'' test which would prevent the submission of 
affidavits when documents have been filed with State corporation 
commissions.
    One commenter representing environmental advocacy groups criticized 
paragraph (c)(2)(i)(D) of proposed Sec. 773.26 insofar as the 
provisions allowed for the submission of an opinion of counsel in 
support of a challenge with respect to an ownership or control link or 
with respect to the status of a violation. In substance, the commenter 
asserted that such opinions present no factual evidence for the 
regulatory authority. Such opinions of counsel represent legal opinions 
with respect to ownership or control and invade the province of the 
decisionmaker, the regulatory authority.
    OSM agrees that an opinion of counsel should not, in itself, be 
considered ``evidence.'' Indeed, opinions of counsel constitute legal 
analysis based upon factual information. Both proposed and final 
regulations require that such opinions ``be supported by evidentiary 
materials.''
    Nevertheless, OSM must disagree that such opinions should be 
excluded. By providing an opportunity for the submission of such 
opinions, OSM is seeking to encourage counsel to conduct a diligent 
investigation of the facts and to assist regulatory authorities by 
presenting the fruits of such investigation--the factual materials--
along with counsel's legal opinions as to the import of such evidence. 
The decision as to the weight to be given to the evidentiary materials 
and the persuasiveness of the counsel's opinions remain with the 
regulatory authority considering the challenge to the ownership or 
control link. Lawyers routinely argue their clients' positions to 
triers of fact and law. Such argument does not invade the province of 
the decisionmaker which retains the authority to make the decision.
    OSM has decided to allow for a challenger's submission of an 
opinion of counsel in support of his or her position as part of final 
Sec. 773.25. Such opinion would be appropriate for submission when it 
is supported by evidentiary materials; when it is rendered by an 
attorney who certifies that he or she is qualified to render an opinion 
of law; and when counsel states that he or she has personally and 
diligently investigated the facts of the matter or where counsel states 
that such opinion is based upon information which has been supplied to 
counsel and which is assumed to be true.
    Whereas the proposed rule only provided for such opinion when 
counsel made a personal investigation of the facts, the final rule 
incorporates language to provide for opinions where such investigation 
has not been made. The basis for this change is to reflect that, under 
certain circumstances, attorneys might not choose to conduct a complete 
personal investigation of the factual representations made within the 
opinion. See Formal Opinion 346 (Revised), Tax Law Opinions in Tax 
Shelter Investment Offerings, Standing Committee on Ethics and 
Professional Responsibility, American Bar Association (January 29, 
1982).
    Such opinion is similar in type to that provided by counsel to an 
adversary party as to title, tax issues, or environmental compliance in 
real estate transactions. The indicator of reliability in this document 
is that the attorney is offering his or her opinion subject to 
professional standards provided by national and local bar associations 
and possible sanctions for the violations of such standards which may 
be imposed by applicable rules of conduct governing attorneys. In 
addition, under the final regulation, the attorney's opinion by itself 
is not enough to challenge an ownership or control link. Evidentiary 
materials need to be submitted along with such opinion.
    In addition to the substantive change noted above, OSM has made 
non-substantive changes to the provision which clarify the requirements 
of the final rule provision. Accordingly, OSM has adopted the proposed 
rule with the changes noted as paragraph (c)(2)(i)(D) of final 
Sec. 773.25.
    As described above, paragraph (d) of proposed Sec. 773.26, required 
proof for the rebuttal of ownership or control presumptions, 
represented OSM's attempt to offer substantive standards which would 
have established what must be proved by those seeking to rebut the 
presumptions of ownership or control contained in current Sec. 773.5(b) 
of this title. Proof of the type of facts set forth in the proposed 
regulations would have established that the presumed owner or 
controller did not, in fact, have the authority directly or indirectly 
to determine the manner in which the relevant surface coal mining 
operation was conducted, under the provisions of 30 CFR 773.5(b).
    OSM has determined not to go forward with paragraph (d) of proposed 
Sec. 773.26 and has, therefore, withdrawn that portion of the proposed 
rule. In substance, OSM believes that ownership and control 
determinations are inherently a case specific process. Each ownership 
or control matter turns on the totality of circumstances in a given 
case and whether the evidence presented demonstrates that the presumed 
owner or controller does not or did not, in fact, have the authority 
directly or indirectly to determine the manner in which the relevant 
surface coal mining operation was conducted. See 30 CFR 773.5(b)(1). 
The pragmatic focus of such an inquiry will continue to be whether a 
presumed controller actually exercised control over an entity or had 
the substantive power to exercise control over an entity, even if he or 
she chose not to actually exercise such power. As OSM has stated 
previously in the preamble to 30 CFR Sec. 773.5(b), ``To the extent 
that a coal company controls or can exercise control over a contract 
operator, it should be held responsible for any outstanding violations 
of the Act which it should have prevented or corrected.'' (Emphasis 
added.) See Preamble to Requirements for Surface Coal Mining and 
Reclamation Permit Approval; Ownership and Control; Final Rule, 53 FR 
38868 at page 38877 (October 3, 1988). In effect, a person challenging 
a presumption of control must demonstrate, by a preponderance of the 
evidence, that neither of these two circumstances is applicable.
    While it might be initially attractive for the agency to create a 
standard containing three or four elements, the proof of which 
automatically rebuts a presumption, OSM is unwilling to impose such 
potentially rigid substantive tests upon the process of analyzing 
ownership or control cases. OSM believes that such rigid standards do 
not serve the interests of the States, industry, or OSM, because they 
might be taken to preclude consideration of other rebuttal evidence not 
listed or, conversely, might force a State regulatory authority to 
accept a rebuttal which conforms substantially to OSM's model but 
which, in the opinion of the regulatory authority, does not in fact 
rebut the presumption. OSM's experience has taught that each ownership 
or control rebuttal requires an analysis of the presumed relationship 
within the complete factual context.
    Accordingly, in analyzing the ownership or control profile of an 
entity, OSM will look to the totality of circumstances--with the view 
to understanding how a particular entity operates and operated--to 
determine the true owners or controllers of a surface coal mining 
operation.
    Commenters representing environmental advocacy groups asserted that 
the rules should provide that any documents submitted by persons 
challenging presumptions of ownership or control be considered part of 
the public record and part of the permit file. On the other hand, 
industry commenters argued that the rules are deficient because they do 
not contain a provision by which documentation submitted could be held 
confidential. They further asserted that there was no means for a 
challenger to obtain a protective order with respect to confidential 
materials submitted in support of a challenge.
    OSM agrees that documents submitted in support of a challenge to an 
ownership or control link or in support of a challenge to the status or 
the existence of a violation should normally be considered part of the 
public record. The public has a legitimate interest in knowing and 
understanding the basis for a regulatory authority's decisions in these 
matters. In a democracy, it is unreasonable for a governmental agency 
to make such decisions based upon secret information. Further, the 
credibility of the regulatory authority and the integrity of its 
decisionmaking process require that its decisions be supported by an 
adequate record.
    At the same time, OSM also recognizes that there may be valid 
competitive reasons why industry operators believe that certain 
information needs to be kept confidential. For instance, a person may 
not wish to reveal the price which he or she has paid for the coal 
extracted by a mine contractor for fear that other contractors or 
competitors will learn of this information and change their prices or 
bids to the disadvantage of the person revealing the information. A 
person concerned about such disclosure may be reluctant to submit a 
copy of the relevant contract because it contains the agreed price. OSM 
disagrees, however, that these industry concerns require special 
provisions in the rules to seal documents or to otherwise protect 
confidentiality.
    In balancing the concerns of the public and the coal industry with 
respect to public access to the submitted documents, OSM will be guided 
by the principles of the Freedom of Information Act, 5 U.S.C. 552 
(FOIA), and the Departmental regulations implementing FOIA. See 43 CFR 
2.11-2.22. Upon request by a member of the public, OSM will ordinarily 
make available to the requestor documents provided by challengers of 
ownership or control links, the status of violations, and the existence 
of violations. To the extent that a person submitting information to 
OSM asserts that the materials should be kept confidential, OSM will 
evaluate that request in accordance with the applicable provisions of 
FOIA.
    In accordance with the above analysis, OSM has determined that the 
interests of the commenters can be addressed under current law and that 
the rule does not need to be modified.
    In accordance with the above discussion, OSM has determined to 
adopt a final version of the proposed rule. The final rule has been 
renumbered as Sec. 773.25 to reflect the withdrawal of proposed 
Sec. 773.25, procedures for challenging ownership or control links 
prior to entry in AVS. As indicated above, OSM has modified the 
provisions of the proposal to allow for the submission of an opinion of 
counsel based upon evidence developed through counsel's personal 
investigation or based upon facts which have been supplied to counsel 
in support of a challenge of an ownership or control presumption. As 
further discussed above, OSM has inserted language in paragraph 
(c)(1)(iii) to clarify that a permittee may challenge the existence of 
the violation at the time it was cited within the context of 
improvident permit issuance as provided by Secs. 773.20 and 773.21. OSM 
has also withdrawn paragraph (d) of the proposed rule, required proof 
for the rebuttal of ownership or control presumptions, described above. 
The final rule contains no other substantive changes from proposed rule 
Sec. 773.26. The final rule contains certain other non-substantive 
modifications as described below.
    Paragraph (a) of final Sec. 773.25 provides that provisions of 
Sec. 773.25 are applicable to any challenge concerning an ownership or 
control link or the status of a violation when such challenge is made 
under the provisions of 30 CFR 773.20 and 30 CFR 773.21 (improvidently 
issued permits); Secs. 773.23 (the regulatory authority's review of 
ownership or control and violation information), and 773.24 (procedures 
for challenging ownership or control links shown in AVS); or under 30 
CFR part 775 (administrative and judicial review of permitting 
decisions).
    Paragraph (a) of the final rule differs from the proposed rule in 
that references to proposed Sec. 773.25, procedures for challenging 
ownership or control links prior to entry in AVS, have been deleted. A 
further change in this paragraph from the proposed rule provides that 
the provisions of final Sec. 773.25 apply to challenges of an ownership 
or control ``link to any person'' rather than only to a ``link to any 
person in a violation notice.'' The purpose of this change is to 
clarify that the provisions of the section apply to challenges of 
ownership or control links including those which do not generate a 
current link to an outstanding violation. OSM's experience has 
demonstrated that members of the regulated community have, in many 
cases, sought proactively to challenge ownership or control links to 
other persons, without regard to whether there were outstanding 
violations. Such challenges have been asserted, among other reasons, to 
avoid the risk of being linked to future violations through such 
ownership or control relationships. OSM recognizes that this is a 
legitimate concern. Accordingly, the change in the final rule allows 
the challenge of ownership or control links without regard to whether 
there are outstanding violations.
    Paragraph (a)(2) of final Sec. 773.25 contains a further change 
from the proposed rule in that the regulation provides that the 
provisions of the rule apply to challenges of ``the status of any 
violation covered by a notice.'' (Emphasis added.) The comparable 
section of the proposed regulation provided that the regulation applied 
to the status of ``the violation covered by such notice.'' The purpose 
of the change is to recognize that there may be multiple violations, 
rather than a single violation, to which a person is linked through 
ownership or control. A person may wish to challenge the status of each 
of these violations, rather than only the violation contained in a 
single notice. If so, the provisions of final Sec. 773.25 apply to such 
challenges. Consistent with this change, ``such notice'' is changed to 
``a notice.''
    Paragraph (b) of final Sec. 773.25 provides the basic allocation of 
responsibility among regulatory authorities to make decisions with 
respect to ownership or control and with respect to the status of 
violations. State regulatory authorities are expected to have 
procedures in place to address challenges made in accordance with these 
rules, including in situations where there are ongoing State 
proceedings in other jurisdictions on permit applications.
    Paragraph (b)(1)(i) if final Sec. 773.25 provides that the 
regulatory authority before which an application is pending has 
``responsibility'' for making decisions with respect to the ``ownership 
or control relationships of the application.'' This represents a change 
of terminology from the comparable provision of the proposed rule which 
provided that the regulatory authority would have ``authority for 
making decisions with respect to the ownership or control of the 
applicant.''
    First, the use of the word ``responsibility,'' rather than 
``authority,'' more accurately describes the regulatory authority's 
mandate under this regulation. ``Responsibility'' encompasses both 
authority, the power to act, and the obligation to act.
    Further, paragraph (b)(1)(i) of final Sec. 773.25 speaks of 
``ownership or control relationships of the application,'' rather than 
of the ``ownership or control of the applicant,'' as provided in the 
proposed rule. This change clarifies that the regulatory authority 
before which an application is pending will evaluate and make decisions 
with respect to the ownership and control issues with respect to an 
entire application, rather than just the particular applicant, 
consistent with this regulatory authority's primary responsibility for 
the application. This regulatory authority has responsibility for 
revising ownership or control information submitted as part of the 
permit application and other available information to ensure the 
complete identification of ownership or control relationships relevant 
to the decision to be made with respect to the application. The word 
``relationships'' has been added to the regulation because it better 
explains the focus of this process.
    Paragraph (b)(1)(ii) of final Sec. 773.25 provides that the 
regulatory authority that issued a permit has responsibility for making 
decisions with respect to the ownership or control relationships of the 
permit. The regulatory authority which issued a permit would have done 
so based upon a complete review of ownership or control information as 
required by the regulations. In the event that the improvidently issued 
permit regulations of 30 CFR 773.20 and 773.21 are invoked, this 
regulatory authority will have to decide whether such permit has been 
improvidently issued and whether, if the basis for such improvident 
issuance was an ownership or control link to a violator, whether such 
improvident issuance has been remedied. Accordingly, that regulatory 
authority must make decisions with respect to ownership or control 
relationships incident to the permit.
    In paragraph (b)(1)(ii) of final Sec. 773.25, ``responsibility'' 
has replaced the word ``authority'' contained in the proposed rule. The 
reasoning provided with respect to the changes made to paragraph 
(b)(1)(i) of the final rule is applicable here. Again, the regulatory 
authority will be making decisions ``with respect to the ownership or 
control relationships of the permit, ``rather than with respect to the 
ownership or control of the permittee,'' as provided in the proposed 
rule. This reflects that regulatory authority's primary responsibility 
for the permit which it has issued.
    Paragraph (b)(1)(iii) of final Sec. 773.25 provides that the State 
regulatory authority that issued a State violation notice has 
responsibility for making decisions with respect to the ownership or 
control relationships of the violation. The State regulatory authority 
issuing the violation is in the best position to be aware, in the first 
instance, of operative facts which identify those owners or controllers 
who have the ``authority directly or indirectly to determine the manner 
in which the relevant surface coal mining operation is conducted'' and 
who can thus cause the abatement of the violation. See 30 CFR 773.5(b).
    As in paragraph (b)(1)(i) of final Sec. 773.25, ``responsibility'' 
has replaced the word ``authority'' contained in the proposed rule. The 
reasoning provided with respect to these changes in paragraph (b)(1)(i) 
of the final rule is applicable here. Again, the regulatory authority 
will be making decisions ``with respect to the ownership or control 
relationships of the violation,'' rather than ``with respect to the 
ownership or control of any person cited in such notice [of 
violation],'' as provided in the proposed rule.
    Paragraph (b)(1)(iv) of the final Sec. 773.25 provides that the 
regulatory authority that issued a violation notice, whether State or 
Federal, would have responsibility for making decisions concerning the 
status of the violation covered by the notice. As in paragraph 
(b)(1)(i) of the final rule, ``responsibility'' has replaced the word 
``authority'' previously contained in the proposed rule. The reasoning 
provided with respect to the similar change in paragraph (b)(1)(i) of 
this final rule is applicable here.
    As in the proposed rule, the ``status'' of the violation means 
whether the violation remains outstanding, has been corrected, is in 
the process of being corrected, or is the subject of a good faith 
appeal, within the meaning of 30 CFR 773.15(b)(1). This approach is 
consistent with the provisions of section 510(c) of SMCRA which require 
that a regulatory authority considering a permit application look to 
the ``agency that has jurisdiction over such violation'' to determine 
whether a violation ``has been or is in the process of being 
corrected.''
    Paragraph (b)(2) of final Sec. 773.25 provides that OSM has 
responsibility for making decisions with respect to the ownership or 
control relationships of a Federal violation notice.
    As in paragraph (b)(1)(i) of final Sec. 773.25, ``responsibility'' 
has replaced the word ``authority'' contained in the proposed rule. The 
reasoning provided with respect to this change in paragraph (b)(1)(i) 
is applicable here.
    Paragraph (b)(2) of final Sec. 773.25 is essentially a Federal 
counterpart to paragraph (b)(1)(iii) and the same basic rationale 
applies here, as well. This provision differs from (b)(1)(iii), 
however, in that OSM's authority to decide the ownership and control 
relationships of a Federal violation notice is not initial 
responsibility as the State's responsibility is in (b)(1)(iii). 
Instead, OSM's responsibility is final.This difference recognizes that 
State regulatory authorities are subject to oversight by OSM. OSM is 
not subject to similar oversight by the States.
    Under the allocation principles set forth in paragraphs (b)(1) and 
(b)(2) of final Sec. 773.25, a regulatory authority deciding whether a 
permit application should be granted or whether a permit has been 
improvidently issued determines for itself the ownership or control 
relationships of the application or permit, but it defers to the 
regulatory authority that issued a violation notice for a determination 
of the ownership or control relationships of the violation. The 
application is then denied or the permit subject to treatment under the 
regulations governing improvident issuance if any owner or controller 
of the applicant or permittee is also an owner or controller of a 
violator, as determined by the respective regulatory authorities.
    Paragraph (b)(3)(i) of final Sec. 773.25 provides that with respect 
to information shown on AVS, the responsibility of State regulatory 
authorities to make decisions concerning ownership or control links 
will be subject to the plenary authority of OSM. This represents a 
change from the comparable provision of the proposed rule which 
provided that the authority of regulatory authorities to make ownership 
or control decisions with respect to applicants, permittees, and 
persons cited in violation notices and decisions with respect to the 
status of violations would be subject to OSM's review as an element of 
State program oversight under parts 733, 842, and 843.
    The rationale for this change is simply that OSM is ultimately 
responsible for the maintenance and content of the AVS with respect to 
ownership or control information. OSM believes that the quality of 
ownership or control information is the core of AVS. OSM must closely 
monitor such information to maintain the accuracy of such information 
and the integrity of AVS. The need to protect the integrity of the AVS 
dictates that OSM have the ability to review the underlying basis 
supporting any ownership or control link shown on the system and to 
change information with respect to any ownership or control link or all 
such links, if necessary. Accordingly, the final rule provides that 
OSM's authority will be plenary with respect to ownership or control 
information shown on AVS.
    Thus, once ownership or control information is entered into AVS, 
OSM will assume control of such data. If OSM reviews such information 
and concludes that it is incorrect, OSM will act to correct such 
ownership or control information and incorporate such corrected 
information into AVS. OSM intends to coordinate any such changes with 
the regulatory authority responsible for initial entry of the data in 
question.
    Under paragraph (b)(3)(ii) of final Sec. 773.25, with respect to 
information shown on AVS relating to the status of a violation and with 
respect to ownership or control information which has not been entered 
into AVS by a State, the authority of a State regulatory authority will 
be subject to OSM's program oversight authority under 30 CFR parts 733, 
842, and 843. OSM relies primarily upon the States to determine whether 
State violations have been abated or not. SMCRA section 510(c) 
explicitly states that an applicant must demonstrate that any current 
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 * * *'' See also 30 CFR 
773.15(b)(1).
    Further, where State ownership or control information has not yet 
become part of AVS, the information has not yet entered the Federal 
information stream and has not yet become OSM's immediate 
responsibility. Such information is, in effect, still the primary 
responsibility of the State regulatory authority and potentially 
subject to correction through procedures of the State regulatory 
program. If correct information fails to enter the AVS, that may 
represent a weakness of the regulatory authority's decisionmaking 
process. Accordingly, that process may require review. With respect to 
the State's decisionmaking process, principles of primacy require that 
OSM review State actions in these matters in accordance with OSM's 
program oversight under parts 733, 842, and 843. In the exercise of 
program oversight however, it is also probable that OSM would review 
particular decisions with a view to determining whether the State 
regulatory authority complied with the provisions of its approved 
program. Accordingly, in the event that a State determines not to enter 
an ownership or control link into AVS, OSM will review such decision 
when it has reason to believe, through information provided in a 
citizen's complaint or otherwise, that the State's ownership or control 
decision is arbitrary, capricious, or an abuse of discretion under the 
State program.
    In final Sec. 773.25, OSM has deleted language contained in the 
proposed rule which would have provided that when OSM disagreed with 
the decisions of State regulatory authorities, OSM would take action, 
as appropriate, under Sec. 843.24, oversight of State permitting 
decisions with respect to ownership or control or the status of 
violations. This language has been deleted for two reasons. First, the 
proposed language was redundant. Paragraph (b)(3)(ii) of final 
Sec. 773.25 already provides that State regulatory authorities' 
decisions are subject to OSM's oversight under parts 733, 842, and 843 
of 30 CFR. As a section of part 843, the provisions of final 
Sec. 843.24 would thus be applicable under appropriate circumstances. 
Further, the agency was concerned that additional language specifically 
requiring OSM to take action under final Sec. 843.24 could somehow be 
construed as a limiting factor on OSM's authority to take action under 
parts 733 or 842 or under other sections of part 843 as provided by 
previous paragraph (b)(3)(ii) or 773.25.
    Paragraph (c) of final Sec. 773.25 establishes evidentiary 
standards applicable to the formal and informal review of ownership or 
control links and the status of violations. The provisions of the final 
section are substantively similar to the provisions of the comparable 
provisions of the proposed rule. Certain minor changes described below 
have been made to the proposal.
    Paragraph (c)(1) of final Sec. 773.25 provides that in any formal 
or informal review of an ownership or control link or of the status of 
a violation covered by a violation notice, the agency responsible for 
making a decision is required to first make a prima facie determination 
or showing that the link exists, existed during the relevant period, 
and/or that the violation remains outstanding. The language ``existed 
during the relevant period'' has been added to the final rule to 
clarify that, even when a person is not a current owner or controller 
of a surface coal mining operation, a previous ownership or control 
link to that operation may be the basis for permit denial where the 
surface coal mining operation has an outstanding violation and that 
violation had its inception during the previous period of ownership or 
control. The requirement of a prima facie determination or prima facie 
showing is satisfied by evidence presented establishing a presumption 
of ownership or control. A prima facie determination is made when the 
agency is reviewing the evidence itself, in an informal process; a 
prima facie showing is made when the agency's determination is the 
subject of a formal administrative or judicial review process. When the 
agency makes such a determination or showing, the person seeking to 
challenge the link or the status of the violation than has the burden 
of proving the necessary elements of his or her challenge to the link 
or to the status of the violation by a preponderance of the evidence.
    Also, in the comparable provision of the proposed rule, the rule 
language referred to the evidentiary standards applicable to the review 
of ownership or control links ``to a person cited in a violation 
notice.'' The final rule has been changed to reflect that these 
standards will be applicable to the review of an ownership or control 
link, without regard to whether such relationship involves a link to an 
outstanding violation. The rationale for such a change has been 
explained previously in this preamble in the discussion of a similar 
change made in paragraph (a)(1) of this final rule section. As in the 
proposed rule, where there is a link to a violation, these evidentiary 
standards will apply to the review of the status of a violation.
    Paragraph (c)(1) of final Sec. 773.25, requires a challenger of an 
ownership or control link to prove at least one of three proposed 
conclusions by a preponderance of the evidence to succeed in his or her 
challenge.
    Under paragraph (c)(1)(i) of final Sec. 773.25, a challenger can 
demonstrate that the facts relied upon by the responsible agency to 
prove ownership or control under the definitions of ``owned or 
controlled'' or ``owns or controls'' contained in 30 CFR 773.5 do not 
or did not exist. The final regulation differs from the comparable 
provision of the proposed regulation in that while the final regulation 
refers to 30 CFR 773.5, it does not specifically cite particular 
paragraphs of 30 CFR 773.5 defining presumed and deemed relationships 
of ownership or control. On June 28, 1993, OSM proposed rules which, if 
adopted, would modify the organization of regulatory language in 30 CFR 
773.5. See Proposed Rule, 58 Fed. Reg. 34652 (June 28, 1993). By 
changing the language in paragraph (c)(1)(i) of final Sec. 773.25 to 
delete references to the current paragraph organization of 30 CFR 
773.5, OSM retains the flexibility to adopt or reject its rule proposal 
of June 28, 1993, without having to further modify final Sec. 773.25.
    Paragraph (c)(1)(ii) of final Sec. 773.25 provides that a person 
challenging a presumption of ownership or control can prove that the 
person subject to the presumption does not and did not have authority 
directly or indirectly to determine the manner in which surface coal 
mining operations were conducted. The final rule deletes a reference 
contained in the proposed rule to the paragraph (d) of the proposed 
rule which provided the required proof for the rebuttal of ownership or 
control presumptions. As indicated above, that portion of the proposed 
rule has been withdrawn.
    Paragraph (c)(1)(iii) of final Sec. 773.25 provides that a 
challenger can prove that the violation covered by a violation notice 
did not exist, has been corrected, is in the process of being 
corrected, or is the subject of a good faith appeal within the meaning 
of 30 CFR 773.15(b)(1). The final rule provides that a person 
challenging the status of a violation under Sec. 773.24 will not be 
able to challenge the existence of the violation at the time it was 
cited unless such challenge is made by a permittee within the context 
of Secs. 773.20-773.21 of this part. As indicated previously, the 
proposed rule did not explicitly allow challenge of the existence of 
the violation by a permittee within the context of improvident permit 
issuance. The proposed rule also did not include the words ``at the 
time it was cited'' with respect to the concept ``existence of the 
violation.'' The final rule has provided such clarification. Also, 
references to proposed Sec. 773.25, procedures for challenging 
ownership or control links prior to entry in AVS, have been deleted. In 
addition, while no further substantive change has been made to the text 
of paragraph (c)(1)(iii) of final Sec. 773.25, some editing has been 
done to clarify the parallel construction of the regulatory text.
    Under the provisions of final Sec. 773.25, the existence of the 
violation at the time it was cited could also be challenged in a 
proceeding under 30 CFR part 775 (involving administrative or judicial 
appeals of permitting decisions), unless the challenger has failed to 
take timely advantage of a prior opportunity to litigate the violation 
or is bound by a previous administrative or judicial determination 
concerning the existence of the violation.
    In addition, certain minimal changes have been made to the proposed 
rule with respect to the submission of documents in the proof of 
challenges. Paragraphs (c)(2)(i)(B) and (c)(2)(i)(C) of proposed 
Sec. 773.26 provided that certified copies of corporate documents and 
certified copies of documents filed with or issued by State, Municipal, 
or Federal government agencies could be submitted. Paragraphs 
(c)(2)(i)(B) and (c)(2)(i)(C) of final Sec. 773.25 clarify that copies 
of such documents can be submitted only ``if certified.''
    Paragraph (c)(2)(i)(D) of final Sec. 773.25 provides for a 
challenger's submission of an opinion of counsel in support of his or 
her position. Such opinion would be appropriate for submission when it 
is supported by evidentiary materials; when it is rendered by an 
attorney who certifies that he or she is qualified to render an opinion 
of law; and when counsel states that he or she has personally and 
diligently investigated the facts of the matter or where counsel states 
that such opinion is based upon information which has been supplied to 
counsel and which is assumed to be true.
    In accordance with the discussion above, the proposed rule has been 
renumbered as final rule Sec. 773.25 and adopted as modified.
    Deferral of action on proposed Sec. 773.27--Periodic Check of 
Ownership or Control Information. In the September, 1991 proposed rule 
package, OSM proposed this section which would have required that the 
regulatory authority engage in periodic review of a permitted site to 
assure that basic ownership and control information contained in the 
current official record of the permit was and remains complete and 
accurate. Subsequent to the publication of that proposal, OSM published 
a modified version of such proposal as part of a comprehensive rule 
proposal designed to address permit information requirements; ownership 
or control; and the transfer, assignment and sale of permit rights. See 
58 FR 34652, 34666 (June 28, 1993). OSM intends to address the proposed 
rule within the context of the subsequent rulemaking. Accordingly, OSM 
defers any decision with respect to this proposed rule.
3. Part 778--Permit Applications--Minimum Requirements for Legal, 
Financial, Compliance, and Related Information
    Deferral of action on proposed Sec. 778.13--Identification of 
Interests. In the September, 1991 proposal, OSM proposed to revise the 
provisions of paragraphs (c) and (d) of then current 30 CFR 778.13 to 
clarify that permit applicants would be required to disclose relevant 
information with respect to both ``deemed'' and ``presumed'' owners or 
controllers within the meaning of the definitions of ``owned or 
controlled'' and ``owns or controls'' under 30 CFR 773.5 (a) and (b), 
respectively.
    Subsequent to the publication of that proposal, OSM published a new 
proposed amendment to 30 CFR 778.13 as part of the comprehensive rule 
proposal cited above which was designed to address permit information 
requirements; ownership or control; and the transfer, assignment and 
sale of permit rights. See 58 FR 34652, 34668 (June 28, 1993). 
Accordingly, OSM hereby defers any decision with respect to the 
amendments proposed to 30 CFR 778.13 in today's rulemaking. Instead, 
OSM will address proposed amendments to 30 CFR 778.13 within the 
context of that subsequent proposal.
    Section 778.14--Violation information. The proposed amendment would 
have provided that the introductory language in paragraph (c) of 30 CFR 
778.14 be amended to require a permit applicant to disclose all 
violation notices received by the applicant within the preceding three 
years. In addition, such introductory language would have been amended 
to require the disclosure of all outstanding violation notices for any 
surface coal mining operation that is deemed or presumed to be owned or 
controlled by either the applicant or by any person who is deemed or 
presumed to own or control the applicant under definitions of ``owned 
or controlled'' or ``owns or controls'' under 30 CFR 773.5.
    The regulation to be amended required the applicant to disclose 
violations of various laws listed in 30 CFR 778.14(c). Use of the 
proposed amended definition of ``violation notice'' from 30 CFR 773.5 
would have obviated the need for such a list.
    The regulation to be amended further required that the applicant 
provide only a list of unabated cessation orders and unabated air and 
water quality violation notices received prior to the date of the 
application by any surface coal mining and reclamation operation owned 
or controlled by either the applicant or by any person who owns or 
controls the applicant. With respect to this second list, that 
regulation did not require that an applicant list notices of violation 
received or unpaid penalties or fees incurred by any surface coal 
mining operation owned or controlled by the applicant or by any person 
who owns or controls the applicant.
    Moreover, in litigation relating to Secs. 778.14, 773.15(b)(1), and 
related matters before the U.S. District Court of the District of 
Columbia, the Secretary advised the court that he had decided to 
reconsider Sec. 778.14(c). The Secretary stated that he intended to 
propose a regulation ``which considers the extent to which violation 
information should be reported concerning owners and controllers of 
applicants as well as entities owned or controlled by the applicant.'' 
See National Wildlife Fed'n v. Lujan, No. 88-3117-AER (D.D.C.), 
Memorandum of Points and Authorities in Support of the Federal 
Defendants' Cross-Motion for Summary Judgment and in Opposition to 
Plaintiffs' Motions for Summary Judgment, footnote 33, at page 90.
    Consistent with the representation made to the court, the proposed 
amendment to paragraph (c) of Sec. 778.14 would have required an 
applicant to disclose all outstanding violation notices received by any 
surface coal mining operation that was deemed or presumed to be owned 
or controlled by either the applicant or any person who was deemed or 
presumed to own or control the applicant.
    Commenters representing members of the coal industry expressed 
concern over the proposed amendment to 30 CFR 778.14(c) for essentially 
three reasons. They asserted that the proposed amendment impermissibly 
expanded the types of violations which must be reported by an applicant 
by incorporating the newly amended definition of ``violation notice'' 
as the basis for reporting; that the proposal inappropriately expanded 
the definition of ``owners or controllers'' which must be reported; and 
that the proposal inappropriately expanded the type of information 
required for operations linked through ownership or control.
    OSM disagrees with the commenters' assertions. First, the proposed 
regulation does incorporate the new definition of the term ``violation 
notice'' which had been proposed, and has now been adopted, in 
Sec. 773.5. The new definition of violation notice, however, is not 
overly broad. In this preamble, OSM has already responded to similar 
comments made with respect to this definition in the section of this 
preamble captioned ``Section 773.5--Definitions.''
    By incorporating the amended definition of ``violation notice,'' 
the proposed amendment to paragraph (c) of Sec. 778.14 would have 
incorporated the list and types of violations which are relevant to a 
regulatory authority's decision whether to issue a permit under section 
510(c) of the Act and under the provisions of 30 CFR 773.15(b)(1). In 
contrast to this, the unamended version of the regulation did not 
require that an applicant list unpaid penalties or fees incurred by any 
surface coal mining operation owned or controlled by the applicant or 
by any person who owns or controls the applicant. Accordingly, the 
proposed amendment would expand what has to be reported to enable the 
regulatory authority to have necessary information to make its 
decision. It is entirely appropriate to require that a permit applicant 
report such information to the regulatory authority so that the 
regulatory authority can make an informed decision.
    As indicated above, commenters further asserted that the proposal 
inappropriately expanded the definition of ``owners or controllers'' by 
requiring the reporting of all outstanding violations received prior to 
the date of permit applications by surface coal mining operations 
deemed or presumed to be owned or controlled by the applicant or by any 
person who owns or controls the applicant. The commenters asserted that 
this placed the applicant in an untenable position. OSM disagrees with 
this assertion.
    Even if 30 CFR 778.14(c) would not be amended by the proposal, the 
regulation already required the reporting of violations of surface coal 
mining operations which the applicant is deemed or presumed to own or 
control under the provisions of 30 CFR 773.5. Such reporting is 
required even if the applicant believes that he or she can rebut the 
presumption of ownership or control. The permit application is not 
forced to admit ownership or control. On the contrary, such reporting 
can be done by an applicant who, at the same time, reserves his or her 
rights to deny ownership or control. Even under current law, the 
applicant must disclose violations incident to the presumed ownership 
or control relationship so that the regulatory authority can evaluate 
this information. Thus, the amendment would just clarify what the 
regulation already does. Therefore, the amendment has not 
inappropriately expanded the definition of what constitutes surface 
coal mining operations owned or controlled by the applicant.
    Commenters further asserted that the proposal inappropriately 
expanded the type of information required for operations linked through 
ownership or control. In substance, the commenters argued that the 
proposed regulation is overbroad and vague in requiring the reporting 
of ``all outstanding violation notices'' received prior to the date of 
application which are linked, through ownership or control, to the 
applicant. Again, OSM disagrees with the commenters.
    As discussed previously in this preamble with respect to 
Sec. 773.25 of the final rule, an ``outstanding violation'' is one 
which is currently in violation of the Act or of other laws specified 
in Sec. 510(c) of the Act. Under the proposed amendment to 30 CFR 
778.14(d), an ``outstanding violation notice'' is a written 
notification from a governmental entity advising of a violation which 
remains uncorrected. Such violations are the basis for permit denial 
unless an applicant can demonstrate that the violation is in the 
process of being corrected or is the subject of a good faith appeal, 
within the meaning of 30 CFR 773.15(b)(1). It is reasonable to require, 
prior to the date of application, that a permit applicant disclose such 
violations to the regulatory authority with respect to surface coal 
mining operations to which it is linked through ownership or control.
    One commenter suggested that the proposed amendment should be 
modified to require only the reporting of violations which would 
subject an applicant to permit block. OSM considers this proposal to be 
too restrictive. For instance, under commenter's proposal, an applicant 
correcting a violation to the satisfaction of the agency which has 
jurisdiction over such violation would not report such violation at the 
time of application. Nevertheless, any permit to be issued should be 
conditioned upon the performance of the corrective work being 
accomplished. Absent the reporting of such violation by the applicant, 
a regulatory authority might overlook the violation and issue the 
permit unconditioned upon such performance. The same rationale would 
apply with respect to the reporting of violations which are the subject 
of good faith appeal, within the meaning of 30 CFR 773.15(b)(1). 
Accordingly, OSM must reject the proposed change.
    In addition, commenters asserted that requiring such disclosure by 
large companies with multiple affiliates and multiple surface coal 
mining operations is overly burdensome. OSM believes that companies 
which own or control surface coal mining operations should be aware of 
the compliance status of such operations. If companies choose to engage 
in surface coal mining operations, they should also have the capability 
of monitoring such operations. It is reasonable to require the 
disclosure of outstanding violations. Thus, OSM disagrees with the 
commenters' assertion.
    Nevertheless, OSM intends to further address the issues of 
compliance under 30 CFR 778.13 and 778.14. In a recently proposed rule 
package of June 28, 1993, OSM proposed the streamlining of companies' 
reporting under 30 CFR 778.13 and 778.14 through the use of information 
already incorporated into AVS. See 58 FR 34652 et seq. (June 28, 1993). 
Further, OSM's AVS Office stands ready to work with companies in the 
development of methods to report such companies' ownership or control 
relationships and to track the compliance of surface coal mining 
operations.
    As indicated previously in the preamble discussion of final section 
773.15, OSM has decided to retain a limited presumption that notices of 
violation are in the process of being abated for purposes of a 
regulatory authority's review of a permit application. OSM made this 
decision as result of comments received in response to its proposed 
rules. Accordingly, OSM has amended paragraph (b)(1) of final 
Sec. 773.15 to provide that a regulatory authority may presume, in the 
absence of a cessation order, that a notice of violation is in the 
process of abatement if certain conditions are present. These 
conditions include that the abatement period for the notice of 
violation has not yet expired and that the applicant has provided 
certification that such violation is in the process of being corrected 
to the agency with jurisdiction over the violation as part of the 
violation information provided pursuant to Sec. 778.14. In accordance 
with that change made to final Sec. 773.15, OSM has added language to 
paragraph (c) of final Sec. 778.14 requiring that an applicant provide 
such certification along with his or her disclosure of violations.
    In accordance with the above discussion, OSM has determined to 
adopt, with the modification noted, the proposed amendment to 30 CFR 
778.14(c) as a final rule.
4. Part 840--State Regulatory Authority: Inspection and Enforcement
    Section 840.13--Enforcement Authority. The proposed rule provided 
that paragraph (b) of 30 CFR 840.13 be amended to include a reference 
to proposed Sec. 843.23 as an enforcement provision whose stringency 
must be matched by State programs. As has been stated previously in 
this preamble, OSM has deferred action on the adoption of proposed 
Sec. 843.23 for a later rulemaking. See Proposed Rule, 58 FR 34652 et 
seq. (June 28, 1993). While OSM has adopted the reference to 843.23 for 
inclusion in paragraph (b) of 30 CFR 840.13, the adoption of such 
reference does not prejudge whether OSM will ultimately adopt proposed 
Sec. 843.23 as a final rule.
5. Part 843--Federal Enforcement
    Part 843--Table of Contents. In the September, 1991, proposal, OSM 
proposed to amend the Table of Contents of 30 CFR part 843 to add, in 
numerical order, the proposed regulations for the Federal enforcement 
of the proposed AVS-related regulations. The proposed additions would 
have included Sec. 843.23, sanctions for knowing omissions or 
inaccuracies in ownership or control and violation information, and 
Sec. 843.24, oversight of State permitting decisions with respect to 
ownership or control of the status of violations.
    Subsequent to the publication of the proposed additions to the 
Table of Contents, OSM proposed a modified version of 843.23 as part of 
a separate rulemaking. See Proposed Rule, 58 FR 34652 et seq. (June 28, 
1993). OSM has deferred action on the adoption of proposed Sec. 843.23 
for that later rulemaking. Since action on proposed Sec. 843.23 has 
been deferred, OSM will not adopt a reference to Sec. 843.23 for 
inclusion in the Table of Contents at this time. If a final version of 
843.23 is adopted, a reference to the section will be added to the 
Table of Contents.
    OSM has adopted the proposed reference to 843.24, oversight of 
State permitting decisions with respect to ownership or control or the 
status of violations, for inclusion in the Table of Contents.
    Section 843.10--Information collection. The September, 1991, 
proposal would have removed existing section 843.10 since part 843 did 
not contain any information collection requirements which required the 
approval by the Office of Management and Budget under 44 U.S.C. 3507. 
The references to Sec. 843.14(c) and 843.16 in existing 843.10 did not 
represent information collection requirements. The requirements in 
Sec. 843.14(c) for OSM to furnish copies of notices and orders to the 
State regulatory authority and to any person having an interest did not 
require OMB approval because the obligation to provide the information 
was imposed upon OSM and not upon the State or upon a member of the 
public. Section 843.16 merely informed the public of the right to file 
an application for review and request a hearing under 43 CFR part 4.
    In accordance with the proposal, OSM has deleted section 843.10.
    Deferral of decision with respect to proposed Sec. 843.23--
Sanctions for knowing omissions or inaccuracies in ownership or control 
and violation information. Proposed Sec. 843.23 was designed to respond 
to those circumstances in which there had been a knowing failure to 
provide the regulatory authority with complete and accurate ownership 
and control or violation information in an application or other 
document submitted pursuant to parts 773 and 778 of Title 30.
    Proposed Sec. 843.23 was designed ``to carry out the purposes'' of 
sections 507(b)(4), 510(b), 510(c), and 518(g) of SMCRA. The proposed 
section was designed to deter and punish the intentional failure to 
provide the complete and accurate ownership and control information 
required by sections 507(b)(4) and 510 (b)-(c) of the Act. It would 
have further implemented the criminal provisions of section 518(g) 
where appropriate.
    Subsequently, OSM again proposed this rule with certain 
modifications. See 58 FR 34652 et seq. (June 28, 1993).
    At this time, OSM has determined to defer further action on the 
proposed rule. OSM will address the proposed rule within the context of 
the subsequent rulemaking initiated on June 28, 1993.
    As has been discussed previously in this preamble, OSM has allowed 
references to Sec. 843.23 to remain in various sections of some of the 
other final rules adopted today in the event that a final Sec. 843.23 
is adopted. That such references have been allowed to remain, however, 
does not constitute a prejudgment by OSM to ultimately adopt proposed 
Sec. 843.23 or some version of that rule. Any decision of this type 
will be made within the context of the subsequent rulemaking.
    Section 843.24--Oversight of State permitting decisions with 
respect to ownership or control or the status of violations. Proposed 
Sec. 843.24 would have provided standards for OSM's oversight of State 
permitting decisions with respect to ownership or control or the status 
of violations.
    Paragraph (a) of proposed Sec. 843.24 would have established the 
bases which would have required OSM to have taken action under the 
provisions of paragraphs (b) and (c) of proposed Sec. 843.24.
    Paragraph (a)(1) of proposed Sec. 843.24 would have provided that 
OSM would have been required to take action whenever it determined, 
through its oversight of the implementation of State programs, that a 
State had issued a permit without complying with the State program 
equivalents of proposed Secs. 773.22 (verification of ownership or 
control application information), 773.23 (review of ownership or 
control and violation information), 773.24 (procedures for challenging 
ownership or control links in AVS), 773.26 (standards for challenging 
ownership or control links and the status of violations), and 843.23 
(sanctions for knowing omissions or inaccuracies in ownership or 
control and violation information).
    Paragraph (a)(2) of proposed Sec. 843.24 would have provided that 
OSM would have been required to take action whenever it had determined, 
through its oversight of the implementation of State programs, that a 
State had failed in a systemic manner to comply with the State program 
equivalent of proposed Sec. 773.27 (periodic check of ownership or 
control information).
    Paragraph (a)(2) of proposed Sec. 843.24 would have defined 
``failure to comply in a systemic manner'' to include a continuing 
pattern of noncompliance by a State, or one of more instances of 
noncompliance that result from or evidence a legal or policy decision 
which the State intended to apply to similar cases.
    Under paragraph (a) of proposed Sec. 843.24, a State's isolated 
failure to comply with proposed Sec. 773.27 (periodic check of 
ownership and control information) would have been treated differently 
from isolated failures to comply with the proposed regulations listed 
in paragraph (a)(1) of proposed Sec. 843.24.
    Paragraph (b) of proposed Sec. 843.24 would have required OSM to 
initiate action under 30 CFR 843.21 if, as a result of the 
determination made under paragraph (a) of the proposed section, OSM had 
reason to believe that the State had issued a permit improvidently 
within the meaning of 30 CFR 773.20.
    Paragraph (c) of proposed Sec. 843.24 would have provided for 
remedial actions by OSM against a State which did not comply with the 
proposed regulations relating to ownership or control and violation 
information during the permit application process. Such actions would 
have been applied where the State had knowingly failed to comply with 
the State program equivalents of sections 773.22 (verification of 
ownership or control application information), 773.23 (review of 
ownership or control and violation information), 773.24 (procedures for 
challenging ownership or control links in AVS), 773.26 (standards for 
challenging ownership or control links and the status of violations), 
or 843.23 (sanctions for knowing omissions or inaccuracies in ownership 
or control and violation information), or where the State had failed in 
a systemic manner to comply with Sec. 773.27 (periodic check of 
ownership and control information).
    Under the proposed regulation, the remedial actions against a non-
complying State could have included grant reduction or termination 
under 30 CFR 735.21 or 30 CFR 886.18 and the substitution of Federal 
enforcement or other action pursuant to 30 CFR 733.12(b). Such remedial 
actions would not have been used where the State's actions were 
mandated by court order or where the State had not knowingly failed to 
comply.
    A commenter representing environmental advocacy groups expressed 
concern that proposed Sec. 843.24 did not expressly provide that 
citizens could petition OSM to take enforcement action where they had 
reason to believe that violations of the sections subject to 
Sec. 843.24 exist. OSM recognizes commenter's concern about citizen 
participation and has addressed that issue in some detail above in this 
preamble in the section captioned ``Citizen Participation.'' The 
analysis in that section of the preamble is generally applicable to 
proposed Sec. 843.24. For reasons similar to those expressed in that 
section of the preamble, OSM must reject commenter's proposal to 
explicitly modify the proposed rule at this time.
    Until these matters are addressed directly by further proposal of 
the agency, citizens could, however, assert their rights in a number of 
ways in accordance with the provisions of proposed Sec. 843.24. With 
respect to specific permits under paragraph (b) of proposed 
Sec. 843.24, concerned citizens could assert their complaints within 
the context of 30 CFR 842.11, 842.12, 842.15, and 843.21. With respect 
to more global remedies such as the reduction of State grants or the 
termination or the substitution of Federal enforcement provided by 
paragraph (c) of proposed Sec.  843.24, OSM could accept and review 
information submitted by citizens with a view to determining whether 
such remedies were appropriate under the circumstances.
    The commenter also took issue with the provision of paragraph (b) 
of proposed Sec. 843.24 in that such provision would have provided that 
OSM take action under the provisions of 30 CFR 843.21 if OSM had reason 
to believe that a State had issued a permit improvidently within the 
meaning of 30 CFR 773.20. The commenter questioned the legality of 30 
CFR 773.20 and 843.21 and asserted that these improvidently issued 
permit rules violated SMCRA. OSM disagrees with commenter's criticisms. 
OSM considers these rules to be legal. OSM incorporates by reference 
the arguments that the Department has made defending such rules in 
briefs filed in the case of National Wildlife Federation v. Lujan, No. 
88-3117 (D.D.C.), and Save Our Cumberland Mountains, Inc., v. Lujan, 
No. 81-2134 (D.D.C.). As indicated previously, copies of these briefs 
are being placed in the Administrative Record of this rulemaking.
    A commenter representing State regulatory authorities questioned 
the provision of paragraph (c) of proposed Sec. 843.24 which stated 
that a State regulatory authority would be excused from a failure to 
comply with the State program equivalents of the AVS-related 
regulations if such non-compliance was the result of a ``mandatory 
injunction.'' The commenter asked for clarification of this term.
    Under the proposed regulation, a mandatory injunction would be an 
order to a regulatory authority by a court with jurisdiction over which 
the regulatory authority has no control. Such an order would have the 
effect of ordering or otherwise preventing the regulatory authority 
from complying with the provisions of the regulations cited in 
paragraph (c) of proposed Sec. 843.24.
    A commenter representing a State regulatory authority indicated 
approval of the requirement contained in paragraph (c) of proposed 
Sec. 843.24 that a State's failure to comply with proposed 
Secs. 773.22, 773.23, 773.24, 773.26, and 843.23 be a ``knowing'' 
failure, before sanctions could be imposed.
    OSM agrees with commenter and has retained the ``knowing'' standard 
in paragraph (c) of the final rule adopted as described below. The 
determination of what constitutes a State's ``knowing'' behavior would 
be made based upon a full consideration of the facts. In substance, the 
issue would be whether the State knew or had reason to know that its 
actions constituted a failure to comply with the regulations.
    OSM has determined to adopt the proposed rule, with certain 
modifications, as final rule Sec. 843.24. The final rule and the 
rationale behind such modifications are now described.
    First, in paragraph (a) of the proposed rule, a reference to 
proposed Sec. 773.26 has been deleted from among the list of 
regulations with which a State must comply to avoid action by OSM. As 
discussed previously, proposed Sec. 773.26 has been renumbered and 
adopted as final Sec. 773.25. Accordingly, a reference to Sec. 773.25 
has been substituted in paragraph (a) of final Sec. 843.24. A similar 
substitution has also been made in paragraph (c) of the final rule.
    Second, OSM has deleted subparagraph (a)(2) of proposed 
Sec. 843.24. The proposed section would have required action by OSM 
when OSM determined that a State had systemically failed to comply with 
proposed Sec. 773.27, periodic check of ownership or control 
information. As has been discussed previously, OSM is deferring action 
on proposed Sec. 773.27 as part of a subsequent rulemaking. See 58 FR 
34652 et seq.
    In dealing with a similar deferral with respect to proposed 
Sec. 843.23 described above in this preamble, OSM was able to allow 
references to proposed Sec. 843.23 to remain in other final rules in 
the event of the ultimate adoption of 843.23. If Sec. 843.23 is 
ultimately not adopted, the references in the final rules to it will be 
mere surplusage.
    Unlike those other references to proposed Sec. 843.23, the 
references to proposed Sec. 773.27 contained in final Sec. 843.24 are 
presented within a context of defining and applying a special standard, 
systemic noncompliance, applicable only to a State's failure to comply 
with Sec. 773.27. The rationale for adopting the particular standard of 
systemic noncompliance is inextricably linked to the issue of whether 
the adoption of proposed Sec. 773.27 is appropriate. Accordingly, both 
issues will be appropriately addressed together in the separate 
rulemaking. Thus, OSM has deleted all of subparagraph (a)(2) of 
proposed Sec. 843.24.
    Further, the provisions of paragraph (c) of proposed Sec. 843.24 
would have required OSM to initiate action under Secs. 735.21 or 886.18 
and/or Sec. 733.12 if OSM determined that a State had failed to comply 
in a systemic manner with the State program equivalent to Sec. 773.27. 
In the final Sec. 843.24, OSM has deleted such language for the reasons 
justifying a similar deletion of subparagraph (a)(2) of the proposed 
rule.
    OSM emphasizes that the deletion of this language does not indicate 
that OSM has made a prejudgment with respect to the ultimate adoption 
of proposed Sec. 773.27 or with respect to the issue of systemic 
noncompliance with respect to such proposed section. These matters will 
be addressed in the subsequent rulemaking.
    In accordance with the above discussion, Sec. 843.24 is adopted as 
modified.

III. Procedural Matters

Effect of the Rule in Federal Program States and on Indian Lands

    This rule will apply, through cross-referencing, in those States 
with Federal programs: California, Georgia, Idaho, Massachusetts, 
Michigan, North Carolina, Oregon, Rhode Island, South Dakota, 
Tennessee, and Washington. The Federal programs for these States appear 
at 30 CFR parts 905, 910, 912, 921, 922, 933, 937, 939, 941, 942, and 
947, respectively. The rule will also apply through cross-referencing 
to Indian lands as provided in 30 CFR part 750. No comments were 
received concerning unique conditions in any of these Federal program 
states or on Indian lands which would require changes to the national 
rules or as specific amendments to any or all of the Federal programs 
or the Indian lands program.

Effect of the Rule on State Programs

    The provisions of section 503(a)(1) of the Act require that State 
laws regulating surface coal mining and reclamation operations be ``in 
accordance with'' the requirements of the Act. Further, section 
503(a)(7) of the Act requires that State programs contain rules and 
regulations ``consistent with'' regulations issued by the Secretary 
pursuant to the Act.
    These terms are defined at Sec. 730.5 of title 30 of the Code of 
Federal Regulations to require that State programs contain procedures 
which are, with respect to the Act, no less stringent than the Act; and 
with respect to the Secretary's regulations, no less effective than the 
Secretary's regulations in meeting the requirements of the Act.
    Following promulgation of this final rule, OSM will evaluate State 
programs to determine whether any changes in these programs will be 
necessary. If the Director determines that any State program provisions 
should be amended to be made no less effective than the revised Federal 
rules, the individual States will be notified in accordance with the 
provisions of 30 CFR 732.17.

Federal Paperwork Reduction Act

    The collection of information contained in this rule has been 
approved by the Office of Management and Budget under 44 U.S.C. 3501 et 
seq. and assigned clearance numbers 1029-0034, 1029-0041, and 1029-
0051.

Executive Order 12778; Civil Justice Reform Certification

    This rule has been reviewed under the applicable standards of 
Section 2(b)(2) of Executive Order 12778, Civil Justice Reform (56 FR 
55195). In general, the requirements of Section 2(b)(2) of Executive 
Order 12778 are covered by the preamble discussion of this rule. 
Additional remarks follow concerning individual elements of the 
Executive Order:
A. What is the Preemptive Effect, if any, to be Given to the 
Regulation?
    The rule would have the same preemptive effect as other standards 
adopted pursuant to SMCRA. To retain primacy, States have to adopt and 
apply standards for their regulatory programs that are no less 
effective than those set forth in OSM's rules. Any State law that is 
inconsistent with, or that would preclude implementation of this 
proposed rule would be subject to preemption under SMCRA section 505 
and implementing regulations at 30 CFR 730.11. To the extent that the 
rules would result in preemption of State law, the provisions of SMCRA 
are intended to preclude inconsistent State laws and regulations. This 
approach is established in SMCRA, and has been judicially affirmed. See 
Hodel v. Virginia Surface Mining and Reclamation Ass'n, 452 U.S. 264 
(1981).
B. What is the Effect on Existing Federal Law or Regulation, if any, 
Including all Provisions Repealed or Modified?
    This rule modifies the implementation of SMCRA as described herein, 
and is not intended to modify the implementation of any other Federal 
statute. The preceding discussion of this rule specifies the Federal 
regulatory provisions that are affected by this rule.
C. Does the Rule Provide a Clear and Certain Legal Standard for 
Affected Conduct Rather than a General Standard, While Promoting 
Simplification and Burden Reduction?
    The standard established by this rule are as clear and certain as 
practicable, given the complexity of topics covered and the mandates of 
SMCRA.
D. What is the Retroactive Effect, if any, to be Given to the 
Regulation?
    This rule is not intended to have retroactive effect.
E. Are Administrative Proceedings Required Before Parties may File Suit 
in Court? Which Proceedings Apply? Is the Exhaustion of Administrative 
Remedies Required?
    No administrative proceedings are required before parties may file 
suit in court challenging the provisions of this rule under section 
526(a) of SMCRA, 30 U.S.C. 1276(a)
    Prior to any judicial challenge to the application of the rule, 
however, administrative procedures must be exhausted. In situations 
involving OSM application of the rule, applicable administrative 
procedures may be found at 43 CFR part 4. In situations involving State 
regulatory authority application of provisions equivalent to those 
contained in this rule, applicable administrative procedures are set 
forth in the particular State program.
F. Does the Rule Define Key Terms, Either Explicitly or by Reference to 
Other Regulations or Statutes That Explicitly Define Those Items?
    Terms which are important to the understanding of this rule are set 
forth in 30 CFR 700.5 and 701.5.
G. Does the Rule Address Other Important Issues Affecting Clarity and 
General Draftsmanship of Regulations set Forth by the Attorney General, 
With the Concurrence of the Director of the Office of Management and 
Budget, That are Determined to be in Accordance With the Purposes of 
the Executive Order?
    The Attorney General and the Director of the Office of Management 
and Budget have not issued any guidance on this requirement.

Regulatory Flexibility Act

    The Department of the Interior has determined that this final rule 
will not have a significant economic impact on a substantial number of 
small entities under the Regulatory Flexibility Act, 5 U.S.C. et seq. 
The final rule will not change costs to industry or to the Federal, 
State, or local governments. Furthermore, the rules produce no adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of United States enterprises to compete with 
foreign-based enterprises in domestic or export markets.

Executive Order 12866

    The final rule has been reviewed under Executive Order 12866.

National Environmental Policy Act (NEPA)

    OSM has prepared a final environmental assessment (EA) of this rule 
and has made a finding that the rules adopted in this rulemaking will 
not significantly affect the quality of the human environment under 
section 102(2)(C) of the National Environmental Policy Act of 1969 
(NEPA), 42 U.S.C. 4332(2)(C). A finding of no significant impact 
(FONSI) has been approved for the final rule in accordance with OSM 
procedures under NEPA. The EA is on file in the OSM Administrative 
Record, room 660, 800 North Capitol St., NW., Washington, DC.

    Author: The principal author of this final rule is Harvey P. 
Blank, Attorney-Adviser, Division of Surface Mining, Office of the 
Solicitor, U.S. Department of the Interior, 1849 C Street, NW, 
Washington, DC 20240. Inquiries, however, with respect to the rule 
should be directed to Russell Frum at the address and telephone 
number specified in FOR FURTHER INFORMATION CONTACT.

List of Subjects

30 CFR Part 701

    Law enforcement, Surface mining, Underground mining.

30 CFR Part 773

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Surface mining, Underground mining.

30 CFR Part 778

    Reporting and recordkeeping requirements, Surface mining, 
Underground mining.

30 CFR Part 840

    Intergovernmental relations, Reporting and recordkeeping 
requirements, Surface mining, Underground mining.

30 CFR Part 843

    Administrative practice and procedure, Law enforcement, Reporting 
and recordkeeping requirements, Surface mining, Underground mining.

    Dated: July 18, 1994.
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.
    Accordingly, 30 CFR Parts 701, 773, 778, 840, and 843 are amended 
as set forth below:

PART 701--PERMANENT REGULATORY PROGRAM

    1. The authority citation for part 701 continues to read as 
follows:

    Authority: Pub. L. 95-87 (30 U.S.C. 1201 et seq.), and Pub. L. 
100-34.


Sec. 701.5  [Amended]

    2. Section 701.5 is amended by deleting the definition of 
``Violation notice.''

PART 773--REQUIREMENTS FOR PERMITS AND PERMIT PROCESSING

    3. and 4. The authority citation for part 773 continues to read as 
follows:

    Authority: 30 U.S.C. 1201 et seq., 16 U.S.C. 470 et seq., 16 
U.S.C. 1531 et seq., 16 U.S.C. 661 et seq., 16 U.S.C. 703 et seq., 
16 U.S.C. 668a et seq., 16 U.S.C. 469 et seq., 16 U.S.C. 470aa et 
seq., and Pub. L. 100-34.

    5. Section 773.5 is amended by adding the definitions of 
``Applicant/Violator System or AVS,'' ``Federal violation notice,'' 
``Ownership or control link,'' ``State violation notice,'' and 
``Violation notice,'' in alphabetical order as follows:


Sec. 773.5  Definitions.

* * * * *
    Applicant/Violator System or AVS means the computer system 
maintained by OSM to identify ownership or control links involving 
permit applicants, permittees, and persons cited in violation notices.
    Federal violation notice means a violation notice issued by OSM or 
by another agency or instrumentality of the United States.
* * * * *
    Ownership or control link means any relationship included in the 
definition of ``owned or controlled'' or ``owns or controls'' in this 
section or in the violations review provisions of Sec. 773.15(b) of 
this part. It includes any relationship presumed to constitute 
ownership or control under the definition of ``owned or controlled'' or 
``owns or controls'' in this section, unless such presumption has been 
successfully rebutted under the provisions of Secs. 773.24 and 773.25 
of this part or under the provisions of part 775 of this chapter and 
Sec. 773.25.
    State violation notice means a violation notice issued by a State 
regulatory authority or by another agency or instrumentality of State 
government.
    Violation notice means any written notification from a governmental 
entity, whether by letter, memorandum, judicial or administrative 
pleading, or other written communication, of a violation of the Act; 
any Federal rule or regulation promulgated pursuant thereto; a State 
program; or any Federal or State law, rule, or regulation pertaining to 
air or water environmental protection in connection with a surface coal 
mining operation. It includes, but is not limited to, a notice of 
violation; an imminent harm cessation order; a failure-to-abate 
cessation order; a final order, bill, or demand letter pertaining to a 
delinquent civil penalty; a bill or demand letter pertaining to 
delinquent abandoned mine reclamation fees; and a notice of bond 
forfeiture, where one or more violations upon which the forfeiture was 
based have not been corrected.

    6. Section 773.10 is revised to read as follows:


Sec. 773.10  Information collection.

    (a) The collections of information contained in 30 CFR part 773 
have been approved by the Office of Management and Budget under 44 
U.S.C. 3501 et seq. and assigned clearance number 1029-0041. The 
information will be used by the regulatory authorities in processing 
applications. Response is required to obtain a benefit in accordance 
with 30 U.S.C. 1201 et seq.
    (b) Public reporting burden for this collection of information is 
estimated to average four and one-half hours per response, including 
the time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information. Send comments regarding this burden 
estimate to OSM Information Collection Clearance Officer, Room 640 NC, 
1951 Constitution Ave., Washington, DC 20240; and the Office of 
Management and Budget, Paperwork Reduction Project (1029-0041), 
Washington, DC 20503.

    7. Section 773.15 is amended by revising paragraphs (b)(1) 
introductory text and (b)(2) as follows:


Sec. 773.15  Review of permit applications.

* * * * *
    (b) Review of violations. (1) Based on a review of all reasonably 
available information concerning violation notices and ownership or 
control links involving the applicant, including information obtained 
pursuant to Secs. 773.22, 773.23, 778.13, and 778.14 of this chapter, 
the regulatory authority shall not issue the permit if any surface coal 
mining and reclamation operation owned or controlled by either the 
applicant or by any person who owns or controls the applicant is 
currently in violation of the Act, any Federal rule or regulation 
promulgated pursuant thereto, a State program, or any Federal or State 
law, rule, or regulation pertaining to air or water environmental 
protection. In the absence of a failure-to-abate cessation order, the 
regulatory authority may presume that a notice of violation issued 
pursuant to Sec. 843.12 of this chapter or under a Federal or State 
program is being corrected to the satisfaction of the agency with 
jurisdiction over the violation where the abatement period for such 
notice of violation has not yet expired and where, as part of the 
violation information provided pursuant to Sec. 778.14 of this chapter, 
the applicant has provided certification that such violation is in the 
process of being so corrected. Such presumption shall not apply where 
evidence to the contrary is set forth in the permit application, or 
where the notice of violation is issued for nonpayment of abandoned 
mine land reclamation fees or civil penalties. If a current violation 
exists, the regulatory authority shall require the applicant or person 
who owns or controls the applicant, before the issuance of the permit, 
to either--
* * * * *
    (2) Any permit that is issued on the basis of a presumption 
supported by certification under Sec. 778.14 of this chapter that a 
violation is in the process of being corrected, on the basis of proof 
submitted under paragraph (b)(1)(i) of this section that a violation is 
in the process of being corrected, or pending the outcome of an appeal 
described in paragraph (b)(1)(ii) of this section, shall be 
conditionally issued.
* * * * *
    8. Section 773.20 is amended by revising paragraphs (b) and (c) to 
read as follows:


Sec. 773.20  Improvidently issued permits: General procedures.

* * * * *
    (b) Review criteria. (1) A regulatory authority shall find that a 
surface coal mining and reclamation permit was improvidently issued 
if--
    (i) Under the violations review criteria of the regulatory program 
at the time the permit was issued:
    (A) The regulatory authority should not have issued the permit 
because of an unabated violation or a delinquent penalty or fee; or
    (B) The permit was issued on the presumption that a notice of 
violation was in the process of being corrected to the satisfaction of 
the agency with jurisdiction over the violation, but a cessation order 
subsequently was issued; and
    (ii) The violation, penalty, or fee:
    (A) Remains unabated or delinquent; and
    (B) Is not the subject of a good faith appeal, or of an abatement 
plan or payment schedule with which the permittee or other person 
responsible is complying to the satisfaction of the responsible agency; 
and
    (iii) Where the permittee was linked to the violation, penalty, or 
fee through ownership or control under the violations review criteria 
of the regulatory program at the time the permit was issued, an 
ownership or control link between the permittee and the person 
responsible for the violation, penalty, or fee still exists, or where 
the link has been severed, the permittee continues to be responsible 
for the violation, penalty, or fee.
    (2) The provisions of Sec. 773.25 of this part shall be applicable 
when a regulatory authority determines:
    (i) Whether a violation, penalty, or fee existed at the time that 
it was cited, remains unabated or delinquent, has been corrected, is in 
the process of being corrected, or is the subject of a good faith 
appeal, and
    (ii) Whether any ownership or control link between the permittee 
and the person responsible for the violation, penalty, or fee existed, 
still exists, or has been severed.
    (c) Remedial measures. (1) A regulatory authority which, under 
paragraph (b) of this section, finds that because of an unabated 
violation or a delinquent penalty or fee a permit was improvidently 
issued shall use one or more of the following remedial measures:
    (i) Implement, with the cooperation of the permittee or other 
person responsible, and of the responsible agency, a plan for abatement 
of the violation or a schedule for payment of the penalty or fee;
    (ii) Impose on the permit a condition requiring that in a 
reasonable time the permittee or other person responsible abate the 
violation or pay the penalty or fee;
    (iii) Suspend the permit until the violation is abated or the 
penalty or fee is paid; or
    (iv) Rescind the permit.
    2. If the regulatory authority decides to suspend the permit, it 
shall afford at least 30 days' written notice to the permittee. If the 
regulatory authority decides to rescind the permit, it shall issue a 
notice in accordance with Sec. 773.21 of this part. In either case, the 
permittee shall be given the opportunity to request administrative 
review of the notice under 43 CFR 4.1370 through 4.1377, where OSM is 
the regulatory authority, or under the State program equivalent, where 
a State is the regulatory authority. The regulatory authority's 
decision shall remain in effect during the pendency of the appeal, 
unless temporary relief is granted in accordance with 43 CFR 4.1376 or 
the State program equivalent.

    9. Section 773.21 is amended by replacing the reference to 
``Sec. 773.20(c)(4)'' in the introductory paragraph with 
``Sec. 773.20(c)(1)(iv)'' and by revising the introductory language 
contained in paragraph (a) to read as follows:


Sec. 773.21  Improvidently issued permits: Rescission procedures.

* * * * *
    (a) Automatic suspension and rescission. After a specified period 
of time not to exceed 90 days the permit automatically will become 
suspended, and not to exceed 90 days thereafter rescinded, unless 
within those periods the permittee submits proof, and the regulatory 
authority finds, consistent with the provisions of Sec. 773.25 of this 
part, that--
* * * * *
    10. Section 773.21 is further amended by deleting paragraph (c).
    11. Section 773.22 is added as follows:


Sec. 773.22  Verification of ownership or control application 
information.

    (a) In accordance with Sec. 773.15(c)(1) of this part, prior to the 
issuance of a permit, the regulatory authority shall review the 
information in the application provided pursuant to Sec. 778.13 of this 
chapter to determine that such information, including the 
identification of the operator and all owners and controllers of the 
operator, is complete and accurate. In making such determination, the 
regulatory authority shall compare the information provided in the 
application with information from other reasonably available sources, 
including--
    (1) Manual data sources within the State in which the regulatory 
authority exercises jurisdiction, including: (i) The regulatory 
authority's inspection and enforcement records and (ii) State 
corporation commission or tax records, to the extent they contain 
information concerning ownership or control links; and
    (2) Automated data sources, including: (i) The regulatory 
authority's own computer systems and (ii) the Applicant/Violator 
System.
    (b) If it appears from the information provided in the application 
pursuant to Sec. 778.13(c) through (d) of this chapter that none of the 
persons identified in the application has had any previous mining 
experience, the regulatory authority shall inquire of the applicant and 
investigate whether any person other than those identified in the 
application will own or control the operation (as either an operator or 
other owner or controller).
    (c) If, as a result of the review conducted under paragraphs (a) 
and (b) of this section, the regulatory authority identifies any 
potential omission, inaccuracy, or inconsistency in the ownership or 
control information provided in the application, it shall, prior to 
making a final determination with regard to the application, contact 
the applicant and require that the matter be resolved through 
submission of (1) An amendment to the application or (2) a satisfactory 
explanation which includes credible information sufficient to 
demonstrate that no actual omission, inaccuracy, or inconsistency 
exists. The regulatory authority shall also take action in accordance 
with the provisions of Sec. 843.23 of this chapter (or the State 
program equivalent), where appropriate.
    (d) Upon completion of the review conducted under this section, the 
regulatory authority shall promptly enter into or update all ownership 
or control information on AVS.

    12. Section 773.23 is added as follows:


Sec. 773.23  Review of ownership or control and violation information.

    (a) Following the verification of ownership or control information 
pursuant to Sec. 773.22(b) of this part, the regulatory authority shall 
review all reasonably available information concerning violation 
notices and ownership or control links involving the applicant to 
determine whether the application can be approved under Sec. 773.15(b) 
of this part. Such information shall include--
    (1) With respect to ownership or control links involving the 
applicant, all information obtained under Secs. 773.22 and 778.13 of 
this chapter; and
    (2) With respect to violation notices, all information obtained 
under Sec. 778.14 of this chapter, information obtained from OSM, 
including information shown in the AVS, and information from the 
regulatory authority's own records concerning violation notices.
    (b) If the review conducted under paragraph (a) of this section 
discloses any ownership or control link between the applicant and any 
person cited in a violation notice--
    (1) The regulatory authority shall so notify the applicant and 
shall refer the applicant to the agency with jurisdiction over such 
violation notice; and
    (2) The regulatory authority shall not approve the application 
unless and until it determines, in accordance with the provisions of 
Secs. 773.24 and 773.25 of this part (or the State program equivalent), 
(i) That all ownership or control links between the applicant and any 
person cited in a violation notice are erroneous or have been rebutted, 
or (ii) that the violation has been corrected, is in the process of 
being corrected, or is the subject of a good faith appeal, within the 
meaning of Sec. 773.15(b)(1) of this part (or the State program 
equivalent).
    (c) Following the regulatory authority's decision on the 
application (including unconditional issuance, conditional issuance, or 
denial of the permit) or following the applicant's withdrawal of the 
application, the regulatory authority shall promptly enter all relevant 
information related to such decision or withdrawal into AVS.

    13. Section 773.24 is added as follows:


Sec. 773.24  Procedures for challenging ownership or control links 
shown in AVS.

    (a)(1) Any applicant or other person shown in AVS in an ownership 
or control link to any person may challenge such link in accordance 
with the provisions of paragraphs (b) through (d) of this section and 
Sec. 773.25 of this part, unless such applicant or other person is 
bound by a prior administrative or judicial determination concerning 
the link.
    (2) Any applicant or other person shown in AVS in an ownership or 
control link to any person cited in a Federal violation notice may 
challenge the status of the violation covered by such notice in 
accordance with the provisions of paragraphs (b) through (d) of this 
section and Sec. 773.25 of this part, unless such applicant or other 
person is bound by a prior administrative or judicial determination 
concerning the status of the violation.
    (3) Any applicant or other person shown in AVS in an ownership or 
control link to any person cited in a State violation notice may 
challenge the status of the violation covered by such notice in 
accordance with the State program equivalents to paragraphs (b) through 
(d) of this section and Sec. 773.25 of this part for the State that 
issued the violation notice, unless such applicant or other person is 
bound by a prior administrative or judicial determination concerning 
the status of the violation.
    (b) Any applicant or other person who wishes to challenge an 
ownership or control link shown in AVS or the status of a Federal 
violation, and who is eligible to do so under the provisions of 
paragraphs (a)(1) or (a)(2) of this section, shall submit a written 
explanation of the basis for the challenge, along with any relevant 
evidentiary materials and supporting documents, to OSM, addressed to 
the Chief of the AVS Office, Office of Surface Mining Reclamation and 
Enforcement, U.S. Department of the Interior, Washington, D.C. 20240.
    (c) OSM shall review any information submitted under paragraph (b) 
of this section and shall make a written decision whether or not the 
ownership or control link has been shown to be erroneous or has been 
rebutted and/or whether the violation covered by the notice remains 
outstanding, has been corrected, is in the process of being corrected, 
or is the subject of a good faith appeal within the meaning of 
Sec. 773.15(b)(1) of this part.
    (d)(1) If, as a result of the decision reached under paragraph (c) 
of this section, OSM determines that the ownership or control link has 
been shown to be erroneous or has been rebutted and/or that the 
violation covered by the notice has been corrected, is in the process 
of being corrected, or is the subject of a good faith appeal, OSM shall 
so notify the applicant or other person and, if an application is 
pending, the regulatory authority, and shall correct the information in 
AVS.
    (2) If, as a result of the decision reached under paragraph (c) of 
this section, OSM determines that the ownership or control link has not 
been shown to be erroneous and has not been rebutted and that the 
violation covered by the notice remains outstanding, OSM shall so 
notify the applicant or other person and, if an application is pending, 
the regulatory authority, and shall update the information in AVS, if 
necessary.
    (i) OSM shall serve a copy of the decision on the applicant or 
other person by certified mail, or by any means consistent with the 
rules governing service of a summons and complaint under Rule 4 of the 
Federal Rules of Civil Procedure. Service shall be complete upon tender 
of the notice or of the mail and shall not be deemed incomplete because 
of a refusal to accept.
    (ii) The applicant or other person may appeal OSM's decision to the 
Department of the Interior's Office of Hearings and Appeals within 30 
days of service of the decision in accordance with 43 CFR 4.1380 
through 4.1387. OSM's decision shall remain in effect during the 
pendency of the appeal, unless temporary relief is granted in 
accordance with 43 CFR 4.1386.

    14. Section 773.25 is added as follows:


Sec. 773.25  Standards for challenging ownership or control links and 
the status of violations.

    (a) The provisions of this section shall apply whenever a person 
has and exercises a right, under the provisions of Secs. 773.20, 
773.21, 773.23, or 773.24 of this part or under the provisions of part 
775 of this chapter, to challenge (1) an ownership or control link to 
any person and/or (2) the status of any violation covered by a notice.
    (b) Agencies responsible. (1) Except as provided in paragraph 
(b)(3) of this section--
    (i) The regulatory authority before which an application is pending 
shall have responsibility for making decisions with respect to 
ownership or control relationships of the application.
    (ii) The regulatory authority that issued a permit shall have 
responsibility for making decisions with respect to the ownership or 
control relationships of the permit.
    (iii) The State regulatory authority for the State that issued a 
State violation notice shall have responsibility for making decisions 
with respect to the ownership or control relationships of the 
violation.
    (iv) The regulatory agency that issued a violation notice, whether 
State or Federal, shall have responsibility for making decisions 
concerning the status of the violation covered by such notice, i.e., 
whether the violation remains outstanding, has been corrected, is in 
the process of being corrected, or is the subject of a good faith 
appeal, within the meaning of Sec. 773.15(b)(1) of this part.
    (2) OSM shall have responsibility for making decisions with respect 
to the ownership or control relationships of a Federal violation 
notice.
    (3)(i) With respect to information shown on AVS, the 
responsibilities referred to in paragraph (b)(1) of this section shall 
be subject to the plenary authority of OSM to review any State 
regulatory authority decision regarding an ownership or control link.
    (ii) With respect to ownership or control information which has not 
been entered into AVS by a State and with respect to information shown 
on AVS relating to the status of a violation, State regulatory 
authorities' determinations are subject to OSM's program authority 
oversight under parts 733, 842, and 843 of this chapter.
    (c) Evidentiary standards. (1) In any formal or informal review of 
an ownership or control link or of the status of a violation covered by 
a violation notice, the responsible agency shall make a prima facie 
determination or showing that such link exists, existed during the 
relevant period, and/or that the violation covered by such notice 
remains outstanding. Once such a prima facie determination or showing 
has been made, the person challenging such link or the status of the 
violation shall have the burden of proving by a preponderance of the 
evidence, with respect to any relevant time period--
    (i) That the facts relied upon by the responsible agency to 
establish: (A) Ownership or control under the definition of ``owned or 
controlled'' or ``owns or controls'' in Sec. 773.5 of this part or (B) 
a presumption of ownership or control under the definition of ``owned 
or controlled'' or ``owns or controlls'' in Sec. 773.5 of this part, do 
not or did not exist;
    (ii) That a person subject to a presumption of ownership or control 
under the definition of ``owned or controlled'' or ``owns or controls'' 
in Sec. 773.5 of this part, does not or did not in fact have the 
authority directly or indirectly to determine the manner in which 
surface coal mining operations are or were conducted, or
    (iii) That the violation covered by the violation notice did not 
exist, has been corrected, is in the process of being corrected, or is 
the subject of a good faith appeal within the meaning of 
Sec. 773.15(b)(1) of this part; provided that the existence of the 
violation at the time it was cited may not be challenged under the 
provisions Sec. 773.24 of this part: (A) By a permittee, unless such 
challenge is made by the permittee within the context of Secs. 773.20 
through 773.21 of this part; (B) by any person who had a prior 
opportunity to challenge the violation notice and who failed to do so 
in a timely manner; or (C) by any person who is bound by a prior 
administrative or judicial determination concerning the existence of 
the violation.
    (2) In meeting the burden of proof set forth in paragraph (c)(1) of 
this section, the person challenging the ownership or control link or 
the status of the violation shall present probative, reliable, and 
substantial evidence and any supporting explanatory materials, which 
may include--
    (i) Before the responsible agency--
    (A) Affidavits setting forth specific facts concerning the scope of 
responsibility of the various owners or controllers of an applicant, 
permittee, or any person cited in a violation notice; the duties 
actually performed by such owners or controllers; the beginning and 
ending dates of such owners' or controllers' affiliation with the 
applicant, permittee, or person cited in a violation notice; and the 
nature and details of any transaction creating or severing an ownership 
or control link; or specific facts concerning the status of the 
violation;
    (B) If certified, copies of corporate minutes, stock ledgers, 
contracts, purchase and sale agreements, leases, correspondence, or 
other relevant company records;
    (C) If certified, copies of documents filed with or issued by any 
State, Municipal, or Federal governmental agency.
    (D) An opinion of counsel, when supported by (1) Evidentiary 
materials; (2) a statement by counsel that he or she is qualified to 
render the opinion; and (3) a statement that counsel has personally and 
diligently investigated the facts of the matter or, where counsel has 
not so investigated the facts, a statement that such opinion is based 
upon information which has been supplied to counsel and which is 
assumed to be true.
    (ii) Before any administrative or judicial tribunal reviewing the 
decision of the responsible agency, any evidence admissible under the 
rules of such tribunal.
    (d) Following any determination by a State regulatory authority or 
other State agency, or any decision by an administrative or judicial 
tribunal reviewing such determination, the State regulatory authority 
shall review the information in AVS to determine if it is consistent 
with the determination or decision. If it is not, the State regulatory 
authority shall promptly inform OSM and request that the AVS 
information be revised to reflect the determination or decision.

PART 778--PERMIT APPLICATIONS--MINIMUM REQUIREMENTS FOR LEGAL, 
FINANCIAL, COMPLIANCE, AND RELATED INFORMATION

    15. The authority citation for part 778 continues to read as 
follows:

    Authority: Public Law 95-87, 30 U.S.C. 1201 et seq., and Public 
Law 100-34.

    16. Section 778.14 is amended by revising the introductory language 
in paragraph (c) to read as follows:


Sec. 778.14  Violation information.

* * * * *
    (c) A list of all violation notices received by the applicant 
during the three-year period preceding the application date, and a list 
of all outstanding violation notices received prior to the date of the 
application by any surface coal mining operation that is deemed or 
presumed to be owned or controlled by either the applicant or any 
person who is deemed or presumed to own or control the applicant under 
the definition of ``owned or controlled'' and ``owns or controls'' in 
Sec. 773.5 of this chapter. For each notice of violation issued 
pursuant to Sec. 843.12 of this chapter or under a Federal or State 
program for which the abatement period has not expired, the applicant 
shall certify that such notice of violation is in the process of being 
corrected to the satisfaction of the agency with jurisdiction over the 
violation. For each violation notice reported, the list shall include 
the following information, as applicable:
* * * * *

PART 840--STATE REGULATORY AUTHORITY: INSPECTION AND ENFORCEMENT

    17. The authority citation for Part 840 continues to read as 
follows:

    Authority: Public Law 95-87, 30 U.S.C. 1201 et seq., and Public 
Law 100-34, unless otherwise noted.

    18. Section 840.13 is amended by revising paragraph (b) to read as 
follows:


Sec. 840.13  Enforcement authority.

* * * * *
    (b) The enforcement provisions of each State program shall contain 
sanctions which are no less stringent than those set forth in section 
521 of the Act and shall be consistent with Secs. 843.11, 843.12, 
843.13, and 843.23 and subchapters G and J of this chapter.

PART 843--FEDERAL ENFORCEMENT

    19. and 20. The authority citation for part 843 continues to read 
as follows:

    Authority: 30 U.S.C. 1201 et seq., as amended; and Pub. L. 100-
34.


Sec. 843.10  [Removed]

    21. Section 843.10 is removed.
    22. Section 843.24 is added as follows:


Sec. 843.24  Oversight of State permitting decisions with respect to 
ownership or control or the status of violations.

    (a) The Office shall take action pursuant to paragraphs (b) and (c) 
of this section whenever it determines, through its oversight of the 
implementation of State programs, that a State has issued a permit 
without complying with the State program equivalents of Secs. 773.22, 
773.23, 773.24, 773.25, and 843.23 of this chapter.
    (b) If, as a result of its determination that a State has failed to 
comply with the provisions set forth in paragraph (a) of this section, 
the Office has reason to believe that the State has issued a permit 
improvidently within the meaning of Sec. 773.20 of this chapter, the 
Office shall initiate action under the provisions of Sec. 843.21 of 
this part.
    (c) If the Office determines that a State's failure to comply with 
the State program equivalents of Secs. 773.22, 773.23, 773.24, 773.25, 
and 843.23 of this chapter was knowing, it shall initiate action under 
Secs. 735.21 or 886.18 (as allowed by law) and/or Sec. 733.12(b) of 
this chapter, unless the State's action was the result of a mandatory 
injunction of a court of competent jurisdiction.

[FR Doc. 94-26554 Filed 10-27-94; 8:45 am]
BILLING CODE 4310-05-M