[Federal Register Volume 70, Number 16 (Wednesday, January 26, 2005)]
[Proposed Rules]
[Pages 3840-3850]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1311]



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Part V





Department of the Interior





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Office of Surface Mining Reclamation and Enforcement



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30 CFR Parts 701 and 774



Transfer, Assignment, or Sale of Permit Rights; Proposed Rule

  Federal Register / Vol. 70, No. 16 / Wednesday, January 26, 2005 / 
Proposed Rules  

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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Parts 701 and 774

RIN 1029-AC49


Transfer, Assignment, or Sale of Permit Rights

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

ACTION: Proposed rule.

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SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement 
(OSM), propose to revise our rules for, and related to, the transfer, 
assignment, or sale of permit rights. This proposed rule effectuates a 
settlement agreement we entered into with the National Mining 
Association (NMA) in connection with NMA's judicial challenge to 
certain provisions of our December 19, 2000, final ownership and 
control rule (2000 ownership and control rule or 2000 rule). In this 
proposed rule, we propose to: Revise the regulatory definitions of 
transfer, assignment, or sale of permit rights and successor in 
interest; revise the regulatory provisions relating to transfer, 
assignment, or sale of permit rights; and create separate rules for 
successors in interest. The primary purpose of the proposed rule is to 
distinguish clearly the circumstances that will constitute a transfer, 
assignment, or sale of permit rights (requiring a regulatory 
authority's approval and, at a minimum, a permit revision) or result in 
a successor in interest (requiring the issuance of a new permit) from 
those that will only require a permittee to provide information 
updates. The proposed rule also affords us an opportunity to ensure our 
rules are consistent with recent legal developments. This proposed 
rulemaking does not suspend or withdraw any of the provisions of our 
2000 ownership and control rule, nor does it affect any of our proposed 
revisions to the 2000 rule published on December 29, 2003. This 
proposed rule is authorized under the Surface Mining Control and 
Reclamation Act of 1977, as amended (SMCRA or the Act).

DATES: Written comments: We will accept written comments on the 
proposed rule until 4:30 p.m., eastern time, on March 28, 2005.
    Public hearings: Upon request, we will hold a public hearing on the 
proposed rule at a date, time, and location to be announced in the 
Federal Register before the hearing. We will accept requests for a 
public hearing until 4:30 p.m., eastern time, on February 16, 2005. If 
you wish to attend a hearing, but not speak, you should contact the 
person identified under FOR FURTHER INFORMATION CONTACT before the 
hearing date to verify that the hearing will be held. If you wish to 
attend and speak at the hearing, you should follow the procedures under 
``III. Public Comment Procedures.''

ADDRESSES: You may submit comments, identified by docket number 1029-
AC49, by any of the following methods:
     E-mail: [email protected]. Include docket number 1029-AC49 
in the subject line of the message.
     Mail/Hand Delivery/Courier: Office of Surface Mining 
Reclamation and Enforcement, Administrative Record, Room 252, 1951 
Constitution Avenue, NW., Washington, DC 20240.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Docket: You may review the docket (administrative record) 
for this rulemaking including comments received in response to this 
proposed rule at the Office of Surface Mining Reclamation and 
Enforcement, Administrative Record, located in Room 101, 1951 
Constitution Avenue, NW., Washington, DC 20240. The Administrative 
Record office is opened Monday through Friday, excluding holidays from 
8 a.m. to 4 p. m. The telephone number is (202) 208-2847.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking. For detailed instructions on 
submitting comments and additional information on the rulemaking 
process, see ``III. Public Comment Procedures?'' in the SUPPLEMENTARY 
INFORMATION section of this document.
    If you wish to comment on the information collection aspects of 
this proposed rule, submit your comments to the Office of Management 
and Budget, Office of Information and Regulatory Affairs, Attention: 
Interior Desk Officer, via electronic mail, to [email protected] 
or via telefacsimile at (202) 395-6566.
    You may submit a request for a public hearing orally or in writing 
to the person and address specified under FOR FURTHER INFORMATION 
CONTACT. We will announce the address, date and time for any hearing in 
the Federal Register before the hearing. If you are disabled and 
require special accommodation to attend a public hearing, you should 
contact the person listed under FOR FURTHER INFORMATION CONTACT.

FOR FURTHER INFORMATION CONTACT: Earl D. Bandy, Jr., Office of Surface 
Mining Reclamation and Enforcement, Appalachian Region, Applicant/
Violator System Office, 2679 Regency Road, Lexington, Kentucky 40503. 
Telephone: (859) 260-8424 or (800) 643-9748. E-mail: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background to the Proposed Rule
II. Discussion of the Proposed Rule
    A. Section 701.5--Definition: Successor in Interest
    B. Section 701.5--Definition: Transfer, Assignment, or Sale of 
Permit Rights
    C. Revised Heading for 30 CFR Part 774
    D. Section 774.1--Scope and Purpose
    E. Section 774.17--Transfer, Assignment, or Sale of Permit 
Rights
    F. Section 774.18--Successors in Interest
III. Public Comments Procedures
IV. Procedural Determinations

I. Background to the Proposed Rule

    On December 21, 1998, we published a proposed rule to revise, among 
other things, our regulatory definition of successor in interest and 
our regulatory provisions for transfer, assignment, or sale of permit 
rights. See 63 FR 70580, 70591, 70601. In the 1998 proposed rule, we 
did not propose to revise our regulatory definition of transfer, 
assignment, or sale of permit rights. In our 2000 ownership and control 
rule, 68 FR 75036, which is the final rule based on the 1998 proposal, 
we explained that, following our analysis of the comments on the 
proposed revision of the definition of successor in interest and the 
regulatory provisions for transfer, assignment, or sale of permit 
rights, ``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.'' 65 FR 79605. With specific reference to the regulatory 
provisions at 30 CFR 774.17, we explained: ``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.'' 65 FR 79642.
    After we promulgated the 2000 rule, NMA filed a lawsuit in the U.S. 
District Court for the District of Columbia, challenging certain 
provisions of the 2000 rule. National Mining Association v. Office of 
Surface Mining, et al., No. 01-366 (CKK) (D.D.C.). Although we did not 
adopt the proposed revisions to our transfer, assignment, or sale 
rules, NMA argued that we reopened the issue for comment and judicial 
review. In order

[[Page 3841]]

to settle this issue, we agreed to publish a proposed rule concerning 
transfer, assignment, or sale of permit rights for public notice and 
comment. More specifically, we agreed to: (1) Propose regulatory 
revisions clarifying the interplay between, and the applicability of, 
our transfer, assignment, or sale regulations at 30 CFR 774.17 and the 
permittee information requirements found at 30 CFR 774.12(c); (2) 
reconsider the provisions of 30 CFR 774.17 that we addressed in the 
1998 proposed rule; and (3) reconsider whether a change in majority 
shareholder of a permittee or operator is a transfer, assignment, or 
sale of permit rights requiring approval under 30 CFR 774.17.
    In addition, until any new transfer, assignment, or sale rules 
become effective, we agreed to clarify our implementation of our 
existing rules, in light of legal developments. On September 9, 2004, 
we issued System Advisory Memorandum  23 to effectuate this 
aspect of the settlement and to memorialize our interim clarification. 
To obtain a paper copy of System Advisory Memorandum  23, 
please contact the person identified under FOR FURTHER INFORMATION 
CONTACT or, for an electronic copy, visit the following Internet 
address: www.avs.osmre.gov.
    Our decision to propose new transfer, assignment, or sale and 
related rules is also driven by other developments. In 1988, we defined 
the phrases owned or controlled and owns or controls in terms of 
certain relationships that were deemed or presumed to constitute 
ownership or control. 53 FR 38868 (October 3, 1988). For example, under 
paragraph (a)(1) of the definition, permittees and majority 
shareholders (as well as certain other persons) were ``deemed'' to be 
owners or controllers, while, under paragraph (b), officers, directors, 
operators, and certain minority shareholders (as well as certain other 
persons) were ``presumed'' to be owners or controllers. The rules also 
provided that the presumptions of ownership or control could be 
overcome, or rebutted, upon an appropriate showing. Since 1979, we have 
defined transfer, assignment, or sale of permit rights, as it is 
currently defined, to mean a change in ownership or other effective 
control over the right to conduct surface coal mining operations. See 
existing 30 CFR 701.5.
    Reading the two provisions in conjunction, some regulatory 
authorities have concluded that a change of a presumed owner or 
controller, such as an officer or director, resulted in a change in 
ownership or other effective control and, thus, constituted a transfer, 
assignment, or sale requiring regulatory approval under 30 CFR 774.17, 
while others have not.
    Then, in the 1998 proposed rule, we proposed to eliminate the 
presumptions of ownership or control. 63 FR 70580, 70604. Thereafter, 
on May 29, 1999, the U.S. Court of Appeals for the District of Columbia 
Circuit issued its decision in NMA's challenge to our April 21, 1997 
interim final rule (which carried forward the presumptions in the 1988 
rule). National Mining Association. v. U.S. Department of the Interior, 
177 F.3d 1 (D.C. Cir. 1999) (NMA v. DOI II). NMA challenged four of our 
six rebuttable 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)). 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.
    In a June 15, 2000 decision in Peabody Western Coal Co. v. OSM, No. 
DV 2000-1-PR, the Department of the Interior's Office of Hearings and 
Appeals had occasion to examine the impact of NMA v. DOI II on 
transfer, assignment, or sale issues. In Peabody Western, OSM 
determined that Peabody Western's change of all of its corporate 
officers and directors constituted a transfer, assignment, or sale of 
permit rights under 30 CFR 701.5. The administrative law judge 
disagreed, explaining that, after NMA v. DOI II, OSM cannot presume 
that an officer or director is a controller and, therefore, a change of 
an officer or director, or even a change of all officers and directors, 
cannot, standing alone, automatically constitute a change of 
``effective control'' triggering a transfer, assignment, or sale of 
permit rights. The administrative law judge also made some other 
observations that we assigned particular weight in developing this 
proposed rule. The judge noted that the ``other effective control'' 
language is ``vague and imprecise'' and ``discloses no meaningful 
standard and provides no advance notice to a regulated corporate 
entity'' as to which corporate changes will constitute a transfer, 
assignment, or sale. This defect, according to the judge, does not 
provide ``adequate advance notice of the purported regulatory 
standard'' and leaves permittees ``to speculate'' as to when regulatory 
approval is required.
    In the 2000 rule, we adopted the proposal to eliminate presumptions 
of control (see 65 FR 79600), adopted separate definitions of ``own, 
owner, or ownership'' and ``control or controller'' (see 30 CFR 701.5), 
and added specific requirements for permittees to update their 
ownership and control and related information upon any change of that 
information, including the change of an officer, director, or minority 
shareholder (see 30 CFR 774.12(c)). However, as explained above, we did 
not revise our definition of transfer, assignment, or sale of permit 
rights (see 30 CFR 701.5), which still includes the ``other effective 
control'' language, or the corresponding regulatory requirements. Thus, 
the existing rule continues to suffer the same flaws identified in 
Peabody Western. Also, the information update requirement at 30 CFR 
774.12(c) created some confusion as to whether we had formally decided 
that a change in an officer, director, minority shareholder, or certain 
other persons, did not constitute a transfer, assignment, or sale of 
permit rights, but rather required only an information update. We were 
silent on this point in the preamble to the 2000 rule.
    In sum, our settlement with NMA and other developments have caused 
us to reevaluate and propose revisions to our rules relating to the 
transfer, assignment, or sale of permit rights. In issuing today's 
proposed rule, our overarching objective is to provide greater clarity 
for both regulatory authorities and the regulated community by 
creating, to the extent possible, ``bright line,'' objective standards 
as to which circumstances will trigger a transfer, assignment, or sale 
of permit rights, or give rise to a successor in interest, requiring 
regulatory approval and/or a new permit. We also seek to clarify which 
changes will require only an information update under 30 CFR 774.12(c).

II. Discussion of the Proposed Rule

    In this section, we discuss our proposed revisions to certain 
sections of the Code of Federal Regulations (CFR). While the range of 
regulatory concepts discussed in this proposed rulemaking includes 
other concepts in our rules, such as ownership, control, permit 
eligibility, and permittee information requirements, we are only 
proposing to

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revise our regulatory definitions of transfer, assignment, or sale of 
permit rights and successor in interest, as well as our rules for 
transfer, assignment, or sale of permit rights. Directly related to 
these proposed revisions, we also propose to create new rules for 
successors in interest.
    The regulatory revisions we propose today are based upon our 
review, deliberations, and reconsideration of issues relating to the 
transfer, assignment, or sale of permit rights and successors in 
interest. We analyzed the relevant statutory provisions, including the 
limited legislative history of those provisions, researched relevant 
legal decisions, the use of the term ``successor in interest'' in other 
regulatory and legal contexts, and previous objections to the current 
rules, and relied on our considerable expertise and experience in 
handling transfer, assignment, or sale issues over the years. In 
addition, we reconsidered the relevant portions of our 1998 proposed 
rule as well as the relevant portions of the subsequent 2000 final 
rule. In short, we believe our proposal is consistent with SMCRA's 
statutory provisions and relevant legal precedents. We also believe 
this proposal, if adopted, would meet our objective of creating 
``bright line,'' objective standards for this aspect of our regulatory 
program. We invite comments on both of these issues.
    Following are discussions of our specific proposed changes to the 
definitions at 30 CFR 701.5 and the rules at 30 CFR 774.17, our 
proposed creation of new 30 CFR 774.18, and other ministerial changes 
required as a result of this proposed rulemaking.

A. Section 701.5--Definition: Successor in Interest

    We propose to revise the regulatory definition of successor in 
interest at 30 CFR 701.5. The current definition of successor in 
interest states: ``Successor in interest means any person who succeeds 
to rights granted under a permit, by transfer, assignment, or sale of 
permit rights.'' We propose to revise the definition to read: 
``Successor in interest means a person who follows a permittee, by 
statutory succession, operation of law, or as a result of a similar, 
non-substantive change in form, in ownership over the right to conduct 
surface coal mining operations granted under a permit. Successors in 
interest will result from a non-commercial, non-substantive event, such 
as a business name change or an inheritance.'' As explained in more 
detail below, the proposed revision separates the concepts of 
``successor in interest'' and ``transfer, assignment, or sale of permit 
rights.'' Most importantly, the proposal also removes the subjective 
concept of control (or ``effective control'') from the definition of 
successor in interest, but retains the more objective standard of 
``ownership,'' as we defined that term in the 2000 rule.
    The starting point of our analysis was the recognition that our 
current rules merge the concepts of ``successor in interest'' and 
``transfer, assignment, or sale of permit rights.'' That is, under our 
current rules, a successor in interest arises as a result of a 
transfer, assignment, or sale. Upon further reflection and analysis, we 
determined that the Act, in sections 506(b) (successor in interest) and 
511(b) (transfer, assignment, or sale of permit rights), appears to 
treat these concepts differently and separately. Thus, we are proposing 
to separate the concept of successor in interest from the concept of 
transfer, assignment, or sale of permit rights.
    In pertinent part, section 506(b) of SMCRA provides that

    A successor in interest to a permittee who applies for a new 
permit within thirty days of succeeding to such interest and who is 
able to obtain the bond coverage of the original permittee may 
continue surface coal mining and reclamation operations according to 
the approved mining and reclamation plan of the original permittee 
until such successor's application is granted or denied.

We believe our proposal to separate the concepts of successor in 
interest and transfer, assignment, or sale finds support in the Act 
itself and in its legislative history. First, and most obviously, the 
concepts are discussed in different sections of the Act: The successor 
in interest provisions are found under section 506, while the 
provisions for transfer, assignment, or sale of permit rights are found 
under section 511. The mere fact that the provisions are in different 
sections suggests that Congress intended them to have different 
meanings. This reading of the Act is also supported by the limited 
legislative history. An unenacted version of SMCRA provided that

    All permits issued pursuant to the requirements of this Act 
shall be issued for a term not to exceed five years and shall be 
nontransferable: Provided, That a successor in interest to a 
permittee who applies for a new permit within thirty days of 
succeeding to such interest and who is able to obtain the bond 
coverage of the original permittee may continue surface coal mining 
and reclamation operations according to the approved mining and 
reclamation plan of the original permittee until such successor's 
application is granted or denied.

S.7, 95th Congress, 1st Session, Senate Report No. 95-128 (May 10, 
1977). Thus, this version of the Act that existed just prior to 
enactment expressly disallowed transfers, but provided that successors 
in interest who applied for new permits could continue operations under 
the existing permit until a permitting decision was made. This language 
suggests a distinction between transfers and situations giving rise to 
a successor in interest. As enacted, SMCRA section 511(b) allows for 
the transfer, assignment, or sale of permit rights with regulatory 
approval. Thus, although Congress ultimately allowed for transfers, it 
retained separate language providing for successors in interest.
    We submit that this same legislative history indicates that 
Congress intended for more relaxed regulatory requirements for 
successors in interest. For example, under the specified circumstances, 
successors in interest are expressly allowed to continue mining under 
the existing permit, while there is no such express provision for 
transferees, assignees, and purchasers. The relaxed regulatory scrutiny 
for a ``successor in interest'' comports with our understanding that a 
successor in interest results when the permittee undergoes a change in 
form only. By contrast, a transfer, assignment, or sale results in a 
substantive change in the party exercising rights under the permit. It 
makes sense, in our view, that Congress would provide for less 
regulatory scrutiny when there is only a change in form.
    Our conclusion that a successor in interest scenario involves a 
non-substantive change in form is based on our research of State and 
Federal definitions of the term and rules applying the term ``successor 
in interest''; State and Federal case law where the term ``successor in 
interest'' was relevant to the subject matter of the case; and the 
traditional legal definition of ``successor in interest.'' In our 
research, we found that ``successor in interest'' is consistently used 
to describe a non-substantive, statutory event. That is to say, we have 
found that a successor in interest is the result of an operation of law 
or other non-commercial event, in the sense that the successor does not 
acquire an ownership interest in exchange for goods, services, or 
monetary or other consideration. The two most often cited events that 
result in a successor in interest are: (1) Inheritance, upon the death 
of another person, and (2) a change of the name of an entity--such as 
through a corporate reorganization--where all other legal rights and 
obligations are unchanged. Indeed, the case law we examined 
consistently found a successor in

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interest to be a business entity that evolves from a previous entity 
where, apparently, all other legal attributes of the successor entity 
remained the same. In addition, Black's Law Dictionary (6th ed. 1990) 
explains:

    In order to be a ``successor in interest,'' a party must 
continue to retain the same rights as original owner without change 
in ownership and there must be change in form only and not in 
substance, and transferee is not a ``successor in interest.'' In 
cases of corporations, the term ordinarily indicates statutory 
succession as, for instance, when corporation changes its name but 
retains same property.

(Emphasis added.) See also Holland v. Williams Mt. Coal Co., 256 F.3d 
819, 821-22 (D.C. Cir. 2001) (referring to the Black's definition as 
the ``standard corporate law definition''). In Holland, the U.S. Court 
of Appeals for the District of Columbia Circuit also explained that 
``[a] party simply acquiring property of a firm in an arm's length 
transaction, and taking up its business activity, does not become the 
selling firm's ``successor in interest.'' Id. at 822. Thus, under the 
generally accepted legal definition of ``successor in interest,'' it 
appears that a change of ownership is considered non-substantive when 
the new owner retains the same rights as the original owner and the new 
owner continues to hold the same ownership interests as the original 
owner. See, e.g., Holland, 256 F.3d at 822 (a successor in interest 
``is a successor to the wealth of the predecessor, typically through a 
corporate reorganization'') (emphasis in original). With the exception 
of labor and employment law, in no instance in our research did we find 
a successor in interest in the context of a commercial transaction 
resulting in a change of ownership in exchange for goods, services, or 
monetary or other consideration. Rather, the legal definition and other 
applications of the term suggest events that seemingly exclude 
commercial transactions.
    Under SMCRA, a successor in interest appears to be subject to the 
same requirements as any other applicant for a new permit. However, a 
successor in interest would have an expectation of privilege not 
accorded to other applicants for a new permit because the Act 
explicitly allows mining to continue under the existing mining and 
reclamation plan while the successor's application is under review. 
This expectation of privilege or minimal regulatory scrutiny only 
occurs when there is a change in form only--as in the successor in 
interest scenario--when the circumstances do not require further 
review. We feel this interpretation and application of ``successor in 
interest'' is consistent with the State and other Federal uses that we 
examined. While a successor in interest has an expectation to continue 
the surface coal mining operation under the existing permit, the 
successor must also apply for a new permit because the preceding person 
who held the permit no longer exists, whether that ``person'' was a 
natural person or a business entity.
    A transfer, assignment, or sale of permit rights under section 
511(c) of SMCRA, by contrast, appears to differ substantially from the 
successor in interest scenario in that a transfer, assignment, or sale 
represents a substantive change in the permittee or operator that would 
require regulatory approval and a new permit or a permit revision, 
presumably before mining can commence or resume. Thus, a transferee, 
assignee, or purchaser does not have the same expectation of privilege 
as a successor in interest. Also, because there is a substantive change 
in the permittee or operator, the conditions under which the 
substantively different party should be allowed to mine may be 
materially different than the conditions for the previous permittee. 
Arguably, continued mining under the existing permit is not appropriate 
and, at a minimum, the existing permit should be revised to reflect the 
change in circumstances before mining is resumed.
    In the case of a transfer or sale of a permit to a new entity, the 
new entity generally will be seeking regulatory approval to assume the 
title of permittee. In contrast, in the case of a transfer or sale of 
an entity holding a permit, the name of the permittee may not change 
but the principle owner of the permittee may change. The situation is 
somewhat different for an assignment under 511(b) of SMCRA. We are 
proposing that a rational view of an assignment is a change in the 
designated operator, when other than the permittee. In such cases, the 
permittee stays the same but the approved mining entity changes through 
the authorized assignment of permit rights to a designated operator. We 
believe that in all these cases, the regulatory authority must 
determine if the entity that would be authorized to mine as a result of 
the transfer, assignment or sale of permit rights is eligible to 
conduct mining and reclamation operations. Thus, entities seeking to 
exercise permit rights acquired through transfer, assignment, or sale 
do not have the same expectation of privilege as a successor in 
interest.
    In sum, as a result of our research, we propose that defining 
successor in interest as an independent concept, and not in the context 
of a transfer, assignment, or sale of permit rights, represents a more 
accurate and desirable implementation of the ``successor in interest'' 
concept embodied in section 506(b) of the Act. We are also proposing 
that the key conceptual differences between a successor in interest and 
transfer, assignment, or sale of permit rights are that a successor in 
interest: (1) Occurs as the result of an operation of law or other non-
commercial event and involves a non-substantive change in form, (2) has 
an expectation of privilege to continue mining operations under the 
existing permit not present in a transfer, assignment, or sale of 
permit rights, and (3) must apply for a new permit and not for a permit 
revision. These differences create a ``bright line'' distinction 
between entities who become successors in interest and entities that 
seek validation of permit rights acquired by way of a transfer, 
assignment, or sale.
    One other important aspect of our proposed definition of successor 
in interest bears mention. We propose to remove the subjective concept 
of control--or ``effective control''--from the definition; at the same 
time, we propose to retain the more objective concept of ``ownership'' 
in the definition. (Although the current definition does not contain 
the words ownership or control, the concepts of ownership and control 
are effectively incorporated into the definition by reference to the 
definition of transfer, assignment, or sale of permit rights, which 
contains the terms ``ownership'' and ``effective control.'') Retention 
of the ownership concept is appropriate, in our view, because a 
successor in interest scenario involves a change in ownership, even 
though the change is technical or non-substantive. In the 2000 rule, we 
defined own, owner, or ownership to mean ``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.'' See 30 CFR 
701.5. (On December 29, 2003, we proposed a non-substantive revision to 
this definition. 68 FR 75038. Our proposed revision remains pending. If 
adopted, the proposed revision would not affect today's proposed rule.) 
Thus, under this proposal, a successor in interest would result when 
there has been a non-substantive change in ownership of greater than 50 
percent of a permittee. By way of example, under this proposal, if a 
corporate permittee undergoes a reorganization (for example changing 
its legal status from a C corporation to a limited-liability company), 
resulting in a name change but retention of the same ownership

[[Page 3844]]

interests, the new entity would be a successor in interest and would be 
subject to the regulatory requirements discussed below under proposed 
new section 774.18. Also, if a person inherits an ownership interest in 
a permittee of greater than 50 percent, the person would be a successor 
in interest to the permittee. A corollary to this proposal is that a 
change in ownership of 50 percent or less of the permittee or a change 
in control, standing alone, would never result in a successor in 
interest (or, as explained below, a transfer, assignment or sale) and, 
thus, would only require, at most, an information update under 30 CFR 
774.12(c). Thus, if adopted, this aspect of the proposed rule would 
achieve the twin goals of providing a ``bright line,'' objective 
standard as to which circumstances will give rise to a successor in 
interest and which changes will require only an information update 
under 30 CFR 774.12(c). We invite comment on the statutory rationale 
provided above for the proposed changes to the definition of successor 
in interest. We also invite comment on whether, after applying the 
current definition for 25 years, there are practical reasons warranting 
or arguing against these changes.

B. Section 701.5--Definition: Transfer, Assignment, or Sale of Permit 
Rights

    We propose to revise the regulatory definition of transfer, 
assignment, or sale of permit rights. The current definition of 
transfer, assignment, or sale of permit rights is as follows: 
``Transfer, assignment, or sale of permit rights means a change in 
ownership or other effective control over the right to conduct surface 
coal mining operations under a permit issued by the regulatory 
authority.'' We propose to revise the definition to read: ``Transfer, 
assignment, or sale of permit rights means a commercial transaction 
resulting in a change in ownership over the right to conduct surface 
coal mining operations granted under a permit or a change in operator. 
A transfer, assignment, or sale of permit rights involves a substantive 
change and not a mere change in form.'' As with our proposed definition 
of successor in interest, the most significant aspect of our proposed 
revision to the definition of transfer, assignment, or sale of permit 
rights is the proposed removal of the subjective concept of control (or 
``effective control'') from the definition. Again, as with the 
definition of successor in interest, we also retained the more 
objective standard of ``ownership.'' The proposal would, to the extent 
possible, establish an objective standard that can be readily 
understood by both regulatory authorities and the regulated community.
    As discussed above, to clearly distinguish a transfer, assignment, 
or sale from a successor in interest scenario, we also propose that a 
transfer, assignment, or sale always involves a ``commercial 
transaction'' and a ``substantive change'' in ownership of a permittee, 
and not, as in the case of a successor in interest, a mere change in 
form. As previously explained, we propose that a successor in interest 
scenario, unlike a transfer, assignment, or sale, occurs as the result 
of an operation of law or other non-commercial event and involves a 
non-substantive change in form. In this proposal, we use the terms 
``transfer'' and ``sale'' interchangeably. While there are technical 
differences between the terms--such as the fact that a sale involves 
monetary consideration while a transfer may not--the differences are of 
no practical consequence under this proposal because all substantive 
changes of ownership--whether accomplished by sale or transfer--would 
be subject to the same regulatory requirements. When we refer to a 
``commercial transaction,'' we mean acquisition of an ownership 
interest in exchange for goods, services, or monetary or other 
consideration. By ``substantive change,'' we mean that the new owner 
does not retain the same rights and legal attributes as the original 
owner and does not succeed to the wealth of the original owner. We 
derive this understanding of the term ``substantive change'' from the 
definition of the term ``successor in interest.'' As previously 
discussed, the caselaw interpreting the term ``successor in interest'' 
makes clear that an entity acquiring an ownership interest in another 
entity by way of a sale or transfer is not a successor in interest 
because sales and transfers involve substantive changes in ownership.
    Throughout our deliberations, we were mindful of Peabody Western's 
admonition that our existing definition, to the extent it relies on the 
concept of ``effective control,'' is ``vague and imprecise'' and 
``discloses no meaningful standard and provides no advance notice to a 
regulated corporate entity'' as to which corporate changes will 
constitute a transfer, assignment, or sale. We determined that it was 
the inclusion of the phrase ``or other effective control'' that created 
the imprecision in the current definition. The concept of control is 
embodied in section 510(c) of the Act. Under that section, an applicant 
is not eligible to receive a permit if it owns or controls an operation 
with an outstanding violation. Our existing definition of transfer, 
assignment, or sale of permit rights imports the control concept from 
section 510(c), but nothing in the Act compels that approach. However, 
we believe that a substantive change in majority ownership, which 
almost always involves a change of control, remains a sufficient 
indicator of a transfer or sale. As such, we propose to remove the 
concept of ``effective control'' from the definition of transfer, 
assignment, or sale of permit rights, while expressly retaining the 
ownership criterion.
    Under this proposal, both direct transfer and sale of a permit to a 
new entity and a transfer or sale of an entity holding permit rights 
would trigger the regulatory requirements associated with transfer, 
assignment, or sale of permit rights. In the first scenario, involving 
transfer or sale of a permit to a new entity, the new entity would have 
to seek regulatory approval to become the new permittee, and the 
regulatory authority would have to determine whether the new entity is 
eligible to receive a permit. In the second scenario, involving a 
transfer or sale of an entity holding permit rights, the permittee 
would remain the same, and the regulatory authority would have to 
determine whether the existing permittee remains eligible to conduct 
surface coal mining operations. While we cannot address every 
hypothetical transaction in this preamble, the following examples 
outline our general understanding of the types of transactions that 
would constitute transfers or sales of permit rights under this 
proposal.

    Example 1: Company A holds a SMCRA mining permit. Company B, 
through a commercial transaction involving an exchange of 
consideration, acquires greater than 50 percent of the stock or 
other ownership instruments of Company A. This transaction will be 
considered a transfer or sale under the definition we propose today. 
If Company A wishes to remain the permitee, A would have to, at a 
minimum, apply for a permit revision under section 774.17, discussed 
below. The regulatory authority would then have to determine whether 
A (not B) remains eligible for a permit under SMCRA and its 
implementing regulations. If Company B wishes to become the new 
permittee, B would become the subject of the permit eligibility 
determination. On the other hand, if Company B acquires 50 percent 
or less of Company A, there would not be a transfer or sale under 
the proposed definition. However, the existing permittee, A, would 
have to inform the regulatory authority of this transaction, by way 
of an information update, under 30 CFR 774.12(c).


[[Page 3845]]


    Example 2: Parent Company A has a wholly-owned subsidiary, S, 
which holds a SMCRA mining permit. Company A, through a commercial 
transaction involving an exchange of consideration, sells or 
transfers greater than 50 percent of the stock or other ownership 
instruments in S to a new company, B. This transaction will be 
considered a transfer or sale under the definition we propose today. 
If S wishes to remain the permitee, S would have to, at a minimum, 
apply for a permit revision under section 774.17, discussed below. 
The regulatory authority would then have to determine whether S (not 
B) remains eligible for a permit under SMCRA and its implementing 
regulations. If Company B wishes to become the new permittee, B 
would become the subject of the permit eligibility determination. On 
the other hand, if Company B acquires 50 percent or less of S, there 
would not be a transfer or sale under the proposed definition. 
However, the existing permittee, S, would have to inform the 
regulatory authority of this transaction, by way of an information 
update, under 30 CFR 774.12(c).

    Example 3: Company A holds a SMCRA mining permit, but wishes to 
leave the mining business. Company B acquires all of Company A's 
assets, including the mining permit. This transaction, which 
involves the direct sale or transfer of a mining permit, would 
constitute a transfer or sale requiring regulatory approval. Under 
section 774.17, discussed below, Company B, as the new mining 
entity, would have to apply to become the new permittee and would, 
thus, be the subject of the regulatory authority's permit 
eligibility determination. As explained below, although Company B 
purportedly acquired Company A's mining permit, Company B does not 
have the right to mine under the permit without regulatory approval.

    Example 4: Company A, which holds a SMCRA mining permit, merges 
with Company B. Under the terms of the merger, B acquires a greater 
than 50 percent ownership interest in A. This transaction would 
constitute a transfer or sale under the proposed definition. If 
Company A is the surviving corporation and wishes to remain the 
permitee, A would have to, at a minimum, apply for a permit revision 
under section 774.17, discussed below. The regulatory authority 
would then have to determine whether A (not B) remains eligible for 
a permit under SMCRA and its implementing regulations. On the other 
hand, if Company B is the surviving company, Company B would have to 
seek regulatory approval to become the new permittee and would, 
thus, become the subject of the permit eligibility determination. 
If, through the merger, Company B acquires 50 percent or less of 
Company A, there would not be a transfer or sale under the proposed 
definition. However, the existing permittee, A, would have to inform 
the regulatory authority of this transaction, by way of an 
information update, under 30 CFR 774.12(c).

    Example 5: Company A, which holds a SMCRA permit, is 
experiencing financial difficulties and becomes involved, either 
voluntarily or involuntarily, in Chapter 7 bankruptcy proceedings. 
The bankruptcy trustee liquidates Company A's assets and sells the 
mining equipment and mining permit to Company B. This transaction, 
which involves the direct sale or transfer of a mining permit, would 
constitute a transfer or sale requiring regulatory approval. Under 
section 774.17, discussed below, Company B, as the new mining 
entity, would have to apply to become the new permittee and would, 
thus, be the subject of the regulatory authority's permit 
eligibility determination. As explained below, although Company B 
purportedly acquired Company A's mining permit, Company B does not 
have the right to mine under the permit without regulatory approval. 
If Company A is going through a Chapter 11 bankruptcy 
reorganization, Company A will typically continue to operate its 
business as a ``debtor in possession.'' This scenario, which 
typically will not involve a substantive change in ownership of 
Company A, generally will not constitute a transfer or sale under 
the proposed definition. However, as in the non-bankruptcy setting, 
if a new entity does acquire a greater than 50 percent ownership 
interest in A, the transaction would constitute a transfer, 
assignment, or sale requiring regulatory approval.

    We expressly invite comment on our proposed approach to these 
issues, including whether both direct transfer or sale of a permit and 
transfer or sale of an entity holding permit rights should constitute a 
transfer, assignment, or sale of permit rights requiring regulatory 
approval.
    The Act, at section 507(b)(1), requires a permit applicant to 
identify the operator, if different from the applicant. In our 
experience, the best, and perhaps only, example of an assignment of 
permit rights, in the SMCRA context, is a change in the designated 
operator. While a change in the designated operator shares with a 
transfer and a sale the common feature of a substantive commercial 
transaction, a change of operator does not involve a change in the 
permittee, who still retains the obligations associated with the 
approved permit. Rather, the permittee stays the same and only the 
mining entity changes. Because ``assignment'' of permit rights is 
included in section 511(b), and section 507(b)(1) requires 
identification of the operator if different from the applicant, a 
change of the designated operator appears significant enough to 
expressly require regulatory approval under section 511(b), even though 
it does not necessarily involve a change of ownership. Therefore, we 
propose expressly to clarify that a change in operator constitutes an 
assignment and triggers the regulatory requirements associated with 
transfer, assignment, or sale of permit rights. Under this proposal, 
when there is a change of the designated operator, the regulatory 
authority would have to determine whether the new operator is eligible 
to conduct surface coal mining operations under the Act and its 
implementing regulations. We are proposing this clarification because, 
under current rules, some regulatory authorities have considered a 
change in operator as subject to transfer, assignment, or sale 
provisions, while others have not. We expressly invite comment on this 
clarification.
    As previously mentioned, in our settlement with NMA, we agreed to 
reconsider whether a change in majority shareholder of a permittee or 
operator is a transfer, assignment, or sale of permit rights requiring 
approval under 30 CFR 774.17. We have reconsidered the issue and, for 
the reasons explained above, have decided to incorporate the concept of 
majority ownership--through cross-reference to our definition of 
ownership at 30 CFR 701.5--in our proposed definitions of successor in 
interest and transfer, assignment, or sale of permit rights. Thus, 
based on our reconsideration of the issue, we have concluded that a 
non-substantive change in majority ownership always gives rise to a 
successor in interest (requiring a new permit) and a substantive change 
in majority ownership always constitutes a transfer, assignment, or 
sale (requiring, at a minimum, a permit revision). We specifically 
invite comments on this approach.
    In the settlement with NMA, we also agreed to clarify the interplay 
between our transfer, assignment, or sale regulations and the permittee 
information update requirements found at 30 CFR 774.12(c), which 
references 30 CFR 778.11(c) and (d). Under today's proposal, as 
explained, a change of majority ownership would always result in a 
successor in interest or transfer, assignment, or sale of permit 
rights. As such, any change in ownership of 50 percent or less or a 
change in control, standing alone, would never result in a successor in 
interest or a transfer, assignment or sale and, thus, would only 
require, at most, an information update under 30 CFR 774.12(c). While a 
change in majority ownership would require an information update under 
existing section 774.12(c) (based on the cross-reference to section 
778.11(c)), we have separately proposed changes to section 778.11(c). 
See 68 FR 75047. Therefore, we have not included specific proposed 
changes to section 774.12(c) at this time because of the possible 
changes to the sections it references. However, it is our intent to 
include, as part of any final rule,

[[Page 3846]]

changes to section 774.12(c) that would provide an objective ``bright 
line'' between its permit information update requirements and those 
changes subject to sections 774.17 or proposed 774.18.

C. Revised Heading for 30 CFR Part 774

    As a result of proposing to create a new section in 30 CFR part 774 
pertaining to successors in interest, we also propose to revise the 
heading for 30 CFR part 774 by inserting the term ``successor in 
interest.'' The revised heading would read: ``Revision; Renewal; 
Transfer, Assignment, or Sale of Permit Rights; Successor in Interest; 
Post Permit Issuance Requirements; and Other Actions Based on 
Ownership, Control, and Violation Information.''

D. Section 774.1--Scope and Purpose

    Also as a result of proposing to create new regulatory provisions 
for successors in interest in 30 CFR part 774, we propose to revise the 
current scope and purpose at 30 CFR 774.1 by inserting the term 
``successor in interest.'' It will then read as follows: ``This part 
provides requirements for revision; renewal; transfer, assignment, or 
sale of permit rights; successor in interest; 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.''

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

    Section 511(b) of SMCRA states: ``No transfer, assignment, or sale 
of the rights granted under any permit issued pursuant to this Act 
shall be made without the written approval of the regulatory 
authority.'' 30 U.S.C. 1261(b). Our regulations implementing this 
statutory provision are currently found at 30 CFR 774.17; the 
definition of transfer, assignment, or sale of permit rights is found 
at 30 CFR 701.5.
    As we agreed in our settlement with NMA, we have examined and 
reconsidered all aspects of our existing regulations for the transfer, 
assignment, or sale of permit rights as well as all the aspects of 30 
CFR 774.17 that we addressed in our 1998 proposed rule. As a result, 
along with proposing to revise the definition of transfer, assignment, 
or sale of permit rights, we are also proposing to revise each portion 
of our rules establishing the regulatory requirements for transfers, 
assignments, or sales of permit rights. Below, we discuss each proposed 
revision by paragraph.
30 CFR 774.17(a)
    Existing paragraph 774.17(a) provides that no transfer, assignment, 
or sale of rights granted by a permit shall be made without the 
regulatory authority's prior written approval. This provision has been 
construed by some as an attempt to require regulatory authority 
approval of private business transactions. We propose to revise this 
provision to make clear that the regulatory authority has no 
involvement in private business transactions. However, in doing so, we 
also stress that, under this proposal, a person's acquisition of a 
permit or an entity holding rights granted under a permit does not mean 
that the purchaser has acquired the right to mine. We continue to 
believe that only the regulatory authority can validate permit rights 
upon transfer, assignment, or sale and that, in validating such permit 
rights, the regulatory authority must determine if the entity that 
proposes to mine as a result of the private transaction is eligible to 
conduct surface coal mining operations under the Act and its 
implementing regulations. Stated differently, only upon validation by 
the regulatory authority can it be said that the acquiring entity has 
permit rights. Thus, our proposal not only retains the concept that a 
regulatory authority must give written approval of a transfer, 
assignment, or sale, but that such approval must be granted before 
mining operations can commence.
    Although section 511(b) of the Act does not include the word 
``prior,'' we continue to believe a requirement of prior regulatory 
approval can reasonably be inferred from the statutory language. The 
requirement for a regulatory authority's prior approval before mining 
operations can commence also comports with our conclusion that a 
transferee, assignee, or purchaser has no expectation of privilege to 
continue mining under an existing permit. Thus, these proposed 
revisions retain the requirement for prior approval before mining by 
the transferee, new assignee, or purchaser resumes or commences, while 
clarifying that we are not attempting to regulate private commercial 
transactions. We invite comment upon this approach and our rationale 
for it. We also invite comment on whether, after over 20 years under 
the current rules, these changes are needed or warranted.
30 CFR 774.17(b)
    Paragraph (b) sets forth the proposed application requirements for 
a permit revision allowing a transferee, assignee, or purchaser of 
permit rights to conduct surface coal mining operations.
    In paragraph (b)(1)(i), we propose that the applicant identify the 
telephone number of the existing permittee in the application. We 
believe this information is beneficial to the regulatory authority 
during its review of the application. In this same paragraph, the 
existing provision requires the applicant to provide the existing 
permit number or ``other identifier.'' Because no other identifier is 
as unique to a transfer, assignment, or sale of permit rights as the 
permit number itself, we propose to remove the ``other identifier'' 
language.
    Proposed paragraph (b)(1)(ii) would require a description of the 
transfer, assignment, or sale. Whereas the current provision requires a 
``brief description,'' we propose to remove the modifier ``brief'' as 
too limiting. We do not intend for the description to be exceedingly 
lengthy, but it should provide sufficient information concerning the 
transaction for the regulatory authority to understand the nature of 
the commercial transaction affecting rights granted under the permit.
    Proposed paragraph (b)(1)(iv) would be a new provision. We propose 
that the application under section 774.17 must include any proposed 
changes to the existing mining and/or reclamation plan. We believe that 
it is important for the regulatory authority to review the applicant's 
anticipated changes in the mining and/or reclamation plan at the same 
time the regulatory authority is determining whether the applicant is 
eligible for a permit. However, by this proposal, we do not intend to 
limit the right of an approved applicant to later seek revision of an 
approved permit.
    Current paragraph (b)(2) requires the applicant to advertise the 
filing of the application, including the requirement to identify the 
name and address of the permittee. We propose to add the modifier 
``existing'' to the word ``permittee.'' ``Existing permittee'' means 
the permittee that transferred, assigned, or sold the permit rights. 
Significantly, we also propose that no advertisement is required for an 
assignment or when there is only a change in operator. We note that the 
existing requirement for public notice is less extensive than that 
required for significant revisions, which, under our rules, are subject 
to the full public notice requirements applicable to new permit 
applications. See 30 CFR 773.6. We propose to retain the substance of 
existing paragraph (b)(2) for transfers and sales. However, we do not 
believe that an assignment of permit rights to a designated operator is 
significant enough to require public notice and comment. An assignment 
of permit rights involves only a conveyance of the

[[Page 3847]]

permittee's right to mine, without affecting his obligation for full 
compliance under the permit. Therefore, we believe that advertising and 
public comment are not necessary for an assignment of permit rights to 
a designated operator.
30 CFR 774.17(c)
    Proposed paragraph (c), which addresses public participation 
requirements, would remain substantively similar to the existing 
provisions. However, as with the advertising provision proposed at 
paragraph (b)(2), we do not believe an assignment of rights granted 
under a permit or a change in operator is significant enough to require 
public participation.
30 CFR 774.17(d)
    Proposed paragraph 774.17(d) sets forth the criteria for approval 
of a permit application submitted under 30 CFR 774.17. The proposed 
provisions are substantively similar to the existing rules. We propose 
to revise the performance bond provision in paragraph (d)(2) to clarify 
that an applicant must submit proof of a sufficient performance bond or 
other guarantee. We propose removing that portion of the current 
provision that indicates an applicant can obtain the bond coverage of 
the original permittee because it is unnecessary and included within 
the concept of submitting proof of sufficient bond.
    We propose to add new paragraph (d)(3), which requires regulatory 
authority approval of any proposed changes to the existing permittee's 
approved mine and/or reclamation plan. This proposed change corresponds 
to the proposed addition of new paragraph (b)(1)(iv), discussed above. 
In our view, any proposed change to the mining and reclamation plans 
should be approved as part of this process. Nonetheless, we recognize 
that the permittee may apply for a revision of an approved permit at 
any time.
30 CFR 774.17(e)
    We propose to revise current paragraph (e), which contains 
provisions for notification of the regulatory authority's permitting 
decision. Proposed paragraph (e)(1) is substantively similar to 
existing paragraph (e). We propose to eliminate existing paragraph 
(e)(2), which is predicated on the idea that the applicant is seeking 
approval of a private business transaction; in its place, we propose to 
add a new provision that would require the regulatory authority to 
update the application, permit, and other relevant records in the 
Applicant/Violator System (AVS) (see definition at 30 CFR 701.5) once a 
permitting decision under these procedures has been made. We believe 
that keeping the information in AVS accurate and current remains 
critical to the effective and efficient operation of the computer 
system.
30 CFR 774.17(f)
    Proposed paragraph 774.17(f) is substantively similar to the 
existing paragraph. The only noteworthy change would be removal of the 
term ``successor in interest'' to emphasize that 30 CFR 774.17, as 
revised, would no longer apply to successors in interest. Instead, the 
proposed revision would focus on ``any new permittee approved to 
commence surface coal mining operations under this section.''

F. Section 774.18--Successor in Interest

    Section 506(b) of SMCRA states, in pertinent part:

    A successor in interest to a permittee who applies for a new 
permit within thirty days of succeeding to such interest and who is 
able to obtain the bond coverage of the original permittee may 
continue surface coal mining and reclamation operations according to 
the approved mining and reclamation plan of the original permittee 
until such successor's application is granted or denied.

30 U.S.C. 1256(b). Previously, as under our existing rules, we have 
commingled the concepts of ``successor in interest'' and ``transfer, 
assignment, or sale.'' Thus, successor in interest is currently defined 
to mean a person who succeeds to rights granted under a permit, by 
transfer, assignment, or sale of those rights. Due to this merger of 
concepts, we have never promulgated separate regulatory provisions 
pertaining exclusively to successors in interest, as distinct from 
transferees, assignees, and purchasers. As explained previously in this 
preamble, we now propose to give separate regulatory effect to section 
506(b)'s ``successor in interest'' provisions at proposed new 30 CFR 
774.18. Our reasons for proposing to separate the successor in interest 
provisions from the transfer, assignment, or sale provisions are 
explained elsewhere in this preamble. The most significant aspect of 
these proposed provisions is that a successor in interest may, under 
certain specified circumstances, continue to mine under the existing 
permit while the regulatory authority processes the successor in 
interest's new permit application. Below, we discuss each proposed 
provision by paragraph.
30 CFR 774.18(a)
    We propose to add new paragraph 774.18(a), which would establish 
application requirements for successors in interest. Consistent with 
SMCRA section 506(b), proposed paragraph (a)(1) would provide that a 
successor in interest must apply for a new permit within 30 days of 
succeeding to the rights granted under an existing permit. Proposed 
paragraph (a)(2) would require a successor in interest to obtain 
performance bond coverage in an amount sufficient to cover the 
operations proposed in the permit application and provide proof of such 
coverage to the regulatory authority. Proposed paragraph (a)(3) 
requires the successor in interest to meet any other requirements 
specified by the regulatory authority. Proposed paragraph (a)(3) is 
consistent with provisions in our other permitting rules and is also 
consistent with our belief that a regulatory authority should retain 
some discretion to specify additional requirements based on the case-
specific circumstances of a particular permit application.
30 CFR 774.18(b)
    At paragraph (b), we propose to give effect to SMCRA section 
506(b)'s provision for successors in interest to continue mining under 
the existing permit. Consistent with section 506(b), we propose that a 
successor in interest who applies for a new permit within 30 days, and 
who is able to obtain the bond coverage of the original permittee, or 
equivalent bond coverage, may continue uninterrupted surface coal 
mining and reclamation operations under the existing permit. This 
provision comports with the statutory text of section 506(b) and the 
legislative history supporting that section. Although the Act specifies 
that the successor in interest must obtain the bond coverage of the 
original permittee, we believe that it is consistent with the Act to 
allow the successor in interest to obtain new bond coverage equivalent 
to the original permittee's coverage.

III. Public Comment Procedures

    Electronic or Written Comments: If you submit written comments, 
they should be specific, confined to issues pertinent to the proposed 
rule, and explain the reason for any recommended change(s). We 
appreciate any and all comments, but the most useful and likely to 
influence decisions on a final rule will be those that either involve 
personal experience or include citations to and analyses of SMCRA, its 
legislative history, its impending regulations, case law, other 
pertinent

[[Page 3848]]

State or Federal laws or regulations, technical literature, or other 
relevant publications.
    Except for comments provided in an electronic format, you should 
submit three copies of your comments if practical. We will not consider 
anonymous comments. Comments received after the close of the comment 
period (see DATES) or at locations other than those listed above (see 
ADDRESSES) will not be considered or included in the Administrative 
Record.
    Availability of Comments: Our practice is to make comments, 
including names and home addresses of respondents, available for public 
review during regular business hours at the OSM Administrative Record 
Room (see ADDRESSES). Individual respondents may request that we 
withhold their home address from the rulemaking record. We will honor 
this request to the extent allowable by law. There also may be 
circumstances in which we would withhold from the rulemaking record a 
respondent's identity, to the extent allowed by law. If you wish us to 
withhold your name and/or address, you must state this prominently at 
the beginning of your comment and submit your comment by regular mail, 
not electronically. We will make all submissions from organizations or 
businesses, and from individuals identifying themselves as 
representatives or officials of organizations or businesses, available 
for public inspection in their entirety.
    Public hearings: We will hold a public hearing on the proposed rule 
upon request only. The time, date, and address for any hearing will be 
announced in the Federal Register at least 7 days prior to the hearing.
    Any person interested in participating in a hearing should inform 
Mr. Earl Bandy (see FOR FURTHER INFORMATION CONTACT), either orally or 
in writing by 4:30 p.m., eastern time, on February 16, 2005. If no one 
has contacted Mr. Bandy to express an interest in participating in a 
hearing by that date, a hearing will not be held. If only one person 
expresses an interest, a public meeting rather than a hearing may be 
held, with the results included in the Administrative Record.
    The public hearing will continue on the specified date until all 
persons scheduled to speak have been heard. If you are in the audience 
and have not been scheduled to speak and wish to do so, you will be 
allowed to speak after those who have been scheduled. We will end the 
hearing after all persons scheduled to speak and persons present in the 
audience who wish to speak have been heard. To assist the transcriber 
and ensure an accurate record, we request, if possible, that each 
person who speaks at a public hearing provide us with a written copy of 
his or her testimony.
    Public meeting: If there is only limited interest in a hearing at a 
particular location, a public meeting, rather than a public hearing, 
may be held. Persons wishing to meet with us to discuss the proposed 
rule may request a meeting by contacting the person listed under FOR 
FURTHER INFORMATION CONTACT. All meetings will be open to the public 
and, if possible, notice of the meetings will be posted at the 
appropriate locations listed under ADDRESSES. A written summary of each 
public meeting will be made a part of the administrative record of this 
rulemaking.

IV. Procedural Determinations

Executive Order 12866--Regulatory Planning and Review

    The proposed rule is considered a significant rule and is subject 
to review by the Office of Management and Budget under Executive Order 
12866.
    a. The proposed 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. The proposed revisions to the regulations implementing 
SMCRA sections 506(b) and 511(b) will not have an adverse economic 
impact on the coal industry or State regulatory authorities. The 
anticipated expenses for the coal industry and the States under the 
proposed creation of separate provisions for successors in interest are 
not significant, given that these costs previously have been a subset 
of costs projected for the coal industry and States under the 
provisions for transfer, assignment, or sale of permit rights. 
Therefore, any change in the estimated costs would be relatively small. 
None of the changes significantly alter the fundamental framework of 
our regulatory program.
    b. The proposed rule would not create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency.
    c. The proposed rule would not alter the budgetary effects of 
entitlements, grants, user fees, loan programs, or the rights and 
obligations of their recipients.
    d. The proposed rule may raise novel legal or policy issues which 
is why it is considered significant.

Regulatory Flexibility Act

    The Department of the Interior certifies that this proposed 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.). As previously stated, the proposed revisions to the regulations 
implementing sections 506(b) and 511(b) of SMCRA would not have an 
adverse economic impact on the coal industry or State regulatory 
authorities. In addition, the proposed rule would produce no adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of United States enterprises to compete with 
foreign-based enterprises in domestic or export markets.

Small Business Regulatory Enforcement Fairness Act

    For the reasons previously stated, this proposed rule is not a 
major rule under 5 U.S.C. 804(2), the Small Business Regulatory 
Enforcement Fairness Act. This proposed rule:
    a. Does not have an annual effect on the economy of $100 million or 
more.
    b. Will not cause major increases 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 the 
United States-based enterprises to compete with foreign-based 
enterprises.

Unfunded Mandates Reform Act of 1995

    For the reasons previously stated, this proposed rule would not 
impose an unfunded mandate on State, local, or tribal governments or 
the private sector of more than $100 million per year. The proposed 
rule does not have a significant or unique effect on State, local or 
tribal governments or the private sector. A statement concerning 
information required under the Unfunded Mandates Reform Act (2 U.S.C. 
1531) is not required.

Executive Order 12630--Takings

    This proposed rule does not have any significant takings 
implications under Executive Order 12630. Therefore, a takings 
implication assessment is not required.

Executive Order 12988--Civil Justice Reform

    In accordance with Executive Order 12988, the Office of the 
Solicitor has determined that this rule does not unduly burden the 
judicial system and meets the requirements of sections 3(a) and 3(b)(2) 
of the Order.

[[Page 3849]]

Executive Order 13132--Federalism

    For the reasons discussed above, this proposed rule does not have 
significant Federalism implications to warrant the preparation of a 
Federalism Assessment under Executive Order 13132.

Executive Order 13175--Consultation and Coordination With Indian Tribal 
Governments

    In accordance with Executive Order 13175, we have evaluated the 
potential effects of this proposed rule on Federally recognized Indian 
tribes. We have determined that the proposed rule would not have 
substantial direct effects on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian Tribes.

Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This proposed rule is not considered a significant energy action 
under Executive Order 13211. For the reasons previously stated, the 
proposed revisions to the regulations implementing SMCRA sections 
506(b) and 511(b) would not have a significant effect on the supply, 
distribution, or use of energy.

Paperwork Reduction Act

    The proposed rule requires an information collection under the 
Paperwork Reduction Act. In accordance with 44 U.S.C. 3507(d), OSM has 
submitted the information collection and recordkeeping requirements of 
30 CFR part 774 to the Office of Management and Budget (OMB) for review 
and approval.
    Title: Revision; Renewal; Transfer, Assignment, or Sale of Permit 
Rights; Successor in Interest; Post-Permit Issuance Requirements; and 
Other Actions Based on Ownership, Control, and Violation Information.
    OMB Control Number: 1029-New.
    Summary: Sections 506 and 511 of Public Law 95-87 provide that 
persons seeking permit revisions, renewals, transfer, assignment, or 
sale of their permit rights for coal mining activities submit relevant 
information to the regulatory authority to allow the regulatory 
authority to determine whether the applicant meets the requirements for 
the action anticipated.
    Bureau Form Number: None.
    Frequency of Collection: On occasion.
    Description of Respondents: Surface coal mining permit applicants 
and State regulatory authorities.
    Total Annual Responses: 6,701.
    Total Annual Burden Hours: 59,331.
    Comments are invited on:
    (a) Whether the proposed collection of information is necessary for 
the proper performance of OSM and State regulatory authorities, 
including whether the information will have practical utility;
    (b) The accuracy of OSM's estimate of the burden of the proposed 
collection of information;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    (d) Ways to minimize the burden of collection on the respondents.
    Under the Paperwork Reduction Act, OSM must obtain OMB approval of 
all information and recordkeeping requirements. No person is required 
to respond to an information collection request unless the form or 
regulation requesting the information has a currently valid OMB control 
(clearance) number. To obtain a copy of OSM's information collection 
clearance request, explanatory information, and related forms, contact 
John A. Trelease at (202) 208-2783 or by e-mail at [email protected].
    By law, OMB must respond to OSM's request for approval within 60 
days of publication of this proposed rule, but may respond as soon as 
30 days after publication. Therefore, to ensure consideration by OMB, 
you must send comments regarding these burden estimates or any other 
aspect of these information collection and recordkeeping requirements 
by February 25, 2005, to the Office of Management and Budget, Office of 
Information and Regulatory Affairs, Attention: Interior Desk Officer, 
via e-mail to [email protected], or via facsimile to (202) 395-
6566. Also, please send a copy of your comments to John A. Trelease, 
Office of Surface Mining Reclamation and Enforcement, Room 252-SIB, 
1951 Constitution Ave., NW., Washington, DC 20240, or electronically to 
[email protected].

National Environmental Policy Act

    We have reviewed this proposed rule and determined that it is 
categorically excluded from the National Environmental Policy Act 
process in accordance with the Departmental Manual 516 DM 2, Appendices 
1.9 and 2.

Clarity of This Regulation

    Executive Order 12866 requires each agency to write regulations 
that are easy to understand. We invite your comments on how to make 
this proposed rule easier to understand, including answers to questions 
such as the following: (1) Are the requirements in the proposed rule 
clearly stated? (2) Does the proposed rule contain technical language 
or jargon that interferes with its clarity? (3) Does the format of the 
proposed rule (grouping and order of sections, use of headings, 
paragraphing, etc.) aid or reduce its clarity? (4) Would the rule be 
easier to understand if it were divided into more (but shorter) 
sections? (A ``section'' appears in bold type and is preceded by the 
symbol ``Sec.  '' and a numbered heading; for example, Sec.  774.17. 
(5) Is the description of the proposed rule in the SUPPLEMENTARY 
INFORMATION section of this preamble helpful in understanding the 
proposed rule? What else could we do to make the proposed rule easier 
to understand? Send a copy of any comments that concern how we could 
make this proposed rule easier to understand to: Office of Regulatory 
Affairs, Department of the Interior, Room 7229, 1849 C Street NW., 
Washington, DC 20240. You may also e-mail the comments to this address: 
[email protected].

List of Subjects

30 CFR Part 701

    Law enforcement, Surface mining, Underground mining.

30 CFR Part 774

    Reporting and recordkeeping requirements, Surface mining, 
Underground mining.

    Dated: December 22, 2004.
Rebecca W. Watson,
Assistant Secretary, Land and Minerals Management.

    For the reasons given in the preamble, OSM proposes to amend 30 CFR 
Parts 701 and 774 as set forth below:

PART 701--PERMANENT REGULATORY PROGRAM

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

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

    2. Amend Sec.  701.5 as follows:
    a. Revise the definition of Successor in interest.
    b. Revise the definition of Transfer, assignment, or sale of permit 
rights.
    The revised definitions read as follows.


Sec.  701.5  Definitions.

* * * * *
    Successor in interest means a person who follows a permittee, by 
statutory succession, operation of law, or as a result of a similar, 
non-substantive change in form, in ownership over the right to conduct 
surface coal mining

[[Page 3850]]

operations granted under a permit. Successors in interest will result 
from a non-commercial, non-substantive event, such as a business name 
change or an inheritance.
* * * * *
    Transfer, assignment, or sale of permit rights means a commercial 
transaction resulting in a change in ownership over the right to 
conduct surface coal mining operations granted under a permit or a 
change in operator. A transfer, assignment, or sale of permit rights 
involves a substantive change and not a mere change in form.
* * * * *
    3. Revise the heading for part 774 to read as follows:

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

    4. The authority citation for part 774 continues to read as 
follows:

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

    5. 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; successors in interest; 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.
    6. Revise Sec.  774.17 to read as follows:


Sec.  774.17  Transfer, assignment, or sale of permit rights.

    (a) General. Permit rights obtained by way of a transfer, 
assignment, or sale of those rights are not valid without the prior 
written approval of the regulatory authority.
    (b) Application requirements. An applicant for approval to conduct 
surface coal mining operations under permit rights obtained by way of a 
transfer or sale of those rights, or wishing to assign permit rights to 
an operator other than the permittee, must--
    (1) Provide the regulatory authority with an application that must 
include--
    (i) The name, address, and telephone number of the existing 
permittee and relevant permit number;
    (ii) A description of the transfer, assignment, or sale;
    (iii) The applicant's or operator's legal, financial, compliance, 
and related information as specified under part 778 of this chapter; 
and
    (iv) Any proposed changes to the existing mining plan or 
reclamation plan.
    (2) Advertise the filing of the application in a newspaper of 
general circulation in the locality of the existing and proposed 
operations involved, indicating the name and address of the applicant, 
the existing permittee, the permit number, the geographic location of 
the permit, and the address to which written comments may be sent. No 
advertisement is required where there is only a change in operator 
through assignment.
    (3) Obtain performance bond coverage in an amount sufficient to 
cover the proposed operations, as required under part 800 of this 
chapter, and provide proof of such coverage to the regulatory 
authority.
    (c) Public participation. Any person having an interest that is or 
may be adversely affected by a decision on an application submitted 
under this section involving a transfer or sale, including an official 
of any Federal, State, or local government agency, may submit written 
comments on the application to the regulatory authority within a time 
specified by the regulatory authority.
    (d) Approval Criteria. The regulatory authority may approve an 
application under this section if it finds in writing, in accordance 
with Sec.  773.15(n) of this chapter, that the applicant or permittee--
    (1) Is eligible to receive a permit under Sec.  773.12 or Sec.  
773.14 of this chapter;
    (2) Has submitted proof of sufficient performance bond coverage or 
other guarantee, as required under part 800 of this chapter;
    (3) Has received approval of any proposed changes to the existing 
permittee's approved mining plan or reclamation plan; and
    (4) Meets any other requirements specified by the regulatory 
authority.
    (e) Notification. Following the permitting decision, the regulatory 
authority must--
    (1) Notify the existing permittee; the transferee, assignee, or 
purchaser; commenters; and OSM, if OSM is not the regulatory authority, 
of its findings, and
    (2) Enter and update application, permit, and other relevant 
information in AVS.
    (f) Continued mining and reclamation. Any new permittee approved to 
commence surface coal mining operations under this section shall assume 
the liability and reclamation responsibilities of the existing permit 
and shall conduct the surface coal mining and reclamation operations in 
full compliance with the Act, the regulatory program, and the terms and 
conditions of the existing permit, unless the applicant has obtained a 
new or revised permit as provided in this subchapter.
    7. Add new Sec.  774.18 to read as follows:


Sec.  774.18  Successors in Interest.

    (a) Application requirements. A successor in interest must--
    (1) Apply for a new permit within 30 days of succeeding to the 
right to conduct surface coal mining operations granted under an 
existing permit; and
    (2) Obtain performance bond coverage in an amount sufficient to 
cover the proposed operations, as required under part 800 of this 
chapter, and provide proof of such coverage to the regulatory 
authority.
    (3) Meet any other requirements specified by the regulatory 
authority.
    (b) Continued operation under the existing permit. A successor in 
interest who complies with paragraph (a)(1) of this section and is able 
to obtain the bond coverage of the original permittee, or equivalent 
bond coverage, may continue surface coal mining and reclamation 
operations under an existing permit until such successor in interest's 
application for a new permit is granted or denied.

[FR Doc. 05-1311 Filed 1-25-05; 8:45 am]
BILLING CODE 4310-05-P