[Federal Register Volume 67, Number 24 (Tuesday, February 5, 2002)]
[Rules and Regulations]
[Pages 5207-5213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2748]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Part 917

[KY-220-FOR]


Kentucky Regulatory Program

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

ACTION: Final rule, approval of amendment.

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SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement 
(OSM), are approving a proposed amendment to the Kentucky regulatory 
program (the Kentucky program) under the Surface Mining Control and 
Reclamation Act of 1977 (SMCRA or the Act). Kentucky proposed to revise 
its program at 405 KAR 7:097 pertaining to reclamation in lieu of cash 
payment of civil penalties. Kentucky intended to revise its program as 
required by Federal regulations.

EFFECTIVE DATE: February 5, 2002.

FOR FURTHER INFORMATION CONTACT: William J. Kovacic, Director, 
Lexington Field Office, 2675 Regency Road, Lexington, Kentucky 40503. 
Telephone: (859) 260-8402.

SUPPLEMENTARY INFORMATION:
I. Background on the Kentucky Program
II. Submission of the Proposed Amendment
III. OSM's Findings
IV. Summary and Disposition of Comments
V. OSM's Decision
VI. Procedural Determinations

I. Background on the Kentucky Program

    Section 503(a) of the Act permits a State to assume primacy for the 
regulation of surface coal mining and reclamation operations on non-
Federal and non-Indian lands within its borders by demonstrating that 
its State program includes, among other things, ``a State law which 
provides for the regulation of surface coal mining and reclamation 
operations in accordance with the requirements of the Act* * *; and 
rules and regulations consistent with regulations issued by the 
Secretary pursuant to the Act.'' See 30 U.S.C. 1253(a)(1) and (7). On 
the basis of these criteria, the Secretary of the Interior 
conditionally approved the Kentucky program on May 18, 1982. You can 
find background information on the Kentucky program, including the 
Secretary's findings, the disposition of comments, and the conditions 
of the approval in the May 18, 1982, Federal Register (47 FR 21404). 
You can also find later actions concerning Kentucky's program and 
program amendments at 30 CFR 917.12, 917.13, 917.15, 917.16 and 917.17.

II. Submission of the Amendment

    By letter dated December 22, 1998 (Administrative Record No. KY-
1449), the Kentucky Department of Surface Mining Reclamation 
Enforcement (Kentucky) sent us an amendment to its program under SMCRA 
(30 U.S.C. 1201 et seq.). Kentucky sent the amendment in response to a 
required program amendment at 30 CFR 732.17(b) and to include the 
changes made at its own initiative. The amendment, at 405 KAR 7:097, 
authorizes the Natural Resources and Environmental Protection Cabinet 
(Cabinet) to allow a permittee, person, or operator (hereinafter 
collectively called the in-kind permittee) to perform in-kind 
reclamation, environmental rehabilitation, or similar action to correct 
environmental pollution--instead of making cash payment of a civil 
penalty assessed under KRS 350.990(11).
    We announced receipt of the proposed amendment in the January 25, 
1999, Federal Register (64 FR 3670). The public comment period ended on 
February 24, 1999. Kentucky made changes to the original submission. On 
April 9, 1999, a Statement of Consideration and amended regulations 
were filed with the Kentucky Legislative Research Committee 
(Administrative Record No. KY-1458). By letter dated June 10, 1999 
(Administrative Record No. KY-1461), Kentucky submitted the final 
version of the proposed amendment to OSM. A new comment period was 
opened in the July 16, 1999, Federal Register (64 FR 38391) and closed 
on August 2, 1999. In both Federal Register notices, we opened the 
public comment period and provided an opportunity for a public hearing 
or meeting on the amendment's adequacy. We did not hold a public 
hearing or meeting because no one requested one. We received comments 
from an environmental group and a mining company.
    During our review of this amendment, we identified several issues 
requiring

[[Page 5208]]

clarification. A list of questions to Kentucky and Kentucky's responses 
are provided in an OSM memorandum, dated November 20, 2000, 
(Administrative Record No. KY-1507). We requested further clarification 
on one of the issues by letter dated February 23, 2001, (Administrative 
Record No. KY-1504). Kentucky responded in a letter dated April 2, 2001 
(Administrative Record No. KY-1510).

III. OSM's Findings

    Following are the findings we made concerning the amendment under 
SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. We are 
approving the amendment.
    The submittal of this proposed amendment implements House Bill 839 
passed by the Kentucky 1986 General Assembly. OSM's approval of the 
Kentucky statute required Kentucky, prior to implementation, to submit 
to OSM for its approval proposed regulations to implement House Bill 
839. This was codified at 30 CFR 917.16(c)(3). Therefore, we are 
removing the required amendment at 30 CFR 917.16(c)(3).
    Kentucky proposes to authorize the Cabinet to allow an in-kind 
permittee to perform in-kind reclamation, environmental rehabilitation, 
or similar action to correct environmental pollution (hereinafter 
collectively called in-kind reclamation or in-kind work)--instead of 
making cash payment of a civil penalty assessed under KRS 350.990. This 
regulation also establishes criteria and procedures to implement KRS 
350.990(11). A written request must be filed to perform in-kind work. 
If authorized, the performer of the work must enter into a binding 
Civil Penalty Reclamation Agreement (Agreement) with the Cabinet for 
work selected by the Cabinet. No fees are required for the written 
request or the Agreement. Those who enter into an Agreement: must 
obtain legal right of entry to the work site; must maintain liability 
insurance coverage; will, in some cases, be required to obtain a 
performance bond; and must perform the work activities specified in the 
Agreement. If the in-kind work is not completed according to the 
Agreement, the full amount of the assessed civil penalty must be paid. 
Certain proposed in-kind permittees, civil penalties, and sites are 
ineligible for in-kind activities. Certain kinds of activities and 
costs are not authorized.
    There are no corresponding Federal regulations that establish 
specific requirements applicable to State regulatory programs that 
provide for in-kind reclamation. In a January 29, 1987, letter to 
Kentucky and other State regulatory authorities, OSM established 
minimum criteria for approval of State program amendments concerning 
in-kind reclamation (Administrative Record No. KY-1508). To be approved 
for in-kind reclamation, a State program amendment must:
    1. Identify categories of sites that qualify for reclamation under 
the program amendment;
    2. Specify the criteria and procedures for determining the dollar 
value of reclamation work to be performed;
    3. Contain a plan for evaluating the performance of the reclamation 
work;
    4. Contain timeframes for completion of the reclamation work; and
    5. Specify the recourse available to the State regulatory authority 
should the reclamation work not meet established standards or not be 
completed.
    Section 1 of the proposed amendment establishes the applicability 
and general provisions of in-kind reclamation. An in-kind permittee may 
perform in-kind reclamation in lieu of cash payment of one or more 
civil penalties if the aggregate amount of the penalties is $2,500 or 
more. The in-kind reclamation will be authorized under a legally 
binding Agreement. The in-kind permittee will be held responsible for 
obtaining a legal right of entry to the activity site and liability 
insurance coverage. The amendment requires that the liability-insurance 
policy remain in force during the course of the Agreement. Upon the 
incapacity of the insurer to continue coverage, the in-kind permittee 
is required to promptly notify the Cabinet. The Cabinet will give the 
in-kind permittee up to 90 days to replace the coverage, after which 
the in-kind reclamation must cease. The Cabinet may then terminate the 
Agreement. By a letter dated April 2, 2001, Kentucky stated it will 
exercise its discretion as to how rapidly to terminate the Agreement in 
view of all the facts at hand such as: the likelihood that the in-kind 
permittee will obtain replacement insurance in a short time and then 
expeditiously complete the in-kind reclamation; the amount of work 
uncompleted; and the severity of environmental problems at the site. 
The State noted that absent convincing evidence of a good faith effort 
to obtain replacement insurance and evidence of probable success in 
timely obtaining it, Kentucky will move quickly to terminate the 
Agreement, within two weeks and almost certainly 30 days of the 
cessation of the in-kind reclamation work (Administrative Record No. 
KY-1510).
    Section 1 states that the in-kind permittee is required to provide 
a performance bond for in-kind reclamation of a mine site. In a 
memorandum dated November 20, 2001, Kentucky stated that the term 
``mine site'' is used to differentiate between a site that was 
disturbed by mining (either coal or non-coal) and a site affected by 
some other type of environmental problem (trash dumps, straight pipes, 
brine from gas wells, etc.). The term is not meant to represent or 
replace any terms formally used in SMCRA (Administrative Record No. KY-
1507).
    For in-kind reclamation of lands other than mine sites (non-mine 
sites), the Cabinet may require a performance bond if it determines 
that the authorized activities could create a risk of environmental 
harm. This bond would be in addition to any bond required by another 
Federal, State, or local law. Kentucky stated that because the 
activities under this administrative regulation are not surface coal 
mining and reclamation operations, as defined by SMCRA, the bond does 
not have to meet the provisions of 405 KAR Chapter 10. However, it 
noted that bonds that do meet these provisions would be acceptable to 
the Cabinet.
    Finally, Kentucky said that because the activities are not 
``surface coal mining and reclamation operations,'' the in-kind 
reclamation would be subject to standards delineated in the Agreement, 
and would not be subject to Title V standards under SMCRA. We agree 
that in-kind reclamation of the sites described in the Kentucky 
amendment would not constitute surface coal mining and reclamation 
operations therefore, these sites would not be subject to the 
permitting or bonding requirements under Title V of SMCRA.
    As we stated in the April 5, 1989, rulemaking (54 FR 13814), no 
permit is required ``when reclamation activities are conducted where no 
coal extraction or other activities described in the definition of 
`surface coal mining operations' at section 701(28) of SMCRA are taking 
place.'' We further stated that section 506(a) of SMCRA only requires a 
permit for surface coal mining operations as ``defined in section 
701(28), not the additional reclamation activities specified in the 
definition of surface coal mining and reclamation operations defined in 
section 701(27) [of SMCRA].'' Id. at 13816.
    At 405 KAR 7:097, Section 1(9), the Kentucky amendment prohibits 
the removal of coal in connection with any in-kind reclamation. Section 
1(10) of the amendment specifies that authorized activities include 
only ``on-ground activities that directly result in reclamation, 
environmental rehabilitation, or correction of

[[Page 5209]]

environmental pollution.'' Therefore, the amendment does not authorize 
coal extraction or any of the other activities described in the 
definition of ``surface coal mining operations'' at section 701(28) of 
SMCRA. The reclamation obligation cited in the definition of ``surface 
coal mining and reclamation operations'' is an integral part of the 
surface coal mining operations and applies to entities mining coal. 
``The right to mine carries with it the obligation to restore the land 
after mining has ceased.'' See 54 FR 13814 (April 5, 1989). Even an 
operator mining without a permit ``incurs the obligation to reclaim.'' 
See 54 Id. at 13821. Hence, an in-kind permittee under the Kentucky 
amendment would not be subject to the permitting, bonding requirements 
or reclamation standards of Title V of SMCRA.
    Section 1 lists certain limitations with respect to the in-kind 
reclamation program. Some of these include the following:
     As previously stated, coal removal in connection with the 
authorized reclamation activities is prohibited;
     Educational, promotional, training, and other activities 
that may indirectly affect the environment is prohibited;
     In-kind reclamation activities that do not exceed in 
estimated cost the assessed amount of the civil penalty will not be 
authorized; and
     Crediting of costs incurred under the Agreement in excess 
of the civil penalty amount to satisfy penalties not covered by the 
Agreement will not be permitted.
    Subsection 1 (13) specifies that the Kentucky Division of Abandoned 
Mine Lands (AML) shall determine the estimate of the cost of the in-
kind reclamation activities. To clarify this statement, OSM met with 
Kentucky on November 20th, 2000 to determine how the cost estimates 
would be calculated. Kentucky stated that the cost estimates will be 
based upon the type of work to be performed at a unit cost and is based 
upon AML staff's most current actual cost experience in the vicinity of 
the work site (Administrative Record No. KY-1507).
    The Director finds that Subsection 1 (13) satisfies the second 
minimum criterion set forth in the January 29, 1987, letter 
(Administrative Record No. KY-1508).
    Sections 2 through 4 identify circumstances under which certain 
proposed in-kind permittees, civil penalties, and sites will not be 
eligible for in-kind reclamation. A proposed in-kind permittee that is 
ineligible to receive a permit under KRS Chapter 350 and 405 KAR 
Chapters 7-24 for a reason other than nonpayment of a civil penalty 
will not be eligible for in-kind reclamation. In-kind reclamation in 
lieu of civil penalties will not be authorized if the violation that 
led to any of the civil penalties remains unabated; or if the proposed 
in-kind permittee entered into an agreed order with the Cabinet to pay 
the civil penalty and failed to comply with the agreed order. Section 4 
defines an ineligible site as that which is:
     Under a valid permit under KRS Chapter 350 for which a 
bond has not been forfeited;
     Under another valid Federal, State, or local permit under 
which the permit holder has responsibility for environmental conditions 
at the site; or
     Is affected by an ongoing enforcement action for violation 
of Federal, State, or local environmental laws, unless the agency 
pursuing the enforcement action consents.
    Kentucky further clarified that the only post-SMCRA sites that are 
eligible are those ``where the bond is forfeited, the bond is 
inadequate, alternative enforcement has failed and there is no other 
enforcement recourse under Title V'' of SMCRA. The Director finds that 
Section 4 of the proposed amendment and the delineation of mine sites 
and non-mine sites in Section 1 and the Kentucky's November 20, 2000, 
response (Administrative Record No. 1507) satisfy the first minimum 
criterion set forth in the January 29, 1987, letter (Administrative 
Record No. 1508).
    Provisions and requirements for the selection of sites for in-kind 
reclamation are included in Section 5 of the amendment. The amendment 
authorizes the Cabinet to compile a prioritized list of candidate sites 
for consideration, and requires that the list be made available to the 
public. The section further requires the Cabinet to consult with the 
county fiscal court; and authorizes the Cabinet to consult with the in-
kind permittee, other government agencies, and the general public in 
its selection of a site and in-kind reclamation activity for each 
application. The amendment permits the Cabinet to give preference to 
sites or activities that address environmental impacts from coal 
mining.
    Section 6 describes the criteria concerning the types of in-kind 
reclamation activities and what costs can be authorized. Activities not 
authorized include: those that the in-kind permittee already has a duty 
to perform under KRS Chapter 350 or other Federal, State or local law; 
activities which the in-kind permittee already has a legal obligation 
to perform under a valid contract; and activities on lands or waters in 
which the in-kind permittee has a financial interest. The amendment 
prohibits certain costs such as: those which incurred prior to the 
Agreement; equipment or services donated by a party other than the in-
kind permittee; payments for access to the site; transportation; and 
administrative costs and overhead. The amendment permits authorization 
of reclamation activities in conjunction with AML projects of the 
Cabinet under KRS 350.550 through 350.597. The amendment also permits 
the authorization of in-kind reclamation in conjunction with the 
reclamation of bond-forfeiture sites, provided the in-kind permittee: 
did not own or control the site under KRS Chapter 350; was not an 
operator or agent on the site under KRS Chapter 350; and has no direct 
or indirect ownership or other interest in the land.
    Section 7 of the amendment specifies the procedures an in-kind 
permittee must follow to request performance of in-kind reclamation. 
Among other stipulations, the amendment clarifies that filing a request 
will not stay the collection of the civil penalty. The amendment also 
requires the Cabinet to notify the in-kind permittee in writing whether 
it intends to pursue an Agreement within 15 days of receipt of the 
request.
    Section 8 lists the information required in the Agreement and other 
provisions and limitations relating to the Agreement. Subsection 8 
(1)(g) requires that the Agreement specify the time span within which 
the authorized activities shall be completed. Subsection 8 (5) 
stipulates that the Cabinet may terminate the Agreement at any time if 
the in-kind permittee fails to satisfy its terms. Subsections 8 (7) and 
(8) state that the civil penalty shall remain due and payable until the 
Cabinet has determined in writing that the in-kind permittee has 
satisfactorily fulfilled the terms of the Agreement; and if the 
Agreement is breached, the full-assessed civil penalty will be due and 
payable. Subsection 8 (6) requires the Cabinet to conduct field 
inspections as necessary to monitor progress under the Agreement. In a 
November 20, 2000, memorandum (Administrative Record No. KY-1507), 
Kentucky stated that the in-kind reclamation site will be inspected 
during critical phases of the work and the number of inspections will 
depend in part on the size or duration of the project. Kentucky stated 
that at a minimum an in-kind reclamation site will be inspected once to 
ensure the work is satisfactorily completed under the terms of the 
Agreement (Administrative Record No. KY-1507).

[[Page 5210]]

    The Director finds that Subsections 8 (1)(g) and (5) through (8), 
and the November 20, 2000, (Administrative Record No. KY-1507) 
memorandum satisfy the third, fourth and fifth minimum criteria, as set 
forth in the January 29, 1987, letter (Administrative Record No. KY-
1508).
    The civil penalty provisions at section 518 of SMCRA and the 
Federal rules at 30 CFR 845.20 do not specify the method of payment for 
assessed penalties. Since Kentucky is not changing how it assesses 
civil penalties, this amendment continues to uphold the purpose of 
civil penalties, which is to ``deter violations and to ensure maximum 
compliance with . . . [SMCRA] on the part of the coal mining 
industry.'' (30 CFR 845.2) Allowing an in-kind permittee to perform 
reclamation in lieu of paying a civil monetary penalty is still a 
penalty. Therefore, the Director finds that the June 10, 1999, revised 
amendment is consistent with the purpose and requirements for payment 
of penalties in section 518 of SMCRA. Additionally, the amendment 
satisfies the minimum criteria for approval set forth in the January 
29, 1987, letter.

IV. Summary and Disposition of Comments

Public Comments

    By letters dated, January 14, 1999 (Administrative Record No. KY-
1453), February 8, 1999 (Administrative Record No. KY-1456), and July 
21, 1999 (Administrative Record No. KY-1464), these three comment 
letters were submitted by an environmental group and a mining company.
    One commenter posited that in-kind reclamation activities 
constitute a regulated ``surface coal mining operation'' and therefore 
must occur under a SMCRA Title V permit and bond. The commenter claimed 
that the proposal to substitute an Agreement for a permit is dubious 
unless the Agreement contains all of the safeguards and conditions of a 
permit, including public notice and the opportunity to comment on the 
proposed reclamation; bond coverage; and a specific reclamation plan 
setting enforceable and measurable benchmarks to assure that the site 
is left no worse and is in fact properly reclaimed. The commenter is 
concerned that in-kind reclamation will occur under circumstances that 
create a risk of inadequate reclamation from the surface landowner's 
standpoint. Third-party intervention on a site under an Agreement may 
extinguish the obligations of the party who initially disturbed and 
abandoned the site. If the reclamation work turns out to have been 
inadequate, the landowner will be left without recourse.
    As stated in our findings, we do not agree that the definition of 
``surface coal mining and reclamation operations'' includes the in-kind 
activities authorized under this amendment. Therefore, no Title V 
permitting or bonding requirements apply. Sections (1)(6)(b) and (1)(7) 
of the amendment safeguard the landowner's interests by requiring that 
the permittee performing the in-kind reclamation (1) have a public 
liability insurance policy in effect in an amount adequate to 
compensate for both personal injury and property damage that may result 
from the reclamation activities; and (2) provide a performance bond for 
all in-kind reclamation of mine sites. For in-kind reclamation of sites 
other than mine sites, the Cabinet may require a performance bond if 
the reclamation activities could create a risk of environmental harm. 
Perhaps the most important safeguard is the requirement that the in-
kind permittee obtain right of entry from the landowner.
    We do not share the commenter's concern that third-party 
intervention on a mine site under an Agreement may extinguish the 
obligations of the party who initially disturbed and abandoned the 
site. First, to the extent that the in-kind permittee corrects 
outstanding violations, we see no reason why the landowner would have 
any objection to the extinguishments of those obligations. Second, 
Section 4 of the amendment provides that sites under a valid SMCRA 
permit for which the bond has not been forfeited are not eligible. It 
also specifies that sites under another valid federal, state, or local 
permit are not eligible if the permit holder still has responsibility 
for environmental conditions at the site. Third, nothing in the 
amendment absolves the previous permittee or operator of any liability.
    One commenter questioned the adequacy of Section 7(6) of the 
amendment, which requires the Cabinet to notify the in-kind permittee 
within 15 days whether it intends to pursue an Agreement in response to 
the in-kind permittee's request to perform in-kind reclamation. 
According to the commenter, 15 days is insufficient time to involve the 
surface landowner and adjoining landowners in Agreement negotiation and 
the decision on whether to allow the in-kind reclamation activity.
    SMCRA and the implementing Federal regulations contain no 
provisions relating to landowner participation in in-kind reclamation. 
Therefore, we have no legal basis for requiring that Kentucky make the 
modifications sought by the commenter. In addition, we concur with 
Kentucky's Statement of Consideration that the landowner will 
automatically have a major role in the Agreement process because the 
in-kind permittee must first obtain right of entry from the landowner. 
Kentucky also stated that, as a practical matter, there will be 
discussions with the surface landowner, and possibly with adjoining 
surface owners, during the process of determining whether a specific 
site is an appropriate candidate for in-kind reclamation 
(Administration Record No. KY-1458). Section 5(4) of the amendment 
grants Kentucky the discretion to consult with private individuals 
regarding the selection of sites and the activities to be authorized. 
Additionally, Section 8 gives Kentucky the discretion to include other 
parties to the Agreement if they are necessary.
    The commenter further stated that the amendment should specify a 
time by which negotiations will either be successfully completed or the 
penalty will be collected. In its Statement of Consideration, Kentucky 
stated that if the negotiation over the Agreement is unproductive, the 
Cabinet can end the discussion at any time and demand cash payment.
    Finally, the commenter argued that any unpaid civil penalty 
interest should continue to accrue during negotiations. In response, 
Kentucky stated that any interest due and owing would not be tolled 
during discussions.
    A commenter stated that the regulation should explicitly reference 
the process by which a third-party landowner can secure review and 
enforcement of the terms of a reclamation agreement. The commenter is 
concerned that, without explicit reference to such a process, an 
Agreement will fail to provide the required opportunity for public 
review that is mandated for permit-related actions by the Cabinet, and 
thus fail to provide a mechanism as effective as the permit in this 
regard. According to another comment, Section 8 of the amendment should 
clarify that when an Agreement falls within the ambit of the definition 
of ``surface coal mining and reclamation operations,'' the inspection 
and citizen participation procedures of 405 KAR Chapters 7-24 apply. 
The commenter further states that, for other reclamation activities, 
inspections should occur at all critical times in the reclamation plan, 
and termination of the Agreement should automatically trigger 
forfeiture of whatever bond has been posted.

[[Page 5211]]

    As discussed in our findings, in-kind reclamation is not a surface 
coal mining and reclamation operation. Therefore, there is no legal 
basis to require that reclamation agreements include provisions for 
inspection, enforcement, and public participation consistent with those 
applicable to permits and permitting actions under Title V of SMCRA. 
However, Kentucky has stated that if a landowner observes actions or 
conditions that he believes are inconsistent with the Agreement, he can 
bring them to the attention of the Cabinet and the in-kind permittee. 
In addition, Section 8(6) of the amendment requires that the Cabinet 
conduct field inspections as necessary to monitor progress under the 
Agreement. In subsequent correspondence Kentucky stated that it intends 
to conduct inspections during critical phases of the work and would 
conduct at least one inspection upon completion of work. Kentucky 
anticipates that most in-kind reclamation projects will be small and 
take less than a week to complete.
    A commenter states that--

[I]t is not clear that the person performing in-lieu activity who 
fails to properly conduct such activity would be ``permit-blocked'' 
from future permit issuance if there remained outstanding violations 
of the law on an ``in-lieu'' site. While the regulation notes that 
the agreement must specify ``the consequences of failure to satisfy 
the terms of the Civil Penalty Reclamation Agreement,'' it must be 
clarified that the consequences of such failure include mandatory 
issuance of enforcement orders and permit blocking for outstanding 
unabated NOVs and COs.

    If the comment refers to outstanding violations of environmental 
laws committed on the in-kind reclamation site by someone other than 
the in-kind permittee, we disagree that the in-kind permittee should be 
held liable for violations he, himself, did not commit, even if he 
fails to satisfy the terms of the Agreement. There is no legal basis 
under SMCRA for assigning responsibility for those violations to the 
in-kind permittee.
    If, on the other hand, the commenter is referring to violations 
committed by the in-kind permittee on the in-kind reclamation site, we 
have no authority to require the State to take enforcement action under 
Title V of SMCRA because in-kind reclamation is not a surface coal 
mining operation under SMCRA and is outside the jurisdiction of SMCRA. 
However, under Section 8(7) of the amendment, if Kentucky terminates 
the Agreement for failure to comply with all of its terms, the in-kind 
permittee will be liable for the full amount of all existing civil 
penalties he previously owed. Consequently, the permittee would be 
subject to the prohibition on issuance of future surface coal mining 
permits under 405 KAR 8:010 Section 13 and section 510(c) of SMCRA.
    One commenter expressed concerns over Subsections (3) through (5) 
of Section 2 in the December 22, 1998, version of the proposed 
amendment. In that version, an in-kind permittee was deemed ineligible 
for in-kind reclamation if: he had an outstanding violation under KRS 
Chapter 350 and had not corrected the violation; he owned or controlled 
a surface coal mining operation for which the permit had been revoked 
or the bond forfeited, or which was currently in violation of KRS 
Chapter 350, and the correction of the violation had not been 
completed; or he was in violation of other Federal, State, or local 
environmental laws. The commenter indicated that large companies with 
multiple operations are rarely, if ever, free from violations of any 
laws and regulations. The time required to avoid or correct violations 
of environmental laws can be extensive. The limitations imposed by the 
amendment would have afforded large companies very little opportunity 
to perform in-kind reclamation.
    In response to a similar comment received during the state's 
rulemaking process, Kentucky has eliminated Subsections (1) through (5) 
in the June 10, 1999, version of the amendment. The amendment now 
defines an ineligible in-kind permittee as one who is ineligible to 
receive a permit under KRS Chapter 350 and 405 KAR Chapters 7-24 for a 
reason other than non-payment of a civil penalty. The Director finds 
that this change renders the above comment moot.
    A commenter recommends that Section 8 of the proposed amendment 
should require that the Agreement include other permits needed for the 
State or Federal government, including water, floodplain, air, dredge-
and-fill, transportation, etc. We believe that adding this requirement 
is repetitive since subsection 1(8) already requires that the in-kind 
permittee comply with all Federal, State, and local laws and 
regulations.

Federal Agency Comments

    Under 30 CFR 732.17(h)(11)(i) and section 503 (b) of SMCRA, we 
requested comments on the amendment from various Federal agencies with 
an actual or potential interest in the Kentucky program (Administrative 
Record No. KY-1509). No comments were received.

Environmental Protection Agency (EPA)

    Under 30 CFR 732.17(h)(11)(i) and (ii), we are required to get a 
written concurrence from EPA for those provisions of the proposed 
program amendment that relate to air or water quality standards issued 
under the authority of the Clean Water Act (33 U.S.C. 1251 et seq.) or 
the Clean Air Act (42 U.S.C. 7401 et seq.). None of the revisions that 
Kentucky proposed in this amendment pertain to air or water quality 
standards. Therefore we did not ask EPA to concur on the amendment. By 
letter dated February 1, 1999, we requested comments on the amendment 
from EPA (Administrative Record Number KY-1509). EPA did not respond to 
our request.

V. OSM's Decision

    Based on the above findings we approve the amendment sent to us by 
Kentucky.
    To implement this decision, we are amending the Federal regulations 
at 30 CFR part 917, which codify decisions concerning the Kentucky 
program. We find that good cause exists under 5 U.S.C. 553(d)(3) to 
make this final rule effective immediately. Section 503(a) of SMCRA 
requires that the State's program demonstrates that the State has the 
capability of carrying out the provisions of the Act and meeting its 
purposes. Making this regulation effectively immediately will expedite 
that process. This will not create a hardship for Kentucky but rather 
aid Kentucky's reclamation abilities. SMCRA requires consistency of 
State and Federal standards.

VI. Procedural Determinations

Executive Order 12630--Takings

    This rule does not have takings implications under Executive Order 
12630 and, therefore, a takings implication assessment is not required. 
This determination is based on the fact that the rule would allow a 
person assessed a civil monetary penalty the option of performing in-
kind reclamation, environmental rehabilitation, or similar action to 
correct environmental damage in lieu of making cash payment.

Executive Order 12866--Regulatory Planning and Review

    This rule is exempted from review by the Office of Management and 
Budget (OMB) under Executive Order 12866 (Regulatory Planning and 
Review).

Executive Order 12988--Civil Justice Reform

    The Department of the Interior has conducted the reviews required 
by section 3 of Executive Order 12988 (Civil Justice Reform) and has 
determined that this rule meets the

[[Page 5212]]

applicable standards of subsections (a) and (b) of that section. 
However, these standards are not applicable to the actual language of 
State regulatory programs and program amendments because each program 
is drafted and promulgated by a specific State, not by OSM. Under 
sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal 
Regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on 
proposed State regulatory programs and program amendments submitted by 
the States must be based solely on a determination of whether the 
submittal is consistent with SMCRA and its implementing Federal 
regulations and whether the other requirements of 30 CFR Parts 730, 
731, and 732 have been met.

Executive Order 13132--Federalism

    This rule does not have Federalism implications. SMCRA delineates 
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.'' 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.

Executive Order 13211--Regulations That Significantly Affect the 
Supply, Distribution, or Use of Energy

    On May 18, 2001, the President issued Executive Order 13211 which 
requires agencies to prepare a Statement of Energy Effects for a rule 
that is (1) considered significant under Executive Order 12866, and (2) 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. Because this rule is exempt from review 
under Executive Order 12866 and is not expected to have a significant 
adverse effect on the supply, distribution, or use of energy, a 
Statement of Energy Effects is not required.

National Environmental Policy Act

    This rule does not require an environmental impact statement 
because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that 
agency decisions on proposed State regulatory program provisions do not 
constitute major Federal actions within the meaning of section 
102(2)(C) of the National Environmental Policy Act (42 U.S.C. 
4332(2)(C)).

Paperwork Reduction Act

    This rule does not contain information collection requirements that 
require approval by the OMB under the Paperwork Reduction Act (44 
U.S.C. 3507 et seq.).

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 fact that the rule would allow a 
person assessed a civil monetary penalty the option, after certain 
requirements are met, of performing in-kind reclamation, environmental 
rehabilitation, or similar action to correct environmental damage in 
lieu of making a cash payment. The rule does not impose any new costs. 
It is assumed that the person choosing this option would do so because 
of a perceived benefit that would result.

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 
previously stated, this rule:
    a. Does not have an annual effect on the economy of $100 million.
    b. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    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.

Unfunded Mandates

    This rule will not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of $100 million or more in any 
given year. This determination is based upon the fact that the State 
submittal merely provides an alternative means of paying a penalty. The 
rule does not impose any new costs.

List of Subjects in 30 CFR Part 917

    Intergovernmental relations, Surface mining, Underground mining.

    Dated: December 19, 2001.
Allen D. Klein,
Regional Director, Appalachian Regional Coordinating Center.

    For the reasons set out in the preamble, 30 CFR 917 is amended as 
set forth below:

PART 917--KENTUCKY

    1. The authority citation for part 917 continues to read as 
follows:

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


    2. Section 917.15 is amended in the table by adding a new entry in 
chronological order by date of final publication to read as follows:


Sec. 917.15  Approval of Kentucky regulatory program amendments.

* * * * *

----------------------------------------------------------------------------------------------------------------
    Original amendment submission date         Date of final  publication             Citation/description
----------------------------------------------------------------------------------------------------------------
 
*                  *                  *                  *                  *                  *
                                                        *
December 22, 1998........................  February 5, 2002..................  405 KAR 7:097 approved (in-kind
                                                                                reclamation)
----------------------------------------------------------------------------------------------------------------


[[Page 5213]]

Sec. 917.16  [Amended]

    3. Section 917.16 is amended by removing and reserving paragraph 
(c) (3).

[FR Doc. 02-2748 Filed 2-4-02; 8:45 am]
BILLING CODE 4310-05-P