[Federal Register Volume 72, Number 231 (Monday, December 3, 2007)]
[Rules and Regulations]
[Pages 68000-68031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-23162]



[[Page 67999]]

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Part II





Department of the Interior





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Office of Surface Mining Reclamation and Enforcement



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30 CFR Parts 701, 773, 774 et al.



Ownership and Control; Permit and Application Information; Transfer, 
Assignment, or Sale of Permit Rights; Final Rule

  Federal Register / Vol. 72, No. 231 / Monday, December 3, 2007 / 
Rules and Regulations  

[[Page 68000]]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Parts 701, 773, 774, 778, 843, and 847

RIN 1029-AC52


Ownership and Control; Permit and Application Information; 
Transfer, Assignment, or Sale of Permit Rights

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

ACTION: Final Rule.

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SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement 
(OSM), are publishing this final rule to amend certain provisions of 
our ``ownership and control'' and related rules, as well as our rules 
pertaining to the transfer, assignment, or sale of permit rights. More 
specifically, we are amending our definitions pertaining to ownership, 
control, and transfer, assignment, or sale of permit rights and our 
regulatory provisions governing: permit eligibility determinations; 
improvidently issued permits; ownership or control challenges; post-
permit issuance actions and requirements; transfer, assignment, or sale 
of permit rights; application and permit information; and alternative 
enforcement. Additionally, we are removing our current rules pertaining 
to improvidently issued State permits. This final rule implements 
various provisions of, and is authorized by, the Surface Mining Control 
and Reclamation Act of 1977 (SMCRA or the Act).

EFFECTIVE DATE: January 2, 2008.

FOR FURTHER INFORMATION CONTACT: Debbie J. Feheley, Chief, Applicant/
Violator System Office, Office of Surface Mining Reclamation and 
Enforcement, Appalachian Region, 2679 Regency Road, Lexington, Kentucky 
40503. Telephone: (859) 260-8424 or (800) 643-9748; electronic mail: 
[email protected].
    Additional information concerning OSM, this rule, and related 
documents may be found on OSM's Internet home page (Internet address: 
http://www.osmre.gov) and on our Applicant/Violator System Office's 
(AVS Office's) Internet home page (Internet address: http://www.avs.osmre.gov).

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background to the Final Rule
II. Public Participation in the Rulemaking Process
III. Discussion of the Final Rule
    A. General Comments
    B. Section 701.5--Definition: Control or Controller
    C. Section 701.5--Definition: Own, Owner, or Ownership
    D. Section 701.5--Definition: Transfer, Assignment, or Sale of 
Permit Rights
    E. Section 773.3--Information Collection
    F. Section 773.7--Review of Permit Applications
    G. Section 773.8--General Provisions for Review of Permit 
Application Information and Entry of Information Into AVS
    H. Section 773.9--Review of Applicant and Operator Information
    I. Section 773.10--Review of Permit History
    J. Section 773.12--Permit Eligibility Determination
    K. Section 773.14--Eligibility for Provisionally Issued Permits
    L. Section 773.21--Initial Review and Finding Requirements for 
Improvidently Issued Permits
    M. Section 773.22--Notice Requirements for Improvidently Issued 
Permits
    N. Section 773.23--Suspension or Rescission Requirements for 
Improvidently Issued Permits
    O. Section 773.26--How To Challenge an Ownership or Control or 
Finding
    P. Section 773.27--Burden of Proof for Ownership or Control 
Challenges
    Q. Section 773.28--Written Agency Decisions on Challenges to 
Ownership or Control Listings or Findings
    R. Section 774.9--Information Collection
    S. Section 774.11--Post-permit Issuance Requirements for 
Regulatory Authorities and Other Actions Based on Ownership, 
Control, and Violation Information
    T. Section 774.12--Post-permit Issuance Information Requirements 
for Permittees
    U. Section 774.17--Transfer, Assignment, or Sale of Permit 
Rights
    V. Section 778.8--Information Collection
    W. Section 778.11--Providing Applicant and Operator Information
    X. Section 843.21--Procedures for Improvidently Issued State 
Permits
    Y. Sections 847.11 and 847.16--Criminal Penalties and Civil 
Actions for Relief
IV. Procedural Determinations

I. Background to the Final Rule

    This final rule is based on our October 10, 2006, proposed rule (71 
FR 59592), in which we proposed to amend certain provisions of our 2000 
final ownership and control rule (65 FR 79582) and our rules pertaining 
to the transfer, assignment, or sale of permit rights at 30 CFR 701.5 
(definition of transfer, assignment, or sale of permit rights) and 30 
CFR 774.17 (regulatory requirements). The 2000 final rule, which took 
effect for Federal programs (i.e., SMCRA programs for which OSM is the 
regulatory authority) on January 18, 2001, primarily addresses areas 
related to ownership or control of surface coal mining operations under 
section 510(c) of SMCRA. 30 U.S.C. 1260(c). Under section 510(c), an 
applicant for a permit to conduct surface coal mining and reclamation 
operations (hereafter ``applicant'' or ``permit applicant'') is not 
eligible to receive a permit if the applicant owns or controls any 
surface coal mining operation that is in violation of SMCRA or other 
applicable laws. In addition to implementing section 510(c), the 2000 
final rule also addresses, among other things, permit application 
information requirements, post-permit issuance information 
requirements, entry of information into the Applicant/Violator System 
(AVS), application processing procedures, and alternative enforcement. 
See generally 65 FR 79661-79671. Previously, we viewed our transfer, 
assignment, or sale rules as related to our ownership and control rules 
because our previous definition of transfer, assignment, or sale of 
permit rights incorporated ownership and control concepts. See 30 CFR 
701.5 (2007).
    Shortly after we promulgated our 2000 final rule, the National 
Mining Association (NMA) filed a lawsuit in the U.S. District Court for 
the District of Columbia in which NMA challenged the ownership and 
control and related provisions of our 2000 final rule on multiple 
grounds. NMA's suit also included a challenge to our transfer, 
assignment, or sale rules. Although the 2000 rule did not amend our 
transfer, assignment, or sale rules, NMA argued that we reopened those 
rules by proposing to revise them in the proposed rule that preceded 
the 2000 final rule.
    As we explained in our 2006 proposed rule, NMA's lawsuit was 
another in a series of lawsuits concerning ownership and control and 
related issues. Litigation in this area--involving, at times, OSM, 
State regulatory authorities (administering OSM-approved State 
programs), NMA, and environmental groups--has been contentious and 
ongoing since at least 1988. The 2000 final rule replaced a 1997 
interim final rule (62 FR 19451), which was partially invalidated by 
the U.S. Court of Appeals for the District of Columbia Circuit. 
National Mining Ass'n v. Dep't of the Interior, 177 F.3d 1 (DC Cir. 
1999) (NMA v. DOI II). The interim final rule replaced three sets of 
predecessor regulations dating back to 1988 and 1989 (53 FR 38868, 54 
FR 8982, 54 FR 18438), which were invalidated by the D.C. Circuit 
because the court found that one aspect of the rules was inconsistent 
with section 510(c) of SMCRA. National Mining Ass'n v. Dep't of the 
Interior, 105 F.3d 691 (DC Cir. 1997) (NMA v. DOI I). The

[[Page 68001]]

preamble to our 2000 final rule contains a detailed discussion of the 
prior rules and the related litigation. See generally 65 FR 79582-
79584.
    This continuous litigation has created regulatory uncertainty for 
OSM, State regulatory authorities, the regulated community, and the 
public. In an effort to end the litigation concerning our 2000 final 
rule, we entered into negotiations with NMA in an attempt to settle 
NMA's judicial challenge. Ultimately, in three partial settlement 
agreements, we were able to settle all of the issues presented in NMA's 
rule challenge. The three partial settlement agreements (along with a 
modification to the third of those agreements), which were filed with 
and approved by the court, are included in our public record supporting 
this final rule. Under the terms of the settlement, we agreed to 
publish two proposed rules in the Federal Register (one pertaining to 
ownership and control and related issues and the other pertaining to 
transfer, assignment, or sale issues) in accordance with the 
Administrative Procedure Act's standard notice and comment procedures. 
We did not agree to finalize any of the provisions as proposed and, 
indeed, this final rule departs from the settlement agreement and our 
2006 proposed rule in significant respects. To the extent we promulgate 
final rules in accordance with the terms of the three partial 
settlements, NMA agreed not to challenge those final rules.
    With respect to the two proposed rules, the settlement obligated us 
to take various types of actions. For example, in some instances, we 
agreed to propose specific rule language. In other instances, we agreed 
only to publish certain clarifications to the preamble supporting our 
2000 rule (we published these clarifications in our 2006 proposed 
rule--71 FR 59605-59606--and do not repeat them in this final rule). 
With regard to transfer, assignment, or sale issues, we agreed only to 
publish a proposed rule, and did not agree upon any specific rule 
language. As part of the overall settlement, NMA also agreed to drop 
several of its claims without any further action on our part. We view 
the settlement as highly favorable in that it gave us the opportunity 
to clarify and simplify our regulations without hampering our ability 
to enforce SMCRA. More importantly, the settlement allowed us to retain 
key aspects of our regulatory program without the risk of having them 
overturned in court.
    After giving due consideration to all public comments received on 
our 2006 proposed rule, we decided to issue this final rule. Our final 
rule clarifies ambiguous provisions in our previous regulations and 
clearly sets forth the responsibilities and obligations of the 
regulated community and regulatory authorities. Most importantly, 
however, this final rule ensures that we and our State counterparts 
have the tools we need to enforce SMCRA. While we are certainly aware 
that not all interested parties will be entirely satisfied with every 
aspect of this final rule, we are confident that, on balance, the rule, 
which required difficult line drawing, strikes a fair and appropriate 
balance between competing interests. Our sincere hope is that this 
final rule will introduce regulatory stability--which is important to 
all interested parties--to aspects of our regulatory program that have 
been mired in uncertainty and litigation for years.

II. Public Participation in the Rulemaking Process

    In order to obtain as broad a range of suggestions and ideas as 
possible, we made sure there were ample opportunities for public 
participation in the rulemaking process. To satisfy our obligations 
under the settlement, we published the first of the two proposed 
rules--relating to ownership and control and related issues--on 
December 29, 2003. 68 FR 75036 (2003 proposed rule). We received and 
granted a request for an extension of the public comment period. The 
public comment period, as extended, closed on March 29, 2004. We 
published the second proposed rule--relating to the transfer, 
assignment, or sale of permit rights--on January 26, 2005. 70 FR 3840 
(2005 proposed rule). Again, we received and granted an extension 
request. The public comment period, as extended, closed on April 15, 
2005.
    After the comment periods had closed on the two proposed rules 
described above, we reviewed all comments received and decided to meet 
with representatives of our State co-regulators before taking further 
action. States with OSM-approved SMCRA programs (primacy states) have 
primary responsibility for the regulation of surface coal mining and 
reclamation operations within their State and must have State rules 
that are consistent with, and no less stringent than, our national 
rules. Because any new national rules could impact the primacy States, 
it was important to meet with those States prior to issuing a final 
rule. We met with State representatives from June 7-9, 2005, in 
Cincinnati, OH. The results of the outreach meeting are detailed in a 
report that is included in our public record supporting this 
rulemaking.
    Based on the comments from our 2003 and 2005 proposed rules and 
information gathered at our meeting with the States, we decided it was 
best to combine the topics covered in the two proposed rules and issue 
one new, reproposed rule. Whereas we could have proceeded to finalize 
the 2003 and 2005 proposed rules, without additional public 
participation, we issued the combined 2006 proposed rule for the 
express purpose of allowing the public another opportunity to comment 
on the proposed changes.
    Our combined proposed rule was published on October 10, 2006. We 
did not receive any extension requests, and the comment period closed 
on December 11, 2006. We received 15 comment documents, including seven 
submitted by or on behalf of State regulatory authorities, seven from 
companies and associations connected with the coal mining industry, and 
one from organizations representing environmental and citizens' 
interests. The three primary sets of comments we received were from the 
Interstate Mining Compact Commission (IMCC), the National Mining 
Association (NMA), and Kentucky Resources Council, Inc. and Citizens 
Coal Council (KRC/CCC) (these organizations submitted one joint comment 
document). IMCC represents State regulatory authorities, the front-line 
regulators under SMCRA in most coal-producing states. IMCC's comments 
were supported, in whole or in part, by several State regulatory 
authorities. NMA is an industry trade association. NMA's comments were 
supported, in whole or in part, by several coal companies. KRC/CCC 
represent environmental and citizens' interests.
    We did not receive a request for a public hearing and none was 
held. After our evaluation of all the public comments, and based on our 
nearly 30 years of implementing the relevant statutory provisions, we 
decided to issue a final rule. In short, this final rule is the 
culmination of a carefully-considered, lengthy process, marked by ample 
opportunities for meaningful public comment.

III. Discussion of the Final Rule

    This final rule amends our definitions of ownership, control, and 
transfer, assignment or sale of permit rights; amends our regulatory 
provisions governing permit application information collection, permit 
eligibility reviews and determinations, provisionally issued permits, 
improvidently issued permits, ownership or control challenges, post-

[[Page 68002]]

permit issuance information requirements, and alternative enforcement; 
and removes the Federal procedures for improvidently issued State 
permits. Below, we discuss each aspect of this final rule and respond 
to comments received on our 2006 proposed rule.

A. General Comments

    On balance, most aspects of our 2006 proposed rule were well 
received by most commenters. One commenter said that, ``[g]enerally, 
the proposed rule is an improvement over the existing rule,'' noting 
that ``the improvement is primarily the result of the simplification of 
the rules.'' Similarly, another commenter found the proposed rule to be 
a ``breath of fresh air'' that will put an end to ``unnecessary 
complexity.'' Another commenter said the ``new proposed rule provides a 
more reasonable and workable framework for regulatory authorities.'' We 
appreciate these comments.
    One commenter disagreed with virtually every aspect of our 2006 
proposed rule. In addition to specific comments on the proposed 
amendments, this commenter opined that we should not amend our 2000 
rule because, unlike our 2006 proposed rule, the 2000 rule was ``fully 
considered.'' We disagree with the premise of this comment. As 
explained above, this final rule is the culmination of a lengthy 
process that afforded ample opportunity for public participation. 
Indeed, rather than finalizing our 2003 and 2005 proposed rules, we 
instead reproposed the amendments to allow another opportunity for 
public comments. In this final rule, as with our 2000 rule, we 
carefully considered, and responded to, all of the comments we 
received. In fact, we modified the proposed rule in several respects 
based on comments.
    This commenter also stated that, with a single exception, the 
proposed amendments lacked a ``reasoned analysis'' or ``lawful 
purpose,'' particularly to the extent that we proposed to ``change 
course'' by rescinding prior rule provisions. Consistent with the 
Administrative Procedure Act (APA), the primary purpose of the proposed 
rule was to provide sufficient explanation of the proposed amendments 
to allow for informed public comments. The best evidence that we 
achieved that objective is the quality of the comments we actually 
received on the proposed rule, including the comments submitted by this 
commenter. Further, with regard to this final rule, it is well accepted 
that we, as the agency charged with implementing SMCRA, may reconsider 
the wisdom of our policies on a continuing basis. None of our 
interpretations are set in stone. In our discussion of the substantive 
provisions of this final rule, below, we sufficiently set forth a 
``reasoned analysis'' and the basis and purpose of the amendments to 
our previous rules. Finally, in many instances, the amendments to our 
2000 rule do not constitute a reversal of policy but are better 
described as clarifications to our previous rules.
    The commenter also chides us for not litigating NMA's challenge to 
our 2000 rule and instead electing to settle the litigation. In this 
regard, the commenter refers to our decision to settle as an 
``astonishing collapse.'' We disagree. Any litigation has an attendant 
risk of loss, as past litigation over our previous ownership and 
control rules demonstrates. In both NMA v. DOI I and NMA v. DOI II, the 
D.C. Circuit invalidated key aspects of our prior rules, even though we 
thought those rules were well reasoned and lawful. We saw our 
settlement with NMA as an opportunity to eliminate the risk of losing 
important aspects of our regulatory program. This rulemaking initiative 
has also allowed us to simplify and clarify our previous rules, while 
continuing to ensure that regulatory authorities have all the tools 
they need to enforce SMCRA. We view the settlement as a success, not a 
``collapse.''
    The commenter implies that, as a result of our settlement with NMA, 
we may have prejudged this final rule. The commenter similarly refers 
to our ``supposedly reserved discretion'' to decline to adopt the 
revisions we agreed to propose under the settlement. We reiterate that 
under the settlement agreement, we were only required to propose two 
rules--i.e., our 2003 and 2005 proposed rules--and were not required to 
finalize any provisions as proposed. The best evidence that we have not 
prejudged this final rule is the fact that the rule departs from the 
settlement agreement and our 2003, 2005, and 2006 proposed rules in 
significant respects, especially with regard to the information permit 
applicants must disclose in their permit applications (see heading 
III.W., below).
    Next, the commenter asserts that we did not ``endorse the proposed 
changes as better interpretation[s] of the statute at issue or as 
better policy choices.'' Specifically with regard to our 2003 proposed 
rule (which has been withdrawn), the commenter states that we ``did not 
believe that SMCRA requires or would be best implemented by many, if 
indeed any, of the proposed revisions.'' In support of these comments, 
the commenter points to isolated portions of the preambles to our 
proposed rules, where we did not state, or even imply, that we did not 
endorse our own proposed rules. Rather, we simply pointed out that, at 
the proposed rule stage, we did not necessarily agree with NMA's 
analysis supporting its position with regard to one proposed amendment 
in this multi-issue rulemaking. Moreover, our statements were limited 
to the specific issue being discussed and did not, in any way, apply to 
the totality of the proposed rules. To be sure, we fully endorse every 
aspect of this final rule--each of which is authorized by SMCRA--as 
part of our comprehensive regulatory program related to ownership and 
control issues.
    This commenter also expressed the opinion that our administrative 
record for this rulemaking is inadequate with regard to our settlement 
with NMA or our potential prejudgment of the issues in the proposed 
rulemaking. The commenter asked us to supplement our public record 
supporting this rulemaking with various documents pertaining to the 
settlement, including the settlement agreements themselves, every draft 
of the agreements, every item of correspondence relating to the 
settlement, and every note or memorandum of communications relating to 
the settlement. After the requested supplementation of our public 
record, the commenter requested that we reopen the comment period to 
solicit further comments regarding any ``actual basis'' for this 
rulemaking and any possible agency prejudgment of its outcome.
    In response to this comment, we will place the three partial 
settlement agreements, along with a modification to the third of those 
agreements, in our public record, but we otherwise decline to honor the 
commenter's requests. The three partial settlement agreements discussed 
above, which were filed with and approved by the U.S. District Court 
for the District of Columbia, collectively represent the totality of 
our settlement agreement with NMA. We note that these agreements have 
been publicly available ever since they were filed with the court. The 
additional information requested by the commenter is irrelevant to this 
rulemaking and/or privileged. If this final rule is challenged in 
court, the administrative record we will lodge with the court will 
contain all information that is legally required to support the 
rulemaking.
    Another commenter asked about the transition from our previous 
rules to these new rules. For example, the commenter asked whether 
there will be a requirement for existing permittees to

[[Page 68003]]

provide information for their permits under the new rules. The 
provisions we adopt in this final rule will become effective for 
Federal programs 30 days after the publication date of this final rule 
and will apply prospectively. The rule will apply to Federal permitting 
as applications are received for new permits, renewals, revisions, and 
transfers, assignments or sales. Similarly, with regard to information 
requirements, existing permittees will not have to comply with the new 
permit application information disclosures until their next permitting 
action. The rule will become effective in primacy States after we 
approve amendments to State programs and will apply in the manner 
outlined above for Federal programs.
    An industry commenter said it would be desirable to have better 
coordination between OSM and the State regulatory authorities with 
regard to the maintenance and application of ownership and control 
information. We believe coordination between our AVS Office and the 
State regulatory authorities on ownership or control issues is already 
excellent. However, we appreciate this comment and will continue to 
strive to achieve even greater levels of cooperation and coordination 
with the States.
    Finally, some State commenters expressed concern that our 2006 
proposed rule would place an undue burden on state regulatory 
authorities to identify persons who control surface coal mining 
operations. In this final rule, we believe we have alleviated this 
concern by making sure State regulatory authorities will have the 
information they need to identify potential controllers. Further, as 
always, our AVS Office remains ready to assist the States with 
ownership or control investigations.

B. Section 701.5--Definition: Control or Controller

    Under section 510(c) of SMCRA, 30 U.S.C. 1260(c), where ``any 
surface coal mining operation owned or controlled by the applicant is 
currently in violation of this Act or such other laws referred to [in] 
this subsection, the permit shall not be issued * * *.'' Thus, under 
this section, permit applicants who own or control surface coal mining 
operations with outstanding violations of SMCRA or certain other laws 
are not eligible for new permits. SMCRA does not define the terms 
``owned'' or ``controlled,'' or any variations thereof.
    At 30 CFR 701.5, our 2000 rule contained definitions of ``control 
or controller'' and ``own, owner, or ownership'' to implement section 
510(c) of the Act. In our 2006 proposed rule, we identified a problem 
with our 2000 rule. On the one hand, the 2000 rule had a broad, 
flexible definition of control or controller (30 CFR 701.5). For 
example, any person who had the ``ability'' to determine the manner in 
which a surface coal mining operation was conducted was a controller. 
At the same time, we had information disclosure requirements at 30 CFR 
778.11(c)(5) that required permit applicants to disclose all of their 
controllers in a permit application. We deemed this unfair to permit 
applicants because, under the flexible definition, reasonable minds 
could differ as to who met the regulatory definition of control or 
controller, and permit applicants could be taken to task for failing to 
identify a person the regulatory authority later deemed to be a 
controller.
    To remedy this problem, we could have modified the definition of 
control or controller to make it more specific, removing a regulatory 
authority's leeway and flexibility to determine control relationships 
on a case-by-case basis. Or, we could have made the information 
disclosure requirements more objective, while retaining the flexible 
definition of control or controller. In our 2006 proposed rule, we 
chose to propose the latter approach. We conclude that the ``ability to 
determine'' standard is desirable from a regulatory standpoint because 
it ``gives regulatory authorities flexibility to consider all of the 
relevant facts, on a case-by-case basis, in determining whether control 
is present; regulatory authorities also have the leeway to follow 
control wherever it may exist in a series of business relationships.'' 
(One commenter aptly referred to the ``ability to determine'' standard 
as a ``general, functional definition'' that ``enable[s] regulatory 
authorities to follow control in whatever unconventional direction it 
may lead.'') We also conclude that it would be easier for the regulated 
community to evade a definition with specific categories of controllers 
by reorganizing their business structures and relationships so as not 
to fall within the defined categories. In short, we feel it is 
essential to have a flexible definition of control or controller that 
allows regulatory authorities to identify controllers in real-world 
situations. For these reasons, we are retaining the flexible ``ability 
to determine'' standard that was contained in our 2000 rule by adopting 
the definition of control or controller as proposed, with one minor 
modification. In conjunction with retaining the ``ability to 
determine'' standard, we are amending our permit application 
information disclosure requirements so that they are more objective. 
See heading III.W., below.
    While we proposed to retain the ``ability to determine'' standard, 
we proposed to amend other aspects of our definition. In our 2000 final 
rule, we defined control or controller in terms of circumstances or 
relationships that establish a person's control of a surface coal 
mining operation. We also took the somewhat unusual step of including 
in the regulatory text examples of persons who may be, but are not 
always, controllers. As we explained in our 2006 proposed rule, the 
National Mining Association, in its judicial challenge to our 2000 
rule, alleged that our definition of control or controller was vague, 
arbitrary and capricious, and contrary to NMA v. DOI II.
    To settle NMA's claim, we agreed to propose removing certain 
specific categories of controllers from our definition at previous 
paragraphs (3) (general partner in a partnership) and (4) (person who 
has the ability to commit financial or real property assets). In 
addition, from previous paragraph (5), we agreed to propose removing 
the phrase ``alone or in concert with others,'' the phrase ``indirectly 
or directly,'' and all the examples of control at previous paragraphs 
(5)(i) through (5)(vi). In satisfaction of our obligation under the 
settlement agreement, we proposed these revisions to our definition of 
control or controller in December 2003 (68 FR 75037). When we issued 
our 2006 proposed rule, on which this final rule is based, we decided 
to carry forward these aspects of our 2003 proposal. In this final 
rule, we are adopting the proposed amendments because they streamline 
and simplify the previous definition, without weakening it.
    We stress that though we are removing certain language from the 
previous definition, the new definition still allows a regulatory 
authority to reach any person or entity with the ability to determine 
how a surface coal mining operation is conducted. Further, the 
``ability to determine'' standard will continue to encompass both 
indirect and direct control, as well as control in concert with others, 
where there is actual ability to control. While we are removing from 
the regulatory text two specific categories of controllers (general 
partner in a partnership; person who has the ability to commit 
financial or real property assets), as well as the list of examples of 
persons who may be controllers, we stress that, under this final rule, 
all of these persons may still be controllers. In fact, as we explained

[[Page 68004]]

in the proposed rule, general partners and persons who can commit 
assets are almost always controllers. See, e.g., NMA v. DOI II, 177 
F.3d at 7. However, because these persons are already covered under the 
``ability to determine'' standard, specific reference to them in the 
regulatory text is unnecessary.
    With specific reference to the examples of controllers, we deemed 
it awkward to retain them in the regulatory text when the examples do 
not impose any regulatory requirements. These types of examples, we 
concluded, are best addressed in preamble language. Further, the 
examples were potentially misleading, as they did not describe the 
universe of persons who could be controllers. Although we are removing 
the examples of controllers from the regulatory text, the persons in 
the examples may still be controllers if they in fact have the ability 
to control a surface coal mining operation. As we said in the proposed 
rule, in our experience implementing section 510(c) of the Act since 
1977, the persons identified in the examples are often controllers. 
Therefore, our discussion of these examples in the preamble to the 2000 
final rule (65 FR 79598-600) remains instructive.
    For ease of reference, the examples of controllers in the 2000 
definition are as follows: (1) The president, an officer, a director 
(or a person performing functions similar to a director), or an agent 
of an entity; (2) a partner in a partnership, or a participant, member, 
or manager of a limited liability company; (3) a person who owns 
between 10 and 50 percent of the voting securities or other forms of 
ownership of an entity, depending upon the relative percentage of 
ownership compared to the percentage of ownership by other persons, 
whether a person is the greatest single owner, or whether there is an 
opposing voting bloc of greater ownership; (4) an entity with officers 
or directors in common with another entity, depending upon the extent 
of overlap; (5) a person who owns or controls the coal mined or to be 
mined by another person through lease, assignment, or other agreement 
and who also has the right to receive or direct delivery of the coal 
after mining; and (6) a person who contributes capital or other working 
resources under conditions that allow that person to substantially 
influence the manner in which a surface coal mining operation is or 
will be conducted. Relevant contributions of capital or working 
resources include, but are not limited to: (a) Providing mining 
equipment in exchange for the coal to be extracted; (b) providing the 
capital necessary to conduct a surface coal mining operation when that 
person also directs the disposition of the coal; or (c) personally 
guaranteeing the reclamation bond in anticipation of a future profit or 
loss from a surface coal mining operation. While we decided to reprint 
these examples for ease of reference, it is important to remember that 
not all persons identified in these examples are always controllers; in 
order to be a controller, the person must meet the regulatory 
definition in this final rule. Further, this list of examples is by no 
means exhaustive; that is, other persons not identified in the examples 
may also be controllers.
    In sum, the definition of control or controller we are adopting in 
this final rule retains the most critical aspect of the 2000 
definition, namely, the flexible ``ability to determine'' standard. 
Like our 2000 rule, this final rule also provides that permittees and 
operators of surface coal mining operations are always controllers. 
Although we removed some of the language from the 2000 definition of 
control or controller for the sake of simplifying the definition and 
removing unnecessary verbiage, the definition in this final rule is 
substantively identical to the prior definition, and we intend for 
regulatory authorities to enforce it as such.

Responses to Comments

    Multiple commenters responded to our proposal both in favor of and 
against the proposed amendments. IMCC and other State commenters did 
not oppose our proposed definition of control or controller. In 
particular, these commenters found ``merit in the `ability to 
determine' standard.'' IMCC and another State commenter said we should 
remove the word ``other'' from paragraph (3) of the proposed 
definition. In the proposed rule, paragraph (3) of the definition reads 
as follows: ``(3) Any other person who has the ability to determine the 
manner in which a surface coal mining operation is conducted.'' 
(Emphasis added.) We agree with these commenters that the word 
``other'' is unnecessary. Thus, in this final rule, we are removing the 
word ``other,'' so that the final paragraph, redesignated as paragraph 
(c), reads: ``Any person who has the ability to determine the manner in 
which a surface coal mining operation is conducted.''
    Another commenter said that eliminating specific categories from 
the definition, such as officers, directors, and general partners 
creates an unreasonable burden for the regulatory authorities and 
creates a false sense of security for applicants and permittees. We 
note that under our 2000 rule, officers and directors were not deemed 
to be controllers. Instead, they were included in the examples of 
persons who might be controllers. Because, as explained above, we are 
moving away from listing discrete categories of controllers in the 
regulatory definition, we decline to add these categories of persons to 
the definition. At the same time, under amended 30 CFR 778.11, 
discussed below under heading III.W., the identity of these persons 
will have to be disclosed by permit applicants in their permit 
applications. Thus, while regulatory authorities will have to make 
findings of control, they will have the information they need up front 
to identify potential controllers. This commenter also suggested that 
we create two classes of controllers, with one category of ``presumed'' 
controllers. In our 2000 rule, we made a considered decision to 
eliminate the use of presumptions of ownership or control in our 
definitions. We did not reopen that issue in our 2006 proposed rule, 
and the commenter has not given us sufficient reason to reconsider our 
decision.
    NMA, an industry trade association, and other industry commenters, 
noted that our proposed definition of control or controller is a ``vast 
improvement over the current rules,'' but suggested that we further 
revise the definition ``to be more clearly based on operations owned or 
controlled by the applicant (instead of entities or any person owning 
or controlling them).'' We are not adopting this suggestion because we 
do not read section 510(c) of the Act to be so limiting. While section 
510(c) provides that an applicant who owns or controls a surface coal 
mining operation with outstanding violations is not eligible for a 
permit, we have historically found that, in the specific context of 
section 510(c), control of an entity is a reasonable surrogate for 
control of that entity's surface coal mining operations. Thus, if an 
applicant controls an entity that, in turn, controls a surface coal 
mining operation with a violation, the applicant will not be eligible 
for a permit. This approach has been embodied in all versions of our 
ownership and control rules since the first rule was promulgated in 
1988. Moreover, the approach was expressly approved by the United 
States Court of Appeals for the District of Columbia Circuit in NMA's 
challenge to a prior version of our rules. NMA v. DOI II, 177 F.3d at 
4-5.
    KRC/CCC disagreed with our proposal to remove paragraphs (3) 
(general partner in a partnership) and (4) (person who has the ability 
to commit financial

[[Page 68005]]

or real property assets) from our previous definition of control or 
controller; the examples of control at previous 30 CFR 701.5; and the 
language relating to ``indirect control'' and ``control in concert.'' 
KRC/CCC asserts that the ``sole rationale that OSM states for 
rescinding much of the current definition of control or controller is 
the same rationale the agency gives for rescinding the requirement to 
list all of a permit applicants' controllers: OSM prefers to establish 
a ``bright line,'' ``objective'' standard for permit information that 
an applicant must submit. KRC/CCC similarly asserts that these aspects 
of the proposed rule are based on our proposal to remove the 
requirement for an applicant to list all of its controllers in a permit 
application. These comments miss the mark. There is no linkage between 
our decision to simplify the definition by removing the examples of 
control and the other language identified by the commenters. Rather, as 
explained above, the aspect of the control definition that related to 
the information disclosure requirements was the flexible ``ability to 
determine'' standard. That is, if we were going to keep that flexible 
standard, which we deemed to be crucial, we wanted to eliminate 
information disclosure requirements based on that standard. Thus, in 
our 2006 proposed rule, we proposed to retain the ``ability to 
determine'' standard in the definition, while simultaneously proposing 
to make the information disclosure requirements more objective.
    Our proposed definition of control or controller was an outgrowth 
of our settlement with NMA. In settling NMA's challenge to the 
definition, we were able to retain the ``ability to determine'' 
standard in exchange for proposing the other changes to the definition 
that the commenters take issue with. Given that the changes to the 
definition are non-substantive, and the new definition has the same 
reach as its 2000 counterpart, we view the settlement on this issue to 
be favorable. Moreover, we were not obligated to finalize the 
definition as proposed.
    Aside from the settlement, we identified other bases for the 
proposed changes in the preamble to the proposed rule. For example, in 
support of our proposal to remove paragraphs (3) and (4) of the 
previous definition, along with the examples of control, we explained 
that the persons identified in those paragraphs were already covered by 
the ``ability to determine'' standard, and, thus, it was not necessary 
to include them separately in the regulatory text; we also explained 
that removal of the unnecessary verbiage would simplify the regulatory 
text, which had become rather unwieldy and cluttered with language that 
did not contain any regulatory requirements. 71 FR 59594. As we 
explained above, another reason we decided to remove the examples of 
control was that they were potentially misleading to the extent that 
the list was not exhaustive; we did not want to create the incorrect 
impression that only those persons listed could be controllers.
    KRC/CCC also states that our decision to simplify the definition 
``runs afoul of the fact that OSM promulgated the current definition 
six years ago bases on well-supported findings that all of its elements 
were necessary to allow the agency to implement SMCRA effectively.'' We 
disagree with this comment. In the very passage of the preamble to the 
2000 rule cited by these commenters, we stated that the definition of 
``control or controller stand[s] alone, but the examples are useful * * 
*.'' 65 FR 79599. Stating that the examples are ``useful'' hardly 
equates with saying they are a necessary part of the regulatory text. 
To the contrary, because the examples do not impose any independent 
regulatory requirements, we have determined that they are best 
discussed in preamble language explaining the scope of the rule.
    KRC/CCC also object to the removal of the phrases ``alone or in 
concert with others'' and ``indirectly or directly'' from paragraph (5) 
of our previous definition of control or controller. They believe that 
the removal of the phrases will impact the ability of regulatory 
authorities to identify controllers, particularly in situations where 
control may only be exercised indirectly, in concert with others, or 
both. We understand the commenters' concern, but we nevertheless 
disagree with the comment. As we explained above, we are removing these 
phrases in order to simplify what had become a cumbersome definition 
and because they are already encompassed in the ``ability to 
determine'' standard that we are retaining in this final rule. We can 
understand how a change in substance might possibly be inferred from a 
change in the regulatory text without a corresponding explanation as to 
the effect of the change. However, we have expressly stated, in the 
preambles to our 2006 proposed rule and this final rule, that the 
``ability to determine'' standard will continue to encompass both 
indirect and direct control, as well as control in concert with others, 
where there is actual ability to control. We will continue to enforce 
this aspect of the rule in Federal program states, and we expect State 
regulatory authorities to enforce it in primacy states.
    After careful consideration of the public comments, we are adopting 
the revisions to the definition of control or controller as proposed, 
with the one minor modification discussed above. In sum, we determined 
that it is best to have a clear, concise definition of control and 
controller that retains the crucial ``ability to determine'' standard. 
We are fully confident that the definition in this final rule will 
continue to allow regulatory authorities to follow control wherever it 
exists.

C. Section 701.5--Definition: Own, Owner, or Ownership

    As mentioned above, section 510(c) of the Act, 30 U.S.C. 1260(c), 
uses, but does not define, the term ``owned.'' Our 2000 rule, which we 
are amending in this final rule, contained a definition of own, owner, 
or ownership at 30 CFR 701.5. Shortly after we promulgated the 2000 
rule, NMA filed its judicial challenge, which included a claim that our 
definition of own, owner, or ownership was inconsistent with SMCRA, 
arbitrary and capricious, and contrary to the DC Circuit's decision in 
NMA v. DOI II. NMA also took issue with the ``downstream'' reach of the 
rule, as it pertained to ownership. The term ``downstream,'' as used by 
the DC Circuit in the NMA v. DOI I and NMA v. DOI II decisions, means a 
surface coal mining operation that is down a corporate (or other 
business) chain from an applicant. For example, if an applicant has a 
subsidiary, the subsidiary would be considered ``downstream'' from the 
applicant; by contrast, if an applicant has a parent company, the 
parent company would generally be considered ``upstream'' from the 
applicant. NMA's claim pertained to how far downstream a regulatory 
authority can look from the applicant when making a permit eligibility 
determination based on ownership (as distinct from control) of a 
surface coal mining operation. Just as SMCRA does not define the terms 
``owned'' or ``controlled,'' it also does not address the downstream 
reach of the ownership and control provisions.
    To settle NMA's claim, we agreed to propose to revise our previous 
definition of own, owner, or ownership and the provision at previous 30 
CFR 773.12(a)(2) that governs the downstream reach of the definition 
when making a permit eligibility determination. In satisfaction of the 
settlement agreement, we proposed the revisions in our 2003 proposed 
rule. When we issued our 2006 proposed rule, on which this final rule 
is based,

[[Page 68006]]

we decided to carry forward this aspect of the 2003 proposal. In this 
final rule, we are adopting the amendments as proposed.
    The first revision is to the definition itself. Our prior 
definition of ownership, at 30 CFR 701.5, included persons ``possessing 
or controlling in excess of 50 percent of the voting securities or 
other instruments of ownership of an entity.'' (Emphasis added.) We 
have concluded that the prior definition of ownership was confusing to 
the extent that it included ``control'' concepts. Given that control or 
controller is defined in the same section of the CFR, the natural 
tendency of the reader was to try to import that definition into the 
definition of own, owner, or ownership, which renders the ownership 
definition nonsensical. To remove this confusion, we are adopting our 
proposal to amend the definition by substituting the term ``owning of 
record'' in place of ``possessing or controlling.'' Thus, the revised 
definition will read as follows: ``Own, owner, or ownership, as used in 
parts 773, 774, and 778 of this chapter (except when used in the 
context of ownership of real property), means being a sole proprietor 
or owning of record in excess of 50 percent of the voting securities or 
other instruments of ownership of an entity.''
    Our use of the term ``owning of record'' better effectuates our 
intent with regard to the meaning of ownership (as distinct from 
control), creates a ``bright line'' standard, and removes the inherent 
confusion with the previous definition. As we explained in the preamble 
to our 2006 proposed rule, ``owning of record'' is a term found in 
section 507(b) of the Act, 30 U.S.C. 1257(b), under which permit 
applicants must identify, among other things, ``any person owning[ ] of 
record 10 per centum or more of any class of voting stock of the 
applicant * * *.'' Because the Act itself uses the term ``owning of 
record'' in an analogous context, we deemed it a good fit for our 
definition of own, owner, or ownership. Moreover, we used the statutory 
term ``owning of record'' in our ownership and control rules from 1988 
through 2000. See, e.g., 30 CFR 773.5 (2000). It was only in our 2000 
rule that we used the phrase ``possessing or controlling'' in our 
ownership definition, and that definition was immediately challenged in 
Federal court, in part because of the confusion that results from 
defining ownership in terms of control. Since the term ``owning of 
record'' has been in the statute since 1977, and in our ownership and 
control rules from 1988 through 2000, regulatory authorities and the 
regulated industry will be familiar with the term and its meaning.
    The second revision affects 30 CFR 773.12(a)(2), with respect to 
the downstream reach of the definition under the rules pertaining to 
permit eligibility. In NMA v. DOI II, the D.C. Circuit held that a 
regulatory authority can deny a permit based on limitless 
``downstream'' control relationships. NMA v. DOI II, 177 F.3d at 4-5. 
That is, if an applicant indirectly controls an operation with a 
violation, through its ownership or control of intermediary entities, 
the applicant is not eligible for a permit. Id. at 5. The operation 
with a violation can be limitlessly downstream from the applicant.
    Although the DC Circuit's decision clearly addresses downstream 
control in the context of permit eligibility, it does not squarely 
address the situation where there is downstream ownership of entities, 
without control. For example, assume Company A owns 51 percent of 
Company B, and Company B, in turn, owns 51 percent of Company C, a coal 
mining company whose mining operations are in violation of SMCRA. While 
it is clear that we could deny a permit to Company A if it controls 
Company C through its ownership or control of Company B, it is not 
clear, under the NMA v. DOI II decision, whether OSM could deny a 
permit to Company A based solely on Company A's ownership of Company B, 
which, in turn, owns the violator, Company C. There is at least a 
plausible argument that the DC Circuit's decision does not allow us to 
deny permits based solely on downstream ownership (absent control) of 
an operation with a violation.
    Our former rules allowed us to reach ``downstream'' with regard to 
both ownership and control. Under those rules, the regulatory authority 
could deny a permit if an applicant indirectly owned an operation in 
violation of SMCRA or other applicable laws. The operation in violation 
could be infinitely downstream from the applicant--meaning that 
ownership of the operation could be indirect, through intermediary 
entities--as long as there was an uninterrupted chain of ownership 
between the applicant and the operation. NMA argued that this provision 
was contrary to the plain meaning of SMCRA and violated principles of 
corporate law. NMA claimed that ownership of a corporation does not 
equate to ownership of the corporation's assets (including mining 
operations). Thus, according to NMA, we should be able to deny a permit 
based on ownership only if one of the applicant's own operations has a 
violation.
    To settle NMA's claim we agreed to propose a regulatory revision at 
30 CFR 773.12(a) to limit the reach of permit denials based on 
ownership to ``one level down'' from the applicant. We proposed the 
revision in our 2003 proposed rule. Because we continued to find merit 
in the proposal, we carried it forward in our 2006 proposed rule. In 
this final rule, we are adopting the amendment to section 773.12(a) as 
proposed. Under this final rule, if an applicant directly owns an 
entity with an unabated or uncorrected violation of SMCRA or other 
applicable laws--meaning there are no intermediary entities between the 
applicant and the entity with a violation--the applicant is not 
eligible for a permit. In other words, the rule would reach one level 
down from the applicant to the entity the applicant owns. On the other 
hand, an applicant's indirect ownership of an entity with a violation, 
standing alone, would not make the applicant ineligible for a permit. 
However, the same applicant would not be eligible for a permit if it 
controls the violator entity.
    While we stated in the preamble to our 2006 proposed rule that the 
``one level down'' approach is not compelled by the Act, we conclude 
that it is a reasonable interpretation of the Act, especially in light 
of the DC Circuit's decision in NMA v. DOI II. Moreover, because 
regulatory authorities may continue to consider violations at 
``downstream'' operations, as long as control (as opposed to ownership) 
is present, the amendment will not impair a regulatory authority's 
ability to adequately enforce section 510(c) of the Act. The mechanics 
of the amendment to 30 CFR 773.12(a) that pertains to the downstream 
reach of the definition of own, owner, or ownership is further 
discussed under heading III.J., below.

Responses to Comments

    NMA, and other industry commenters, commented that our proposed 
definition of own, owner, or ownership is ``a significant improvement 
over the existing rule,'' but nevertheless stated that ``ownership of 
an entity alone does not equate to ownership of the entity's surface 
coal mining operation.'' As such, NMA maintains that the proposed rule 
``is not entirely consistent with the principles of American corporate 
law.'' Under NMA's formulation, a regulatory authority could not even 
reach one level down with regard to ownership; that is, the regulatory 
authority could only deny a permit based on ownership if the applicant 
itself owns an operation (as opposed to an entity) with an outstanding 
violation. We disagree. We

[[Page 68007]]

have historically found that, in the specific context of section 
510(c), which pertains to permit eligibility and does not impose 
personal financial liability on owners, ownership of an entity is a 
reasonable surrogate for ownership of that entity's surface coal mining 
operations. Furthermore, we have carefully considered whether this 
approach is not only reasonable but also consistent with the legal 
maxim that to abrogate a common-law principle, a statute must speak 
directly to the question addressed by the common law. The Supreme Court 
has addressed this issue consistently in Isbrandtsen Co. v. Johnson, 
343 U.S. 779, 783 (1952); Mobil Oil Corp. v. Higginbotham, 436 U.S. 
618, 625 (1978); Astoria Fed. Sav. & Loan Assn v. Solimino, 501 U.S. 
104, 108 (1991); United States v. Texas, 507 U.S. 529, 534 (1993); and 
United States v. Bestfoods, 524 U.S. 51, 63 (1998). As to this specific 
principle of statutory interpretation, we believe that the 
interpretation of section 510(c) adopt today with respect to an owned 
surface coal mining operation is sufficiently broad to satisfy 
administrative purposes while being fully consistent with Supreme Court 
precedent and NMA v. DOI II.
    KRC/CCC claims that our substitution of the phrase ``owning of 
record'' for ``possessing or `controlling'' represents a substantive 
change, despite our assertion in our 2006 proposed rule that the change 
would be non-substantive. In support of their comment, KRC/CCC cites to 
the preamble to our 2000 final rule, in which we stated: ``We added the 
term `controlling' based on the reality that sometimes persons who do 
not technically own stock (or other instruments of ownership) 
nonetheless have the ability to control the stock, either by holding 
the voting rights associated with the stock or other arrangement with 
the owner of record.'' While we agree with these commenters that this 
revision is not purely non-substantive, we are not persuaded to deviate 
from the proposed amendment. The confusion we identified in the 
definition--i.e., defining ownership in terms of control--was real and 
is remedied by the amendment we are adopting in this final rule. 
Moreover, under the old definition, which included the ``possessing or 
controlling'' language, a regulatory authority would have had to make a 
finding that a person controlled in excess of 50 percent of the voting 
securities or other instruments of ownership of an entity. That same 
finding would, in all likelihood, support a finding that that person is 
a controller of the entity under our definition of control or 
controller. As such, anything that might be lost under the definition 
of own, owner, or ownership, would still be covered under the 
definition of control or controller, based on similar proof. Thus, as 
the commenters requested, the definitions, when taken together, will 
``encompass[ ] all of the same persons that the existing regulations 
sweeps in.''
    KRC/CCC also objected to our proposal to limit the downstream reach 
of our definition of own, owner, or ownership. These commenters' 
objection is multi-faceted. First, they reference our statements at 71 
FR 59595 that ``we do not necessarily agree with NMA's analysis [that 
ownership of a corporation does not equate to ownership of the 
corporation's assets]'' and ``[w]e do not believe this approach is 
compelled by either SMCRA or the decision in NMA v. DOI II.'' It is 
important to remember that, as discussed above, under NMA's formulation 
of section 510(c) of the Act, regulatory authorities could not even 
look ``one level down'' with respect to ownership. Thus, in this final 
rule, we continue to disagree with NMA's argument that ownership of an 
entity does not equate to ownership of that entity's surface coal 
mining operations. Further, while the ``one level down'' approach is 
not necessarily compelled by the Act--which is entirely silent on the 
point--it is certainly a reasonable construction of section 510(c)'s 
ownership provision. Also, based on NMA v. DOI II's uncertain holding 
on this issue (discussed above), we did perceive at least some risk of 
loss in court if our rules continued to reach infinitely downstream on 
the ownership side (as opposed to the control side). Thus, the 
amendment we adopt today is a good compromise on the issue, one which 
allows us to retain the ability to look one level down with regard to 
ownership, rather than just at the applicant's own operations.
    KRC/CCC also asserts that our proposed amendment ``rests upon yet 
another glaring error of statutory and regulatory interpretation.'' The 
alleged ``error'' appears to be the commenters' perception that the 
amendment is inconsistent with our prior statements to the effect that 
ownership is distinct from control and that ownership of an operation 
with a violation, standing alone, can provide the basis for a permit 
denial. Our prior statements, which we continue to stand by, did not 
speak to the downstream reach of the definition and are, therefore, not 
inconsistent with today's amendment. Further, under this final rule, 
ownership and control are still distinct concepts; thus, if an 
applicant owns, but does not control, an operation with a violation, 
under the definition of own, owner, or ownership, the applicant is not 
eligible for a permit.
    KRC/CCC further opines that ``ownership is more easily established 
than control.'' Thus, in KRC/CCC's view, ``the proposed regulation will 
make it more time consuming, costly, and uncertain for regulatory 
authorities to pursue links between applicants and remote downstream 
subsidiaries who are responsible for uncorrected regulatory 
violations.'' In response, we note that, even though ownership may be 
more easily established than control, regulatory authorities will be 
required to enforce the rules as written, regardless of the associated 
time and cost. Moreover, as explained above, regulatory authorities 
will be empowered to make case-specific determinations of control based 
on the flexible ``ability to determine'' standard.
    Finally, KRC/CCC imply that Congress intended for SMCRA to reach 
infinitely downstream with regard to ownership and state that the 
proposed amendment would ``make it impossible for OSM or state 
regulatory authorities to deny permits to applicants that own 
subsidiaries responsible for uncorrected violations, where regulators 
cannot establish the applicant's actual control of the subsidiary.'' We 
disagree with the predicate to this comment--that Congress intended for 
section 510(c)'s ownership provision to reach infinitely downstream. As 
stated previously, Congress was entirely silent on this issue, and the 
holding in NMA v. DOI II casts at least some doubt on the correctness 
of KRC/CCC's position. Again, the amendment we adopt today represents a 
reasonable interpretation of section 510(c).
    IMCC, whose member States will be the regulatory authorities most 
often making findings of downstream control under these provisions, did 
not object to our proposed amendment to the downstream reach of the 
rule with regard to ownership, as long as the States are empowered to 
obtain the information necessary to make control findings. As explained 
below under heading III.W., under this final rule, regulatory 
authorities will have the necessary information.
    A State commenter said that our proposal to limit the downstream 
reach of ownership does not make sense. The premise of this comment is 
that, under our definition of own, owner, or ownership, an owner will 
always be a controller. Thus, if we can go limitlessly downstream with 
regard to control, we should be able to do the same with regard to 
ownership. We agree with this

[[Page 68008]]

commenter that owning greater than 50 percent of entity will almost 
always confer control over that entity. However, if Company A owns 
Company B and Company B owns Company C, it does not stand to reason 
that Company A controls Company C. However, Company A may in fact 
control or have the ability to control Company C; under this final 
rule, regulatory authorities are empowered to make that finding.
    This commenter also said it appears inconsistent under section 
510(c) of SMCRA to distinguish between ownership and control in terms 
of downstream relationships because section 510(c) couples ownership 
and control. We disagree with this comment. Section 510(c) refers 
disjunctively to ownership or control. As of our 2000 final rule, we 
have treated ownership and control as distinct concepts. Further, these 
terms have different meanings under corporate law. We conclude, for the 
reasons explained above, that it is entirely appropriate, and 
consistent with SMCRA, to continue to give separate effect to the 
ownership and control aspects of section 510(c).

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

    Over the years, we have found that the regulatory provisions 
pertaining to the transfer, assignment, or sale (TAS) of permit rights 
have generated a great deal of confusion. We have discovered that the 
various State regulatory authorities have very different views as to 
what constitutes a transfer, assignment, or sale requiring regulatory 
approval. As mentioned above, in order to settle the litigation 
instituted by NMA, we agreed to propose new transfer, assignment, or 
sale rules. However, we did not agree to propose any specific 
provisions. We viewed the rulemaking called for under the settlement as 
an excellent opportunity to revisit our TAS rules.
    In accordance with the settlement agreement, we published a 
proposed rule on January 26, 2005. 70 FR 3840. In that proposed rule, 
we proposed fairly sweeping changes to our TAS regulations. More 
specifically, we proposed to: revise our regulatory definitions of 
transfer, assignment, or sale of permit rights and successor in 
interest at 30 CFR 701.5; revise our regulatory provisions at 30 CFR 
774.17 relating to the transfer, assignment, or sale of permit rights; 
and create, for the first time, separate rules for successors in 
interest.
    A number of commenters on our 2005 proposal suggested that the 
broad conceptual changes we proposed were not warranted. Several 
commenters stated that our statutory rationales for some of the 
proposed changes, including our reading of the legislative history, 
were flawed. Further, commenters suggested that we did not achieve our 
primary purpose of providing greater clarity in our transfer, 
assignment, or sale regulations. Upon consideration of those and other 
comments, and input from our State co-regulators, we determined that we 
could achieve our purpose of simplifying and clarifying our regulations 
through more modest revisions to our rules.
    As a result, in our 2006 proposed rule, we proposed to revise our 
current definition of transfer, assignment, or sale of permit rights at 
section 701.5 but to keep our existing TAS regulatory requirements 
largely intact. The primary purpose of our 2006 proposal was to seek to 
distinguish clearly the circumstances that will trigger a transfer, 
assignment, or sale of permit rights as opposed to an information 
update under 30 CFR 774.12 (see heading III.T., below).
    Section 511(b) of SMCRA, 30 U.S.C. 1261(b), provides that ``[n]o 
transfer, assignment, or sale of permit rights granted under any permit 
issued pursuant to this Act shall be made without the written approval 
of the regulatory authority.'' Under our previous definition, transfer, 
assignment, or sale of permit rights meant ``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 
proposed to revise our regulatory definition of transfer, assignment, 
or sale of permit rights to mean a change of a permittee. Our 2006 
proposal was informed by a decision of the Department of the Interior's 
Office of Hearing and Appeals (OHA) in Peabody Western Coal Co. v. OSM, 
No. DV 2000-1-PR (June 15, 2000) (Peabody Western), comments received 
on our 2005 proposed rule, and our further discussions with our State 
co-regulators. After consideration of the public comments we received 
on our 2006 proposal, we are adopting the amendment to our TAS 
definition as proposed.
    In Peabody Western, OHA examined the impact of NMA v. DOI II on 
transfer, assignment, or sale issues. OSM had 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 other observations that we assigned particular weight 
to in developing our 2006 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. Because we ultimately agreed with many 
of the judge's observations about our previous TAS rules, we did not 
seek further review of OHA's decision.
    Throughout our deliberations on TAS-related issues, we were mindful 
of OHA's admonitions that our previous definition, to the extent it 
relied on the concept of ``effective control,'' was ``vague and 
imprecise'' and ``disclose[d] no meaningful standard and provide[d] no 
advance notice to a regulated corporate entity'' as to which corporate 
changes would constitute a transfer, assignment, or sale. We 
acknowledge that our previous definition created confusion--among 
regulatory authorities, the regulated industry, and the public--that 
lead to various interpretations of the regulatory requirements.
    We conclude that the imprecision in our previous definition was 
created largely by our inclusion of the phrase ``or other effective 
control.'' Under SMCRA, the concept of control, in the context of 
permit eligibility, is found in section 510(c) of the Act. As explained 
above, under that section, an applicant is not eligible to receive a 
permit if it owns or controls an operation with an unabated or 
uncorrected violation. Our previous definition of transfer, assignment, 
or sale of permit rights imported the ownership and control concept 
from section 510(c), but nothing in the Act compels that approach. We 
conclude that importing section 510(c) ownership and control concepts 
into our TAS regulations created undue confusion as to what constitutes 
a transfer, assignment, or sale of permit rights. Thus, the TAS 
definition we are adopting in this final rule disentangles TAS and 
ownership and control concepts. This final rule clearly provides that a 
change of a permittee's

[[Page 68009]]

owners or controllers does not constitute a transfer, assignment, or 
sale.
    In addition to responding to the decision in Peabody Western, we 
also conclude that revising our definition of transfer, assignment, or 
sale of permit rights to mean a change of a permittee is consistent 
with the objective of section 511(b) of the Act. As explained above, 
section 511(b) requires regulatory approval for a transfer, assignment, 
or sale of permit rights. Those permit rights are held by the 
permittee. As long as the permit continues to be held by the same 
``person''--under section 701(19) of the Act, 30 U.S.C. 1291(19), the 
term ``person'' includes corporations, partnerships, and other business 
organizations--we see no reason to apply the regulatory provisions 
governing transfer, assignment, or sale of permit rights.
    Under this final rule, a change in permittee triggers a TAS that 
requires regulatory approval. In determining whether there is a change 
in permittee, we are looking for indicia that the existing permittee 
has actually conveyed its permit rights to a new person (the putative 
new permittee/successor in interest) who desires to continue mining 
under the permit. There would also be a change in permittee when an 
existing permittee reorganizes itself into a new type of business 
entity (for example, from a partnership to a limited liability 
company). In that instance, there is a fundamental legal change in the 
nature of the permittee that will trigger a TAS. Similarly, a merger or 
acquisition would trigger a TAS if the non-permittee entity seeks to 
become the new, named permittee or if the merger or acquisition results 
in a new type of business entity being created (e.g., if the permittee 
is a corporation and the merged entities become a limited liability 
company).
    If the permittee's owners or controllers change, but the permittee 
remains the same, there has not been a transfer, assignment, or sale; 
in this instance, the existing permittee is the entity that will 
continue mining under the permit and will, among other things, have to 
maintain appropriate bond coverage. We emphasize that while a 
permittee's change of an officer, director, shareholder, or certain 
other persons in its organizational structure would not trigger a 
transfer, assignment, or sale of permit rights under this proposal, the 
permittee would be required to report certain of these changes under 
final 30 CFR 774.12 (see heading III.T., below).
    In sum, our final TAS definition introduces the clarity we have 
been seeking with regard to our TAS regulations. Importantly, the TAS 
definition also reduces the burden on both the coal mining industry and 
regulatory authorities due to the fact that fewer transactions or 
events will qualify as a transfer, assignment, or sale requiring an 
application and regulatory approval under 30 CFR 774.17. Our TAS 
definition is also fully consistent with the Act.
    IMCC and other State commenters supported our proposed TAS 
definition. These commenters stated that ``this is a more sensible and 
understandable approach.'' Another State commenter said the new TAS 
definition is much simpler and eliminates much of the confusion 
regarding permit transactions.
    IMMC also said we should clarify in the preamble that a corporation 
that converts to a limited liability company is considered a separate 
and distinct permittee, thus triggering a TAS, and that a merger will 
result in a TAS unless the new merged entity continues to do business 
in the existing permittee's name. In response to these comments, we 
have included a preamble discussion, above, of the TAS-related effects 
of these types of transactions.
    NMA and other industry commenters strongly supported our proposed 
definition. These commenters agreed with the holding in Peabody Western 
and that the previous definition was confusing. They also agreed that 
ownership and control concepts should be removed from the definition of 
TAS. Another State commenter said it would really like to see a more 
streamlined process for permit transfers. For the reasons stated above, 
we believe our new TAS definition will substantially streamline the TAS 
process.
    KRC/CCC opposed our proposed definition. These commenters said our 
proposal was inconsistent with SMCRA because it provides a clear avenue 
for circumvention of the ownership and control provisions of section 
510(c) of the Act. These commenters opine that, under the proposed 
definition, an individual who owns or controls a surface coal mining 
operation that is in continuing violation of SMCRA might continue to 
mine without regard to section 510(c) of SMCRA by assuming control of a 
clean entity that already has a mining permit. They explain that the 
tainted individual may have been truly separate from the existing 
permittee or the permittee may be a ``straw man'' created by the 
tainted individual to circumvent section 510(c). Either way, these 
commenters said our proposed definition would leave regulatory 
authorities powerless to enforce section 510(c).
    We understand these commenters' concerns but, for the reasons 
explained above, we disagree that there is a necessary linkage between 
section 510(c)'s ownership and control provisions and the TAS 
provisions of section 511(b). Based on our own analysis and the near 
unanimous support of other commenters, we have chosen to separate the 
two concepts, and KRC/CCC's comments do not persuade us to do 
otherwise. Moreover, we note that we are constrained by the DC 
Circuit's decisions in NMA v. DOI I and NMA v. DOI II. In NMA v. DOI I, 
the DC Circuit concluded that when making permit eligibility 
determinations under section 510(c), we can only consider violations at 
operations the applicant owns or controls; the court struck down our 
ability to deny permits based on violations at operations owned or 
controlled by the applicant's owners or controllers. 105 F.3d at 694. 
If we cannot consider these ``upstream'' violations in the first 
instance, when making permit eligibility determinations under section 
510(c) and 30 CFR 773.12, we likewise cannot consider them under 
section 511(b)'s TAS provisions (even if there were a linkage between 
section 510(c) and section 511(b)). In NMA v. DOI II, the DC Circuit 
held that we can deny a permit under section 510(c) only when an 
applicant, through ownership or control, is in violation at the time of 
application. We cannot consider current violations at an operation the 
applicant ``has controlled'' but no longer does (unless the applicant 
has a demonstrated pattern of willful violations under section 510(c) 
of the Act). 177 F.3d at 5. Thus, even if we could consider an upstream 
controller's violations, we could not consider those violations if the 
controller ended the control relationship with the operation that is in 
violation.
    With regard to the ``straw man'' hypothetical, we note that the DC 
Circuit has explained that we have the authority to determine who the 
``real applicant is--i.e., to pierce the corporate veil in cases of 
subterfuge'' in order to ensure that we have the true applicant before 
us. NMA v. DOI I, 105 F.3d at 695. Thus, if a violator does try to set 
up a ``straw man'' to evade section 510(c) of the Act, the regulatory 
authority is empowered to identify the ``real applicant'' and deny the 
permit if that person currently owns or controls an operation with a 
violation. And, of course, a regulatory authority can always pursue an 
appropriate alternative enforcement action against the ``tainted 
individual'' under the Act's various enforcement provisions. See,

[[Page 68010]]

e.g., SMCRA Sec.  518(f), 30 U.S.C. 1268(f); 30 CFR part 846.
    Finally, KRC/CCC takes us to task for relying on the decision in 
Peabody Western because, in these commenters' view, the judge's 
observations were ultra vires. These commenters assert that OHA ``is 
not authorized to review the validity of the Secretary's regulations or 
to shrink from applying them fully.'' These commenters also state that 
OHA's decision is not precedential and does not necessarily constitute 
a legal interpretation of OHA as a whole. As explained above, 
regardless of its precedential value, we ultimately agreed with Peabody 
Western's observations about our previous definition and opted not to 
seek further review of that decision. Moreover, virtually all other 
commenters agreed with the underlying basis of the Peabody Western 
decision: That our previous definition was vague, imprecise, and 
confusing. After the decision, we reevaluated the statutory basis for 
our definition and determined that the Act does not require us to 
import ownership or control concepts into the TAS analysis.
    Although IMCC and other State commenters supported our proposed TAS 
definition and related TAS provisions at 30 CFR 774.17 (see discussion 
under heading III.U., below), they did echo KRC/CCC's concerns about a 
new owner or controller with outstanding violations trying to ``enter 
through the back door'' by joining an existing permittee. They said 
that even though the addition of this person will no longer trigger a 
TAS, the regulatory authority should be able to ``suspend the permit 
immediately'' until the new person has complied with all provisions of 
the Act. These commenters offered specific language to this effect that 
they proposed for a new paragraph 774.12(d). Section 774.12 contains 
``Post-permit issuance information requirements for permittees.'' See 
heading III.T., below, for a full discussion of that section.
    Again, although we understand the concern, we decline to adopt this 
comment for the reasons discussed above. In the final analysis, we are 
constrained by the decision in NMA v. DOI I and otherwise find no 
authority in SMCRA to ``suspend the permit immediately'' when a new 
person with a violation, such as an officer, director, or shareholder, 
joins the permittee's organizational structure. However, as explained 
above, under section 510(c) of the Act, the regulatory authority has 
the authority to identify the true applicant and, the regulatory can 
always employ SMCRA's array of enforcement powers to seek to compel 
abatement of outstanding violations.

E. Section 773.3--Information Collection

    At 30 CFR 773.3, our regulations contain a discussion of Paperwork 
Reduction Act requirements and the information collection aspects of 30 
CFR part 773. We proposed to amend this section by streamlining the 
codified information collection discussion. We did not receive any 
comments on our proposal and are adopting the amendment as proposed. A 
more detailed discussion of the information collection burdens 
associated with part 773 is contained under the Procedural 
Determinations section (see heading IV.10.), below.

F. Section 773.7--Review of Permit Applications

    We proposed to revise previous 30 CFR 773.7(a) to correct a cross-
reference and to eliminate a cross-reference that is no longer 
relevant. In general, section 737.7(a) requires the regulatory 
authority to review certain information developed in connection with an 
application for a permit, revision, or renewal and to issue a written 
decision on the application. The second sentence of the previous 
section provided: ``If an informal conference is held under Sec.  
773.13(c), the decision shall be made within 60 days of the close of 
the conference, unless a later time is necessary to provide an 
opportunity for a hearing under paragraph (b)(2) of this section.'' In 
our 2000 final rule, we redesignated previous section 773.15(a)(1) as 
773.7(a), but made no other revisions to the provision at that time. 
After the promulgation of our 2000 rule, it came to our attention that 
the cross-references in that provision were either incorrect or no 
longer applicable.
    We proposed to correct the first cross-reference so that it 
properly refers to section 773.6(c). We also proposed to remove the 
language that included the second cross-reference because it is no 
longer relevant due to certain provisions in our 2000 final rule. More 
specifically, we proposed to remove the qualifier phrase ``unless a 
later time is necessary to provide an opportunity for a hearing under 
paragraph (b)(2) of this section'' because ``(b)(2)'' referred to a 
provision--previous 30 CFR 773.15(b)(2)--that no longer exists and 
because the logic behind the current provision is no longer applicable. 
The hearing contemplated by previous section 773.15(b)(2) was a hearing 
held in conjunction with an applicant's appeal of a notice of 
violation.
    We did not receive any comments on our proposal and are adopting 
the amendments as proposed. Thus, under this final rule, if an 
applicant is pursuing a good faith appeal of a violation, and otherwise 
meets the criteria of 30 CFR 773.14 (see heading III.K., below), the 
applicant will be eligible to receive a provisionally issued permit. 
Under these circumstances, we no longer see a need to delay the 
permitting decision to provide an opportunity for a hearing on a 
violation.

G. Section 773.8--General Provisions for Review of Permit Application 
Information and Entry of Information Into AVS

    Under 30 CFR 773.8, a regulatory authority is required to enter 
certain permit application information into AVS. (See 30 CFR 701.5 for 
definition of Applicant/Violator System or AVS.) We proposed to revise 
previous 30 CFR 773.8 by removing the phrase ``ownership and control'' 
from paragraph (b)(1). We proposed this revision because we also 
proposed to revise the heading of 30 CFR 778.11 by removing the phrase 
``ownership and control.'' See discussion under heading III.W., below. 
Our rationale for the proposed revisions was that, under Sec.  778.11, 
an applicant must submit information in addition to what could be 
called ``ownership and control'' information. At paragraph 773.8(b)(1), 
we also proposed to add language clarifying that the information 
described (through a cross-reference to sections 778.11 and 778.12(c)) 
is required to be disclosed.
    We did not receive any specific comments on our proposal and are 
adopting the amendments as proposed. Under this final rule, the entire 
provision at paragraph 773.8(b)(1) now reads: ``The information you are 
required to submit under Sec. Sec.  778.11 and 778.12(c) of this 
subchapter.''

H. Section 773.9--Review of Applicant and Operator Information

    As part of a regulatory authority's permit eligibility 
determination, our regulations at 30 CFR 773.9 require regulatory 
authorities to review certain information provided by permit 
applicants. Similar to our amendment to section 773.8, we proposed to 
revise the section heading at 30 CFR 773.9 by removing references to 
``ownership and control'' information. We also proposed to revise 
section 773.9(a) by removing the phrase ``applicant, operator, and 
ownership or control.'' We explained that these revisions clarify that 
the applicant information, required to be disclosed under section 
778.11, is not

[[Page 68011]]

limited to ownership and control information.
    As with the revision to section 773.8, we also proposed to revise 
section 773.9(a) by clarifying that the information described in the 
section (through a cross-reference to section 778.11) is not optional 
and must be disclosed in a permit application. Finally, we proposed to 
revise section 773.9(a) by changing the term ``business structure'' to 
``organizational structure.'' We explained that this is a broader and 
more inclusive description of the entities subject to the review.
    We are adopting the amendments as proposed. (We respond to the one 
comment we received on the proposed provision under heading III.W., 
below.) Thus, the amended section heading now reads: ``Review of 
applicant and operator information'' and amended paragraph (a) 
provides: ``We, the regulatory authority, will rely upon the 
information that you, the applicant, are required to submit under Sec.  
778.11 of this subchapter, information from AVS, and any other 
available information, to review your and your operator's 
organizational structure and ownership and control relationships.''

I. Section 773.10--Review of Permit History

    We proposed to revise 30 CFR 773.10, which requires regulatory 
authorities to, among other things, review the permit history of a 
permit applicant and its operator during the permit eligibility review. 
More specifically, we proposed to revise section 773.10(b) by removing 
the reference to the applicant's ``controllers disclosed under 
Sec. Sec.  778.11(c)(5) and 778.11(d) of this subchapter.'' In 
paragraph (c), we proposed to remove the language ``your controllers, 
or your operator's controllers'' from the first sentence. In the second 
sentence of paragraph (c), we proposed to remove the language ``and was 
not disclosed under Sec.  778.11(c)(5) of this subchapter.'' We 
proposed these revisions because we also proposed to remove the 
requirement at section 778.11 for an applicant to disclose its 
controllers (including its ``designated controller'') in a permit 
application. See discussion under heading III.W., below.
    We did not receive any specific comments on our proposal and are 
adopting the amendments as proposed. Under this final rule, paragraph 
(b) now reads: ``We will also determine if you or your operator have 
previous mining experience.'' Paragraph (c) now reads: ``If you or your 
operator do not have any previous mining experience, we may conduct an 
additional review under Sec.  774.11(f) of this subchapter. The purpose 
of this review will be to determine if someone else with mining 
experience controls the mining operation.''

J. Section 773.12--Permit Eligibility Determination

    We proposed to revise our provisions for permit eligibility 
determinations at 30 CFR 773.12, which, along with other provisions, 
implement section 510(c) of the Act. We received multiple comments 
about the different aspects of our proposed changes. After careful 
consideration of all the comments we received, we decided to adopt the 
amendments as proposed. Below, we discuss each aspect of the final rule 
provisions and respond to comments we received on our 2006 proposals.
1. Section 773.12(a)--``Downstream'' Ownership
    As indicated above, under our discussion of the definition of own, 
owner, or ownership (see heading III.C), paragraph 773.12(a) is our 
regulatory provision that governs the ``downstream'' reach of the rule 
in terms of permit eligibility. We proposed to revise paragraph (a)(2) 
so that the regulatory authority would no longer be able to deny a 
permit based on indirect ownership of a surface coal mining operation 
with a violation; however, we explained that we would keep the right to 
deny a permit based on indirect control. To simplify the rule, we also 
proposed to merge previous paragraphs (a)(2) and (a)(3), without 
changing the substantive meaning of those provisions. Under the new 
paragraph (a)(2), we proposed to remove the reference to ownership so 
that a permit applicant would not be eligible for a permit if any 
surface coal mining operation that the applicant or the applicant's 
operator ``indirectly control[s] has an unabated or uncorrected 
violation and [the applicant's or operator's] control was established 
or the violation was cited after November 2, 1988.'' Thus, with respect 
to ownership, regulatory authorities could only look ``one level down'' 
from the applicant in making a permit eligibility determination. For 
the reasons explained under heading III.C., we are adopting these 
amendments as proposed.
    We have already responded to comments relating to the downstream 
reach of the rule under the discussion of our amended definition of 
own, owner, or ownership. See heading III.C., above.
2. Section 773.12(b)--Independent Authority Language
    We also proposed to remove previous 30 CFR 773.12(b). Consistently 
with the D.C. Circuit's ruling on retroactivity in NMA v. DOI II, our 
2000 final rule explained, at paragraph 773.12(b), that an applicant is 
eligible to receive a permit, despite it or its operator's indirect 
ownership or control of an operation with an unabated or uncorrected 
violation, if both the violation and the assumption of ownership or 
control occurred before November 2, 1988. However, 30 CFR 773.12(b) 
also provided that the applicant is not eligible to receive a permit 
under this provision if there ``was an established legal basis, 
independent of authority under section 510(c) of the Act, to deny the 
permit * * *.''
    NMA challenged 30 CFR 773.12(b), claiming that if there is an 
``independent authority'' to deny the permit, that authority exists 
whether or not it is referenced in the regulatory language. According 
to NMA, the provision is superfluous and potentially confusing. To 
settle this claim, we proposed to remove 30 CFR 773.12(b). We satisfied 
our obligation under the settlement in our 2003 proposed rule. Because 
we continued to find merit in the proposal, we carried it forward in 
our 2006 proposed rule.
    We conclude that any ``independent authority'' exists with or 
without this regulatory provision. Thus, because the language is in 
fact superfluous, we are adopting our proposal to remove this 
provision. We assume that regulatory authorities will be familiar with 
any other laws that may affect an applicant's ability to obtain a 
permit. We do note that the explanation in former 30 CFR 773.12 is 
still true and valid; however, we conclude that this type of 
explanatory information is best left for preamble language. This 
amendment makes section 773.12, as a whole, more clear and concise, 
without diminishing its effectiveness. Because we removed 30 CFR 
773.12(b), we also redesignated paragraphs (c), (d), and (e) as (b), 
(c), and (d), respectively.
    KRC/CCC oppose the removal of the ``independent authority'' 
language, asserting that this language served as an important reminder 
to regulatory authorities involved in permit eligibility 
determinations. Further, these commenters state that, because the 
Federal regulations serve as a benchmark for judging counterpart 
provisions in State programs, we should retain this language to signal 
to States that State programs may not be drawn

[[Page 68012]]

so as to eliminate independent authority as a basis for permit denial. 
Finally, these commenters claim that, to the extent the proposed change 
was intended to be non-substantive, we run the risk that regulatory 
personnel, the courts, or both will impute unintended meaning to the 
action that OSM proposed.
    We conclude that explanatory language like that contained in 
previous 30 CFR 773.12 is properly contained in preamble discussions. 
To the extent that a change in policy can be inferred by our removal of 
this language, we clarify that we do not intend a policy change. Again, 
we trust that the States are aware of the legal authorities that could 
affect permit eligibility, and it is not our place to instruct States 
how to enforce laws other than SMCRA.
3. State Regulatory Authorities Apply Their Own Ownership and Control 
Rules
    In our 2006 proposed rule, we explained in preamble language that, 
in meeting its obligations under section 510(c) of the Act and the 
State counterparts to that provision, each State, when it processes a 
permit application, must apply its own ownership and control rules to 
determine whether the applicant owns or controls any surface coal 
mining operations with violations. The concept is important enough to 
repeat in this final rule. Consistently with State primacy, it is 
appropriate for the regulatory authority with jurisdiction over an 
application to apply its own ownership or control rules when making a 
permit eligibility determination, since that regulatory authority has 
the greatest interest in whether or not mining should commence or 
continue within its jurisdiction. However, when a regulatory authority 
is applying its ownership or control rules to violations in other 
jurisdictions, it is advisable for the regulatory authority to consult 
and coordinate, as necessary, with the regulatory authority with 
jurisdiction over the violation and our AVS Office. We also stress that 
a regulatory authority processing a permit application has no authority 
to make determinations relating to the initial existence or current 
status of a violation, or a person's responsibility for a violation, in 
another jurisdiction.
    We did not receive any specific comments on this explanation in our 
2006 proposed rule. However, one commenter expressed a general concern 
that the ``practical effect of the proposed ownership and control rules 
on interstate evaluations will be to dilute the strongest state systems 
by applying the weaker rules of states who have adopted a lower 
standard.'' Based on our foregoing explanation, this result should not 
occur because each State will apply its own rules when making permit 
eligibility determinations. Thus, States with stronger rules will apply 
those provisions, and not those of any other State, when making permit 
eligibility determinations.

K. Section 773.14--Eligibility for Provisionally Issued Permits

    Section 773.14 of our 2000 final rule allows for the issuance of a 
``provisionally issued permit'' if the applicant meets the criteria 
under 30 CFR 773.14(b). The codified regulatory language used the word 
``may,'' indicating that the regulatory authority had discretion to 
grant a provisionally issued permit, even if the applicant otherwise 
met the eligibility criteria at paragraph 773.14(b). While the preamble 
discussion in our 2000 rule is not explicit on this point, we intended, 
in this context, that an applicant is eligible to receive a 
provisionally issued permit under the specified circumstances. See, 
e.g., 65 FR 79618-19, 79622-24, 79632, 79634-35, and 79638. In order to 
reconcile any ambiguity, we proposed to revise our rule language at 30 
CFR 773.14(b) so that it plainly states that an applicant who meets the 
30 CFR 773.14(b) eligibility criteria will be eligible for a 
provisionally issued permit.
    One commenter, a State regulatory authority, said changing ``may'' 
to ``will'' improves this section. We did not receive any other 
comments on our proposal and are adopting the amendment as proposed. 
However, we stress that an applicant must meet all other permit 
application approval and issuance requirements before receiving a 
provisionally issued permit, and the provisional permittee must comply 
with all performance standards.

L. Section 773.21--Initial Review and Finding Requirements for 
Improvidently Issued Permits

    Sections 773.21 through 773.23 of our rules are the provisions 
governing improvidently issued permits. These are permits that should 
not have been issued because of an applicant's ownership or control of 
a surface coal mining operation with an unabated or uncorrected 
violation at the time of permit issuance. We proposed two substantive 
revisions to 30 CFR 773.21(c). Below, we discuss each aspect of the 
final rule provisions and respond to comments we received on our 2006 
proposals.
1. Evidentiary Standard
    Our first proposed revision related to our burden of proof and 
evidentiary standard when making a preliminary finding that a permit 
was improvidently issued. In our 2003 proposed rule, in accordance with 
our settlement with NMA, we proposed to amend section 773.21(c) so that 
our preliminary finding that a permit was improvidently issued ``must 
be based on reliable, credible, and substantial evidence and establish 
a prima facie case that [the permittee's] permit was improvidently 
issued.'' See 68 FR 75039. Based on input received from our State co-
regulators--both in their comments on our 2003 proposed rule and in our 
outreach meeting--we determined that requiring a prima facie case of 
improvident permit issuance to be based on ``reliable, credible, and 
substantial'' evidence is too high of a burden on a regulatory 
authority (particularly for a preliminary finding). As a result, in our 
2006 proposed rule, we proposed that a preliminary finding that a 
permit was improvidently issued ``must be based on evidence sufficient 
to establish a prima facie case that [the permittee's] permit was 
improvidently issued.'' After reviewing the comments on our proposal, 
we conclude that this evidentiary standard is consistent with the 
standard that typically applies to OSM's regulatory findings. As such, 
we are adopting the amendment as proposed. See headings III.P. and 
III.S., below, for additional discussions on burden of proof issues.
    We did not receive any adverse comments on our proposal. IMCC and 
other State commenters strongly supported the proposed revision. IMCC 
reiterated its comments on our 2003 proposed rule, noting that our 2003 
proposal would have required more weighty evidence than would normally 
be the case and essentially converted the concept of ``prima facie'' to 
a higher evidentiary standard. KRC/CCC also supported the 2006 
proposal. They explained that our 2003 proposed rule contained an 
unexplained and unnecessary evidentiary standard for prima facie 
showings. We agree with these comments and, therefore, abandoned the 
2003 approach.
2. Removal of Various Posting Requirements
    We proposed to remove previous 30 CFR 773.21(c)(2), which required 
us to post a notice of a preliminary finding of improvident permit 
issuance at our office closest to the permit area and on the Internet. 
Similarly, we also proposed to remove the requirement at

[[Page 68013]]

previous paragraph 773.22(d) to post a preliminary decision ``at our 
office closest to the permit area.'' Additionally, we proposed to 
remove all other Internet posting requirements adopted in our 2000 
final rule. In addition to paragraph 773.21(c)(2), we proposed to 
remove the Internet posting requirements found at previous paragraphs 
773.22(d), 773.23(c)(2), and 773.28(d). We proposed to retain the 
requirement at paragraph 773.23(c)(2) to post a notice of permit 
suspension or rescission at our office closest to the permit area. We 
also proposed to retain the requirement at paragraph 773.28(d) to post 
a final agency decision on a challenge of an ownership or control 
listing or finding on AVS. After consideration of the public comments, 
we adopted these amendments as proposed.
    Our inclusion of the Internet posting requirements in our 2000 
final rule was primarily based on comments that we should expand the 
public's access to our decisions. See, e.g., 65 FR 79632. While public 
access to final decisions remains important, we have concluded that the 
various Internet posting requirements in our 2000 final rule were 
unduly burdensome to regulatory authorities, especially when public 
notice of final decisions can be accomplished by the less burdensome, 
conventional method of posting them at our office closest to the permit 
area. We deem it improper to require States to establish and maintain 
potentially costly information technology systems and hire qualified 
staff to implement posting requirements that do not have proven 
utility. Moreover, nothing in the Act requires these postings. In 
addition, regulatory authorities are already required to enter much of 
the relevant information into AVS, which is available to the public. We 
also conclude that posting preliminary findings by any method is unduly 
burdensome, particularly because this information is of questionable 
value to the public. In sum, in this final rule, we removed all 
Internet and preliminary finding posting requirements, but retained 
public posting of our final decisions.
    We received only one comment on our proposal to remove these 
various posting requirements. KRC/CCC opposed our proposals. First, 
these commenters state that we pointed to no objection from any SMCRA 
regulatory authority or to any experience of our own to support our 
``conclusory assertions.'' We concede that experience under these 
provisions has been limited, particularly because these requirements 
never took effect for the States. However, we note that the States have 
not expressed any objection to removing the provisions. In short, we 
reconsidered the wisdom of these provisions prior to their widespread 
implementation. As such, our removal of the provisions in this final 
rule does not alter the status quo. We have concluded that our multiple 
posting requirements were unnecessary overkill. Moreover, the Act 
provides ample opportunities for public participation, which have been 
adequate prior to and since 2000. These commenters have not given us 
any reason to conclude otherwise.
    Next, these commenters point to a preamble discussion in our 2000 
final rule where we acknowledged, generally, the Act's public 
participation requirements. However, we did not state or conclude that 
the provisions we are removing in this final rule are required by the 
Act. In the same preamble, we noted the Act's various public 
participation requirements. Upon reconsideration of this issue, we 
conclude that the Act's public participation requirements are 
sufficient.
    Finally, these commenters assert that our statement in our 2006 
proposed rule that these provisions were of ``questionable value to the 
public'' was politically motivated. We disagree. As explained above, 
upon further examination, we determined that the multiple posting 
requirements in our 2000 rule were unnecessary and excessive. We also 
note that these commenters do not present any concrete reasons why 
these posting requirements are needed. For example, the commenters do 
not explain why posting requirements not contained in the Act are so 
beneficial that we should require States to undertake the expense of 
implementing them. In short, these commenters have not provided a 
convincing argument in favor of retaining the provisions.

M. Section 773.22--Notice Requirements for Improvidently Issued Permits

    We proposed to remove 30 CFR 773.22(d), which contained posting 
requirements similar to those found at previous 30 CFR 773.21(c)(2), 
discussed above under heading III.L. Specifically, we proposed to 
remove the requirement to post a notice of proposed suspension or 
rescission at our office closest to the permit area and on the 
Internet. Because we proposed to remove paragraph (d), we also proposed 
to redesignate paragraphs (e) through (h) as paragraphs (d) through 
(g). For the reasons discussed under heading III.L., above, we are 
adopting these amendments as proposed. In the final rule language that 
follows this preamble discussion of our final rule, our amendments to 
30 CFR 773.22 are shown as a Federal Register instruction.

N. Section 773.23--Suspension or Rescission Requirements for 
Improvidently Issued Permits

    We proposed to revise the posting requirements contained in 30 CFR 
773.23. Previous 30 CFR 773.23(c)(2) required us to post a final notice 
of permit suspension or rescission (which requires the holder of the 
improvidently issued permit to cease all surface coal mining operations 
on the permit) at our office closest to the permit area and on the 
Internet. We proposed to remove the requirement to post final notices 
on the Internet. However, because section 773.23(c)(2) pertains to 
final findings (as opposed to preliminary and proposed findings under 
sections 773.21 and 773.22, respectively), we proposed to retain the 
requirement to post them at our office closest to the permit area. For 
the reasons discussed under heading III.L., above, we are adopting the 
amendments as proposed. We conclude it is appropriate to post such 
notices of final actions for public view.

O. Section 773.26--How To Challenge an Ownership or Control Listing or 
Finding

    Sections 773.25 through 773.28 of our rules govern challenges to 
ownership or control listing or findings. Generally speaking, an 
ownership or control listing happens when an applicant identifies, or 
``lists,'' a person as an owner or controller in a permit application. 
That information is then entered into AVS by a regulatory authority. By 
contrast, an ownership or control finding under 30 CFR 774.11(g) 
constitutes a regulatory authority's fact-specific determination that a 
person owns or controls a surface coal mining operation.
    In its judicial challenge to our 2000 final rule, NMA claimed that 
previous 30 CFR 773.26(a) was confusing. That section explains how and 
where a person may challenge an ownership or control listing or 
finding. NMA claimed that the provision did not clearly delineate the 
appropriate forum in which to bring a challenge. NMA also expressed 
concern that the provision seemed to refer only to applicants and 
permittees but not other persons who are identified in AVS as owners or 
controllers.
    Section 773.25 of our 2000 final rule provided that any person 
listed in a permit application or in AVS as an owner or controller, or 
found by a

[[Page 68014]]

regulatory authority to be an owner or controller, may challenge the 
listing or finding. As we explained in the preamble to the 2000 rule, 
our intent was to allow any person listed in a permit application or in 
AVS, or found to be an owner or controller, to initiate a challenge at 
any time, regardless of whether there is a pending permit application 
or an issued permit. See 65 FR 79631. Section 773.26(a) was never 
intended to limit who may use the challenge procedures under 30 CFR 
773.25; rather, it only specified the procedure and forum in which to 
challenge an ownership or control listing or finding.
    However, to provide even greater clarity to the language at section 
773.26(a), and in accordance with our settlement with NMA, we proposed 
(in our 2003 proposed rule) to revise our regulations at 30 CFR 
773.26(a) to more clearly specify the forum in which a person may 
initiate an ownership or control challenge. Because we continued to 
find merit in the proposal, we carried it forward to our 2006 proposed 
rule. Specifically, we proposed that challenges pertaining to a pending 
permit application must be submitted to the regulatory authority with 
jurisdiction over the pending application. We further proposed that all 
other challenges concerning ownership or control of a surface coal 
mining operation must be submitted to the regulatory authority with 
jurisdiction over the relevant surface coal mining operation. We are 
adopting this amendment as proposed.
    We also proposed to add new 30 CFR 773.26(e), in accordance with 
our settlement with NMA. In this final rule, we are adopting new 
paragraph 773.26(e) as proposed. This new provision allows a person who 
is unsure why he or she is shown in AVS as an owner or controller of a 
surface coal mining operation to request an informal explanation from 
our AVS Office. The new provision requires us to respond to such a 
request within 14 days. Our response would be informal and would set 
forth in simple terms why the person is shown in AVS. In most, if not 
all, cases, the explanation would be as simple as specifying that the 
person was found to be an owner or controller under 30 CFR 774.11(g) 
(of which the person should already be aware due to that section's 
written notice requirement) or was listed as an owner or controller in 
a permit application. Understanding the basis for being shown in AVS 
will give persons a better sense of the type of evidence they will need 
to introduce in an ownership or control challenge. See also 30 CFR 
773.27(c), which provides examples of materials a person may submit in 
support of his or her ownership or control challenge.
    We emphasize that, in meeting its obligations under section 510(c) 
of the Act and the State counterparts to that provision, each State 
must apply its own ownership and control rules to determine whether the 
applicant owns or controls any surface coal mining operations with 
violations. See generally 65 FR 79637. Further, we stress that an 
ownership or control decision by one State is not necessarily binding 
on any other State. This approach is consistent with principles of 
State primacy and recognizes that not all States will have identical 
ownership and control rules.
    We did not receive any adverse comments on the proposed amendments. 
NMA and other industry commenters voiced support for the changes, 
stating that the new language ``makes clear'' that any person listed in 
a permit application or in AVS may challenge that listing at any time. 
Further, these commenters state that proposed paragraph 773.26(e) adds 
another protection for persons listed in AVS.

P. Section 773.27--Burden of Proof for Ownership or Control Challenges

    As discussed above, our rules contain provisions for challenging 
ownership or control listings or findings. Under previous 30 CFR 
773.27(a), a successful challenger had to prove by a preponderance of 
the evidence that he or she is not, or was not, an owner or controller. 
In its judicial challenge to our 2000 final rule, NMA argued that we 
must demonstrate at least a prima facie case so that the challenger can 
know what evidence he or she must rebut.
    The preamble to our 2000 final rule already made it clear that we 
had to establish a prima facie case when making a finding of ownership 
or control:

[I]n making a finding [of ownership or control] under final Sec.  
774.11(f), the regulatory authority must indeed make a prima facie 
determination of ownership and control, based on the evidence 
available to the regulatory authority. In making a prima facie 
determination, the finding should include evidence of facts which 
demonstrate that the person subject to the finding meets the 
definition of own, owner, or ownership or control or controller in 
Sec.  701.5.

65 FR 79640. Nonetheless, to settle NMA's claim and to set forth more 
clearly the relative burdens of the parties, we agreed to propose 
revisions to section 30 CFR 773.27(a) and 774.11(f), as well as a 
related revision to 30 CFR 773.21(c) (see discussion above under 
heading III.L. above). In satisfaction of our settlement obligation, we 
proposed the revisions in our 2003 proposed rule. Because we continued 
to find merit in the proposals, we carried them forward, in slightly 
modified form, in our 2006 proposed rule. After consideration of the 
public comments, we are adopting the amendments as proposed, with 
slight modifications.
    Under this final rule, we are amending 30 CFR 774.11(f) to clarify 
that a regulatory authority's preliminary finding of ownership or 
control must be based on evidence sufficient to establish a prima facie 
case of ownership or control. We are also adding a new provision at 
paragraph 774.11(g) that requires us to issue a final finding of 
ownership or control after giving the person subject to the preliminary 
finding an opportunity to submit information tending to demonstrate a 
lack of ownership or control. The final finding at paragraph 774.11(g) 
will be based upon, and, if necessary, amplify, the prima facie finding 
under paragraph 774.11(f). As such, the final finding will, at a 
minimum, be based on evidence sufficient to establish a prima facie 
case. Based upon the changes at section 774.11, we have amended section 
773.27(a) so that it reads:

    (a) When you challenge a listing of ownership or control, or a 
finding of ownership or control made under Sec.  774.11(g) of this 
subchapter, you must prove by a preponderance of the evidence that 
you either--
    (1) Do not own or control the entire surface coal mining 
operation or relevant portion or aspect thereof; or
    (2) Did not own or control the entire surface coal mining 
operation or relevant portion or aspect thereof during the relevant 
time period.

    Our amendment to paragraph (a) clarifies that a person can 
challenge either an ownership or control listing or a finding of 
ownership or control under 30 CFR 774.11(g). Further, due to the cross-
reference to paragraph 774.11(g), it is clear that any such challenge 
will be based on a finding that is, at a minimum, supported by evidence 
sufficient to establish a prima facie case of ownership or control. At 
paragraphs 773.27(a)(1) and (a)(2), this final rule clarifies that the 
``operation'' referred to in the previous provisions is a surface coal 
mining operation.
    Under the burden of proof allocation in this final rule, as under 
our previous rules, if the challenge concerns a finding of ownership or 
control, the regulatory authority will already have borne the initial 
burden of establishing a prima facie case of ownership or control by

[[Page 68015]]

issuing its finding in accordance with paragraph 774.11(g). If the 
challenge concerns an ownership or control listing, the regulatory 
authority's initial burden is substantially lower: The regulatory 
authority must specify only the circumstances of the listing, such as 
who listed the person, the date of the listing, and in what capacity 
the person was listed. In either type of challenge, after the 
regulatory authority meets its initial burden, the burden shifts to the 
challenger to prove, by a preponderance of the evidence, that he or she 
does not, or did not, own or control the relevant surface coal mining 
operation. The challenger bears the ultimate burden of persuasion.
    We did not receive any adverse comments on our proposed amendments. 
NMA and other industry commenters supported our proposals, noting that 
the prima facie standard adds fairness to the process. KRC/CCC did not 
oppose making express the implicit requirement that ownership or 
control findings must be based on evidence sufficient to establish a 
prima facie case.

Q. Section 773.28--Written Agency Decisions on Challenges to Ownership 
or Control Listings or Findings

    We proposed to revise the posting requirements of 30 CFR 773.28, 
our rules governing written agency decisions on challenges to ownership 
or control listings or findings. Former paragraph 773.28(d) required us 
to post final decisions on ownership or control challenges on AVS and 
on the AVS Office's Internet home page. We proposed to remove the 
requirement to post these decisions on the Internet. However, because 
30 CFR 773.28 pertains to final decisions on ownership or control 
challenges, we proposed to keep the requirement to post these decisions 
on AVS. Because these final decisions may have permit eligibility 
consequences, it is appropriate to make such decisions publicly 
available by posting them on AVS.
    After consideration of the public comments received on our 
proposal, we decided to adopt this amendment as proposed. Our rationale 
for removing the Internet posting requirement and our responses to 
comments are set forth more fully above, under the discussion of 30 CFR 
773.21 (see heading III.L).
    One State commenter said we should specify the location of the 
posting required under paragraph 773.28(d). The final provision 
requires posting on AVS. After this rule takes effect in primacy 
States, our AVS Office will notify these States how to input the 
required information.

R. Section 774.9--Information Collection

    At 30 CFR 774.9, our regulations contain a discussion of Paperwork 
Reduction Act requirements and the information collection aspects of 30 
CFR part 774.9. We proposed to amend this section by streamlining the 
codified information collection discussion. We did not receive any 
comments and are adopting the amendment as proposed. A more detailed 
discussion of the information collection burdens associated with part 
774 is contained under the Procedural Determinations section (see 
heading IV.10.), below.

S. Section 774.11--Post-permit Issuance Requirements for Regulatory 
Authorities

    We proposed several revisions to 30 CFR 774.11, which primarily 
contains requirements for regulatory authorities following the issuance 
of a permit. After consideration of the public comments received on our 
proposals, we are adopting them as proposed, with the minor 
modifications described below.
    First, we proposed to revise paragraph 774.11(a)(3), which 
previously required a regulatory authority to enter into AVS all 
``[c]hanges of ownership or control within 30 days after receiving 
notice of a change.'' We proposed to revise paragraph (a)(3) by 
removing ``Changes in ownership or control'' and replacing it with 
``Changes to information initially required to be provided by an 
applicant under 30 CFR 778.11.'' We proposed this revision because we 
also proposed to revise the heading of 30 CFR 778.11 by removing the 
phrase ``ownership and control.'' See discussion below, under heading 
III.W. Our rationale for the proposed revisions was that, under section 
778.11, an applicant must submit information in addition to what could 
be called ``ownership and control'' information. We are adopting this 
amendment because we are also adopting the corresponding amendment to 
section 778.11.
    Second, we proposed to revise 30 CFR 774.11(e). Under the specified 
circumstances, 30 CFR 774.11(c) of our rules requires us to make a 
preliminary finding of permanent permit ineligibility. Paragraph 30 CFR 
774.11(d) provides for administrative review of a preliminary finding. 
Previous paragraph 774.11(e) provided: ``We must enter the results of 
the finding and any hearing into AVS.'' There was substantial confusion 
as to whether we had to enter a preliminary finding into AVS, prior to 
administrative resolution.
    To settle a claim brought by NMA, we agreed to clarify that a 
finding of permanent permit ineligibility would be entered into AVS 
only if it is affirmed on administrative review or if the person 
subject to the finding does not seek administrative review and the time 
for seeking administrative review has expired. To incorporate this 
clarification into our regulatory requirements, we proposed to revise 
paragraph 774.11(e). Specifically, at the beginning of paragraph (e), 
we proposed to add the subheading ``Entry into AVS.'' We also proposed 
to create new paragraph (e)(1), to provide: ``If you do not request a 
hearing, and the time for seeking a hearing has expired, we will enter 
our finding into AVS,'' and new paragraph (e)(2), to provide: ``If you 
request a hearing, we will enter our finding into AVS only if that 
finding is upheld on administrative appeal.'' After consideration of 
the comments received on these proposals, we are adopting the 
amendments as proposed. We conclude that, given the severe consequences 
that attach to a finding of permanent permit ineligibility, it is only 
fair to afford a measure of due process before entering the finding 
into AVS.
    Third, we proposed to revise 30 CFR 774.11(f), which governs a 
regulatory authority's finding of ownership or control. As with our 
amendment to 30 CFR 773.27, discussed above under heading III.P., we 
proposed to revise paragraph 774.11(f) to clarify that a regulatory 
authority's written finding of ownership or control must be based on 
evidence sufficient to establish a prima facie case. In the preamble to 
our 2000 final rule, we explained that a finding of ownership or 
control must be based on a prima facie determination of ownership or 
control (65 FR 79640). In our 2006 proposed rule, we proposed to make 
this implicit requirement explicit. In the context of a regulatory 
authority's finding of ownership or control, a prima facie case is one 
consisting of sufficient evidence to establish the elements of 
ownership or control and that would entitle the regulatory authority to 
prevail unless the evidence is overcome by other evidence.
    In our 2003 proposed rule, we proposed that a regulatory 
authority's prima facie finding under section 774.11(f) must be based 
on reliable, credible, and substantial evidence. However, as with 
section 773.21 (see heading III.L., above), based on input received 
from our State co-regulators and other commenters, we determined that 
requiring a prima facie finding of ownership or control to be based on 
``reliable, credible, and substantial'' evidence is too high of a 
burden on a regulatory authority for an initial finding.

[[Page 68016]]

    Thus, in our 2006 proposed rule, we proposed that our findings of 
ownership or control under paragraph 774.11(f) ``must be based on 
evidence sufficient to establish a prima facie case of ownership or 
control.'' We explained that this is the evidentiary standard that 
typically applies to OSM's regulatory findings. After consideration of 
the public comments received on this proposal, we are adopting the 
amendment as proposed.
    In this final rule, we are also modifying proposed paragraph 
774.11(f) to clarify that the finding in this section is a preliminary 
finding. This amendment merely makes express an implicit aspect of our 
2006 proposal. It was clear, in context, that the finding in paragraph 
774.11(f) was intended to be preliminary, as it preceded the final 
determination required under proposed paragraph 774.11(g). We are also 
amending paragraph 774.11(f) to make clear that the ``operation'' 
referenced in that provision is a ``surface coal mining operation.''
    For logistical reasons, we also proposed to merge previous 
paragraph 774.11(f)(1) into new paragraph 774.11(f); merge the 
substance of former paragraph 774.11(f)(2) into new paragraph 774.11(g) 
(discussed below); and remove former paragraph 774.11(f)(3) to be 
consistent with the removal of the requirements at previous 30 CFR 
778.11(c)(5) and (d) (discussed below under heading III.W.). These 
proposed changes included the removal of the requirement at previous 
paragraph 774.11(f)(3) that, following a finding of ownership or 
control, a person had to disclose his or her identity under 30 CFR 
778.11(c)(5) and, if appropriate, certify that he or she was a 
controller under 30 CFR 778.11(d). As discussed below under heading 
III.W., we removed the information disclosure requirements at previous 
paragraphs 778.11(c)(5) and (d). Therefore, the cross-references to 
those provisions in previous section 774.11 no longer made sense. We 
adopted these amendments as proposed.
    Fourth, we proposed to revise section 774.11 to address NMA's claim 
that our 2000 final rule denied a person the right to challenge a 
decision to ``link'' it by ownership or control to a violation before 
the ``link'' is entered into AVS. While we disagree with the 
characterization that we enter ``links'' to violations into AVS, we 
proposed to create a new paragraph 774.11(g).
    In our 2006 proposed rule, we explained that, under the new 
regulatory provision, after we make a preliminary written finding of 
ownership or control under paragraph 774.11(f), but before we enter the 
finding into AVS, we will allow the person subject to the preliminary 
finding 30 days in which to submit any information tending to 
demonstrate a lack of ownership or control. After reviewing all 
information submitted, if we are persuaded that the person is not an 
owner or controller, we will serve the person with a written notice to 
that effect; if we still find the person to be an owner or controller 
or if the person does not submit any information within the 30-day 
period, we must enter our finding into AVS. The requirement to enter 
our finding into AVS was previously found at paragraph 774.11(f)(2); we 
moved that requirement into new paragraph 774.11(g).
    After consideration of the public comments we received on proposed 
paragraphs 774.11(f) and (g), we are adopting the amendments as 
proposed, with a minor modification. We modified the proposal to 
provide that, if we make a final finding (under paragraph 774.11(g)) 
that the person is an owner or controller, we will issue a written 
finding to that person. The process under new paragraph 774.11(g) will 
be informal and non-adjudicatory, and we expect regulatory authorities 
to make prompt determinations after receipt of any information under 
this provision. We conclude that NMA had a legitimate concern regarding 
previous paragraph 774.11(f). Moreover, any delay of entry of a finding 
of ownership or control into AVS will be very minor.
    Fifth, we proposed to add a new paragraph 774.11(h), which would 
have specified that we do not need to make a finding of ownership or 
control before entering into AVS the information that permit applicants 
are required to disclose under paragraphs 778.11(b) and (c). With non-
substantive changes, we are adopting the amendment as proposed. 
However, we decided to move this provision to new paragraph 778.11(e) 
because we determined that it makes more sense in the section 
pertaining to permit information. See complete discussion under heading 
III.W., below.
    Finally, we proposed to make non-substantive revisions to previous 
paragraph 774.11(g) and redesignate that provision. We adopted this 
amendment as proposed. Final paragraph 774.11(h) now reads: ``If we 
identify you as an owner or controller under paragraph (g) of this 
section, you may challenge the finding using the provisions of 
Sec. Sec.  773.25, 773.26, and 773.27 of this subchapter.''
    IMCC and other State commenters strongly supported the evidentiary 
standards in our 2006 proposed rule. IMCC reiterated its comments on 
our 2003 proposed rule, noting that our 2003 proposal would have 
required more weighty evidence than would normally be the case and 
essentially converted the concept of ``prima facie'' to a higher 
evidentiary standard. Another State commenter said ``using the prima 
facie standard is an improvement and provides clarity.'' We agree with 
these comments.
    NMA and other industry commenters also supported the prima facie 
standard. These commenters said the fact that OSM must establish a 
prima facie case, coupled with the changes that limit entry in AVS 
until after findings become final, provides fairness to the process. 
While NMA did reiterate its belief that it is not unreasonable to 
expect the agency to base its findings on ``reliable, credible, and 
substantial'' evidence, NMA accepts the prima facie standard as part of 
the larger settlement agreement. These commenters also supported our 
proposal to allow a person found to be an owner or controller 30 days 
to provide contrary evidence to the agency before the finding is 
entered into AVS. In sum, NMA said that our proposed revisions to 
sections 773.26 and 774.11, taken as a whole, would enhance the 
fairness of the AVS system by providing clearer avenues for those who 
are improperly listed in AVS to be removed in a prompt manner. We agree 
with these comments and conclude that the amendments we adopt today 
will in fact increase procedural fairness.
    KRC/CCC supported our proposed prima facie standard. They explained 
that our 2003 proposed rule contained an unexplained and unnecessary 
evidentiary standard for prima facie showings. However, these 
commenters objected to what they consider an ``automatic stay'' for 
ownership or control findings under proposed paragraph 774.11(e). We 
disagree with these commenters that the proposed provision, which we 
have adopted in this final rule, amounts to an unlawful automatic stay.
    One aspect of section 510(c) of the Act is that an applicant is not 
eligible for a permit ``after a finding by the regulatory authority, 
after opportunity for hearing, that the applicant, or the operator 
specified in the application, controls or has controlled mining 
operations with a demonstrated pattern of willful violations of this 
Act of such nature and duration with such resulting irreparable damage 
to the environment as to indicate an intent not to comply with the 
provisions of this Act.'' 30 U.S.C. 1260(c). We implement this 
``permanent permit ineligibility'' provision at 30 CFR

[[Page 68017]]

774.11(c) through (e); these provisions are separate and distinct from 
the provisions relating to ownership and control findings at proposed 
(and final) paragraphs 774.11(f) and (g).
    KRC/CCC assert that the proposed provision at 774.11(e), under 
which we would not enter a preliminary finding of permanent permit 
ineligibility into AVS unless the person subject to the finding fails 
to request an administrative hearing within the allotted time or the 
finding is upheld on administrative appeal, amounts to an impermissible 
automatic stay. In these commenters' view, the provision is 
inconsistent with sections 514(d) and 525(c) of the Act, 30 U.S.C. 
1264(d), 1275(c), and their state law counterparts.
    We disagree with these commenters. The relevant portion of section 
510(c) provides that an applicant is permanently permit ineligible only 
``after opportunity for hearing.'' (Emphasis added.) In our 2000 rule, 
we determined that the appropriate hearing is under 43 CFR 4.1350 
through 4.1356. See 30 CFR 774.11(d) (2001). If we were to adopt KRC/
CCC's comments, we would have to enter a preliminary finding of 
permanent permit ineligibility into AVS prior to an opportunity for 
hearing. Because that approach would be in contravention of the Act, we 
decline to adopt the comment.
    These commenters' citation to a preamble discussion in our 2000 
final rule is unpersuasive. In that passage, we were addressing 
ownership and control findings under previous paragraph 774.11(f), not 
preliminary findings of permanent permit ineligibility under paragraph 
774.11(c). Because section 510(c) expressly requires a hearing before a 
finding of permanent permit ineligibility, our final provision at 
paragraph 774.11(e) is not inconsistent with our prior preamble 
discussion relating to ownership or control findings.
    In sum, given the severity of a finding of permanent permit 
eligibility, we conclude that it is appropriate to delay entry of the 
finding into AVS until it becomes final, after the opportunity for a 
hearing. This approach is consistent with the Act's statutory mandate.

T. Section 774.12--Post-Permit Issuance Information Requirements for 
Permittees

    We proposed to revise 30 CFR 774.12, which sets forth information 
reporting requirements for permittees after the issuance of a permit. 
More specifically, in the introductory language at paragraph 774.12(c), 
we proposed to remove the cross-reference to previous 30 CFR 778.11(d) 
because we also proposed to remove that provision. We are adopting this 
amendment as proposed because we are adopting the proposal to remove 
previous paragraph 778.11(d). As a result of our removal of previous 
paragraph 778.11(d), we are also redesignating paragraph 778.11(e) as 
new paragraph 778.11(d). Accordingly, we are revising the cross-
reference at paragraph 774.12(c)(1) so that it properly refers to new 
section 778.11(d).
    We also proposed to add new paragraph 774.12(c)(3), which would 
have required a permittee to provide written notification to the 
surety, bonding entity, guarantor, or other person that provides the 
bonding coverage currently in effect whenever there is an addition, 
departure, or change in any position of any person the permittee was 
required to identify under 30 CFR 778.11(c). However, based on numerous 
negative comments, we are not adopting the proposed surety notification 
language. Based on the comments, we have concluded that the proposed 
notification is unnecessary and that it is inappropriate for us to 
become involved in private contractual matters between permittees and 
sureties.
    In addition, proposed paragraph 774.12(c)(3) would have provided 
that the regulatory authority with jurisdiction over the permit could 
require written verification of continued appropriate bond coverage 
following the identified additions, departures, or changes. However, 
due to negative comments, we are not adopting this proposed provision. 
We conclude that that verification is unnecessary because our 
regulations already provide that a surety bond is ``noncancellable'' 
during its term. 30 CFR 800.20.
    We did not receive any comments in favor of requiring permittees to 
notify sureties or other bond providers upon the addition, departure, 
or change in position of any person identified in paragraph 778.11(c). 
Those who did comment were strongly against the proposal.
    IMCC and other State commenters were against the surety 
notification provision. These commenters state that, while bonding 
entities may want to evaluate bond coverage following additions, 
departures, or changes in positions of certain persons, this is a 
private contractual matter between permittees and bonding companies. 
Another State commenter echoed these concerns, stating that the 
proposed provision is not supported by the Act and that these are 
private matters between the parties. This commenter also said that, in 
crafting their indemnity agreements, bond providers can require updated 
information from the insured.
    IMCC explained that the States did not want to become involved in 
these otherwise private business transactions by having to monitor, 
track, and enforce these corporate changes. They assert that under the 
proposed rule, the States would have been responsible for insuring that 
these written verifications were provided to the surety and for 
enforcing any failures to do so. Another State commenter said it is not 
a logical approach to make the States responsible to verify that these 
written notifications take place. Two other State commenters said 
assuring compliance would likely create a substantial burden on both 
permittees and regulatory authorities.
    IMCC and other State commenters also stated that there was a 
question as to how a State's failure to enforce the provision could 
impact the future viability of existing bonds. Similarly, another State 
commenter expressed concern that a permittee's failure to provide the 
notification to a surety could be raised as a defense by the surety in 
the event of a bond forfeiture.
    NMA and other industry commenters strongly disagreed with our 
proposal. NMA explained that, under the proposal, the permittee would 
have to provide surety notification for additions, departures, or 
changes in position for persons including officers and directors. For 
large companies, NMA explained, these changes may be frequent. As such, 
NMA viewed our proposal as unduly burdensome and unnecessary. Like the 
State commenters, NMA also noted that OSM should not interfere in the 
contractual arrangements between the surety and the mining company. 
Another industry commenter, who supported the entire proposed rule 
except for our proposed revisions to section 774.12, asserted that the 
proposed revisions would be an imposition on the private contractual 
relations between sureties and the operator.
    NMA and other industry commenters also noted that if a surety wants 
this type of information, the surety should bargain for it as part of 
its contract with the mining company. Similarly, one industry commenter 
said that sureties are well positioned to negotiate these types of 
notifications in their surety agreements, while another said sureties 
are quite adept at requiring information that satisfies their needs. 
Another industry commenter said the proposed notification is unneeded 
and may cause bonding companies to increase premiums. Finally, an 
industry

[[Page 68018]]

commenter said updates to permit documents are already subject to 
general public disclosure under the applicable regulations.
    In sum, all commenters were strongly against our surety 
notification proposal. We agree with most of the concerns identified 
above, and, therefore, decided not to adopt our proposal.
    IMCC and other State commenters did suggest that we adopt the 
substance of the second part of our proposal by requiring permittees to 
provide written verification of continued appropriate bond coverage 
within 60 days of any relevant addition, departure, or change. A State 
commenter agreed, noting that some sureties are of the view that such 
changes in a permittee's principals materially alter a surety's 
liability under the bond. Thus, this commenter agreed with IMCC that 
States should have the authority to require a permittee to provide 
assurances that the bond remains valid.
    However, another State commenter disagreed with IMCC and the other 
State commenters on this point. This commenter disagreed that a 
permittee should be required to provide verification of bond coverage 
to a regulatory authority upon such change because bond coverage is 
irrevocable. NMA and other industry commenters likewise said there is 
no need for OSM to require written verification of continued 
appropriate bond coverage because, under 30 CFR 800.20, once a 
regulatory authority has a bond, the bond cannot be released until the 
regulatory authority approves the release. We agree with these 
commenters that, under section 800.20, surety bonds are 
``noncancellable,'' and, therefore, a permittee's verification is 
unnecessary. As such, we are not adopting our proposal.

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

    In 2005, to effectuate our settlement with NMA, we proposed to 
revise our regulations governing the transfer, assignment, or sale of 
permit rights. Our proposal was expansive and constituted a significant 
departure from our then-existing regulations. As explained above under 
heading III.D., in our 2006 proposed rule, we decided to scale back the 
scope of our 2005 proposal. Under our 2006 proposal, the primary change 
to our transfer, assignment, or sale regulations was the proposed 
revision to our definition of transfer, assignment, or sale of permit 
rights at 30 CFR 701.5, which we have adopted in this final rule. By 
contrast, we proposed relatively minor revisions to our regulations at 
30 CFR 774.17, which contain our regulatory procedures governing the 
transfer, assignment, or sale of permit rights.
    Previous paragraph 774.17(a) provided that ``[n]o transfer, 
assignment, or sale of rights granted by a permit shall be made without 
the prior written approval of the regulatory authority.'' Our 
requirement for ``prior written approval'' of a transfer, assignment, 
or sale has been construed by some as an attempt to require regulatory 
authority approval of private business transactions. In this final 
rule, we want to make clear that we have no involvement in private 
business transactions. However, we also stress that a person's 
purported acquisition of the rights granted under a permit does not 
mean the person has acquired the right to mine. Only the regulatory 
authority can validate permit rights upon a transfer, assignment, or 
sale. In validating such permit rights, the regulatory authority must 
determine that 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 and that the 
entity has obtained sufficient bond coverage. Only upon validation by 
the regulatory authority can it be said that the acquiring entity has 
become the new permittee (or a successor in interest, as that term is 
defined under 30 CFR 701.5) and has a right to mine.
    However, we also recognize that requiring operations to cease while 
a permittee seeks regulatory approval for a transfer, assignment, or 
sale of permit rights could result in unnecessary disruptions to the 
nation's energy supply. Thus, we proposed that operations on the permit 
may continue on a short-term basis, at the discretion of the regulatory 
authority, while the permittee seeks regulatory approval of a transfer, 
assignment, or sale, but only if the prospective successor in interest 
can demonstrate to the satisfaction of the regulatory authority that 
sufficient bond coverage will remain in place. We also explained that, 
prior to a decision on an application for a transfer, assignment, or 
sale, the regulatory authority retains all of its enforcement powers 
and should take immediate action if the prospective successor in 
interest is not complying with the terms of the permit or any 
requirements of the Act or its implementing regulations.
    Based on the above considerations, we proposed to revise previous 
paragraph 774.17(a) as follows: ``(a) General. No transfer, assignment, 
or sale of rights granted by a permit shall be made without the prior 
written approval of the regulatory authority. At its discretion, the 
regulatory authority may allow a successor in interest to continue 
surface coal mining and reclamation operations under the permit during 
the pendency of an application for approval of a transfer, assignment, 
or sale of permit rights submitted under paragraph (b) of this section, 
provided that the successor in interest can demonstrate to the 
satisfaction of the regulatory authority that sufficient bond coverage 
will remain in place.'' After consideration of the public comments we 
received on this proposal, we are adopting the amendment as proposed, 
with minor modifications. In response to State comments, we added the 
word ``prospective'' before ``successor in interest.'' These changes 
recognize that an acquiring entity only becomes the successor in 
interest to the rights granted under the permit (under 30 CFR 701.5) 
after the regulatory authority approves the transfer, assignment, or 
sale.
    At paragraph 774.17(d)(1), we proposed to revise the cross-
references to our permit eligibility rules. We explained that while the 
reference to section 773.12 was still correct, the reference to section 
773.15 was no longer correct, due to revisions we adopted in our 2000 
final rule. Thus, we proposed to revise the paragraph so that it cross-
references sections 773.12 and 773.14. We adopted this amendment as 
proposed.
    IMCC and other State commenters said that in section 774.17(a), the 
word ``prospective'' should be inserted each time before the words 
``successor in interest'' since the actual succession to the permit 
rights does not transpire until the transfer, assignment, or sale has 
been completed and approved by the regulatory authority. We agree with 
this comment and, as explained above, have modified the final rule 
provision accordingly.
    One State commenter said that in addition to sufficient bond 
coverage, the prospective successor in interest should also be required 
to demonstrate that appropriate insurance coverage remains in place. We 
are not adopting this comment because it is not a requirement under 
SMCRA. However, States remain free to seek this information as part of 
their State programs.
    NMA and other industry commenters supported our proposal to allow 
operations on the permit to continue while the permittee seeks 
regulatory approval of a TAS. These commenters stated that the proposed 
provision requiring the prospective successor in interest to 
demonstrate adequate bond coverage is an appropriate guarantee that the 
surface coal mining operation

[[Page 68019]]

will continue in an environmentally acceptable manner. NMA also agreed 
with our observation that that we retain all of our enforcement powers 
against the prospective successor pending approval of a TAS. Because of 
these protections that remain in place, NMA suggested that the final 
rule should provide that the regulatory shall, rather than may, allow a 
prospective successor to continue operations under the permit pending 
TAS review. We decline to adopt this comment. It is important for the 
regulatory authority to retain discretion in these matters because the 
regulatory authority will be in the best position to assess the 
situation on the ground and to make a reasonable forecast as to whether 
there are likely to be significant problems in approving the transfer, 
assignment, or sale. For example, the regulatory authority may already 
possess information that indicates that the TAS application is likely 
to be rejected. In that circumstance, it would make little sense to 
require the regulatory authority to allow mining to continue.
    KRC/CCC objects to our proposal to allow operations to continue on 
a short-term basis pending TAS approval. These commenters assert that 
our proposal is flatly inconsistent with section 511(b) of SMCRA, 30 
U.S.C. 1261(b). These commenters ``urge OSM not to waste the time and 
resources of all concerned by adopting this flawed proposal.'' We 
disagree with these commenters. Put simply, section 511(b) does not 
preclude the limited continued mining we are allowing for in this final 
rule. That section merely provides that no TAS ``shall be made without 
the written approval of the regulatory authority.'' The statutory 
provision is silent as to whether the permittee or the prospective 
successor can continue mining pending TAS review. For the reasons 
discussed above, we conclude that final section 774.17(a) is a 
reasonable interpretation of the statutory provision. The protections 
afforded by sufficient bond coverage and the regulatory authority's 
enforcement powers will ensure that the operation continues to be in 
compliance with the requirements of the Act during the limited time it 
takes for the regulatory authority to render a decision on a TAS 
application. Moreover, section 506(b) of the Act, 30 U.S.C. 1256(b), 
provides that a ``successor in interest to the 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'' mining operations until the application is granted or 
denied. This provision clearly demonstrates that Congress did not 
intend for mining operations to cease upon a transfer, assignment, or 
sale of permit rights.

V. Section 778.8--Information Collection

    At 30 CFR 778.8, our regulations contain a discussion of Paperwork 
Reduction Act requirements and the information collection aspects of 30 
CFR part 778. We proposed to amend this section by streamlining the 
codified information collection discussion. We did not receive any 
comments on this proposal and are adopting this amendment as proposed. 
A more detailed discussion of the information collection burdens 
associated with part 778 is contained under the Procedural 
Determinations section (see heading IV.10.), below.

W. Section 778.11--Providing Applicant and Operator Information

    Section 507(b) of the Act, 30 U.S.C. 1257(b), contains minimum 
information requirements that permit applicants must comply with when 
they submit permit applications. Historically, our ownership and 
control and related rules have required permit applicants to disclose 
information in addition to section 507(b)'s minimum requirements. Most 
germane to this rulemaking, since 1989, we have required permit 
applicants to identify all of their ``owners and controllers'' in their 
permit applications. See, e.g., 30 CFR 778.13(c) (1989); 30 CFR 
778.11(c)(5) (2001).
    Although section 507 does require the disclosure of certain 
``upstream'' information, it does not require applicants to disclose 
all of their upstream ``owners'' and ``controllers,'' as those terms 
are used in the context of section 510(c) of the Act. Nevertheless, 
courts have consistently upheld our ability to collect information in 
excess of section 507(b)'s minimum requirements when that information 
is ``needed to ensure compliance with the Act.'' NMA v. DOI II, 177 
F.3d at 9 (quoting In re Permanent Surface Mining Regulation Litig., 
653 F.2d 514, 523 (DC Cir.) (en banc), cert. denied sub nom., Peabody 
Coal Co. v. Watt, 454 U.S. 822 (1981).
    In our settlement with NMA, we agreed to propose a definition of 
control or controller that retained the flexible ``ability to 
determine'' standard, coupled with a proposal to remove the requirement 
that permit applicants list all of their controllers in a permit 
application. We satisfied our settlement obligation by proposing those 
amendments in our 2003 proposed rule. Because we continued to find 
merit in the proposal, we carried it forward in our 2006 proposed rule. 
However, we also proposed to add a new provision that would require an 
applicant to disclose the identity of each business entity in the 
applicant's and operator's organizational structure, up to and 
including the ultimate parent entities of the applicant and operator.
    In our 2006 proposed rule, we explained that while it is important 
to retain a flexible definition of control, it is difficult to have an 
objective information disclosure standard based on that type of 
definition. Our stated objective was to create a ``bright line,'' 
objective information disclosure standard for both applicants (who must 
submit certain information in permit applications) and regulatory 
authorities (who review applications for completeness and compliance 
with the Act).
    Our proposal to remove the requirement for applicants to identify 
all of their controllers in a permit application generated the 
strongest adverse comments. In response to these comments, we modified 
the proposal in a key respect. Thus, in this final rule, permit 
applicants will have to continue to provide much of the ``upstream'' 
information that was required under the previous version of section 
778.11, but will not have to identify all of their ``owners'' or 
``controllers,'' as those terms are defined at 30 CFR 701.5. This final 
rule achieves the ``bright line'' information disclosure standard we 
desired, but also ensures that regulatory authorities will have the 
information they need to enforce the Act, including the ability to make 
informed ``control'' determinations. Below, we discuss the ``upstream'' 
information provisions of this final rule in greater detail as well as 
our other amendments to previous section 778.11.
    We proposed to remove the term ``ownership and control'' from the 
heading of this section. We did not receive any specific comments on 
the proposed revision and are adopting the amendment as proposed. The 
new heading for 30 CFR 778.11 reads: ``Providing applicant and operator 
information.'' We revised this heading because, under section 778.11, 
an applicant must submit information in addition to what could be 
called ``ownership and control'' information and because we are also 
eliminating the requirements at former 30 CFR 778.11(c)(5) and (d) for 
applicants to disclose all of their owners and controllers in a permit 
application, including the ``certified controller'' under former 
paragraph (d). As a result

[[Page 68020]]

of these amendments, and the other amendments discussed below, revised 
30 CFR 778.11 now more closely tracks the permit application 
information requirements contained in section 507(b) of the Act. While 
some of the persons identified under amended 30 CFR 778.11 could be 
owners or controllers under our regulatory definitions, the broad term 
``applicant and operator information'' is a better description of the 
information an applicant is required to disclose.
    Previous paragraph 778.11(a)(1) required permit applicants to 
identify whether they or their operators were ``corporations, 
partnerships, sole proprietorships, or other business entities.'' We 
proposed to add ``associations'' to this list of business entities to 
conform the provision more closely to section 507 of the Act. We did 
not receive any comments on this proposal and are adopting the 
amendment as proposed.
    Previous paragraph 778.11(b)(4) required an applicant to disclose 
the identity of the person(s) responsible for submitting the Federal 
Coal Reclamation Fee Report (Form OSM-1) and for remitting the fee to 
OSM. In our 2006 proposed rule, we proposed to eliminate this 
requirement. After considering comments on our 2006 proposed rule, we 
are adopting this amendment as proposed. When we imposed this 
requirement in our 1989 permit information rule (54 FR 8982), we stated 
that: ``Furnishing the name of the person paying the reclamation fee 
will assist [OSM] in collecting the money and arranging for audits when 
necessary.'' Id. at 8983. In our experience since 1989, we have found 
that there is little correlation between obtaining this information and 
our ability to collect reclamation fees and arrange for audits. This is 
particularly true given that Subchapter R of our rules clearly sets 
forth requirements for submission of OSM-1 forms and payment of 
reclamation fees; the overlapping requirement at section 778.11 did 
little or nothing to enhance our enforcement of the reclamation fee 
provisions.
    Further, the identity of the person who will ultimately be 
responsible for submission of the OSM-1 may not be known at the time of 
application. Knowing the name of the anticipated submitter at the time 
of application is of little utility when that person may change prior 
to actual submission of the form. We also note that the former 
provision required States to get this information even though mining 
operators pay the reclamation fee to OSM. We saw no reason to impose an 
information collection burden on the States when they do not need the 
information to enforce any provisions of their programs. Finally, we 
note that the information is not required to be in a permit application 
under section 507 of the Act.
    We proposed to add a new provision at paragraph 778.11(b)(4) that 
would have required permit applicants to identify ``[e]ach business 
entity in the applicant's and operator's organizational structure, up 
to and including the ultimate parent entity.'' We are adopting a 
comment (discussed more fully below) to expand the proposed paragraph 
(b)(4) to require more ``upstream'' information. Under the proposed 
provision, an applicant would have had to identify only the business 
entities in its and its operator's organizational structures, and not, 
for example, the officers, directors, and shareholders of each of those 
entities. Under this final rule, permit applicants will have to 
identify the business entities in the relevant organizational 
structures, plus, for every such entity, every president, chief 
executive officer, and director (or persons in similar positions), and 
every person who owns, of record, 10 percent or more of the entity.
    As discussed in more detail below, in our responses to the comments 
received on proposed section 778.11, we have concluded that while the 
information we are requiring under final paragraph 778.11(b)(4) is not 
required to be disclosed under section 507(b) of the Act, it is 
necessary to ensure compliance with the Act. Given that we are removing 
the requirement for applicants to disclose all of their controllers, we 
conclude that the information required to be submitted under final 
paragraph 778.11(b)(4) is necessary to allow regulatory authorities to 
make ``findings'' of control under amended 30 CFR 774.11(g). After the 
decisions in NMA v. DOI I and NMA v. DOI II, there has been a greater 
emphasis on enforcement actions, such as those under section 518(f) of 
the Act (30 U.S.C. 1268(f)), as opposed to the permit-blocking 
mechanism contained in section 510(c) of the Act. See, e.g., NMA v. DOI 
I, 105 F.3d at 695 (noting that ``blocking permits under section 510(c) 
is not the only regulatory mechanism under SMCRA'' and referencing 
sections 518(a) (civil penalties), 518(f) (individual civil penalties), 
and 521(a), 30 U.S.C. 1271 (cessation orders)). As the DC Circuit 
concluded, some of the upstream information required under section 
507(b)

is relevant to other statutory provisions. For example, section 
507(b)(4)'s requirement that a corporate applicant provide 
information pertaining to its officers and directors can be used to 
identify individuals subject to civil penalties under section 
518(f). * * * In addition, OSM or the state regulatory authority can 
use the information required under section 507(b) to determine who 
the real applicant is--i.e., to pierce the corporate veil in cases 
of subterfuge in order to ensure that it has the true applicant 
before it.

    NMA v. DOI I, 105 F.3d at 695. We agree with the DC Circuit's 
analysis and similarly conclude that the upstream information we are 
requiring under final 30 CFR 778.11(b)(4), though in addition to the 
information required under section 507(b) of the Act, is necessary to 
ensure that regulatory authorities can make informed ``control'' 
determinations and implement the enforcement provisions of the Act.
    While we are eliminating the requirement for applicants to disclose 
all of their ``controllers'' (see discussion below under this heading), 
the information we are requiring under final paragraph 778.11(b)(4) 
will significantly overlap with our previous upstream ownership and 
control information requirements at 778.11(c)(5). However, final 
paragraph 778.11(b)(4) has the critical advantage of being based on 
``bright line,'' objective criteria. That is, all the persons required 
to be disclosed under the provision are readily identifiable, without 
subjectivity, ambiguity, confusion, or uncertainty. As such, we 
achieved one of the major goals of this rulemaking: creating concrete, 
objective information requirements while ensuring that regulatory 
authorities have all the information they need to ensure compliance 
with the Act.
    We proposed several revisions to previous paragraph 778.11(c). 
Under this paragraph, a permit applicant must provide certain 
information for the persons listed in the provision. We proposed to add 
``partner'' and ``member'' to this list of persons and to reorder the 
list. We proposed to add ``partner'' because that term is used in 
section 507(b)(4) of the Act and because partnerships are common 
business entities in the coal mining industry. Likewise, limited 
liability companies, comprised of ``members,'' have become prevalent in 
the industry. Thus, we proposed to include the term ``member'' to 
ensure that we obtain the necessary information for members of a 
limited liability company. We did not receive any adverse comments on 
our proposal to add ``partner'' and ``member'' to the list at section 
778.11(c) and are adopting the amendments as proposed. One State

[[Page 68021]]

commenter said this section has been improved by adding ``partner'' and 
``member.''
    We also proposed to redesignate former 30 CFR 778.11(c)(4) as 30 
CFR 778.11(c)(6) and to revise the regulatory language. The previous 
provision required permit applicants to provide certain information for 
every ``Person who owns 10 to 50 percent of the applicant or the 
operator.'' We proposed to revise the provision to read: ``Person who 
owns, of record, 10 percent or more of the applicant or operator.'' 
After due consideration to the comments received on this proposal, we 
are adopting the amendments as proposed. The previous provision did not 
cover persons who owned greater than 50 percent because those persons 
would have been covered under previous paragraph 778.11(c)(5). In this 
final rule, because we are removing previous paragraph 778.11(c)(5)--
i.e., the requirement to identify all owners and controllers--we are 
modifying the disclosure of ownership information to include all owners 
of 10 percent or more of the applicant and operator. This provision is 
designed to track section 507(b)(4) of the Act, which requires 
applicants to disclose ``any person owning, of record 10 per centum or 
more of any class of voting stock of the applicant.'' We decided not to 
include section 507(b)(4)'s reference to ``voting stock''; instead, 
final paragraph 778.11(c)(6) will include all instruments of ownership, 
not just voting stock. We conclude that this information, like the 
information required to be disclosed under final paragraph 
778.11(b)(4), is necessary to ensure compliance with the Act.
    As explained above, we also proposed to remove previous section 
778.11(c)(5), which required applicants to identify all of their owners 
or controllers in a permit application. At this risk of repetition, our 
desire was to create a ``bright line'' reporting standard that permit 
applicants and regulatory authorities could easily understand. We 
received strong, adverse comments on this proposal (which we respond to 
below). Although we are finalizing this amendment as proposed, we have 
expanded final paragraph 778.11(b)(4), which will, as a practical 
matter, require applicants to identify many of the same persons they 
would have identified under previous section 778.11(c)(5). We note that 
section 507(b) of the Act does not require applicants to identify their 
``owners'' or ``controllers,'' as those terms are used in the context 
of section 510(c), though it does require the disclosure of some 
upstream information. In final paragraph 778.11(b)(4), we have expanded 
on section 507(b)'s upstream information disclosure requirements to 
ensure that regulatory authorities have all the information they need 
to enforce section 510(c) and other provisions of the Act.
    In addition to proposing to remove the requirement to list all 
controllers under previous section 778.11(c)(5), we proposed to remove 
previous paragraph 778.11(d). That section provided that ``[t]he 
natural person with the greatest level of effective control over the 
entire proposed surface coal mining operation must submit a 
certification, under oath, that he or she controls the proposed surface 
coal mining operation.''
    NMA challenged previous paragraph 778.11(d) on procedural and 
substantive grounds, claiming, among other things, that it is vague and 
raises self-incrimination concerns. In our settlement with NMA, we were 
not required to propose elimination of this requirement; instead, in 
our 2003 proposed rule, we proposed to retain the ``certified 
controller'' concept, albeit with proposed amendments to the regulatory 
text. However, in our 2006 proposed rule, based on further internal 
deliberations and input from our State co-regulators, we proposed to 
remove this provision from our regulations. After reviewing comments on 
our 2006 proposed rule, we are adopting our proposal to remove this 
requirement. We conclude that the concept is unworkable given that an 
applicant may not know the identity of this person at the time of 
application, and the identity of the person may change over time. 
Further, the information is of questionable value to regulatory 
authorities because a regulatory authority cannot necessarily take an 
enforcement action against a person just because the person has 
certified that he or she is a controller. Moreover, despite the fact 
that applicants will not have to identify a certified controller, the 
person who would have been identified under this provision will almost 
certainly be identified under one of the other information disclosure 
provisions at paragraphs 778.11(b)(4) and 778.11(c). Finally, the 
identity of the person, at the time of application, who is expected to 
have the greatest level of effective control could be a matter of some 
dispute between the applicant and the regulatory authority. As such, 
retention of this provision would be at odds with our desire to create 
objective permit disclosure requirements.
    Finally, we are adopting proposed paragraph 774.11(h) as new 
paragraph 778.11(e). We proposed to add a new paragraph 774.11(h) to 
specify that we do not need to make a finding of ownership or control 
under amended section 774.11 before entering into AVS the information 
that permit applicants are required to disclose under paragraphs 
778.11(b) and (c). For example, if we find that an applicant failed to 
disclose an operator in a permit application, we can enter the identity 
of the operator into AVS without making a finding of ownership or 
control. This is so because an applicant is required to identify its 
operator under section 507(b)(1) of the Act. 30 U.S.C. 1257(b)(1); 30 
CFR 778.11(b)(3).
    Proposed paragraph (h) made clear that the mere listing of a person 
in AVS pursuant to 30 CFR 778.11(b) or (c) does not create a 
presumption or constitute a determination that such person owns or 
controls a surface coal mining operation. Of course, some of the 
persons required to be disclosed under sections 30 CFR 778.11(b) and 
(c) will, in fact, be owners or controllers, but that is because they 
meet the definition of own, owner, or ownership or control or 
controller at 30 CFR 701.5, not because they are listed in AVS. We did 
not receive any comments on our proposal and, with non-substantive 
changes, we are adopting the amendment as proposed. We decided to move 
this provision to new paragraph 778.11(e) because we determined that it 
makes more sense in the section pertaining to permit information.

Responses to Comments

``Upstream'' Permit Application Information
    As mentioned above, the ``upstream'' information disclosure aspects 
of our 2006 proposed rule generated the strongest adverse comments. 
IMCC and other State commenters identified our proposed amendments to 
section 778.11 as their ``primary concern'' with our proposed rule. 
These commenters said that our proposed elimination of the requirement 
for applicants to identify their owners and controllers would leave the 
States in an ``untenable position'' in attempting to make control 
determinations and asserted that we ``painted with too broad of a 
brush'' in attempting to reconcile objections that our prior definition 
of control or controller was vague, arbitrary, and capricious. IMCC 
asserted that, without the information, States would have to undertake 
time-consuming and costly investigations, without adequate resources to 
do so. Other State commenter asserted that it is inappropriate and 
unnecessary to shift the workload to the States to identify 
controllers. While IMCC and other State commenters appreciate our 
retention of

[[Page 68022]]

a flexible definition of control, these commenters state that without 
the necessary permit application information, the discretion and 
flexibility that a State regulatory authority enjoys is meaningless. 
Finally, these commenters asserted that the lack of adequate permit 
application information would inhibit the States' ability to enforce 
various sections of the Act, including sections 510(c) and 518(f). 
Given that State regulatory authorities are the front-line regulators 
under SMCRA in most coal-producing states, we attached great weight to 
their comments.
    IMCC and other State commenters offered concrete alternatives to 
alleviate the perceived shortcomings in our proposal. First, borrowing 
from our amended definition of control or controller, these commenters 
suggested that we modify our proposal by requiring applicants to 
disclose ``any person who has the ability to determine the manner in 
which a surface coal mining operation is conducted.'' We did not adopt 
this comment because it would have introduced the very uncertainty that 
we are attempting to avoid with respect to our permit application 
information disclosures. In this regard, another State commenter said 
that we overstate an applicant's uncertainty as to who its controllers 
are. While we agree with this commenter that our amended control 
definition is clearer than our previous definition, we still conclude 
that it is better to base our information disclosure requirements on 
purely objective criteria, rather than on our flexible control 
definition.
    However, we are adopting IMCC's second suggestion. IMCC and other 
State commenters opined that

if the applicant is not required to identify its controllers or the 
officers, directors and owners of its parent entities, the 
regulatory authority must find some other means to discover the 
identity of those persons and entities in order to determine who may 
be subject to individual liability and if there is subterfuge as to 
who is the real applicant.

To remedy this identified information deficit, these commenters 
suggested that we modify our proposal by requiring permit applicants to 
identify not only the business entities in their organizational 
structures but also, for each business entity, the identity of the 
president, chief executive officer (CEO), directors, and greater-than-
10 percent shareholders. These commenters explained that presidents and 
CEOs are unique due to the responsibility imposed upon them under 
corporate law for the day-to-day operation of the entity. Likewise, 
directors typically elect and can remove the president and CEO, and 
shareholders elect the directors. By contrast, these commenters 
explained that, in the States' experience, it is rare that a junior 
officer several levels up the corporate chain is a controller. By 
obtaining the identified information, IMCC said that the States can 
effectively enforce the Act. We agree and, as discussed above, have 
adopted this comment in final paragraph 778.11(b)(4). IMCC's approach 
is an excellent compromise that allows us to create objective permit 
application information standards and obtain the information necessary 
for us and State regulatory authorities to enforce SMCRA.
    Like the State commenters, KRC/CCC expressed dissatisfaction with 
our proposal to remove the requirement for applicants to identify all 
of their owners and controllers. These commenters stated that we could 
not lawfully promulgate the proposed revision based on our 
``unexplained and unsubstantiated desire to establish `bright line,' 
`objective' permit information requirements.'' In support of their 
position, these commenters cite various excerpts from preambles to our 
prior rules where we explained that the ``upstream'' information 
provisions of previous section 778.11 were necessary to enforce section 
510(c) and other provisions of the Act. They also state that ``it is 
inconceivable that allowing permit applicants to keep secret the 
identity of many, if not most, controllers would advance any of SMCRA's 
purposes.'' Further, these commenters state that permit applicants 
should not have any difficulty identifying their controllers in their 
permit applications. Finally, these commenters stated that we did not 
establish a lawful basis for our proposed revision to section 773.9. 
(Although the commenter referred to section 773.10, in context, it 
appears that the comment was actually directed at section 773.9.)
    We understand and appreciate these comments. Upon consideration of 
these comments, and those submitted on behalf of the State regulatory 
authorities, we modified our proposed rule. As previously explained, 
under paragraph 778.11(b)(4) of this final rule, permit applicants will 
have to disclose each business entity in their organizational 
structure, up to and including their ultimate parent entity. Further, 
for every such business entity, applicants will be required to identify 
each president, CEO, and director (or persons in similar positions) and 
every person who owns 10 percent or more of the entity. While this 
upstream information is in addition to section 507's requirements, we 
agree with these commenters and the State commenters that this 
information is necessary to enforce the Act. We do reiterate, however, 
that under this final rule, permit applicants will not have to identify 
their owners or controllers as those terms are defined at final section 
701.5. However, as explained above, under final paragraph 778.11(b)(4), 
permit applicants will be required to identify many of the same persons 
they would have identified under previous section 778.11(c)(5).
    We disagree with these commenters to the extent they suggest that 
our desire to create ``bright line,'' ``objective'' permit information 
requirements does not justify our decision to remove the requirement 
for applicants to identify their owners and controllers. We believe it 
is a laudable goal, in and of itself, for any regulatory agency to make 
its rules as clear, concise, and objective as possible, which we feel 
we have accomplished in this final rule. Moreover, as we explained 
above, under heading III.B., we concluded there was a tension between 
our flexible control definition and the related, previous requirement 
for applicants to identify their controllers in permit applications. We 
have eliminated that tension by making the permit information 
disclosure requirements purely objective, while still ensuring that 
regulatory authorities have the information they need to enforce the 
Act. Further, shortly after we promulgated our 2000 rule, NMA sued us 
over the requirement for permit applicants to disclose all of their 
controllers, given the alleged vagueness of our previous definition. We 
perceived at least some risk of loss and, therefore, opted to settle 
NMA's challenge.
    As mentioned, these commenters also said that permit applicants 
should not have any problem identifying their controllers and that 
allowing permit applicants to ``keep secret'' the identity of their 
controllers does not advance the purposes of SMCRA. As we stated in 
response to a similar State comment, our amended control definition is 
clearer than our previous definition; however, reasonable minds could 
still differ as to who meets the regulatory definition of control or 
controller. As such, we conclude that it is better to base our 
information disclosure requirements on purely objective criteria, 
rather than on our flexible control definition. This final rule is 
fully authorized by, and advances the purposes of, SMCRA. The rule 
comports with sections 507 and 510 of the Act, and provides regulatory 
authorities with the additional information they need to enforce the 
Act. The information

[[Page 68023]]

required under final paragraph 778.11(b)(4) will give regulatory 
authorities a complete picture of the applicant, allowing regulatory 
authorities to make informed permitting decisions and to take 
enforcement actions when necessary.
    Finally, we respond to these commenters' statement that we did not 
establish a lawful basis for our proposed revision to section 773.9. 
That section, as amended in this final rule, requires regulatory 
authorities to rely on applicant and operator information, including 
the information applicants submit under section 778.11, to review the 
applicant's and operator's organizational structures and ownership or 
control relationships before making a permit eligibility determination 
under section 773.12. Given our adoption of final paragraph 
778.11(b)(4), final section 773.9 is substantively identical to the 
previous provision, requiring the regulatory authority to engage in the 
same type of review, based on similar information, prior to making a 
permit eligibility determination. By not changing the substance of the 
provision, we have eliminated these commenters' concern that we did not 
provide a lawful basis for the proposed change.
    NMA and other industry commenters strongly supported our proposed 
removal of the requirement for permit applicants to identify all of 
their owners and controllers in their permit applications, primarily 
because our proposal more closely resembled the information disclosure 
requirements of section 507 of the Act.
    However, these commenters strongly opposed proposed paragraph 
778.11(b)(4), which would have required permit applicants to disclose 
the identity of each business entity in the applicant's and operator's 
organizational structure, up to and including the ultimate parent 
entity of the applicant and operator. Quoting the DC Circuit's decision 
in NMA v. DOI I, these commenters argued that our proposal was 
impermissible because it amounted to an ``attempt[ ] to use section 
510(c) to regulate those not covered by that section.'' NMA v. DOI I, 
105 F.3d at 694. Similarly, contrary to the comments submitted by IMCC 
and other State regulatory authorities, one State commenter said 
proposed paragraph 778.11(b)(4) does not appear to be grounded in the 
Act and, from the regulatory viewpoint, appears to serve no purpose.
    We strongly disagree with these commenters. In NMA v. DOI I, the DC 
Circuit concluded that when making permit eligibility determinations 
under section 510(c), we can only consider violations at operations the 
applicant owns or controls; the court struck down our ability to deny 
permits based on ``upstream'' violations--i.e., violations at 
operations owned or controlled by the applicant's owners or 
controllers. In our proposed rule, we did not suggest that OSM could 
use proposed paragraph 778.11(b)(4)'s ``upstream'' information to deny 
permits and, therefore, we were not attempting to use section 510(c) to 
regulate persons not covered by that section. Further, as explained 
above, in NMA v. DOI I, the DC Circuit actually noted that section 507 
of the Act itself requires disclosure of some upstream information that 
is relevant to statutory provisions other than section 510(c). NMA v. 
DOI I, 105 F.3d at 695. For example, the court noted that the upstream 
information can be used ``to identify individuals subject to civil 
penalties under section 518(f)'' or ``to determine who the real 
applicant is.'' Id. More importantly, in NMA v. DOI II, the DC Circuit 
expressly approved our previous information disclosure requirements 
that required permit applicants to identify all of their ``upstream'' 
owners or controllers. NMA v. DOI II, 177 F.3d at 9.
    As explained above, we expanded proposed 778.11(b)(4) to require 
even more ``upstream'' information. Thus, under this final rule, permit 
applicants will have to disclose much of the same ``upstream'' 
information that they had to disclose under our prior rules. Based on 
our review of the comments submitted on our proposed rule, and a review 
of our own prior statements on the issue, we conclude that the 
information we are requiring in this final rule is necessary for us and 
the State regulatory authorities to enforce the Act. More specifically, 
by giving us a complete picture of the applicant and its organizational 
structure, the information will enhance our ability to take enforcement 
actions when necessary, identify ``real applicants,'' and verify the 
applicant's statement under section 507(b)(5) of the Act as to 
``whether the applicant, any subsidiary, affiliate, or persons 
controlled by or under common control with the applicant'' has ever 
forfeited a mining bond or had a mining permit suspended or revoked 
within the 5-year period preceding the date of application. Because we 
have amply demonstrated the ``practical utility'' of the information 
required to be disclosed under this final rule, we also disagree with 
these commenters that our information requirements violate the 
Paperwork Reduction Act.
Certified Controller
    Previous 30 CFR 778.11(d) required the natural person with the 
greatest level of effective control over the entire proposed surface 
coal mining operation to submit a certification of that status. IMCC 
and the States, in their comments on our 2003 proposed rule and again 
during our outreach meeting described above, suggested that previous 
paragraph 778.11(d) was problematic and that it should be eliminated. 
In our 2006 proposed rule, we proposed to remove the requirement. IMCC 
and the other State commenters did not comment on this aspect of our 
2006 proposed rule and, therefore, presumably still support removal of 
the provision.
    NMA and other industry commenters strongly supported our proposed 
removal of the ``certified controller'' provision. These commenters 
contended that the provision was vague and raised concerns about self-
incrimination under the Fifth Amendment to the United States 
Constitution. They also noted that permit applicants may not know the 
identity of the person at the time of application, and the person may 
change over time. Finally, they stated it is unfair to require 
identification of the person in advance of any violations at the 
surface coal mining operation. While we have adopted our proposal to 
remove this provision, we do not agree with all of these commenters' 
observations. For example, we do not agree that the provision 
implicated the Fifth Amendment's protection against self-incrimination, 
nor do we agree that our prior rule was unfair to the extent it 
required identification of the certified controller prior to the 
occurrence of any violations. Rather, for the reasons discussed above, 
we decided to remove the provision because we agree with the States 
that it was relatively meaningless and lacked practical utility. We do 
agree with these commenters that the identity of this person may not be 
known at the time of application and may change over time.
    KRC/CCC opposed our proposed removal of the provision, arguing that 
any entity competent to conduct surface coal mining operations should 
be able to identity the natural person with the greatest level of 
effective control over the proposed operation. They state that, despite 
NMA's litigating position, the provision was not vague and did not 
raise Fifth Amendment concerns. Finally, they said that the fact that 
the identity of the person may change over time did not justify 
eliminating the provision. As stated above, we agree that the provision 
did not implicate the

[[Page 68024]]

Fifth Amendment. However, we do feel that the provision lacked the pure 
objectivity we sought to achieve. For example, what if the regulatory 
authority disagreed with the applicant's designation? Could, or should, 
the regulatory authority substitute its judgment for that of the 
applicant? And, if so, to what end? As explained above, regulatory 
authorities could not necessarily have taken an enforcement action 
against a person just because the person had certified that he or she 
was a controller under our regulatory definition. In sum, this 
information is not required by the Act, and we conclude that it is not 
necessary to ensure compliance with the Act. Further, under final 
paragraphs 778.11(b) and (c), applicants will still have to disclose 
the identity of the persons most likely to control their surface coal 
mining operations (e.g., officers, directors, etc.). Thus, if a 
violation does occur at the operation, regulatory authorities will know 
whom to talk to first.
Identity of Person Responsible for Submitting Form OSM-1
    NMA and other industry commenters supported our proposal to remove 
previous 30 CFR 778.11(b)(4), which required permit applicants to 
identify the person(s) responsible for submitting the Coal Reclamation 
Fee Report (Form OSM-1) and for remitting payment to OSM. These 
commenters said the provision is unnecessary and duplicative. For the 
reasons explained above, we agree with these commenters and have 
adopted our proposal to remove the provision.
    KRC/CCC opposed removal of the provision. They stated that when we 
first adopted this provision we ``necessarily concluded'' that 
``identification of persons responsible for filing Form OSM-1 provides 
important information regarding ownership or control of the permit 
applicant.'' We disagree. As explained above, when we imposed this 
requirement in our 1989 permit information rule (54 FR 8982), we stated 
that: ``Furnishing the name of the person paying the reclamation fee 
will assist [OSM] in collecting the money and arranging for audits when 
necessary.'' Id. at 8983. We did not conclude that the information is 
important for ownership or control purposes. In our experience since 
1989, we have found that there is little correlation between obtaining 
this information and our ability to collect reclamation fees and 
arrange for audits, particularly because we have similar provisions in 
our other regulations. These commenters also make the unsupported 
statement that requiring this information ``helps ensure the level of 
pre-planning that Congress sought to require the coal industry to 
undertake.'' We cannot speak for Congress on this point, but we note 
that Congress did not provide for disclosure of this information under 
section 507(b) of the Act. Finally, these commenters said the fact that 
States will most often obtain this information, even though States do 
not use the information for any purpose, does not justify eliminating 
the provision. As explained above, we see no reason to impose an 
information collection burden on the States, particularly when we have 
concluded that the information is duplicative and unnecessary. In sum, 
this information is not required to be disclosed under section 507 of 
the Act, and we conclude that removal of previous paragraph 
778.11(b)(4) will not impair our ability to enforce the Act.

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

    We are adopting our 2006 proposal to remove 30 CFR 843.21 in its 
entirety. Section 843.21 contained Federal procedures relative to 
State-issued permits that may have been improvidently issued based on 
certain ownership or control relationships. The section provided for 
direct Federal inspection and enforcement, including our authority to 
issue notices of violation and cessation orders, if, after an initial 
notice, a State failed to take appropriate action or show good cause 
for not taking action with respect to an improvidently issued State 
permit. Its removal provides greater regulatory stability through 
clarification of the State/Federal relationship related to permitting 
in primacy States, which has been a source of great confusion for many 
years. See, e.g., Coteau Prop. Co. v. 53 F. 3d 1466, 1472 (8th Cir. 
1995) (``there exists a state of general confusion regarding SMCRA's 
allocation of power between OSM and primacy states'').
    We first adopted regulations concerning improvidently issued 
permits on April 28, 1989 (54 FR 18438). In our 2003 proposed rule, we 
proposed to amend, but otherwise retain, section 843.21. More 
specifically, we proposed to eliminate the various provisions of 
section 843.21 that required posting of notices and findings on the 
Internet. In addition, based on our settlement with NMA, we proposed to 
clarify the basis for a notice under 30 CFR 843.21(a). After we issued 
our 2003 proposed rule, we reviewed our historic use of this section 
and, in our 2006 proposed rule, decided to propose its removal.
    We are removing section 843.21 for two reasons. First, based on our 
experience implementing this section, we conclude that it is no longer 
needed. Since we issued the rule in 1989, we are not aware of a single 
instance of OSM's having to take an enforcement action under section 
843.21 against a permittee holding a State-issued permit. The fact that 
OSM, to our knowledge, did not have to take any enforcement actions 
under this provision indicates to us that State regulatory authorities 
are making proper permit eligibility determinations in the first 
instance or, in the rare case of improvident permit issuance, properly 
applying State counterparts to our improvidently issued permit 
regulations. (Under our improvidently issued permit regulations--30 CFR 
773.21 through 773.23--and the State counterparts to those regulations, 
a regulatory authority can initiate procedures to suspend or rescind 
permits it has improvidently issued due to certain ownership or control 
relationships.) Consequently, we conclude that there is not a need for 
the provision of previous section 843.21 authorizing us to take a 
direct enforcement action against a State permittee regarding a State 
permit that may have been improvidently issued.
    The second reason we are removing section 843.21 is that a decision 
within the Department of the Interior caused us to reexamine our 
oversight role relative to State permitting decisions. On October 21, 
2005, the Department of the Interior's Assistant Secretary for Land and 
Minerals Management (ASLMM) issued a final decision concerning a 
citizen's group's request that OSM conduct a Federal inspection in a 
case where the citizen's group was dissatisfied with a State regulatory 
authority's decision to issue a coal mining permit. (A copy of the 
ASLMM's October 21, 2005, final decision is contained in the public 
record for this rulemaking.) The citizen's group requested an 
inspection even though mining on the permit had not yet commenced and 
the citizen's group had failed to prosecute a direct appeal of the 
State's permitting decision in State tribunals.
    In her decision, the ASLMM pointed out that ``OSM intervention at 
any stage of the state permit review and appeal process would in effect 
terminate the state's exclusive jurisdiction over the matter and [would 
frustrate SMCRA's] careful and deliberate statutory design.'' See also 
Bragg v. Robertson, 248 F. 3d 275, 288-289, 293-295 (4th Cir. 2001) 
(regulation under SMCRA is ``mutually

[[Page 68025]]

exclusive, either Federal or State law regulates coal mining activity 
in a State, but not both simultaneously''; primacy States have 
``exclusive jurisdiction'' over surface coal mining operations on 
nonfederal lands within their borders).
    The final decision also explained that in a ``primacy state, permit 
decisions and any appeals are solely matters of the state jurisdiction 
in which OSM plays no role.'' In support of this statement, the final 
decision cited the U.S. Court of Appeals for the District of Columbia 
Circuit's landmark en banc decision in In re Permanent Surface Mining 
Regulation Litig., 653 F. 2d 514, 523 (DC Cir.) (en banc), cert. denied 
sub nom., Peabody Coal Co. v. Watt, 454 U.S. 822 (1981) (PSMRL). In 
that case, the en banc court held that SMCRA grants OSM the rulemaking 
authority to require States to secure permit application information 
beyond the Act's specific information requirements. Id. at 527. The 
court laid the groundwork for its holding with a discussion of the 
relative roles of the Secretary of the Interior and the States in 
administering the Act. More specifically, the court explained:

    In an approved and properly enforced state program, the state 
has the primary responsibility for achieving the purposes of the 
Act. First, the State is the sole issuer of permits. In performing 
this centrally important duty, the state regulatory authority 
decides who will mine in what areas, how long they may conduct 
mining operations, and under what conditions the operations will 
take place. See Act Sec. Sec.  506, 510. It decides whether a 
permittee's techniques for avoiding environmental degradation are 
sufficient and whether the proposed reclamation plan is acceptable. 
Act Sec.  510(b).
    Administrative and judicial appeals of permit decisions are 
matters of state jurisdiction in which the Secretary [of the 
Interior] plays no role. Act Sec.  514.

Id. at 519 (emphasis added). In a footnote accompanying this passage, 
the DC Circuit went on to explain that ``[t]he independence of a state 
administering an approved state program under the Surface Mining Act 
may be contrasted with the continuing role of the Environmental 
Protection Agency after a state has assumed responsibility for 
pollution discharge permits under the Federal Water Pollution Control 
Act, 33 U.S.C. 1251-1376 (1976 & Supp. II 1978). The EPA Administrator 
retains veto power over individual permit decisions under that 
statute.'' Id.
    The ASLMM's decision, and the materials cited therein, caused us to 
look more carefully at the statutory and regulatory scheme governing 
our oversight role related to State permitting decisions and, in 
particular, the propriety of retaining section 843.21. Inasmuch as 
section 843.21 authorized direct Federal enforcement against State 
permittees based on State permitting decisions, it was inconsistent 
with the ASLMM's decision and PSMRL's admonition that a primacy State 
is the ``sole issuer of permits'' within the State.
    Further, under SMCRA, State permitting is entirely separate from 
Federal inspections and associated Federal enforcement. The statutory 
provisions related to permit application review and permit decisions 
are found at section 510 of the Act, 30 U.S.C. 1260, and appeals of 
permitting decisions are provided for under section 514 of the Act, 30 
U.S.C. 1264. There is no mention in these statutory provisions of the 
need for an inspection--the predicate to Federal enforcement under 
section 521 of the Act (30 U.S.C. 1271)--in connection with State 
permitting decisions, and certainly nothing in these provisions 
mandates Federal intervention in State permitting decisions. Our 
regulations governing administrative and judicial review of permitting 
decisions (30 CFR part 775) are likewise silent as to the need for an 
inspection in the context of permitting appeals. Moreover, nothing in 
our Federal inspection regulations at 30 CFR parts 842 and 843 suggests 
that those procedures can be used as an alternative to our permitting 
appeal provisions.
    The Act's provisions for Federal inspections expressly provide that 
such inspections are of mining ``operations.'' See SMCRA Sec.  517(a), 
30 U.S.C. 1267(a) (referring to inspections of surface coal mining and 
reclamation operations) and SMCRA Sec.  521(a) (referring to 
inspections of surface coal mining operations). The definitions of 
surface coal mining and reclamation operations and surface coal mining 
operations at SMCRA Sec. Sec.  701(27) and (28), 30 U.S.C. 1291(27) and 
(28), do not mention anything about permits or permitting decisions. 
Instead, those definitions refer to activities and the areas upon which 
those activities occur. In short, the purpose of a Federal inspection 
is to determine what is happening at the mine, and, thus, SMCRA's 
inspection and enforcement provisions do not readily apply to State 
permitting decisions because they are not activities occurring at the 
mine. See, e.g., Coteau, 53 F. 3d at 1473 (``Permitting requirements 
such as revelation of ownership and control links are not likely to be 
verified through the statutorily-prescribed method of physical federal 
inspection of the mining operation * * *.'').
    In summary, the statutory and regulatory provisions related to 
inspections and enforcement are separate and distinct, both practically 
and legally, from permitting actions. The Act and our regulations 
provide specific administrative and judicial procedures for persons 
adversely affected and seeking relief from permitting decisions; our 
Federal inspection regulations do not serve as an alternative to those 
procedures. Distinct from the review of permitting decisions, Congress 
provided for inspection and enforcement for activities occurring at the 
mine and purposely excluded permitting activities from the operation-
specific inspection and enforcement process. In short, Congress did not 
intend for OSM to second guess a State's permitting decisions. Instead, 
the Secretary of the Interior's ultimate power over a State's lax 
implementation of its permitting provisions is set out in section 
521(b) of the Act, 30 U.S.C. 1271(b). PSMRL, 653 F. 2d at 519. The 
Secretary's power under section 521(b) includes taking over an entire 
State permit-issuing process. Id.
    In the preamble to our December 19, 2000, final rule--in which we, 
among other things, repromulgated previous section 843.21--we stated 
that, in NMA v. DOI II, the U.S. Court of Appeals for the D.C. Circuit 
upheld our ability to take remedial action relative to improvidently 
issued State permits. 65 FR 79653. After further internal review, we 
believe the better interpretation is that NMA v. DOI II, when taken 
together with the same court's decision in PSMRL, the ASLMM's final 
decision, and the statutory and regulatory framework discussed above, 
does not support retention of section 843.21.
    In NMA v. DOI II, the D.C. Circuit addressed, among other things, 
NMA's assertion that our 1997 version of section 843.21 (see 62 FR 
19450) impinged on State primacy. The D.C. Circuit agreed with NMA and 
invalidated our improvidently issued State permit regulations. 177 F. 
3d at 9. In invalidating section 843.21, the court noted that section 
521 of the Act ``sets out specific procedural requirements to be met 
before the Secretary may take remedial action against a state 
permittee.'' Id. Ultimately, the court concluded that our 1997 version 
of section 843.21 was invalid because it did not comply with the 
procedural requirements of section 521(a)(3) of the Act. Id. In our 
2000 preamble, we interpreted the NMA v. DOI II decision as holding 
that our ability to take enforcement actions based on improvidently 
issued State permits is

[[Page 68026]]

authorized by section 521 of the Act, as long as we adhere to the 
specific procedures set forth in that section. Thus, in our 2000 final 
rule, we attempted to cure the defect in the 1997 version of section 
843.21 by repromulgating it in accordance with the procedures set forth 
in section 521 of the Act. 65 FR 79652.
    As mentioned above, we reassessed the viability of section 843.21, 
including our analysis of the NMA v. DOI II decision, in light of the 
ASLMM's final decision. Upon reexamination, we concluded that another 
reading of NMA v. DOI II, as it relates to our 1997 version of section 
843.21, is that the court identified section 521(a)(3) of the Act as 
containing the only procedures under which we can take enforcement 
actions against a State permittee, but did not expressly hold that our 
improvidently issued State permits regulations could, if amended, fall 
within the contours of section 521(a)(3). For a number of reasons, we 
conclude this is the better reading of NMA v. DOI II.
    For example, we have already discussed the fact that a Federal 
inspection of mining operations is a predicate to Federal enforcement 
under section 521(a) and that there is a mismatch between these types 
of inspections and alleged permitting defects. Further, as outlined in 
the ASLMM's decision, SMCRA's statutory scheme suggests that there is 
no Federal role in State permitting decisions. Up until our 2000 final 
rule, our provisions related to Federal enforcement against State 
permittees resulting from the inspections identified in section 521(a) 
were contained exclusively in 30 CFR 843.11 and 843.12. When we 
repromulgated section 843.21, we unintentionally created overlapping 
provisions implementing section 521(a). Removing section 843.21 
eliminates any confusion or uncertainty created by these 
unintentionally overlapping provisions.
    We did not receive any adverse comments on our proposal, but we did 
receive comments strongly in favor. As such, we are adopting our 
proposal to remove section 843.21.
    IMCC and other State commenters strongly supported our proposal to 
remove section 843.21. These commenters stated: ``We wholeheartedly 
endorse and agree with all of the reasons and legal justifications set 
forth in OSM's well crafted preamble language accompanying the decision 
to remove Section 843.21.'' We appreciate this comment. In support of 
their position, these commenters also cited various passages of the 
Act, PSMRL, and the ASLMM decision described above. Another State 
commenter supported our proposal, noting that ``[r]emoval of this 
section reflects a more appropriate conception of the relationship 
between OSM and primacy states.'' We agree with these commenters' 
observations and took them into consideration when deciding to adopt 
our proposal to remove section 843.21.
    NMA and other industry commenters also strongly supported our 
proposal, noting that ``OSM has set forth persuasive reasons for 
deleting this provision.'' NMA stated that removal of this provision 
would: (1) Conform the rules to the purpose and structure of that 
statute, which places exclusive regulatory and permitting jurisdiction 
with primacy States; (2) prevent third parties from circumventing the 
specific procedures for appealing State permits under the approved 
State permitting and administrative review provisions; and (3) 
recognize that inspections of mining operations were not intended, and 
are ill-suited, for questioning the efficacy of State permitting 
decisions. For the reasons set forth above, we agree with these 
observations.
    NMA endorsed our reading of NMA v. DOI II, to the extent we 
suggested that the DC Circuit did not expressly hold that our 
previously-invalidated improvidently issued State permits regulations 
could, if amended, fall within the contours of section 521(a)(3). NMA 
also asserts that nothing in that decision suggests that section 843.21 
was compelled by the Act. We agree with these comments. NMA also stated 
that ``OSM has clearly articulated a reasoned basis in this proposal 
for changing its interpretation and policy under SMCRA.'' Again, we 
agree.
    In the balance of its comments on this issue, NMA cites many of the 
cases that are cited in the ASLMM's decision and in our discussion 
above. NMA also agreed with our observation that there is a mismatch 
between the subject matter of previous section 843.21 and the 
inspections contemplated under section 521(a) of the Act. On the other 
hand, NMA notes that section 521(b), 30 U.S.C. 1271(b), appears to be 
the one provision where Congress contemplated OSM's stepping in and 
becoming the regulatory authority for permitting decisions. For the 
reasons set forth above, we agree with these comments.
    Finally, NMA noted that we ``identified compelling factual 
reasons'' for removing previous section 843.21, including the fact that 
we have never taken an enforcement action against a State permittee 
under previous section 843.21. NMA asserts that ``the rule has never 
served as an integral or necessary part of assuring that States 
faithfully execute their responsibilities under their approved State 
programs.'' Moreover, according to NMA, the previous rule was a 
substantial intrusion on State primacy and undermined the federalism 
established in SMCRA. Again, for the reasons discussed above, we agree 
with these comments.

Y. Section 847.11 and 847.16--Criminal Penalties and Civil Actions for 
Relief

    In our 2000 rule, we adopted certain new ``alternative 
enforcement'' provisions to implement sections 518(e), 518(g), and 
521(c) of the Act. 30 U.S.C. 1268(e), 1268(g), 1271(c). During the 
course of litigation over our 2000 final rule, NMA claimed that certain 
of these provisions unlawfully abrogated State prosecutorial discretion 
by making it mandatory for States to seek criminal penalties or 
institute civil actions for relief when certain specified conditions 
occurred. See 30 CFR 847.11 (2001) (criminal penalties), 847.16 (2001) 
(civil actions for relief), and 847.2(c) (requiring State regulatory 
programs to include criminal penalty and civil action provisions that 
are no less stringent than the Federal requirements).
    Upon further reflection, we agreed that the regulatory authority--
Federal or State--should have the discretion to evaluate the severity 
of a violation and ultimately to determine whether referral for 
alternative enforcement is warranted. Therefore, we agreed to settle 
NMA's claim. In 2003, to satisfy our obligation under the settlement, 
we proposed to revise our regulations at 30 CFR 847.11 and 847.16 to 
remove the mandatory nature of referrals for alternative enforcement. 
Because we continued to find merit in the proposal, we carried it 
forward in our 2006 proposed rule.
    In this final rule, we are adopting the amendments as proposed. 
Specifically, we changed the word ``will'' to ``may'' in the operative 
provisions--i.e., section 847.11 (introductory language) and paragraph 
847.16(a)--to underscore that a regulatory authority ``may,'' but is 
not bound to, refer a particular matter for alternative enforcement.
    We first promulgated these provisions in our 2000 final rule. See 
generally 65 FR 79655-58. Although we stated in the preamble to that 
rule that the newly-adopted provisions ``largely track the statutory 
provisions they implement,'' we did not explain why we chose to make 
these alternative enforcement actions mandatory when the Act does not 
compel that result.

[[Page 68027]]

    Section 847.11 of our rules implements sections 518(e) and (g) of 
the Act. Under section 518(e), any person who willfully and knowingly 
commits certain actions, ``shall, upon conviction, be punished by a 
fine of not more than $10,000, or by imprisonment for not more than one 
year or both.'' Similarly, under section 518(g), whoever knowingly 
undertakes certain actions, or knowingly fails to undertake certain 
required actions, ``shall, upon conviction, be punished by a fine of 
not more than $10,000, or by imprisonment for not more than one year or 
both.'' By their terms, these sections do not make enforcement 
mandatory. As we explained in the preamble to our 2000 rule, the use of 
the word ``shall'' in sections 518(e) and (g) of SMCRA does not require 
the commencement of criminal proceedings, it only specifies the 
punishment that applies upon conviction. See 65 FR 79657. Thus, while 
these sections specify punishments, they do not specify when the 
regulatory authority is required to seek a conviction. As such, we 
assume that Congress intended for the government to retain 
prosecutorial discretion, as is customary in criminal law. Because we 
did not explain the basis for making these actions mandatory in our 
2000 rule, and because we now determine that it is best for regulatory 
authorities to retain prosecutorial discretion, we are adopting the 
amendments to section 847.11 as proposed.
    Section 847.16 of our rules implements section 521(c) of the Act. 
Under certain specified circumstances, section 521(c) of the Act 
provides that the ``Secretary may request the Attorney General to 
institute a civil action for relief * * *.'' (Emphasis added.) By its 
terms, this section--through use of the word ``may''--vests the 
Secretary with complete discretion to refer matters to the Attorney 
General. In our 2000 rule, we made these referrals mandatory but did 
not explain our rationale for deviating from the statutory text. We now 
conclude that it is better to afford regulatory authorities the 
discretion contemplated by the Act. Requiring regulatory authorities to 
refer even the most minor violations to the Attorney General is 
inefficient, time consuming, and potentially costly. As such, we are 
adopting our proposed amendment to paragraph 847.16(a).
    IMCC and other State commenters supported our proposal. They stated 
that they agree ``it is important that the states retain the discretion 
to evaluate the severity of a violation and ultimately determine 
whether referral for alternative enforcement is warranted.'' Another 
State commenter said these sections have been improved by adding 
discretion for regulatory authorities. For the reasons set forth above, 
we agree with these comments.
    NMA and other industry commenters also supported our proposal. 
These commenters stated that the previous rules abrogated State 
prosecutorial discretion by making it mandatory for States to seek 
criminal penalties or institute civil actions, regardless of merit. 
They asserted that our proposal ``will provide much rationality to the 
process, and will ensure that limited resources are allocated to the 
most important cases.'' NMA also said that our proposal was supported 
by case law and the Administrative Procedure Act. We agree with these 
comments.
    KRC/CCC opposed our proposal, claiming that the ``sole reason that 
OSM gives for proposing the change is that it has come to sympathize 
with NMA's allegation that the current rule[s] unlawfully abrogate 
State prosecutorial discretion.'' To the contrary: We agree with NMA's 
assertion because it is grounded in the Act. In the discussion above, 
we have adequately explained the statutory authority for, and basis and 
purpose of, our amendments to our alternative enforcement provisions. 
In sum, the Act does not make alternative enforcement actions 
mandatory, and we conclude that it is better for regulatory authorities 
to retain the customary discretion in this area.
    These commenters also assert that, in prior preamble statements 
supporting our 2000 final rule, we made clear that our previous rules 
did not abrogate prosecutorial discretion. For example, we said that 
``[f]inal Sec.  847.11 requires that the regulatory authority refer all 
cases meeting the criteria of section 518(e) and (g) to the Attorney 
General, who has the discretion to determine whether to act upon the 
referral.'' In this passage, we merely acknowledged that even if a 
regulatory authority makes a referral, the Attorney General will have 
prosecutorial discretion. In this final rule, we conclude that the 
SMCRA regulatory authorities, who have developed considerable expertise 
in the administration of the Act, should have the discretion to 
determine the severity of a violation in the first instance. Upon 
referral, the Attorney General will still have the usual prosecutorial 
discretion.
    In another passage, we said that ``[t]he circumstances that 
precipitate a civil action for relief are very specific in the Act. If 
a regulatory authority encounters one of these circumstances, final 
Sec.  847.16(a) requires that the regulatory authority refer the case 
to the Attorney General.'' Again, while we certainly made referrals 
under section 847.16(a) mandatory, we did not explain why we deviated 
from the statutory term ``may'' contained in section 521(c) of the Act. 
For the reasons discussed above, we have reconsidered the wisdom of our 
prior policy choice and decided to return to the language of the Act.

IV. Procedural Determinations

1. Executive Order 12866--Regulatory Planning and Review

    This final rule is not considered a significant regulatory action 
under the criteria of Executive Order 12866.
    a. The final 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 revisions to the regulations do not have an adverse 
economic impact on the coal industry or State regulatory authorities.
    The revisions result in a minor reduction in expenses for the coal 
industry and State regulatory authorities because programmatic changes 
to the regulations reduce the reporting burden for certain types of 
applicants and transactions. Expenses are slightly reduced because 
revisions to the definition of transfer, assignment, or sale of permit 
rights at 30 CFR 701.5, result in fewer transactions or events 
qualifying as transfers, assignments, or sales requiring an application 
and regulatory approval under 30 CFR 774.17. In addition, permit 
applicants no longer identify all of their controllers in a permit 
application under 30 CFR 778.11(c), and State regulatory authorities no 
longer enter that information into AVS under 30 CFR 773.8(b)(1).
    The programmatic changes to the regulations are estimated to result 
in a savings to the coal industry of approximately $64,000 per year and 
a savings to the State and Federal regulatory authorities of 
approximately $40,000 per year. None of the changes in the rule 
significantly alter the fundamental conceptual framework of our 
regulatory program.
    b. This rulemaking does not create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency.
    c. This rulemaking does not alter the budgetary effects of 
entitlements, grants, user fees, loan programs, or the rights and 
obligations of their recipients.
    d. This rulemaking does not raise novel legal or policy issues.

[[Page 68028]]

2. 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.). 
As previously stated, the revisions to the regulations would likely 
reduce the cost of doing business for the regulated industry and State 
regulatory authorities and, therefore, would not have an adverse 
economic impact on the coal industry or State regulatory authorities. 
In addition, the rulemaking produces no adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
United States enterprises to compete with foreign-based enterprises in 
domestic or export markets.

3. Small Business Regulatory Enforcement Fairness Act

    For the reasons previously stated, this rule is not a major rule 
under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement 
Fairness Act. This 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 
United States-based enterprises to compete with foreign-based 
enterprises.

4. Unfunded Mandates

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

5. Executive Order 12630--Takings

    We have determined that this rulemaking does not have any 
significant takings implications under Executive Order 12630. 
Therefore, a takings implication assessment is not required.

6. Executive Order 12988--Civil Justice Reform

    In accordance with Executive Order 12988, the Department of the 
Interior's 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.

7. Executive Order 13132--Federalism

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

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

    In accordance with Executive Order 13175, we have evaluated the 
potential effects of this rule on Federally-recognized Indian tribes. 
We have determined that the 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.

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

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

10. Paperwork Reduction Act

    The collections of information contained in this final rule have 
been approved by the Office of Management and Budget under 44 U.S.C. 
3501 et seq. and assigned control numbers 1029-0116 and 1029-0117.

11. National Environmental Policy Act

    We have found that this final rule is categorically excluded from 
environmental review under section 102(2)(C) of the National 
Environmental Policy Act, 42 U.S.C. 4332(2)(C). This determination was 
made in accordance with the Department of the Interior's Departmental 
Manual. 516 DM 2.3(A)(2), Appendix 1.10. In addition, we have 
determined that none of the ``extraordinary circumstances'' exceptions 
to the categorical exclusion apply. 516 DM 2, Appendix 2.

12. Effect of the Rule on State Programs

    Following publication of this final rule, we will evaluate the 
State programs approved under section 503 of SMCRA, 30 U.S.C. 1253, to 
determine any changes in those programs that may be necessary. When we 
determine that a particular State program provision should be amended, 
the particular State will be notified in accordance with the provisions 
of 30 CFR 732.17. On the basis of this rule, we have made a preliminary 
determination that State program revisions will be required.

List of Subjects

30 CFR Part 701

    Law enforcement, Surface mining, Underground mining.

30 CFR Part 773

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

30 CFR Part 774

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

30 CFR Part 778

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

30 CFR Part 843

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

30 CFR Part 847

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

    Dated: November 7, 2007.
C. Stephen Allred,
Assistant Secretary, Land and Minerals Management.


0
For the reasons given in the preamble, OSM is amending 30 CFR parts 
701, 773, 774, 778, 843, and 847 as set forth below.

PART 701--PERMANENT REGULATORY PROGRAM

0
1. The authority citation for part 701 continues to read as follows:

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


0
2. Amend Sec.  701.5 as follows:
0
a. Revise the definition of ``control or controller''.
0
b. Revise the definition of ``own, owner, or ownership''.
0
c. Revise the definition of ``transfer, assignment, or sale of permit 
rights''.
0
The revisions read as follows:


Sec.  701.5  Definitions.

* * * * *

[[Page 68029]]

    Control or controller, when used in parts 773, 774, and 778 of this 
chapter, refers to or means--
    (a) A permittee of a surface coal mining operation;
    (b) An operator of a surface coal mining operation; or
    (c) Any person who has the ability to determine the manner in which 
a surface coal mining operation is conducted.
* * * * *
    Own, owner, or ownership, as used in parts 773, 774, and 778 of 
this chapter (except when used in the context of ownership of real 
property), means being a sole proprietor or owning of record in excess 
of 50 percent of the voting securities or other instruments of 
ownership of an entity.
* * * * *
    Transfer, assignment, or sale of permit rights means a change of a 
permittee.
* * * * *

PART 773--REQUIREMENTS FOR PERMITS AND PERMIT PROCESSING

0
3. The authority citation for part 773 continues to read as follows:

    Authority: 30 U.S.C. 1201 et seq., 16 U.S.C. 470 et seq., 16 
U.S.C. 661 et seq., 16 U.S.C. 703 et seq., 16 U.S.C. 668a et seq., 
16 U.S.C. 469 et seq., and 16 U.S.C. 1531 et seq.


0
4. Revise Sec.  773.3 to read as follows:


Sec.  773.3  Information collection.

    The collections of information contained in part 773 have been 
approved by the Office of Management and Budget under 44 U.S.C. 3501 et 
seq. and assigned clearance number 1029-0115. The information collected 
will be used by the regulatory authority in processing surface coal 
mining permit applications. Persons intending to conduct surface coal 
mining operations must respond to obtain a benefit. A Federal agency 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless it displays a currently valid OMB 
control number. Response is required to obtain a benefit in accordance 
with SMCRA. Send comments regarding burden estimates or any other 
aspect of this collection of information, including suggestions for 
reducing the burden, to the Office of Surface Mining Reclamation and 
Enforcement, Information Collection Clearance Officer, Room 202--SIB, 
1951 Constitution Avenue, NW., Washington, DC 20240.

0
5. In Sec.  773.7, revise paragraph (a) to read as follows:


Sec.  773.7  Review of permit applications.

    (a) The regulatory authority will review an application for a 
permit, revision, or renewal; written comments and objections 
submitted; and records of any informal conference or hearing held on 
the application and issue a written decision, within a reasonable time 
set by the regulatory authority, either granting, requiring 
modification of, or denying the application. If an informal conference 
is held under Sec.  773.6(c) of this part, the decision will be made 
within 60 days of the close of the conference.
* * * * *

0
6. In Sec.  773.8, revise paragraph (b)(1) to read as follows:


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

* * * * *
    (b) * * *
    (1) The information you are required to submit under Sec. Sec.  
778.11 and 778.12(c) of this subchapter.
* * * * *

0
7. In Sec.  773.9, revise paragraph (a) to read as follows:


Sec.  773.9  Review of applicant and operator information.

    (a) We, the regulatory authority, will rely upon the information 
that you, the applicant, are required to submit under Sec.  778.11 of 
this subchapter, information from AVS, and any other available 
information, to review your and your operator's organizational 
structure and ownership or control relationships.
* * * * *

0
8. In Sec.  773.10, revise paragraphs (b) and (c) to read as follows:


Sec.  773.10  Review of permit history.

* * * * *
    (b) We will also determine if you or your operator have previous 
mining experience.
    (c) If you or your operator do not have any previous mining 
experience, we may conduct an additional review under Sec.  774.11(f) 
of this subchapter. The purpose of this review will be to determine if 
someone else with mining experience controls the mining operation.

0
9. In Sec.  773.12, revise paragraphs (a)(1) and (a)(2), remove 
paragraphs (a)(3) and (b), and redesignate paragraphs (c), (d), and (e) 
as paragraphs (b), (c), and (d), respectively, to read as follows:


Sec.  773.12  Permit eligibility determination.

* * * * *
    (a) * * *
    (1) You directly own or control has an unabated or uncorrected 
violation; or
    (2) You or your operator indirectly control has an unabated or 
uncorrected violation and your control was established or the violation 
was cited after November 2, 1988.
* * * * *

0
10. In Sec.  773.14, revise paragraph (b) introductory text to read as 
follows:


Sec.  773.14  Eligibility for provisionally issued permits.

* * * * *
    (b) We, the regulatory authority, will find you eligible for a 
provisionally issued permit under this section if you demonstrate that 
one or more of the following circumstances exists with respect to all 
violations listed in paragraph (a) of this section--
* * * * *

0
11. In Sec.  773.21, revise paragraph (c) to read as follows:


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

* * * * *
    (c) When we make a preliminary finding under paragraph (a) of this 
section, we must serve you with a written notice of the preliminary 
finding, which must be based on evidence sufficient to establish a 
prima facie case that your permit was improvidently issued.
* * * * *

0
12. Amend Sec.  773.22, by removing paragraph (d) and redesignating 
paragraphs (e), (f), (g), and (h) as (d), (e), (f), and (g), 
respectively.

0
13. In Sec.  773.23, revise paragraph (c)(2) to read as follows:


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

* * * * *
    (c) * * *
    (2) Post the notice at our office closest to the permit area.
* * * * *

0
14. In Sec.  773.25 revise paragraphs (a) and (b) to read as follows:
* * * * *
    (a) Listed in a permit application or AVS as an owner or controller 
of an entire surface coal mining operation, or any portion or aspect 
thereof:
    (b) Found to be an owner or controller of an entire surface coal 
mining operation, or any portion or aspect thereof, under Sec. Sec.  
773.21 or 774.11(g) of this subchapter; or

0
15. In Sec.  773.26, revise the table in paragraph (a) and add new 
paragraph (e) to read as follows:

[[Page 68030]]

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

* * * * *
    (a) * * *

------------------------------------------------------------------------
                                               Then you must submit a
      If the challenge concerns . . .       written explanation to . . .
------------------------------------------------------------------------
(1) a pending State or Federal permit       the regulatory authority
 application.                                with jurisdiction over the
                                             application.
(2) your ownership or control of a surface  the regulatory authority
 coal mining operation, and you are not      with jurisdiction over the
 currently seeking a permit.                 surface coal mining
                                             operation.
------------------------------------------------------------------------

* * * * *
    (e) At any time, you, a person listed in AVS as an owner or 
controller of a surface coal mining operation, may request an informal 
explanation from the AVS Office as to the reason you are shown in AVS 
in an ownership or control capacity. Within 14 days of your request, 
the AVS Office will provide a response describing why you are listed in 
AVS.

0
16. In Sec.  773.27, revise paragraph (a) to read as follows:


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

* * * * *
    (a) When you challenge a listing of ownership or control, or a 
finding of ownership or control made under Sec.  774.11(g) of this 
subchapter, you must prove by a preponderance of the evidence that you 
either--
    (1) Do not own or control the entire surface coal mining operation 
or relevant portion or aspect thereof; or
    (2) Did not own or control the entire surface coal mining operation 
or relevant portion or aspect thereof during the relevant time period.

0
17. In Sec.  773.28, revise paragraph (d) to read as follows:


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

* * * * *
    (d) We will post all decisions made under this section on AVS.
* * * * *

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

0
18. The authority citation for part 774 continues to read as follows:

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


0
19. Revise Sec.  774.9 to read as follows:


Sec.  774.9  Information collection.

    (a) The collections of information contained in part 774 have been 
approved by the Office of Management and Budget under 44 U.S.C. 3501 et 
seq. and assigned clearance number 1029-0116. Regulatory authorities 
will use this information to:
    (1) Determine if the applicant meets the requirements for revision; 
renewal; transfer, assignment, or sale of permit rights;
    (2) Enter and update information in AVS following the issuance of a 
permit; and
    (3) Fulfill post-permit issuance requirements and other obligations 
based on ownership, control, and violation information.
    (b) A Federal agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a currently valid OMB control number. Response is required to 
obtain a benefit in accordance with SMCRA. Send comments regarding 
burden estimates or any other aspect of this collection of information, 
including suggestions for reducing the burden, to the Office of Surface 
Mining Reclamation and Enforcement, Information Collection Clearance 
Officer, Room 202-SIB, 1951 Constitution Avenue, NW., Washington, DC 
20240.

0
20. Amend Sec.  774.11 as follows:
0
a. Revise the table in paragraph (a).
0
b. Revise paragraphs (e), (f), and (g).
0
c. Add new paragraph (h).
0
The amendments read as follows:


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

    (a) * * *

------------------------------------------------------------------------
     We must enter into AVS all . . .        Within 30 days after . . .
------------------------------------------------------------------------
(1) permit records........................  the permit is issued or
                                             subsequent changes made.
(2) unabated or uncorrected violations....  the abatement or correction
                                             period for a violation
                                             expires.
(3) changes to information initially        receiving notice of a
 required to be provided by an applicant     change.
 under 30 CFR 778.11.
(4) changes in violation status...........  abatement, correction, or
                                             termination of a violation,
                                             or a decision from an
                                             administrative or judicial
                                             tribunal.
------------------------------------------------------------------------

* * * * *
    (e) Entry into AVS.
    (1) If you do not request a hearing, and the time for seeking a 
hearing has expired, we will enter our finding into AVS.
    (2) If you request a hearing, we will enter our finding into AVS 
only if that finding is upheld on administrative appeal.
    (f) At any time, we may identify any person who owns or controls an 
entire surface coal mining operation or any relevant portion or aspect 
thereof. If we identify such a person, we must issue a written 
preliminary finding to the person and the applicant or permittee 
describing the nature and extent of ownership or control. Our written 
preliminary finding must be based on evidence sufficient to establish a 
prima facie case of ownership or control.
    (g) After we issue a written preliminary finding under paragraph 
(f) of this section, we will allow you, the person subject to the 
preliminary finding, 30 days in which to submit any information tending 
to demonstrate your lack of ownership or control. If, after reviewing 
any information you submit, we are persuaded that you are not an owner 
or controller, we will serve you a written notice to that effect. If, 
after reviewing any information you submit, we still find that you are 
an owner or controller, or if you do not submit any information within 
the 30-day period, we will issue a written finding and enter our 
finding into AVS.
    (h) If we identify you as an owner or controller under paragraph 
(g) of this section, you may challenge the finding using the provisions 
of Sec. Sec.  773.25, 773.26, and 773.27 of this subchapter.

0
21. In Sec.  774.12, revise paragraph (c) to read as follows:


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

* * * * *
    (c) Within 60 days of any addition, departure, or change in 
position of any person identified in Sec.  778.11(c) of this 
subchapter, you must provide--
    (1) The information required under Sec.  778.11(d) of this 
subchapter; and
    (2) The date of any departure.

0
22. In Sec.  774.17, revise paragraph (a), paragraph (d) introductory 
text, and paragraph (d)(1) to read as follows:


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

* * * * *
    (a) General. No transfer, assignment, or sale of rights granted by 
a permit shall be made without the prior written approval of the 
regulatory authority. At its discretion, the regulatory authority

[[Page 68031]]

may allow a prospective successor in interest to engage in surface coal 
mining and reclamation operations under the permit during the pendency 
of an application for approval of a transfer, assignment, or sale of 
permit rights submitted under paragraph (b) of this section, provided 
that the prospective successor in interest can demonstrate to the 
satisfaction of the regulatory authority that sufficient bond coverage 
will remain in place.
* * * * *
    (d) Criteria for approval. The regulatory authority may allow a 
permittee to transfer, assign, or sell permit rights to a successor, if 
it finds in writing that the successor--
    (1) Is eligible to receive a permit in accordance with Sec. Sec.  
773.12 and 773.14 of this chapter;
* * * * *

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

0
23. The authority citation for part 778 continues to read as follows:

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


0
24. Revise Sec.  778.8 to read as follows:


Sec.  778.8  Information collection.

    The collections of information contained in part 778 have been 
approved by the Office of Management and Budget under 44 U.S.C. 3501 et 
seq. and assigned clearance number 1029-0117. The information collected 
will be used by the regulatory authority to ensure that all legal, 
financial, and compliance information requirements are satisfied before 
issuance of a permit. Persons intending to conduct surface coal mining 
operations must respond to obtain a benefit. A Federal agency may not 
conduct or sponsor, and a person is not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number. Response is required to obtain a benefit in accordance 
with SMCRA. Send comments regarding burden estimates or any other 
aspect of this collection of information, including suggestions for 
reducing the burden, to the Office of Surface Mining Reclamation and 
Enforcement, Information Collection Clearance Officer, Room 202-SIB, 
1951 Constitution Avenue, NW., Washington, DC 20240.

0
25. Amend Sec.  778.11 as follows:
0
a. Revise the section heading.
0
b. Revise paragraph (a) introductory text and paragraphs (a)(1), 
(b)(4), and (c).
0
c. Remove paragraph (d).
0
d. Redesignate paragraph (e) as paragraph (d).
0
e. Revise newly designated paragraph (d) introductory text.
0
f. Add a new paragraph (e).
0
The revisions and addition read as follows:


Sec.  778.11  Providing applicant and operator information.

    (a) You, the applicant, must provide in the permit application--
    (1) A statement indicating whether you and your operator are 
corporations, partnerships, associations, sole proprietorships, or 
other business entities;
* * * * *
    (b) * * *
    (4) Each business entity in the applicant's and operator's 
organizational structure, up to and including the ultimate parent 
entity of the applicant and operator; for every such business entity, 
you must also provide the required information for every president, 
chief executive officer, and director (or persons in similar 
positions), and every person who owns, of record, 10 percent or more of 
the entity.
    (c) For you and your operator, you must provide the information 
required by paragraph (d) of this section for every--
    (1) Officer.
    (2) Partner.
    (3) Member.
    (4) Director.
    (5) Person performing a function similar to a director.
    (6) Person who owns, of record, 10 percent or more of the applicant 
or operator.
    (d) You must provide the following information for each person 
listed in paragraph (c) of this section--
* * * * *
    (e) We need not make a finding as provided for under Sec.  
774.11(g) of this subchapter before entering into AVS the information 
required to be disclosed under this section; however, the mere listing 
in AVS of a person identified in paragraph (b) or (c) of this section 
does not create a presumption or constitute a determination that such 
person owns or controls a surface coal mining operation.

PART 843--FEDERAL ENFORCEMENT

0
26. The authority citation for part 843 continues to read as follows:

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


Sec.  843.21  [Removed]

0
27. Remove Sec.  843.21.

PART 847--ALTERNATIVE ENFORCEMENT

0
28. The authority citation for part 847 continues to read as follows:

    Authority: 30 U.S.C. 1201 et seq.
0
29. In Sec.  847.11, revise the introductory text to read as follows:


Sec.  847.11  Criminal penalties.

    Under sections 518(e) and (g) of the Act, we, the regulatory 
authority, may request the Attorney General to pursue criminal 
penalties against any person who--
* * * * *

0
30. In Sec.  847.16, revise paragraph (a) introductory text to read as 
follows:


Sec.  847.16  Civil actions for relief.

    (a) Under section 521(c) of the Act, we, the regulatory authority, 
may request the Attorney General to institute a civil action for relief 
whenever you, the permittee, or your agent--
* * * * *
 [FR Doc. E7-23162 Filed 11-30-07; 8:45 am]
BILLING CODE 4310-05-P