[Federal Register Volume 65, Number 244 (Tuesday, December 19, 2000)]
[Rules and Regulations]
[Pages 79582-79672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-32002]



[[Page 79581]]

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Part III





Department of the Interior





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Office of Surface Mining Reclamation and Enforcement



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30 CFR Parts 701, 724, et al.



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

  Federal Register / Vol. 65, No. 244 / Tuesday, December 19, 2000 / 
Rules and Regulations  

[[Page 79582]]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

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

RIN 1029-AB94


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

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

ACTION: Final rule.

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

EFFECTIVE DATE: January 18, 2001.

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

SUPPLEMENTARY INFORMATION:

Table of Contents

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

I. What Events Precipitated This Rulemaking?

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

[[Page 79583]]

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

[[Page 79584]]

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

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

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

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

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

IV. Derivation Tables

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

[[Page 79585]]

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

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


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


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

[[Page 79586]]

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

[[Page 79587]]

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


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

[[Page 79588]]

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


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

[[Page 79589]]

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


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


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


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


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

[[Page 79590]]

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

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

A. Withdraw the Proposal

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

B. Compliance With the Administrative Procedure Act

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

[[Page 79591]]

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

C. Public Participation

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

D. Oversight

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

[[Page 79592]]

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

E. Plain Language

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

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

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

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

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

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

[[Page 79593]]

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

F. Other General Comments

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

[[Page 79594]]

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

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

A. Section 701.5--Definitions

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

[[Page 79595]]

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

[[Page 79596]]

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

[[Page 79597]]

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

[[Page 79598]]

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

[[Page 79599]]

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

[[Page 79600]]

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

[[Page 79601]]

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

[[Page 79602]]

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

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

[[Page 79603]]

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

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

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

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

[[Page 79604]]

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

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

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

[[Page 79605]]

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

[[Page 79606]]

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

[[Page 79607]]

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

B. Section 724.5--Definitions

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

C. Section 773.5--Definitions

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

D. Section 773.10--Information Collection

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

[[Page 79608]]

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

E. Section 773.15--Review of Permit Applications

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

[[Page 79609]]

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

[[Page 79610]]

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

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

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

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

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

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

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

[[Page 79611]]

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

[[Page 79612]]

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

[[Page 79613]]

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

[[Page 79614]]

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

[[Page 79615]]

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

[[Page 79616]]

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

[[Page 79617]]

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

    In the future, instead of providing permit eligibility 
recommendations, we would use AVS to provide a variety of reports, 
including a report on applicants and violations on the operations 
they own or control, for use by the regulatory authority in 
reviewing applications and permits. Consistent with the principle of 
State primacy, regulatory authorities would then perform their own 
analyses of an applicant's legal identity information, permit 
history, and compliance history, and make permitting decisions based 
on their findings without receiving a recommendation from OSM. Our 
role would be to administer and operate the AVS and maintain the 
integrity of the system data. The State, subject to OSM oversight 
reviews, would have full authority in deciding whether to issue a 
permit.

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

[[Page 79618]]

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

[[Page 79619]]

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

[[Page 79620]]

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

F. Section 773.16--Permit Eligibility Determination

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

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

[[Page 79621]]

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

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

[[Page 79622]]

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

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

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

[[Page 79623]]

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

[[Page 79624]]

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

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

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

G. Section 773.17--Permit Conditions

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

[[Page 79625]]

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

H. Section 773.18--Additional Permit Conditions

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

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

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

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

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

[[Page 79626]]

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

[[Page 79627]]

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

[[Page 79628]]

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

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

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

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

[[Page 79629]]

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

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

K. Section 773.22--Identifying Entities Responsible for Violations

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

[[Page 79630]]

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

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

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

[[Page 79631]]

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

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

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

[[Page 79632]]

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

[[Page 79633]]

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

[[Page 79634]]

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

[[Page 79635]]

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

[[Page 79636]]

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

[[Page 79637]]

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

[[Page 79638]]

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

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

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

[[Page 79639]]

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

[[Page 79640]]

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

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

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

[[Page 79641]]

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

O. Section 774.10--Information Collection

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

P. Section 774.13--Permit Revisions

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

[[Page 79642]]

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

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

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

R. Section 778.5--Definitions

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

S. Section 778.10--Information Collection

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

Summary of Comments and Adjustments to Burden Estimates

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

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

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

[[Page 79643]]

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

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

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

[[Page 79644]]

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

[[Page 79645]]

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

[[Page 79646]]

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

Sec. 7701. Taxpayer Identifying Number

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

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

[[Page 79647]]

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

[[Page 79648]]

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

[[Page 79649]]

current and accurate information available.

U. Section 778.14--Violation Information

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

[[Page 79650]]

violation notices received during the three-year period preceding the 
date of an application. This requirement, which we are adopting as part 
of final Sec. 778.14(c), must be met regardless of whether the 
applicant still owns or controls the operations that incurred those 
violations.
    Several commenters argued that the information requirements in 
Secs. 778.14(a) and (b) concerning permit suspensions and revocations 
and bond forfeitures from persons under common control with the 
applicant are inconsistent with NMA v. DOI I. The commenters are 
mistaken. Nothing in the cited court decision prohibits collection of 
this information. Section 507(b)(5) of SMCRA, 30 U.S.C. 1257(b)(5), 
expressly requires submission of ``a brief explanation of the facts 
involved'' for permit suspensions and revocations and bond forfeitures 
experienced by ``the applicant, any subsidiary, affiliate, or persons 
controlled by or under common control with the applicant.'' Our 
regulations appropriately flesh out this statutory requirement by 
requiring only the information relevant to identifying the 
circumstances of a permit suspension, revocation, or bond forfeiture 
and their bearing on permit eligibility.
    Several commenters claimed that the proposed rule was flawed 
because it failed to address the requirement in section 510(c) of SMCRA 
to disclose violations of other environmental protection laws relating 
to air or water quality. Commenters also stated that noncompliance with 
this requirement is widespread, that inaccurate and incomplete 
disclosure of this information by applicants is the rule rather than 
the exception, that we have failed to enforce this provision for the 
past 22 years, and that we have failed to execute interagency 
agreements concerning the loading, listing, and cross-referencing of 
violations of State and Federal air and water laws by surface coal 
mining operations. The commenters said disclosure of air and water 
quality violations should be a part of ``other information available to 
the regulatory authority'' and that OSM and States should investigate 
the disclosure of this information by permit applicants.
    We disagree that the proposed rule did not address these types of 
violations. Both proposed and final Sec. 778.14(c) require a list of 
all violation notices received by an applicant during the three-year 
period preceding submission of an application as well as a list of all 
unabated or uncorrected violation notices incurred by operations the 
applicant or its operator own or control as of the date of application. 
Both our previous regulation (Sec. 773.5) and this final rule 
(Sec. 701.5) define ``violation notice'' as including these types of 
violations. With respect to enforcement, we acknowledge that we have 
not been successful in negotiating a formal agreement on a national 
basis with other agencies such as the Environmental Protection Agency 
(EPA). However, we do enter air and water quality violations into AVS 
when we receive this information from appropriate agencies. For 
example, EPA's Region III, which has responsibility for compliance with 
the Clean Water Act in the major coal mining States of northern 
Appalachia, has provided selected violation information to us for the 
past three years.
    The same commenters suggested that we define the phrase ``other 
information available'' as used in section 510(c) of the Act to include 
any violations of air or water quality laws related to mining 
operations owned or controlled by the applicant. The commenters also 
stated that regulatory authorities should contact Federal and State 
agencies in other States to determine compliance with air and water 
quality laws; that we should require State regulatory authorities to 
maintain data in AVS of all violations of air or water quality laws 
related to mining operations; that we should maintain a current 
database in AVS for violations incurred under Federally approved State 
air and water quality programs; and that each permitting agency should 
be required to withhold permit issuance pending a demonstration of 
compliance with air and water quality protection requirements, as 
required under section 510(c) of the Act.
    To the extent that reliable information readily available to the 
regulatory authority indicates that the applicant is in violation of 
air or water quality requirements, we agree that section 510(c) of the 
Act requires that the permit be withheld. However, this obligation is 
limited to violations meeting our definition of violation in Sec. 701.5 
of this rule; i.e., the agency with jurisdiction over air or water 
quality must have provided the offending party with written 
notification of the failure to comply. This limitation is consistent 
with the reference in section 510(c) to ``notices of violation * * * 
incurred by the applicant.'' Section 510(c) requires use of both the 
violation schedule submitted with the application and ``other 
information available to the regulatory authority'' to determine permit 
eligibility. We decline to adopt the commenters' suggestions regarding 
application of the ``other information available'' phrase because we do 
interpret that phrase as requiring only that regulatory authorities use 
all reliable information readily available to them in a useable form. 
It does not mean that they must actively seek out all potential sources 
of information concerning air and water quality violations. 
Furthermore, we have no control over the availability of air and water 
quality violation information, which, in our experience, other agencies 
may be reluctant to provide, either at all or in the form and detail 
needed for accurate permit eligibility determinations under section 
510(c). As discussed above, although we have not been successful in 
negotiating national agreements for AVS data entry, we do have an 
arrangement with EPA Region III whereby we enter air and water quality 
violation information into AVS when EPA determines that it is 
appropriate to do so. States are free to negotiate separate information 
exchange agreements with other agencies, and we encourage them to do 
so.
    In any case, under section 510(c) of the Act and this final rule, 
the applicant has the responsibility to include all violations of air 
or water quality laws and regulations in the violation schedule 
submitted with the application. The regulatory authority must consider 
the information in the schedule when making permit eligibility 
determinations.
    Several commenters expressed support for the proposed elimination 
of the provision in Sec. 778.14(c) that requires the applicant to 
certify that any violation in a notice of violation for which the 
abatement period has not expired is being corrected to the satisfaction 
of the agency with jurisdiction over the violation. Upon further 
analysis, we decided to retain the certification requirement, which 
appears in Sec. 778.14(c)(8) of this final rule. In the absence of 
evidence to the contrary, an applicant's certification that a violation 
is being abated satisfies the requirement of section 510(c) that an 
applicant submit proof that a violation ``has been or is in the process 
of being corrected to the satisfaction of the regulatory authority, 
department, or agency which has jurisdiction over such violation.'' 
Hence, certification is a useful tool in determining whether an 
applicant may be eligible for a provisionally issued permit under final 
Sec. 773.14(b).
    A commenter suggested that violation information required from 
applicants should also include all outstanding violation notices for 
any entity who owns or controls the applicant and who

[[Page 79651]]

is owned or controlled by the applicant or its owners and controllers. 
The commenter stated that, while some of this information cannot be 
used to determine permit eligibility, it could be used for other 
enforcement purposes. We decline to adopt the commenter's suggestion. 
Our final rule closely resembles the information requirements of 
sections 507(b)(5) and 510(c) of the Act, 30 U.S.C. 1257(b)(5) and 
1260(c), respectively, with the addition of a requirement to provide 
information concerning all unabated or uncorrected violation notices 
received in connection with any operation that the applicant or its 
operator owns or controls. The latter information is the most relevant 
for determining permit eligibility under section 510(c) of the Act. We 
do not believe that there is sufficient justification for requiring the 
additional information sought by the commenter simply because it might 
be useful for unspecified ``other enforcement purposes.''
    Several commenters said that the controller of a violation should 
mean the person who did not abate the violation, not the person who 
created it. We disagree. The person who caused, or was initially cited 
for, the violation and any persons who subsequently had the authority 
to correct the violation are collectively responsible for abating or 
correcting the violation, unless otherwise provided for by the Act, its 
implementing regulations, or established principles of business law.
    Several commenters asserted that the language in proposed 
Sec. 778.14(c) is not consistent with section 507(b)(5) of SMCRA. The 
primary statutory authority for the previous, proposed and final 
versions of Sec. 778.14(c) is a combination of sections 201(c)(2) and 
510(c) of the Act. Section 507(b)(5) of the Act is the primary 
statutory basis only for paragraphs (a) and (b) of Sec. 778.14.
    A few commenters suggested that listing cessation orders should be 
required, since a cessation order suspends all or part of the operation 
of the permit. Both proposed and final Sec. 778.14(c) require the 
reporting of all violation notices, which we define in Sec. 701.5 as 
including cessation orders.
    Some commenters asserted that the rule should require reporting of 
violation notices received by entities in common control with the 
applicant. We disagree. The ``under common control'' provision applies 
only to information requirements under section 507(b)(5) of the Act, 30 
U.S.C. 1257(b)(5). Since section 507(b)(5) does not require reporting 
of violation notices received by the persons to whom it applies, the 
corresponding regulations in final Secs. 778.14(a) and (b) also do not 
include this requirement.
    The same commenters asserted that the information required in 
Sec. 778.14 should include both abated and unabated violations. Final 
Sec. 778.14(c) requires a list of all violation notices, both abated 
and unabated, that an applicant or operator received within the three-
year period preceding the date of application. We based this 
requirement on section 510(c) of the Act, which includes a similar 
provision regarding the applicant. To meet this requirement, an 
applicant must disclose the abated and unabated violations which it and 
its operator received in the three-year period preceding the date of an 
application.

V. Section 842.11--Federal Inspections and Monitoring

    We are not adopting proposed Sec. 842.11.
    We originally proposed to revise 30 CFR 842.11(e)(3)(i) because we 
believed the provision was inconsistent with the D.C. Circuit's 
decision in NMA v. DOI I. However, a closer examination found no 
inconsistency. The existing rule does not preclude applicants from 
receiving permits based on the violations of their owners or 
controllers. Rather, it precludes owners and controllers, when they 
apply for a permit of their own, from receiving that permit if there 
are unabated or uncorrected violations at operations they own or 
control.
    A commenter suggested that we should make a corresponding change to 
a similar provision in 30 CFR 840.11(g)(3)(i), which applies to States. 
(Part 842 governs only Federal inspections and monitoring.) This 
suggestion is now moot since we are not adopting the proposed rule.

W. Section 843.5--Definitions

    We proposed to remove Sec. 843.5 from our regulations. Section 
843.5 contained two definitions, unwarranted failure to comply and 
willful violation. We proposed to move the definition of unwarranted 
failure to comply from Sec. 843.5 to Sec. 846.5. In addition, we 
proposed to remove the definition of willful violation from Secs. 843.5 
and 701.5 because we found the definition of willful violation to be 
unnecessary in light of our proposed definition of ``willful or 
willfully.''
    We received no comments on the proposed removal of Sec. 843.5. 
However, since the final rule uses the term unwarranted failure to 
comply only in Sec. 843.13, there is no longer any need to move the 
definition of unwarranted failure to comply from Sec. 843.5. As a 
result, the final rule retains both Sec. 843.5 and the existing 
definition of unwarranted failure to comply.
    As proposed, we are removing the definition of willful violation 
from Secs. 843.5 and 701.5 because it is no longer necessary in light 
of our newly adopted definition of ``willful or willfully'' in 
Sec. 701.5. Under the final rule, a ``willful violation'' will be an 
act or omission that meets the definitions of ``willful or willfully'' 
and violation in Sec. 701.5. Section VI.A. of this preamble discusses 
the comments that we received on the removal of willful violation.

X. Section 843.11--Cessation Orders

    Previous 30 CFR 843.11(g) required that, within 60 days of issuance 
of a cessation order, we notify all persons identified as owners or 
controllers under other specified provisions of our rules. We proposed 
to revise that rule to make the cross-references consistent with 
proposed Secs. 773.17 and 778.13 and to remove the requirement to 
notify the persons involved that they had been identified as an owner 
or controller. Under the proposed rule, we would be required only to 
notify them that a cessation order had been issued. We received no 
comments on this proposed rule.
    We are adopting the proposed rule in revised form. Final 
Sec. 843.11(g) provides that, within 60 days after issuing a cessation 
order, we will notify the permittee, the operator, and any person who 
has been listed or identified by the applicant, permittee, or OSM as an 
owner or controller of the operation. The final rule replaces the 
previous and proposed cross-references concerning identification of 
owners or controllers with a cross-reference to the ownership and 
control definitions in final Sec. 701.5. We are making this change 
because the cross-references in the previous and proposed rules 
included only persons identified as owners or controllers by the 
permittee. However, the rules that we are adopting today establish 
procedures by which the regulatory authority also may identify and list 
persons as owners or controllers. See final Sec. 774.11(f). Therefore, 
for consistency with that rule, we are replacing the previous and 
proposed cross-references with a requirement to notify all persons who 
are identified as owners or controllers, regardless of whether they 
were listed by an applicant in an application, subsequently disclosed 
by the permittee, or identified by the regulatory authority as an owner 
or controller of the applicant or permittee.

[[Page 79652]]

Y. Section 843.21--Procedures for Improvidently Issued State Permits

Background
    We proposed minor amendments to paragraphs (d) and (e) of 30 CFR 
843.21, which sets forth our procedures for taking Federal enforcement 
action concerning improvidently issued State permits. Although we did 
not propose any substantive changes to paragraphs (a), (b), (c), and 
(f) of the previous rule, we included them in the proposed rule to 
provide opportunity for public comment on the complete process. See 63 
FR 70580, 70608.
    After the proposal was published, the U.S. Court of Appeals for the 
D.C. Circuit issued its decision in NMA v. DOI II. In that decision, 
the court upheld our ability to take remedial action relative to 
improvidently issued State permits, but found that our previous 
regulations ``impinge on the ``primacy'' afforded states under SMCRA 
insofar as they authorize OSM to take remedial action against operators 
holding valid state mining permits without complying with the 
procedural requirements set out in section 521(a) of SMCRA, 30 U.S.C. 
Sec. 1271(a).'' NMA v. DOI II, 177 F.3d at 9. Specifically, the court 
ruled that, absent imminent danger or harm under section 521(a)(2) of 
SMCRA, we must use the ``specific procedures in section 521(a)(3) of 
SMCRA'' when we seek ``to revoke a permit issued by the state under its 
state plan.'' Id. at 9-10. We modified the proposed rule to conform to 
the court's decision.
    Section 521(a)(3) of the Act requires the Secretary to take 
enforcement action if, on the basis of a Federal inspection, ``the 
Secretary or his authorized representative determines that any 
permittee is in violation of any requirement of this Act or any permit 
condition required by this Act.'' When taking enforcement action under 
this section, the Secretary must issue a notice of violation to the 
permittee or the permittee's agent fixing a reasonable time for 
abatement of the violation and provide opportunity for a public 
hearing. Section 521(a)(3) further provides for issuance of a cessation 
order if the permittee fails to abate the violation within the time 
originally fixed or subsequently extended.
    Because section 521(a)(3) specifies that we may only take 
enforcement action on the basis of a Federal inspection, one commenter 
argued that the final rule also must be consistent with section 
521(a)(1) of the Act, which establishes the conditions under which we 
may conduct a Federal inspection in a State with primacy. We agree. 
Therefore, we have revised the rule to adopt the commenter's 
recommendation, with the modifications needed to adapt those 
requirements and procedures to situations that involve improvidently 
issued permits.
    Section 521(a)(1) of SMCRA provides that when the Secretary, on the 
basis of any information available to him, including receipt of 
information from any person, has reason to believe that any person is 
in violation of any requirement of the Act or any permit condition 
required by the Act, the Secretary must notify the State regulatory 
authority in the State in which the violation exists and provide the 
State ten days to take appropriate action to cause the violation to be 
corrected or to show good cause for not taking appropriate action. If 
the State fails to take appropriate action or show good cause within 
ten days, the Secretary must immediately order a Federal inspection 
unless the information available to the Secretary is a result of a 
previous Federal inspection. When a Federal inspection under section 
521(a)(1) results from information provided to the Secretary by any 
person, the Secretary must notify the person when the inspection will 
take place and allow the person to accompany the inspector during the 
inspection.
    Our final rule includes inspection provisions and procedures 
analogous to those in section 521(a)(1) of the Act and enforcement 
provisions and procedures analogous to those in section 521(a)(3) of 
the Act. Final Sec. 843.21(a) requires that we provide the State 
regulatory authority with a ten-day notice when we have reason to 
believe that a State permit has been improvidently issued. Final 
Sec. 843.21(b) clarifies the conditions under which we will consider a 
State response to a ten-day notice appropriate. Final Sec. 843.21(c) 
requires that we notify the State and the permittee if we determine 
that a State response is not appropriate and that a Federal inspection 
is thus necessary. Final Sec. 843.21(d) requires that we conduct a 
Federal inspection when a State response is not appropriate. It also 
requires that, on the basis of that inspection and other available 
information, we make a written finding as to whether the permit was 
improvidently issued. Final Sec. 843.21(e)(1) requires that we issue a 
notice of violation if we find that the permit has been improvidently 
issued. Final Sec. 843.21(e)(2) requires that we issue a cessation 
order if the notice of violation is not abated in a timely fashion. In 
both cases we must provide opportunity for a public hearing on the 
notice or order. Final Sec. 843.21(f) sets forth the circumstances 
under which we may terminate or vacate a notice of violation or 
cessation order.
Final Paragraph (a): Initial Notice
    Under final Sec. 843.21(a)(1), we will issue an initial notice to 
the State regulatory authority, if, on the basis of any information 
available to us, including information submitted by any person, we have 
reason to believe a State-issued permit was improvidently issued, and 
the State has failed to take appropriate action. The initial notice 
will state in writing the reasons for our belief that the permit was 
improvidently issued and will request the State to take appropriate 
action under paragraph (b) of the final rule within 10 days. We will 
serve the notice on the State regulatory authority, the permittee, and 
any person providing information under paragraph (a). In response to 
comments advocating greater public notice and participation, we added 
paragraph (a)(2) to the final rule. Under that paragraph, we will also 
provide notice to the public by posting the initial notice at our 
office closest to the permit area and on the AVS Office Internet home 
page.
Final Paragraph (b): State Response
    Final Sec. 843.21(b) requires a State to respond to an initial 
notice under paragraph (a) within 10 days and to demonstrate in writing 
that: (1) the permit was not improvidently issued under Sec. 773.21 or 
the State regulatory program equivalent; (2) the State is in compliance 
with the State regulatory program equivalents of final Secs. 773.21 
through 773.23; or (3) the State has good cause for not complying with 
the State regulatory program equivalents of Secs. 773.21 through 
773.23. Under final paragraph (b)(2), the State need not have completed 
action to suspend or rescind an improvidently issued permit as long as 
the State has initiated and is pursuing proceedings consistent with 
Secs. 773.21 through 773.23.
    ``Good cause'' under final paragraph (b)(3) does not include the 
lack of State program equivalents of Secs. 773.21 through 773.23. A 
State without counterpart regulations retains implied authority to take 
remedial action on an improvidently issued State permit because of its 
express authority to deny permits in the first instance. See, e.g., NMA 
v. DOI II, 177 F.3d at 9. Hence, this rule properly allows OSM to take 
remedial action when a State regulatory authority does not take action 
with respect to an improvidently issued State permit.

[[Page 79653]]

Paragraph (c): Notice of Federal Inspection
    Under final Sec. 843.21(c), if we find that the State has failed to 
make the demonstration required under paragraph (b), we must initiate a 
Federal inspection under paragraph (d) to determine if the permit was 
improvidently issued under the criteria of Sec. 773.21 or the State 
regulatory program equivalent. We also must: (1) Issue a notice to the 
State regulatory authority and the permittee stating in writing the 
reasons for our finding and stating our intention to initiate a Federal 
inspection; (2) notify any person who provided information under 
paragraph (a) that leads to a Federal inspection that he or she may 
accompany the inspector on any inspection of the minesite; and (3) post 
the notice at our office closest to the permit area and on the AVS 
Office Internet home page.
Paragraph (d): Federal Inspection and Written Finding
    Under final Sec. 843.21(d), no less than 10 days and no more than 
30 days after providing notice under paragraph (c), we will conduct an 
inspection and make a written finding as to whether the State permit 
was improvidently issued. In making that finding, we will evaluate all 
available information, including information submitted by the State, 
the permittee, or any other person. The timeframes in this paragraph 
are intended to allow for submission and receipt of information in 
response to the notice provided under paragraph (c) and investigation 
of complex ownership and control relationships while still ensuring 
that inspections and findings are made in a reasonably prompt fashion. 
The Federal inspection required under this paragraph will not always 
involve an on-the-ground inspection of either the permit at issue or 
the minesite with which the violation is associated because some 
violations, such as unpaid reclamation fees or civil penalties, do not 
constitute on-the-ground violations. Thus, in many instances, the 
inspection will consist of an examination of ownership or control 
relationships and review of relevant records, files, papers and the 
like.
    To ensure that the public has the opportunity to review the 
finding, paragraph (d) of the final rule requires that we post the 
finding at our office closest to the permit area and on the AVS Office 
Internet home page. In addition, if we find that the permit was 
improvidently issued, the rule requires that we issue a notice to the 
State and the permittee stating in writing the reasons for our finding.
Final Paragraph (e): Federal Enforcement
    If we find that a State permit was improvidently issued under 
paragraph (d), we must initiate Federal enforcement under paragraph 
(e). Under final Sec. 843.21(e)(1), we must issue a notice of violation 
(NOV) to the permittee or the permittee's agent consistent with 
Sec. 843.12(b), which contains format and content requirements for 
Federal notices of violation. Among other things, the notice must be in 
writing and must specify a reasonable time for abatement. Final 
Sec. 843.21(e)(1) also provides opportunity for a public hearing under 
existing Secs. 843.15 and 843.16 upon issuance of an NOV.
    If an NOV is not remedied within the abatement period, final 
Sec. 843.21(e)(2) requires us to issue a cessation order (CO) 
consistent with Sec. 843.11(c), which contains format and content 
requirements for cessation orders. Among other things, under that rule, 
the order must be in writing and must specify the nature of the 
condition, practice or violation that resulted in issuance of the 
order. Final Sec. 843.21(e)(2) also provides opportunity for a public 
hearing under Secs. 843.15 and 843.16 upon issuance of a CO. In 
addition, 43 CFR 4.1160, et seq., allows a permittee or any person 
having an interest which is or may be adversely affected by a notice of 
violation or cessation order issued under authority of section 
521(a)(3) to seek review of the notice and order, including a public 
hearing.
    The previous rule required only that we take unspecified 
``appropriate remedial action,'' which, the rule stated, could include 
issuance of an NOV ceasing mining by a specified date. However, in NMA 
v. DOI II, the court held that our remedial action must be consistent 
with section 521(a)(3) of the Act. Therefore, like that section of the 
Act, the final rule requires issuance of an NOV, followed by issuance 
of a failure-to-abate CO if the NOV is not abated in a timely fashion.
Final Paragraph (f): Remedies to Notice of Violation or Cessation Order
    Final paragraph (f) establishes conditions under which we may 
vacate or terminate an NOV or CO issued under paragraph (e). Except as 
discussed below, it is substantively identical to previous 30 CFR 
843.21(e), although we have modified some of the language and 
terminology for consistency with plain language principles and other 
provisions of this final rule. There are two significant changes from 
the previous rule. First, since final Sec. 843.21(e) now provides for 
the issuance of failure-to-abate cessation orders as well as notices of 
violation, final Sec. 843.21(f) applies to those orders, not just to 
NOVs as in the previous rule. Second, we have added paragraph (f)(2)(v) 
and modified paragraph (f)(2)(iii) for consistency with the new 
eligibility standards for provisionally issued permits under final 
Sec. 773.14(b).
Final Paragraph (g): No Civil Penalty
    Final paragraph (g) is substantively identical to previous 30 CFR 
843.21(f).
Provisions of Proposed Rule That We Did Not Adopt
    We did not adopt the provisions of proposed Secs. 843.21(d)(3) and 
(e)(2) pertaining to the submission of accurate and complete 
information. Under the proposed rule, we intended to allow failure to 
submit accurate and complete information at the time of application for 
a permit to form the basis for a finding that a permit was 
improvidently issued (and the subsequent issuance of an NOV), if 
disclosure of the information would have made the applicant ineligible 
to receive a permit.
    However, upon further review, we determined that we have 
insufficient basis to classify the failure to supply permit application 
information as a violation in the absence of any underlying outstanding 
enforcement action concerning the failure to submit that information. 
Therefore, we are not adopting the proposed revisions.
Disposition of Comments
    Several commenters said that proposed Sec. 843.21(d)(3) was 
unnecessary. That provision described instances when we would not take 
remedial action relative to an improvidently issued State permit. Under 
the proposal, we would not take remedial action if: (1) Any violation, 
penalty, or fee was abated or paid; (2) an abatement plan or payment 
schedule was entered into; (3) all inaccurate or incomplete information 
questions were resolved; or (4) the permittee and the operator, and all 
operations owned or controlled by the permittee and the operator, were 
no longer responsible for the violation, penalty, fee, or information. 
See proposed Secs. 843.21(d)(3)(i) through (iv). The commenters 
objected to our failure to state in the preamble why remedial action 
would not be taken under the four conditions specified in proposed 
Sec. 843.21(d)(3)(i) through (iv). They also stated that the conditions 
``open the door for delaying and negotiating compliance'' and appear to 
violate ``the

[[Page 79654]]

Act's requirement that enforcement action be taken immediately on all 
violations, regardless of whether the operator violated the rules on 
environmental standards, ownership or control information, or 
bonding.''
    After considering these comments, we are not adopting the proposed 
rules to which the commenters object. Under the final rule, if a State 
fails to adequately respond to our initial notice within ten days, we 
must initiate a Federal inspection. If we ultimately find that the 
permit was improvidently issued, we must undertake Federal enforcement 
under final Sec. 843.21(e), including the issuance of an NOV and, when 
appropriate, a failure-to-abate CO. However, under final 
Sec. 843.21(f)(2), we will terminate an NOV or CO if: (1) The violation 
has been abated or corrected; (2) the permittee or the operator no 
longer owns or controls the relevant operation; (3) the violation is 
the subject of a good faith administrative or judicial appeal; (4) the 
violation is the subject of an abatement plan or payment schedule; or 
(5) the permittee is pursuing a good faith challenge or appeal of 
relevant ownership or control listings or findings. Also, under final 
Sec. 843.21(f)(1), we will vacate an NOV or CO if it resulted from an 
erroneous conclusion under Sec. 843.21. Termination or vacation of an 
NOV or CO under these circumstances is appropriate because, even if the 
underlying violation remains uncorrected, the permittee would no longer 
be ineligible to receive a permit under section 510(c) of the Act.
    A commenter noted that proposed Secs. 843.21(d)(3)(iv) and 
(e)(2)(iii) both contain the phrase ``no longer responsible for the 
violation.'' The commenter asked how an entity can be responsible for a 
violation at a particular point in time and later be relieved of 
responsibility. The commenter suggested that an entity, and its owners 
and controllers at the time the violation occurred, continue to be held 
responsible until the violation is abated without regard to who may 
later own or control the entity.
    As explained above, we did not adopt the provision proposed at 
Sec. 843.21(d)(3)(iv). However, we adopted a similar provision at final 
paragraph (f)(2)(ii), which is substantively identical to the 
corresponding provision in previous Sec. 843.21(d). Final 
Sec. 843.21(f)(2)(ii) is consistent with both NMA v. DOI II and our 
longstanding practice. See, e.g., 54 FR 18438, 18456-57 (April 28, 
1989). Under NMA v. DOI II, we may no longer deny a permit based on 
past ownership or control of an operation with an unabated violation. 
Therefore, when a permittee severs an ownership or control relationship 
and thus becomes eligible to receive a new permit, it would be 
incongruous to cease operations on an existing permit only to issue a 
new one to the same permittee for the same operation upon 
reapplication. Therefore, under final Sec. 843.21(f)(2)(ii), if a 
person no longer owns or controls the relevant operation with a 
violation and is not directly responsible for the violation, we will 
terminate an NOV or CO issued under final Sec. 843.21(e).
    With reference to proposed Sec. 843.21(e), the same commenter asked 
if a violation should be vacated rather than terminated if an operator 
can demonstrate a lack of current responsibility for a violation, 
penalty, or fee. In this final rule, as in the proposal, we continue 
our long-held distinction between vacation and termination. Under final 
Sec. 843.21(f)(1), we will vacate an NOV or CO if we cited the 
violation in error. Technically, a vacated violation never existed. 
Under final Sec. 843.21(f)(2), we will terminate an NOV or CO whenever 
one of the circumstances in (f)(2)(i) through (v) exists. In other 
words, we will terminate an NOV or CO issued under Sec. 843.21(e) when 
the permittee is once again eligible to receive a permit under 30 CFR 
773.12 or 773.14 and section 510(c) of the Act.
    Two commenters said the word ``may'' in proposed Sec. 843.21(d)(2) 
should be changed to ``shall'' to clarify that enforcement action is 
mandatory. Final Sec. 843.21(e) provides that we must take enforcement 
action if we find that a permit was improvidently issued under final 
paragraph (d).
    A commenter said that our remedial actions should not be limited to 
issuance of an NOV that ceases mining. Proposed Sec. 843.21(d)(2) would 
not have done so. However, final Sec. 843.21(e) clarifies that our 
remedial actions under this section are indeed limited to the issuance 
of an NOV and, as appropriate, a failure-to-abate CO. In NMA v. DOI II, 
the court held that our authority to take remedial action on 
improvidently issued State permits derives from section 521(a)(3) of 
SMCRA. That paragraph of the Act authorizes only the two types of 
enforcement actions identified in our final rule.
    A commenter said that the proposed amendments to Sec. 843.21 
violate section 521 of SMCRA because operating under an improvidently 
issued permit is a violation of the Act. The commenter asserted that 
SMCRA ``allows but one response by a State to a finding that a permit 
was unlawfully issued--the commencement of an enforcement action under 
section 521 of [SMCRA].''
    SMCRA does not mention improvidently issued permits. However, in 
NMA v. DOI II, the court upheld our authority to take enforcement 
action on improvidently issued State permits provided we adhere to the 
requirements of section 521(a)(3) of the Act. The final rule is fully 
consistent with that section of the Act. If a State fails to adequately 
respond to a ten-day notice issued under final Sec. 843.21(a), and if 
we subsequently find under final Sec. 843.21(d) that a State permit was 
improvidently issued, we will take the appropriate enforcement actions 
under final Sec. 843.21(e).
    A commenter expressed disappointment that the proposed regulations 
would allow us to issue notices of violation whenever we disagree with 
a State's response to a ten-day notice. The commenter said the 
provision was unnecessary because the States have demonstrated an 
ability to properly administer their programs and determine what 
permittees need to do to achieve compliance. We concur that, in 
general, States have administered their programs in a responsible 
manner. However, that fact does not mean that we should not have a 
remedy for the occasional aberration or a future lapse in State 
performance.
    The commenter also said that Sec. 843.21, along with Secs. 773.20 
and 773.21, ``conflict with specific terms of the Act's carefully 
defined enforcement structure, with fundamental notions of due process 
and finality, with Congress' provision for State primacy in the 
regulation of surface coal mining and reclamation, and with the law 
disfavoring retroactive regulations.'' In substance, this commenter 
questioned our authority to take enforcement actions concerning 
improvidently issued State permits.
    In NMA v. DOI II, the U.S. Court of Appeals expressly upheld our 
authority to take remedial action for improvidently issued State 
permits under the express authority of section 201 of the Act, as long 
as we do so in accordance with the specific procedures of section 521. 
Id. at 9-10. This final rule fully complies with that decision.

Z. Section 843.24--Oversight of State Permitting Decisions With Respect 
to Ownership or Control or the Status of Violations

    We proposed to remove previous Sec. 843.24 from our regulations. 
Previous Sec. 843.24 provided for the oversight of State permitting 
decisions with respect to ownership or control or the status of 
violations. In this final rule, we are removing previous Sec. 843.24.

[[Page 79655]]

    A commenter said the absence of previous Sec. 843.24 would result 
in oversight teams needing more guidance on ownership and control 
issues. Another commenter said that OSM cannot rely upon Sec. 843.21 to 
satisfy the oversight obligations under previous Sec. 843.24(b).
    We determined that final Sec. 843.21, coupled with general 
oversight procedures, are sufficient to allow us to satisfy our 
oversight obligations with regard to improvidently issued State 
permits. Performance agreements between OSM and State regulatory 
authorities will address any concerns in the actual oversight 
procedures. The comments on this section did not persuade us to change 
our proposal to remove Sec. 843.24 from our regulations.

AA. Part 846--Alternative Enforcement

    The provisions we adopt from proposed part 846 are found in final 
part 847.
    We proposed to revise part 846 by adding provisions to provide 
regulatory codification of certain statutory enforcement provisions 
that we refer to as alternative enforcement actions.
    In this final rule, we are not adopting part 846 as it was 
proposed. Instead, we will retain the existing provisions in 30 CFR 
843.13 for the suspension or revocation of permits for a pattern of 
violations and the existing provisions in part 846 for individual civil 
penalties. In addition, we are adopting part 847 to provide for 
criminal penalties and civil actions for relief under the authority of 
sections 518(e), 518(f), and 521(c) of Act, 30 U.S.C. 1268(e) and (f) 
and 1271(c). The final provisions largely track the statutory 
provisions they implement. We will take these actions when primary 
enforcement mechanisms do not result in the abatement of a violation.
    Final Sec. 847.1 states that part 847 governs the use of measures 
provided in sections 518(e), 518(g), and 521(c) of the Act for criminal 
penalties and civil actions to compel compliance with provisions of the 
Act.
    Final Sec. 847.2 provides that: (1) Whenever a court of competent 
jurisdiction enters a judgment against or convicts a person under these 
provisions, we will update AVS to reflect the judgment or conviction; 
(2) the existence of a performance bond or bond forfeiture cannot be 
used as the sole basis for determining that an alternative enforcement 
action is unwarranted; (3) each State regulatory program must contain 
provisions for civil actions and criminal penalties that are no less 
stringent than those in part 847 and include the same or similar 
procedural requirements; and (4) nothing in this part eliminates or 
limits any additional enforcement rights or procedures available under 
Federal or State law.
    The provision concerning performance bonds and bond forfeitures is 
derived from proposed Sec. 773.22(d). A commenter objected to that 
proposed rule, which would have provided, in part, that the existence 
of a performance bond cannot be used as the sole basis for a regulatory 
authority's determination that alternative enforcement action is not 
warranted. The commenter asserted that in some situations, the 
existence of the bond is, in fact, the sole basis for determining that 
alternative enforcement action is not warranted and that OSM should be 
sensitive to actual practice and procedure at the State level. We 
disagree. Bond forfeiture is not an enforcement action. In addition, 
bond forfeiture proceeds may be insufficient to reclaim the site or 
correct all violations. In these situations, the alternative 
enforcement actions described in part 847 may assist in achieving 
complete reclamation and full compliance.
    Final Sec. 847.11 implements the criminal penalty provisions of 
sections 518(e) and 518(g) of the Act. It provides that a regulatory 
authority will request pursuit of criminal penalties under sections 
518(e) and 518(g) of the Act against any person who: (1) Willfully and 
knowingly violates a permit condition; (2) willfully and knowingly 
fails or refuses to comply with any order issued under section 521 or 
526 of the Act, or any order incorporated into a final decision issued 
by the Secretary, except for those specifically excluded under section 
518(e) of the Act; or (3) knowingly makes any false statement, 
representation, or certification, or knowingly fails to make any 
statement, representation, or certification in any application, record, 
report, plan, or other document filed or required to be maintained 
under the regulatory program or any order or decision issued by the 
Secretary under the Act. In final Sec. 847.11(a), we modified proposed 
Sec. 846.11(a) to more closely track sections 518(e) and 518(g) of the 
Act. We are not adopting proposed Sec. 846.11(c), which merely 
reiterated the penalties specified in sections 518(e) and (g) of the 
Act, 30 U.S.C. 1268(e) and (g), and is thus unnecessary since final 
Sec. 847.11 already contains a reference to those provisions of the 
Act.
    Final Sec. 847.16 implements the civil action provisions at section 
521(c) of the Act. Final Sec. 847.16(a) requires that, under section 
521(c) of the Act, 30 U.S.C. 1271(c), the regulatory authority request 
the Attorney General to institute a civil action for relief whenever a 
permittee or an agent of the permittee meets the criteria specified in 
final Secs. 847.16(a)(1) through (a)(6). Final Sec. 847.16(a) is 
derived from proposed Sec. 846.16(a).
    Final Sec. 847.16(a)(1) requires that a regulatory authority 
request the Attorney General to institute a civil action for relief 
whenever a permittee or an agent of the permittee violates or fails or 
refuses to comply with any order or decision issued by the regulatory 
authority. Final Sec. 847.11(a)(1) is derived from proposed 
Sec. 846.16(a)(1)(i).
    Final Sec. 847.16(a)(2) requires that a regulatory authority 
request the Attorney General to institute a civil action for relief 
whenever a permittee or an agent of the permittee interferes with, 
hinders, or delays the regulatory authority in carrying out the 
provisions of the Act or its implementing regulations. Final 
Sec. 847.16(a)(2) is derived from proposed Sec. 846.16(a)(1)(ii).
    Final Sec. 847.16(a)(3) requires that a regulatory authority 
request the Attorney General to institute civil action for relief 
whenever a permittee or an agent of the permittee refuses to admit the 
regulatory authority's authorized representative onto the site of a 
surface coal mining and reclamation operation. Final Sec. 847.16(a)(3) 
is derived from proposed Sec. 846.16(a)(1)(iii).
    Final Sec. 847.16(a)(4) requires that a regulatory authority 
request the Attorney General to institute civil action for relief 
whenever a permittee or an agent of the permittee refuses to allow 
authorized representatives to inspect a surface coal mining and 
reclamation operation. Final Sec. 847.16(a)(4) is derived from proposed 
Sec. 846.16(a)(1)(iv).
    Final Sec. 847.16(a)(5) requires that a regulatory authority 
request the Attorney General to institute civil action for relief 
whenever a permittee or an agent of the permittee refuses to furnish 
any information or report that the regulatory authority requests under 
the Act or regulatory program. Final Sec. 847.16(a)(5) is derived from 
proposed Sec. 846.16(a)(1)(v).
    Final Sec. 847.16(a)(6) requires that a regulatory authority 
request the Attorney General to institute civil action for relief 
whenever a permittee or an agent of the permittee refuses to allow 
access to, or copying of, those records that the regulatory authority 
determine necessary to carry out the provisions of the Act and its 
implementing regulations. Final Sec. 847.16(a)(6) is derived from 
proposed Sec. 846.16(a)(1)(vi).
    Final Sec. 847.16(b) provides that a civil action for relief 
includes a permanent or

[[Page 79656]]

temporary injunction, restraining order, or any other appropriate order 
by a district court of the United States for the district in which the 
surface coal mining and reclamation operation is located or in which a 
permittee has its principal office. Final Sec. 847.16(b) is derived 
from proposed Sec. 846.16(a)(2).
    Final Sec. 847.16(c) provides that temporary restraining orders 
will be issued in accordance with Rule 65 of the Federal Rules of Civil 
Procedure, as amended. Final Sec. 847.16(c) is derived from proposed 
Sec. 846.16(b).
    Final Sec. 847.16(d) provides that any relief the court grants to 
enforce an order under final Sec. 847.16(b) will continue in effect 
until completion or final termination of all proceedings for review of 
that order under the Act or its implementing regulations unless, 
beforehand, the district court granting such relief sets aside or 
modifies the order. Final Sec. 847.16(d) is derived from proposed 
Sec. 846.16(c).
General Comments on Proposed Part 846
    A commenter said that, as recently as 1988, OSM expressly disavowed 
any connection between the ownership and control provisions in section 
510(c) of the Act and the Act's enforcement provisions. The commenter 
said that in the 1988 individual civil penalty rule, the agency stated 
that the ownership or control rule does not inform the scope or 
circumstances of liability for a corporate officer, director, or agent 
under SMCRA. The commenter further claimed that the proposed rule 
imposes a responsibility on officers, directors, or agents to know all 
the facts arising in day-to-day operations.
    This final rule does not purport any connection between the permit 
eligibility provision in section 510(c) of SMCRA and any enforcement 
provision, including those we call alternative enforcement. While an 
individual may incur a personal liability or sanction under the 
enforcement provisions in sections 518 and 521 of the Act, the permit 
eligibility requirement under section 510(c), and our definitions of 
ownership and control, do not impose any such personal liability. 
Further, this final rule does not impose any responsibility on any 
individual to know all of the facts arising from day-to-day operations. 
However, as we said in the 1988 individual civil penalty rule, any 
individual should exercise reasonable care in his or her position to 
acquire knowledge of the functions attendant to his or her position. 53 
FR 3666 (February 8, 1988).
    Several commenters asked us to clarify when alternative enforcement 
action is not warranted. Sections 847.11 and 847.16 of the final rule 
identify those circumstances under which the regulatory authority must 
seek criminal penalties or civil actions for relief. Otherwise, the 
regulatory authority must make a determination on a case-specific 
basis.
    A commenter asserted that the language in the Act for criminal 
sanctions and civil actions for relief is sufficient without repeating 
the provisions in the regulations. We do not agree. Final Secs. 847.11 
and 847.16 flesh out the statutory requirements. Incorporation of the 
statutory sanctions into our regulations also emphasizes their 
availability.
    A commenter said that section 518 of SMCRA expressly limits 
enforcement to permittees and that the proposed rule improperly 
attempts to punish operators, who are not permittees. The commenter is 
mistaken. Section 518(e) applies to ``any person,'' while section 
518(g) applies to ``whoever'' knowingly takes or fails to take certain 
actions.
    A commenter said that the proposed rule ignores the existing 
mandate to employ alternative enforcement actions. There is no such 
mandate, except in the context of 30 CFR 845.15(b)(2), which applies 
only to certain cessation orders and is not germane to this rulemaking. 
Furthermore, the final rule does require the use of certain alternative 
enforcement actions in specified circumstances.
    A commenter suggested the term ``alternative enforcement'' should 
be changed to ``additional enforcement'' to clarify that the provisions 
involve additional steps a regulatory authority may take to make a 
violator comply with the Act.
    We do not believe adopting the commenter's suggestion is necessary. 
Alternative enforcement actions are, in fact, additional enforcement 
mechanisms authorized under the Act to compel compliance with the Act 
when primary enforcement mechanisms do not result in the abatement or 
correction of a violation. We have used the term ``alternative 
enforcement'' in this manner since the early days of the regulatory 
program without creating confusion. The same commenter expressed 
concern that States sometimes use alternative enforcement instead of 
``regular enforcement.'' We stress that the provisions for alternative 
enforcement are to be used, as appropriate, in conjunction with what 
the commenter calls ``regular enforcement.''
Specific Comments on Proposed Part 846
    Following are descriptions of the proposed provisions, how the 
proposed provisions are disposed of in this final rule, and how we 
addressed the comments we received on them.
Sec. 846.1--Scope
    We proposed to revise the scope of part 846 to conform to the 
proposed provisions for alternative enforcement. Since we did not adopt 
the revisions proposed in part 846, we also did not adopt the proposal 
to revise the scope at Sec. 846.1. We received no comments on the 
proposed revision.
Sec. 846.5--Definitions
    Unwarranted failure to comply. We proposed to revise the definition 
of unwarranted failure to comply and move the definition from 
Sec. 843.5 to Sec. 846.5. Since we are not revising existing 
Sec. 843.13, the existing definition for unwarranted failure to comply 
remains unchanged at 30 CFR 843.5.
    Violation, failure, or refusal. We proposed to retain the existing 
definition of violation, failure, or refusal in part 846. As part of 
our effort to consolidate definitions, we are instead moving the 
definition of violation, failure, or refusal in modified form to 
Sec. 701.5.
Proposed Sec. 846.11--Criminal Penalties
    We proposed to add new regulations to provide for criminal 
penalties under the authority of sections 518(e) and 518(g) of the Act. 
We proposed to incorporate these provisions in part 846. In this final 
rule, we are adopting provisions for criminal penalties at Sec. 847.11.
    A commenter asserted that the proposed rule would give both OSM and 
primacy States the option of not pursuing criminal conviction for false 
statements, including those in permit applications, and the option of 
not penalizing mine operators who do not abate violations.
    The final rule does not provide the regulatory authority with the 
option not to pursue abatement or correction of a violation. 
Furthermore, under final Sec. 847.11(c), a regulatory authority must 
request that the Attorney General pursue criminal penalties against any 
person who knowingly makes a false statement, representation, or 
certification, or who knowingly fails to make any statement, 
representation, or certification in any application, record, report, 
plan, or other document filed or required to be maintained under the 
regulatory program or any order or decision issued by the Secretary 
under

[[Page 79657]]

the Act. However, the Attorney General has prosecutorial discretion in 
deciding whether to act on those requests. We have no authority under 
SMCRA to limit that discretion.
    A commenter claimed the proposed provisions for criminal penalties 
improperly merged paragraphs (e), (f), and (g) of section 518 into one 
regulatory provision. Final Sec. 847.11 implements only sections 518(e) 
and (g) of SMCRA. Neither SMCRA nor any other law prohibits us from 
addressing these sections of the Act in the same section of our 
regulations. The regulations implementing section 518(f) of SMCRA, 30 
U.S.C. 1268(f), appear in 30 CFR part 846.
    Commenters said the proposed Sec. 846.11 included persons not 
mentioned in the statute. Section 518(e) of the Act applies to ``any 
person'' without limitation. Nonetheless, because of our desire to more 
closely conform to the language of the Act, we are not adopting 
proposed Sec. 846.11(b), which would have more specifically identified 
the persons subject to criminal penalties.
    Several commenters cited proposed Sec. 846.11 as proof that ``verbs 
other than `shall' '' negate the mandatory enforcement provisions of 
SMCRA. Another commenter said that section 518(g) of the Act requires 
us to pursue criminal conviction of persons making false statements and 
that the word ``may'' makes this enforcement requirement optional. The 
commenters have misinterpreted the meaning of ``shall'' in section 
518(e) and (g) of SMCRA. As used in those sections, ``shall'' does not 
require enforcement, it only specifies the punishment that applies upon 
conviction.
    Final Sec. 847.11 requires that the regulatory authority refer all 
cases meeting the criteria of section 518(e) and (g) to the Attorney 
General, who has the discretion to determine whether to act upon the 
referral.
    Several commenters said we should not use the proposed criminal 
sanctions to ``go after'' certified controllers under proposed 
Sec. 778.13(m). In substance, these commenters suggest that persons 
certified as controllers under proposed Sec. 778.13(m), which appears 
in revised form in Sec. 778.11(d) of the final rule, should not be 
targeted for pursuit of criminal penalties. We do not anticipate that 
certified controllers will be singled out for criminal prosecution. 
Each case will be decided on its own merits.
Proposed Sec. 846.12--Individual Civil Penalties
    We proposed to revise the existing provisions for individual civil 
penalties and incorporate them into a section of alternative 
enforcement provisions within part 846. We are not adopting the 
proposed revisions to part 846 in this final rule. Therefore, the 
existing provisions for individual civil penalties in part 846 remain 
unchanged.
Proposed Sec. 846.14--Suspension or Revocation of Permits: Pattern of 
Violations
    We proposed to revise Sec. 843.13, which implements section 
521(a)(4) of the Act by providing for the suspension or revocation of 
permits for a pattern of violations, and move it to Sec. 846.14. The 
proposed rule would have eliminated the restrictions on how a pattern 
of violations is determined.
    Commenters opposed the proposed revisions to existing Sec. 843.13 
because the revisions would have expanded the circumstances under which 
the regulatory authority could issue a show cause order. The commenters 
also said that violations counted for pattern purposes should be 
limited to violations that occurred at individual mining operations; 
that is, they should be permit-specific as in the existing regulations. 
The commenters also opposed allowing consideration of a controller's 
compliance history at prior operations to establish a pattern of 
violations.
    We have concluded that revision of the rules governing suspension 
or revocation of permits for a pattern of violations requires further 
study. Therefore, we are not adopting proposed Sec. 846.14. Existing 
Sec. 843.13 remains unchanged.
Proposed Sec. 846.15--Suspension or Revocation of Permits: Failure To 
Comply With a Permit Condition
    This proposed rule would have authorized suspension or revocation 
of permits for failure to comply with a permit condition imposed under 
proposed Sec. 773.18.
    Some commenters supported proposed Sec. 846.15, asserting that 
suspension or revocation of permits is a powerful but seldom used 
enforcement tool. They also claimed that the proposed rule would 
clarify that suspension or revocation of a permit may be used for 
failure to comply with any permit condition, not just those that are 
related to ownership and control. Other commenters opposed proposed 
Sec. 846.15, especially the circumstances that would prompt a 
regulatory authority to issue a show cause order for failure to comply 
with a permit condition.
    As discussed in sections VI.E. and VI.H. of this preamble, we are 
not adopting the permit conditions in proposed Sec. 773.18. 
Furthermore, we see no need to initiate permit suspension or revocation 
proceedings for an isolated failure to comply with a permit condition. 
Therefore, we are not adopting proposed Sec. 846.15.
Proposed Sec. 846.16--Civil Actions for Relief
    We proposed to add a new Sec. 846.16 to allow regulatory 
authorities to pursue civil actions for relief under the authority of 
section 521(c) of the Act. We are adopting the proposed rule in 
modified form at final Sec. 847.16. We are not adopting the provision 
that would have specified the scope of persons subject to civil 
actions. Instead, final Sec. 847.16(a) limits the scope of this rule to 
the permittee or the permittee's agent. We made this change so that the 
final rule conforms to the scope of section 521(c) of the Act.
    Several commenters said they supported the use of section 521(c) of 
SMCRA to pursue injunctions against persons acting in concert with 
entities linked to outstanding violations. Other commenters argued that 
the proposed rule improperly applied to persons not mentioned in the 
statute. Since section 521(c) applies only to the ``permittee or his 
agent,'' final Sec. 847.16(a) applies only to these persons. We are not 
adopting the more expansive provisions in proposed Sec. 846.16.
    A commenter asserted that proposed Sec. 846.16(a)(1)(v) did not 
match its preamble description. The commenter said the authority under 
which the information would be requested is more limited in the 
preamble discussion. Proposed Sec. 846.16(a)(1)(v) stated that refusal 
to furnish any information or report requested by a regulatory 
authority is cause to pursue a civil action for relief. 63 FR 70627. 
The preamble discussion of proposed Sec. 846.16(a)(1)(v) indicated that 
refusal to furnish any information or report requested by a regulatory 
authority under the provisions of the Act or its implementing 
regulations is cause to pursue a civil action for relief. 64 FR 70614. 
The difference to which the commenter refers appears to be that 
information requested under the Act and its implementing regulations is 
more limiting than any information requested by a regulatory authority. 
Since section 521(c)(E) applies to a permittee or agent who ``refuses 
to furnish any information or report requested by the Secretary in 
furtherance of this Act,'' we have revised final Sec. 847.16(a)(5) to 
apply only to refusals to furnish any information or report that the 
regulatory authority

[[Page 79658]]

requests ``under the Act or regulatory program.''
    A commenter said proposed Sec. 846.16(a)(1)(vi) is inconsistent 
with the existing regulations at 30 CFR 840.12(b) and 842.13(a)(2), 
which, the commenter claimed, authorize right of access by State and 
Federal regulatory authorities. We find no inconsistency among these 
rules. Final Sec. 847.16(a)(6) provides a means of enforcing the record 
access requirement of Secs. 840.12(b) and 842.13(a)(2) when the 
permittee refuses to grant access otherwise, i.e., when standard 
enforcement mechanisms fail.
    A commenter claimed that section 521(c)(F) of the Act applies only 
to those records required to be maintained under SMCRA. Section 
521(c)(F) applies to ``such records as the Secretary determines 
necessary in carrying out the provisions of this Act.'' Because the Act 
authorizes the adoption of State and Federal regulatory programs, the 
phrase ``the provisions of this Act'' necessarily includes regulations 
adopted pursuant to the Act. Therefore, final Sec. 847.16(a)(6) applies 
to all records that the regulatory authority determines to be 
``necessary to carry out the provisions of the Act and its implementing 
regulations.''
    Several commenters asked who the ``we'' is in proposed Sec. 846.16. 
Final Sec. 847.16(a) clarifies that ``we'' means the regulatory 
authority.
    A commenter suggested that ``will'' should be changed to ``may'' in 
proposed Sec. 846.16(a). The commenter said ``will'' makes the 
provision a mandatory action, while ``may'' is more permissive. We are 
not adopting the recommended change. The circumstances that precipitate 
a civil action for relief are very specific in the Act. If a regulatory 
authority encounters one of these circumstances, final Sec. 847.16(a) 
requires that the regulatory authority refer the case to the Attorney 
General.

BB. Miscellaneous Cross-References

    As a result of certain revisions and redesignations in this final 
rule, it was necessary to change cross-references appearing in a number 
of sections which we did not otherwise change in substantive fashion. 
For example, we changed the cross-reference in 30 CFR 874.16 from 
``Sec. 773.15(b)(1)'' to ``Secs. 773.12, 773.13, and 773.14'' to 
reflect the fact that this rule revises previous Sec. 773.15(b)(1). The 
amendatory language in this final rule identifies these cross-reference 
changes.

VII. What Effect Will This Rule Have in Federal Program States and 
on Indian Lands?

    Through cross-referencing in the respective regulatory programs, 
this final rule applies to all lands in States with Federal regulatory 
programs. States with Federal regulatory programs include Arizona, 
California, Georgia, Idaho, Massachusetts, Michigan, North Carolina, 
Oregon, Rhode Island, South Dakota, Tennessee and Washington. These 
programs are codified at 30 CFR parts 903, 905, 910, 912, 921, 922, 
933, 937, 939, 941, 942, and 947, respectively.

VIII. How Will This Rule Affect State Programs?

    We will evaluate State regulatory programs approved under 30 CFR 
part 732 and section 503 of the Act to determine whether any changes in 
these programs are necessary to maintain consistency with Federal 
requirements. If we determine that a State program provision needs to 
be amended as a result of these revisions to the Federal rules, we will 
notify the State in accordance with 30 CFR 732.17(d).
    Section 505(a) of the Act, 30 U.S.C. 1255(a), and 30 CFR 730.11(a) 
provide that SMCRA and Federal regulations adopted under SMCRA do not 
supersede any State law or regulation unless that law or regulation is 
inconsistent with the Act or the Federal regulations adopted under the 
Act. Section 505(b) of the Act and 30 CFR 730.11(b) provide that we may 
not construe existing State laws and regulations, or State laws and 
regulations adopted in the future, as inconsistent with SMCRA or the 
Federal regulations if these State laws and regulations either provide 
for more stringent land use and environmental controls and regulations 
or have no counterpart in the Act or the Federal regulations.
    Under 30 CFR 732.15(a), State programs must provide for the State 
to carry out the provisions of, and meet the purposes of, the Act and 
its implementing regulations. In addition, that rule requires that 
State laws and regulations be in accordance with the provisions of the 
Act and consistent with the Federal regulations. As defined in 30 CFR 
730.5, ``consistent with'' and ``in accordance with'' mean that the 
State laws and regulations are no less stringent than, meet the minimum 
requirements of, and include all applicable provisions of the Act. The 
definition also provides that these terms mean that the State laws and 
regulations are no less effective than the Federal regulations in 
meeting the requirements of the Act. Under 30 CFR 732.17(e)(1), we may 
require a State program amendment if, as a result of changes in SMCRA 
or the Federal regulations, the approved State program no longer meets 
the requirements of SMCRA or the Federal regulations.
    Among other things, this rule provides that State regulatory 
authorities must: (1) use the AVS in determining permit eligibility; 
(2) enter application, permit, and State violation information into 
AVS; (3) update and maintain permit and violation information in AVS; 
and (4) evaluate unabated and uncorrected violations to determine if 
alternative enforcement actions should be taken to compel the abatement 
or correction of such violations.
    Several commenters said that the proposed rule would enhance and 
expand State roles. They thanked us for our confidence in the States' 
decision-making ability. Other commenters said that the rule would tax 
State resources and that our oversight of permitting decisions and 
State administrative procedures will likely increase. These commenters 
said that the rule would require additional personnel, computer 
hardware, and legal resources to support information collection, 
tracking and analysis, investigation, alternative enforcement, and 
permit eligibility determinations. Several commenters said that OSM 
should be ready to supplement State funding and/or provide technical 
assistance.
    We recognize that these regulations will result in some changes in 
how we and the States operate. We agree there could be additional 
demands on Federal and State resources. As States adopt counterparts to 
our regulatory changes, we will provide them with technical assistance 
in implementing these changes, if requested. In the interim, we plan to 
hold various events to discuss the effects of this rulemaking. We also 
plan to update the various directives, policy statements, manuals, and 
other guidance documents, as necessary, and make them available to 
State regulators.
    A commenter said that environmental groups could sue States like 
they sued OSM in the 1970s and '80s and that States want to avoid that 
possibility. The commenter expressed concern that the requirements that 
apply to regulatory authorities under the final rule might prompt 
allegations of a failure to comply with mandated duties. We have no 
reason to anticipate that these rules will generate citizen suits 
against the States. While these rules place some new requirements on 
regulatory authorities, they largely

[[Page 79659]]

codify long-standing practices in most States. However, section 520 of 
the Act does authorize such suits if the State regulatory authority 
fails to perform any nondiscretionary duty under the Act.
    Commenters asked what will become of the AVS Users Guide and the 
System Advisory Memoranda. We will continue to rely upon and maintain 
the AVS Users Guide, System Advisory Memoranda, and other similar 
documents.

IX. Procedural Determinations

A. Executive Order 12866: Regulatory Planning and Review

    This document is a significant rule and has been reviewed by the 
Office of Management and Budget (OMB) under Executive Order 12866.
    a. This rule will not have an effect of $100 million or more on the 
economy. It will not adversely affect in a material way the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or Tribal governments or communities.
    b. This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency.
    c. This rule does not alter the budgetary effects or entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients.
    d. This rule does raise legal or policy issues that have been the 
subject of extensive litigation.
    A cost benefit analysis prepared by OSM indicates that overall the 
final rule will decrease the administrative cost burden to the coal 
industry to comply with the new regulations because the majority of 
applicants will be able to certify that the information currently in 
AVS is accurate. The final rule will change requirements to allow 
applicants to reduce certain reporting burdens by making use of OSM's 
automated AVS to provide ownership, control, and other information that 
is common to all permit applications submitted by a company. OSM 
estimates that 75 percent of new permit applicants will be able to take 
advantage of this change in procedures. The estimated cost savings to 
the coal industry is approximately $397,000 per year. Estimates also 
indicated that administrative costs to the Federal government will 
increase by approximately $10,000 per year and to the State governments 
by a total of $434,000 per year. The analysis is on file in the OSM 
administrative record for this rulemaking.
    Two commenters claimed that the proposed rule qualifies as a 
significant rule under Executive Order 12866 because it raises novel 
legal and policy issues and, therefore, should be reviewed by OMB. As 
stated above, the final rule is considered significant and has been 
reviewed by OMB under Executive Order 12866.

B. Regulatory Flexibility Act

    The Department of the Interior certifies that this rule will not 
have a significant economic impact on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
This determination is based on the findings that the regulatory 
additions in the rule will not significantly change costs to industry 
or to Federal, State, or local governments. Furthermore, the rule 
produces 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.
    Under the regulations of the Small Business Administration (SBA) at 
13 CFR 121.201, the size standard for a small business in coal mining 
is 500 or fewer employees. OSM neither collects nor maintains data on 
the number of employees a coal operator and its affiliates may have. 
Data available to OSM from another Federal agency indicated that out of 
approximately 4,000 coal mining operations, all but 11 may qualify as a 
small business under the SBA regulations. Since nearly all would 
qualify as a small business, the analysis of the impacts of the rule on 
the entire coal mining industry is in effect a determination of the 
impacts the rule would have on small entities.
    OSM determined the impact of the final rule based on the estimated 
administrative costs potentially incurred by the coal industry in 
association with fulfilling the requirement to gather, organize, report 
and review the information required at the time of a permit application 
according to 30 CFR Parts 773, 774 and 778. The cost estimates are 
derived from the information collection clearance package submitted by 
OSM to OMB for the final regulation. While other costs may be incurred 
by the industry, OSM believes that these labor costs are the primary 
source of the costs of compliance with the final rule. For analytical 
purposes, OSM estimates of the number of applicants/respondents are 
based on data collected by OSM for the 1999 evaluation year.
    OSM estimates that overall the final rule will decrease the 
administrative cost burden to the industry to comply with the new 
regulations because a majority of applicants per year will be allowed 
to certify that the information currently in AVS is accurate. The 
number of applicants subject to the new regulations range in number 
from 310 per year for new permits to approximately 4000 per year for 
all permits, permit revisions, permit renewals, and transfers, 
assignments and sales of permit rights. The final rule will change 
requirements to allow applicants to reduce certain reporting burdens by 
making use of OSM's automated AVS to provide ownership, control, and 
other information that is common to all permit applications submitted 
by a company. OSM estimates that 75 percent of permit applicants will 
be able to take advantage of this change in procedures.

                               Estimated Change to Industry Costs Under Final Rule
----------------------------------------------------------------------------------------------------------------
                      Status quo prior to final regulation                               Final  regulation
----------------------------------------------------------------------------------------------------------------
                                                     Cost per         Cost to        Cost per         Cost to
                   30 CFR part                       applicant       industry        applicant       industry
----------------------------------------------------------------------------------------------------------------
773.............................................            $280         $36,250            $280         $36,250
774.............................................           1,020       1,693,200             960       1,462,800
                                                 ---------------------------------------------------------------
778.............................................           1,460         394,640           1,290         227,760
                                                 ---------------------------------------------------------------
      Total.....................................           2,760       2,124,090           2,530       1,726,810
                                                 ===============================================================
Net change......................................           final rule compared to status quo ($397,280)
                                                 ===============================================================
----------------------------------------------------------------------------------------------------------------


[[Page 79660]]

    One commenter stated that the proposed rule did not fully comply 
with the Regulatory Flexibility Act. The commenter said that OSM 
provided no facts to substantiate its statement that the rule will not 
have a significant economic impact on a substantial number of small 
entities or significantly change costs to the industry, Federal, State, 
or local governments as required by section 605(b) of the Regulatory 
Flexibility Act. The commenter also said that the rule would subject 
small entities to unlawful permit conditions and the threat of losing 
their permits and that OSM should solicit comments from small entities 
on how the proposal will affect them, as required by section 609 of the 
Regulatory Flexibility Act.
    OSM disagrees. The proposed rule was issued in compliance with the 
requirements of section 605(b) of the Regulatory Flexibility Act. The 
proposed rule contained the certification required by section 605(b) 
and a statement providing the basis for the certification. A more 
detailed statement is included above and a cost benefit analysis is on 
file in the OSM administrative record for this rulemaking. With regard 
to the requirements of section 609 of the Regulatory Flexibility Act 
that small entities have an opportunity to participate in the 
rulemaking, section 609 applies only to rules that will have a 
significant economic impact on a substantial number of small entities. 
This rule does not have such an effect. Nevertheless, OSM took several 
steps to insure public participation by all that might be affected by 
the rule, both directly and indirectly through their national trade 
association. OSM held outreach meetings with industry prior to 
publishing the proposed rule in the Federal Register, published a 
proposed rule in the Federal Register with a public comment period that 
with extensions lasted over four months, issued a press release, made 
the proposed rule available on the Internet, and met with 
representatives from the coal industry during the public comment 
period.

C. Small Business Regulatory Enforcement Fairness Act

    This rule is not a major rule under 5 U.S.C. 804(2), the Small 
Business Regulatory Enforcement Fairness Act. For the reasons stated 
above, this rule:
    a. Does not have an annual effect on the economy of $100 million or 
more.
    b. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions because the rule does not impose major 
new requirements on the coal mining industry or consumers.
    c. Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S. based enterprises to compete with foreign-based enterprises for 
the reasons stated above.

D. Unfunded Mandates Reform Act of 1995

    This rule does not impose an unfunded mandate on State, local, or 
Tribal governments or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State, 
local or Tribal governments or the private sector. A statement 
containing the information required by the Unfunded Mandates Reform Act 
(2 U.S.C. 1531, et seq.) is not required.

E. Executive Order 12630: Takings

    In accordance with Executive Order 12630, the rule does not have 
significant takings implications. This determination is based on the 
fact that the rule will not have an impact on the use or value of 
private property and so, does not result in significant costs to the 
government.

F. Executive Order 13132: Federalism

    This rule does not have Federalism implications. The rule does not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government.
    One commenter objected to OSM's statement that the rule did not 
have Federalism implications within the meaning of Executive Order 
13132. OSM has again reviewed Executive Order 13132 and the provisions 
of SMCRA and concluded that the rule does not have Federalism 
implications within the meaning of Executive Order 13132. The 
provisions of SMCRA delineate the roles of the Federal and State 
governments with regard to the regulation of surface coal mining and 
reclamation operations. One of the purposes of SMCRA is to ``establish 
a nationwide program to protect society and the environment from the 
adverse effects of surface coal mining operations.'' States are not 
required to regulate surface coal mining and reclamation operations 
under SMCRA, but they may do so if they wish and if they meet certain 
requirements. SMCRA also provides for Federal funding of 50 percent of 
the cost of administering State regulatory programs approved under 
SMCRA. Section 503(a)(1) of SMCRA requires that State laws regulating 
surface coal mining and reclamation operations be ``in accordance 
with'' the requirements of SMCRA, and section 503(a)(7) requires that 
State programs contain rules and regulations ``consistent with'' 
regulations issued by the Secretary pursuant to SMCRA. Further, section 
505 of SMCRA specifically provides for the preemption of State laws and 
regulations that are inconsistent with the provisions of SMCRA.

G. Executive Order 12988: Civil Justice Reform

    In accordance with Executive Order 12988, the Office of the 
Solicitor has determined that this rule (1) does not unduly burden the 
judicial system and (2) meets the requirements of sections 3(a) and 
3(b)(2) of the order. Additional remarks follow concerning individual 
elements of the Executive Order:
1. What is the preemptive effect, if any, to be given to the 
regulation?
    This regulation will 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 regulations. Any State law 
that is inconsistent with or that would preclude implementation of the 
proposed regulation would be subject to preemption under SMCRA section 
505 and implementing regulations at 30 CFR 730.11. To the extent that 
the proposed regulation 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 versus Virginia Surface Mining and 
Reclamation Ass'n, 452 U.S. 264 (1981).
2. 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.
3. 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 standards established by this rule are as clear and certain as 
practicable,

[[Page 79661]]

given the complexity of topics covered and the mandates of SMCRA.
4. What is the retroactive effect, if any, to be given to the 
regulation?
    This rule is not intended to have retroactive effect.
5. 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 challenges to 
the application of the rule, however, administrative proceedings must 
be exhausted, unless specified otherwise. See final 30 CFR 773.23(d). 
In situations involving OSM application of the rule, applicable 
administrative proceedings may be found in 43 CFR part 4. In situations 
involving state regulatory authority application of the provisions 
equivalent to those contained in this rule, applicable administrative 
procedures are set forth in the particular state program.
6. 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 
defined in the rule or set forth in 30 CFR 700.5 and 701.5.
7. 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.

H. Paperwork Reduction Act

    Under the Paperwork Reduction Act, agencies may not conduct or 
sponsor a collection of information unless the collection displays a 
currently valid OMB control number. Also, no person must respond to an 
information collection request unless the form or regulation requesting 
the information has a currently valid OMB control number. Therefore, in 
accordance with 44 U.S.C. 3501 et seq, we submitted the information 
collection and recordkeeping requirements of 30 CFR Parts 773, 774, and 
778 to OMB for review and approval. OMB subsequently approved the 
collection activities and assigned them OMB control numbers 1029-0115, 
1029-0116, and 1029-0117, which appear in Secs. 773.3, 774.9, and 
778.8, respectively.
    To obtain a copy of our information collection clearance authority, 
explanatory information and related forms, contact John A. Trelease, 
OSM's Information Collection Clearance Officer, at (202) 208-2783 or by 
e-mail at [email protected].
    One commenter stated that the proposed rule violated the Paperwork 
Reduction Act by requiring the collection of information not 
specifically required by SMCRA. OSM disagrees. Section 507(b) lists 
some of the information required in a permit application and states 
that the application shall include, ``among other things,'' 17 
enumerated items. The use of the phrase ``among other things'' clearly 
indicates that the list in section 507(b) was not intended to be all 
inclusive. Further, many of the information collection requirements 
contained in the rule have been previously litigated and the courts 
have held that the listing of information required of permit applicants 
in the Act is not exhaustive and does not preclude the Secretary from 
requiring the States to secure additional information needed to insure 
compliance with the Act.

I. National Environmental Policy Act of 1969 and Record of Decision

    OSM has prepared an environmental assessment (EA) for this rule and 
has made a finding that it would 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. section 4332(2)(C). 
The EA and finding of no significant impact are on file in the OSM 
Administrative Record for this rule.

List of Subjects

30 CFR Part 701

    Law enforcement, Surface mining, Underground mining.

30 CFR Part 724

    Administrative practice and procedure, Penalties, Surface mining, 
Underground mining.

30 CFR Part 750

    Indian-lands, Reporting and recordkeeping requirements, Surface 
mining.

30 CFR Part 773

    Administrative practice and procedure, Reporting and record keeping 
requirements, Surface mining, Underground mining.

30 CFR Part 774

    Reporting and record keeping requirements, Surface mining, 
Underground mining.

30 CFR Part 775

    Administrative practice and procedure, Surface mining, Underground 
mining.

30 CFR Part 778

    Reporting and record keeping requirements, Surface mining, 
Underground mining.

30 CFR Part 785

    Reporting and record keeping requirements, Surface mining, 
Underground mining.

30 CFR Part 795

    Grant programs-natural resources, Reporting and record keeping 
requirements, Small business, Surface mining, Technical assistance, 
Underground mining.

30 CFR Part 817

    Environmental protection, Reporting and record keeping 
requirements, Surface mining.

30 CFR Part 840

    Intergovernmental relations, Reporting and record keeping 
requirements, Surface mining, Underground mining.

30 CFR Part 842

    Law enforcement, Surface mining, Underground mining.

30 CFR Part 843

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

30 CFR Part 846

    Administrative practice and procedure, Penalties, Surface mining, 
Underground mining.

30 CFR Part 847

    Administrative practice and procedure, Law enforcement, Penalties, 
Surface mining, Underground mining.

30 CFR Part 874

    Indian-lands, Surface mining, Underground mining.

30 CFR Part 875

    Indian-lands, Surface mining, Underground mining.

[[Page 79662]]

30 CFR Part 903

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 905

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 910

    Environmental protection, Intergovernmental relations, Surface 
mining, Underground mining.

30 CFR Part 912

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 921

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 922

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 933

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 937

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 939

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 941

    Intergovernmental relations, Surface mining, Underground mining.

30 CFR Part 942

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

30 CFR part 947

    Intergovernmental relations, Surface mining, Underground mining.

    Dated: September 25, 2000.
Sylvia V. Baca,
Assistant Secretary, Land and Minerals Management.

    For the reasons discussed in the preamble, the Office of Surface 
Mining amends 30 CFR chapter VII as follows.

PART 701--PERMANENT REGULATORY PROGRAM

    1. Revise the authority citation for part 701 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


    2. Amend Sec. 701.5 as follows:
    a. Remove the definition of Willful violation.
    b. In the definition of Unanticipated event or condition revise the 
reference from ``Sec. 773.15'' to read ``Sec. 773.13.''
    c. Add the following definitions in alphabetical order to read as 
set forth below:


Sec. 701.5  Definitions.

* * * * *
    Applicant/Violator System or AVS means an automated information 
system of applicant, permittee, operator, violation and related data 
OSM maintains to assist in implementing the Act.
* * * * *
    Control or controller, when used in parts 773, 774, and 778 and 
Sec. 843.21 of this chapter, refers to or means--
    (1) A permittee of a surface coal mining operation;
    (2) An operator of a surface coal mining operation;
    (3) A general partner in a partnership;
    (4) A person who has the ability to, directly or indirectly, commit 
the financial or real property assets or working resources of an 
applicant, a permittee, or an operator; or
    (5) Any other person who has the ability, alone or in concert with 
others, to determine, indirectly or directly, the manner in which a 
surface coal mining operation is conducted. Examples of persons who 
may, but do not necessarily, meet this criterion include--
    (i) The president, an officer, a director (or a person performing 
functions similar to a director), or an agent of an entity;
    (ii) A partner in a partnership, or a participant, member, or 
manager of a limited liability company;
    (iii) A person who owns between 10 and 50 percent of the voting 
securities or other forms of ownership of an entity, depending upon the 
relative percentage of ownership compared to the percentage of 
ownership by other persons, whether a person is the greatest single 
owner, or whether there is an opposing voting bloc of greater 
ownership;
    (iv) An entity with officers or directors in common with another 
entity, depending upon the extent of overlap;
    (v) A person who owns or controls the coal mined or to be mined by 
another person through lease, assignment, or other agreement and who 
also has the right to receive or direct delivery of the coal after 
mining; and
    (vi) A person who contributes capital or other working resources 
under conditions that allow that person to substantially influence the 
manner in which a surface coal mining operation is or will be 
conducted. Relevant contributions of capital or working resources 
include, but are not limited to--
    (A) Providing mining equipment in exchange for the coal to be 
extracted;
    (B) Providing the capital necessary to conduct a surface coal 
mining operation when that person also directs the disposition of the 
coal; or
    (C) Personally guaranteeing the reclamation bond in anticipation of 
a future profit or loss from a surface coal mining operation.
* * * * *
    Knowing or knowingly means that a person who authorized, ordered, 
or carried out an act or omission knew or had reason to know that the 
act or omission would result in either a violation or a failure to 
abate or correct a violation.
* * * * *
    Own, owner, or ownership, as used in parts 773, 774, and 778 and 
Sec. 843.21 of this chapter (except when used in the context of 
ownership of real property), means being a sole proprietor or 
possessing or controlling in excess of 50 percent of the voting 
securities or other instruments of ownership of an entity.
* * * * *
    Violation, when used in the context of the permit application 
information or permit eligibility requirements of sections 507 and 
510(c) of the Act and related regulations, means--
    (1) A failure to comply with an applicable provision of a Federal 
or State law or regulation pertaining to air or water environmental 
protection, as evidenced by a written notification from a governmental 
entity to the responsible person; or
    (2) A noncompliance for which OSM has provided one or more of the 
following types of notice or a State regulatory authority has provided 
equivalent notice under corresponding provisions of a State regulatory 
program--
    (i) A notice of violation under Sec. 843.12 of this chapter.
    (ii) A cessation order under Sec. 843.11 of this chapter.
    (iii) A final order, bill, or demand letter pertaining to a 
delinquent civil penalty assessed under part 845 or 846 of this 
chapter.
    (iv) A bill or demand letter pertaining to delinquent reclamation 
fees owed under part 870 of this chapter.
    (v) A notice of bond forfeiture under Sec. 800.50 of this chapter 
when--
    (A) One or more violations upon which the forfeiture was based have 
not been abated or corrected;
    (B) The amount forfeited and collected is insufficient for full

[[Page 79663]]

reclamation under Sec. 800.50(d)(1) of this chapter, the regulatory 
authority orders reimbursement for additional reclamation costs, and 
the person has not complied with the reimbursement order; or
    (C) The site is covered by an alternative bonding system approved 
under Sec. 800.11(e) of this chapter, that system requires 
reimbursement of any reclamation costs incurred by the system above 
those covered by any site-specific bond, and the person has not 
complied with the reimbursement requirement and paid any associated 
penalties.
    Violation, failure or refusal, for purposes of parts 724 and 846 of 
this chapter, means--
    (1) A failure to comply with a condition of a Federally-issued 
permit or of any other permit that OSM is directly enforcing under 
section 502 or 521 of the Act or the regulations implementing those 
sections; or
    (2) A failure or refusal to comply with any order issued under 
section 521 of the Act, or any order incorporated in a final decision 
issued by the Secretary under the Act, except an order incorporated in 
a decision issued under section 518(b) or section 703 of the Act.
    Violation notice means any written notification from a regulatory 
authority or other governmental entity, as specified in the definition 
of violation in this section.
* * * * *
    Willful or willfully means that a person who authorized, ordered or 
carried out an act or omission that resulted in either a violation or 
the failure to abate or correct a violation acted--
    (1) Intentionally, voluntarily, or consciously; and
    (2) With intentional disregard or plain indifference to legal 
requirements.


Sec. 701.11  [Amended]

    3. Revise the reference in the second sentence of Sec. 701.11(a) 
from ``30 CFR 773.11(b)'' to read ``Sec. 773.4(b) of this chapter.''

PART 724--INDIVIDUAL CIVIL PENALTIES

    4. Revise the authority citation for part 724 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 724.5  [Removed]

    5. Remove Sec. 724.5.

PART 750--REQUIREMENTS FOR SURFACE COAL MINING AND RECLAMATION 
OPERATIONS ON INDIAN LANDS

    6. Revise the authority citation for part 750 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


    7. Revise Sec. 750.12(c)(2)(ii) to read as follows:


Sec. 750.12  Permit applications.

* * * * *
    (c) * * *
    (2) * * *
    (ii) Sections 773.4, 773.15(c), 777.17;
* * * * *

PART 773--REQUIREMENTS FOR PERMITS AND PERMIT PROCESSING

    8. Revise the authority citation for part 773 to read as follows:

    Authority: 30 U.S.C. 1201 et seq., 16 U.S.C. 470 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., and 16 U.S.C. 1531 et seq.


    9. Remove the following sections and paragraphs:
    a. Sec. 773.5
    b. Sec. 773.15(a) introductory heading
    c. Sec. 773.15(b)
    d. Sec. 773.15(c)(1)
    e. Sec. 773.15(e)
    f. Sec. 773.17(h)
    g. Sec. 773.20
    h. Sec. 773.24

    10. Redesignate sections and paragraphs as indicated in the 
following table:

------------------------------------------------------------------------
                  Section                       is redesignated as...
------------------------------------------------------------------------
773.10....................................  773.3
773.11....................................  773.4
773.12....................................  773.5
773.13....................................  773.6
773.15, section heading...................  773.7
773.15(a)(1)..............................  773.7(a)
773.15(a)(2)..............................  773.7(b)
773.15(c).................................  773.15
773.15(c)(2)..............................  773.15(b)
773.15(c)(3)..............................  773.15(c)
773.15(c)(3)(i)...........................  773.15(c)(1)
773.15(c)(3)(ii)..........................  773.15(c)(2)
773.15(c)(4)..............................  773.15(d)
773.15(c)(5)..............................  773.15(e)
773.15(c)(6)..............................  773.15(f)
773.15(c)(7)..............................  773.15(g)
773.15(c)(8)..............................  773.15(h)
773.15(c)(9)..............................  773.15(i)
773.15(c)(10).............................  773.15(j)
773.15(c)(11).............................  773.15(k)
773.15(c)(12).............................  773.15(l)
773.15(c)(13).............................  773.15(m)
773.15(d).................................  773.16
------------------------------------------------------------------------


    11. Revise Sec. 773.3 to reads as follows:


Sec. 773.3  Information collection.

    (a) Under the Paperwork Reduction Act, the Office of Management and 
Budget (OMB) has approved the information collection requirements of 
this part. Regulatory authorities will use this information in 
processing surface coal mining permit applications. Persons intending 
to conduct such operations must respond to obtain a benefit. A Federal 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless it displays a currently 
valid OMB control number. The OMB clearance number for this part is 
1029-0115.
    (b) We estimate that the public reporting burden for this part will 
average 36 hours per response, including time spent reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden estimate 
or any other aspect of these information collection requirements, 
including suggestions for reducing the burden, to the Office of Surface 
Mining Reclamation and Enforcement, Information Collection Clearance 
Officer, Room 210, 1951 Constitution Avenue, NW, Washington, DC 20240. 
Please refer to OMB Control Number 1029-0115 in any correspondence.


Sec. 773.6  [Amended]

    12. Revise the reference in newly designated Sec. 773.5(a)(3)(ii) 
from ``Sec. 773.12'' to read ``Sec. 773.5.''

    13. Add new Secs. 773.8, 773.9, 773.10, 773.11, 773.12, 773.13, 
773.14, and paragraphs 773.15(a) and 773.15(n) to read as follows:


Sec. 773.8  General provisions for review of permit application 
information and entry of information into AVS.

    (a) Based on an administratively complete application, we, the 
regulatory authority, must undertake the reviews required under 
Secs. 773.9 through 773.11 of this part.
    (b) We will enter into AVS--
    (1) The ownership and control information you submit under 
Secs. 778.11 and 778.12(c)of this subchapter.
    (2) The information you submit under Sec. 778.14 of this subchapter 
pertaining to violations which are unabated or uncorrected after the 
abatement or correction period has expired.
    (c) We must update the information referred to in paragraph (b) of 
this section in AVS upon our verification of any additional information 
submitted or discovered during our permit application review.

[[Page 79664]]

Sec. 773.9  Review of applicant, operator, and ownership and control 
information.

    (a) We, the regulatory authority, will rely upon the applicant, 
operator, and ownership and control information that you, the 
applicant, submit under Sec. 778.11 of this subchapter, information 
from AVS, and any other available information, to review your and your 
operator's business structure and ownership or control relationships.
    (b) We must conduct the review required under paragraph (a) of this 
section before making a permit eligibility determination under 
Sec. 773.12 of this part.


Sec. 773.10  Review of permit history.

    (a) We, the regulatory authority, will rely upon the permit history 
information you, the applicant, submit under Sec. 778.12 of this 
subchapter, information from AVS, and any other available information 
to review your and your operator's permit histories. We must conduct 
this review before making a permit eligibility determination under 
Sec. 773.12 of this part.
    (b) We will also determine if you, your operator, or any of your 
controllers disclosed under Secs. 778.11(c)(5) and 778.11(d) of this 
subchapter have previous mining experience.
    (c) If you, your operator, your controllers, or your operator's 
controllers do not have any previous mining experience, we may conduct 
additional reviews under Sec. 774.11(f) of this subchapter. The purpose 
of this review will be to determine if someone else with mining 
experience controls the mining operation and was not disclosed under 
Sec. 778.11(c)(5) of this subchapter.


Sec. 773.11  Review of compliance history.

    (a) We, the regulatory authority, will rely upon the violation 
information supplied by you, the applicant, under Sec. 778.14 of this 
subchapter, a report from AVS, and any other available information to 
review histories of compliance with the Act or the applicable State 
regulatory program, and any other applicable air or water quality laws, 
for--
    (1) You;
    (2) Your operator;
    (3) Operations you own or control; and
    (4) Operations your operator owns or controls.
    (b) We must conduct the review required under paragraph (a) of this 
section before making a permit eligibility determination under 
Sec. 773.12 of this part.


Sec. 773.12  Permit eligibility determination.

    Based on the reviews required under Secs. 773.9 through 773.11 of 
this part, we, the regulatory authority, will determine whether you, 
the applicant, are eligible for a permit under section 510(c) of the 
Act.
    (a) Except as provided in Secs. 773.13 and 773.14 of this part, you 
are not eligible for a permit if we find that any surface coal mining 
operation that--
    (1) You directly own or control has an unabated or uncorrected 
violation;
    (2) You or your operator indirectly own or control, regardless of 
when the ownership or control began, has an unabated or uncorrected 
violation cited on or after November 2, 1988; or
    (3) You or your operator indirectly own or control has an unabated 
or uncorrected violation, regardless of the date the violation was 
cited, and your ownership or control was established on or after 
November 2, 1988.
    (b) You are eligible to receive a permit under section 510(c) of 
the Act if any surface coal mining operation you or your operator 
indirectly own or control has an unabated or uncorrected violation and 
both the violation and your assumption of ownership or control occurred 
before November 2, 1988. However, you are not eligible to receive a 
permit if there was an established legal basis, independent of 
authority under section 510(c) of the Act, to deny the permit at the 
time you or your operator assumed indirect ownership or control or at 
the time the violation was cited, whichever is earlier.
    (c) We will not issue you a permit if you or your operator are 
permanently ineligible to receive a permit under Sec. 774.11(c) of this 
subchapter.
    (d) After we approve your permit under Sec. 773.15 of this part, we 
will not issue the permit until you comply with the information update 
and certification requirement of Sec. 778.9(d) of this subchapter. 
After you complete that requirement, we will again request a compliance 
history report from AVS to determine if there are any unabated or 
uncorrected violations which affect your permit eligibility under 
paragraphs (a) and (b) of this section. We will request this report no 
more than five business days before permit issuance under Sec. 773.19 
of this part.
    (e) If you are ineligible for a permit under this section, we will 
send you written notification of our decision. The notice will tell you 
why you are ineligible and include notice of your appeal rights under 
part 775 of this subchapter and 43 CFR 4.1360 through 4.1369.


Sec. 773.13  Unanticipated events or conditions at remining sites.

    (a) You, the applicant, are eligible for a permit under Sec. 773.12 
if an unabated violation--
    (1) Occurred after October 24, 1992; and
    (2) Resulted from an unanticipated event or condition at a surface 
coal mining and reclamation operation on lands that are eligible for 
remining under a permit that was--
    (i) Issued before September 30, 2004, including subsequent 
renewals; and
    (ii) Held by the person applying for the new permit.
    (b) For permits issued under Sec. 785.25 of this subchapter, an 
event or condition is presumed to be unanticipated for the purpose of 
this section if it--
    (1) Arose after permit issuance;
    (2) Was related to prior mining; and
    (3) Was not identified in the permit application.


Sec. 773.14  Eligibility for provisionally issued permits.

    (a) This section applies to you if you are an applicant who owns or 
controls a surface coal mining and reclamation operation with--
    (1) A notice of violation issued under Sec. 843.12 of this chapter 
or the State regulatory program equivalent for which the abatement 
period has not yet expired; or
    (2) A violation that is unabated or uncorrected beyond the 
abatement or correction period.
    (b) We, the regulatory authority, may find you eligible for a 
provisionally issued permit if you demonstrate that one or more of the 
following circumstances exists with respect to all violations listed in 
paragraph (a) of this section--
    (1) For violations meeting the criteria of paragraph (a)(1) of this 
section, you certify that the violation is being abated to the 
satisfaction of the regulatory authority with jurisdiction over the 
violation, and we have no evidence to the contrary.
    (2) As applicable, you, your operator, and operations that you or 
your operator own or control are in compliance with the terms of any 
abatement plan (or, for delinquent fees or penalties, a payment 
schedule) approved by the agency with jurisdiction over the violation.
    (3) You are pursuing a good faith--
    (i) Challenge to all pertinent ownership or control listings or 
findings under Secs. 773.25 through 773.27 of this part; or
    (ii) Administrative or judicial appeal of all pertinent ownership 
or control listings or findings, unless there is an initial judicial 
decision affirming the

[[Page 79665]]

listing or finding and that decision remains in force.
    (4) The violation is the subject of a good faith administrative or 
judicial appeal contesting the validity of the violation, unless there 
is an initial judicial decision affirming the violation and that 
decision remains in force.
    (c) We will consider a provisionally issued permit to be 
improvidently issued, and we must immediately initiate procedures under 
Secs. 773.22 and 773.23 of this part to suspend or rescind that permit, 
if--
    (1) Violations included in paragraph (b)(1) of this section are not 
abated within the specified abatement period;
    (2) You, your operator, or operations that you or your operator own 
or control do not comply with the terms of an abatement plan or payment 
schedule mentioned in paragraph (b)(2) of this section;
    (3) In the absence of a request for judicial review, the 
disposition of a challenge and any subsequent administrative review 
referenced in paragraph (b)(3) or (4) of this section affirms the 
validity of the violation or the ownership or control listing or 
finding; or
    (4) The initial judicial review decision referenced in paragraph 
(b)(3)(ii) or (4) of this section affirms the validity of the violation 
or the ownership or control listing or finding.


Sec. 773.15  Written findings for permit application approval.

* * * * *
    (a) The application is accurate and complete and the applicant has 
complied with all requirements of the Act and the regulatory program.
* * * * *
    (n) The applicant is eligible to receive a permit, based on the 
reviews under Secs. 773.7 through 773.14 of this part.

    14. Revise Secs. 773.21 through 773.23 to read as follows:


Sec. 773.21  Initial review and finding requirements for improvidently 
issued permits.

    (a) If we, the regulatory authority, have reason to believe that we 
improvidently issued a permit to you, the permittee, we must review the 
circumstances under which the permit was issued. We will make a 
preliminary finding that your permit was improvidently issued if, under 
the permit eligibility criteria of the applicable regulations 
implementing section 510(c) of the Act in effect at the time of permit 
issuance, your permit should not have been issued because you or your 
operator owned or controlled a surface coal mining and reclamation 
operation with an unabated or uncorrected violation.
    (b) We will make a finding under paragraph (a) of this section only 
if you or your operator--
    (1) Continue to own or control the operation with the unabated or 
uncorrected violation;
    (2) The violation remains unabated or uncorrected; and
    (3) The violation would cause you to be ineligible under the permit 
eligibility criteria in our current regulations.
    (c) When we make a preliminary finding under paragraph (a) of this 
section, we must--
    (1) Serve you with a written notice of the preliminary finding; and
    (2) Post the notice at our office closest to the permit area and on 
the AVS Office Internet home page (Internet address: http://www.avs.osmre.gov).
    (d) Within 30 days of receiving a notice under paragraph (c) of 
this section, you may challenge the preliminary finding by providing us 
with evidence as to why the permit was not improvidently issued under 
the criteria in paragraphs (a) and (b) of this section.
    (e) The provisions of Secs. 773.25 through 773.27 of this part 
apply when a challenge under paragraph (d) of this section concerns a 
preliminary finding under paragraphs (a) and (b)(1) of this section 
that you or your operator currently own or control, or owned or 
controlled, a surface coal mining operation.


Sec. 773.22  Notice requirements for improvidently issued permits.

    (a) We, the regulatory authority, must serve you, the permittee, 
with a written notice of proposed suspension or rescission, together 
with a statement of the reasons for the proposed suspension of 
rescission, if--
    (1) After considering any evidence submitted under Sec. 773.21(d) 
of this part, we find that a permit was improvidently issued under the 
criteria in paragraphs (a) and (b) of Sec. 773.21 of this part; or
    (2) Your permit was provisionally issued under Sec. 773.14(b) of 
this part and one or more of the conditions in Secs. 773.14(c)(1) 
through (4) exists.
    (b) If we propose to suspend your permit, we will provide 60 days 
notice.
    (c) If we propose to rescind your permit, we will provide 120 days 
notice.
    (d) We will also post the notice at our office closest to the 
permit area and on the AVS Office Internet home page (Internet address: 
http://www.avs.osmre.gov).
    (e) If you wish to appeal the notice, you must exhaust 
administrative remedies under the procedures at 43 CFR 4.1370 through 
4.1377 (when OSM is the regulatory authority) or under the State 
regulatory program equivalent (when a State is the regulatory 
authority).
    (f) After we serve you with a notice of proposed suspension or 
rescission under this section, we will take action under Sec. 773.23 of 
this part.
    (g) The regulations for service at Sec. 843.14 of this chapter, or 
the State regulatory program equivalent, will govern service under this 
section.
    (h) The times specified in paragraphs (b) and (c) of this section 
will apply unless you obtain temporary relief under the procedures at 
43 CFR 4.1376 or the State regulatory program equivalent.


Sec. 773.23  Suspension or rescission requirements for improvidently 
issued permits.

    (a) Except as provided in paragraph (b) of this section, we, the 
regulatory authority, must suspend or rescind your permit upon 
expiration of the time specified in Sec. 773.22(b) or (c) of this part 
unless you submit evidence and we find that--
    (1) The violation has been abated or corrected to the satisfaction 
of the agency with jurisdiction over the violation;
    (2) You or your operator no longer own or control the relevant 
operation;
    (3) Our finding for suspension or rescission was in error;
    (4) The violation is the subject of a good faith administrative or 
judicial appeal (unless there is an initial judicial decision affirming 
the violation, and that decision remains in force);
    (5) The violation is the subject of an abatement plan or payment 
schedule that is being met to the satisfaction of the agency with 
jurisdiction over the violation; or
    (6) You are pursuing a good faith challenge or administrative or 
judicial appeal of the relevant ownership or control listing or finding 
(unless there is an initial judicial decision affirming the listing or 
finding, and that decision remains in force).
    (b) If you have requested administrative review of a notice of 
proposed suspension or rescission under Sec. 773.22(e) of this part, we 
will not suspend or rescind your permit unless and until the Office of 
Hearings and Appeals or its State counterpart affirms our finding that 
your permit was improvidently issued.
    (c) When we suspend or rescind your permit under this section, we 
must--
    (1) Issue you a written notice requiring you to cease all surface 
coal mining operations under the permit; and

[[Page 79666]]

    (2) Post the notice at our office closest to the permit area and on 
the AVS Office Internet home page (Internet address: http://www.avs.osmre.gov).
    (d) If we suspend or rescind your permit under this section, you 
may request administrative review of the notice under the procedures at 
43 CFR 4.1370 through 4.1377 (when OSM is the regulatory authority) or 
under the State regulatory program equivalent (when a State is the 
regulatory authority). Alternatively, you may seek judicial review of 
the notice.

    15. Revise Sec. 773.25 and add Secs. 773.26 through 773.28 to read 
as follows:


Sec. 773.25  Who may challenge ownership or control listings and 
findings.

    You may challenge a listing or finding of ownership or control 
using the provisions under Secs. 773.26 and 773.27 of this part if you 
are--
    (a) Listed in a permit application or in AVS as an owner or 
controller of an entire surface coal mining operation, or any portion 
or aspect thereof;
    (b) Found to be an owner or controller of an entire surface coal 
mining operation, or any portion or aspect thereof, under Secs. 773.21 
or 774.11(f) of this subchapter; or
    (c) An applicant or permittee affected by an ownership or control 
listing or finding.


Sec. 773.26  How to challenge an ownership or control listing or 
finding.

    This section applies to you if you challenge an ownership or 
control listing or finding.
    (a) To challenge an ownership or control listing or finding, you 
must submit a written explanation of the basis for the challenge, along 
with any evidence or explanatory materials you wish to provide under 
Sec. 773.27(b) of this part, to the regulatory authority, as identified 
in the following table.

------------------------------------------------------------------------
                                          Then you must submit a written
   If the challenge concerns a . . .           explanation to . . .
------------------------------------------------------------------------
(1) Pending Federal permit application   OSM.
 or Federally issued permit.
(2) Pending State permit application or  the State regulatory authority
 State-issued permit.                     with jurisdiction over the
                                          application or permit.
------------------------------------------------------------------------

    (b) The provisions of this section and of Secs. 773.27 and 773.28 
of this part apply only to challenges to ownership or control listings 
or findings. You may not use these provisions to challenge your 
liability or responsibility under any other provision of the Act or its 
implementing regulations.
    (c) When the challenge concerns a violation under the jurisdiction 
of a different regulatory authority, the regulatory authority with 
jurisdiction over the permit application or permit must consult the 
regulatory authority with jurisdiction over the violation and the AVS 
Office to obtain additional information.
    (d) A regulatory authority responsible for deciding a challenge 
under paragraph (a) of this section may request an investigation by the 
AVS Office.


Sec. 773.27  Burden of proof for ownership or control challenges.

    This section applies to you if you challenge an ownership or 
control listing or finding.
    (a) When you challenge a listing or finding of ownership or control 
of a surface coal mining operation, you must prove by a preponderance 
of the evidence that you either--
    (1) Do not own or control the entire operation or relevant portion 
or aspect thereof; or
    (2) Did not own or control the entire operation or relevant portion 
or aspect thereof during the relevant time period.
    (b) In meeting your burden of proof, you must present reliable, 
credible, and substantial evidence and any explanatory materials to the 
regulatory authority. The materials presented in connection with your 
challenge will become part of the permit file, an investigation file, 
or another public file. If you request, we will hold as confidential 
any information you submit under this paragraph which is not required 
to be made available to the public under Sec. 842.16 of this chapter 
(when OSM is the regulatory authority) or under Sec. 840.14 of this 
chapter (when a State is the regulatory authority).
    (c) Materials you may submit in response to the requirements of 
paragraph (b) of this section include, but are not limited to--
    (1) Notarized affidavits containing specific facts concerning the 
duties that you performed for the relevant operation, the beginning and 
ending dates of your ownership or control of the operation, and the 
nature and details of any transaction creating or severing your 
ownership or control of the operation.
    (2) Certified copies of corporate minutes, stock ledgers, 
contracts, purchase and sale agreements, leases, correspondence, or 
other relevant company records.
    (3) Certified copies of documents filed with or issued by any 
State, municipal, or Federal governmental agency.
    (4) An opinion of counsel, when supported by--
    (i) Evidentiary materials;
    (ii) A statement by counsel that he or she is qualified to render 
the opinion; and
    (iii) A statement that counsel has personally and diligently 
investigated the facts of the matter.


Sec. 773.28  Written agency decision on challenges to ownership or 
control listings or findings.

    (a) Within 60 days of receipt of your challenge under 
Sec. 773.26(a) of this part, we, the regulatory authority identified 
under Sec. 773.26(a) of this part, will review and investigate the 
evidence and explanatory materials you submit and any other reasonably 
available information bearing on your challenge and issue a written 
decision. Our decision must state whether you own or control the 
relevant surface coal mining operation, or owned or controlled the 
operation, during the relevant time period.
    (b) We will promptly provide you with a copy of our decision by 
either--
    (1) Certified mail, return receipt requested; or
    (2) Any means consistent with the rules governing service of a 
summons and complaint under Rule 4 of the Federal Rules of Civil 
Procedure, or its State regulatory program counterparts.
    (c) Service of the decision on you is complete upon delivery and is 
not incomplete if you refuse to accept delivery.
    (d) We will post all decisions made under this section on AVS and 
on the AVS Office Internet home page (Internet address: http://www.avs.osmre.gov).
    (e) Any person who receives a written decision under this section, 
and who wishes to appeal that decision, must exhaust administrative 
remedies under the procedures at 43 CFR 4.1380 through 4.1387 or, when 
a State is the regulatory authority, the State regulatory program 
counterparts, before seeking judicial review.
    (f) Following our written decision or any decision by a reviewing 
administrative or judicial tribunal, we must review the information in 
AVS to determine if it is consistent with the decision. If it is not, 
we must promptly

[[Page 79667]]

revise the information in AVS to reflect the decision.

    16. Revise the heading for part 774 to read as follows:

PART 774--REVISION; RENEWAL; TRANSFER, ASSIGNMENT, OR SALE OF 
PERMIT RIGHTS; POST-PERMIT ISSUANCE REQUIREMENTS; AND OTHER ACTIONS 
BASED ON OWNERSHIP, CONTROL, AND VIOLATION INFORMATION

    17. Revise the authority citation for part 774 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


    18. Redesignate sections as indicated in the following table:

------------------------------------------------------------------------
                    Section                       is redesignated as . .
------------------------------------------------------------.-----------
774.10.........................................                   774.9
774.11.........................................                   774.10
------------------------------------------------------------------------


    19. Revise Sec. 774.1 to read as follows:


Sec. 774.1  Scope and purpose.

    This part provides requirements for revision; renewal; transfer, 
assignment, or sale of permit rights; entering and updating information 
in AVS following the issuance of a permit; post-permit issuance 
requirements for regulatory authorities and permittees; and other 
actions based on ownership, control, and violation information.

    20. Revise newly redesignated Sec. 774.9 to read as follows:


Sec. 774.9  Information collection.

    (a) Under the Paperwork Reduction Act, the Office of Management and 
Budget (OMB) has approved the information collection requirements of 
this part. Regulatory authorities will use this information to: (1) 
Determine if the applicant meets the requirements for revision; 
renewal; transfer, assignment, or sale of permit rights;
    (2) Enter and update information in AVS following the issuance of a 
permit; and
    (3) Fulfill post-permit issuance requirements and other obligations 
based on ownership, control, and violation information. Persons must 
respond to obtain a benefit. A Federal agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number. 
The OMB clearance number for this part is 1029-0116.
    (b) We estimate that the public reporting burden for this part will 
average 8 hours per response, including time spent reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden estimate 
or any other aspect of these information collection requirements, 
including suggestions for reducing the burden, to the Office of Surface 
Mining Reclamation and Enforcement, Information Collection Clearance 
Officer, Room 210, 1951 Constitution Avenue, NW, Washington, DC 20240. 
Please refer to OMB Control Number 1029-0116 in any correspondence.

    21. Add new Sec. 774.11 to read as follows:


Sec. 774.11  Post-permit issuance requirements for regulatory 
authorities and other actions based on ownership, control, and 
violation information.

    (a) For the purposes of future permit eligibility determinations 
and enforcement actions, we, the regulatory authority, must enter into 
AVS the data shown in the following table--

------------------------------------------------------------------------
    We must enter into AVS all . . .        within 30 days after . . .
------------------------------------------------------------------------
(1) Permit records.....................  the permit is issued or
                                          subsequent changes made.
(2) Unabated or uncorrected violations.  the abatement or correction
                                          period for a violation
                                          expires.
(3) Changes of ownership or control....  receiving notice of a change.
(4) Changes in violation status........  abatement, correction, or
                                          termination of a violation, or
                                          a decision from an
                                          administrative or judicial
                                          tribunal.
------------------------------------------------------------------------

    (b) If, at any time, we discover that any person owns or controls 
an operation with an unabated or uncorrected violation, we will 
determine whether enforcement action is appropriate under part 843, 846 
or 847 of this chapter. We must enter the results of each enforcement 
action, including administrative and judicial decisions, into AVS.
    (c) We must serve a preliminary finding of permanent permit 
ineligibility under section 510(c) of the Act on you, an applicant or 
operator, if the criteria in paragraphs (c)(1) and (c)(2) are met. In 
making a finding under this paragraph, we will only consider control 
relationships and violations which would make, or would have made, you 
ineligible for a permit under Secs. 773.12(a) and (b) of this 
subchapter. We must make a preliminary finding of permanent permit 
ineligibility if we find that--
    (1) You control or have controlled surface coal mining and 
reclamation operations with a demonstrated pattern of willful 
violations under section 510(c) of the Act; and
    (2) The violations are of such nature and duration with such 
resulting irreparable damage to the environment as to indicate your 
intent not to comply with the Act, its implementing regulations, the 
regulatory program, or your permit.
    (d) You may request a hearing on a preliminary finding of permanent 
permit ineligibility under 43 CFR 4.1350 through 4.1356.
    (e) We must enter the results of the finding and any hearing into 
AVS.
    (f) At any time, we may identify any other person who owns or 
controls an entire operation or any relevant portion or aspect thereof. 
If we identify such a person, we must--
    (1) Issue a written finding to the person and the applicant or 
permittee describing the nature and extent of ownership or control; and
    (2) Enter our finding under paragraph (f)(1) of this section into 
AVS; and
    (3) Require the person to--
    (i) Disclose their identity under Sec. 778.11(c)(5) of this 
subchapter; and
    (ii) Certify they are a controller under Sec. 778.11(d) of this 
subchapter, if appropriate.
    (g) A person we identify under paragraph (f)(1) of this section may 
challenge the finding using the provisions of Secs. 773.25, 773.26 and 
773.27 of this subchapter.

    22. Add Sec. 774.12 to read as follows:


Sec. 774.12  Post-permit issuance information requirements for 
permittees.

    (a) Within 30 days after the issuance of a cessation order under 
Sec. 843.11 of this chapter, or its State regulatory program 
equivalent, you, the permittee, must provide or update all the 
information required under Sec. 778.11 of this subchapter.
    (b) You do not have to submit information under paragraph (a) of 
this section if a court of competent jurisdiction grants a stay of the 
cessation order and the stay remains in effect.
    (c) Within 60 days of any addition, departure, or change in 
position of any

[[Page 79668]]

person identified in Sec. 778.11(c) or (d) of this subchapter, you must 
provide--
    (1) The information required under Sec. 778.11(e) of this 
subchapter; and
    (2) The date of any departure.


Sec. 774.13  [Amended]

    23. Amend Sec. 774.13 as follows:
    a. Revise the reference in the first sentence Sec. 774.13(b)(2) 
from ``Secs. 773.13'' to read ``Secs. 773.6.''
    b. Revise the reference in Sec. 774.13(c) from ``Sec. 773.15(c)'' 
to read ``Sec. 773.15.''


Sec. 774.15  [Amended]

    24. Revise the reference in Sec. 774.15(b)(3) from ``Secs. 773.13'' 
to read ``Secs. 773.6.''


Sec. 774.17  [Amended]

    25. Revise the reference in Sec. 774.17(d)(1) from ``Sec. 773.15(b) 
and (c)'' to read ``Secs. 773.12 and 773.15.''

PART 775--ADMINISTRATIVE AND JUDICIAL REVIEW OF DECISIONS

    26. The authority citation for part 775 continues to read as 
follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 775.11  [Amended]

    27. Revise the reference in the third sentence of Sec. 775.11(b)(1) 
from ``Sec. 773.13(c)'' to read ``Sec. 773.6(c).''

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

    28. Revise the authority citation for part 778 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.

    29. Redesignate Sec. 778.10 as Sec. 778.8 and revise it to read as 
follows:


Sec. 778.8  Information collection.

    (a) Under the Paperwork Reduction Act, the Office of Management and 
Budget (OMB) has approved the information collection requirements of 
this part. Section 507(b) of the Act provides that persons applying for 
a permit to conduct surface coal mining operations must submit to the 
regulatory authority certain information regarding the applicant and 
affiliated entities, their compliance status and history, property 
ownership and other property rights, violation information, right of 
entry, liability insurance, the status of unsuitability claims, and 
proof of publication of a newspaper notice. The regulatory authority 
uses this information to ensure that all legal, financial and 
compliance requirements are satisfied before issuance of a permit. 
Persons seeking to conduct surface coal mining operations must respond 
to obtain a benefit. A Federal agency may not conduct or sponsor, and a 
person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number. The OMB 
clearance number for this part is 1029-0117.
    (b) We estimate that the public reporting and record keeping burden 
for this part averages 27 hours per response, including time spent 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden estimate 
or any other aspect of these information collection and record keeping 
requirements, including suggestions for reducing the burden, to the 
Office of Surface Mining Reclamation and Enforcement, Information 
Collection Clearance Officer, 1951 Constitution Avenue, NW, Washington, 
DC 20240. Please refer to OMB Control Number 1029-0117 in any 
correspondence.

    30. Add Sec. 778.9 to read as follows:


Sec. 778.9  Certifying and updating existing permit application 
information.

    In this section, ``you'' means the applicant and ``we'' or ``us'' 
means the regulatory authority.
    (a) If you have previously applied for a permit and the required 
information is already in AVS, then you may update the information as 
shown in the following table.

------------------------------------------------------------------------
                If . . .                          then you . . .
------------------------------------------------------------------------
(1) All or part of the information       may certify to us by swearing
 already in AVS is accurate and           or affirming, under oath and
 complete.                                in writing, that the relevant
                                          information in AVS is
                                          accurate, complete, and up to
                                          date.
(2) Part of the information in AVS is    must submit to us the necessary
 missing or incorrect.                    information or corrections and
                                          swear or affirm, under oath
                                          and in writing, that the
                                          information you submit is
                                          accurate and complete.
(3) You can neither certify that the     must include in your permit
 data in AVS is accurate and complete     application the information
 nor make needed corrections.             required under this part.
------------------------------------------------------------------------

    (b) You must swear or affirm, under oath and in writing, that all 
information you provide in an application is accurate and complete.
    (c) We may establish a central file to house your identity 
information, rather than place duplicate information in each of your 
permit application files. We will make the information available to the 
public upon request.
    (d) After we approve an application, but before we issue a permit, 
you must update, correct, or indicate that no change has occurred in 
the information previously submitted under this section and 
Secs. 778.11 through 778.14 of this part.

    31. Add Sec. 778.11 to read as follows:


Sec. 778.11  Providing applicant, operator, and ownership and control 
information.

    (a) You, the applicant, must provide in the permit application--
    (1) A statement indicating whether you and your operator are 
corporations, partnerships, sole proprietorships, or other business 
entities;
    (2) Taxpayer identification numbers for you and your operator.
    (b) You must provide the name, address, and telephone number for--
    (1) The applicant.
    (2) Your resident agent who will accept service of process.
    (3) Any operator, if different from the applicant.
    (4) Person(s) responsible for submitting the Coal Reclamation Fee 
Report (Form OSM-1) and for remitting the reclamation fee payment to 
OSM.
    (c) For you and your operator, you must provide the information 
required by paragraph (e) of this section for every--
    (1) Officer.
    (2) Director.
    (3) Person performing a function similar to a director.
    (4) Person who owns 10 to 50 percent of the applicant or the 
operator.
    (5) Person who owns or controls the applicant and person who owns 
or controls the operator. For each owner or controller who does not own 
or control an entire surface coal mining operation, you may list the 
portion or aspect of the

[[Page 79669]]

operation which that person owns or controls.
    (d) The natural person with the greatest level of effective control 
over the entire proposed surface coal mining operation must submit a 
certification, under oath, that he or she controls the proposed surface 
coal mining operation.
    (e) You must provide the following information for each person 
listed in paragraphs (c) and (d) of this section--
    (1) The person's name, address, and telephone number.
    (2) The person's position title and relationship to you, including 
percentage of ownership and location in the organizational structure.
    (3) The date the person began functioning in that position.

    32. Add Sec. 778.12 to read as follows:


Sec. 778.12  Providing permit history information.

    (a) You, the applicant, must provide a list of all names under 
which you, your operator, your partners or principal shareholders, and 
your operator's partners or principal shareholders operate or 
previously operated a surface coal mining operation in the United 
States within the five-year period preceding the date of submission of 
the application.
    (b) For you and your operator, you must provide a list of any 
pending permit applications for surface coal mining operations filed in 
the United States. The list must identify each application by its 
application number and jurisdiction, or by other identifying 
information when necessary.
    (c) For any surface coal mining operations that you or your 
operator owned or controlled within the five-year period preceding the 
date of submission of the application, and for any surface coal mining 
operation you or your operator own or control on that date, you must 
provide the--
    (1) Permittee's and operator's name and address;
    (2) Permittee's and operator's taxpayer identification numbers;
    (3) Federal or State permit number and corresponding MSHA number;
    (4) Regulatory authority with jurisdiction over the permit; and
    (5) Permittee's and operator's relationship to the operation, 
including percentage of ownership and location in the organizational 
structure.

    33. Revise Sec. 778.13 to read as follows:


Sec. 778.13  Providing property interest information.

    You, the applicant, must provide in the permit application all of 
the following information for the property to be mined--
    (a) The name and address of--
    (1) Each legal or equitable owner(s) of record of the surface and 
mineral.
    (2) The holder(s) of record of any leasehold interest.
    (3) Any purchaser(s) of record under a real estate contract.
    (b) The name and address of each owner of record of all property 
(surface and subsurface) contiguous to any part of the proposed permit 
area.
    (c) A statement of all interests, options, or pending bids you hold 
or have made for lands contiguous to the proposed permit area. If you 
request in writing, we will hold as confidential, under 
Sec. 773.6(d)(3)(ii) of this chapter, any information you are required 
to submit under this paragraph which is not on public file under State 
law.
    (d) The Mine Safety and Health Administration (MSHA) numbers for 
all structures that require MSHA approval.

    34. Revise Sec. 778.14 to read as follows:


Sec. 778.14  Providing violation information.

    (a) You, the applicant, must state, in your permit application, 
whether you, your operator, or any subsidiary, affiliate, or entity 
which you or your operator own or control or which is under common 
control with you or your operator, has--
    (1) Had a Federal or State permit for surface coal mining 
operations suspended or revoked during the five-year period preceding 
the date of submission of the application; or
    (2) Forfeited a performance bond or similar security deposited in 
lieu of bond in connection with surface coal mining and reclamation 
operations during the five-year period preceding the date of submission 
of the application.
    (b) For each suspension, revocation, or forfeiture identified under 
paragraph (a), you must provide a brief explanation of the facts 
involved, including the--
    (1) Permit number.
    (2) Date of suspension, revocation, or forfeiture, and, when 
applicable, the amount of bond or similar security forfeited.
    (3) Regulatory authority that suspended or revoked the permit or 
forfeited the bond and the stated reasons for the action.
    (4) Current status of the permit, bond, or similar security 
involved.
    (5) Date, location, type, and current status of any administrative 
or judicial proceedings concerning the suspension, revocation, or 
forfeiture.
    (c) A list of all violation notices you or your operator received 
for any surface coal mining and reclamation operation during the three-
year period preceding the date of submission of the application. In 
addition you must submit a list of all unabated or uncorrected 
violation notices incurred in connection with any surface coal mining 
and reclamation operation that you or your operator own or control on 
that date. For each violation notice reported, you must include the 
following information, when applicable--
    (1) The permit number and associated MSHA number.
    (2) The issue date, identification number, and current status of 
the violation notice.
    (3) The name of the person to whom the violation notice was issued,
    (4) The name of the regulatory authority or agency that issued the 
violation notice.
    (5) A brief description of the violation alleged in the notice.
    (6) The date, location, type, and current status of any 
administrative or judicial proceedings concerning the violation notice.
    (7) If the abatement period for a violation in a notice of 
violation issued under Sec. 843.12 of this chapter, or its State 
regulatory program equivalent, has not expired, certification that the 
violation is being abated or corrected to the satisfaction of the 
agency with jurisdiction over the violation.
    (8) For all violations not covered by paragraph (c)(7) of this 
section, the actions taken to abate or correct the violation.


Sec. 778.21  [Amended]

    35. Revise the reference in Sec. 778.21 from ``Sec. 773.13(a)(1)'' 
to read ``Sec. 773.6(a)(1).''

PART 785--REQUIREMENTS FOR PERMITS FOR SPECIAL CATEGORIES OF MINING

    36. Revise the authority citation for part 785 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 785.13  [Amended]

    37. Revise the reference in Sec. 785.13(c) from ``Sec. 773.13'' to 
read ``773.6'' and the reference in the second sentence of 
Sec. 785.13(h) from ``Sec. 773.13'' to read ``Sec. 773.6.''


Sec. 785.21  [Amended]

    38. Revise the reference in the introductory text of Sec. 785.21(e) 
from ``773.11'' to read ``773.4.''


Sec. 785.25  [Amended]

    39. Revise the reference in the first sentence of Sec. 785.25(a) 
from ``Sec. 773.15(b)(4)'' to read ``Sec. 773.13.''

[[Page 79670]]

PART 795--PERMANENT REGULATORY PROGRAM--SMALL OPERATOR ASSISTANCE 
PROGRAM

    40. Revise the authority citation for part 795 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 795.9  [Amended]

    41. Revise the reference in the first sentence of Sec. 795.9(d) 
from ``Sec. 773.13(d)'' to read ``Sec. 773.6(d).''

PART 817--PERMANENT PROGRAM PERFORMANCE STANDARDS--UNDERGROUND 
MINING ACTIVITIES

    42. Revise the authority citation for part 817 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 817.121  [Amended]

    43. Revise the reference in the last sentence of Sec. 817.121(g) 
from ``Sec. 773.13(d)'' to read ``Sec. 773.6(d).''

PART 840--STATE REGULATORY AUTHORITY: INSPECTION AND ENFORCEMENT

    44. Revise the authority citation for part 840 to read as follows:

    Authority: 30 U.S.C. 1201 et seq., unless otherwise noted.


Sec. 840.14  [Amended]

    45. Revise the reference in Sec. 840.14(b)(2) from ``773.13(d)'' to 
read ``773.6(d).''

PART 842--FEDERAL INSPECTIONS AND MONITORING

    46. Revise the authority citation for part 842 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 842.16  [Amended]

    47. Revise the reference in Sec. 842.16(a)(2) from 
``Sec. 773.13(d)'' to read ``Sec. 773.6(d).''

PART 843--FEDERAL ENFORCEMENT

    48. Revise the authority citation for part 843 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 843.5  [Amended]

    49. In Sec. 843.5, remove the definition of Willful violation.

    50. Revise Sec. 843.11(g) to read as follows:


Sec. 843.11  Cessation orders.

* * * * *
    (g) Within 60 days after issuing a cessation order, OSM will notify 
in writing the permittee, the operator, and any person who has been 
listed or identified by the applicant, permittee, or OSM as an owner or 
controller of the operation, as defined in Sec. 701.5 of this chapter.
* * * * *

    51. Revise Sec. 843.21 to read as follows:


Sec. 843.21  Procedures for improvidently issued State permits.

    (a) Initial notice. If we, OSM, on the basis of any information 
available to us, including information submitted by any person, have 
reason to believe that a State-issued permit meets the criteria for an 
improvidently issued permit under Sec. 773.21 of this chapter, or the 
State regulatory program equivalent, and the State has failed to take 
appropriate action on the permit under the State regulatory program 
equivalents of Secs. 773.21 through 773.23 of this chapter, we must--
    (1) Issue a notice, by certified mail, to the State, to you, the 
permittee, and to any person providing information under paragraph (a) 
of this section. The notice will state in writing the reasons for our 
belief that your permit was improvidently issued. The notice also will 
request the State to take appropriate action, as specified in paragraph 
(b) of this section, within 10 days.
    (2) Post the notice at our office closest to the permit area and on 
the AVS Office Internet home page (Internet address: http://www.avs.osmre.gov).
    (b) State response. Within 10 days after receiving notice under 
paragraph (a) of this section, the State must demonstrate to us in 
writing that either--
    (1) The permit does not meet the criteria of Sec. 773.21 of this 
chapter or the State regulatory program equivalent;
    (2) The State is in compliance with the State regulatory program 
equivalents of Secs. 773.21 through 773.23 of this chapter; or
    (3) The State has good cause for not complying with the State 
regulatory program equivalents of Secs. 773.21 through 773.23 of this 
chapter. For purposes of this section, good cause has the same meaning 
as in Sec. 842.11(b)(1)(ii)(B)(4) of this chapter, except that good 
cause does not include the lack of State program equivalents of 
Secs. 773.21 through 773.23 of this chapter.
    (c) Notice of Federal inspection. If we find that the State has 
failed to make the demonstration required by paragraph (b) of this 
section, we must initiate a Federal inspection under paragraph (d) of 
this section to determine if your permit was improvidently issued under 
the criteria in Sec. 773.21 of this chapter or the State regulatory 
program equivalent. We must also--
    (1) Issue a notice to you and the State by certified mail. The 
notice will state in writing the reasons for our finding under this 
section and our intention to initiate a Federal inspection.
    (2) Post the notice at our office closest to the permit area and on 
the AVS Office Internet home page (Internet address: http://www.avs.osmre.gov).
    (3) Notify any person who provides information under paragraph (a) 
of this section that leads to a Federal inspection that he or she may 
accompany the inspector on any inspection of the minesite.
    (d) Federal inspection and written finding. No less than 10 days 
but no more than 30 days after providing notice under paragraph (c) of 
this section, we will conduct an inspection and make a written finding 
as to whether your permit was improvidently issued under the criteria 
in Sec. 773.21 of this chapter. In making that finding, we will 
consider all available information, including information submitted by 
you, the State, or any other person. We will post that finding at our 
office closest to the permit area and on the AVS Office Internet home 
page (Internet address: http://www.avs.osmre.gov). If we find that your 
permit was improvidently issued, we must issue a notice to you and the 
State by certified mail. The notice will state in writing the reasons 
for our finding under this section.
    (e) Federal enforcement. If we find that your permit was 
improvidently issued under paragraph (d) of this section, we must--
    (1) Issue a notice of violation to you or your agent consistent 
with Sec. 843.12(b) of this part and provide opportunity for a public 
hearing under Secs. 843.15 and 843.16.
    (2) Issue a cessation order to you or your agent consistent with 
Sec. 843.11(c), if a notice of violation issued under paragraph (e)(1) 
is not remedied under paragraph (f) of this section within the 
abatement period, and provide opportunity for a public hearing under 
Secs. 843.15 and 843.16.
    (f) Remedies to notice of violation or cessation order. Upon 
receipt of information from any person concerning a notice of violation 
or cessation order issued under paragraph (e) of this section, we will 
review the information and--
    (1) Vacate the notice or order if it resulted from an erroneous 
conclusion under this section; or
    (2) Terminate the notice or order if--
    (i) The violation has been abated or corrected to the satisfaction 
of the

[[Page 79671]]

agency with jurisdiction over the violation;
    (ii) You or your operator no longer own or control the relevant 
operation;
    (iii) The violation is the subject of a good faith administrative 
or judicial appeal (unless there is an initial judicial decision 
affirming the violation, and that decision remains in force);
    (iv) The violation is the subject of an abatement plan or payment 
schedule that is being met to the satisfaction of the agency with 
jurisdiction over the violation; or
    (v) You are pursuing a good faith challenge or administrative or 
judicial appeal of the relevant ownership or control listing or finding 
(unless there is an initial judicial decision affirming the listing or 
finding, and that decision remains in force).
    (g) No civil penalty. We will not assess a civil penalty for a 
notice of violation issued under this section.


Sec. 843.24  [Removed]

    52. Remove Sec. 843.24.

PART 846-INDIVIDUAL CIVIL PENALTIES

    53. Revise the authority citation to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 846.5  [Removed]

    54. Remove Sec. 846.5.
    55. Add part 847 to read as follows:

PART 847--ALTERNATIVE ENFORCEMENT

Sec.
847.1   Scope.
847.2   General provisions.
847.11   Criminal penalties.
847.16   Civil actions for relief.

    Authority: 30 U.S.C. 1201 et seq.


Sec. 847.1  Scope.

    This part governs the use of measures provided in sections 518(e), 
518(g) and 521(c) of the Act for criminal penalties and civil actions 
to compel compliance with provisions of the Act.


Sec. 847.2  General provisions.

    (a) Whenever a court of competent jurisdiction enters a judgment 
against or convicts a person under these provisions, we must update AVS 
to reflect the judgment or conviction.
    (b) The existence of a performance bond or bond forfeiture cannot 
be used as the sole basis for determining that an alternative 
enforcement action is unwarranted.
    (c) Each State regulatory program must include provisions for civil 
actions and criminal penalties that are no less stringent than those in 
this part and include the same or similar procedural requirements.
    (d) Nothing in this part eliminates or limits any additional 
enforcement rights or procedures available under Federal or State law.


Sec. 847.11  Criminal penalties.

    Under sections 518(e) and (g) of the Act, we, the regulatory 
authority, will request the Attorney General to pursue criminal 
penalties against any person who--
    (a) Willfully and knowingly violates a condition of the permit;
    (b) Willfully and knowingly fails or refuses to comply with--
    (1) Any order issued under section 521 or 526 of the Act; or
    (2) Any order incorporated into a final decision issued by the 
Secretary under the Act (except for those orders specifically excluded 
under section 518(e) of the Act); or
    (c) Knowingly makes any false statement, representation, or 
certification, or knowingly fails to make any statement, 
representation, or certification in any application, record, report, 
plan, or other document filed or required to be maintained under the 
regulatory program or any order or decision issued by the Secretary 
under the Act.


Sec. 847.16  Civil actions for relief.

    (a) Under section 521(c) of the Act, we, the regulatory authority, 
will request the Attorney General to institute a civil action for 
relief whenever you, the permittee, or your agent--
    (1) Violate or fail or refuse to comply with any order or decision 
that we issue under the Act or regulatory program;
    (2) Interfere with, hinder, or delay us in carrying out the 
provisions of the Act or its implementing regulations;
    (3) Refuse to admit our authorized representatives onto the site of 
a surface coal mining and reclamation operation;
    (4) Refuse to allow our authorized representatives to inspect a 
surface coal mining and reclamation operation;
    (5) Refuse to furnish any information or report that we request 
under the Act or regulatory program; or
    (6) Refuse to allow access to, or copying of, those records that we 
determine necessary to carry out the provisions of the Act and its 
implementing regulations.
    (b) A civil action for relief includes a permanent or temporary 
injunction, restraining order, or any other appropriate order by a 
district court of the United States for the district in which the 
surface coal mining and reclamation operation is located or in which 
you have your principal office.
    (c) Temporary restraining orders will be issued in accordance with 
Rule 65 of the Federal Rules of Civil Procedure, as amended.
    (d) Any relief the court grants to enforce an order under paragraph 
(b) of this section will continue in effect until completion or final 
termination of all proceedings for review of that order under the Act 
or its implementing regulations unless, beforehand, the district court 
granting the relief sets aside or modifies the order.

PART 874--GENERAL RECLAMATION REQUIREMENTS

    56. Revise the authority citation for part 874 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.

    57. Revise Sec. 874.16 to read as follows:


Sec. 874.16  Contractor eligibility.

    To receive AML funds, every successful bidder for an AML contract 
must be eligible under Secs. 773.12, 773.13, and 773.14 of this chapter 
at the time of contract award to receive a permit or provisionally 
issued permit to conduct surface coal mining operations.

PART 875--NONCOAL RECLAMATION

    58. Revise the authority citation for part 875 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.

    59. Revise Sec. 875.20 to read as follows:


Sec. 875.20  Contractor eligibility.

    To receive AML funds for noncoal reclamation, every successful 
bidder for an AML contract must be eligible under Secs. 773.12, 773.13, 
and 773.14 of this chapter at the time of contract award to receive a 
permit or provisionally issued permit to conduct surface coal mining 
operations.

PART 903--ARIZONA

    60. The authority citation for part 903 continues to read as 
follows:

    Authority 30 U.S.C. 1201 et seq.


Sec. 903.773  [Amended]

    61. Revise the reference in the second sentence of 
Sec. 903.773(d)(3) from ``Sec. 773.13(a)(1)'' to read 
``Sec. 773.6(a)(1).''

    62. Revise the reference in Sec. 903.773(g) introductory text from 
``Sec. 773.13(d)'' to read ``Sec. 773.6(d).''

    63. Revise the reference in Sec. 903.773(g)(1) from 
``Sec. 773.13(a)(1)'' to read ``Sec. 773.6(a)(1).''
    64. Revise the reference in Sec. 903.773(g)(2) from 
``Sec. 773.13(a)(1)'' to read ``Sec. 773.6(a)(1).''

[[Page 79672]]

Sec. 903.774  [Amended]

    65. Revise the reference in the first sentence of Sec. 903.774(c) 
from ``Sec. 773.13(b) and (c)'' to read ``Sec. 773.6(b) and (c).''

    66. Revise the reference in Sec. 903.774(f)(2) from 
``Sec. 773.13(a)(3)'' to read ``Sec. 773.6(a)(3).''

PART 905--CALIFORNIA

    67. Revise the authority citation for part 905 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 905.773  [Amended]

    68. Revise the reference in Sec. 905.773(d)(3) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''

    69. Revise the reference in the first sentence of Sec. 905.773(f) 
from ``Sec. 773.13(c)'' to read ``Sec. 773.6(c).''
    70. Revise the reference in Sec. 905.773(g) from ``Sec. 773.13(d)'' 
to read ``Sec. 773.6(d).''


Sec. 905.774  [Amended]

    71. Revise the reference in the second sentence of Sec. 905.774(b) 
from ``773.13(b) and (c)'' to read ``773.6(b) and (c).''

    72. Revise the reference in Sec. 905.774(e) from 
``Sec. 773.13(a)(3)'' to read ``Sec. 773.6(a)(3).''

PART 910--GEORGIA

    73. Revise the authority citation for part 910 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 910.773  [Amended]

    74. Revise the reference in Sec. 910.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 910.774  [Amended]

    75. Revise the reference in Sec. 910.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 912--IDAHO

    76. Revise the authority citation for part 912 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 912.773  [Amended]

    77. Revise the reference in Sec. 912.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 912.774  [Amended]

    78. Revise the reference in Sec. 912.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 921--MASSACHUSETTS

    79. Revise the authority citation for part 921 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 921.773  [Amended]

    80. Revise the reference in Sec. 921.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 921.774  [Amended]

    81. Revise the reference in Sec. 921.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 922--MICHIGAN

    82. Revise the authority citation for part 922 to read as follows:

    Authority: 30 U.S.C. 1201 et seq.


Sec. 922.773  [Amended]

    83. Revise the reference in Sec. 922.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 922.774  [Amended]

    84. Revise the reference in Sec. 922.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 933--NORTH CAROLINA

    85. Revise the authority citation for part 933 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 933.773  [Amended]

    86. Revise the reference in Sec. 933.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 933.774  [Amended]

    87. Revise the reference in Sec. 933.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 937--OREGON

    88. Revise the authority citation for part 937 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 937.773  [Amended]

    89. Revise the reference in Sec. 937.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 937.774  [Amended]

    90. Revise the reference in Sec. 937.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 939--RHODE ISLAND

    91. Revise the authority citation for part 939 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 939.773  [Amended]

    92. Revise the reference in Sec. 939.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 939.774  [Amended]

    93. Revise the reference in Sec. 939.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 941--SOUTH DAKOTA

    94. Revise the authority citation for part 941 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 941.773  [Amended]

    95. Revise the reference in Sec. 941.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''


Sec. 941.774  [Amended]

    96. Revise the reference in Sec. 941.774(b)(1) from 
``Secs. 773.13'' to read ``Secs. 773.6.''

PART 942--TENNESSEE

    97. Revise the authority citation for part 942 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 942.773  [Amended]

    98. Revise the reference in Sec. 942.773(b)(4) from ``Sec. 773.13'' 
to read ``Sec. 773.6.''

    99. Revise the reference in the introductory paragraph of 
Sec. 942.733(d) from ``Sec. 773.11(d)(2)'' to read 
``Sec. 773.5(d)(2).''


Sec. 942.774  [Amended]

    100. Revise the reference in the first sentence of Sec. 942.774(c) 
from ``Sec. 773.13'' to read ``Secs. 773.6.''

PART 947--WASHINGTON

    101. Revise the authority citation for part 947 to read as follows:

    Authority:  30 U.S.C. 1201 et seq.


Sec. 947.773  [Amended]

    102. Revise the reference in Sec. 947.773(b)(4) from 
``Sec. 773.13'' to read ``Sec. 773.6.''


Sec. 947.774  [Amended]

    103. Revise the reference in the first sentence of 
Sec. 947.774(b)(1) from ``Secs. 773.13'' to read ``Secs. 773.6.''

[FR Doc. 00-32002 Filed 12-18-00; 8:45 am]
BILLING CODE 4310-05-P