[Federal Register Volume 73, Number 221 (Friday, November 14, 2008)]
[Rules and Regulations]
[Pages 67576-67647]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26458]



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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 700, 724, 773, et al.



Abandoned Mine Land Program; Final Rule

  Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / 
Rules and Regulations  

[[Page 67576]]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Parts 700, 724, 773, 785, 816, 817, 845, 846, 870, 872, 873, 
874, 875, 876, 879, 880, 882, 884, 885, 886, and 887

RIN 1029-AC56
[Docket ID: OSM-2008-0003]


Abandoned Mine Land Program

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 revising our regulations for the Abandoned Mine Reclamation 
Fund (Fund) and the Abandoned Mine Land (AML) program. This rule 
revises our regulations to be consistent with the Tax Relief and Health 
Care Act of 2006, Public Law 109-432, signed into law on December 20, 
2006, which included the Surface Mining Control and Reclamation Act 
Amendments of 2006 (the 2006 amendments). The rule reflects the 
extension of our statutory authority to collect reclamation fees for an 
additional fourteen years and to reduce the fee rates. The rule also 
updates the regulations in light of the statutory amendments that 
change the activities State and Tribal reclamation programs may perform 
under the AML program, funding for reclamation grants to States and 
Indian tribes, and transfers to the United Mine Workers of America 
(UMWA) Combined Benefit Fund (CBF), the UMWA 1992 Benefit Plan, and the 
UMWA Multiemployer Health Benefit Plan (1993 Benefit Plan). Finally, 
our rule extends incentives reauthorized by the 2006 amendments 
pertaining to the remining of certain lands and water adversely 
affected by past mining.

DATES: Effective Date: January 13, 2009.

FOR FURTHER INFORMATION CONTACT: Danny Lytton, Chief, Reclamation 
Support Division, 1951 Constitution Ave., NW., Washington, DC 20240; 
Telephone: 202-208-2788; E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background on the Reclamation Fee and the Abandoned Mine Land 
Program
    A. How did the reclamation fee work before the 2006 amendments?
    B. How did the AML program work before the 2006 amendments?
    C. How did the 2006 amendments change these programs?
II. Outreach and Guidance
III. Description of the Final Rule and Discussion of the Comments 
Received
    A. General Comments
    B. Section By Section Analysis
IV. Procedural Determinations

I. Background on the Reclamation Fee and the Abandoned Mine Land 
Program

A. How did the reclamation fee work before the 2006 amendments?

    Title IV of the Surface Mining Control and Reclamation Act of 1977 
(SMCRA) created an AML reclamation program funded by a reclamation fee 
assessed on each ton of coal produced. The fees collected have been 
placed in the Fund. We, either directly or through grants to States and 
Indian tribes with approved AML reclamation plans under SMCRA, have 
been using money from the Fund primarily to reclaim lands and waters 
adversely impacted by mining conducted before the enactment of SMCRA 
and to mitigate the adverse impacts of mining on individuals and 
communities. Also, since Fiscal Year (FY) 1996, an amount equal to the 
interest earned by and paid to the Fund has been available for direct 
transfer to the UMWA CBF to defray the cost of providing health care 
benefits for certain retired coal miners and their dependents. See 
Energy Policy Act of 1992, Public Law 102-486, 106 Stat. 2776, 3056, 
Sec.  19143(b)(2) of Title XIX.
    Section 402(a) of SMCRA fixed the reclamation fee for the period 
before September 30, 2007, at 35 cents per ton (or 10 percent of the 
value of the coal, whichever is less) for surface-mined coal other than 
lignite, 15 cents per ton (or 10 percent of the value of the coal, 
whichever is less) for coal from underground mines, and 10 cents per 
ton (or 2 percent of the value of the coal, whichever is less) for 
lignite. As originally enacted, section 402(b) of SMCRA authorized 
collection of reclamation fees for 15 years following the date of 
enactment (August 3, 1977); thus, our fee collection authority would 
have expired August 3, 1992. However, Congress extended the fees and 
our fee collection authority through September 30, 1995, in the Omnibus 
Budget Reconciliation Act of 1990 (Pub. L. 101-508, 104 Stat. 1388, 
Sec.  6003(a)). The Energy Policy Act of 1992 (Pub. L. 102-486, 106 
Stat. 2776, 3056, Sec.  19143(b)(1) of Title XIX), extended the fees 
through September 30, 2004. A series of short interim extensions in 
appropriations and other acts extended the fees through September 30, 
2007.

B. How did the AML program work before the 2006 amendments?

    SMCRA established the AML reclamation program in response to 
concern over extensive environmental damage caused by past coal mining 
activities. Before the 2006 amendments, the AML program reclaimed 
eligible lands and waters using money appropriated by Congress from the 
Fund, which came from the reclamation fees collected from the coal 
mining industry. Eligible lands and waters were those which were mined 
for coal or affected by coal mining or coal processing, were abandoned 
or left inadequately reclaimed prior to the enactment of SMCRA on 
August 3, 1977, and for which there was no continuing reclamation 
responsibility under State or other Federal laws.
    SMCRA established a priority system for reclaiming coal problems. 
Before the 2006 amendments, the AML program had five priority levels, 
but reclamation was focused on eligible lands and waters that reflected 
the top three priorities. The first priority was ``the protection of 
public health, safety, general welfare, and property from extreme 
danger of adverse effects of coal mining practices.'' 30 U.S.C. 
1233(a)(1) (unamended). The second priority was ``the protection of 
public health, safety, and general welfare from adverse effects of coal 
mining practices.'' 30 U.S.C. 1233(a)(2) (unamended). The third 
priority was ``the restoration of land and water resources and the 
environment previously degraded by adverse effects of coal mining 
practices * * *.'' 30 U.S.C. 1233(a)(3) (unamended).
    As the law required, the Fund was divided into State or Tribal and 
Federal shares. Each State or Indian tribe with a Federally approved 
reclamation plan was entitled to receive 50 percent of the reclamation 
fees collected annually from coal operations conducted within its 
borders. The ``Secretary's share'' of the Fund consisted of the 
remaining 50 percent of the reclamation fees collected annually and all 
other receipts to the Fund. The Secretary's share was allocated into 
three shares as required by the 1990 amendments to SMCRA. See Omnibus 
Budget Reconciliation Act of 1990, Public Law 101-508, 104 Stat. 1388, 
Sec.  6004. First, we allocated 40% of the Secretary's share to 
``historic coal'' funds to increase reclamation grants to States and 
Indian tribes for coal reclamation. However, all the funds which were 
allocated may not have been appropriated. Second, we allocated 20% to 
the Rural Abandoned Mine Program (RAMP), operated by the Department of 
Agriculture. However, funding for that program has not been 
appropriated AML funds since the mid 1990's. Last, SMCRA required us to 
allocate 40% to ``Federal expense'' funds to provide grants to States 
for emergency programs that abate sudden

[[Page 67577]]

dangers to public health or safety needing immediate attention, to 
increase reclamation grants in order to provide a minimum level of 
funding to State and Indian tribal programs with unreclaimed coal 
sites, to conduct reclamation of emergency and high-priority coal sites 
in areas not covered by State and Indian tribal programs, and to fund 
our operations that administer Title IV of SMCRA.
    States with an approved State coal regulatory program under Title V 
of SMCRA and with eligible coal mined lands may develop a State program 
for reclamation of abandoned mines. The Secretary may approve the State 
reclamation program and fund it. At the time the 2006 amendments were 
enacted, 23 States received annual AML grants to operate their approved 
reclamation programs. Three Indian tribes (the Navajo, Hopi and Crow 
Indian tribes) without approved regulatory programs have received 
grants for their approved reclamation programs as authorized by section 
405(k) of SMCRA.
    Before the 2006 amendments, a State or Indian tribe was authorized 
to certify that it had addressed all known coal problems within the 
State or on Indian lands within its jurisdiction. These certified 
States and Indian tribes were able to use AML grant funds to abate the 
impacts of mineral mining and processing. SMCRA established the 
following priorities for the certified programs:

    (1) The protection of public health, safety, general welfare, 
and property from extreme danger of adverse effects from mineral 
mining and processing practices.
    (2) The protection of public health, safety, and general welfare 
from adverse effects of mineral mining and processing practices.
    (3) The restoration of land and water resources and the 
environment previously degraded by the adverse effects of mineral 
mining and processing practices.

30 U.S.C. 1240a(c).
    Certified States and Indian tribes could also use these funds to 
improve or construct utilities adversely affected by mineral mining and 
to construct public facilities in communities impacted by coal or 
mineral mining or processing. 30 U.S.C. 1240a(e). In addition, 
certified States and Indian tribes could use these funds for activities 
or construction of specific public facilities related to the coal or 
minerals industry in areas impacted by coal or minerals development. 30 
U.S.C. 1240a(f).
    In contrast, uncertified States and Indian tribes could use AML 
grant funds on noncoal projects only to abate extreme dangers to public 
health, safety, general welfare, and property that arose from the 
adverse effects of mineral mining and processing and only at the 
request of the Governor or the governing body of the Indian tribe. 30 
U.S.C. 1239.
    The minimum program funding level provided additional grant funding 
to uncertified States and Indian tribes so that each reclamation 
program would receive enough annual AML funding to support a viable 
program. Before the 2006 amendments, SMCRA set the minimum program 
level at $2 million. 30 U.S.C. 1232(g)(8) (as amended by the Omnibus 
Budget Reconciliation Act of 1990, Public Law 101-508, Sec.  6004). 
However, appropriations have generally only funded the minimum program 
level at $1.5 million. See, e.g., Department of the Interior, 
Environment, and Related Agencies Appropriations Act, 2006, Public Law 
109-54, 119 Stat. 513 (2005) (``[G]rants to minimum program States will 
be $1,500,000 per State in fiscal year 2006.''). The Federal Fiscal 
Year runs from October 1 through September 30, so that FY 2006 is 
October 1, 2005, through September 30, 2006. SMCRA did not mandate a 
particular share of the Fund be used to support the minimum program, 
and we chose to use moneys from the Federal expense share of the Fund 
for this purpose.
    Before the 2006 amendments, States and Indian tribes were allowed 
to deposit up to 10 percent of their State or Tribal share and 10 
percent of their historic coal funds into set-aside accounts for either 
future coal reclamation or acid mine drainage abatement and treatment 
programs or both. 30 U.S.C. 1232(g)(6) (as amended by the Omnibus 
Budget Reconciliation Act of 1990, Public Law 101-508, Sec.  6004). In 
addition, uncertified States and Indian tribes were allowed to spend up 
to 30% of their funds on water supply projects that protect, repair, 
replace, construct, or enhance water supply facilities adversely 
affected by coal mining practices. 30 U.S.C. 1233(b)(1) (as amended by 
the Omnibus Budget Reconciliation Act of 1990, Public Law 101-508, 
Sec.  6005).

C. How did the 2006 amendments change these programs?

    The Surface Mining Control and Reclamation Act Amendments of 2006 
were signed into law as part of the Tax Relief and Health Care Act of 
2006, on December 20, 2006. Public Law 109-432. The 2006 amendments 
revise Title IV of SMCRA to make significant changes to the reclamation 
fee and the AML program. The changes are summarized as follows:
     OSM's reclamation fee collection authority is extended 
through September 30, 2021. The statutory fee rates are reduced by 10 
percent from the current levels for the period from October 1, 2007, 
through September 30, 2012. The fee rates are reduced by an additional 
10 percent from the original levels for the period from October 1, 
2012, through September 30, 2021. 30 U.S.C. 1232(a).
     The Fund allocation formula is changed. Beginning October 
1, 2007, certified States are no longer eligible to receive State share 
funds. 30 U.S.C. 1231(f)(3)(B). Instead, amounts which would have been 
distributed as State share for fee collections for certified States are 
distributed as historic coal funds. 30 U.S.C. 1240a(h)(4). The RAMP 
share is eliminated. See 30 U.S.C. 1232(g). The historic coal 
allocation is further increased by the amount that previously was 
allocated to RAMP. 30 U.S.C. 1232(g)(5).
     Distributions of annual fee collections are made outside 
of the appropriations process. Once fully phased in, most fee 
collections will go to States and Indian tribes in annual mandatory 
distributions. Mandatory distributions from the Fund for uncertified 
States and Indian tribes include the State or Tribal share of all fees 
collected for coal produced the previous fiscal year, historic coal 
funds allocated from previous fiscal year production and also 
transferred from collections for certified States and Indian tribes for 
the previous fiscal year, and minimum program make up funding. 30 
U.S.C. 1232(g)(1), (g)(5), and (g)(8)(A). These mandatory distributions 
are phased in at 50 percent for FY 2008 and FY 2009, and 75 percent for 
FY 2010 and FY 2011; full funding will be reached in FY 2012. 30 U.S.C. 
1231(f)(5). After the end of the fee collection period, mandatory 
distributions of money from the Fund for FY 2023 and subsequent years 
will continue from balances in the Fund at the same level as FY 2022 to 
the extent funds are available. 30 U.S.C. 1231(f)(2)(B).
     Certified States and Indian tribes receive mandatory 
distributions of Treasury funds in lieu of the State and Tribal share 
they are no longer eligible to receive. 30 U.S.C. 1240a(h)(2). This 
mandatory distribution will be phased in at 25 percent for the first 
year, 50 percent for the second year, 75 percent for the third year, 
and fully distributed in the fourth year and thereafter. 30 U.S.C. 
1240a(h)(3)(B). These funds may be used to address coal problems that 
arise after certification and for other purposes.

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     All States and Indian tribes with approved reclamation 
plans are paid amounts equal to their unappropriated prior balance of 
State and Tribal share funds from fees collected on coal produced 
before October 1, 2007. 30 U.S.C. 1240a(h)(1)(A)(i). Payments are made 
in seven equal annual installments beginning in FY 2008. 30 U.S.C. 
1240a(h)(1)(C). Payments are mandatory distributions from Treasury 
funds. These payments must be used by uncertified States and Indian 
tribes for the purposes of section 403 of SMCRA. 30 U.S.C. 
1240a(h)(1)(D)(ii). These payments must be used by certified States and 
Indian tribes for purposes established by the State legislature or 
Tribal council, with priority given for addressing the impacts of 
mineral development. 30 U.S.C. 1240a(h)(1)(D)(i). Amounts in the Fund 
previously designated as State or Tribal share equal to the 
unappropriated balance payments transferred to historic coal funds as 
payments are made and used for reclamation grants in FY 2023 and 
thereafter. 30 U.S.C. 1240a(h)(4).
     The minimum funding level for each State or Indian tribe 
with an approved reclamation plan and unfunded high priority coal 
reclamation problems is increased to not less than $3 million annually. 
30 U.S.C. 1232(g)(8)(A). This funding is a mandatory distribution from 
the Secretary's share of the Fund. However, like the rest of the 
distributions from the Fund, these distributions phased in at 50 
percent for FY 2008 and FY 2009, and 75 percent for FY 2010 and FY 
2011; full funding will be reached in FY 2012. 30 U.S.C. 1231(f)(5).
     The States of Tennessee and Missouri are each authorized 
to receive minimum program make up funding for their approved State 
reclamation programs even if they do not meet other requirements, such 
as having an approved coal regulatory program. 30 U.S.C. 1232(g)(8)(B).
     Federal expenses from the Secretary's share must be 
appropriated by Congress. 30 U.S.C. 1231(d)(a). Uses for Federal 
expense funding include the emergency reclamation program, Federal 
reclamation programs, the Watershed Cooperative Agreement Program, and 
our AML administrative expenses.
     The limit on set-aside funding for an acid mine drainage 
(AMD) abatement and treatment program (AMD set-aside) is increased from 
10 percent to 30 percent of State or Tribal share funds and historic 
coal funds. 30 U.S.C. 1232(g)(6). In addition, States and Indian tribes 
are no longer required to get our approval for AMD plans. Id. Set-aside 
funding for future coal reclamation is no longer authorized. Id. The 
previous cap of 30 percent for water supply restoration projects is 
eliminated. 30 U.S.C. 1233(b).
     There are only three AML coal reclamation priorities 
because the previous priorities 4 and 5 have been removed. 30 U.S.C. 
1233(a). Also, ``general welfare'' is eliminated as a component of 
priorities 1 and 2. 30 U.S.C. 1233(a)(1) and (a)(2). OSM must now 
ensure strict compliance with the coal priorities until the State or 
Indian tribe is certified. 30 U.S.C. 1232(g)(2). States and Indian 
tribes may initiate Priority 3 reclamation projects before completing 
all Priority 1 and 2 projects only if the Priority 3 reclamation is 
performed in conjunction with a Priority 1 or 2 project. 30 U.S.C. 
1232(g)(7). Priority 3 lands and waters adjacent to past, present, and 
future Priority 1 and 2 project sites may be reclassified to Priority 1 
or 2. 30 U.S.C. 1233(a)(1)(B)(ii) and 1233(a)(2)(B)(ii).
     The previous prohibition on filing a lien against the 
beneficiary of an AML reclamation project if the person owned the 
surface before May 2, 1977, is eliminated. 30 U.S.C. 1238(a). The 
automatic lien waiver is now extended to all landowners who did not 
consent to, participate in, or exercise control over the mining 
operations that necessitated the reclamation.
     We must approve amendments to the AML inventory system. 30 
U.S.C. 1233(c).
     We may certify that a State or Indian tribe has completed 
coal reclamation without prior request from the State or Indian tribe. 
30 U.S.C. 1240a(a)(2).
     There is a cap of $490 million on total annual Treasury 
funding under this legislation. 30 U.S.C. 1232(i)(3)(A). This cap 
limits payments to States and Indian tribes under 30 U.S.C. 1240a(h) 
and the payments to the CBF, 1992 Benefit Plan, and the 1993 Benefit 
Plan, collectively known as the ``UMWA health care plans,'' under 30 
U.S.C. 1232(h) and 1232(i)(1).
     Subject to certain limitations, to the extent payments 
from premiums and other sources do not meet the financial needs of the 
UMWA health care plans, all estimated Fund interest earnings for each 
fiscal year must be transferred to these plans. 30 U.S.C. 1232(h). The 
unappropriated balance of the RAMP allocation as of December 20, 2006, 
is also available for transfer to the UMWA health care plans. 30 U.S.C. 
1232(h)(4)(B). These additional transfers to the CBF began in FY 2007, 
while transfers to the 1992 and 1993 Benefit Plans began in FY 2008. 30 
U.S.C. 1232(h)(1). Transfers to the 1992 and 1993 Benefit Plans are 
phased in, with transfers in FY 2008-2010 limited to 25%, 50%, and 75% 
respectively, of the amounts that would otherwise be transferred. 30 
U.S.C. 1232(h)(5)(C). If necessary to meet their financial needs, the 
UMWA health care plans are also entitled to payments from 
unappropriated amounts in the Treasury, subject to the overall $490 
million cap on all transfers from the Treasury under the 2006 
amendments. 30 U.S.C. 1232(i)(1)(B) and (i)(3)(A). All interest earned 
by the Fund before December 20, 2006, and not previously transferred to 
the CBF is set aside in a reserve fund that will be used to make 
payments to the UMWA health care plans in the event that their 
financial needs exceed the annual cap. 30 U.S.C. 1232(h)(4)(A).
     The 2006 amendments removed the expiration date for 
remining incentives initially authorized on October 24, 1992, when 
SMCRA was amended to include a new section 510(e) that created an 
exemption from the section 510(c) permit-block sanction for remining 
operations and a new section 515(b)(20)(B) that provided incentives for 
certain eligible remining operations in the form of reduced 
revegetation responsibility periods (2 years in the East and 5 years in 
the West). Energy Policy Act of 1992, Public Law 102-486, section 2503. 
Until the 2006 amendments, those remining incentives had a statutorily 
defined expiration date of September 20, 2004, under 510(e) of SMCRA. 
Id.
     The 2006 amendments authorized us to develop regulations 
to promote remining of eligible land under section 404 in a manner that 
leverages the use of amounts from the Fund to achieve more reclamation. 
30 U.S.C. 1244.
     Upon our approval, an Indian tribe may develop `` a tribal 
program under section 503 [of SMCRA] regulating in whole or in part 
surface coal mining and reclamation operations on reservation land 
under the jurisdiction of the Indian tribe using the procedures of 
section 504(e).'' 30 U.S.C. 1300(j).

II. Outreach and Guidance

    Shortly after the enactment of the 2006 amendments, we notified 
potentially affected parties of the statutory amendments and solicited 
comments on issues related to the 2006 amendments. In January and 
September 2007, we notified all fee payers in writing of the fee rate 
changes. In January, February, and May 2007, we met with 
representatives of States and Indian tribes with approved reclamation 
programs at meetings hosted by the

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Interstate Mining Compact Commission (IMCC) and the National 
Association of Abandoned Mine Land Programs (NAAMLP) to notify the 
States and Indian tribes of the 2006 amendments' changes to SMCRA and 
to seek their input on the amendments. IMCC and NAAMLP subsequently 
submitted joint written comments on specific provisions of the 
amendments. We summarized their comments in the preamble to the 
proposed rule and we took all of the comments into consideration when 
developing the proposed rule.
    In order to facilitate distribution of funds for FY 2008, as 
required in the 2006 amendments, the Director of OSM issued written 
guidance in December 2007. To the extent feasible, we restated and 
expanded upon the content of that guidance in the proposed and final 
rules. We have included the December 2007 written guidance in the 
docket for this rulemaking.
    The December 2007 written guidance was based in part on a December 
2007 memorandum Opinion (M-Opinion), from the Department of the 
Interior, Office of the Solicitor, which analyzed three issues related 
to AML funding. See Funding to States and Indian Tribes Under the 
Surface Mining Control and Reclamation Act of 1977, as Amended by the 
Tax Relief and Health Care Act of 2006, M-37014 (December 5, 2007). In 
this M-Opinion, the Office of the Solicitor advised us that:
     We are required to use grants to pay moneys to eligible 
States and Indian tribes under sections 411(h)(1) and (h)(2) of SMCRA;
     Uncertified States and Indian tribes may not use funds 
that they receive under section 411(h)(1) of SMCRA for noncoal 
reclamation or for the AMD set-aside authorized by section 402(g)(6); 
and
     The minimum program make up funds that eligible 
uncertified States and Indian tribes are entitled to receive under 
section 402(g)(8)(A) of SMCRA are subject to the four year phase-in 
provision of section 401(f)(5)(B).
    The comment period on the proposed rule was originally scheduled 
for 60 days, closing on August 19, 2008. We received requests from 
IMCC, NAAMLP, one State and one environmental group asking us to extend 
the comment period by an additional 60 days. In order to provide 
further opportunity to comment but to facilitate issuance of this final 
rule, we extended the comment period for ten days, through August 29, 
2008. We believe that the number and quality of the comments we 
received, as discussed in the next section, indicate that we provided 
adequate time for comment.

III. Description of the Final Rule and Discussion of the Comments 
Received

    This rulemaking revises our regulations to be consistent with all 
of the revisions to SMCRA contained in the 2006 amendments, except for 
those provisions relating to the remining incentives provisions 
leveraging amounts from the Fund and to tribal primacy. The remining 
incentives provisions that leverage amounts from the Fund are the 
subject of a separate rulemaking, primarily about incentives to reclaim 
refuse ``gob'' piles, proposed on May 1, 2008, at 73 FR 24120. Efforts 
by Indian tribes to develop programs to take over regulatory authority 
for coal mining under the 2006 amendments will be addressed separately 
for each Indian tribe applying for primacy.
    Generally, this rulemaking sets forth standards and procedures for 
the coal reclamation fee, the Fund, and the AML program. This rule 
includes extensive regulations for long term operations of the amended 
Title IV program, including regulations that implement provisions of 
the 2006 amendments that will become effective at later dates. We are 
also taking advantage of this rulemaking opportunity to make other 
changes that we believe are needed to update and clarify related Parts 
of our existing regulations. Throughout this rule, the terms ``money'' 
and ``moneys'' are interchangeable with the terms ``fund'' or 
``funds,'' but not with the term ``Fund,'' as defined in Sec.  700.5.
    We received approximately 51 comments on the proposed rule, 
including joint comments from IMCC and NAAMLP and ten comments from 
individual States and Indian tribes that currently have AML reclamation 
programs under Title IV of SMCRA. In addition, we received comments 
from five environmental groups, one township, and approximately 35 
citizens, most of whom submitted identical letters. Many commenters 
specifically concurred in whole or in part with the IMCC/NAAMLP 
comments.
    The comments that we received ranged from extremely specific to 
very general. We will first address the general comments. Any comment 
directed at a specific section of the proposed rules will be summarized 
and responded to in our section by section analysis. All comments 
timely submitted have been placed in the docket for this rule and are 
available for public review.

A. General Comments

    Several commenters, including IMCC/NAAMLP, made general comments 
regarding the proposed rulemaking. Because these comments affect the 
rule as a whole, we will first address these comments.
    IMCC/NAAMLP and one State commenter suggested that we withdraw the 
proposed rule because of the ``significant differences of opinion'' 
that exist between the States and OSM. The commenters alternatively 
recommended that if we chose not to withdraw the proposed rule that we 
seriously analyze their comments and consider significantly 
restructuring and modifying the final rule to be consistent with their 
suggestions.
    Upon considering the commenters' request, we have decided that 
withdrawing the rule is not appropriate. Our overall general mission is 
to enforce and administer SMCRA, including all of its amendments. This 
final rule helps us to follow that mission because this rule is 
necessary to align our regulations with the 2006 amendments. Without 
this rulemaking, the existing regulations will not reflect the 
statutory changes and could create confusion. In addition, we believe 
this final rule will assist the States, Indian tribes, and the public 
by making our regulations easier to understand by using plain English 
and by providing the affected parties with more guidance and 
clarification when needed. Withdrawing the rule would delay the 
accomplishment of these purposes.
    Several commenters expressed concern that OSM drafted proposed 
rules in a ``heavy handed'' or ``patriarchal'' manner that is a 
``significant and detrimental departure from the cooperative spirit 
between OSM and the States and Tribes that has existed in the AML 
program for the last 25 years.'' As evidence of this point, the 
commenters mention that OSM is ``tak[ing] whatever approach is 
necessary [in interpreting the 2006 amendments] * * * to limit the 
flexibility of the States and Tribes to conduct AML reclamation on the 
sites most important to them within their respective borders. * * * We 
think OSM is merely seizing any justification it can to further limit 
the States and Tribes beyond what Congress intended.'' The commenters 
continued by pointing out that the preamble to the proposed rule 
frequently relies on our increased oversight responsibilities brought 
about by the 2006 amendments to justify the proposed rule. The 
commenters noted that by doing so, OSM is ``departing from the long

[[Page 67580]]

established reliance on oversight as the tool of choice to monitor and 
guide State and Tribal programs in favor of a command and control 
approach. Because of that, the proposed rule has the tone of a Title V 
rule meant to achieve compliance from regulated entities rather than a 
Title IV rule promoting reclamation with partners.'' Another commenter 
stated that the rule violates the intent of Congress because it is 
``micro-managing the methods of AML funding to States and Tribes * * 
*.''
    We appreciate hearing about these concerns from our State AML 
reclamation partners. In drafting both the proposed rule and this final 
rule, we did not attempt to be ``heavy handed'' in our approach or to 
increase oversight or OSM involvement except where mandated by the 2006 
amendments. We value the collegial relationship we have had with the 
State and Tribal AML programs for many years and do not wish to see it 
erode. We recognize that the 2006 amendments significantly expanded all 
the programs' discretion to determine the most effective use of AML 
funds and have tried to reflect this in the proposed and final 
regulations. For instance, as discussed further in the section by 
section analysis, the regulations provide, consistent with the 2006 
amendments, that uncertified programs can choose to direct more funding 
to water supply projects or AMD set-aside accounts with less OSM 
involvement or to address environmental problems adjacent to or in 
conjunction with high priority coal problems. This final rule does not 
extend our oversight role any further than is necessitated by the 2006 
amendments.
    With this rule, we have sought to reflect a balance that will 
promote and enhance the cooperative spirit that presently exists 
between State and Tribal AML programs and their Federal partners at 
OSM. To that end, we believe we have been working openly and closely 
with these State and Tribal programs and the organizations that 
represent them since the 2006 amendments were enacted. Even before the 
proposed rule was published, we met with the concerned States, Tribes, 
and their organizations, and even circulated draft proposed rule 
language to them on several occasions. Through these outreach efforts, 
we believe we have demonstrated that we have been open to comments and 
suggestions from the outset. This openness is further evidenced by the 
fact that we developed the proposed and final rules in order to 
incorporate changes suggested by the States and Indian tribes, 
including revising methods of calculating fund distributions, such as 
the calculation of the minimum program adjustments as described in the 
preamble to Sec.  872.27, and changing several key definitions 
including ``adjacent'' and ``in conjunction'' as described in Sec.  
874.13.
    In addition, the commenters criticize our reliance on advice from 
the Department of the Interior's Solicitor on three issues addressed in 
the rule--the use of grants instead of payments, the effect of the 
phase-in on minimum program funding, and the use of funds received 
under section 411(h)(1) of SMCRA for noncoal reclamation and AMD set-
aside accounts. We acknowledge that many of our decisions are based 
upon the Solicitor's M-Opinion. When the 2006 amendments were first 
enacted, we began extensive analysis of the statute and outreach to the 
States and Indian tribes. At that time, we discovered that there were 
differences regarding the interpretation of several provisions 
contained in the 2006 amendments, and we sought legal guidance from the 
Solicitor's Office on three specific issues. The result of this 
guidance was the M-Opinion, which we used to help draft the proposed 
rule and to make the FY 2008 distributions. The M-Opinion is part of 
the docket for this rulemaking. OSM is bound by the interpretations of 
the 2006 amendments contained in the M-Opinion. See 209 Departmental 
Manual (DM) 3.2(A)(11) (``M-Opinions * * * shall be binding, when 
signed, on all other Departmental offices and officials and which may 
be overruled or modified only by the Solicitor, the Deputy Secretary, 
or the Secretary.''). Thus, our regulations must comply with the 
interpretations contained within the M-Opinion.
    Similarly, a commenter complained about our reliance on section 
402(g)(2) of SMCRA, which states that the Secretary of the Interior 
``shall ensure strict compliance by the States and Indian Tribes with 
the priorities described in section 403(a) until a certification is 
made * * *.'' 30 U.S.C. 1232(g)(2). We agree that the proposed and 
final rule is consistent with this statutory provision, just as with 
other provision of the 2006 amendments.
    The commenters have also criticized what they perceive to be an 
implied sense in the proposed rule that the States and Tribes should be 
satisfied and comfortable with OSM's interpretation of the 2006 
amendments because of the significant increases in grant money provided 
to most States and Indian tribes under the new law. One commenter 
states:

    While the States and Tribes are very appreciative of 
Congressional action to return past unappropriated and current 
moneys to us, our focus has always been to use whatever moneys we 
receive to address public health and safety issues arising from the 
hazards of abandoned mines. For us, it is not just about the money--
it's about programs and partnerships that work effectively and 
efficiently to accomplish the greatest amount of AML remediation 
possible. As a result, our comments regarding the proposed rule are 
intended to restore and structure the AML program in such a manner 
that it can make a difference for our citizens and the environment.

    Congress decided to continue the important reclamation work that 
the States and Tribes are conducting by enacting the 2006 amendments. 
The 2006 amendments created many new opportunities for the States and 
Tribes, and we eagerly anticipate working with the States and Tribes--
our reclamation partners--as this program moves forward. While the 2006 
amendments created great opportunities, it is also quite specific in 
many areas. As we stated above, one of our goals for this rulemaking is 
to align our rules with the 2006 amendments. We believe this final rule 
does so.
    Some commenters are concerned that we have no intention of 
considering their comments to the proposed rule and making revisions to 
the final rule because we have already distributed revised versions of 
some of the existing directives, guidelines, forms and manuals that 
accompany or are significantly related to our rules on the AML program, 
including the Federal Assistance Manual (FAM or GMT-10), and OSM 
Directive AML-1.
    We would like to assure these commenters that no final decisions 
were made concerning the final rule until after we had read and 
analyzed all of the comments that we received. As mentioned above, we 
are bound by the interpretations in the Solicitor's M-Opinion since it 
was issued in December 2007. Pursuant to that M-Opinion as well as the 
decision documents issued with regard to the 2008 distributions, we 
updated the FAM in December 2007 and July 2008. The FAM is a series of 
OSM directives that relate to the management of grants provided to 
States and Tribes under SMCRA. The updates to the FAM allowed us to 
complete the FY 2008 grant distribution, to award and manage the FY 
2008 grants, to provide streamlined grants procedures for certified 
States and Indian tribes, and to make other changes not related to the 
2006 amendments. Because the FAM consists of internal OSM directives, 
we can easily make changes to these

[[Page 67581]]

directives to conform them to the current law and regulations. Thus, we 
are prepared to make additional changes that will be required to 
conform the contents of the FAM with the final rules that are enacted 
after consideration of the comments received on the proposed rule.
    With respect to the AML-1, which is the directive that describes 
OSM's policies and procedures relating to the AML inventory (also known 
as Abandoned Mine Land Inventory System or AMLIS), we circulated a 
draft of this directive to States and Indian tribe to receive their 
input as we are currently in the process of migrating the AML inventory 
into a more usable database. The circulation of a draft of AML-1 has 
allowed us to receive many useful comments on the AML inventory and 
will greatly improve our new AML inventory system. We would like to 
emphasize that we have not yet finalized any changes to AML-1, and 
nothing we are doing to improve the AML inventory will prevent us from 
fully considering the comments received on the proposed rule.
    We received several comments that included general support for the 
AML program and portions of the rule. For instance, one citizen 
commenter encouraged us to ``go through with the amendment to 
reauthorize the Abandoned Mine Land Program [because] our state, 
communities and people deserve to have the land reclaimed and brought 
back to something that can be used again rather than a dangerous 
eyesore that the land is now.'' We appreciate all of the comments we 
received in support of this rule.
    Several environmental groups and one township submitted comments 
that generally support the 2006 amendments and the positive change that 
should result as programs address acid mine drainage in the coalfields. 
These commenters and others stressed the need to recognize that the 
States have diverse AML reclamation programs, and that there is no one-
size-fits-all method to address AML reclamation. Flexibility was 
stressed by many commenters, including but not limited to the many 
commenters that expressed the sentiment that ``States should be given 
the latitude to use the funds for the construction or reconstruction of 
dams and waterways on public lands * * *.''
    We recognize that conditions vary at AML sites across the country--
from climate to the terrain-- and that SMCRA was implemented to provide 
the States with primary governmental responsibility over surface mining 
and reclamation operations. 30 U.S.C. 1201(f). The 2006 amendments did 
not alter the relationship between public and private lands and did not 
change the funding authorities related to the construction of dams and 
waterways. Project selection is the responsibility of each State and 
Indian tribe according to its approved reclamation plan. Thus, where 
possible, we have attempted to provide as much flexibility to States 
and Indian tribes as allowed by SMCRA, as amended in 2006.
    We also received several comments on remining as part of AML 
reclamation. One commenter strongly encouraged us to continue to pursue 
remining incentives, as they state that remining incentives are one of 
the most cost effective means of AML reclamation. In contrast, another 
commenter took a strong position against a broader interpretation of 
remining as an effective way to reclaim abandoned mine lands because 
reclamation in the name of remining has had some unfortunate 
environmental consequences in at least one State. In particular, this 
commenter stated that it is ``opposed [to] any changes that would 
broaden the interpretation of remining beyond the scope of reclaiming 
coal refuse.''
    We would like to state unequivocally that this final rule does not 
address remining in any meaningful way. As discussed below in 
conjunction with Parts 700, 773, 785, 816 and 817, the only changes we 
are making to the regulations related to remining are those that must 
be made to conform the existing regulations with the changes made by 
the 2006 amendments. As mentioned above, we proposed a separate 
rulemaking on May 1, 2008, that addresses our discretionary authority 
under section 415 of SMCRA to enact remining incentives related to AML 
reclamation. 30 U.S.C. 1244. This final rule does not promulgate any of 
the provisions proposed in that rule.
    A commenter also specially criticized the Programmatic 
Environmental Impact Statement (PEIS) for the Federal program for the 
State of Tennessee, and stated that it does ``not support any proposed 
revision of regulations that would further undermine preparation of 
environmental assessments (EA) or findings of no significant impact 
(FONSI) or environmental impact statements (EIS).'' We appreciate the 
concerns raised by this commenter and do not believe that this 
rulemaking changes the preparation of environmental documents under the 
National Environmental Policy Act (NEPA) for Tennessee. Other comments 
related to the Tennessee PEIS are outside of the scope of this rule.
    As one of our goals of this rulemaking was to make the AML 
regulations easier to understand, we have attempted to address a few 
comments that stated the proposed rule was hard to follow and should be 
clarified. Although one State commended our efforts to make the 
regulations clear, it still found that in some places the proposed rule 
was somewhat difficult to fully understand. For example, that same 
State commented that the preamble to the proposed rule referred to a 
separate rulemaking related to the 2006 amendments that was published 
in the Federal Register on May 1, 2008. The State suggested that we 
clarify this reference to note that this May 2008 proposed rule was 
primarily about incentives to reclaim refuse ``gob'' piles. We made 
this change in the final rule and have made every effort to present and 
explain all of the complex issues as easily and simply as possible.
    One environmental group commented that it strongly supports our 
Watershed Cooperative Agreement Program and urges us to use our 
discretion to recommend to Congress in our upcoming FY 2010 budget 
request at least $10 million for that program because restoration 
groups can leverage this funding several times over to provide an 
additional source of funding for AMD remediation. We appreciate the 
comment, but the Watershed Cooperative Agreement Program and future 
budget decisions are beyond the scope of this rule.
    In their previous joint comments dated May 21, 2007, IMCC/NAAMLP 
commented that it will be very important for the States and Indian 
tribes to receive the training they will need to implement the 
provisions of the new rules once they are in place, and urged us to 
keep this in mind. Although it does not impact this rulemaking, we 
agree with the comment and plan to hold training and planning meetings 
with the States and Indian tribes after this rule takes effect.

B. Section by Section Analysis

Part 700--General
Definitions (Sec.  700.5)
    We are adopting the changes to Sec.  700.5 as proposed. These 
changes include the addition of two new definitions (``AML'' and ``AML 
inventory'') and relocation of six existing definitions (``eligible 
lands and water,'' ``emergency,'' ``extreme danger,'' ``left or 
abandoned in either an unreclaimed or inadequately reclaimed 
condition,'' ``project,'' and ``reclamation activity'') from existing 
Sec.  870.5 to Sec.  700.5. Each of these terms apply to all

[[Page 67582]]

of the regulations in Chapter VII of Title 30 of the Code of Federal 
Regulations, and we are making limited substantive changes to the text 
of the definitions of the six relocated terms. We are revising the 
first sentence of the definition of eligible lands consistent with the 
preamble to Part 884 to make it clear that certification qualifies a 
State or Indian tribe for a State or Tribal reclamation plan. However, 
the rest of the definition is substantively unchanged as it applies to 
AML programs. We are also correcting a mistaken reference to Sec.  
874.14 in this definition. As explained in the preamble to the proposed 
rule, the correct reference is Sec.  875.14--Eligible lands and water 
subsequent to certification. In addition, we are rewording two 
definitions (``eligible lands and water,'' and ``left or abandoned in 
either an unreclaimed or inadequately reclaimed condition'') using 
plain English.
    We are also combining two definitions from Sec.  870.5 (``Indian 
reclamation program'' and ``State reclamation program'') into one 
definition in Sec.  700.5 (``reclamation program''). The substance of 
the definition is not changing. In addition, we are moving the 
definition of ``expended'' from Sec.  870.5 to Sec.  700.5 and removing 
the existing limitation that it only applies to costs for reclamation 
in order to make the definition consistent with the entire chapter.
    Last, we are expanding the definition of ``Fund'' in Sec.  700.5. 
Previously, this term was defined slightly differently in both 
Sec. Sec.  700.5 and 870.5. Under this rule, the definition of this 
term in Sec.  700.5 is being expanded to include additional information 
that was contained in Sec.  870.5 (``Abandoned Mine Reclamation Fund or 
Fund''). We believe this will eliminate any confusion that may have 
resulted from having different terminology and definitions to describe 
the same source of money in two Parts of the regulations.
Responses to Comments
    We received one comment on our proposed changes to Sec.  700.5. 
This commenter explained that the proposed changes might ``still lead 
to misinterpretations and inadequate decision making regarding the best 
method to reclaim an AML site, i.e. reclamation or remining.'' We have 
considered this comment, and we appreciate the commenter's concern but 
do not believe that any changes to the definitions are necessary. The 
definition of ``reclamation activity'' in this section explains what is 
considered reclamation of lands and waters eligible under Title IV of 
SMCRA. This definition is not intended to provide guidance as to the 
best method for reclamation. Instead, each State or Indian tribal 
reclamation program has the choice and flexibility to determine what 
reclamation tools to use, including remining, as described in their 
reclamation plan and authorized by law.
Part 724--Requirements for Permits and Permit Processing
Payment of Penalty (Sec.  724.18)
    We are revising Sec.  724.18(d) to update the references in that 
section to reflect our division of existing Sec.  870.15 into separate 
sections within Part 870 and to update information on how to find the 
interest rate for late payments. We received no comments on either this 
Part or Part 870, and we are adopting the changes as proposed.
Part 773--Requirements for Permits and Permit Processing
Unanticipated Events or Conditions at Remining Sites (Sec.  
773.13(a)(2))
    We proposed a technical amendment to Sec.  773.13(a)(2) to conform 
this section with changes made to section 510(e) of SMCRA by the 2006 
amendments. 30 U.S.C. 1260(e). As explained in the preamble to the 
proposed rule, section 510(e) was added to SMCRA in 1992 and created an 
exemption from the section 510(c) permit-block sanction for remining 
operations. This statutory provision originally contained a statutorily 
defined expiration date of September 30, 2004, which was removed by the 
2006 amendments.
Responses to Comments
    One environmental group commented that they oppose an open 
exemption from the section 510(c) permit-block sanction for remining 
operations. While we recognize the group's concern about remining and 
have considered their comment, we are only changing this regulation to 
conform to the 2006 amendments to SMCRA, which we believe are clear. 
Thus, we are adopting the revision to Sec.  773.13(a)(2) as proposed to 
make our regulations consistent with SMCRA.
Part 785--Requirements for Permits for Special Categories of Mining
Information Collection (Sec.  785.10)
    We revised this paragraph using plain language and the current 
format approved by the Office of Management and Budget (OMB). It 
describes OMB's approval of information collections in Part 785, our 
use of that information, and the estimated reporting burden associated 
with those collections. The change is editorial in nature and has no 
substantive effect.
Lands Eligible for Remining (Sec.  785.25(c))
    As explained in more detail in the preamble to the proposed rule, 
we are removing Sec.  785.25(c) to conform our regulations with the 
2006 amendments. As discussed above in connection with Sec.  
773.13(a)(2), the 2008 amendments removed the statutorily defined 
expiration date of September 30, 2004, under section 510(e) of SMCRA. 
30 U.S.C. 1260(e). We received no comments on this section and are 
adopting this section as proposed.
Part 816--Permanent Program Performance Standards--Surface Mining 
Activities
Revegetation: Standards for Success (Sec.  816.116)
    We proposed a technical amendment to Sec.  816.116(c)(2)(ii) and 
(c)(3)(ii) to conform this section with changes made to section 510(e) 
of SMCRA by the 2006 amendments. 30 U.S.C. 1260(e). As explained in the 
preamble to the proposed rule, sections 510(e) and 515(b)(20)(B) were 
added to SMCRA in 1992 and provided incentives for certain eligible 
remining operations in the form of reduced revegetation responsibility 
periods (2 years in the East and 5 years in the West), but those 
remining incentives had a statutorily defined expiration date of 
September 30, 2004. See 30 U.S.C. 1260(e) and 1265(b)(20)(B) (1993). 
The 2006 amendments removed this expiration date, and we are updating 
our regulations in conformance with this change. We are also rewording 
this section using plain English.
Responses to Comments
    One environmental group commented that they ``do not support the 
concept in section 515(b)(20)(B) that provided incentives for certain 
eligible remining operations in the form of reduced revegetation 
responsibility periods (2 years in the East and 5 years in the West). 
Any revision of this section should allow for conditional requirements 
that reflect changes in seasonal averages due to extreme wet or dry 
conditions within the two or five year time frame.'' As we state in our 
response to Sec.  773.13(a)(2), we recognize the commenter's concern 
but are only changing this regulation to conform to the 2006 amendments 
to SMCRA, which we believe are clear. Thus, we adopt the revision to 
Sec.  816.116(c)(2)(ii) and (c)(3)(ii) as proposed to make our 
regulations consistent with SMCRA.

[[Page 67583]]

Part 817--Permanent Program Performance Standards--Underground Mining 
Activities
Revegetation: Standards for Success (Sec.  817.116)
    We also proposed a technical amendment to Sec.  817.116(c)(2)(ii) 
and (c)(3)(ii) to conform this section with changes made to section 
510(e) of SMCRA by the 2006 amendments. 30 U.S.C. 1260(e). The 
revisions to this section are identical to those adopted in Sec.  
816.116, except that this section relates to underground mining 
activities instead of surface mining activities. As explained in the 
preamble to the proposed rule, sections 510(e) and 515(b)(20)(B) were 
added to SMCRA in 1992 and provided incentives for certain eligible 
remining operations in the form of reduced revegetation responsibility 
periods (2 years in the East and 5 years in the West), but those 
remining incentives had a statutorily defined expiration date of 
September 30, 2004. 30 U.S.C. 1260(e) and 1265(b)(20)(B). The 2006 
amendments removed the expiration date, and we are updating our 
regulations in conformance with this change. We are also rewording this 
section using plain English.
Responses to Comments
    One environmental group commented that they do not support the 
language proposed for this section for the same reasons they do not 
support the revision to Sec.  816.116. Likewise, after consideration of 
this comment and for the same reasons stated in Sec.  816.116, we are 
adopting the revisions to 817.116(c)(2)(ii) and (c)(3)(ii) as proposed.
Part 845--Civil Penalties
Use of Civil Penalties for Reclamation (Sec.  845.21)
    We are revising Sec.  845.21(b)(1) as proposed to reflect our move 
of the definition of ``emergency'' from Sec.  870.5 to Sec.  700.5 of 
this chapter. We received no comments on this Part.
Part 846--Individual Civil Penalties
Payment of Penalty (Sec.  846.18)
    We are revising Sec.  846.18(d) to update the references in that 
section to reflect our division of existing Sec.  870.15 into separate 
sections within Part 870 and to update information on how to find the 
interest rate for late payments. We received no comments on either this 
Part or Part 870 and are adopting this section as proposed.
Part 870--Abandoned Mine Reclamation Fund--Fee Collection and Coal 
Production Reporting
    Part 870 describes the requirements and process for you, the coal 
mine operator, to report coal production and to pay the AML reclamation 
fee. We did not receive any comments on our proposed revisions for Part 
870, and we are adopting the proposed changes to this Part for the 
reasons described in the preamble to the proposed rule
Part 872--Moneys Available to Eligible States and Indian Tribes
    We are revising Part 872 to address the changes to SMCRA that the 
2006 amendments made. Generally, our revisions to Part 872 describe the 
moneys that make up the Fund and other sources of funding under SMCRA 
that are available to you, the eligible States and Indian Tribes with 
approved reclamation programs, including otherwise unappropriated funds 
in the U.S. Treasury. This Part also describes how we convey these 
funds to you and the purposes for which you may use them. In addition, 
we are dividing, removing, and renumbering parts of existing Sec. Sec.  
872.11(a) through 872.11(c) and Sec.  872.12, changing headings, adding 
new sections and headings as appropriate, and more clearly describing 
the different types of funds available under this Part. We are making 
these additional changes to make the regulations easier to read and 
understand. Each change, a summary of the comments we received, if any, 
and our responses to these comments are described below in more detail.
    Throughout this Part, the terms ``money'' and ``moneys'' are 
interchangeable with the terms ``fund'' or ``funds,'' but not with the 
term ``Fund,'' as defined in Sec.  700.5.
What does this Part do? (Sec.  872.1)
    This section explains that the purpose of Part 872 is to set forth 
the responsibilities for administering reclamation programs and the 
procedures for managing funds used to finance these programs. We 
received no comments on this section and, for the reasons set forth in 
the preamble to the proposed rule, we are adopting this section as 
proposed.
Definitions (Sec.  872.5)
    This new section contains definitions pertinent to Part 872, 
including four definitions (``allocate,'' ``Indian Abandoned Mine 
Reclamation Fund or Indian Fund,'' ``reclamation plan,'' and ``State 
Abandoned Mine Reclamation Fund or State Fund'') that we are moving 
from existing Sec.  870.5 and two new definitions (``award'' and 
``distribute''). We received no comments on this section and are 
adopting Sec.  872.5 generally as proposed and for the reasons 
discussed in the preamble to the proposed rule. For clarity, we are 
summarizing here our discussion of the terms ``allocate,'' 
``distribute,'' and ``award'' because they are important in describing 
the process that we follow to make funds available to States and Indian 
tribes. Our accounting process first allocates funds to a particular 
share in the Fund when we receive the collected fees. Next, we 
distribute funds annually after the end of each Federal FY to specific 
States and Indian tribes according to the statutory provisions and the 
regulations governing those funds. After the funds are distributed, we 
award funds to States and Indian tribes in grants when they apply for 
such grants. Also, we did make a few minor edits to ``Indian Abandoned 
Mine Reclamation Fund or Indian Fund'' and ``State Abandoned Mine 
Reclamation Fund or State Fund'' for clarity.
Information Collection (Sec.  872.10)
    In this section, we discuss the Paperwork Reduction Act 
requirements and the information collection aspects of Part 872. We are 
updating this section and rewording it using plain English. We did not 
receive any comments on this section and are adopting the section as 
proposed.
Where Do Moneys in the Fund Come From? (Sec.  872.11)
    This section describes the funds we collect, recover, and otherwise 
receive that are the sources of revenue to the Fund. We proposed 
several changes to this section, including rephrasing the section 
heading, and renumbering existing Sec. Sec.  872.11(a) through (a)(6) 
as Sec. Sec.  872.11 through 872.11(f).
    Substantively, we proposed removing language from existing Sec.  
872.11(a)(6) (now renumbered as Sec.  872.11(f)) that made interest 
earned after September 30, 1992, available for possible future transfer 
to the UMWA CBF under section 402(h) of SMCRA because the 2006 
amendments added new provisions related to our transfers to the UMWA 
health care plans. We also proposed to revise and reorganize the 
information in existing Sec. Sec.  872.11(b), including paragraphs 
(b)(1) through (b)(8). For instance, existing Sec.  872.11(b)(1) is now 
included in Sec. Sec.  872.14 and 872.15 on State share funds and Sec.  
886.20 on unused funds. Similarly, existing Sec.  872.11(b)(2) is now 
included in Sec. Sec.  872.17 and 872.18 on Tribal share funds and 
Sec.  886.20 on unused funds. Existing Sec.  872.11(b)(3)

[[Page 67584]]

related to the RAMP program is moved to Sec.  872.20, and existing 
Sec.  872.11(b)(4) is included in Sec. Sec.  872.21 and 872.22 on 
historic coal funds. Existing Sec.  872.11(b)(5), as well as Sec. Sec.  
872.11(b)(7) and (b)(8), are moved to Sec. Sec.  872.24 and Sec.  
872.25 on Federal expense funds. Existing Sec.  872.11(b)(6) is 
included in Sec. Sec.  872.26 and 872.27 on minimum program makeup 
funds. We are moving existing Sec.  872.11(c) to Sec.  872.12(c). We 
are revising all these provisions to be consistent with the 2006 
amendments and to use plain English.
Responses to Comments
    A State commented on proposed Sec.  872.11(f), which provides that 
revenue to the Fund includes ``[i]nterest and other income earned from 
investment of the Fund. We will credit interest and other income only 
to the Secretary's share.'' The commenter reasoned that the interest 
earned on moneys in the Fund that have been allocated to States and 
Indian tribes as State or Tribal share funds ``should be credited to 
the respective state/tribe'' and that this interest would be used for 
the purposes of Title IV.
    Although we agree with the commenter that sections 402(g)(1)(A) and 
(B) direct us to allocate moneys deposited in the fund to the State and 
Indian tribal shares, after consideration of this comment we must 
respectfully disagree with the commenter's conclusion that State and 
Indian tribes should also receive the interest on this allocation. 
Until the Abandoned Mine Reclamation Act of 1990 was enacted, there was 
no provision in SMCRA that allowed the Fund to contain any interest it 
earned. Compare the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 
101-508, 104 Stat. 1388-290, Sec.  6002) with SMCRA (Pub. L. 95-87 
(1977)). The 1990 amendments to SMCRA added sections 401(b)(5) and 
401(e). 30 U.S.C. 1231(b)(5) and 1232(e). Section 401(e) directs the 
Secretary of the Treasury to ``invest such portion of the [Fund that is 
not required to meet current withdrawals] in public debt securities * * 
*.'' Under SMCRA, as amended in 2006, we must credit the interest 
earned on these investments to ``the fund for the purpose of the 
transfers'' to the UMWA health care plans referred to in section 402(h) 
of the Act. Thus, as noted in section 401(b)(5), the Fund will contain 
``interest credited to the fund under subsection (e)'' but this 
interest can only be used for transfers to the UMWA health care plans. 
We do not have the statutory authority to credit the interest earned on 
State and Tribal shares to individual States and Tribes for their use 
under Title IV. Therefore, we adopted Sec.  872.11(f) as proposed so 
that interest earned on the fund is properly credited to enable us to 
meet our obligations as prescribed by sections 401(e) and 402(h) of 
SMCRA.
Where Do Moneys Distributed From the Fund and Other Sources Go? (Sec.  
872.12)
    We did not receive any comments on this section and are adopting 
our proposed changes to Sec.  872.12 for the reasons stated in the 
preamble to the proposed rule.
What Money Does OSM Distribute Each Year? (Sec.  872.13)
    Section 872.13 is a new section that we proposed to add to describe 
how we distribute moneys each year to States and Indian tribes under 
SMCRA. Section 872.13(a) is intended as a tool that can be used to 
locate specific regulatory provisions relating to each type of funding 
that States and Tribes receive under sections 401, 402, and 411 of 
SMCRA. These distributions include State share (Sec.  872.14), Tribal 
share (Sec.  872.17), historic coal (Sec.  872.21), minimum program 
make up (Sec.  872.26), prior balance replacement (Sec.  872.29), and 
certified in lieu funds (Sec.  872.32). Each type of funding is 
described in greater detail elsewhere in the rule.
    Paragraph (b) explains that we use fee collections for coal 
produced in the previous Federal FY on a net cash basis to calculate 
the annual distribution. In other words, collections from the most 
recent FY include any adjustments to fees collected in previous years. 
In order to meet our customer service obligation, we must quickly 
determine how much money we collected each FY so that we can complete 
the mandatory distribution of AML funds to you as early in the FY as 
possible. When we make adjustments to the fees collected in an earlier 
FY due to refunds or additional fee payments, we must make these 
changes to the FY in which we learn that the adjustments are necessary 
because we cannot go back and revise the prior year fee collection 
amounts and distributions that we have already made to you.
    Paragraph (c) briefly states that we distribute Congressionally-
appropriated Federal expense funds when the appropriation becomes 
available.
    Last, paragraph (d) states that you may apply for funds any time 
after we distribute them. Certified States and Indian tribes apply for 
grants using the procedures of Part 885 and uncertified States and 
Indian tribes use the procedures of Part 886.
Responses to Comments
    A State commented on the mandatory annual distributions we 
described under Sec.  872.13, and asked whether the distributions will 
occur in mid-December of each year as they have under our past practice 
for timing annual distributions.
    Section 402(f)(2)(i) of SMCRA only requires us to distribute 
amounts deposited into the Fund for the preceding fiscal year. It does 
not specify when this distribution should occur. Because the fourth 
quarter of the fiscal year ends on September 30, with collections due 
30 days after that, we expect to cut off collections as of November 30 
of each year to capture most of the fourth quarter's collections. As we 
did for the FY 2008 distribution, we distribute these funds to States 
and Indian tribes as soon as practicable thereafter, generally in mid-
December. However, after consideration of this comment, we decided not 
to address the timing of the distribution in this rulemaking in order 
to maintain flexibility to address unforeseen circumstances in future 
years, and we are adopting the rule as proposed.
What are State share funds? (Sec.  872.14)
    To add clarity and establish a consistent structure for the types 
of funding in this Part, and as discussed in the preamble to the 
proposed rule, we proposed adding this section to explain that State 
share funds are 50 percent of the reclamation fees collected on coal 
mined in your State (excluding Indian lands) and allocated to you under 
section 402(g)(1)(A) of SMCRA for coal produced in the previous fiscal 
year. We did not receive any comments on this section, and we are 
adopting it as proposed.
How does OSM distribute and award State share funds? (Sec.  872.15)
    We are adding Sec.  872.15 to explain how we distribute and award 
State share funds to you if you are eligible to receive them. Section 
872.15(a)(1) replaces the third sentence of existing Sec.  872(b)(1) 
and provides that for you to be eligible to receive State share funds, 
you must have and maintain an approved reclamation plan. Section 
872.15(a)(2) incorporates section 401(f)(3)(B) of SMCRA and provides 
that States certified under section 411(a) are ineligible to receive 
moneys from their State share of the Fund as of October 1, 2007. 30 
U.S.C. 1231(f)(3)(B). In accordance with section 401(f)(3)(B), we did 
not distribute State share funds to certified States in FY 2008.
    In Sec.  872.15(b), we describe how we distribute and award State 
share funds

[[Page 67585]]

if you meet the eligibility criteria of paragraph (a). In paragraph 
(b)(1), we include a table explaining the distributions of State share 
funds, which are required to be phased in under 401(d)(3) and (f) of 
SMCRA. 30 U.S.C. 1231(d)(3) and (f). Section 402(g)(1) of SMCRA 
generally requires us, acting on behalf of the Secretary, to distribute 
annually to an uncertified State 50 percent of the reclamation fees we 
collect in that State for the previous FY without prior Congressional 
appropriation. However, section 401(f)(5) of SMCRA, as added by the 
2006 amendments, requires us to phase in the mandatory distribution of 
these funds. 30 U.S.C. 1231(f)(5)(B). As a result, for FY 2008 and FY 
2009, which begin on October 1, 2007, and October 1, 2008, 
respectively, we are distributing to you, the uncertified State, only 
50 percent of the State share allocated to you. Because the State share 
is 50 percent of the reclamation fees collected on production in your 
State, for FY 2008 and FY 2009, you received only 25 percent of the 
reclamation fees collected on coal produced in your State (a 50 percent 
phase-in of the 50 percent in reclamation fees for the State share). 
Likewise, State shares that we distribute in FY 2010 and FY 2011, which 
begin October 1, 2009, and October 1, 2010, respectively, will be 75 
percent of your 50 percent share, which is 37.5 percent of the 
reclamation fees collected on coal produced in your State. We will 
distribute to you your full 50 percent State share from the Fund each 
year beginning with FY 2012, which starts on October 1, 2011, and 
lasting through FY 2022, which ends on September 30, 2022. In FY 2023, 
we expect to distribute to you all moneys remaining in your State share 
of the fund.
    Consistent with section 402(g)(1)(C) of SMCRA, Sec.  872.15(b)(2) 
explains that we are continuing to award funds under this paragraph in 
grants in accordance with Part 886. 30 U.S.C. 1232(g)(1)(C).
Responses to Comments
    IMCC/NAAMLP and two States commented on various aspects of this 
section as proposed. First, as part of a broader comment that affects 
historic coal funds (Sec.  872.22), minimum program make-up funds 
(Sec.  872.27), prior balance replacement funds (Sec.  872.30), and 
certified in lieu funds (Sec.  872.33), as well as State and Tribal 
share funds (this section and Sec.  872.18), IMCC/NAAMLP suggested that 
we change our proposed regulations to allow States and Indian tribes a 
choice to receive these funds either in grants or by direct payments. 
The commenters prefer allowing each State and Indian tribe to choose 
whether to use a grant or direct payment because it maximizes 
flexibility. In support of this position, the commenter asserts that 
Congress did not dictate in the 2006 amendments that we must use grants 
to award funds under SMCRA.
    After consideration of SMCRA and this comment, we have determined 
to finalize Sec.  872.15(b)(2) as proposed with minor edits made for 
clarity. Thus, under this regulation State share funds will be awarded 
as grants to uncertified States and Indian tribes. Section 402(g)(1)(C) 
of SMCRA requires that funds the Secretary allocates to State and 
Indian tribal shares under paragraph (g)(1) of section 402 ``shall only 
be used for annual reclamation project construction and program 
administration grants.'' 30 U.S.C. 1232(g)(1)(C) (emphasis added). This 
provision clearly requires us to award State share funds in grants.
    Second, IMCC/NAAMLP and two separate State commenters suggested 
that we modify the proposed rule to specify what will happen to the 
State share funds that are not distributed during FY 2008 through FY 
2011 under section 401(f)(5)(B) of SMCRA and proposed Sec.  
872.15(b)(1). IMCC/NAAMLP mentioned several possible ways in which 
these withheld funds could be treated, including returning them to the 
States as part of the prior balance replacement funds, holding them in 
the Fund until the end of the AML program in FY 2023, or placing them 
in the historic coal fund. However, IMCC/NAAMLP and one State commenter 
settled on requesting that we add paragraph (c) to this section that 
states: ``We will distribute to you the amounts we withhold under 
subparagraph (b) of this section in two equal installments. We will do 
this in Federal fiscal years 2018 and 2019.''
    IMCC/NAAMLP expressed concerns about whether the States can spend 
these withheld funds on noncoal reclamation and the AMD set-aside once 
they are returned. Similarly, another State commenter requested that we 
allow the amounts that are withheld under the phase-in provision to be 
used as part of the AMD set-aside when they are distributed to the 
States. Specifically, this State commenter was unsatisfied with our 
apparent decision in the proposed rule to ``plac[e] these withheld 
funds into the unappropriated balance category for distribution along 
with the Prior Balance Replacement Payments in subsequent years.'' This 
commenter asserted that we should treat these withheld funds 
differently ``because Prior Balance Replacement Payments carry the 
October 1, 2007 cutoff date.''
    We appreciate the questions and concerns that we received regarding 
what happens to State share funds withheld according to the phase-in 
provision of section 401(f)(5). After careful consideration of the 
alternative approaches presented in the comments, we have decided not 
to modify the proposed rule and are adopting it as proposed with minor 
editorial modifications for clarity.
    In coming to this conclusion, we first reviewed the language 
provided by IMCC/NAAMLP and one State that would have us distributing 
the withheld amounts over two years. As the commenters pointed out, 
such a provision would make the return of these withheld moneys 
consistent with the return of the phased-in certified in lieu funds 
that certified States and Indian tribes receive under section 
411(h)(3)(C). Although this approach has an appeal because it promotes 
consistency as to how to treat the separate phase-in provisions 
contained in the 2006 amendments, after a thorough analysis of this 
issue we have determined that we do not have statutory authority to 
make such a distribution. SMCRA unambiguously states that certified 
States will receive ``[a]mounts withheld from the first 3 annual 
installments [of certified in lieu funds] in 2 equal annual 
installments beginning with fiscal year 2018.'' There is no such 
comparable provision for State share moneys that uncertified States 
receive, and we cannot read such a provision into the statute where it 
does not exist. Therefore, we reject the suggested addition of Sec.  
872.15(c).
    In addition, after reviewing the proposed language of Sec.  875.15, 
we determined that the language of Sec.  872.15(b)(1)(iv) is clear that 
in FY 2023 and thereafter, uncertified States will begin to receive 
moneys ``remaining in their State share of the Fund.'' See also 30 
U.S.C. 1231(f)(2)(B). We believe this language is clear because the 
only State share funds remaining in the Fund in FY 2023 and thereafter 
are those amounts withheld from the phase-in provision of section 
401(f)(5)(B) of SMCRA.
    There are two reasons why the only State share money remaining in 
the Fund in FY 2023 and thereafter is the withheld money from the 
phase-in provision. First, the prior balance replacement fund 
provisions of section 411(h)(1) provide that an amount equivalent to 
all of the State share moneys allocated, but not appropriated, to 
States for reclamation fee collections received on coal produced before

[[Page 67586]]

October 1, 2007, will be returned to the States through Treasury funds. 
30 U.S.C. 1240a(h)(1). As explained in the preamble to Sec.  872.30(c), 
the actual State share moneys that remain in the Fund will then become 
historic coal funds that will also be distributed in FY 2023 and 
thereafter. 30 U.S.C. 1240a(h)(4)(A). In other words, after the prior 
balance replacement funds are paid, there will be no State share moneys 
in the Fund for moneys collected on coal produced prior to October 1, 
2007. Second, because State share funds are now permanently 
appropriated at their full allocation amount, subject to the section 
401(f)(5)(B) phase-in for four fiscal years, the only State share funds 
that will remain in the Fund that can be paid out in FY 2023 are those 
that are withheld by the phase-in. These funds can be used for any of 
the purposes enumerated in Sec.  872.16, including noncoal reclamation 
and inclusion in an AMD set-aside account. Thus, Sec.  
872.15(b)(1)(iv), as proposed, adequately addresses this issue.
    We would also like to mention that we agree with one State's 
analysis that section 411(h)(1)(B) of SMCRA defines the amount that 
will be distributed for prior balance replacement funds as ``the 
unappropriated amount allocated to a State or Indian tribe before 
October 1, 2007 under subparagraph (A) or (B) of section 401(g)(1).'' 
30 U.S.C. 1240a(h)(1)(B). Thus, we are not authorized to use prior 
balance replacement funds to return the withheld amounts of the State 
share for collections received on coal produced after October 1, 2007. 
Section 872.31 explains the purposes for which prior balance 
replacement funds can be used.
    We recognize, however, that only States that remain uncertified in 
FY 2023 and thereafter will receive funds under Sec.  872.15(b)(1)(iv). 
Given the tenor of the comments, we anticipate that some States that 
are currently uncertified may have phased-in State share amounts 
withheld but may certify before they would be eligible to receive these 
funds back in FY 2023 and thereafter. Therefore, as authorized by 
section 411(h)(2)(A) and described further in the preamble to Sec.  
872.33, we are adding language to Sec.  872.33 to clarify that if a 
certified State has unpaid State share funds withheld in the phase-ins, 
we will distribute certified in lieu funds to it at the next annual 
distribution after it certifies. This certified in lieu payment will 
then cover both the State share funds withheld during the phase-in and 
State share allocations from fee collections in the previous FY. Thus, 
States that are currently uncertified and subject to the phase-in of 
State share funds will receive an amount equivalent to the withheld 
amount from Treasury funds as part of their certified in lieu payments 
if they become certified before they have this withheld amount returned 
as State share funds in 2023 and thereafter. As such, these funds can 
be used without restriction as described in Sec.  872.34.
Are there any restrictions on how States may use State share funds? 
(Sec.  872.16)
    For the reasons described in the preamble to the proposed rule, we 
are adopting Sec.  872.16(a) through (e) generally as proposed, 
although we have changed the title and added a word to the introductory 
language for clarity. Moreover, as described below, we are also adding 
paragraph (f) in response to comments received. These paragraphs now 
provide that you, the uncertified State, may use your State share grant 
funds only for the following purposes: (1) To reclaim coal lands and 
waters under Sec.  874.12; (2) to restore water supplies under Sec.  
874.14; (3) to reclaim noncoal lands and waters under Sec.  875.12 as 
requested by the Governor under section 409(c) of SMCRA; (4) to deposit 
into an AMD set-aside fund under Part 876; (5) to acquire land under 
Sec.  879.11; and (6) to maintain the AML inventory under section 
403(c) of SMCRA.
Responses to Comments
    One State and IMCC/NAAMLP commented that States should be allowed 
to use their State share funds to maintain the AML inventory. They 
observed that, by not specifically saying States may use funds other 
than prior balance replacement funds to maintain the AML inventory, the 
regulations could be interpreted to mean the only types of funds that 
States could use to maintain the AML inventory would be prior balance 
replacement funds.
    After reviewing this comment, we have revised Sec.  872.16 to 
include paragraph (f), which specifies that uncertified States can use 
State share funds ``to maintain the AML inventory under section 403(c) 
of SMCRA.'' This addition recognizes that maintaining the AML inventory 
will help uncertified States measure progress toward addressing all 
known coal problems.
What are Tribal share funds? (Sec.  872.17)
    To add clarity and establish a consistent structure for the types 
of funding in this Part, and as discussed in the preamble to the 
proposed rule, we proposed adding this section to explain that Tribal 
share funds are 50 percent of the reclamation fees we collect and 
allocate under 402(g)(1)(A) of SMCRA to you, the Indian tribe(s), in 
the Fund for coal produced in the previous fiscal year from the Indian 
lands in which you have an interest. We did not receive any comments on 
this section, and we are adopting it as proposed.
How does OSM distribute and award Tribal share funds? (Sec.  872.18)
    This section largely is a duplicate of Sec.  872.15 except that it 
applies to Indian tribes and the Tribal share funds instead of States 
and State share funds. So, the explanations in the preamble for Sec.  
872.15 are largely the same for distributing and awarding Tribal share 
funds under this section (including the phase-in provisions), and we 
will not repeat them. In the preamble to the proposed rule, we did note 
a few distinctions involving the distribution of Tribal share funds to 
Indian tribes, including why Sec.  872.18 excludes all certified Indian 
tribes from receiving Tribal share funds after October 1, 2007, and the 
reason why the Crow Indian tribe received a Tribal share distribution 
for FY 2008. We received no comments on these points. We are retaining 
the relevant provisions in the final rule and are adopting them as 
proposed with minor modifications to the wording for clarity.
Responses to Comments
    All of the comments we received on Sec.  872.18 were the part of 
the comments made by IMCC/NAAMLP and the two States that commented on 
Sec.  872.15. Essentially, one State and IMCC/NAAMLP commented that we 
should give Indian tribes the option of receiving their Tribal share 
funds in grants or by direct payments. For the same reasons we give in 
our response to that comment under Sec.  872.15 relating to State share 
funds, we adopt Sec.  872.18(b)(2) as proposed, with a minor 
modification for clarity. Thus, we would continue to award Tribal share 
funds to any uncertified Indian tribes in grants.
    In addition, also as part of a broader comment, IMCC/NAAMLP and one 
State commented that we should distribute Tribal share funds held back 
for the phase-ins in two equal payments in FY 2018 and 2019. Another 
State commenter was unsatisfied with our apparent decision to make 
withheld funds part of the prior balance replacement funds, thereby 
effectively restricting their use in noncoal reclamation and AMD set-
aside accounts. For the same reasons we give in our response to that 
comment under Sec.  872.15 relating to State share funds, we adopt 
Sec.  872.18 as proposed, with minor modifications made for clarity.

[[Page 67587]]

Thus, we will distribute any Tribal share moneys withheld under the 
phase-in provision for reclamation fee collections for coal produced 
after October 1, 2007, in FY 2023 and thereafter when it will be 
returned to any remaining uncertified Tribes.
Are there any restrictions on how Indian tribes may use Tribal share 
funds? (Sec.  872.19)
    For the reasons described in the preamble to the proposed rule, we 
are adopting Sec.  872.19(a) through (e) generally as proposed, 
although we have changed the title and added a word to the introductory 
language for clarity. Moreover, as described below, we are also adding 
paragraph (f) in response to comments received. These paragraphs now 
provide that you, the uncertified Indian tribe, may use your Tribal 
share grant funds only for the following purposes: (1) To reclaim coal 
lands and waters under Sec.  874.12; (2) to restore water supplies 
under Sec.  874.14; (3) to reclaim noncoal lands and waters under Sec.  
875.12 as requested by the governing body of the Indian tribe according 
to section 409(c) of SMCRA; (4) to deposit into an AMD set-aside fund 
under Part 876; (5) to acquire land under Sec.  879.11; and (6) to 
maintain the AML inventory under section 403(c) of SMCRA.
Responses to Comments
    As part of a comment related to the almost identical provision 
related to the use of State share funds, IMCC/NAAMLP commented that we 
should allow use of funds other than prior balance replacement funds to 
maintain the AML inventory. Similarly, one State specified that we 
should add paragraph (f) to Sec.  872.16, related to State share funds, 
that provides that State share funds be allowed to maintain the AML 
inventory. To promote consistent uses of State share and Tribal share 
funds and for the same reasons we decided to include that paragraph (f) 
in Sec.  872.16, we have also decided to include it here. So, Sec.  
872.19(f) now clearly allows uncertified Indian tribes to use their 
Tribal share funds to maintain the AML inventory under section 403(c) 
of SMCRA.
What will OSM do with unappropriated AML funds currently allocated to 
the Rural Abandoned Mine Program? (Sec.  872.20)
    We received no comments on this section. For the reasons discussed 
in the preamble to the proposed rule, we are adopting Sec.  872.20 as 
proposed.
What are historic coal funds? (Sec.  872.21)
    Section 872.21 describes historic coal funds, which are provided 
under section 402(g)(5) of SMCRA based on the amount of coal produced 
before August 3, 1977, in your State or on Indian lands in which you 
have an interest. 30 U.S.C. 1232(g)(5). Under Sec.  872.21(a), we 
determine the amount of the historic coal funds by allocating 60 
percent of the amount of money left in the Fund after we allocate the 
50 percent of reclamation fees to the State or Tribal shares under 
section 402(g)(1). We distribute these historic coal funds for each FY 
to supplement grants awarded to uncertified States and Indian tribes 
that have not completed reclamation of their Priority 1 and 2 coal 
problems as defined by section 403(a). Under Sec.  872.21(b), we 
describe other moneys included in historic coal funds as a result of 
the reallocations we must make during our annual fund distribution. We 
received no comments on this section. For the reasons discussed in the 
preamble to the proposed rule, we are adopting Sec.  872.21 as 
proposed.
How does OSM distribute and award historic coal funds? (Sec.  872.22)
    We are adding Sec.  872.22 to describe how we distribute and award 
historic coal funds. We distribute these funds by determining which 
States and Indian tribes are eligible for historic coal funds. We also 
determine the total amount of funds available from fee collections for 
coal produced in the previous FY and from reallocations based on 
Treasury payments. Then we divide the available total between the 
eligible States and Indian tribes according to each State's or Indian 
tribe's percentage of the total tons of coal produced prior to August 
3, 1977, from all eligible States and Indian tribal lands. We also are 
removing existing Sec.  872.11(b)(4)(i) and (ii) and including similar 
provisions at Sec. Sec.  872.22(d) and (e) as explained below.
    Section 872.22(a) includes three criteria you must meet to be 
eligible to receive historic coal funds. First, in paragraph (a)(1), 
you must have and maintain an approved reclamation plan under Part 884 
to be eligible to receive historic coal funds. Second, you cannot be 
certified under section 411(a) of SMCRA. Third, because section 
402(g)(5)(A) of SMCRA states that you can receive historic coal funds 
only if you have unfunded Priority 1 and 2 coal problems under section 
403(a), to meet the criterion of paragraph (a)(2) you cannot have 
reclaimed all your Priority 1 and 2 coal problems. Thus, if you are an 
uncertified State or Indian tribe that has no remaining unfunded 
Priority 1 or 2 problems, you cannot receive historic coal funds.
    Section 872.22(b) provides that once the eligibility criteria 
listed in Sec.  872.22(a)(1) and (2) are met, we calculate the amount 
of historic coal funds that you receive using a formula based on the 
amount of coal historically produced before August 3, 1977, in your 
State or from the Indian lands concerned. We will continue to use the 
formula described in paragraph (b) of this section to distribute 
historic coal funds to you even after reclamation fee collections end.
    The table in Sec.  872.22(c) describes how we distribute historic 
coal funds, and how these distributions are affected by the four year 
phase-in contained in section 401(f)(5)(B) of SMCRA.
    Section 872.22(d) states that we only distribute the historic coal 
funds you need to reclaim your unfunded Priority 1 or 2 coal problems 
and includes the provisions that we are moving from existing Sec.  
872.11(b)(4)(i) and (ii). Specifically, this paragraph addresses the 
situation where the cost to reclaim all your, the uncertified State's 
or Indian tribe's, remaining Priority 1 and 2 coal problems is more 
than the amount you receive for your State or Tribal share alone, but 
is less than the amount that you receive for your State or Tribal 
share, unused funds from prior allocations, and historic coal funds 
combined. If this event occurs, we will reduce the amount of historic 
coal funds that you receive to the amount needed for you to fund 
reclamation of your remaining Priority 1 or 2 coal problems.
    Under Sec.  872.22(e), we are continuing the long-standing practice 
of awarding historic coal funds to you in grants following the 
provisions of Part 886.
Responses to Comments
    We received six comments regarding paragraphs (b), (c), and (e) of 
Sec.  872.22. However, after careful consideration of these comments 
and for the reasons stated below, we are adopting all paragraphs of 
this section as proposed with only minor revisions to clarify some of 
the references in the regulation.
    As explained in detail above and in the preamble to the proposed 
rule, Sec.  872.22(b) provides that we distribute historic coal funds 
to eligible States and Indian tribes according to an existing formula 
based on the amount of historic coal production before SMCRA was 
enacted. We received comments on this paragraph from IMCC/NAAMLP and 
two States.
    To begin, IMCC/NAAMLP asked whether we would ``recalculate the 
percentages used in the formula each

[[Page 67588]]

year * * *?'' The answer to this question is that we recalculate the 
percentages in the formula every year. The formula is based on the tons 
of coal produced in your State or on your Indian lands prior to August 
3, 1977, and these historic coal production numbers do not change. We 
calculate the distribution percentages by determining the percentage 
your State or Indian tribe has of the total coal tonnage produced in 
the States and Indian tribes eligible for historic coal funding that 
year. The percentages will only change only in two instances: (1) When 
a State or Indian tribe that was not previously eligible for historic 
coal funding becomes eligible by establishing an approved reclamation 
program or by entering sufficient Priority 1 or 2 coal problems in the 
AML inventory; or (2) when a previously eligible State or Indian tribe 
loses eligibility by certifying coal completion or falling below the 
requirement for inventoried Priority 1 or 2 coal problems. Thus, we 
expect the formula to remain the same in many years. Because the 
formula does change, but we expect that it can only change in the 
limited instances described above, we have decided not to place the 
formula into the regulations. The formula and calculations to make the 
annual historic coal fund distribution are published on OSM's Web site 
each year as part of the fund distribution package.
    In addition, two States suggested that we revise the historic coal 
formula. One State suggested that we revise the formula to take into 
account ``the hazards left to be abated.'' Similarly, the other State 
commenter proposed that we revise the formula to take into 
``consideration the inability of a State to complete its [high priority 
reclamation] by September 30, 2022 and beyond.'' As these States point 
out, such revisions would help to ensure minimum program States could 
complete their high priority reclamation projects before the AML 
programs end.
    We appreciate these suggested revisions to the formula and 
recognize that some States with large inventories of high priority coal 
problems receive small distributions of historic coal funds. We also 
recognize that increasing the amount of historic coal funds distributed 
to these States would help them reclaim their coal problems more 
quickly. However, section 402(g)(5)(A) of SMCRA requires us to allocate 
historic coal funds ``through a formula based on the amount of coal 
historically produced in the State or from the Indian lands concerned 
prior to August 3, 1977.'' 30 U.S.C. 1232(g)(5)(A). Because SMCRA does 
not give us the discretion to consider the amount of high priority coal 
problems for each State as listed in the AML inventory when we allocate 
and distribute historic coal funds, we did not make any substantive 
changes to Sec.  872.22(b).
    As with the State share funds under Sec.  872.15 and the Tribal 
share funds under Sec.  872.18, we received several comments inquiring 
into and proposing suggestions for the distribution of historic coal 
funds withheld under the phase-in provision of section 401(f)(5)(B). 
For instance, IMCC/NAAMLP noted that our proposed rule was unclear 
about what happens to these withheld funds, and IMCC/NAAMLP and one 
State recommended that we distribute the amounts of historic coal funds 
withheld because of the phase-in provision in two equal distributions 
in FY 2018 and 2019. These commenters also expressed concerns regarding 
the purposes that the withheld historic coal funds may be used for once 
returned.
    In the discussion in the preamble to Sec. Sec.  872.15 and 872.18, 
we explained that SMCRA does not authorize us to distribute State and 
Tribal share moneys withheld under the section 401(f)(5)(B). Likewise, 
SMCRA does not authorize us to distribute withheld historic coal moneys 
through two payments in FY 2018 and 2019, as we do for the certified in 
lieu moneys withheld from certified States and Indian tribes under the 
phase-in provision of section 411(h)(3). We think that Sec.  872.22 
explains what happens to these withheld historic coal moneys. We 
slightly expanded Sec.  872.22(c)(4) to clarify that in FY 2023 and 
thereafter, States that remain uncertified will receive the amount 
calculated using the historic coal formula each year ``until funds are 
no longer available or you have reclaimed your remaining Priority 1 and 
2 coal problems.'' So, the amount of historic coal funds withheld 
during the phase-in period will remain in the Fund along with other 
undistributed historic coal funds, which will primarily consist of the 
large amounts transferred from unappropriated State and Tribal share 
balances upon payment of prior balance replacement funds under section 
411(h)(1) of SMCRA. In FY 2023 and thereafter, we expect these historic 
coal funds to provide the bulk of funding to States that still have 
high priority coal reclamation. States that receive historic coal funds 
in FY 2023 and thereafter can use them for any of the purposes 
described in Sec.  872.23, including noncoal reclamation and inclusion 
in the AMD set-aside account. Certified States and Indian tribes, 
however, cannot receive certified in lieu funds to make up for any 
withheld historic coal funds. Section 411(h)(2)(A) of SMCRA, which 
governs the use of certified in lieu funds, refers only to State and 
Tribal share funds that were allocated after October 1, 2007, and not 
to historic coal funds. So we could not add a paragraph to Sec.  872.33 
that would allow an amount equal to any withheld historic coal funds to 
be distributed from certified in lieu funds if a State is certified 
before FY 2023.
    As part of its larger comment discussed in more detail in the 
preamble to Sec.  872.15, IMCC/NAAMLP also requested that we change our 
proposed regulations to allow you to have the option of receiving 
historic coal funds in grants or by direct payments. Although we 
considered this comment, we cannot adopt this suggestion for the same 
reason we cannot allow State and Tribal share funds to be paid as 
direct payments in Sec. Sec.  872.15 and 872.18. SMCRA specifies that 
historic coal funds are awarded as ``annual grants to States and Indian 
tribes which are not certified under section 411(a) to supplement 
[State and Tribal share] grants received by such States and Indian 
tribes * * * until the priorities stated in paragraphs (1) and (2) of 
section 403(a) have been achieved * * *.'' 30 U.S.C. 1232(g)(5)(A) 
(emphasis added). Thus, we must distribute historic coal funds as 
grants.
Are there any restrictions on how you may use historic coal funds? 
(Sec.  872.23)
    For the reasons described in the preamble to the proposed rule, we 
are adopting Sec.  872.23(a) through (e) generally as proposed, 
although we have changed the title and added a word to the introductory 
language for clarity. Moreover, as described below, we are also adding 
paragraph (f) in response to comments received. These paragraphs now 
provide that you, the uncertified State or Indian tribe, may use your 
historic coal funds only for the following purposes: (1) To reclaim 
coal lands and waters under Sec.  874.12; (2) to restore water supplies 
under Sec.  874.14; (3) to reclaim noncoal lands and waters under Sec.  
875.12 as requested by the Governor or the governing body of an Indian 
tribe under section 409(c) of SMCRA; (4) to deposit into an AMD set-
aside fund under Part 876; (5) to acquire land under Sec.  879.11; and 
(6) to maintain the AML inventory under section 403(c) of SMCRA.
Responses to Comments
    IMCC/NAAMLP and one State commented that States and Indian tribes 
should be allowed to use their historic coal funds to maintain the AML

[[Page 67589]]

inventory. As with their similar comments directed at Sec. Sec.  872.16 
and 872.19, they observed that, by not specifically saying States and 
Indian tribes may use funds other than prior balance replacement funds 
to maintain the AML inventory, the regulations could be interpreted to 
mean that the only type of funds that States could use to maintain the 
AML inventory would be prior balance replacement funds.
    After reviewing this comment, we have revised Sec.  872.23 to 
include paragraph (f), which specifies that uncertified States and 
Indian tribes are allowed to use historic coal funds to maintain the 
AML inventory. This addition recognizes that maintaining the AML 
inventory will help uncertified States and Indian tribes measure 
progress toward addressing all known coal problems.
    In the preamble to the proposed rule, we specifically requested 
comments on whether or not the requirement in section 402(g)(2) of 
SMCRA for ``strict compliance'' by uncertified States and Indian tribes 
with the priorities for reclamation of coal problems also impacts the 
authorization in section 409(b) that allows historic coal funds to be 
expended on noncoal reclamation. IMCC/NAAMLP commented that they do not 
believe the requirement of section 402(g)(2) applies to the use of 
historic coal funds or prior balance replacement funds.
    We agree with the comment to the extent it describes the purposes 
for which historic coal funds can be used. Amended section 402(g)(2) of 
SMCRA, which requires ``strict compliance'' by uncertified States and 
Indian tribes with the priorities for reclamation of coal problems, 
does not impact the authorization in section 409(b) that allows you to 
spend historic coal funds on noncoal reclamation. Once requests are 
made under section 409(c) of SMCRA, uncertified States and Indian 
tribes may use historic coal funds provided under section 402(g)(5) 
``for those reclamation projects which meet the priorities stated in 
section 403(a)(1)''. 30 U.S.C. 1239(c)(1). Thus, we are adopting Sec.  
872.23(c), as proposed, to explicitly allow uncertified States and 
Indian tribes to continue using historic coal funds for noncoal 
reclamation consistent with section 409(b) of SMCRA. Although we agree 
that historical coal share funds can be used for noncoal reclamation, 
the same is not true for the use of prior balance replacement funds. We 
will discuss this comment as it relates to why a different analysis 
applies to prior balance replacement funds, in conjunction with Sec.  
872.31.
What are Federal expense funds? (Sec.  872.24)
    As proposed, we are dividing existing Sec.  872.11(b)(5) into two 
sections and renumbering those sections as Sec. Sec.  872.24 and 
872.25. These sections address what previously were known as ``Federal 
share funds'' under section 402(g)(3) of SMCRA. With the exception of 
minimum program make up funds, which the 2006 amendments added to 
section 402(g)(3) in paragraph (E), we called them ``Federal expense'' 
funds in the proposed rule and this final rule. The new sections 
address the 2006 amendments and use plain English.
    Section 872.24 replaces the introductory paragraph at existing 
Sec.  872.11(b)(5) and identifies Federal expense funds as moneys in 
the Fund that are not allocated as State share, Tribal share, historic 
coal, or minimum program make up funds. Under section 401(d)(1) of 
SMCRA, we may use Federal expense funds only if Congress appropriates 
them.
Responses to Comments
    Comments we received from IMCC/NAAMLP and one State revealed that 
our description of Federal expense funds under proposed Sec.  872.24 
and our explanation for removing a reference to minimum program make up 
funds in proposed Sec.  872.25(b) were inconsistent. Specifically, the 
comments noted that, under proposed Sec.  872.24, Federal expense funds 
are considered moneys in the Fund that are not allocated or distributed 
as State and Tribal share funds, historic coal funds, and minimum 
program make up funds. Yet, we stated in proposed Sec.  872.25(b) that 
we may not deduct the amount of funds we allocate or distribute as 
Federal expense funds from your State or Tribal share funds and 
historic coal funds, and we proposed to remove a reference to minimum 
program make up funds in proposed Sec.  872.25(b) because ``under 
section 402(g)(3)(E) of SMCRA, as revised by the 2006 amendments, 
minimum program make up funds are expressly included in Federal 
expenses so the additional reference is no longer necessary.'' 73 FR 
35225. The commenters wanted us to clarify whether or not minimum 
program make up funds are Federal expense funds.
    We agree with the commenters that this language in proposed 
Sec. Sec.  872.24 and 872.25 could be confusing, and as explained 
below, we are revising Sec.  875.25 to remove any potential 
inconsistency. Thus, for the reasons stated in the preamble to the 
proposed rule, we are adopting Sec.  872.24 as proposed. As such, 
Federal expense funds are considered to be moneys in the Fund that we 
do not allocate or distribute as State and Tribal share funds, historic 
coal funds, or minimum program make up funds. Section 402(g)(3) of 
SMCRA addresses uses of the Secretary's 20 percent share of the Fund, 
which we divide into two subsets: ``Federal expense funds'' that 
Congress must appropriate, which include funding for expenses under 
sections 402(g)(3)(A) through (D); and minimum program make up funds 
under section 402(g)(3)(E) that are provided under section 402(g)(8) of 
SMCRA and are not subject to Congressional appropriation. Though 
minimum program make up funds come out of the Secretary's 20 percent 
share (sometimes called the ``Federal share''), we do not consider them 
``Federal expense funds'' because Congress does not specifically 
appropriate them (other than the appropriation contained within the 
2006 amendments).
Are there any restrictions on how OSM may use Federal expense funds? 
(Sec.  872.25)
    Section 872.25 describes how we may use Federal expense funds. For 
clarity, we have changed the title of this section from that proposed. 
However, with the exceptions described below, we are generally adopting 
this section as proposed. Section 872.25 replaces existing Sec. Sec.  
872.11(b)(5)(i) through (v) as well as Sec. Sec.  872.11(b)(7) and 
872.11(b)(8) and is worded in plain English.
    Paragraphs (a) through (a)(5) detail that we may, for instance, use 
these funds to perform nonemergency and other projects for States and 
Indian tribes that do not have approved reclamation programs and for 
the Secretary's administration of Title IV of SMCRA and subchapter R of 
the Federal regulations. These paragraphs are based on section 
402(g)(3)(A)-(D) and 402(g)(4) of SMCRA.
    We are renumbering existing Sec.  872.11(b)(7) as Sec.  872.25(b) 
and rewording this provision using plain English to describe the 
Federal expense distributions. This paragraph reflects the provision in 
the last sentence of section 402(g)(5)(A) of SMCRA, which states 
``[f]unds made available under paragraph (3) or (4) of this subsection 
for any State or Indian tribe shall not be deducted against any 
allocation of funds to the State or Indian tribe under paragraph (1) or 
under this paragraph.'' 30 U.S.C. 1232(g)(5)(A). This paragraph 
clarifies that we are prohibited from deducting the amount of funds we 
allocate or distribute as Federal expense funds, described at Sec.  
872.25, from your State or Tribal share funds and historic

[[Page 67590]]

coal funds. Section 872.25(b) also removes a reference in former Sec.  
872.11(b)(7) to minimum program make up funds provided under section 
402(g)(8) of SMCRA. After considering the comments described with 
regard to Sec.  872.24 and this section, we are removing the reference 
to minimum program make up funds that we had included in the proposed 
rule. We do not consider minimum program make up funds to be Federal 
expense funds because, unlike the funds listed in sections 402(g)(3)(A) 
through (D) and 402(g)(4) of SMCRA, minimum program make up funds have 
already been appropriated by Congress in the 2006 amendments and do not 
require any further annual appropriation before distribution can occur. 
30 U.S.C. 1232(g)(3)(E).
    In addition, we are renumbering existing Sec.  872.11(b)(8) as 
Sec.  872.25(c) and rewording it using plain English. This paragraph is 
consistent with section 402(g)(3)(C) of SMCRA. That section allows us 
to use Federal expense funds to address Priority 1, 2, and 3 coal 
problems that meet the eligibility requirements of section 404 in 
States and on Indian lands where the State or Indian tribe does not 
have an abandoned mine reclamation program approved under section 405. 
30 U.S.C. 1232(g)(3)(C).
Responses to Comments
    As discussed above in connection with Sec.  872.24, comments from 
IMCC/NAAMLP and one State pointed out an inconsistency in our 
description of Federal expense funds under Sec.  872.24 and our 
explanation for removing a reference to minimum program make up funds 
in Sec.  872.25(b). More specifically, the comments noted that our 
proposed rule in Sec.  872.24 essentially said minimum program make up 
funds are not Federal expense funds, yet proposed Sec.  872.25(b) said 
they are.
    As we explained in the discussion of Sec.  872.24 in this final 
rule, we agree with the comments and are making changes in the text of 
Sec.  872.25(a) and (b) in the final rule to clarify that minimum 
program make up funds are not Federal expense funds, although both 
minimum program make up funds and Federal expense funds are subsets of 
the Secretary's 20 percent share of collections to the Fund. We believe 
these changes we made to this section are consistent with sections 
401(d)(1) and 402(g)(5)(A) of SMCRA. Section 401(d)(1) of SMCRA 
specifically provides that ``[m]oneys from the fund for expenditures 
under subparagraphs (A) through (D) of section 402(g)(3) shall be 
available only when appropriated for those subparagraphs.'' 30 U.S.C. 
1231(d)(1). In contrast, minimum program make up funds are covered by 
section 401(d)(3) which says ``[m]oneys from the fund shall be 
available for all other purposes of this title without prior 
appropriation * * *.'' 30 U.S.C. 1231(d)(3). This section would include 
minimum program make up funds as set out in sections 402(g)(3)(E) and 
402(g)(8)(A). It is because of this distinction that for the final rule 
we removed the reference to section 402(g)(8) of SMCRA from Sec.  
872.25(b). It also is why we addressed minimum program make up funds 
separately in Sec. Sec.  872.26 through 872.28 instead of including 
them with Federal expenses in Sec.  872.24.
    We also received comments from IMCC/NAAMLP that said we should 
include minimum program make up funding in the list of authorized uses 
of Federal expense funds in Sec.  872.25(a). The comments asserted that 
we ``can use any number of funds to make these [minimum program] 
payments, including the federal expense fund.''
    After consideration of this comment, we decided not to make any 
additional changes to Sec.  872.25. As we stated previously, we 
consider minimum program make up funds to be distinct from Federal 
expense funds even though both minimum program make up funds and 
Federal expense funds come out of the Secretary's 20 percent share of 
annual fee collections, as authorized under section 402(g)(3). The 
primary distinction is that Congress must appropriate Federal expense 
funds while minimum program make up funds do not need a Congressional 
appropriation other than that contained in the 2006 amendments. Section 
401(f)(5)(A) of SMCRA allows us in any fiscal year to request, and 
Congress to appropriate, Federal expense funds from the Fund in 
addition to the mandatory appropriations made for grants to States and 
Indian tribes in the 2006 amendments. We believe, however, that it is 
not necessary to list in this regulation all the possible budget 
choices future administrations and Congress may make.
    IMCC/NAAMLP and two States commented that we should revise Sec.  
872.25(a)(2) to state more affirmatively our responsibility to 
administer emergency powers under section 410 of SMCRA either through 
our Federal Reclamation Program in States and for Indian tribes without 
approved emergency programs or through approved State and Indian tribal 
emergency programs. The comments maintained that section 410(a) of 
SMCRA makes OSM, and not States and Indian tribes, responsible for 
funding emergency projects. In support, the commenters assert that we 
have not given States with approved emergency programs full autonomy to 
operate them, and that recently some States' proposed emergency 
projects have not been approved. The commenters expressed their concern 
that we intend to reduce or eliminate emergency program funding.
    After considering these comments, we have decided not to change 
proposed Sec.  875.25(a)(2). While we appreciate these comments, they 
address issues that are beyond the scope of this rulemaking. For 
example, the 2006 amendments did not amend section 410 of SMCRA or 
otherwise address the scope of OSM's emergency powers. Thus, whether, 
and to what extent, OSM expends money on AML emergencies is unaffected 
by the 2006 amendments and this rulemaking. While we are adding Sec.  
875.25, this section does not expand or constrict the scope of OSM's 
emergency powers. We certainly recognize that AML emergencies can pose 
extreme hazards to public health and safety and property, and we do not 
in any way suggest that it is acceptable for such emergencies to go 
unabated. As always, we will work in a cooperative manner with our 
State co-regulators to assure that AML emergencies will be abated.
What are minimum program make up funds? (Sec.  872.26)
    As proposed, part of our changes to existing Sec.  872.11(b)(6) 
included moving that section to Sec. Sec.  872.26 and 872.27. These 
sections are consistent with the provisions of section 402(g)(8) of 
SMCRA, as revised by the 2006 amendments, for what commonly has been 
called ``minimum program funding'' or the ``minimum program make up.''
    Section 872.26 addresses what we call ``minimum program make up 
funds'' in this rule. First, Sec.  872.26(a) describes these funds as 
additional moneys that we distribute to eligible States and Indian 
tribes each year to make up the difference between their total 
distribution of other funds and $3 million. After consideration of the 
comments received, we have amended Sec.  872.26(a) to identify the 
source of these funds as moneys in the Secretary's 20 percent share of 
the Fund that are authorized for mandatory distribution and are not 
included in the Federal expense share under Sec. Sec.  872.24 and 
872.25. Section 402(g)(3)(E) of SMCRA requires us to use the 
Secretary's 20 percent share of the Fund provided under section 
402(g)(3) for this mandatory distribution. 30 U.S.C.

[[Page 67591]]

1232(g)(3)(E). However, unlike the Federal expense funds provided under 
paragraphs (A) through (D) of section 402(g)(3) and Sec. Sec.  872.24 
and 872.25 of the regulations, these funds do not need additional 
Congressional appropriation. 30 U.S.C. 1231(d)(1).
    Second, Sec.  872.26(b) describes four criteria that you must meet 
to be eligible to receive minimum program make up funds. First, you 
must have and maintain an approved reclamation plan under Part 884. 
Next, you cannot be certified under section 411(a) of SMCRA. Third, the 
total amount of State or Tribal share, historic coal, and prior balance 
replacement funds you receive annually must be less than $3 million. 
Last, you must have unfunded Priority 1 and 2 coal problems greater 
than your total annual amount of State or Tribal share, historic coal, 
and prior balance replacement funds. Other than minor modifications for 
clarity, we did not change these requirements from the proposal.
    Last, consistent with section 402(g)(8)(B) of SMCRA, Sec.  
872.26(c) makes the same amount of funding available to the States of 
Missouri and Tennessee to reclaim Priority 1 and 2 coal problems 
provided they have abandoned mine reclamation plans under Part 884. 
This paragraph was adopted as proposed.
Responses to Comments
    The calculation and use of minimum program make up funds was a 
subject of several comments. These commenters were primarily concerned 
with the amount of money minimum program States will be receiving under 
the 2006 amendments and these regulations. In particular, the general 
comments reflected two primary concerns: first, that if minimum program 
States receive only the minimum level of funding annually they will not 
complete the reclamation of the coal problems listed in the AML 
inventory during the life of the AML program; and, second, whether the 
phase-in provision of SMCRA section 401(f)(5)(B) should apply to 
minimum program make up funds. We will discuss the first concern below, 
but because Sec.  872.27 contains language implementing the phase-in 
provision, we will discuss the second under that section.
    Two States expressed concern that OSM is interpreting the 2006 
amendments in such a manner as to guarantee that minimum program States 
will not receive enough funds to reclaim the sites listed in the AML 
inventory during the life of the program. One of these commenters notes 
that it has ``an AML inventory which exceeds $200 million [and it] 
would never be able to complete reclamation on all the Priority 1 and 2 
hazards in the State by the end of fee collection in 2022 at $3 million 
per year minimum,'' which would leave the citizens of that State ``in 
great danger of being injured or even killed through some type of 
contact with one of these [unreclaimed] hazards.'' Another State 
asserted the same concerns: ``At an annual $3 million funding 
distribution [this State] will not get the Priority 1 and Priority 2 
AML problems reclaimed by September 30, 2022.'' Three environmental 
groups generally commented that minimum program States deserve and are 
due $3 million annually.
    A specific suggestion that these two State commenters and IMCC/
NAAMLP made was to add the words ``or greater'' at the end of the first 
sentence of Sec.  872.26(a) and at the end of Sec.  872.27(a)(1). These 
commenters indicate that these changes will allow the Secretary to give 
a State or Indian tribe more than the minimum program mandatory funding 
of $3 million per year, if he so chose. This language could be used, as 
two States note and IMCC/NAAMLP appears to agree, to allow the 
Secretary to give more funds to minimum program States, particularly in 
the later years of the program after more States and Indian tribes 
certify coal completion and more historic coal funds are available to 
distribute among uncertified States and Indian tribes with large AML 
inventories remaining. One State asked that throughout the rule we make 
it clear that ``minimum program funding is not less than $3 million 
annually and can be greater than $3 million on an annual funding 
basis.'' In regard to a similar suggested change to Sec.  872.27, IMCC/
NAAMLP stated that they did not care how OSM was able to get the 
minimum program States more funds, but that ``it simply needs to be 
done in order to meet the minimum $3 million [annual] award beginning 
immediately.''
    We appreciate the concerns that commenters raise on this point, but 
after careful consideration we have determined that we cannot change 
paragraph (a) of this section (or of Sec.  872.27 as explained below) 
as suggested. We agree with the commenters' point that a static funding 
level of $3 million a year will not enable some States to complete 
their high priority coal reclamation by the time the fee collections 
end. We regret this situation because, as IMCC/NAAMLP and one State 
pointed out, `` `minimum program' does not refer to [a] lack of AML 
hazards that a State has to address,'' and dangerous AML sites will 
likely continue to exist after FY 2022 in minimum program States and 
could pose grave danger to those States' citizens and visitors.
    Unfortunately, the 2006 amendments do not provide us with the 
statutory authorization to augment the $3 million floor to ensure that 
the minimum program States can complete high priority coal reclamation 
using any funds appropriated for mandatory distribution under section 
401 of SMCRA, although we may increase funding above this floor for 
appropriated Federal expenses such as State emergency program funding.
    Section 402(g)(8) of SMCRA requires us to ``ensure that the grant 
awards total not less than $3,000,000 annually to each State and each 
Indian tribe having an approved abandoned mine reclamation program * * 
*.'' 30 U.S.C. 1232(g)(8)(A). All this section does is establish the 
threshold amount that minimum program States will receive; it does not 
alter the underlying calculation that determines how much every 
uncertified State will receive. To calculate whether any uncertified 
State will meet this minimum threshold, you must look at section 
401(f)(3), which states:

    [F]or each fiscal year, * * * the Secretary shall distribute--
    (i) The amounts allocated under [the State and Tribal share 
provisions], the amounts allocated under [the historic coal funds 
provision], and any amount reallocated [because of equivalent amount 
is paid out of Treasury as certified in lieu funds], for grants to 
States and Indian tribes [as historic coal funds]; and
    (ii) The amounts allocated [for the minimum program make-up] 
under section 1232(g)(8).

30 U.S.C. 1231(f)(3). For uncertified States with a total amount to be 
distributed less than $3 million, section 401(f)(3)(ii) authorizes us 
to distribute minimum program make up funds in order to get them up to 
the threshold amount in section 402(g)(8)(A). It is the provisions of 
section 401 that authorize and appropriate these moneys from the Fund 
to uncertified States in mandatory distributions, and nothing in 
section 402(g)(8) changes the formula allocation set forth in section 
401(f)(3). Thus, we are only authorized by SMCRA to provide minimum 
program make up funds, if needed, to bring the funding for each 
uncertified State up to $3 million. We are not authorized to use 
minimum program make up funds to give mandatory distributions in excess 
of these amounts to minimum program States.
    To use Federal expense funds to provide the States with amounts 
greater

[[Page 67592]]

than $3 million, we would need a specific Congressional appropriation. 
Section 401(f)(5)(A) says that ``the amount distributed under this 
section shall be in addition to the amount appropriated from the fund 
during the fiscal year.'' 30 U.S.C. 1231(f)(5)(A). Although section 
401(f)(5)(A) of SMCRA authorizes us to provide additional grants from 
Federal expense funds, it does not require us to provide such grants. 
Instead, the language of individual appropriations acts and our 
budgetary discretion, which are outside the scope of this rulemaking, 
govern how we expend the Federal expense funds.
    We agree that more historic coal funds will be available to the 
remaining uncertified States as other States finish their coal problems 
and become certified. This occurs because the historic coal 
distribution percentages are increased for the remaining States, and 
also because amounts in the Fund equal to the certified in lieu funds 
the newly certified States will now receive are reallocated to historic 
coal funds under section 411(h)(4) and used to increase total historic 
coal distributions. We expect that as States certify, minimum program 
States will receive more historic coal funds and eventually will no 
longer require minimum program make up funds because the increase in 
historic coal funds will raise their funding over the $3 million 
threshold.
    We also note that the comments we received in conjunction with 
Sec. Sec.  872.24 and 872.25 about an inconsistency between the 
description of Federal expense funds and minimum program make up funds 
in the proposed rule also apply to this section. As we previously 
clarified in this final rule, we do not consider minimum program make 
up funds to be Federal expense funds, and, to be consistent with the 
changes we made in Sec. Sec.  872.25(a) and (b), we are also changing 
Sec.  872.26(a) to clarify that the source of minimum program make up 
funds is the moneys in the Secretary's 20 percent share of the Fund 
that are authorized for mandatory distribution.
How does OSM distribute and award minimum program make up funds? (Sec.  
872.27)
    Section 872.27 describes how we distribute and award minimum 
program make up funds. Paragraph (a) provides that we distribute these 
funds to you if you meet the eligibility requirements of Sec.  
872.26(b). In paragraph (a)(1), we describe how we calculate the amount 
of the Secretary's share funds, if any, we use to supplement the other 
funds you receive under Title IV of SMCRA. We add up the annual 
distributions you receive for your prior balance replacement funding 
under Sec.  872.29, your State or Tribal share moneys under Sec. Sec.  
872.14 or 872.17, and your historic coal funds under Sec.  872.21. If 
your distribution of these funds is equal to or greater than $3 million 
annually, you do not receive any minimum program funding under this 
section. If your distribution of these funds is less than $3 million 
annually, we add Secretary's share funds to increase your total 
distribution to $3 million.
    Although we use Secretary's share funds to ensure that you receive 
at least $3 million in your distributions, we are required to reduce 
the amount of these minimum program make up distributions for the first 
four years to comply with the phase-in provision of section 
401(f)(5)(B). The table in paragraph (a)(2) describes how we phase-in 
funding beginning October 1, 2007, until you reach the full funding 
level beginning October 1, 2011.
    We are phasing-in this funding based on sections 401(f)(2)(A)(ii), 
401(f)(3)(A)(ii), and 401(f)(5) of SMCRA. We are calculating the 
phased-in distribution using the method that we chose for the 2008 
distribution because we believe it maximizes funding for the minimum 
program States. To calculate the distribution, we first add up your 
annual prior balance replacement, State or Tribal share, and historic 
coal fund distributions. Then we calculate how much additional minimum 
program make up funding you would need to reach $3 million. We apply 
the phase-in only to that additional minimum program make up funding.
    The following example illustrates the phase-in method: The 
distribution of State A's prior balance replacement funds and its 
phased-in State share funds and historic coal funds totals $400,000. 
The amount of minimum program funds we would add to bring State A's 
total distribution to $3 million is $2.6 million. In FY 2008 and FY 
2009, we would have added 50 percent of the $2.6 million in minimum 
program make up funds, or $1.3 million, to the $400,000 sum of the 
State's other funding. State A's total distributions for FY 2008 and FY 
2009 therefore would have been $1.7 million each. In FY 2010 and FY 
2011, we would add 75 percent of the $2.6 million amount of minimum 
program funds, or $1,950,000, to the $400,000 sum of State A's other 
funding (assuming, for this example, that those other funding levels 
remain constant). State A would therefore receive $2,350,000 in both FY 
2010 and FY 2011.
    The table in Sec.  872.27(a)(2)(iii) shows that beginning in FY 
2012, your total annual distribution will not be less than $3 million 
unless the estimated reclamation cost of your remaining Priority 1 and 
2 coal problems is less than $3 million. Section 872.27(a)(2)(iv) 
explains that if you have Priority 1 and 2 coal problems remaining 
after September 30, 2022, we will continue to fund your total annual 
distribution at no less than $3 million (to the extent funds still are 
available) until the estimated cost of reclaiming your Priority 1 and 2 
coal problems is less than $3 million.
    If the estimated cost of reclaiming your Priority 1 and 2 coal 
problems is less than $3 million but more than your total annual 
distribution of all other types of Title IV funds, we will provide 
minimum program make up funding up to the unfunded reclamation costs of 
your Priority 1 and 2 coal problems.
    Last, Sec.  872.27(b) says we are awarding minimum program make up 
funds to you in grants following the procedures of Part 886 for 
uncertified States and Indian tribes, as we have for many years. After 
careful consideration of the comments received and explained below, we 
decided to adopt Sec.  872.27 as proposed.
Responses to Comments
    As mentioned in the comments to Sec.  872.26, the comments we 
received on minimum program make up funding generally related to two 
primary concerns--the need to complete high priority reclamation before 
the end of the AML program and the application of the phase-in 
provision to minimum program make up funds. With regard to the first 
concern, the commenters who suggested that we add ``or greater'' to 
Sec.  872.26 also suggested we add that phrase to Sec.  872.27(a)(1). 
For the reasons described in Sec.  872.26, we have decided not to add 
the suggested language to this section.
    The rest of the comments on this section, from IMCC/NAAMLP, four 
States, and three environmental groups, generally related to Sec.  
872.27(a)(2), which incorporates SMCRA's phase-in provision of Fund 
moneys. The commenters asserted that SMCRA requires that minimum 
program States receive at least the full $3 million as soon as 
possible, and some of them presented specific reasons why. In 
particular, IMCC/NAAMLP and State commenters specified that we should 
not phase in distributions of minimum program make up funds. To justify 
this position, IMCC/NAAMLP provided an extensive discussion of section 
401(f) and 402(g)(8). Particularly they quoted section 401(f)(5)(B), 
which states

[[Page 67593]]

``notwithstanding paragraph (3), the amounts distributed under this 
subsection'' will be phased in for the first four years beginning with 
FY 2008. 30 U.S.C. 1231(f)(5)(B). The commenter relies on this 
provision and states that OSM ignores this provision, and ``by its own 
terms (i.e. the `notwithstanding' phrase), [the phase-in provision] 
only overrides the requirements of section 401(f)(3).'' The commenter 
finds independent justification in sections 401(f)(1), 401(f)(2), and 
402(g)(8) to support a conclusion that ``section 401(f)(5) only applies 
to such additional funds as might otherwise be provided to OSM to the 
minimum program States and Tribes above the guaranteed distributions 
required elsewhere in the statute. This means that OSM cannot 
contribute more than $1.5 million in additional funding to each minimum 
program States and Tribes in fiscal years 2008 and 2009, and not over 
$2.3 million in additional funding in each of fiscal years 2010 and 
2011, and not over $3.0 million in additional funding in each 
subsequent year through fiscal year 2024.''
    IMCC/NAAMLP and one State described the history of minimum program 
make up funding and how it has neither been fully appropriated nor met 
the needs of eligible States and Indian tribes for several years. IMCC/
NAAMLP and one State detailed portions of the legislative history of 
SMCRA and some of its amendments as it related to historical guarantees 
made to the States and Indian tribes for funding of at least $2 
million. The legislative history included ``Congressional letters from 
committee chairmen [confirming] that Congress did not intend for 
funding to minimum program states to be phased-in.''
    The commenters pointed out that despite these guarantees, Congress 
has generally only appropriated the minimum funding level at $1.5 
million. Moreover, IMCC/NAAMLP provided a chart of the funding 
increases for States and Indian tribes in FY 2008 showing that every 
State and Indian tribe, except minimum program States, received an 
increase in funding ranging from 29 to 269 percent. IMCC/NAAMLP also 
asserted that minimum program States would not expect an increase until 
FY 2012. It continued by pointing out that large numbers of serious 
coal problems remain in some eligible States despite Congressional and 
State intent and efforts to strengthen provisions for abating them, and 
stresses that the purpose of Title IV is to help States and Indian 
tribes abate abandoned mine problems. Thus, IMCC/NAAMLP encouraged us 
to `` `look outside the box' and consider the real reason that Title IV 
was enacted almost 30 years ago'' to justify amending the rule as 
proposed to fund the full $3 million in minimum program make up funds 
immediately. As one State commented, to provide less than the full $3 
million would be a breach of faith between OSM and the States and 
Indian tribes.
    As we stated in response to the comments under Sec.  872.26, we 
agree that minimum program States and Indian tribes face widespread and 
significant abandoned coal mine problems that have yet to be addressed 
despite the Fund's 30-year existence. We acknowledge that eligible 
States and Indian tribes historically have not received the full $2 
million that the previous version of section 402(g)(8) of SMCRA 
indicated they were authorized to receive. With the 2006 amendments, 
Congress addressed this underfunding by increasing the minimum level of 
distributions under this paragraph and making them mandatory. See 30 
U.S.C. 1231(d)(3) and 1232(g)(8)(A). But it also enacted the phase-in 
provision of section 401(f)(5)(B), which effectively makes the minimum 
program States wait until FY 2010 to receive any significant increase 
in funding. 30 U.S.C. 1231(f)(5)(B).
    We must, moreover, disagree with the conclusions that the 
commenters drew from the chronic underfunding of minimum program States 
and the changes to SMCRA made by the 2006 amendments. To begin, we must 
correct a misperception made by some of the commenters. As we described 
in the preamble to the proposed rule and repeated here, the formula 
that the regulations establish to determine the amount of funds that 
minimum program States receive give them an increase, however slight, 
over the $1.5 million annually that they previously received. In our 
calculation example above, we increased State A's funding from $1.5 
million to $1.7 million, a 13% increase. Our records show that all of 
the 10 States that received minimum program funding in FY 2007 received 
more total funding in FY 2008 than they did in the FY 2007 
distribution, with increases ranging from 4% to 168%.
    Most importantly, the commenters have not provided any statutory 
authority under the language of SMCRA as written that supports our not 
applying the phase-in provision of section 401(f)(5)(B) to minimum 
program make up funds. When the 2006 amendments were enacted, we 
recognized the complicated interconnectedness of sections 401 and 402 
of SMCRA. As described above, at our request, the Solicitor issued an 
M-Opinion that provides the Department's interpretation of SMCRA on the 
issue of whether the section 401(f)(5)(B) phase-in provision applies to 
minimum program make up funds. The Solicitor determined that section 
401(f)(3) plainly requires us to reduce the total amount of annual 
grants in FY 2008 through FY 2011, including State or Tribal share, 
historic coal, and minimum program make up funds, to eligible States 
and Indian tribes by applying the phase-in provision of section 
401(f)(5)(B). The M-Opinion recognizes that Congress's reason for 
imposing the phase-in is not readily apparent. At the same time, 
however, it concludes that the language of SMCRA that makes the State 
or Tribal share, historic coal, and minimum program make up funds 
subject to the phase-in is clear.
    After extensively reviewing the rationales presented by the 
commenters, we still believe that the analysis contained in the M-
Opinion is correct. As described, IMCC/NAAMLP asserts that SMCRA only 
applies the phase-in provision in section 401(f)(5)(B) to funds that 
the Secretary may provide to the minimum program States after the other 
guaranteed distributions are made, including the minimum program fund 
distribution that would bring them up to the $3 million floor. We 
believe that such an interpretation of SMCRA is incorrect and ignores 
the statutory scheme of section 401. Section 401(f) of SMCRA clearly 
requires the Secretary to distribute to States and Indian tribes the 
amounts determined under section 401(f)(2). Section 401(f)(2), in turn, 
provides a calculation of funds that are then distributed under section 
401(f)(3). The phase-in provision of section 401(f)(5)(B) unambiguously 
applies to all amounts distributed under section 401(f)(3). Nothing in 
section 401(f)(3) indicates that it only refers to funds distributed in 
addition to other funds distributed under Title IV. Indeed, it clearly 
states it applies to ``the amount to be distributed to States and 
Indian tribes pursuant to'' section 401(f)(2). Thus, we disagree with 
the analysis presented by the commenters.
    Even though it may be unfortunate that some States do not receive 
as much critical funding as they need to reclaim their high priority 
coal projects, we are only authorized to provide as much funding as 
SMCRA allows. As much as we appreciate the desire of these States to 
reclaim the high priority coal problems as quickly as practicable, we 
cannot interpret SMCRA in such a way as to go against its plain 
meaning. Therefore, we are not changing Sec.  872.27 in response to 
these comments.

[[Page 67594]]

    Because we recognize the importance of reclaiming high priority 
coal problems in all uncertified States and Indian tribes, including 
minimum program States, in the proposed rule we specifically invited 
comments on ``other ways to calculate minimum program make up funding 
that meet SMCRA's requirements.'' 73 FR 35226. IMCC/NAAMLP responded 
that they do not prefer a specific approach as long as it provides a 
minimum grant award of $3 million beginning in FY 2008. But as we 
explained, SMCRA's requirements do not allow us provide the full $3 
million.
    Another comment from IMCC/NAAMLP addressed the last line of the 
table in Sec.  872.27(a)(2)(iv). On that line we stated that, if you 
have Priority 1 and 2 coal problems remaining after September 30, 2022, 
we will continue to fund your total annual distribution at no less than 
$3 million (to the extent funds still are available) until the 
estimated cost of reclaiming your Priority 1 and 2 coal problems is 
less than $3 million. IMCC/NAAMLP commented that we should revise this 
section to state that, if a State or Indian tribe has more than $3 
million in Priority 1 or 2 problems remaining after that date and funds 
still are available, we can and will distribute more than $3 million, 
not just a minimum of $3 million.
    We understand the commenter's position, but we included Sec.  
872.27(a)(2)(iv) to make clear that we will add minimum program make up 
funds to your distribution amount until you have less than $3 million 
in Priority 1 and 2 coal problems remaining. This is consistent with 
section 402(g)(8)(A), which authorizes us to set $3 million as the 
floor amount of your total annual mandatory distribution, including 
minimum program make up funds if you qualify for them under this 
section. This is also consistent with section 401(f)(2)(B) of SMCRA, 
which requires that, for FY 2023 and each fiscal year after that, to 
the extent funds are available, we must distribute an amount equal to 
the amount we distributed under 401(f)(2)(A) during fiscal year 2022. 
Further, we use the word ``and'' to include Priority 1 and 2 coal 
problems consistent with the wording of section 402(g)(8) of SMCRA.
    As with State and Tribal share funds and historic coal funds, IMCC/
NAAMLP and two States requested that we change our regulations in 
Sec. Sec.  872.26 and 872.27 to allow States and Indian tribes a choice 
to receive minimum program make up funds either in grants or by direct 
payments. Section 402(g)(8), however, refers to the Secretary's 
ensuring that ``the grant awards'' are made to each minimum program 
State and Indian tribe. Thus, as discussed further in the preamble in 
regard to Sec. Sec.  872.15, 872.18, and 872.22 and because section 
402(g)(8)(A) clearly contemplates that minimum program make up funds 
will be distributed as grants, we are not making the suggested change 
to these sections.
    As with the State share funds under Sec.  872.15, Tribal share 
funds under Sec.  872.18, and historic coal funds under Sec.  872.22, 
we received comments about historic coal funds withheld pursuant to the 
phase-in provision of section 401(f)(5)(B). For instance, IMCC/NAAMLP 
recommended that we distribute the amounts of minimum program make up 
funds withheld because of the phase-in provision in two equal 
distributions in FY 2018 and 2019. As we explained in Sec. Sec.  
872.15, 872.18, and 872.22, SMCRA does not authorize us to distribute 
moneys withheld because of the phase-in of State share, Tribal share, 
historic coal and minimum program make up funds in two payments in FY 
2018 and 2019. Minimum program make up funding withheld during the 
phase-in period will remain in the Fund as part of the Secretary's 
share until it is either distributed as minimum program make up funding 
in FY 2023 and thereafter under Sec.  872.27(a)(2)(iv), or otherwise 
appropriated by Congress and expended by OSM for Federal expenses under 
Sec.  872.25. As we explained for historic coal funds in Sec.  872.22, 
certified in lieu funds can only be used to pay for withheld State 
share or Tribal share funds, so when a State certifies we cannot 
distribute certified in lieu funds equal to withheld minimum program 
funds.
Are there any restrictions on how you may use minimum program make up 
funds? (Sec.  872.28)
    Section 872.28 lists what you may use minimum program make up funds 
for. We first revised the title and introductory text for clarity. 
Furthermore, after considering the comments, we have revised this 
section so that it now allows you to use minimum program make up funds 
for: (a) Priority 1 and 2 coal reclamation under sections 403(a)(1) and 
(2) of SMCRA; and (b) Priority 3 coal reclamation that is part of 
Priority 1 and 2 coal reclamation under sections 403(a)(1) and (2) of 
SMCRA and Sec.  874.13 of this chapter. You may not use minimum program 
make up funds for AMD set-asides because section 402(g)(6)(A) of SMCRA 
allows only State share, Tribal share, or historic coal funds to be 
used for this purpose. Similarly, you may not use minimum program make 
up funds for water supply restoration under section 403(b) or noncoal 
reclamation under section 409(b) because those sections also allow only 
State share, Tribal share or historic coal funds to be used. You may 
not use minimum program make up funds for stand alone Priority 3 
problems or other work because section 402(g)(8) of SMCRA allows us to 
distribute minimum program make up funds only so long as they are 
necessary to achieve the priorities in section 403(a)(1) and (a)(2).
Responses to Comments
    IMCC/NAAMLP and one State commented on this section. As proposed, 
Sec.  872.28 would have allowed States and Indian tribes to use minimum 
program make up funding only for Priority 1 and 2 coal reclamation. 
Both comments suggested we change this section to allow States to use 
minimum program make up funds to reclaim certain Priority 3 coal 
problems as part of addressing Priority 1 or 2 hazards. The State 
clarified that it was not proposing to do ``stand alone'' Priority 3 
coal reclamation with minimum program make up funds. Both, however, 
asserted that reclaiming Priority 3 problems such as spoil ridges as 
part of abating Priority 1 or 2 hazards such as highwalls allows them 
to leverage their limited funding to get the best reclamation at the 
lowest cost. They observed that we historically allowed this practice, 
under which States and Indian tribes save considerable amounts of money 
while providing valuable reclamation.
    We agree with the comments. Section 402(g)(8)(A) of SMCRA provides 
that we will ensure grant awards total not less than $3,000,000 ``so 
long as an allocation of funds to the State or tribe is necessary to 
achieve the priorities stated in paragraphs (1) and (2) of section 
403(a)''. 30 U.S.C. 1232(g)(8)(A). This section does not limit 
expenditures of minimum program funds to Priority 1 and 2 coal 
problems. However, we believe that there must be a strong connection 
between expenditures of these funds and the Priority 1 and 2 coal 
problems which made them necessary. We recognize that States have an 
interest in getting the most reclamation for their limited funds, and 
we share that interest. Also, we recognize that it can be economically 
and logistically advantageous to address lower priority problems, such 
as spoil ridges or waste piles, as part of abating higher priority 
problems such as highwalls, portals, and vertical openings. This 
approach reclaims more AML problems overall, in

[[Page 67595]]

some cases can more effectively abate and reclaim hazards and can 
reduce the cost of reclaiming the higher and lower priority problems. 
In that context, paragraph Sec.  872.28(b) is added to allow you, the 
eligible States and Indian tribes, to use minimum program make up funds 
for Priority 3 coal reclamation that is part of Priority 1 and 2 coal 
reclamation under sections 403(a)(1) and (2) of SMCRA and Sec.  874.13 
of this chapter.
What are prior balance replacement funds? (Sec.  872.29)
    Section 872.29 is one of three new sections we are adding regarding 
section 411(h)(1) of SMCRA and what we have termed ``prior balance 
replacement funds.'' This section describes these funds as moneys we 
must distribute to you instead of the moneys that we allocated to your 
State or Tribal share of the Fund before October 1, 2007, but that we 
did not actually distribute to you because Congress never appropriated 
them. It identifies the source of these funds as general funds of the 
U.S. Treasury that are otherwise unappropriated, not the Fund. Under 
SMCRA, distributions of prior balance replacement funds from general 
funds of the U.S. Treasury are mandatory and are not subject to 
Congressional appropriation. These distributions start in FY 2008 and 
continue through FY 2014. Other than comments related to new Sec.  
872.35 and discussed in the preamble to that section, we did not 
receive any comments on this section and adopt it as proposed.
How does OSM distribute and award prior balance replacement funds? 
(Sec.  872.30)
    We are adding Sec.  872.30 to describe how we distribute and award 
prior balance replacement funds. Under paragraph (a)(1), we distribute 
U.S. Treasury funds to you, all States and Indian tribes with approved 
reclamation plans, equal to the moneys that we allocated to your State 
or Tribal share before October 1, 2007, but that were not distributed 
before then. Under paragraph (a)(2), we distribute these funds to you 
if you are, or are not, certified under section 411(a) of SMCRA. 
Consistent with section 411(h)(1)(C) of SMCRA, paragraph (a)(3) 
requires us to distribute these funds to you in seven equal annual 
installments, beginning in FY 2008.
    Under Sec.  872.30(b), we are awarding prior balance replacement 
funds to you in grants under Part 885 if you are a certified State or 
Indian tribe or under Part 886 if you are uncertified. Section 
411(h)(1) of SMCRA says ``* * * the Secretary shall make payments to 
States or Indian tribes for the amount due * * *.'' 30 U.S.C. 
1240a(h)(1)(A)(i).
    Section 872.30(c) addresses sections 411(h)(1)(A)(ii) and 
411(h)(4)(A) of SMCRA, as revised by the 2006 amendments. 30 U.S.C. 
1240a(h)(1)(A)(ii) and 1240a(h)(4)(A). It requires us to transfer to 
historic coal funds the moneys in your State or Tribal share of the 
Fund that were allocated, but not appropriated to you, before October 
1, 2007. The amount of this transfer is the same amount that we pay you 
as prior balance replacement funds under this section and 411(h)(1) of 
SMCRA. Section 872.30(c) further requires us to make the amounts 
transferred to the historic coal funds available for annual grants 
beginning in FY 2023, which is the same time we distribute the 
remaining moneys under Title IV. Finally, it requires us to allocate, 
distribute, and award the transferred amounts to you according to the 
provisions applicable to historic coal funds under Sec. Sec.  872.21, 
872.22, and 872.23.
Responses to Comments
    We received comments on this section from IMCC/NAAMLP and two 
States. Two commenters advocated that we amend our proposed rule text 
to allow States and Indian tribes the option of receiving prior balance 
replacement funds under this section and certified in lieu funds under 
Sec.  872.32 either in grants or by direct payments. The third 
commenter simply asserted that ``OSM's interpretation that the payments 
to certified States must be accomplished by the grant process is in 
error and the funds should be distributed by a direct payment.''
    More specifically, IMCC/NAAMLP and one State contend that SMCRA 
does not directly address the issue of the system that should be used 
to disburse Treasury funds to States and Indian tribes and acknowledge 
that the ``Secretary has the discretion to design a payment mechanism 
that meets the needs of the States and tribes.'' At the same time, 
these two commenters advocate that we choose a system that allows the 
States and Indian tribes to have the flexibility to choose between 
grants, which would give States and Indian tribes the `` `protection' 
and guidance that such a process affords,'' and some type of direct 
payment mechanism, which would ``provide more unrestricted and 
immediate access to these moneys for States and Tribes who desire 
maximum discretion with regard to the use of these moneys * * *.'' 
These commenters never identified a specific mechanism that we could 
use to provide the direct payment but urged us to create a system 
similar to that used to pay mineral royalties to States under the 
Mineral Leasing Act. They also stated that State legislatures and 
Tribal councils will ensure States and Indian tribes use the funds 
legally and appropriately under SMCRA and State and Tribal contracting 
law and that Federal audits will scrutinize project selection and 
expenditures.
    We disagree with the commenters' assertions either that we should 
distribute Treasury funds to you as direct payments or allow you to 
choose between receiving the funds in grants or some type of direct 
payment. We agree with the Solicitor's M-Opinion that we are required 
to use grant agreements to make the Treasury payments under section 
411(h) of SMCRA, and we incorporate its reasoning by reference. 
Furthermore, even if we did have some discretion, we would still choose 
to distribute these funds as grants. As explained further in the 
preamble to the proposed rule, we identified at least four reasons why 
it is advantageous to use grants to distribute funds under section 
411(h). These reasons include allowing us to continue the established 
and effective process we have been using for almost 30 years to 
disburse moneys from the Fund to States and Indian tribes, helping us 
to address our programmatic responsibilities concerning certified and 
uncertified States and Indian tribes under sections 201(c)(1) and (4) 
of SMCRA, maintaining financial accountability for the distributed 
moneys, and maintaining consistency with Treasury regulations 
associated with grants (31 CFR Part 205).
    In a separate but related comment, IMCC/NAAMLP requested that we 
change this section to allow distributions of prior balance replacement 
funds to occur on October 1 of each fiscal year. This would be in 
contrast to our proposal, which would have us distribute funds in the 
mandatory distribution after we account for all reclamation fees 
collected for the previous year.
    We agree that we have the authority and the ability to distribute 
the prior balance replacement funds earlier in the fiscal year than the 
other funds in the annual mandatory distribution. Prior balance 
replacement funds are the only funds we are required to distribute that 
will usually not change in amount based on annual collections. For two 
reasons, however, we do not believe it advisable to provide for earlier 
distribution of the prior balance replacement funds. First, in order to 
distribute these funds earlier than other funds, we would have to

[[Page 67596]]

conduct a separate distribution and grants process. This, we believe, 
would be a waste of our administrative resources. Second, distributing 
these funds in advance of others could create a significant problem in 
years where proposed distributions of Treasury funds exceed the $490 
million cap provided in section 402(i)(3)(A) of SMCRA. 30 U.S.C. 
1232(i)(3)(A). In such years, we would have to reduce the amount of 
prior balance replacement funds that we distribute. We could not 
determine that amount of reduction, however, until we calculate the 
total amount of fee collections for the FY in question. Distributing 
prior balance replacement funds before we have made that calculation 
would create a significant administrative burden. Consequently, we did 
not change the regulatory text to specifically provide for earlier 
distributions. However, because we are not including any regulations 
mandating that distributions be made on a specific date, we reserve the 
right to use our discretion at some point in the future to reconsider 
the circumstances and allow for an earlier distribution of prior 
balance replacement funds.
    In sum, we are adopting Sec.  872.30 generally as proposed, but, 
for the reasons explained in the preamble to new Sec.  872.35 we are 
adding a reference to make clear that prior balance replacement funds 
will be reduced if the $490 million cap set forth in section 402(i)(3) 
is exceeded.
Are there any restrictions on how you may use prior balance replacement 
funds? (Sec.  872.31)
    Consistent with section 411(h)(1)(D)(i) of SMCRA, Sec.  872.31(a) 
requires you, a certified State or Indian tribe, to use the prior 
balance replacement funds you receive only for the purposes that your 
State legislature or Tribal council establishes, giving priority to 
addressing the impacts of mineral development. 30 U.S.C. 
1240a(h)(1)(D)(i). Under SMCRA, as revised by the 2006 amendments, the 
State legislature or Tribal council has broad and sole discretion to 
determine how prior balance replacement funds will be spent. Because 
OSM has no basis for approving or disapproving individual projects to 
be undertaken with these funds, we do not believe that projects paid 
for with prior balance replacement funds would be subject to our review 
requirements under laws such as the National Environmental Policy Act 
of 1969 (NEPA) and the National Historic Preservation Act (NHPA). 
Certified States or Indian tribes would be solely responsible for 
determining what other Federal laws are applicable to their activities. 
Therefore, we are not requiring an Authorization to Proceed (ATP) from 
OSM with an accompanying NEPA review.
    Sections 872.31(b) through (b)(3) require that uncertified States 
and Indian tribes use their prior balance replacement funds only for 
activities related to abandoned coal mine problems. Section 
411(h)(1)(D)(ii) specifies that uncertified States ``shall use any 
amounts provided under this paragraph for the purposes described in 
section 403.'' 30 U.S.C. 1240a(h)(1)(D)(ii). So, uncertified States and 
Tribes must use prior balance replacement funds to reclaim Priority 1, 
2, and 3 coal problems under Sec.  874.12, to restore water supplies 
under Sec.  874.14, and to maintain the AML inventory under section 
403(c) of SMCRA. Though not a required use in Sec.  872.31(b), we 
believe uncertified States and Indian tribes may use these funds to 
acquire lands under Sec.  879.11 as needed to address coal problems 
under section 403.
Responses to Comments
    We received numerous comments on this section. We will begin by 
discussing the comments we received on Sec.  872.31(a) from IMCC/
NAAMLP, one Indian tribe, and two States regarding compliance with the 
National Environmental Policy Act (NEPA). IMCC/NAAMLP and State 
commenters generally preferred not to have us do the NEPA review or an 
ATP for prior balance replacement funds expended by certified States 
and Indian tribes, but these commenters asked that we clarify why we 
will not require NEPA review. In contrast, IMCC/NAAMLP added that if 
``a Tribe is still required to perform a NEPA review due to other 
federal requirements (i.e. federal fiduciary responsibilities), the 
Tribes would prefer to work with OSM to accomplish this.'' Likewise, an 
Indian tribe commented that it was required to have NEPA documentation, 
and that we should conduct the NEPA reviews and issue ATPs for projects 
funded with prior balance replacement funds under section 411(h)(1) 
upon receipt of a certified State's or Indian tribe's written request 
because we have ``provided well-timed review and approval of [their] 
SMCRA projects resulting in the timely completion of these projects.''
    After reviewing these comments, we have decided not to change Sec.  
872.31(a) to specifically incorporate NEPA. As IMCC/NAAMLP suggested, 
we do not believe that a Federal nexus exists on individual projects 
undertaken by certified States and Indian tribes using prior balance 
replacement funds for the purposes set forth by their State 
legislatures or Tribal councils. We do not need to address this point 
in these regulations because other statutes, regulations, and case law 
support that principle. For example, the Department's NEPA regulations 
state: ``If Federal funding is provided with no Federal agency control 
as to the expenditure of such funds by the recipient, NEPA compliance 
is not necessary.'' 43 CFR 46.100(a); see also 40 CFR 1508.18 (`` 
`Major Federal Action' includes actions with effects that may be major 
and which are potentially subject to Federal control and 
responsibility.''). Because SMCRA clearly requires us to make the prior 
balance replacement fund payments to certified States and Indian tribes 
and gives the State legislatures and Tribal councils sole discretion as 
to how the funds are spent, we do not need to document NEPA compliance 
or issue ATPs. The exception to this lack of Federal nexus exists when 
certified States and Indian tribes use prior balance replacement funds, 
as directed by their State legislature or Tribal council, to maintain 
certification status under section 411 of SMCRA by reclaiming any 
remaining or newly discovered coal problems following the requirements 
of sections 403 and 404 of SMCRA and Parts 874 and 875 of this chapter.
    We also would like to stress that it is possible certified States 
or Indian tribes will undertake projects with prior balance replacement 
funds that involve Federal decisions by some other Federal entity, and, 
as such, NEPA compliance may be required. Moreover, it is possible that 
some certified States and Indian tribes will have their own 
requirements to comply with NEPA or its State or Tribal counterparts. 
It is the responsibility of each certified State and Indian tribe to 
determine what requirements, if any, apply to individual projects 
(other than any coal reclamation they do under Part 874) that they fund 
with moneys they receive under Sec.  872.31(a) and section 411(h)(1) of 
SMCRA. Thus, it is the responsibility of all States and Indian tribes 
to ensure that they meet all the applicable requirements they identify 
including NEPA requirements, and a specific regulation relating to NEPA 
requirements is not needed.
    In much the same way, while we are appreciative that at least one 
Indian tribe would like for us to remain involved in their NEPA 
compliance process, given the limitation on our discretion on the use 
and control of the funds under section 411(h)(1), we do not believe it 
is appropriate to provide

[[Page 67597]]

a formal option for us to do NEPA reviews and issue ATPs for Indian 
tribes (other than for coal projects under Part 874). However, we will 
fulfill the Secretary's trust responsibilities for Indian tribes and 
continue to work cooperatively with them while respecting the roles and 
jurisdictions of other Federal entities.
    With regard to Sec.  872.31(a), we received two additional comments 
from States in response to our request for comments on the wording of 
the regulation to describe the purposes for which certified States and 
Indian tribes may use prior balance replacement fund moneys distributed 
to them under section 411(h)(1). In the proposed rule, we explained 
that Sec.  872.31(a) may significantly affect certified States' and 
Indian tribes' reclamation programs and invited comments on it. The 
commenters specified that no additional explanation is needed; 
therefore, we are adopting Sec.  872.31(a) as proposed, with a minor 
change for clarity to conform to the new title for the section.
    Most of the comments submitted on Sec.  872.31 related to paragraph 
(b). These comments came from IMCC/NAAMLP, one Indian tribe, five 
uncertified States, one certified State, and three environmental 
groups. In particular, they were concerned with two purposes for which, 
under proposed Sec.  872.31(b), uncertified States and Indian tribes 
cannot use prior balance replacement funds--namely for placement in the 
30 percent AMD set-aside accounts and for noncoal reclamation under 
section 409(c). Most of the comments received were similar because they 
generally urged us to allow uncertified States and Indian tribes to use 
prior balance replacement funds for these two additional purposes. But 
there were subtle differences between them. For instance, IMCC/NAAMLP 
and most State commenters asserted that we should change this section 
to give uncertified States and Indian tribes the ability to use prior 
balance replacement funds for the 30% AMD set-aside and for noncoal 
reclamation under section 409(c). IMCC/NAAMLP and two States proposed 
specific language consistent with their interpretation. One State went 
further and commented that we do not have the authority under SMCRA to 
limit the use of prior balance replacement funds for noncoal 
reclamation, and, if we did so, it would be at least considered 
arbitrary and capricious, violate NEPA, and be tantamount to a taking 
of their property under the Fifth Amendment. However, we did receive 
one comment in support of our interpretation because that State 
perceived that our interpretation gives it greater flexibility on how 
certified States and Indian tribes can spend their prior balance 
replacement funds.
    To begin, IMCC/NAAMLP and most States maintained that prior balance 
replacement funds are ``colored'' as State and Tribal share moneys 
because they are being provided by Congress to compensate them for the 
State and Tribal share balances that had been allocated, but never 
appropriated to them, based on past reclamation fees collected from 
coal producers in those States and from Indian lands. Because 
uncertified States and Indian tribes had historically been able to use 
the State and Tribal share moneys that they did receive for noncoal 
reclamation and the AMD set-aside, these commenters advance the 
argument that they should be allowed, if they so choose, to use prior 
balance replacement funds for these purposes as well.
    These commenters take issue with the discussion in the preamble to 
the proposed rule that asserts a fundamental distinction exists between 
the Treasury funds we distribute under section 411(h)(1) and Fund 
moneys allocated under section 402(g)(1) for State and Tribal share 
funds. They refer to section 411(h)(1)(A)(i) of SMCRA, which says ``the 
amount due for the aggregate unappropriated amount allocated to the 
State or Indian tribe under subparagraph (A) or (B) of section 
402(g)(1)'' and in 411(h)(1)(B) to ``the unappropriated amount 
allocated to a State or Indian tribe before October 1, 2007, under 
subparagraph (A) or (B) of section 402(g)(1).'' According to these 
commenters, these statutory provisions recognize that prior balance 
replacement funds are considered and always have been considered State 
and Tribal share funds allocated under section 402(g)(1) of SMCRA 
regardless of the funding source used to provide the moneys to the 
States and Indian tribes. In that context, they urge that we base the 
use of prior balance replacement funds on the original uses for State 
and Tribal share funds, which would include noncoal reclamation and the 
AMD set-aside. In contrast, one State supported our statement that 
there is a fundamental distinction between prior balance replacement 
funds and section 402(g) moneys distributed from the Fund because this 
State perceives that such a distinction allows it greater flexibility 
on how certified States can use prior balance replacement funds.
    What is more, one State advocated that a better reading of this 
provision relies on the references to the ``amount due'' in sections 
411(h)(1)(A)(i) and 411(h)(1)(B). Because section 411(h)(1)(B) refers 
to the past allocation, this State advances that ``funds may be 
allocated, on the one hand, but unappropriated, on the other. * * * The 
fact that funds have not been appropriated or are appropriated from one 
source as opposed to another, does not change the fact that they have 
been allocated under [section 402(g)(1)].'' Using this approach, the 
State concludes that because section 409 allows State and Tribal share 
funds and historic coal funds to be used for noncoal reclamation, and 
the prior balance replacement funds are simply Treasury fund 
appropriations used to satisfy the State and Tribal share allocations 
under section 402(g)(1), then prior balance replacement funds must be 
allowed to be used for noncoal reclamation, just as the State and 
Tribal share allocations may be used.
    The same State questioned our use of section 411(h)(1)(D)(ii) to 
prevent uncertified States from using prior balance replacement funds 
on noncoal reclamation projects. It and other States pointed out that, 
under section 411(h)(1)(D)(ii), uncertified States are required to use 
prior balance replacement funds ``for purposes described in section 
403.'' 30 U.S.C. 1240a(h)(1)(D)(ii). Section 403 lists three 
priorities, all of which are coal based. This State correctly noted 
that section 403 applies to ``all expenditures from the Fund, including 
[section 402(g)] allocations'' and that section 402(g)(2) provides that 
``the Secretary shall ensure strict compliance by the States and Indian 
tribes with the priorities described in section 403(a)'' in making 
grants under sections 402(g)(1) and 402(g)(5).
    That State continued by pointing out that section 409(c)(1) 
provides: ``The Secretary may make expenditures and carry out the 
purposes of this section * * * for those reclamation projects which 
meet the purposes of this section, the reference to coal in section 
403(a)(1) of this title shall not apply.'' 30 U.S.C. 1239(c)(1). The 
State contends that this provision ``specifically broadens the scope'' 
of section 403 and that OSM has no basis for interpreting the reference 
to section 403(a)(1) differently in section 402(g)(2).
    Some commenters also maintained that prior balance replacement 
funds are not fundamentally distinct from State and Tribal share funds 
when SMCRA is read as a whole. IMCC/NAAMLP and other commenters 
emphasized that we must read the entire statute in context when 
interpreting the meaning of section 411. The comments maintained: 
``Section 403 * * * is modified by Section 409, which provides for the 
expenditure of AML funds at any

[[Page 67598]]

Priority 1 or 2 site, regardless of the commodity mined.'' Because the 
wording of section 409(b) indicates that State or Tribal share funds 
(from 402(g)(1)or (g)(2)) and historic coal funds (402(g)(5)) may be 
used for noncoal reclamation, these commenters contend that Congress 
easily could have changed section 411(h)(1), section 409, or both to 
limit the use of the unappropriated State and Tribal share balances 
that are being distributed under section 411(h)(1) if it wanted to, but 
did not. Thus, the commenters assert that because Congress left section 
409 unchanged, uncertified States and Indian tribes should be allowed 
to use all funds distributed under SMCRA to reclaim extremely dangerous 
noncoal mine problems that threaten public health, safety, and 
property. See 30 U.S.C. 1233(a)(1)(A) and 1239(c).
    One comment made by IMCC/NAAMLP provided that section 402(g)(2) 
does not apply to the use of historic coal funds or prior balance 
replacement funds. As support, the commenters explained that section 
411(h)(1) allows these funds to be ``expended pursuant to the 
`priorities' of section 403'', and expenditures made pursuant to 
section 409(b), which refers to those priorities, are indeed part of 
the section 403 priorities. As additional support, they point out that 
section 401 of SMCRA, which ``speaks to the `purposes' of the Fund,'' 
specifically includes coal reclamation under section 403 and noncoal 
reclamation under section 409.
    Moreover, IMCC/NAAMLP and two States commented that they believe 
our position on the use of prior balance replacement funds would force 
them to spend years working on high-cost, low-priority coal projects 
that present little threat to public health and safety at the expense 
of leaving tens of thousands of hazardous abandoned noncoal mines 
unattended. They stated that all fatalities in recent decades in two 
western States were related to abandoned noncoal mines. Additionally, 
they observed that the danger to public health and safety from 
abandoned noncoal mines throughout the country is increasing due to 
increased urban sprawl into undeveloped areas and outdoor recreation. 
One Indian tribe stated that allowing uncertified States to use as much 
funding as possible would allow timely completion of AML problems that 
would benefit both Tribal and State stakeholders. One State maintained 
that we could be held liable if people are hurt or injured in abandoned 
noncoal mines that we refuse to fund.
    Furthermore, comments from IMCC/NAAMLP and some States described 
events that occurred after the enactment of the 2006 amendments that 
they maintain demonstrates Congressional intent to allow uncertified 
States and Indian tribes to use prior balance replacement funds for 
noncoal reclamation. They point to a June 6, 2007, letter in which six 
Senators of three western States expressed their view that a fair 
reading of the amended Act allows using historic coal funds and prior 
unappropriated balance allocations for high priority noncoal sites 
because section 409 did not change in the amendments, allowing it to 
operate as it did in the past. The comments also described legislation 
introduced into the 2008 Congressional session and testimony given in 
support of that legislation to clarify Congress's intent that prior 
balance replacement funds be used for noncoal reclamation.
    After a thorough analysis of the comments, we determined that our 
interpretation of the 2006 amendments as presented in the proposed rule 
is consistent with the plain meaning of SMCRA and the Solicitor's M-
Opinion, which also analyzes section 409(b). For those reasons, and as 
explained in the preambles to our proposed rule and this final rule, we 
are adopting Sec.  872.31(b) as proposed, with a minor change for 
clarity to conform to the new title for the section.
    A proper analysis of this issue must begin with section 409(b) of 
SMCRA because it specifically provides that ``[f]unds available for use 
in carrying out the purpose of this section shall be limited to those 
funds which must be allocated to the respective States or Indian tribes 
under the provisions of paragraphs (1) and (5) of section 402(g).'' 30 
U.S.C. 1239(b). Thus, the plain meaning of this subsection is that 
moneys uncertified States and Indian tribes can use for noncoal 
reclamation are restricted to those moneys we must allocate to their 
State or Tribal share and historic coal funds. While it is true that 
section 411(h)(1)(B) also discusses the ``unappropriated amount 
allocated to a State or Indian tribe before October 1, 2007'' for State 
or Tribal share funds, we believe the statute makes a clear distinction 
between those Treasury funds (i.e., prior balance replacement funds) 
based on unappropriated, but previously allocated, State and Tribal 
share payments, and those that continue to be allocated from current 
revenue collections. Section 409(b) is written in the present tense--
``limited to those funds which must be allocated'' as State share funds 
(emphasis added). 30 U.S.C. 1239(b). The only funds that must be 
allocated are those from current reclamation fee collections, and not 
the funds that already have been allocated prior to the beginning of 
fiscal year 2008, which are the ones that the prior balance replacement 
funds seek to replace.
    In any event, the prior balance replacement funds are not 
``allocations'' under section 402(g)(1); they are distributions under 
section 411(h). Prior balance replacement funds provide a payment equal 
to the amount of what had been allocated, but had never been 
appropriated. It is Congress's prerogative to allocate moneys to 
entities, but not appropriate the full amount. It happens frequently. 
See, e.g., the discussion in Sec.  872.27 of Congress authorizing $2 
million as the minimum program funding level but only appropriating 
$1.5 million. Just because SMCRA now appropriates the amount of money 
as prior balance replacement funds that the States and Indian tribes 
would have received as State and Tribal share funds had it fully 
appropriated the allocated amount in the first place, it does not 
follow that the conditions that apply to allocated State and Tribal 
share funds also attach to the prior balance replacement funds. The 
prior balance replacement funds are a separate appropriation whose 
calculation just happens to depend on the difference between the 
amounts of a prior allocation and a prior appropriation.
    We also do not perceive any conflict between the different uses of 
the moneys distributed under sections 402(g)(2) and 411(h)(1)(D)(ii) 
even though they both refer to section 403(a)(1). We do not view 
section 409(c)(1) as a general broadening of the scope of section 
403(a)(1) to allow noncoal reclamation; instead, section 409(c)(1) is 
restrictive and only allows for noncoal reclamation to occur on lands 
otherwise meeting the criteria of section 403(a)(1) when funds 
specifically mentioned by section 409(b) are used--the State or Tribal 
share and historic coal funds. As such, we are acting within the 
authority that SMCRA grants under section 201(c)(2) ``to publish and 
promulgate such rules and regulations as may be necessary to carry out 
the purposes and provisions of this Act.''
    Likewise, although we recognize how important noncoal reclamation 
is to several States, the primary purpose of the enactment of SMCRA 
relates to coal. See 30 U.S.C. Sec. Sec.  1201, 1202. Allowing 
uncertified States to continue to use the same type of funds that they 
have used in the past to fund noncoal reclamation (i.e., State or 
Tribal share and historic coal funds), while providing that some

[[Page 67599]]

funds must be used toward coal reclamation (i.e., prior balance 
replacement funds), is consistent with the purposes of SMCRA.
    We recognize the extreme hazards posed by unreclaimed noncoal mine 
lands. Uncertified States and Indian tribes may continue to use their 
State or Tribal share and historic coal funds to abate Priority 1 
noncoal problems under section 403(a)(1) as provided in section 409(b) 
and (c) of SMCRA. Nothing in this rulemaking prevents that. In fact, 
most uncertified States and Indian tribes will have roughly the same 
amount of those funds available for noncoal reclamation that they have 
had in the past, even considering the phase-ins. We note that some 
uncertified western States commonly partner with Federal land 
management agencies to abate high priority noncoal problems on public 
lands. Those States receive additional funding from those agencies and 
in their legislative appropriations that enable them to address a wider 
range of noncoal AML problems. One Indian tribe commented that 
uncertified States should be allowed to use prior balance replacement 
funds for noncoal reclamation to enable an adjacent uncertified State 
to continue partnering with that Tribe on noncoal projects that impact 
members of that tribe in areas outside Indian lands. Our interpretation 
of section 411(h)(1) should not adversely affect such ongoing 
partnerships or prevent uncertified States and Indian tribes from 
addressing Priority 1 noncoal problems.
    It is possible some uncertified States may find they have more 
funds for noncoal reclamation than they expected. By using prior 
balance replacement funds exclusively for coal purposes under section 
403, uncertified States no longer would have to split their State share 
and historic coal funds between coal and noncoal reclamation to the 
extent they did in the past and could use more State share and historic 
coal funds for noncoal if they so choose. Moreover, as the phase-in 
years are completed and as some States certify coal completion, more 
State share and historic coal funds will become available to 
uncertified programs for coal and noncoal reclamation. Uncertified 
States therefore should be able to address Priority 1 noncoal problems 
to no less an extent than they did before Congress enacted the 2006 
amendments. Once States complete reclamation of all known coal problems 
and certify, their legislatures have the authority to use all the 
funding States will receive under sections 411(h)(1) and (2) for 
noncoal reclamation.
    IMCC/NAAMLP, five States, and three environmental groups also 
commented that we should change Sec.  872.31 to allow uncertified 
States and Indian tribes to use prior balance replacement funds for the 
30% AMD set-aside. IMCC/NAAMLP commented that much of its reasoning for 
using prior balance replacement funds for noncoal reclamation also 
applies to allowing States and Indian tribes to use those funds for the 
30% AMD set-aside, so we do not repeat all of it here. IMCC/NAAMLP and 
States asserted that AMD treatment projects typically are Priority 3 
projects. They maintained that to allow them to use prior balance 
replacement funds for AMD projects under Sec.  874.13, but not for the 
AMD set-aside, is inconsistent because both treat the same type and 
priority of coal-related problems under section 403 of SMCRA. As one 
State noted, in its opinion, ``OSM is essentially authorizing the use 
of prior balance replacement funds for current AMD work on one hand, 
while denying the use of these funds for further AMD work on the 
other.'' Further, it noted such work clearly is one of the purposes of 
section 403 of SMCRA, so any restriction on the use of these funds for 
AMD remediation is inappropriate. It also maintained that section 
402(g)(6)(B)(ii)(I) of SMCRA, which states that a qualified hydrologic 
unit destined for AML abatement must have land and water that 
``include[s] any of the priorities described in section 403,'' 
establishes and defines the use of AMD set-aside funds. It asserted 
that this passage, along with the statement at section 
411(h)(1)(D)(ii), provided a clear nexus to section 403 of SMCRA, and 
thus prior balance replacement funds can be used for AMD set-aside 
because it is effectively a priority of section 403. It cited the fact 
that the references in sections 402 and 411 to section 403 are 
identical and concluded that ``Treasury funds should not be 
artificially excluded for use in set-aside for AMD.''
    One State commented that Congress created the AMD fund language in 
SMCRA to allow States and Indian tribes to address this ``eligible 
priority problem type'' well into the future beyond the expiration of 
the fee collections and the end of grants to States under SMCRA. That 
State's comment described its chronic and acute acid mine drainage 
problem. The comment added that funding the AMD set-aside at the 
highest level of deposits available is of great importance to the 
citizens of that State. IMCC/NAAMLP added that Congress has included 
language in the recent appropriation bills that affirms its support of 
Title IV funds being set aside for the purpose of environmental 
restoration related to treatment or abatement of acid mine drainage 
without restriction.
    We agree with the comments that acid mine drainage is a widespread 
and serious problem and recognize how important it is to the States to 
address it. Nothing in this rulemaking reduces a State's authority to 
address acid mine drainage in projects it funds under Sec.  874.13 with 
State share and historic coal funds. In addition, because prior balance 
replacement funds must be expended for the reclamation of coal 
problems, which as many commenters pointed out often includes Priority 
3 problems related to AMD, uncertified States can use these funds for 
those purposes. In sum, as the regulation reflects, funding Priority 1, 
2, or 3 acid mine drainage projects with prior balance replacement 
funds distributed under section 411(h)(1) of SMCRA is consistent with 
all subsections of section 403 of SMCRA, including section 403(a)(3).
    For the reasons in the preamble to the proposed rule, the 
Solicitor's M-Opinion, and those we provided in this preamble in our 
responses to comments on uncertified States and Indian tribes using 
these funds for noncoal reclamation, we do not believe that prior 
balance replacement funds can be used for the same purposes as State or 
Tribal share funds simply because an equal amount was allocated but not 
appropriated as State or Tribal share. The actual appropriation of 
these funds occurred in the 2006 amendments, and section 
411(h)(1)(d)(2) of SMCRA now clearly authorizes prior balance 
replacement funds to be used only for the ``purposes described in 
section 403.''
    Section 403 of SMCRA does include Priority 1, 2, and 3 coal 
problems, the restoration of water supplies, and the maintenance of the 
AML inventory. Priority 1, 2, or 3 coal problems include AMD projects. 
As Sec.  872.31(b) provides, uncertified States and Indian tribes can 
use prior balance replacement funds for any of these purposes.
    Section 403 does not include the AMD set-aside. So, Sec.  872.31 
does not allow uncertified States to place prior balance replacement 
funds into the AMD set-aside accounts established under State law under 
section 402(g)(6) of SMCRA. That section explicitly authorizes 
uncertified States and Indian tribes to set-aside up to 30 percent of 
``the total of the grants made annually to the State under paragraphs 
(1) and (5)'' to address AMD. The requirement in section 402(g)(6)(B) 
that funds

[[Page 67600]]

deposited in the set-aside be used to address AMD in a qualified 
hydrologic unit that contains land and water that are eligible pursuant 
to section 404 and include any of the ``priorities described in section 
403(a)'' provides the flexibility and assurance that those funds will 
be used to address AMD ``in a comprehensive manner'' and that their use 
will not be limited to addressing only part of a problem.
    Though Priority 3 AMD projects and funds in the AMD set-aside will 
address similar problems, section 403 does not refer to the AMD set-
aside in its description of the priorities for which funds can be 
expended under that section. Congress could have said you may use 
section 411(h)(1) funds for the AMD set-aside under section 402(g)(6), 
but it did not do so in sections 402(g)(6) or 411(h)(1). It also could 
have referred to the AMD set-aside in section 403, but did not do that 
either. Instead, it explicitly worded section 402(g)(6) to say you may 
use funds you receive under sections 402(g)(1) (State or Tribal share 
funds) and (g)(5) (historic coal funds) for the AMD set-aside and 
referred to the ``purposes described in section 403'' for prescribing 
the use of funds available under section 411(h)(1).
    We realize our interpretation means you can use prior balance 
replacement funds for current AMD projects but not for deposit into the 
AMD set-aside. We acknowledge that moneys set-aside in such State 
accounts should be used at some future date to address AMD abatement 
and treatment problems, but we think there is a distinction between 
expending funds directly for reclamation costs and depositing funds in 
a trust account to earn interest. We believe our interpretation of 
section 411(h)(1)(D)(ii) and of section 403 is consistent with the 
amended wording of SMCRA.
What are certified in lieu funds? (Sec.  872.32)
    We are adding three new sections addressing funds distributed to 
States and Indian tribes described in section 411(h)(2) of SMCRA. 30 
U.S.C. 1240a(h)(2). We call these moneys ``certified in lieu funds'' in 
this rule. As the first of these three sections--Sec.  872.32--
describes, certified in lieu funds are moneys that we distribute to 
you, a certified State or Indian tribe, in lieu of moneys otherwise 
allocated to your State or Tribal share of the Fund after October 1, 
2007. We are prohibited from distributing State and Tribal share moneys 
to you because of the exclusion in section 401(f)(3)(B) of SMCRA. 30 
U.S.C. 1231(f)(3)(B). This section also identifies the source of these 
certified in lieu funds as otherwise unappropriated funds in the United 
States Treasury, not the Fund. The annual distribution of certified in 
lieu funds is mandatory and not subject to prior Congressional 
appropriation. These distributions start in FY 2009 because section 
411(h)(2) of SMCRA specifies that our payments must equal the State and 
Tribal share funds ``allocated on or after October 1, 2007.'' 30 U.S.C. 
1240a(h)(2)(A). So, the first fees collected that can serve as the 
basis for calculating certified in lieu payments are those allocated on 
coal produced during FY 2008. As a result, we are distributing 
certified in lieu funds for the first time in FY 2009. Other than 
comments related to new Sec.  872.35 and discussed in the preamble to 
that section, we did not receive any comments on this section and adopt 
it as proposed.
How does OSM distribute and award certified in lieu funds? (Sec.  
872.33)
    Section 872.33 describes how we distribute and award certified in 
lieu funds. Paragraph (a) states that you must be certified under 
section 411(a) of SMCRA to receive certified in lieu funds, as required 
in section 411(h)(2) and defined in section 411(h)(2)(B). If you meet 
that requirement, we follow the steps described in paragraph (b) to 
distribute these moneys to you. Under paragraph (b)(1), we annually 
distribute to you, beginning in FY 2009, an amount based on 50 percent 
of the reclamation fees we received for coal produced during the 
previous FY in your State or on Indian lands within the jurisdiction of 
your Indian tribe. Paragraph (b)(2) states that the funds we annually 
distribute to you are in lieu of moneys you would have received from 
your State or Tribal share of the Fund if section 401(f)(3)(B) of 
SMCRA, as revised by the 2006 amendments, did not specifically exclude 
you from receiving those funds. 30 U.S.C. 1231(f)(3)(B). Although the 
Fund is not the source of these moneys that we distribute to you, you 
receive moneys each year as though you were still receiving them from 
your State or Tribal share of the Fund.
    Section 872.33(b)(3) explains, using a table, how we are phasing in 
our distribution of certified in lieu funds to you over the first three 
years beginning October 1, 2008. This paragraph is consistent with 
section 411(h)(3)(B) of SMCRA, which requires that in the first three 
fiscal years beginning with FY 2009, the amount we annually distribute 
to you is equal to 25 percent, 50 percent, and 75 percent, 
respectively, of 50 percent of the annual reclamation fee collections 
in your State or from Indian lands within your jurisdiction. 30 U.S.C. 
1240a(h)(3)(B). You will receive an amount equal to 100 percent of your 
50 percent State or Tribal share of annual reclamation fee collections 
in the fiscal year beginning October 1, 2011, and in the following 
fiscal years.
    Section 872.33(c) states that we use grants to pay these funds to 
you. Section 411(h)(2) of SMCRA says ``the Secretary shall pay to each 
certified State or Indian tribe * * *.'' 30 U.S.C. 1240a(h)(2)(A). As 
with the section 411(h)(1) prior balance replacement fund ``payments,'' 
we must use grants to pay certified in lieu funds to you. See the 
discussion of Sec.  872.30 above.
    Paragraph Sec.  872.33(d) addresses the provisions of sections 
401(f)(3)(A)(i) and 411(h)(4) of SMCRA. It requires us to transfer to 
historic coal funds the same amount of funds that we distribute to you 
as certified in lieu funds. The transferred amounts come from moneys in 
your State or Tribal share of the Fund that are otherwise allocated to 
you for the prior fiscal year, but which you are barred from receiving. 
We must make those transferred amounts available for annual grants 
beginning in FY 2009, and are doing so at the same time we distribute 
all other moneys under Title IV. Finally, Sec.  872.33(d) requires us 
to allocate, distribute, and award the transferred amounts to 
uncertified States and Indian tribes according to the provisions 
applicable to historic coal funds under Sec. Sec.  872.21, 872.22, and 
872.23.
    Section 411(h)(3)(C) of SMCRA requires us to distribute to you, in 
two equal annual installments in FY 2018 and FY 2019, the amounts we 
withhold from the first three payments of certified in lieu funds as a 
result of the phased-in distribution. 30 U.S.C. 1240a(h)(3)(C). Section 
872.33(e) incorporates that provision into the regulations.
Responses to Comments
    As part of a broader comment, IMCC/NAAMLP commented that we should 
give States and Indian tribes the option of receiving their certified 
in lieu funds in grants or by direct payments. In addition, one State 
stated that SMCRA required certified in lieu funds to be distributed by 
direct payments.
    As we explained in response to similar comments we received on 
Sec.  872.30, we conclude that we are required to distribute all funds 
to States and Indian tribes in grants, including certified in lieu 
funds we distribute under this section. Our detailed explanation of our 
decision to use grants appears in the discussion of our responses to 
comments we received on that section, and we do not repeat it

[[Page 67601]]

here. Therefore, we are adopting the Sec.  872.33 as proposed with one 
minor addition to (b) for clarity.
Are there any restrictions on how you may use certified in lieu funds? 
(Sec.  872.34)
    As proposed, Sec.  872.34 stated that you may use certified in lieu 
funds for any purpose. After considering the comments described below, 
we have interpreted SMCRA to place no restrictions on the use of 
certified in lieu funds. This is because Congress did not place any 
limits on the use of these funds in the 2006 Amendments. Thus, we have 
revised the title and language for clarity. Because section 411(h)(2) 
does not specify the purpose(s) for which the funding it provides may 
be used, we interpret it to mean that the use of the funds it provides 
is not restricted.
    As a certified State or Indian tribe, you must address coal 
problems that arise after certification under existing Sec.  875.14(b), 
and we are not changing this requirement. In addition, when each State 
and Indian tribe became certified under the existing regulations at 
Sec.  875.13(a)(3), it had to provide an agreement to ``give top 
priority'' to any coal problems that occur after certification. So, 
certified States and Indian tribes must address these coal problems, 
regardless of the funding source.
Responses to Comments
    In the proposed rule, we requested comments on an alternative 
interpretation of section 411(h)(2). At that time, we explained that 
section 411(h)(2) of SMCRA, as revised by the 2006 amendments, is 
silent on how certified in lieu funds may be used, and that an argument 
could be made that this section's silence on the use of these funds 
does not mean certified States and Indian tribes may use them for any 
purpose. Instead, it might be viewed as meaning that the other 
provisions of section 411 of SMCRA, specifically 411(b) through (g), 
apply to the use of certified in lieu funds. We asked for comments 
because we recognized this interpretation would make a major difference 
in not only how these funds may be used but in our role in overseeing 
that use.
    IMCC/NAAMLP, one State, and three environmental groups representing 
a coalition of conservation districts and watershed groups responded to 
our request for comments. The IMCC/NAAMLP and State commenters agreed 
with our interpretation that the use of the funds we distribute under 
section 411(h)(2) is not restricted by SMCRA. Moreover, they pointed 
out that provisions in section 411(b) through (g) would be difficult to 
apply to certified States and Indian tribes. Both the IMCC/NAAMLP and 
the State commenter maintained that the provisions of sections 411(b) 
and (c) could possibly apply to newly discovered coal problems because 
we could require newly discovered coal problems to meet the eligibility 
criteria of paragraph (b) and the priorities described in paragraph 
(c). Those commenters added that paragraph (d) would not apply because 
it refers to expenditures from the Fund and certified States and Indian 
tribes no longer receive moneys from the Fund. Further, they maintained 
that paragraphs (e) and (f) would not apply because they restrict the 
use of funds certified States and Indian tribes receive.
    In contrast, the three environmental groups agreed with the 
alternative approach mentioned in the preamble. Specifically, they 
contended that sections 411(b) through (g) provide context and guidance 
for and set the rules on how all funds for the AML program must be 
used, regardless of their origin. These commenters stated that ``[t]he 
absence of explicit provision[s] in SMCRA addressing how certified in 
lieu funds may be used does not authorize organizations that receive 
such funds to use them for any purpose * * *. [A]n explicit provision 
in the statute would be required in order to use certified in lieu 
funds for any purpose'' (emphasis omitted).
    After careful consideration of the comments that both agree and 
disagree with our proposed rule, we agree with the rationale presented 
in the preamble to the proposed rule and generally espoused by the 
IMCC/NAAMLP and State commenters. Thus, in the final rule we have 
clarified that our interpretation of SMCRA is that there are no 
restrictions on the use of certified in lieu funds. Because we believe 
there are no restrictions on certified in lieu funds, we disagree with 
the portion of the IMCC/NAAMLP comment that said the language of the 
2006 amendments specifically allows these funds to be used for any 
purpose. We find SMCRA contains no specific instruction on the use of 
these funds, but at the same time, it places no restrictions upon them. 
We also believe that section 411(b) and (c) of SMCRA only apply to 
certified States and Indian tribes that conduct noncoal reclamation 
programs with State or Tribal share funds distributed prior to October 
1, 2007. As further explained in the preamble to Sec.  875.13, our 
intention is to work cooperatively with certified States or Indian 
tribes to ensure coal problems that exist after certification are 
appropriately addressed.
When will OSM reduce the amount of prior balance replacement funds or 
certified in lieu funds distributed to you? (Sec.  872.35)
    In the proposed rule, we specifically invited comments on whether 
we should add a provision to the regulations that describes how we 
would reduce our distribution of prior balance replacement funds and 
certified in lieu funds, as well as transfers made to the UMWA health 
care plans under section 402(i) of SMCRA, if we exceed the annual 
funding cap of $490 million for disbursement of Treasury funds.
    Two States and IMCC/NAAMLP responded to this invitation. IMCC/
NAAMLP asserted that such a provision was not necessary, but that we 
should adopt the language in section 402(i)(3)(B) of SMCRA verbatim if 
we chose to add one. The State commenters did not take a position on 
whether or not we should add such a provision, but they also suggested 
we use the exact wording of section 402(i)(3)(B) if we did.
    Although our current funding projections do not indicate that we 
will ever need to invoke this section, we have decided to add this 
section so that we can more completely address future funding 
scenarios. We tried to incorporate the language of section 
402(i)(3)(B), while still placing it in plain English. Thus, Sec.  
872.35(a) provides that for any FY when moneys distributed from 
Treasury under section 402(i), including prior balance replacement 
funds, certified in lieu funds, and transfers to the UWMA health care 
plans, total more than $490 million, we will adjust all of the 
disbursed amounts by the same percentage to reduce total payments to 
the level of the cap. For that FY, we would reduce distributions of 
prior balance replacement funds by that same percentage from the amount 
otherwise required under Sec.  872.30. Similarly, we would reduce 
distributions of certified in lieu funds by that same percentage from 
the amount otherwise required under Sec.  872.33. Section 872.35(b) 
incorporates the language of section 402(i)(3)(B)(ii), which states we 
will not include funds under section 402(h)(5)(A) as part of this 
calculation.
    IMCC/NAAMLP also suggested that if we add a section about the $490 
million cap it should say: ``This adjustment does not apply to the 
minimum program make up funds.'' Although we are not adding this 
language, we agree with this statement to an extent. The cap applies 
only to Treasury funds, but minimum

[[Page 67602]]

program make up funds come from the Fund not Treasury. So minimum 
program funds distributed under Sec.  872.27 will not be reduced under 
this section.
    However, we must disagree with a similar comment made by one State 
that if we add this provision, we need to provide that every State and 
Indian tribe is guaranteed $3 million because that is the level of 
funding that States, OSM, Congress, and others recognized as being the 
minimum funding level to support a viable AML program. We appreciate 
this comment, but after review, we believe the regulations as written 
already provide that minimum program States will receive the full $3 
million, subject to applicable phase-ins, even if the $490 million cap 
is reached. The only type of Treasury funds provided to minimum program 
States is prior balance replacement funds during FY 2008 through 2014. 
If the cap were reached during that time, their prior balance 
replacement funding would be reduced by the same percentage as every 
other recipient of Treasury funds under section 402(i). However, under 
Sec.  872.27 we calculate minimum program make up funding by adding up 
the distributions of all other types of funds for that FY, including 
prior balance replacement funds, then adding the amount of minimum 
program make up funding needed to increase the total distribution to 
$3,000,000, subject to phase-ins. Thus, if the $490 million cap is 
exceeded and prior balance replacement funding is reduced, the Fund 
will effectively supplement any reduction of the prior balance 
replacement funds with increased minimum program make up funds, and the 
total funding for minimum program States will be unchanged.
Part 873--Future Reclamation Set-Aside Program
    We proposed to make changes to Sec. Sec.  873.11 and 873.12 
primarily to reflect the elimination of the authority for States and 
Indian tribes to set aside funds for future reclamation that was once 
contained in section 402(g)(6). The changes to Sec. Sec.  873.11 and 
873.12 reflect that change by restricting future set-aside actions to 
funding received prior to December 20, 2006, while preserving the 
requirements that existing funds contained in the set-aside account be 
used for their intended purpose. We received no comments on our 
proposed changes to this part, and are adopting them as proposed.
Part 874--General Reclamation Requirements
Definitions (Sec.  874.5)
    We proposed to add this section to Part 874 to include the 
definition of the term ``Reclamation plan or State reclamation plan'' 
as it is defined in Sec.  872.5. We received no comments on this 
section and adopt it as proposed.
Information Collection (Sec.  874.10)
    In this section, we discuss the Paperwork Reduction Act 
requirements and the information collection aspects of Part 874. We are 
updating this section and rewording it using plain English. We did not 
receive any comments on this section and are adopting the section as 
proposed.
Applicability (Sec.  874.11)
    As explained in the preamble to the proposed rule, we proposed to 
revise this section to clarify how the provisions of Part 874 apply to 
the types of funding made available under the 2006 amendments and to 
reword it using plain English. We received no comments on this section, 
but for reasons explained in connection to comments received on Part 
875, we have made some changes to this section for consistency. Other 
than minor editorial changes, the significant revision to the final 
rule merges proposed paragraphs (c) and (d) into a new paragraph (c) 
that requires certified States and Indian tribes to comply with Parts 
874 and 875 to maintain their certification status under section 411(a) 
of SMCRA, regardless of the funding they use to accomplish the 
reclamation.
Eligible Coal Lands and Water (Sec.  874.12)
    As explained in the preamble to the proposed rule, we are revising 
existing paragraphs (c), (e), and (f) of Sec.  874.12 to reflect our 
changes to the funding applicability in Sec.  874.11, to correct minor 
errors in the existing regulations, and to reword these paragraphs 
using plain English. We have not extended the eligibility criterion in 
paragraph (d) to certified States and Indian tribes because the AML 
inventory does not show that any sites would be eligible under this 
section in certified States and Indian tribes and because certified 
States and Indian tribes would not need any special authority due to 
their generally unrestricted authority to expend Title IV funds as 
described in Part 872. We received no comments on this section and 
adopt it as proposed.
Reclamation Objectives and Priorities (Sec.  874.13)
    We are changing Sec.  874.13 to reflect expenditure priorities 
outlined in section 403(a) of SMCRA, as revised by the 2006 amendments, 
and to clarify how reclamation programs should address Priority 3 
reclamation objectives. Paragraph (a) of Sec.  874.13 contains the most 
recent date for our ``Final Guidelines for Reclamation Programs and 
Projects'' published in 2001. 66 FR 31250, 31258. In addition, it 
contains the long-standing requirement in section 403(a) of SMCRA that 
expenditures must ``reflect the * * * priorities in the order stated.'' 
30 U.S.C. 1233(a).
    The remainder of Sec.  874.13(a) is generally the same as the text 
of sections 403(a)(1), (a)(2), and (a)(3) of SMCRA, as revised by the 
2006 amendments. However, we are adding the last sentence of Sec.  
874.13(a)(3) to clarify the term ``adjacent,'' which was added by the 
2006 amendments. More specifically, sections 403(a)(1)(B)(ii) and 
(a)(2)(B)(ii) of SMCRA allow for certain lands and waters that have 
been degraded by past coal mining practices to be restored as either a 
Priority 1 or Priority 2 expenditure if they are adjacent to a Priority 
1 or Priority 2 site. This new statutory provision also extends to 
certain degraded lands and waters adjacent to Priority 1 or 2 sites 
that have already been reclaimed under the approved reclamation plan. 
In effect, the 2006 amendments allow reclamation programs to offer 
amendments to the AML inventory, where applicable, that would 
reclassify certain current Priority 3 lands and waters as Priority 1 or 
Priority 2 expenditures.
    We are defining the term ``adjacent'' as Priority 3 eligible lands 
and waters that are ``geographically contiguous.'' Land and water 
resources that are spatially connected to a Priority 1 or Priority 2 
site, even those sites previously reclaimed, may now be recorded in the 
AML inventory as Priority 1 or Priority 2 unfunded costs, funded costs, 
or completed expenditures, as applicable.
    Paragraph (b) of Sec.  874.13 incorporates the 2006 amendments' 
complete revision of section 402(g)(7) of SMCRA. Previously, section 
402(g)(7) contained the requirements for developing hydrologic unit 
plans consistent with the AMD set-aside trust provision of section 
402(g)(6). The amended language of section 402(g)(7) now addresses how 
Priority 3 work can be undertaken; it states:

    In complying with the priorities described in section 403(a), 
any State or Indian tribe

[[Page 67603]]

may use amounts available in grants made annually to the State or 
tribe under paragraphs (1) and (5) for the reclamation of eligible 
land and water described in section 403(a)(3) before the completion 
of reclamation projects under paragraphs (1) and (2) of section 
403(a) only if the expenditure of funds for the reclamation is done 
in conjunction with the expenditure before, on, or after the date of 
enactment of the Surface Mining Control and Reclamation Act 
Amendments of 2006 of funds for reclamation projects under 
paragraphs (1) and (2) of section 403(a).

30 U.S.C. 1232(g)(7).
    In effect, section 402(g)(7) prevents uncertified States or Indian 
tribes from using State or Tribal share funds, as discussed in section 
402(g)(1) of SMCRA, and Sec. Sec.  872.14 and 872.17, and historic coal 
funds, as discussed in section 402(g)(5) of SMCRA and Sec.  872.21, for 
the reclamation of Priority 3 lands and water before they have 
completed their Priority 1 and 2 reclamation projects. However, section 
402(g)(7) does provide an exception that allows State or Tribal share 
funds and historic coal funds to be used for Priority 3 lands and 
waters, but only if that reclamation is done in conjunction with the 
expenditure of funds before, on, or after December 20, 2006, for 
Priority 1 and Priority 2 reclamation.
    To be consistent with this section, we are applying section 
402(g)(7) of SMCRA in a manner that is slightly more restrictive than 
the way we have promoted Priority 3 land and water reclamation in the 
past. Our longstanding approach, based on the first sentence of section 
403(a), has been that reclamation programs can reclaim Priority 3 land 
and water projects before the completion of all Priority 1 and 2 
projects as long as the overall reclamation program generally reflects 
the priorities in section 403(a) of SMCRA. The Department of the 
Interior initially expressed this approach in a May 18, 1982, 
memorandum by the Office of the Solicitor that recognized the 
discretion program officials have in selecting projects based upon a 
wide range of qualitative and quantitative data. This memorandum also 
concluded that the States and the Secretary have ample authority and 
rationale to select projects based upon such factors as are outlined in 
Sec.  874.13 and to fund lower priority projects together with higher 
priority projects as long as the total program reflects the achievement 
of objectives in section 403(a) of SMCRA.
    Through the life of the AML program, we published and maintained an 
advisory document titled ``Final Guidelines for Reclamation Programs 
and Projects'' (see latest version 66 FR 31250, June 11, 2001). These 
guidelines direct that, generally, reclamation of lower priority 
projects should not begin until all known higher priority projects have 
been completed, are in the process of being reclaimed, or have been 
approved for funding by the Secretary. See 66 FR 31252 (``Reclamation 
Site Ranking''). Our guidance further explains that lower priority 
projects or contiguous work may be undertaken in conjunction with high 
priority projects, but it sets forth factors to weigh to determine if 
the lower priority projects should be considered over higher priority 
projects. Examples of these factors include: When a landowner consents 
to participate in post reclamation maintenance activities of the area; 
when the reclamation provides many benefits to the landowner and those 
benefits have a greater cumulative value than other projects; and when 
reclamation provides offsite public benefits. Id. We also promote the 
reclamation of lower priority lands and waters when it is cost 
effective. See 66 FR 31253 (``Reclamation Extent''). To date, we have 
encouraged stand-alone Priority 3 projects and Priority 3 work that is 
contiguous with higher priority work based upon the efficiencies gained 
for the program and the environmental and community benefits.
    To be consistent with the revised language of section 402(g)(7) of 
SMCRA, we are replacing the existing language under Sec.  874.13(b) 
with language that specifies that this provision applies to uncertified 
States and Indian tribes who seek to use State or Tribal share funds 
and historic coal funds for Priority 3 reclamation. However, based on 
section 402(g)(7) and our past experience, this provision also requires 
uncertified States and Indian tribes to meet one of two conditions 
before being allowed to reclaim Priority 3 sites.
    Under the first condition, described in Sec.  874.13(b)(1), 
uncertified States and Indian tribes may only complete stand-alone 
Priority 3 projects after the State or Indian tribe has completed all 
Priority 1 and 2 reclamation projects in its jurisdiction. We believe 
this provision to be slightly more restrictive than the existing 
regulations because it prohibits stand-alone Priority 3 projects until 
all known Priority 1 or 2 sites have been completed, unless the 
uncertified State or Indian tribe meets the conditions detailed in 
Sec.  874.13(b)(2).
    Section 874.13(b)(2) allows uncertified States and Indian tribes to 
reclaim Priority 3 lands and waters before all higher priority sites 
are reclaimed, as long as they are being done ``in conjunction with'' a 
Priority 1 or Priority 2 project. Specifically, Sec.  874.13(b)(2) 
allows you to expend State or Tribal share and historic coal funds for 
the reclamation of Priority 3 lands and water that are related to past, 
present, or future projects, but only if you determine that such 
expenditures would or would have (i) facilitate(d) the Priority 1 or 
Priority 2 reclamation or, (ii) provide(d) reasonable savings at the 
time of the project towards the objective of reclaiming all Priority 3 
land and water problems. We are adding these two conditions because 
they will promote Priority 3 reclamation while emphasizing the elevated 
Priority 1 and 2 reclamation objectives contained in the 2006 
amendments. Under our revision, program officials could not only use 
State and Tribal share and historic coal funds for Priority 3 sites 
that would aid in the reclamation of higher priority sites or would be 
cost efficient to do so, but they could also revisit each completed 
project and determine if there are Priority 3 lands and waters related 
to those past projects that still need to be reclaimed. These Priority 
3 sites could then be reclaimed before the all Priority 1 and 2 
problems have been addressed.
    While we anticipate that most Priority 3 lands that fall within 
Sec.  874.13(b)(2)(i) would have been addressed during the initial 
project, there may be areas where, at the time, the efficiencies of 
combined contracting or other cost saving factors would have satisfied 
Sec.  874.13(b)(2)(ii). Reasons why such lands may not have been 
incorporated in the initial project could include past landowner 
restrictions, shortage of available grant funding, staffing and 
administrative considerations, or the potential for remining.
    We believe that the language of Sec.  874.13(b)(2) does not 
specifically preclude allowing Priority 3 work as a separate phase of 
construction within a Priority 1 or 2 project. However, Priority 3 work 
that is undertaken as a separate phase may not realize the 
administrative and contracting efficiencies of combined design and 
development, one-time mobilization and demobilization costs, or reduced 
unit costs that can be attributed to larger projects. These types of 
factors would be central to an analysis to determine whether there are 
reasonable savings under Sec.  874.13(b)(2)(ii).
    As described above, the 2006 amendments substantially elevated and 
redirected resources towards the uncertified programs with the most 
hazardous--Priority 1 and 2--coal sites. This was accomplished through 
the mandatory distributions of State or Tribal share funds and historic 
coal funds, the reallocation of the section 402(g)(1) funding away from 
certified

[[Page 67604]]

programs, and raising the minimum program make up funding level. 30 
U.S.C. 1231(f)(3)(B), 1232(g)(1)(A), 1232(g)(1)(B), 1232(g)(5), 
1232(g)(8)(A), and 1240a(h)(4). In addition, the 2006 amendments 
strengthened our responsibilities towards oversight of reclamation by 
obliging us to ensure that uncertified States and Indian tribes 
strictly comply with the priorities in section 403, by requiring us to 
review amendments to the AML inventory, by granting us the authority to 
unilaterally certify the completion of coal problems, and by 
restricting the use of prior balance replacement funds to address coal 
problems under section 403. 30 U.S.C. 1232(g)(2), 1233(c), 1240a(a)(A), 
and 1240a(h)(1)(D)(ii).
    Given these new funding directives and our enhanced oversight 
responsibilities, we believe that limiting the number and types of 
Priority 3 projects that could be addressed under the ``in conjunction 
with'' provision is consistent with the intent of SMCRA, as revised by 
the 2006 amendments, particularly section 402(g)(7). To ensure that 
high priority site reclamation is promoted while we observe our long-
term commitment to eliminate all coal problems, we are providing that 
you may use State or Tribal share funds or historic coal funds to 
reclaim Priority 3 sites even if you have not completed all Priority 1 
and Priority 2 problems if the reclamation of those sites facilitates 
the reclamation of Priority 1 and 2 problems or if you determine that 
there would be reasonable savings towards the objective of reclaiming 
all Priority 3 land and water problems.
    Generally, we expect reasonable savings to be composed of a number 
of reduced expenditures in project development and construction, such 
as reduced design costs, reduced mobilization and demobilization 
charges, reduced unit prices, and administrative efficiencies, and that 
as the Priority 3 work increases in size or cost, the amount of 
potential savings diminishes. As part of our oversight and AML 
inventory management responsibilities, we will review individual State 
or Indian tribe determinations under Sec.  874.13(b)(2)(ii) that the 
reclamation of specific Priority 3 lands and waters are appropriate 
because they facilitate reclamation or provide reasonable savings 
towards the long-term objective of reclaiming all coal problems.
    We do not believe that our efforts to define the use of ``in 
conjunction with'' will significantly reduce the types of Priority 3 
projects that are reclaimed. While our Sec.  874.13(b)(2) is intended 
to address Priority 3 reclamation undertaken as part of the process of 
developing and undertaking traditional reclamation projects under 
403(a) of SMCRA, there are a number of activities that are performed by 
reclamation programs to address eligible lands and waters that are not 
subject to this provision, including water supply restoration, the 30 
percent set-aside for AMD projects, the use of prior balance 
replacement funds, projects authorized under the AML Enhancement Rule, 
Appalachian Clean Streams projects, Watershed Cooperative Agreement 
projects, and any AML sites reclaimed under the remining incentives 
provided under section 415 of SMCRA, as revised by the 2006 amendments. 
These activities primarily address Priority 3 lands and waters but are 
not affected by the limitation contained in Sec.  874.13(b)(2) for a 
variety of reasons. Water supply restoration projects and the AMD 30% 
set-aside program are authorized by sections 403(b) and 402(g)(6)(A) of 
SMCRA, respectively. 30 U.S.C. 1233(b) and 1232(g)(6)(A). Prior balance 
replacement funds may be used for Priority 3 reclamation because they 
are specifically directed to be used for the purposes of section 403 of 
SMCRA, as provided in Sec.  872.31. Although funded from the Federal 
expense share of the Fund, Appalachian Clean Streams projects and 
Watershed Cooperative Agreement projects are authorized through 
specific Congressional appropriations. AML Enhancement Rule projects 
were established through a specific rulemaking process where the 
Secretary used the powers and authority under section 413(a) of SMCRA 
to provide States and Indian tribes with the authority to reduce 
project costs to the maximum extent practicable on abandoned mine sites 
which have deposits of coal or coal refuse remaining. 30 U.S.C. 
1242(a); see also 64 FR 7470. Qualifying sites are specifically 
provided for as an exception to SMCRA under section 528. 30 U.S.C. 
1278. Neither section 413(a) nor section 528 was revised by the 2006 
amendments, and we do not believe anything in the 2006 amendments would 
affect the existing AML Enhancement Rule. Finally, many of the AML 
sites that may be reclaimed pursuant to the remining incentives 
contained in the 2006 amendments would be Priority 3 sites. These 
remining incentives are specifically authorized by section 415 of 
SMCRA, as amended. In conclusion, while our requirements at Sec.  
874.13(b)(2) will prevent the reclamation of some stand-alone Priority 
3 sites previously undertaken as part of the traditional reclamation 
program, the programs discussed above still offer many Priority 3 land 
and water reclamation opportunities.
Responses to Comments
    We received a range of comments disagreeing and agreeing with 
various portions of our proposed revisions to Sec.  874.13. Some 
comments regarding this section were very general, while some suggested 
specific revisions. We begin with a discussion of the general comments. 
Some commenters did not agree that the new statutory provisions 
restricted Priority 3 land and water reclamation. These commenters 
viewed the proposed revisions to Sec.  874.13 as unwarranted and 
unnecessary restrictions on the discretion of the State to decide how 
Priority 3 lands should be addressed prior to the completion of all 
health and safety problems within their borders. In contrast, two State 
commenters recognized that the new statutory provisions emphasized the 
reclamation Priority 1 and Priority 2 AML coal problems first and 
foremost, but they urged us to be very cautious in defining terms in 
the new regulations. They supported restraint on both the types and 
extent of land and water reclamation problems that might qualify for 
reclamation as a Priority 1 or 2 expenditure so as to not reclaim an 
inappropriate amount of Priority 3 AML problems.
    IMCC/NAAMLP stated that they disagreed with our description in the 
preamble to the proposed rule that the 2006 amendments substantially 
elevated and redirected resources towards the reclamation of hazardous 
coal sites. They assert that Congress did not intend to upset the 
existing programmatic design; a design they characterize as allowing 
discretion and flexibility for the States and Indian tribes to 
undertake stand-alone Priority 3 projects along with other Priority 1 
and/or 2 projects. As support, the commenters reviewed the AML 
inventory and determined that Priority 3 projects are only 15 percent 
of total projects being reclaimed by the States and Indian tribes; 
thus, their reclamation work already reflects the priorities in section 
403(a).
    Moreover, IMCC/NAAMLP contended that the proposed rule would place 
an unreasonable burden on the States and Indian tribes and would 
further indicate that we are unwilling to work with the States and 
Indian tribes to accomplish as much Priority 3 work as is appropriate 
and feasible under SMCRA. They questioned this perceived approach 
because ``lower priority, environmental restoration work has paid some 
of the largest dividends

[[Page 67605]]

under the AML program and received some of the greatest accolades from 
our citizens.'' These commenters pointed to the proposed language of 
Sec.  874.13 as another example of OSM taking a heavy-handed approach 
that further erodes the heretofore cooperative relationship between OSM 
and the States and Indian tribes in reclaiming AML problems. Although 
IMCC/NAAMLP recognizes that ``OSM has attempted to pave the way for a 
variety of priority 3 projects to continue, the restrictions and 
limitations that are contained in [this regulation] will only serve to 
stifle the flexibility that has been the hallmark of this program since 
1982.''
    Four State commenters repeated the sentiments expressed by IMCC/
NAAMLP. For instance, one State summarized its position that ``it 
should be the State/Tribe that determines if they have met the 
requirements and if the Priority 3 features meet eligibility 
requirements.'' All State commenters and three environmental groups 
specifically advocated flexibility in State decisions.
    After carefully considering the comments by IMCC/NAAMLP, States, 
and environmental groups regarding these provisions, we have concluded 
that the 2006 amendments did change the programmatic focus of the AML 
program by changing how Priority 3 lands and waters can be addressed 
prior to a State's completion of all Priority 1 or 2 health and safety 
problems within its borders. In the proposed rule, we observed that the 
2006 amendments substantially elevated and redirected resources towards 
the uncertified State and Tribal reclamation programs with the most 
hazardous--Priority 1 and 2--coal sites. We base this conclusion on the 
mandatory distributions of funds, the reallocation of the section 
402(g)(1) funding away from certified programs, and raising the minimum 
program make up funding level, which are all contained in the 2006 
amendments. 30 U.S.C. 1231(f)(3)(B), 1232(g)(1)(A), 1232(g)(1)(B), 
1232(g)(5), 1232(g)(7), 1232(g)(8)(A), and 1240a(h)(4).
    In addition, although we recognize that some commenters disagree, 
the 2006 amendments clearly imposed additional oversight 
responsibilities on us by obliging us to ensure that uncertified States 
and Indian tribes strictly comply with the priorities in section 403 of 
SMCRA, by requiring us to review amendments to the AML inventory, by 
granting us the authority to unilaterally certify the completion of 
coal problems, and by directing the use of prior balance replacement 
funds to reclaiming coal problems under section 403. 30 U.S.C. 
1232(g)(2), 1233(c), 1240a(a)(A), and 1240a(h)(1)(D)(ii). Although we 
do not intend for this rule to weaken our cooperation with our State 
co-regulators, it is clear that the 2006 amendments intentionally 
altered the design of the program to accelerate the reclamation of 
Priority 1 and 2 problems and to restrict the amount of Priority 3 
reclamation prior to the completion of projects addressing health and 
safety problems. Thus, we are required to take a more active role in 
monitoring progress towards these goals.
    Although IMCC/NAAMLP acknowledged that they did not dispute our 
ability and authority ``to review individual State or Tribal 
determinations on these matters as part of our oversight and inventory 
management responsibilities,'' they expressed major concerns that this 
regulatory section and all of these rules will create an adversarial 
relationship between us and our co-regulators. After having closely 
reviewed these concerns and SMCRA, as revised by the 2006 amendments, 
we do not believe the regulations will have such an effect.
    Our commitment to cooperatively work with our State and Indian 
tribal partners on the reclamation of such problems, including Priority 
3 lands and waters to the extent provided for under SMCRA, remains as 
strong as it has been in the past. We view our working relationship 
with the individual State and Indian tribal programs as a mutually 
cooperative partnership. As the commenters point out, for close to 30 
years, individual States and Indian tribes have implemented effective 
AML programs, assisted each other as partners, directly supported our 
training efforts, and worked with us to implement our oversight role. 
We anticipate that States and Indian tribes will quickly adjust to the 
new emphasis placed on completing Priority 1 and 2 problems and will 
incorporate Priority 3 lands and waters under section 402(g)(7) 
consistent with SMCRA.
    In addition to the general comments, IMCC/NAAMLP and several States 
disagreed with portions of the proposed revisions to Sec. Sec.  
874.13(a)(1), 874.13(a)(2), and 874.13(a)(3). To begin, many comments 
expressed concern about our use and definition of the term ``adjacent 
to'' to mean ``geographically contiguous.'' As mentioned above, in 
Sec.  874.13(a)(3) we provided that ``Priority 3 land and water 
resources that are geographically contiguous with existing or 
remediated Priority 1 or 2 problems will be considered adjacent under 
paragraphs (a)(1)(ii) or (a)(2)(ii) of this section.'' At that time, we 
requested input from commenters concerning the types and extent of land 
and water reclamation problems that could be elevated to Priority 1 or 
Priority 2 expenditures under the ``adjacent to'' provision. For 
example, we provided a list of questions to help frame comments, 
including whether we should adjust our definition of ``adjacent to'' to 
encompass hydrologic connections and/or disturbances by a single mining 
operation or company, whether large and expensive Priority 3 problems 
next to small and inexpensive Priority 1 or 2 problems would be 
appropriate to elevate to Priority 1 or 2 status, and whether water 
lines or AMD abatement activities specifically provided for under other 
sections of SMCRA (sections 403(b) and 402(g)(6), respectively) should 
be excluded from coverage.
    We received a range of answers on these questions and this 
provision as a whole. Generally, IMCC/NAAMLP and several States opposed 
any restrictions on the type or extent of land and water reclamation 
problems subject to the ``adjacent to'' provision of section 403(a)(1) 
and (a)(2). These commenters were against any limitations, monetary or 
otherwise, relative to adjacent lands and waters, and they oppose 
restrictions on the types of Priority 3 problems or costs that can 
qualify, including any restrictions on including AMD problems and water 
supply problems. These commenters generally promoted a rule that would 
make no limits on the ``adjacent to'' provision and would defer 
entirely to the discretion of the individual State or Indian tribe. 
IMCC/NAAMLP stated that the language of SMCRA did not support any 
restrictions on the types of land and water resources eligible for 
consideration under the ``adjacent to'' provision. Another State 
commented that the definition of ``adjacent to'' would be an undue 
limitation. Moreover, IMCC/NAAMLP and one State cautioned that we not 
create a situation where we effectively create ``high'' Priority 3 
projects and ``low'' Priority 3 projects.
    Specifically, we received many comments that suggested alternative 
definitions for ``adjacent to.'' IMCC/NAAMLP, two State commenters, and 
three environmental groups proposed that we allow for the watershed 
connection, and could do so by adding ``and/or hydrologically 
connected'' after ``geographically contiguous'' in Sec.  874.13(a)(3). 
IMCC/NAAMLP and one State also indicated that they would not object to 
the regulations further defining ``hydrologically connected'' to mean 
``all watershed areas bounded by a third order stream.'' They promoted 
this position as being consistent with the

[[Page 67606]]

Total Maximum Daily Load (TMDL) process and representing a ``compromise 
between no limitations on use and directly connected features.'' In 
addition, three environmental groups suggested we change Sec.  874.13 
to allow both geographically contiguous or hydrologically connected 
Priority 3 sites to be elevated, and that we should add the following 
sentence to the end of Sec.  874.13(a)(3): ``Priority 3 water resources 
will be considered hydrologically connected to the problem if the 
problem is the source of at least 50% of the acid mine drainage that 
the Priority 3 water resource discharges or receives.'' They point out 
that mining does not just affect the surface and often affects 
hydrology, which does not follow surface borders, but the 50 percent 
limitation will prevent Priority 3 sites whose connection to a Priority 
1 or 2 site is highly attenuated from being elevated in priority. What 
is more, an environmental group explained that the ``[d]efinition of 
the term `adjacent' should include all disturbances by a single mining 
operation. If there is a hydrologic connectivity with sites that might 
be distant, those should be included in the definition of `adjacent.' 
''
    On the other hand, one State supported our proposed definition 
limiting ``adjacent to'' to land and water resources that are 
geographically contiguous with existing or remediated Priority 1 or 2 
problems. This State requested that if we expanded the definition, then 
we should do so carefully ``in order to reduce the `opportunity' for 
abuse of reclaiming excessive (acres) amount of Priority 3 AML 
problems.'' Another State generally agreed with limiting ``adjacent 
to'' to mean ``geographically contiguous,'' and it further commented 
that it could see no reason to include water supply replacement 
problems as eligible under a definition of ``adjacent to'' because they 
currently are assigned no priority and up to 100% of the grant can be 
spent on them. Thus, it recommended we delete ``and water'' from the 
last sentence of the proposed Sec.  874.13(a)(3). This State further 
expressed concern for any definition of ``adjacent to'' that would 
allow adjacent Priority 3 problems to be used to elevate other Priority 
3 problems adjacent to them; in effect creating a domino effect where 
``adjacent to'' determinations would elevate the expenditure priority 
beyond the initial connection to the original health and safety 
problem. This State, however, suggested we change ``will'' to ``can'' 
in the last sentence of Sec.  872.13(a)(3). According to the commenter, 
this change would give the States flexibility to determine whether or 
not it wanted to have a Priority 3 project elevated in priority.
    We thank all commenters for their suggestions, but we have decided 
not to make any changes to the definition of the term ``adjacent to'' 
under Sec.  874.13(a)(3). As explained above, we have incorporated the 
language from sections 403(a)(1) and (a)(2) of SMCRA into Sec.  
874.13(a)(1) and (a)(2). We do not believe further regulatory guidance 
as to that language is needed at this time. As for Sec.  874.13(a)(3), 
we believe the plain meaning of ``adjacent to'' clearly limits the 
types of Priority 3 projects that can be elevated to those that are 
geographically contiguous or share a border with at least one Priority 
1 or 2 site. Even if it were not clear, there are many reasons why we 
would choose to define ``adjacent to'' to relate only to those land and 
water resources and the environment that are physically next to the 
Priority 1 or 2 site. We are not including within the definition of 
``adjacent to'' the possibility that a hydrologic connection alone 
could elevate the expenditure priority of land and water reclamation 
problems. In addition, we are not including in the definition the 
possibility that all AML problems within a specific watershed or all 
problems created by a single mining operation would automatically 
qualify for elevated expenditure priority. We have concluded that to 
provide such expansions to the definition of ``adjacent to'' would not 
be consistent with the intent of the 2006 amendments to substantially 
elevate and redirect resources towards the uncertified programs with 
the most hazardous--Priority 1 and 2--coal sites.
    We considered the comments received from IMCC/NAAMLP that advocated 
few restrictions on the ``adjacent to'' definition while also observing 
that, prior to the 2006 amendments, Priority 3 work only comprised 
about 15 percent of the completed reclamation. We have concluded that 
there is no need at this time to incorporate limitations on the types 
and costs of Priority 3 land and water reclamation that may be elevated 
to a Priority 1 or Priority 2 expenditure under revised Sec.  
874.13(a)(1) and (a)(2). Given the requirement in section 402(g)(2) 
that the Secretary must ensure strict compliance by the States and 
Indian tribes with the priorities described in section 403(a) until a 
certification is made under section 411(a), we will continue to perform 
our oversight duties and monitor the accomplishments of reclamation 
programs. If we determine that limitations are appropriate for Sec.  
874.13(a)(1) and (a)(2), we will develop proposed changes consistent 
with SMCRA. In summary, all types of land and water reclamation 
problems, including water supply projects and AMD projects (sections 
403(b) and 402(g)(6), respectively) may be elevated in expenditure 
priority under Sec.  874.13(a)(1) and (a)(2) as long as they are 
physically contiguous (meaning spatially connected) to a Priority 1 or 
2 health or safety problem.
    With regard to how many projects could be elevated under our 
interpretation of ``adjacent to,'' one State raised the possibility of 
the domino effect where a Priority 3 problem that is elevated to a 
Priority 1 or 2 expenditure could be used to elevate other Priority 3 
problems that are not ``adjacent to'' a Priority 1 or 2 health and 
safety problem. After considering the comment, we have concluded that 
the specific language contained in sections 403(a)(1)(B) and (a)(2)(B) 
does not allow adjacent Priority 3 problems to be used to elevate the 
expenditure priority of other adjacent Priority 3 problems that are 
beyond the physical connection to the original health and safety 
problem. The plain language of 403(a)(1)(B) and (a)(2)(B) requires that 
the Priority 3 land and water reclamation problems be adjacent to the 
Priority 1 or 2 health and safety site.
    Although we understand the commenter's concerns, we are also not 
adopting its suggestion that we change ``will'' to ``can.'' We have 
concluded that sections 403(a)(1) and (a)(2) of SMCRA unambiguously 
define the expenditure priorities for lands and waters, and Priority 1 
and 2 sites clearly include Priority 3 projects that are adjacent to a 
current or previously addressed health and safety problem. States and 
Tribes still have discretion to decide whether or not to address lands 
and waters that are adjacent to a health and safety problem. However, 
once they commit to address them, such lands and waters must be 
identified as Priority 1 or Priority 2 expenditures when reporting on 
program activities.
    Another group of comments on this section focused on Sec.  
874.13(b). The introductory text of Sec.  874.13(b) allows uncertified 
States and Indian tribes to use State or Tribal share funds and 
historic coal funds to reclaim Priority 3 lands and waters when one of 
two conditions apply. IMCC/NAAMLP and one State requested that we add 
references to Sec. Sec.  872.26 and 872.29 to this paragraph to allow 
uncertified States and Indian tribes to use minimum program make up 
funds and prior balance replacement funds under this

[[Page 67607]]

paragraph. In a similar manner, IMCC/NAAMLP and one State suggested we 
add a new paragraph (c) to state that prior balance replacement funds 
could be used to reclaim Priority 3 sites.
    The provision as proposed reflects our interpretation that the ``in 
conjunction with'' provision of section 402(g)(7) of SMCRA does not 
apply to prior balance replacement funds received under section 
411(h)(1) of SMCRA. As provided by section 411(h)(1), uncertified 
programs must use prior balance replacement funds for the ``purposes 
described in section 403.'' Section 403 of SMCRA includes the basic 
land and water reclamation priorities (section 403(a)), the 
construction of water supply projects (section 403(b)), and the 
maintenance of the AML inventory (section 403(c)). Because section 
402(g)(7) directs the expenditure of section 402(g)(1) and (g)(5) funds 
and not section 411(h)(1) funds, and because section 411(h)(1) states 
that the funds received under that section must be used for the 
``purposes described in section 403,'' we have concluded that Priority 
3 land and water reclamation may be addressed with section 411(h)(1) 
funds. Uncertified States and Indian tribes may use prior balance 
replacement funds to fund Priority 3 projects as long as the total 
program reflects the achievement of objectives in section 403(a) of 
SMCRA.
    One State also suggested we modify Sec.  874.13(b)(1) to state 
explicitly that States can only conduct stand-alone Priority 3 
reclamation after all Priority 1 and Priority 2 reclamation is 
complete. We are not making any changes in response to this comment. We 
have concluded that Sec.  874.13(b)(1) is clear that until you 
completed all of Priority 1 or 2 reclamation, you may only expend funds 
for Priority 3 reclamation if it is in conjunction with a Priority 1 or 
2 project.
    We received numerous comments on suggested changes to Sec.  
874.13(b)(2). As proposed this paragraph provides: ``The expenditure 
for Priority 3 reclamation is made in conjunction with the expenditure 
of funds for Priority 1 or Priority 2 reclamation projects, including 
Priority 1 or Priority 2 reclamation projects conducted before December 
20, 2006. Expenditures under this paragraph must either: (i) Facilitate 
the Priority 1 or Priority 2 reclamation; or (ii) Provide reasonable 
savings towards the objective of reclaiming all Priority 3 land and 
water problems within the jurisdiction of your State or Indian tribe.''
    IMCC/NAAMLP suggested that in the introductory text of Sec.  
874.13(b)(2), we substitute the words ``past, current or future'' to 
define the scope of Priority 3 projects that can be undertaken in 
conjunction with Priority 1 and 2 projects. We disagree with this 
comment and have not incorporated this change. The comment suggested 
that Sec.  874.13(b)(2), as it refers to Sec.  874.13(b)(2)(i) and 
(b)(2)(ii), concerns entire Priority 3 projects. Section 874.13(b)(2) 
implements the amendments to section 402(g)(7) of SMCRA, and to the 
extent that a State has not completed all of the Priority 1 or 2 sites 
within its jurisdiction, using the term ``Priority 3 projects'' would 
be incorrect.
    One State noted that the first sentence of Sec.  874.13(b)(2) 
appeared confusing and suggested that it be changed to read: ``The 
expenditure for Priority 3 reclamation is made in conjunction with the 
expenditure of funds for Priority 1 or Priority 2 reclamation projects 
including past, current, and future Priority 1 or Priority 2 
reclamation projects.'' We agree with this comment and are making the 
suggested change.
    IMCC/NAAMLP also suggested that we remove the requirements of Sec.  
874.13(b)(2)(i) and (b)(2)(ii) and adopt a provision that would allow 
Priority 3 in conjunction with higher priority work as long as the 
``overall reclamation program generally reflects the priorities in 
section 403(a) of SMCRA.'' The commenter agreed with the May 18, 1982, 
memorandum by the Solicitor's Office that we described in the preamble 
to the proposed rule. 73 FR 35230. Upon review of this comment and the 
memorandum, we have determined that the 2006 amendments no longer 
support a strong adherence to that memorandum. The memorandum addressed 
Priority 3 reclamation conducted with those types of funds prior to the 
2006 Amendments. Our deference in this rulemaking to section 402(g)(7) 
of SMCRA which prohibits certain types of Priority 3 reclamation before 
the completion of all high priority problems recognizes these 
limitations and has nothing to do with how States may or may not have 
exercised discretion prior to the 2006 amendments to SMCRA.
    Two States did not express specific concerns about the proposed 
language but did urge us to keep the final rules general in nature. One 
State commented that each site may have its own unique situation and 
the rules should allow the State programs the greatest flexibility in 
resolving the concerns at each site. We are not making any changes in 
response to these comments. We have revised existing rules consistent 
with the 2006 amendments while maintaining flexibility for AML 
reclamation programs.
    IMCC/NAAMLP and two States submitted comments expressing concern 
that we are significantly limiting the types of Priority 3 projects 
that may be reclaimed by imposing requirements that Priority 3 projects 
facilitate higher priority projects or result in reasonable savings at 
the time of the project towards the objective of reclaiming all 
Priority 3 land and water problems. One State, however, agreed with our 
statement in the preamble to the proposed rule and that we reiterate 
here. We appreciate this State's support and reiterate that we do not 
believe that our efforts to define ``in conjunction with'' will 
significantly reduce the types of Priority 3 projects that are 
reclaimed.
    In response to our request for comment, one State noted that 
Priority 3 work requested by a property owner as a condition of 
agreeing to provide entry to address health or safety problems should 
not fall within the scope of Sec.  874.13(b)(2)(i) which allows 
expenditures that facilitate the reclamation of Priority 1 or 2 
problems. We agree with this commenter that the States and Indian 
tribes have the necessary authority under their reclamation plan and 
regulations to gain entry to sites with Priority 1 and 2 problems, and 
so we did not change the regulation.
    We received a comment from two States that related to the practice 
of phasing reclamation activities under the ``in conjunction with'' 
provision. One State urged flexibility in applying the ``conjunction'' 
standard, as it relates to phases of a project that may be subject to a 
three-year or longer grant. Another State commented that OSM should not 
include language that would specifically preclude allowing Priority 3 
work that is adjacent to or within a Priority 1 or 2 site as a separate 
phase of construction. This State cited that efficiency in reclamation 
should dictate phasing and not the priority designation.
    We find that the language of Sec.  874.13(b)(2) as proposed does 
not specifically preclude Priority 3 work as a separate phase of 
construction within a Priority 1 or 2 project. However, we also note 
that Priority 3 work that is undertaken as a separate phase may not 
realize the administrative and contracting efficiencies of combined 
design and development, one-time mobilization and demobilization costs, 
or reduced unit costs that can be attributed to larger projects and 
that these types of factors would be central to an analysis to 
determine whether there are reasonable savings under

[[Page 67608]]

Sec.  874.13(b)(2)(ii). States and Indian tribes have qualified staff 
with years of mine land reclamation and contracting experience. As one 
commenter noted ``States and Indian tribes have been reclaiming lands 
and water for over 30 years. This experience and efficient management 
of AML funds give the States and Indian tribes the ability to define 
'reasonable' without OSM providing the definition in its proposed 
rules.'' We agree with this commenter and are confident that each State 
and Indian tribe is capable of reviewing Priority 3 lands and waters to 
determine if delaying reclamation to a separate phase will prevent a 
determination under Sec.  874.13(b)(2) that the reclamation will 
provide reasonable savings towards the objective of reclaiming all 
Priority 3 land and water problems within their jurisdiction.
    One State suggested that the ``in conjunction with'' provision of 
Sec.  874.13 (b)(2) should be implemented in a manner that allows 
Priority 3 problems to be addressed ``as long as the Priority 3 that is 
being reclaimed is necessary to complete the reclamation of a Priority 
1 or Priority 2 project.'' This suggested requirement appears to be a 
more stringent requirement than we have proposed. Generally, we are 
endeavoring to give States and Indian tribes as much flexibility and 
discretion as we can within the bounds of SMCRA. We do not believe that 
section 402(g)(7) of SMCRA requires such as a restrictive approach, and 
we think that such an approach would fail to take advantage of the 
reclamation efficiencies that may be present on a site-by-site basis. 
Thus, we are not adopting this suggestion.
    IMCC/NAAMLP and one State requested that we confirm that projects 
conducted under the Appalachian Regional Reforestation Initiative 
(ARRI) and no-cost AML projects are not subject to the ``in conjunction 
with'' provision at Sec.  874.13(b)(2). ARRI is an OSM initiative that 
encourages the planting of trees on reclaimed AML sites. Approval by 
AML program managers to incorporate ARRI tree planting techniques into 
an AML project design in no way determines the applicability of Sec.  
874.13(b)(2). With regard to no-cost AML projects, as we stated in the 
preamble to the proposed rule, projects conducted under the AML 
enhancement rule of 1999 are not subject to the ``in conjunction with'' 
provision at Sec.  874.13(b)(2) because they are provided for under a 
separate rulemaking by the Secretary. To the extent that a no-cost 
contract is implemented under that rulemaking, we agree that it too is 
not subject to Sec.  874.13(b)(2). Thus, no changes are being made in 
accordance with these comments.
    Several comments were submitted that relate to the interplay 
between the ``adjacent to'' standard in Sec.  874.13(a)(3) and the ``in 
conjunction'' language of Sec.  874.13(b)(2). One concern raised by 
numerous commenters, including IMCC/NAAMLP and several States, regards 
the potential unnecessary administrative burdens that they perceive 
that the regulations are placing on the States and Indian tribes. 
Specifically they were concerned that they will need to devote precious 
time and resources to demonstrate to us that their Priority 3 projects 
meet the requirements of this section. Moreover, IMCC/NAAMLP asserted 
that the requirements are too elusive and subjective, are difficult to 
define, and will result in significant disputes and conflicts between 
OSM and the States and Indian tribes. The commenters questioned the 
level of detail, proof, and justification we will require to obtain 
project approval and whether we would set a specific timeframe for the 
qualifying Priority 3 work to be completed. But one State commented 
that it did not want a formal definition of reasonable.
    We are not making changes to the rule as a result of the above 
comments on the level of detail, proof, and justification we will 
require to obtain project approval and whether there would be a 
specific timeframe for the qualifying Priority 3 work to be completed 
within. We originally proposed these two conditions because they will 
promote Priority 3 reclamation while emphasizing the elevated Priority 
1 and 2 reclamation objectives contained in the 2006 amendments. We 
continue to believe that these objectives are central to the 2006 
amendments. We do not agree that the requirements are too elusive and 
subjective, are difficult to define, or will result in significant 
disputes and conflicts, as suggested by IMCC/NAAMLP. Rather, we believe 
that experienced State and Indian tribal program officials will have 
little difficulty recognizing when Priority 3 reclamation facilitates 
higher priority work, and also in understanding the mechanics and costs 
of site reclamation to be able to conclude when reclamation of Priority 
3 lands and waters represents a reasonable savings through program 
efficiencies. In those cases where State or Indian tribal officials are 
uncertain, we remain available to assist in making the determination. 
In terms of the level of detail and justification needed to confirm 
that the provision is being implemented properly, each site will be 
different. Some sites will be located in a manner so favorable that 
assessments of potential savings on the mobilization/demobilization 
costs, reduced unit prices, or other such efficiencies will be 
straightforward and obvious. Some sites, however, may require more 
detailed assessments of potential savings. AML reclamation programs 
have been operating for close to 30 years. We remain confident that 
they possess the technical and administrative expertise to perform 
adequate assessments.
    IMCC/NAAMLP and two States commented that States and Tribes should 
have sole discretion to determine which type of Priority 3 designation 
is applicable in the event that a Priority 3 problem would qualify for 
funding as being both ``adjacent to'' and ``in conjunction with'' a 
high priority problem. IMCC/NAAMLP suggested a revision to the proposed 
regulations to support the requested discretion. One State went further 
by commenting that it should be the State or Indian tribe that 
determines if it has met the requirements of our definitions for the 
terms ``adjacent to'' and ``in conjunction with'' and that the burden 
of proof should be on us to prove that a Priority 3 feature does not 
meet the stated requirements. Another State proposed we add paragraph 
(b)(3) to specify States and Indian tribes ``will determine the 
eligible subparagraphs for eligibility and priority determination.''
    We agree with the premise of these comments. States and Indian 
tribes are responsible for determining whether they have met the 
requirements of our definitions for the terms ``adjacent to'' and ``in 
conjunction with,'' but we do not believe explicit language needs to be 
added to the rule. Determinations made under this section are 
consistent with essentially all of the other programmatic functions, 
such as the eligibility requirements in section 404 of SMCRA, that our 
State and Tribal co-regulators make routinely. We intend to provide 
assistance to the States and Indian tribes through program guidance, if 
needed, and will conduct oversight as necessary to ensure that the 
provisions are being implemented properly. To the extent that we become 
concerned with individual site or program-wide implementation by a 
State or Indian tribe, we will address the matter consistent with our 
oversight process. However, given the new funding directives of the 
2006 amendments, it is possible that our oversight process will have to 
be adjusted. As has been our practice in the past, the States and 
Indian tribes will be invited to participate in the process of refining 
the oversight process and the guidance that

[[Page 67609]]

helps define the State/Federal partnership in the reclamation program.
    In response to one statement that alluded to uncertainty as to what 
we will require to obtain project approval, we remind the commenter 
that the environmental clearance and the ATP process is governed by our 
directive GMT-10, FAM chapter 5-11. We do not believe that the 
reclamation of Priority 3 lands in conjunction with Priority 1 or 2 
problems will require more than minimal additional environmental 
clearance or inventory review time. In accordance with the simplified 
grants process implemented in the early 1990s, we rely on the oversight 
process for conducting in-depth reviews of project implementation and 
inventory management. Under that process, States can participate with 
us in studies and reviews that will help staff exchange information and 
ideas on how best to document program decisions related to the 
requirements of Sec.  874.13(b)(2)(i) and (b)(2)(ii).
    One State commented that the terms ``adjacent,'' ``geographically 
contiguous,'' and ``spatially connected'' appear ambiguous and 
requested further guidance from OSM in the final rule. The term 
``adjacent to'' is defined as being geographically contiguous. We 
further explained that such sites must be spatially connected. If 
needed, we will provide additional guidance as situations arise.
    One State commented that OSM Directive AML-1 should be used to make 
keyword-specific determinations of ``in conjunction with''. This 
comment is beyond the scope of this rulemaking, but we intend to 
consider it if and when we review the OSM Directive AML-1.
    Although beyond the scope of the rule, we intend to address how the 
AML inventory is to be revised to provide for the proper recording and 
reporting of lands and waters adjacent to Priority 1 or 2 health and 
safety problems. At that time we will consider the detailed comments 
that IMCC/NAAMLP and some States provided on this rule that relate to 
changes that could be made to the AML inventory.
    One State commented that the differences in how the State or Tribal 
share, historic coal, and prior balance replacement funds can be 
applied to Priority 3 expenditures raises the issue of how OSM intends 
to track Priority 3 reclamation relative to the type of fund expended. 
This commenter stated that tracking Priority 3 expenditures at a 
project-by-project level would create a substantial administrative 
burden on OSM and the States and Indian tribes. The commenter suggested 
that we revise FAM to require Priority 3 expenditures to be tracked on 
an overall grant basis. We are not making any changes in response to 
this comment. We agree that administrative effort will be expended to 
properly track expenditures from the various funding sources. However, 
State reclamation programs have performed similar tracking and 
management duties relative to administrative funding, minimum program 
funding, set-aside funding, water projects, and any special 
appropriations received in the past. We are confident that reclamation 
programs have or will have the accounting tools in place to accurately 
track expenditures and preserve funding flexibility. However, we will 
consider making this change to FAM in the future if it becomes 
appropriate.
    One commenter strongly encouraged us to allow modification to the 
reclamation processes and authorize expenses for Priority 1 and 2 sites 
to include water quality improvements as a main objective. They stated 
that Priority 1 and 2 reclamation conducted solely for the purpose of 
removing a safety hazard may be overlooking the potential water quality 
benefits that could be derived if alkaline addition occurred as part of 
the reclamation process. This commenter promoted the use of alkaline 
material at Priority 1 and 2 sites as a way to significantly reduce the 
amount of acid mine drainage being produced and then discharged at 
Priority 3 sites. We did not make any changes in response to this 
comment. First, we believe that the main objective of reclamation at 
every Priority 1 or 2 site is the elimination of all health and safety 
hazards. However, State reclamation programs should review all coal 
related problems at each Priority 1 or 2 site and address those lower 
priority problems, including water quality problems, which can be 
integrated into the reclamation plan consistent with Sec.  
874.13(b)(2). The use of alkaline material at Priority 1 or 2 sites to 
reduce mine drainage produced at nearby Priority 3 sites will have to 
be evaluated on a site-by-site basis to determine if such expenditures 
provide reasonable savings towards the objective of reclaiming all 
Priority 3 land and water problems within the jurisdiction of a State 
or Indian tribe.
Water Supply Restoration (Sec.  874.14)
    As explained in the preamble to the proposed rule, we are changing 
this section primarily to reflect the 2006 amendments' removal of 
section 403(a)(4). We received no comments on this section, and adopt 
it as proposed.
Contractor Eligibility (Sec.  874.16)
    As explained in the preamble to the proposed rule, we are revising 
Sec.  874.16 to reflect our changes to the funding applicability 
section in Sec.  874.11. We received no comments on this section, but 
as explained further in the preamble to Part 875, this section has been 
changed to apply to both uncertified States and Indian tribes receiving 
moneys under Title IV as well as certified States or Indian tribes 
conducting coal AML reclamation as required to maintain certification 
under this Part.
Part 875--Certification and Noncoal Reclamation
    As proposed, we are amending the title of this Part to more 
accurately describe the subject matter covered by these regulations. 
Our proposed revisions to this Part contained a new definition section 
at Sec.  875.5 and changes to existing Sec. Sec.  875.10 (Information 
collection), 875.11 (Applicability), 875.12 (Eligible lands and water 
prior to certification), 875.13 (Certification of completion of coal 
sites), 875.14 (Eligible lands and water subsequent to certification), 
875.16 Exclusion of certain noncoal reclamation sites), and 875.20 
(Contractor eligibility).
    In 1994, we explained:

    Congress has created a two-tiered process for addressing noncoal 
problems. Prior to completing all known coal problems, Congress has 
limited a State's/Indian tribe's ability to do noncoal work. This is 
shown in [existing] Sec.  875.12. A State/Indian tribe desiring to 
implement a greatly expanded noncoal reclamation program (see 
[existing] Sec. Sec.  875.14-19), or what could be called the second 
tier, would first have to certify that it had completed all known 
coal problems and the Director would have to concur in the finding 
(see [existing] Sec.  875.13).
    Section 409 of SMCRA, as enacted in 1977, authorized States and 
Indian tribes to undertake noncoal reclamation activities if: (a) 
The Governor of a State or the Chairman of an Indian tribe requested 
funding and the State had either completed all known coal 
reclamation objectives or (b) if coal problems remained, the project 
for which funding was requested was necessary to protect the public 
health and safety.

59 FR 28160.
    As with the proposed rule, the changes we are adopting in the final 
rule update certification procedures and how certified States and 
Indian tribes must address remaining or newly discovered coal problems. 
As indicated in the preamble to the proposed rule, we are also 
finalizing one major substantive change from the existing regulations, 
namely that this Part generally does not apply to certified States and 
Indian tribes that are expending prior balance

[[Page 67610]]

replacement funds or certified in lieu funds. 73 FR 35232-35233.
Responses to Comments
    In general comments, IMCC/NAAMLP and one State referred to our 
proposed changes to Part 875 as a major area of concern. First, they 
questioned whether our proposed revisions could be interpreted to 
require certified States and Indian tribes to complete all known 
noncoal reclamation projects using certified in lieu funds, or 
alternatively, to require a certified State or Indian tribe that 
decides to do noncoal reclamation to follow the priority list in the 
regulations. These two commenters disagreed with either potential 
interpretation. To further expand on these points, the two commenters 
noted a perceived conflict between Sec. Sec.  872.31 and 872.34, which 
generally allows certified States and Indian tribes to use prior 
balance replacement funds and certified in lieu funds with few, if any, 
restrictions and our proposed rule in Part 875, which did not propose 
any changes to Sec.  875.15 (Reclamation priorities for noncoal 
program). In other words, the commenters expressed concern that any 
application of Sec.  875.15 to certified States or Indian tribes would 
place ``unsupported and illegal restraints'' on their use of prior 
balance replacement funds and certified in lieu funds. The commenters 
recommended language be included in the regulations that confirmed that 
certified States and Indian tribes are not required to spend these 
types of funds according to Part 875, including according to the 
noncoal reclamation priorities in Sec.  875.15, and to clarify that a 
certified State can elect to do noncoal reclamation outside the 
framework of this Part.
    After a careful review of SMCRA and consideration of the comments, 
we determined to retain Part 875, with the revisions discussed below. 
We believe it is important to retain these regulatory provisions 
because they implement sections 411(b) through (g) of SMCRA and are 
still applicable to any State or Tribal share funds distributed to 
certified and uncertified States and Indian tribes under section 
402(g)(1) before October 1, 2007. We agree with commenters, however, 
that certified States and Indian tribes are not required to use prior 
balance replacement funds and certified in lieu funds received under 
sections 411(h)(1) and (h)(2) to conduct reclamation under this Part. 
As the commenters pointed out, any other interpretation of Part 875 
would be inconsistent with Sec. Sec.  872.31 and 872.34. However, using 
the interpretation of SMCRA contained in Sec. Sec.  872.31 and 872.34, 
we are no longer authorized to support a noncoal reclamation program 
under SMCRA that uses prior balance replacement funds or certified in 
lieu funds because sections 411(b) through (g), which authorized 
noncoal reclamation programs in certified States and Indian tribes, are 
expressly not applicable to any funds other than State or Tribal share 
funds. Thus, as discussed below, we are using Sec.  875.11(b) to 
clarify the applicability of this part as it applies to certified 
States and Indian tribes. Noncoal reclamation programs conducted by 
uncertified States and Indian tribes and funded by State or Tribal 
share and/or historic coal share funds are authorized by section 409 
and are still covered by this Part.
Definitions (Sec.  875.5)
    We are adding a new section to Part 875 to include the definition 
of the term ``Reclamation plan or State reclamation plan.'' We received 
no comments on this section and are adopting it as proposed.
Information Collection (Sec.  875.10)
    In this section, we discuss the Paperwork Reduction Act 
requirements and the information collection aspects of Part 875. We are 
updating this section and rewording it using plain English. We did not 
receive any comments on this section and are adopting the section as 
proposed.
Applicability (Sec.  875.11)
    Except in connection with the sources of funding that may be used 
for reclamation, our revisions to this section make minimal changes for 
uncertified States and Indian tribes with approved reclamation plans. 
Generally, our changes relate to the use of certified in lieu funds and 
prior balance replacement funds by certified State and Indian tribes 
because, as explained in Part 872 (Moneys Available to Eligible States 
and Indian Tribes) and Part 884 (State Reclamation Plans), certified 
States are not required to spend these funds according to Part 875.
    In paragraph (a) we are clarifying that when you, an uncertified 
State or Indian tribe, expend State share funds, Tribal share funds, 
and historic coal funds for noncoal reclamation, you are subject to the 
limitations on the use of those funds contained in this Part and in 
Sec. Sec.  872.16, 872.19, or 872.23. This portion of our rule does not 
change the existing requirements and is consistent with section 409 of 
SMCRA, which requires that moneys provided by sections 402(g)(1) and 
(g)(5) of SMCRA may be used to address high priority noncoal hazards at 
the request of the Governor or governing body of an Indian tribe. 30 
U.S.C. 1239(b) and (c). We did not include minimum program make up 
funds or prior balance replacement funds as a source of moneys that 
uncertified States may use for noncoal reclamation under this Part for 
the reasons discussed in the preamble to Sec. Sec.  872.28 and 872.31, 
respectively.
    In paragraph (b) of the proposed rule, we had proposed to limit the 
applicability of this part to certified States and Indian tribes. As 
proposed, certified States and Indian tribes could, but were not 
required to, expend prior balance replacement funds and certified in 
lieu funds to address eligible coal problems to maintain certification 
as required by Sec. Sec.  875.13 and 875.14 or to implement any other 
requirements of this Part as provided by the approved reclamation plan. 
After consideration of the comments and discussed in more detail below, 
we have decided to adopt an amended version of this paragraph to dispel 
commenters' concerns that the proposed language would require certified 
States and Indian tribes to spend prior balance replacement funds and 
certified in lieu funds under Part 875. A sentence has been added at 
the end of this section to make this point clear.
Responses to Comments
    As explained in the general comments to Part 875, we received 
comments from IMCC/NAAMLP and one State concerning a possible 
inconsistency between Sec. Sec.  872.31 and 872.34 and the 
applicability of Part 875 regarding restrictions on the use of prior 
balance replacement funds and certified in lieu funds by certified 
States and Indian tribes. In response, we have amended the regulatory 
language to clearly express in Sec.  875.11(b)(1) that certified States 
and Indian tribes are only required to comply with all of the 
provisions in Part 875 when they expend State or Tribal share funds 
distributed to them before October 1, 2007. In contrast, under revised 
Sec.  875.11(b)(2), they may choose to expend prior balance replacement 
funds and certified in lieu funds under this Part to address eligible 
coal problems to maintain certification as required by Sec. Sec.  
875.13 and 875.14. If they choose to address eligible coal problems, 
this reclamation would be governed by Part 874.
    In addition, IMCC/NAAMLP and one State responded to our request for 
alternative approaches to our proposal that certified States and Indian 
tribes be required to use prior balance replacement funds or certified 
in lieu funds to address eligible coal problems to maintain 
certification. Specifically,

[[Page 67611]]

they commented that a certified State or Indian tribe should be able to 
use either prior balance replacement funds or certified in lieu funds 
to maintain certification. However, to use prior balance replacement 
funds, a certified AML program would be required to gain the approval 
of the State legislature or Tribal governing body to do so. These 
commenters suggested that our proposed Sec.  875.11(b) should be 
rewritten to clarify prior balance replacement funds can be used for 
the purposes stated only if approved by the State legislature or Tribal 
governing body.
    After consideration of this comment, we have decided not to include 
any language in Sec.  875.11 that specifies that States and Indian 
tribes would have to gain approval from their State legislature or 
Tribal council before using prior balance replacement funds to maintain 
certification status. We believe that any such provision would simply 
repeat what is already contained in Sec.  872.31(a) of these 
regulations. In accordance with this comment and as discussed above, we 
also clarified that Sec.  875.11(b)(2) gives certified States and 
Indian tribes discretion on whether to spend any prior balance 
replacement funds and/or certified in lieu funds to maintain 
certification status as required by Sec. Sec.  875.13(a)(3) and 
875.14(b).
    IMCC/NAAMLP and one State also responded to our request for 
comments on a possible alternative approach under which our regulations 
would require certified States and Indian tribes to continue to conduct 
noncoal reclamation under this Part and to use certified in lieu funds 
only for reclamation of lands or water affected by the mining of 
minerals and materials other than coal. These commenters asserted that 
such an approach would be contrary to SMCRA because SMCRA ``mandates 
the use of the funds received by a certified State or Tribe.'' They 
followed that ``the decision to do noncoal reclamation should be up to 
the individual States and Tribes, as noncoal reclamation is an option 
in SMCRA and not a requirement.''
    These comments relate to our discussion of the comments received 
under Sec.  872.34 regarding the alternative approach that would 
require certified in lieu funds to be expended under this Part. As 
discussed in more detail in the preamble to that section, Sec.  872.34 
makes clear that we have decided not to place any restrictions on the 
use of certified in lieu funds. We do not believe that we need to 
repeat a similar provision here.
    Importantly, however, as a consequence of this decision, we must 
remove proposed Sec.  875.11(b)(2) from the rule altogether. This 
provision had been proposed to allow certified States and Indian tribes 
the choice to expend prior balance replacement funds or certified in 
lieu moneys to fund a noncoal reclamation program under SMCRA. See, 
e.g., 73 FR 35236. Under the existing rules, after a State or Indian 
tribe certified, the State or Indian tribe could ``implement a noncoal 
reclamation program pursuant to the provisions in Section 411 of 
SMCRA.'' 30 CFR 875.13(c) (2005). Sections 411(b) through 411(g) of 
SMCRA, which provide the authority for certified States' and Indian 
tribes' noncoal reclamation programs, by their own terms apply only to 
grants of State or Tribal share funds. See, e.g., 30 U.S.C. 1240a(b) 
(``If the Secretary has concurred in a State or tribal certification 
under subsection (a), for purposes of determining the eligibility of 
lands and waters for annual grants under section 402(g)(1) * * *.''). 
After October 1, 2007, certified States and Indian tribes no longer 
receive grants under section 402(g)(1). See 30 U.S.C. 1231(3)(B) 
(``Beginning on October 1, 2007, certified States shall be ineligible 
to receive amounts under section 402(g)(1).''). Because sections 411(b) 
through (g) allow only State or Tribal share funds to be expended for a 
noncoal reclamation program under SMCRA and because these funds are no 
longer distributed to certified States and Indian tribes, SMCRA no 
longer authorizes a noncoal reclamation program for certified States 
and Indian tribes. Thus, we cannot allow certified States and Indian 
tribes a choice to expend the funds they do get, namely prior balance 
replacement funds and certified in lieu funds, for a SMCRA sponsored 
noncoal reclamation program.
    This approach is consistent with our 1994 statement that ``[t]he 
Secretary has no independent authority to undertake noncoal reclamation 
activities, and only the States and Indian tribes, utilizing AML funds 
allocated pursuant to Section 402(g)(2) (as amended in 1990, this 
section is now Section 402(g)(1)), could carry out such tasks.'' 59 FR 
28160. The only difference is that now certified States and Indian 
tribes are prohibited from receiving moneys under section 402(g)(1) of 
SMCRA. We do recognize that certified States and Indian tribes may 
choose to use prior balance replacement funds, certified in lieu funds, 
or other funds to conduct their own program to reclaim noncoal hazards. 
Such a program, however, would not be conducted under SMCRA, and Part 
875 would not be applicable.
    Finally, one State commenter suggested a revision to Sec.  
875.11(a) to enable uncertified States and Indian tribes to use prior 
balance replacement funds under Sec.  872.31 to conduct reclamation 
projects on land or water affected by mining of minerals and materials 
other than coal. As described in our discussion of comments received in 
the preamble to Sec.  872.31, we have decided not to make the proposed 
revisions.
Eligible Lands and Water Prior to Certification (Sec.  875.12)
    We proposed to make minor revisions to Sec.  875.12. We received no 
comments on this section, and we adopt it as proposed.
Certification of Completion of Coal Sites (Sec.  875.13)
    We proposed to make some changes to paragraphs (a) and (a)(1) of 
this section and add a new paragraph (d). We did not receive any 
comments on these proposed changes and are adopting them as proposed. 
However, we also invited comments as to whether we should add language 
to the rule detailing how we would suspend or remove certification from 
a State or Indian tribe that is unable or unwilling to address coal 
problems once they are known to exist after certification.
Responses to Comments
    In their comments, IMCC/NAAMLP recognized our authority to suspend 
or remove certification from a State or Indian tribe under SMCRA as 
revised by the 2006 amendments, but they believe OSM should never use 
this authority. They suggest that the addition of such a provision 
would only continue to highlight what they perceive as a undeserved 
heavy handed approach that we are taking against our State and Tribal 
co-regulators in this rule.
    After consideration of this comment, we have decided not to add any 
additional provisions regarding a certification suspension or removal 
process. We view our authority to suspend or remove certification of a 
State or Indian tribe as an action of last resort, if necessary. We 
intend to focus our efforts to work cooperatively with certified States 
or Indian tribes to ensure coal problems that exist after certification 
are appropriately addressed.
    We have also decided to retain Sec.  875.13(c). As discussed in the 
responses to comments under Sec.  875.11, existing Sec.  875.13(c) 
allows certified States and Indian tribes to conduct reclamation 
programs under section 411 of SMCRA. Because certified States and

[[Page 67612]]

Indian tribes still have active grants that use State and Tribal share 
funds distributed before October 1, 2007, we believe it is important to 
recognize that those funds may be used for SMCRA's noncoal reclamation 
program authorized by sections 411(b) through (g). However, our 
decision to retain Sec.  875.13(c) does not authorize certified States 
and Indian tribes to expend prior balance replacement funds and 
certified in lieu funds under their SMCRA noncoal reclamation program. 
Thus, as explained below, any reclamation of noncoal hazards that uses 
prior balance replacement funds and certified in lieu funds will not 
benefit from the provisions in Part 875, including limited liability.
Eligible Lands and Water Subsequent to Certification (Sec.  875.14)
    We proposed revisions to Sec.  875.14(a) to clarify eligibility 
dates and reword it using plain English. We did not receive any 
comments on this section and adopt it as proposed. We note, however, 
that because this paragraph is related to a SMCRA noncoal reclamation 
program, certified States and Indian tribes cannot use it to expend 
prior balance replacement and certified in lieu funds. We only retained 
it because of the remaining active grants that certified States and 
Indian tribes have that contain State share or Tribal share funds 
distributed under section 402(g)(1) and that can be used for a noncoal 
reclamation program under sections 411(b) through (g) of SMCRA.
    We also proposed revisions to Sec.  875.14(b) to clarify the timing 
of reclamation efforts and the sources of funds that may be used to 
address coal problems after certification. Under existing Sec.  
875.14(b), you, the certified State or Indian tribe, were required to 
address coal problems no later than the next grant cycle, subject to 
the availability of funds distributed. Under our proposed rules we 
would require you to submit to us a plan that describes the approach 
and funding sources that you will use to address any coal problems in a 
timely manner. Our proposed rules acknowledged that certified in lieu 
or prior balance replacement funds would, most likely, be identified as 
a funding source in any plans submitted to us. In our proposed rule, we 
stated that we would review plans submitted to us to ensure they 
represent a timely approach to reclamation of existing coal problems. 
We also confirmed that we will monitor progress towards completion of 
any plans submitted. Finally, we proposed retaining the requirement 
that any coal reclamation projects, regardless of funding source, must 
conform to sections 401 through 410 of SMCRA and Part 874 of this 
chapter. 30 U.S.C. 1231-1240.
Responses to Comments
    IMCC/NAAMLP and one State responded to our request for comments on 
how we might review plans submitted under Sec.  875.14(b) by certified 
States and Indian tribes to address newly discovered coal sites. The 
commenters said that it is appropriate that a certified State or Indian 
tribe submit to OSM a notice that an eligible coal problem has been 
discovered and that the notice should contain an estimated timeframe 
for addressing the problem and the source of funding. They also 
commented that our review should be limited to the reasonableness of 
the State's or Indian tribe's approach to address the problem. IMCC/
NAAMLP said that to conduct an investigation of the coal lands, obtain 
clearances, and to physically mitigate the problem may take several 
years. Both commenters stated that the notice should not be required to 
be submitted as a formal reclamation plan amendment. They observed that 
the reclamation plan should already contain a commitment to address any 
newly discovered eligible coal problem as part of the certification 
process and, therefore, a revision to the reclamation plan is not 
required.
    We agree with the commenters that the discovery of a new coal 
problem should not require an amendment to the reclamation plan as long 
as the State or Indian tribe maintains certification. We also agree 
that each coal problem will present its own unique set of circumstances 
when developing and reviewing any plans. Because we received no adverse 
comments, we are adopting Sec.  875.14(b) generally as proposed. 
However, we are removing the ``at the direction of the State 
legislature or Tribal council'' because this language is redundant with 
the regulations contained in Sec.  872.31. Under this provision then, 
certified States and Indian tribes must comply with all of the 
applicable coal provisions contained in sections 401 through 410 of 
SMCRA and Part 874 of this chapter, the applicable regulations that 
address existing or newly discovered coal problems.
Reclamation Priorities for Noncoal Program (Sec.  875.15)
    In our proposed rule, we did not include any revisions to the 
language in Sec.  875.15 (Reclamation priorities for noncoal program) 
stating that we believed that fund applicability requirements in Part 
872 along with any reclamation plan revisions completed under Part 884 
will properly define how the section applies to a project conducted by 
a certified program under Part 875.
Responses to Comments
    IMCC/NAAMLP and one State commented on our original proposal that 
Sec.  875.15 would remain unchanged; thus requiring a certified State 
or Indian tribe to get a determination from the Governor or Tribal 
Chairman in order to do public facilities projects under Part 875. The 
commenters objected that our proposed Sec.  875.15 went on to list 
priorities that a certified State or Tribe must meet to gain approval 
from us. IMCC/NAAMLP and the State said that the clear wording in SMCRA 
contains no restrictions on certified States or Indian tribes other 
than responding to newly discovered coal sites and expending prior 
balance replacement funds as directed by the State or Tribal 
legislative body. The commenters concluded that requiring a certified 
State or Indian tribe to comply with all provisions of this section is 
contrary to SMCRA.
    We respect this comment but have decided not to make changes to 
Sec.  875.15. We believe it is necessary to retain this section because 
it is still applicable to State or Tribal share funds distributed 
before October 1, 2007, that certified States and Indian tribes are 
using to fund SMCRA noncoal reclamation programs. However, as 
previously discussed, Sec.  875.15 would not apply to any project, 
either related to noncoal reclamation or otherwise, that uses prior 
balance replacement funds or certified in lieu funds. Section 875.15 is 
authorized by sections 411(b) through (g), which does not apply to 
prior balance replacement funds or certified in lieu funds.
Exclusion of Certain Noncoal Reclamation Sites (Sec.  875.16)
    We proposed revisions to Sec.  875.16 to exclude you, an 
uncertified State or Indian tribe, from expending moneys from the Fund 
or prior balance replacement funds provided under Sec.  872.29 for the 
reclamation of sites and areas designated for remedial action pursuant 
to the Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA), 42 
U.S.C. 7901 et seq., or that have been listed for remedial action 
pursuant to the Comprehensive Environmental Response Compensation and 
Liability Act of 1980 (CERCLA), 42 U.S.C. 9601 et seq. We proposed this 
revision to maintain consistency with the existing prohibitions on the 
use of moneys from the Fund and the statutory

[[Page 67613]]

restrictions on the use of prior balance replacement funds as explained 
in the preamble to Sec.  872.29. In our proposed rule we also clarified 
that certified States and Indian tribes may use prior balance 
replacement funds or certified in lieu funds for these purposes 
provided they comply with the general statutory and regulatory 
restrictions of those funds. Finally, we invited you to comment on 
whether this paragraph is still needed.
Responses to Comments
    IMCC/NAAMLP and one State supported our proposal, which allows 
certified States and Indian tribes to use prior balance replacement 
funds or certified in lieu funds for reclamation projects identified 
under UMTRCA or the CERCLA provided they comply with the general 
statutory language and restrictions of those funds. IMCC/NAAMLP also 
noted that the Tribes handle these sites by working with the U.S. 
Department of Energy and the U.S. Environmental Protection Agency. 
IMCC/NAAMLP and one State commented that the proposed rules currently 
dictate that uncertified States may not use money from the Fund or from 
the prior balance replacement fund for those purposes and requested 
that the proposed rule be revised to expressly allow certified States 
and Indian tribes to use those funds for these purposes should they 
choose to do so.
    However, one Indian tribe commented that they did not support our 
proposal to allow the certified States and Indian tribes to use their 
prior balance replacement funds or certified in lieu funds for UMTRCA 
or CERCLA remedial action projects. The Tribe commented that these 
projects are very expensive environmental activities and that current 
legislation exists that clearly defines the regulatory authority for 
these two programs, which would be in direct conflict with SMCRA 
authority. Finally, the Tribe noted that Congress continues to fund the 
U.S. Department of Energy to carry out remedial action of the UMTRA 
sites and that the U.S. Environmental Protection Agency (EPA) takes the 
lead on CERCLA sites. They commented that the EPA should be responsible 
for all costs associated with CERCLA sites.
    We appreciate the comments from the IMCC/NAAMLP and one State 
supporting our proposal allowing certified States and Indian tribes to 
use prior balance replacement funds or certified in lieu funds for 
reclamation projects identified under the UMTRCA or CERCLA. Consistent 
with our discussions above, we have included paragraph (b) to state 
that certified States and Indian tribes are only restricted in using 
moneys from the Fund distributed under section 402(g)(1) for UMTRCA and 
CERCLA projects. This provision was necessary because certified States 
and Indian tribes may still have State or Tribal share moneys 
distributed before October 1, 2007. Because prior balance replacement 
funds and certified in lieu funds are not ``moneys distributed from the 
Fund,'' these moneys do not contain the same restriction. Moreover, we 
do not believe it is necessary to expressly state that certified States 
and Indian tribes may use their prior balance replacement funds or 
certified in lieu funds for UMTRCA or CERCLA remedial action projects 
because we believe that the authority for such expenditures is clear 
under Part 872. We also cannot accommodate the comment made by the 
Indian tribe because of the generally unrestrictive nature of our 
interpretation of the use of prior balance replacement funds or 
certified in lieu funds contained in Sec. Sec.  872.31 and 872.34. We 
do note, however, that a certified State or Indian tribe is not 
required to use these moneys for UMTRCA or CERCLA remedial action 
projects, and our regulations simply give certified States and Indian 
tribes discretion on the use of these funds.
    IMCC/NAAMLP and one State commented that in our proposed rule this 
subsection used the phrase ``of this chapter'' twice. One should be 
deleted. We agree with the comment and have revised the final language 
of Sec.  875.16.
Limited Liability (Sec.  875.19)
    In our proposed rule, we did not include any revisions to the 
language in Sec.  875.19 (Limited liability), but we did note that 
under the proposed rule, the only scenario in which a certified State 
or Indian tribe could avail itself of the limited liability provision 
of Sec.  875.19 would be if it decided to maintain a noncoal 
reclamation program under section 411 of SMCRA. 73 FR 35236.
Responses to Comments
    IMCC/NAAMLP and one State commented that ``certified AML programs 
should not be required to follow all of Part 875 to enjoy the 
protection of the limited liability provisions of Sec.  875.19 * * *.'' 
The commenters supported this position by noting that ``the limited 
liability provisions are tied to a State or Tribe following approval of 
the reclamation plan not, to the other provisions of Section 875.''
    We disagree with the implication of this comment and have not made 
any changes to this section. As explained elsewhere in this Part, a 
certified State or Indian tribe must comply with all provisions of Part 
875 in order to expend all State and Tribal share funds distributed to 
certified States and Indian tribes before October 1, 2007. Thus, they 
would receive the benefit of Sec.  875.19 in these circumstances. 
However, prior balance replacement funds and certified in lieu funds 
cannot be used to fund a noncoal reclamation program under SMCRA; 
therefore, the only provisions in Part 875 applicable to those funds 
relate to existing or newly discovered coal problems in certified 
States and Indian tribes. If a certified State or Indian tribe decides 
to use prior balance replacement funds and/or certified in lieu funds 
to reclaim existing or newly discovered coal problems, they must do so 
under sections 401 through 410 of SMCRA and Part 874 of this chapter. 
In that case, the limited liability provision of Sec.  874.15 would 
apply. As we interpret SMCRA in this regulation, the limited liability 
provision contained in Sec.  875.19 will not apply to the reclamation 
of noncoal hazards by certified States and Indian tribes regardless of 
whether they use prior balance replacement funds and/or certified in 
lieu funds as a funding source since such expenditures are not subject 
to this Part.
    We are not persuaded by the commenters' statement that the limited 
liability provisions of our regulations are tied to the approval of the 
reclamation plan and not Part 875. Section 405(l) provides:

    No State shall be liable under any provision of Federal law for 
any costs or damages as a result of action taken or omitted in the 
course of carrying out a State abandoned mine reclamation plan 
approved under this section. This subsection shall not preclude 
liability for cost or damages as a result of gross negligence or 
intentional misconduct by the State. For purposes of the preceding 
sentence, reckless, willful, or wanton misconduct shall constitute 
gross negligence.

    As the commenters mention, it is this statutory subsection that 
provides the basis for Sec. Sec.  874.15 and 875.19. However, the 
reclamation plans under section 405 only contain information regarding 
Title IV of SMCRA. Because prior balance replacement funds and 
certified in lieu funds cannot be used to fund a noncoal reclamation 
program under SMCRA, section 405(l) does not support an interpretation 
that limited liability protection is extended to noncoal reclamation 
programs that are not conducted under Title IV. Under the general 
framework of Sec.  875.11, however, this provision still provides 
limited liability protection to noncoal

[[Page 67614]]

reclamation performed by uncertified States or Indian tribes using 
State or Tribal share funds and/or historic coal funds, as well as 
certified States and Indian tribes that expend State or Tribal share 
moneys distributed before October 1, 2007.
Contractor Eligibility (Sec.  875.20)
    We proposed revisions to Sec.  875.20 to remove the phrase ``[t]o 
receive AML funds for noncoal reclamation'' to clarify that prior 
balance replacement funds received by uncertified States and Indian 
tribes are also subject to the restrictions of this section. We also 
proposed that this section applies to contracts by certified States and 
Indian tribes only when used to address coal problems as necessary to 
maintain certification and that this section is not intended to apply 
to use of section 411(h) funds by certified States and Indian Tribes 
for any purpose other than coal AML reclamation.
    We did not receive any comments on this proposed section. However, 
we made some changes to the proposed language consistent with the other 
changes to this Part. This section now clearly applies to uncertified 
State or Indian tribes conducting noncoal reclamation under this Part 
and certified States or Indian tribes undertaking noncoal reclamation 
using moneys distributed from the Fund under section 402(g)(1) of 
SMCRA. Section 874.16 will now apply to certified States and Indian 
tribes that elect to use prior balance replacement funds and certified 
in lieu funds to address existing or newly discovered coal problems.
Part 876--Acid Mine Drainage Treatment and Abatement Program
    Along with some minor changes, we proposed to make three major 
changes to this Part consistent with the 2006 amendments. First, to 
comply with amended section 402(g)(6)(A), we are raising the previous 
10% limitation on grants for AMD abatement and treatment set-asides to 
30% of annual State or Tribal share and historic coal funds. Second, we 
are specifying the requirements for an uncertified State or Indian 
tribe to establish an AMD abatement and treatment fund. Third, we are 
eliminating the requirements for a State or Indian tribe to prepare AMD 
abatement and treatment plans and for those plans to be approved by the 
Director of OSM.
    The decision by an uncertified State or Indian tribe to establish 
an AMD abatement and treatment fund, or to deposit moneys into an 
established fund, is optional. Section 403(a) of SMCRA established 
health and safety coal AML problems as the top two priorities for 
reclamation programs. SMCRA provides uncertified States and Indian 
tribes with a mechanism for abating AMD while working on high priority 
reclamation projects, if the water resources are adjacent to a high 
priority problem. 30 U.S.C. 1233(a)(1)(B)(ii) and (a)(2)(B)(ii).
Information Collection (Sec.  876.10)
    In this section, we discuss the Paperwork Reduction Act 
requirements and the information collection aspects of Part 876. We are 
updating this section and rewording it using plain English. We did not 
receive any comments on this section and are adopting the section as 
proposed.
Eligibility (Sec.  876.12)
    As explained in the preamble to the proposed rule, we are revising 
the first sentence of paragraph (a) to delete the specific information 
on the time period during which States and Indian tribes may expend 
funds under the 2006 amendments. This section does not need to explain 
these time limits in detail because this section makes these limits not 
applicable to the AMD set-aside program. We also are raising the 
existing 10% cap on deposits to AMD abatement and treatment funds to 
30%, as required by the 2006 amendments. Four environmental groups 
commented in support of the increase in the funding limit for AMD set-
asides from 10% to 30% because of the huge task of cleaning up acid 
mine drainage from abandoned coal mines.
    Existing paragraph (a)(1) is deleted because it referred to the 
future reclamation set-aside fund, which is addressed in Part 873. 
Existing Sec.  876.12(a)(2), which requires that States and Indian 
tribes create the AMD funds under their State or Tribal law, is now 
located in the last sentence of Sec.  876.13(a).
    In addition, we are revising this subsection to clarify that 
section 402(g)(6) of SMCRA establishes that the only moneys from the 
Fund that you may set aside for AMD treatment under this section are 
those that you receive as State or Tribal share funds under section 
402(g)(1) of SMCRA, Sec. Sec.  872.14 and 872.17, or as historic coal 
funds under section 402(g)(5) of SMCRA, Sec.  872.21. Therefore, the 
funds you receive as minimum program make up funds under Sec.  872.26 
or prior balance replacement funds under Sec.  872.29 may not be set 
aside under this Part. As indicated in our discussion of Sec.  872.29, 
we believe that section 411(h)(1) of SMCRA clearly requires uncertified 
States and Indian tribes to use prior balance replacement funds only 
for the purposes of section 403 of SMCRA. This subsection also provides 
that generally up to 10% of the funds we distributed to you before 
December 20, 2006, may be deposited into an AMD abatement and treatment 
fund.
    We are eliminating existing paragraph (b), because it required 
States and Indian tribes to spend their AMD abatement and treatment 
funds according to a plan approved by the Director. Under the 2006 
amendments, the requirements to prepare a plan, consult with the 
Natural Resources Conservation Service, or get the Director's approval 
were eliminated, so existing paragraph (b) is no longer needed.
    With minor modifications suggested by commenters, we are adding a 
new paragraph (b) that requires an uncertified State or Indian tribe to 
establish a special fund account providing for the earning of interest 
as required by section 402(g)(6)(A) of SMCRA. 30 U.S.C. 1232(g)(6)(A). 
This AMD fund must specify that moneys in it may only be used for the 
abatement of the causes and the treatment of the effects of AMD in a 
comprehensive manner. We are using the modifier ``comprehensive'' in 
the regulatory text of paragraph (b)(2) because we are deleting 
existing Sec.  876.13 where ``comprehensive abatement of the causes and 
treatment of the effects of acid mine drainage'' was previously 
contained. We received one comment in support of this deletion.
    Also, paragraph (b)(2) requires AMD abatement and treatment 
projects to occur within ``qualified hydrologic units.'' We are 
defining ``qualified hydrologic unit'' in paragraph (c). We are 
removing this definition from existing Sec.  870.5 of this chapter and 
adding it to this section for clarity and ease of use because the 
phrase is used only in this section. In addition, we are rewording the 
definition slightly in an attempt to make it easier to understand.
    We are also adding paragraph (d) providing that deposits into the 
State or Tribal AMD accounts are considered State or Indian tribal 
moneys. We receive two comments in support of this addition.
Responses to Comments
    IMCC/NAAMLP and one State commented that paragraph (b)(2) as 
proposed would require that moneys may only be used for the 
comprehensive abatement of the causes and treatment of the effects of 
AMD and that such a result is different from section 402(g)(6)(A) of 
SMCRA which requires amounts from the AMD accounts to be

[[Page 67615]]

``expended by the State for the abatement of the causes and the 
treatment of the effects of acid mine drainage in a comprehensive 
manner * * *.'' The comment suggests that we revise the regulation 
language to better match the statutory language. We agree with this 
comment and are changing the regulation accordingly.
    Three environmental groups also noted that OSM did not propose to 
define the terms ``hydrologic unit'' and ``comprehensive manner'' in 
section 402(g)(6) of SMCRA. They noted that by not proposing uniform 
national definitions, we have effectively left the interpretation of 
these terms to the discretion of each State or Indian tribe. The 
commenters believed this deference is appropriate but urged us to 
eliminate any doubt on the subject by stating explicitly that our 
regulations leave the definition of ``hydrologic unit'' and 
``comprehensive manner'' to the discretion of each State or Indian 
tribe authorized to administer an approved AML program. We agree that 
States and Indian tribes are in the best position to designate 
qualified hydrologic units within their borders. While Sec.  876.12(c) 
provides the overall basic structure for a hydrologic unit, States and 
Indian tribes have considerable flexibility in determining the 
location, shape, size, and components of such units. With regard to 
providing a definition of ``comprehensive manner'' we believe that it 
is best left to reclamation program officials to establish appropriate 
restoration goals and treatment thresholds for each hydrologic unit to 
ensure that funds are expended by the State for the abatement of the 
causes and the treatment of the effects of acid mine drainage in a 
comprehensive manner. Past guidance from us to State and Tribe 
reclamation programs emphasized that expenditures must address the 
eligible sites in a hydrologic unit as a whole rather than site-by-
site. We have concluded that, at this time, we do not need to revise 
the regulations to incorporate a definition of ``comprehensive 
manner.''
    IMCC/NAAMLP commented that the word separating the two conditions 
for defining a hydrologic unit in paragraphs (c)(1) and (c)(2) should 
be ``or'' instead of ``and''. They realized that our definition is 
consistent with the statutory language, but they note that actual 
practice over the past 25 years has been that hydrologic units must 
meet one or the other of these criteria, but not both. They commented 
that if the term is defined as we proposed, the scope of this important 
provision will be severely limited in a way that would render the 
purposes and intent of the program ineffective despite the increase in 
the funding limit to 30%.
    We agree with this commenter and others who have identified acid 
mine drainage as a major problem associated with many AML sites, and 
that there is a significant need to treat and abate it. However, the 
statutory requirement is clear. Section 402(g)(6)(B)(ii) says a 
qualified hydrologic unit must contain ``land and water that are (I) 
eligible pursuant to section 404 and include any of the priorities 
described in section 403(a); and (II) the subject of the expenditures 
by the State from the forfeiture of bonds required under section 509 or 
from other States sources to abate and treat acid mine drainage.'' Our 
proposed regulation incorporates this language and we are adopting it 
as proposed.
    IMCC/NAAMLP and one State responded under this section to our 
request for comments on whether AMD abatement and treatment should be 
included in the types of Priority 3 reclamation projects subject to the 
``adjacent to'' and ``in conjunction with'' provisions of Sec.  874.13.
    IMCC/NAAMLP asserted that all AMD abatement and treatment projects 
are considered at a minimum to be Priority 3 projects. As a result, the 
``adjacent to'' and ``in conjunction with'' provisions of Sec.  874.13 
are applicable. The State commenter urged that maximum flexibility be 
given to the States in determining whether AMD abatement and treatment 
can be accomplished under the adjacent to or in conjunction with 
provisions. We agree and are not making any revisions here that would 
restrict AMD as a problem type that can be accomplished under the 
``adjacent to'' or ``in conjunction with'' provisions.
Plan Content (Sec.  876.13)
    We are removing this section because the 2006 amendments eliminated 
the previous requirement for States and Indian tribes to prepare AMD 
abatement and treatment plans. We did not receive any comments on the 
proposed deletion of this section and are adopting it as proposed.
Plan Approval (Sec.  876.14)
    We are also removing this section because the 2006 amendments 
eliminated the previous requirement for the Secretary to approve AMD 
abatement and treatment plans that were prepared by the States and 
Indian tribes. We did not receive any comments on the proposed deletion 
of this section and are adopting it as proposed.
Part 879--Acquisition, Management, and Disposition of Lands and Water
Scope (Sec.  879.1)
    Our proposed rule did not include any changes to this section, but 
we received comments from IMCC/NAAMLP and one State that this Part 
should not apply to certified States and Indian tribes for anything 
other than land acquisition for coal reclamation work to maintain 
certification. We agree with the commenters, and we are now revising 
Sec.  879.1 to clarify the scope of this Part. However, after reviewing 
the comments, we have decided that this Part should not apply to 
certified States and Indian tribes because certified States and Indian 
tribes have such wide discretion over the projects and activities they 
choose to complete with the funds they receive under Title IV. In 
addition, we are also deleting the phrase ``and establishes 
requirements for the redeposit of proceeds from the use or sale of 
land.'' to reflect our revisions to Sec.  879.15, and we are rewording 
this section in plain English.
Definitions (Sec.  879.5)
    We are adding a new section to Part 879 to include the definition 
of the term ``Reclamation plan or State reclamation plan.'' We did not 
receive any comments on this section and are adopting it as proposed.
Information Collection (Sec.  879.10)
    We are removing Sec.  879.10 because the information collection 
requirements contained in Part 879 have been approved by OMB under the 
grants provisions for Part 886 and assigned clearance number 1029-0059. 
We did not receive any comments on this section and are adopting it as 
proposed.
Land Eligible for Acquisition (Sec.  879.11)
    In addition to minor plain English revisions, we proposed to modify 
this section to incorporate the appropriate references to prior balance 
replacement funds received by uncertified programs under section 
411(h)(1) of SMCRA and Sec.  872.29 and remove references that restrict 
land acquisition to moneys that States and Indian tribes receive from 
the Fund because the prior balance replacement funds for uncertified 
States are derived from the Treasury. We are adopting these changes as 
proposed because we believe that uncertified States and Indian tribes 
can use prior balance replacement funds to acquire land as part of 
their obligation under section 411(h)(1)(D)(ii) to use the moneys for 
the purposes described in section 403 of SMCRA.

[[Page 67616]]

    We also proposed to move the definition of ``permanent facility'' 
from Sec.  870.5 to Sec.  879.11(a)(2) and modify it. For the reasons 
stated in the preamble to the proposed rule, we are adopting this 
regulation as proposed.
Responses to Comments
    We received comments from IMCC/NAAMLP and one State that this 
section should not apply to certified States and Indian tribes 
acquiring lands that are not necessary for coal reclamation work. We 
agree with these comments, and, as explained in the preamble to Sec.  
879.1, we made changes to that section to make this Part not applicable 
to certified States and Indian tribes.
Disposition of Reclaimed Land (Sec.  879.15)
    For the reasons stated in the preamble to the proposed rule, we 
proposed to revise the language in existing Sec.  879.15 to remove the 
provision (h) and replace it with language that would implement the 
requirements of Sec. Sec.  885.19 and 886.20, which relate to the 
disposition of unused funds, particularly those that have been 
deobligated. After review of the comments received on this section, we 
are adopting it with the modifications described below.
Responses to Comments
    We received comments from IMCC/NAAMLP and one State that moneys 
gained from the sale of property acquired for any reason should be 
placed in the State's or Indian tribe's own reclamation fund account 
rather than returned to the Federal government because paying the funds 
to the Federal government then awarding them back to the State is 
unnecessary bureaucratic paper shuffling. We consider funds received 
from disposal of acquired land to be one of many possible sources of 
unused funds in grants, so we are adopting the proposed revisions that 
require any proceeds received by uncertified States and Indian tribes 
under this section to be treated as unused funds under Sec.  886.20. 
However, we deleted the sentence in the proposed rule text that 
required all moneys received from disposal of acquired land to be 
returned to us because appropriate handling of unused grant funds may 
vary depending on the particular circumstances. We address the general 
question of whether States and Indian tribes must return unexpended 
grant funds in our discussion of comments to Sec.  886.20. We also 
deleted the reference in the proposed rule to Sec.  885.19, about 
unused funds in grants to certified States and Indian tribes, because 
this Part no longer applies to certified States and Indian tribes.
Part 880--Mine Fire Control
Definitions (Sec.  880.5)
    We are adding a new section to Part 880 to include the definition 
of the term ``Reclamation plan or State reclamation plan.'' We did not 
receive any comments on this section and are adopting it as proposed.
Part 882--Reclamation on Private Land
Information Collection (Sec.  882.10)
    In this section, we discuss the Paperwork Reduction Act 
requirements and the information collection aspects of Part 882. We are 
updating this section and rewording it using plain English. We did not 
receive any comments on this section and are adopting the section as 
proposed.
Liens (Sec.  882.13)
    Consistent with the 2006 amendments' revision of section 408(a) of 
SMCRA, in paragraph (a)(1) we are removing the authority for liens to 
be placed against property for the sole reason that the owners 
purchased the property after May 2, 1977. 30 U.S.C. 1238(a). We are 
also replacing the word ``shall'' with ``must'' in accordance with 
plain English. We received one comment from an environmental group in 
support of our changes and are adopting the section as proposed.
Part 884--State Reclamation Plans
    As further explained in the preamble to the proposed rule, the only 
proposed changes to this Part were the addition of a definitions 
section and revisions to Sec. Sec.  884.11 and 884.17. Consistent with 
section 405(h) of SMCRA, our proposed revisions to this Part 884 
clarified that the requirement to maintain an approved reclamation plan 
continues to apply to all States and Indian tribes, regardless of 
certification status under section 411(a) of SMCRA. However, we 
specifically requested comments on how we should implement these 
provisions as they relate to prior balance replacement funds and 
certified in lieu funds. After review of the comments, we have not made 
any further changes to this Part. Instead, we have modified the first 
sentence of the definition of eligible lands and water in Sec.  700.5 
to make it clear that certification qualifies a State or Indian tribe 
for a State or Tribal reclamation plan. That change, along with the 
proposed changes that we are adopting here, will clarify how this Part 
relates to certified State and Indian tribal reclamation programs.
Responses to Comments
    IMCC/NAAMLP and one State commented that we should require 
certified States or Indian tribes to have an approved reclamation plan 
including a commitment to address newly discovered coal issues 
beginning with the next grant period. They explained that the next 
grant request should include the information concerning the newly 
discovered coal issue and the approximate time to obtain clearances, 
design and actual mitigation of the coal issue and if available a cost 
estimate. These commenters also maintained that all other projects 
directed by the legislature of a certified State or the governing body 
of a certified Indian tribe, including noncoal projects, would be part 
of the simplified grant process and do not need to be part of the 
reclamation plan, which should simply state that the State or Indian 
tribe will undertake projects as directed by the State or Tribal 
legislative body. Finally, the commenters proposed that very little 
information should be required to be in the reclamation plans for 
certified States and Indian tribes on noncoal reclamation projects 
other than that projects will be undertaken as selected and that the 
specific projects would be included as part of the simplified grant 
process.
    As we discussed in our responses to comments under Part 875, we are 
modifying our approach to reclamation plan requirements for certified 
programs. We initially proposed that in addition to the necessary 
commitments to address existing and newly discovered coal problems, 
States and Indian tribes planning to conduct noncoal reclamation 
programs under the umbrella of Part 875 would need to maintain, and 
revise as necessary, their reclamation plan. We now conclude that while 
certified programs still need to maintain a reclamation plan that 
contains the appropriate assurances for addressing coal problems in 
order to receive Title IV moneys, they cannot operate a noncoal 
reclamation program under Part 875 unless they are expending State or 
Tribal share funds received before October 1, 2007. However, as 
discussed in the preamble to Part 874, we are requiring that States and 
Indian tribes that expend moneys, regardless of the source, to maintain 
certification under section 411(a) of SMCRA do so as required by the 
applicable provisions of sections 401 to 410 of SMCRA and Parts 874 and 
875 of this chapter. As a consequence of our revised position on the 
applicability of Part 875, we are not requiring any information for the 
reclamation plan on

[[Page 67617]]

activities other than maintenance of certification and a statement that 
the program will undertake projects in accordance with the State or 
Tribal legislative body.
    One State commenter suggested that the reclamation plans of minimum 
program States should primarily reflect funding sources and what may or 
may not be reclaimed with these funding sources. After consideration of 
this comment, we have decided not to make any changes to this Part to 
implement this suggestion. Upon completion of rulemaking, we intend to 
develop notifications to be sent to the States and Indian tribes 
concerning reclamation plan modification, and we expect that each State 
and Indian tribe will review their existing reclamation plan and 
propose modifications. To the extent that a State or Indian tribe 
wishes to inform the public about the allowable uses of specific 
funding sources, they may incorporate the information into their 
modified reclamation plan.
Definitions (Sec.  884.5)
    We are adding a new section to Part 884 to include the definition 
of the term ``Reclamation plan or State reclamation plan.'' We did not 
receive any comments on this section and are adopting it as proposed.
State Eligibility (Sec.  884.11)
    Existing Sec.  884.11 requires a State with eligible lands and 
water to submit a reclamation plan, which we cannot approve unless the 
State has an approved regulatory program that is consistent with other 
requirements of SMCRA and its implementing regulations except as 
discussed below. As proposed, we are finalizing several revisions to 
this section. First, we proposed to update the citation to the 
definition of ``eligible lands and water'' because we are moving that 
definition from Sec.  870.5 to Sec.  700.5. In addition, we proposed to 
add the appropriate reference to Indian tribes because section 405(k) 
of SMCRA authorizes the Navajo, Hopi, and Crow Indian tribes to have an 
approved reclamation plan without having an approved regulatory 
program. 30 U.S.C. 1235(k); see also 30 CFR Part 756. More 
substantively, for the reasons set forth in the preamble to the 
proposed rule, we proposed to use this section to clarify how Tennessee 
and Missouri are affected by the requirement to have and maintain a 
reclamation plan in light of the statutory direction under section 
402(g)(8) of SMCRA.
Responses to Comments
    We received three comments from environmental groups regarding this 
section. One commenter supported the statutory mandate that Tennessee 
and Missouri receive minimum program make up funding under section 
402(g)(8)(A) in spite of the section 405(c) requirement to have an 
approved State regulatory program under section 503 of SMCRA. Another 
commenter supported the requirement that an approved reclamation plan 
continues to apply to all States and Indian tribes, regardless of 
certification status under section 411(a) of SMCRA.
    We received no adverse comments on this section and adopt it as 
proposed. But we would like to clarify that Tennessee and Missouri are 
not exempt from the certification process. As with any State, they may 
not certify until they have completed all known coal problems, but once 
they have done so, we expect them to proceed with certification in 
accordance with Sec.  875.13.
Content of Proposed State Reclamation Plan (Sec.  884.13)
    We did not propose any changes to this section in our proposed 
rule. However, we received two comments on this section. First, IMCC/
NAAMLP and one State commented that section 403 of SMCRA, with the 
exception of paragraph (c), does not apply to certified States and 
Tribes. Thus, they contend that this section should be revised to 
clarify that certified States and Indian tribes are subject to 
different policies and procedures with regard to their State 
reclamation plans. We agree with the commenter and are revising the 
final rule to reflect that States and Indian tribes are eligible to 
submit a reclamation plan if they have been certified under section 
411(a) of SMCRA and Part 875 of this chapter. Second, we received a 
comment from one State that State plans should be updated to reflect 
any additional requirements that the State may have to meet under the 
final approved rules. We agree with the comment but believe the 
requirement is sufficiently imposed under the existing rules.
State Reclamation Plan Amendments (Sec.  884.15)
    We did not propose any changes to this section in our proposed 
rule. However, we received a comment on this section. This State 
commenter suggested that we include the specific changes that States 
and Indian tribes are required to make to their reclamation plans when 
we notify them under Sec.  884.15(b). The State or Indian tribe would 
then make those specific changes with any other changes that it 
believes are necessary. We agree with the comment to the extent that we 
are required by Sec.  884.15 to notify each State and Indian tribe of 
any changes to SMCRA and AML regulations. But because each reclamation 
plan is tailored to specific program and regional conditions, we 
believe rather than for us to dictate amendments to the reclamation 
plans, it will be more constructive for us to work cooperatively with 
each State or Indian tribe to identify and revise plan amendments as 
necessary to comply with SMCRA and these regulations.
Other Uses by Certified States and Indian Tribes (Sec.  884.17)
    For the reasons explained in the preamble to the proposed rule, we 
only proposed to update the grant application reference from Sec.  
886.15 to Sec.  885.13 and to change the heading and wording of this 
section to reflect the greater discretion that certified States and 
Indian tribes now have to use Title IV moneys.
Responses to Comments
    IMCC/NAAMLP and one State opposed our proposed retention of Sec.  
884.17(a), with provisions for a reclamation plan which includes 
construction of public facilities as a result of coal development. The 
commenters stated that imposing such requirements are in direct 
conflict with SMCRA which allows prior balance replacement funds to be 
used at the discretion of the State legislature or Tribal governing 
body and certified in lieu funds to be used for any purpose. They 
suggest that existing subparagraphs (a) and (b) should be deleted and 
replaced by the language proposed for the new subparagraph (b).
    We agree that Sec.  884.17(a) no longer applies to certified States 
and Indian tribes using prior balance replacement funds or certified in 
lieu funds. However, we are retaining paragraph (a) to accommodate the 
unexpended 402(g)(1) funds still being managed by certified States and 
Indian tribes. We are also retaining our proposed paragraph (b) that 
``Grant applications for uses other than coal reclamation by certified 
States and Indian tribes may be submitted in accordance with Sec.  
885.15 of this chapter.''
Part 885--Grants to Certified States and Indian Tribes
    As explained further in the preamble to the proposed rule, we are 
adding this new Part to provide different rules for

[[Page 67618]]

Title IV grants to certified States and Indian tribes.
What does this Part do? (Sec.  885.1)
    This section specifies that this Part provides procedures for 
grants to certified States and Indian tribes only. We did not receive 
any comments on this section and are adopting it as proposed.
Definitions (Sec.  885.5)
    We are adding this section to include definitions of the terms 
``award,'' ``distribute,'' and ``reclamation plan or State reclamation 
plan.'' We did not receive any comments on this section. For the 
reasons explained in the preamble to the proposed rule, we are adopting 
it as proposed.
Information Collection (Sec.  885.10)
    The information collection section refers to all Title IV grants 
because we currently have an information collection clearance from OMB 
for existing Part 886, which covers all Title IV grants to all eligible 
certified and uncertified States and Indian tribes. We are changing 
Part 886 by limiting it to grants to uncertified States and Indian 
tribes and adding new Part 885 for grants to certified States and 
Indian tribes. Though the information collection burden for grants will 
be split between the two Parts, the total burden will remain the same. 
We expect to notify OMB of the change and to reflect both Parts in 
future clearance actions. We received no comments on this section and 
are adopting it as proposed.
Who is eligible for a grant? (Sec.  885.11)
    In this section, we are stipulating that only certified States or 
Indian tribes with an approved reclamation plan are eligible for grants 
under this Part. We did not receive any comments on this section. For 
the reasons explained in the preamble to the proposed rule, we are 
adopting it as proposed.
What can I use grant funds for? (Sec.  885.12)
    In this section, we are describing how you, a certified State or 
Indian tribe, may use funds awarded in Title IV grants. We did not 
receive any comments on this section. For the reasons explained in the 
preamble to the proposed rule, we are adopting it as proposed.
What are the maximum grant amounts? (Sec.  885.13)
    Paragraph (a) allows you to apply for a grant of any or all 
available funds at any time. Paragraph (b) provides how we determine 
the amount of Title IV funds available to the certified State or Indian 
tribe. Paragraph (c) provides that current FY funds are not available 
for award until after we complete the annual distribution. Paragraph 
(d) requires us to give you current information on the amounts and 
types of funds that are available for award. We did not receive any 
comments on this section. For the reasons explained in the preamble to 
the proposed rule, we are adopting it as proposed.
How long is my grant? (Sec.  885.14)
    In this section, we proposed that the performance period of a 
certified State's or Indian tribe's grant will be the period of time 
you request in your grant application. This proposed section did not 
establish any requirements for how long a grant should be or how many 
grants may be open at any time.
Responses to Comments
    We received comments from IMCC/NAAMLP and one State agreeing that 
the performance period of the grant should be at the discretion of the 
individual States and Indian tribes. The commenters stated that we 
should not be concerned about the administrative burdens of managing 
grants which are open for very long periods, and that the length of the 
grants should be left to the discretion of the States and Indian 
tribes. IMCC/NAAMLP noted that we should be more concerned about the 
administrative burden of the myriad confusing codes used in the process 
of managing our grants. Because we received no adverse comments, we are 
adopting this section as proposed. Although it is beyond the scope of 
this rulemaking, we intend to do what we can to simplify our accounting 
system's codes if an opportunity arises.
How do I apply for a grant? (Sec.  885.15)
    In this section, we proposed to provide application procedures for 
certified States and Indian tribes to receive Title IV grant awards. 
Paragraph (a) mandates that you must use the application forms and 
procedures that we specify. As explained in the preamble to the 
proposed rule, we are not specifying in these rules exactly what 
information we will require because the information we need is likely 
to evolve over time based upon changing laws and OMB requirements for 
Federal grants. Proposed paragraph (b) requires us to award your grant 
agreement as soon as practicable, but no later than 30 days after we 
receive your complete application. Paragraph (c) requires that if your 
application is not complete, we must notify you as soon as practicable 
of the additional information we need to process the award. Paragraph 
(d) requires you to agree to perform the grant in accordance with 
SMCRA, all applicable Federal laws, including nondiscrimination 
statutes, and applicable Federal regulations, including those issued by 
OMB and Treasury.
Responses to Comments
    We received a comment from IMCC/NAAMLP and one State in response to 
our request for suggestions on further streamlining grant procedures. 
The commenters stated that the process is streamlined but noted that if 
we want to really streamline the process, we should change it from a 
grant to a direct payment. This suggestion is addressed in our 
discussion of comments on Sec.  872.30. After consideration of this 
comment and for the same reasons stated in Sec.  872.30, we are 
adopting this section as proposed.
After OSM approves my grant, what responsibilities do I have? (Sec.  
885.16)
    In this section, we proposed to describe the formal grant agreement 
and your operations under it. Proposed paragraph (a) required us to 
send you a written grant agreement when we award you a grant. Proposed 
paragraph (b) provided that you could subgrant functions and funds to 
other organizations, but that you will still be responsible for 
administration of the grant, including funds and reporting. Proposed 
paragraph (c) provided that funds become obligated when we approve the 
grant agreement and that you accept the grant by starting work or 
drawing down funds under it. In paragraph (d), we proposed to make you 
responsible for ensuring that all applicable laws, clearances, permits, 
or requirements are met before you expend funds. Proposed paragraph (e) 
provided that when you reclaim coal projects under our regulations in 
Part 874, we are jointly responsible with you for compliance with NEPA 
and any other laws, clearances, permits or requirements. Proposed 
paragraph (f) required that public facilities constructed with grant 
funds should use fuel other than petroleum or natural gas to the extent 
technologically and economically feasible. Finally, proposed paragraph 
(g) required that you not commit or spend more funds than we have 
awarded and provided that our award of a grant does not obligate us to 
award continuation grants or grant amendments providing more funds to 
cover cost overruns. This provision does not affect our annual 
mandatory distributions to you under section 411(h) of SMCRA.

[[Page 67619]]

Responses to Comments
    We received comments from IMCC/NAAMLP and one State requesting 
clarification of the requirement in paragraph (d) that certified States 
or Indian tribes must ensure compliance with any applicable laws, 
clearances, permits or requirements for projects other than coal 
reclamation. The commenters state that NEPA must have a Federal nexus, 
and because we maintain in the preamble that we will make no Federal 
decision authorizing individual project expenditures, there will be no 
Federal involvement. They therefore assume that NEPA will not apply to 
projects certified States and Indian tribes do and suggest that we 
clarify this in the regulations.
    We disagree with the commenters' assumption that NEPA compliance 
will not be required and we made no changes to the regulation. As we 
discussed in the responses to comments for Sec.  872.31, we will not 
make a Federal decision authorizing individual projects other than coal 
reclamation, but it is possible that you will have to comply with NEPA 
for other Federal or State or Indian tribal requirements. We believe 
the regulation language appropriately assigns to the States and Indian 
tribes the responsibility to determine which requirements apply to 
individual projects other than coal reclamation they do under Part 874 
and to ensure that those requirements are met before they begin 
projects.
How can my grant be amended? (Sec.  885.17)
    In this section, we describe the procedures to amend an existing 
grant. We did not receive any comments on this section. For the reasons 
explained in the preamble to the proposed rule, we are adopting it as 
proposed.
What audit, accounting, and administrative requirements must I meet? 
(Sec.  885.18)
    In this section, we explain that you and we must follow standard 
procedures from OMB for grants management actions. We did not receive 
any comments on this section. For the reasons explained in the preamble 
to the proposed rule, we are adopting it as proposed.
What happens to unused funds from my grant? (Sec.  885.19)
    In this section, we describe how we handle any funds awarded in 
grants but not expended. We did not receive any comments on this 
section. For the reasons explained in the preamble to the proposed 
rule, we are adopting it as proposed.
What must I report? (Sec.  885.20)
    This section describes the information you must report to us about 
your grant. We did not receive any comments on this section. For the 
reasons explained in the preamble to the proposed rule, we are adopting 
it as proposed.
What happens if I do not comply with applicable Federal law or the 
terms of my grant? (Sec.  885.21)
    In this section, we explain that if you fail to comply with your 
grant award or a Federal law or regulation, we will take appropriate 
action. We did not receive any comments on this section. For the 
reasons explained in the preamble to the proposed rule, we are adopting 
it as proposed.
When and how can my grant be terminated for convenience? (Sec.  885.22)
    This section allows either you or us to terminate the grant for 
convenience if that should become appropriate. We did not receive any 
comments on this section. For the reasons explained in the preamble to 
the proposed rule, we are adopting it as proposed.
Part 886--Reclamation Grants to Uncertified States and Indian Tribes
    In this Part, we are describing the procedures that you, the 
uncertified State or Indian tribe, and we, OSM, use in applying, 
awarding, managing, and closing grants authorized by SMCRA, as revised 
by the 2006 amendments. Existing Part 886 covered all reclamation 
grants, but because we are adding a new Part 885 for grants to 
certified States and Indian tribes, we are now limiting this Part to 
grants to uncertified States and Indian tribes only. Throughout this 
Part, we are also changing section titles to a question format in order 
to make it easier to use.
What does this Part do? (Sec.  886.1)
    In this section, we are adding ``uncertified'' to limit this Part 
to grants to uncertified States and Indian tribes and update the 
reference to ``OSM's Final Guidelines for Reclamation Programs and 
Projects'' from the 1980 version in the existing regulations to the 
current version published in 2001. 66 FR 31250. We did not receive any 
comments on this section. For the reasons explained in the preamble to 
the proposed rule, we are adopting it as proposed.
Authority (Sec.  886.3)
    We proposed to delete this section because it is unnecessary and 
duplicative. We did not receive any comments on this proposed deletion, 
and, for the reasons explained in the preamble to the proposed rule, we 
are adopting it as proposed.
Definitions (Sec.  886.5)
    We are adding a new section to Part 886 defining the terms 
``award,'' ``distribute,'' and ``reclamation plan or State reclamation 
plan.'' We did not receive any comments on this section. For the 
reasons explained in the preamble to the proposed rule, we are adopting 
it as proposed.
Information Collection (Sec.  886.10)
    We are revising this paragraph using plain English and using the 
current format approved by OMB. It describes OMB's approval of 
information collections under Part 886, our use of that information, 
and the estimated reporting burden associated with those collections. 
In the future, these information collections will apply to fewer States 
and Indian tribes because of the new Part 885. We expect to notify OMB 
of the change and to reflect both Parts in future clearance actions. We 
received no comments on this section and are adopting it as proposed.
Who is eligible for a grant? (Sec.  886.11)
    We are adding language to this paragraph to specify that this Part 
applies to grants to uncertified States and Indian tribes only. We did 
not receive any comments on this section. For the reasons explained in 
the preamble to the proposed rule, we are adopting it as proposed.
What can I use grant funds for? (Sec.  886.12)
    We proposed to reword paragraph (a) using plain English and move 
the existing provision about OMB cost principles from this paragraph to 
paragraph (e). In paragraph (b), we proposed to reword the provision 
about our reclamation grants and move the existing provision about 
fuels to be used in public facilities to Sec.  886.16(f). We proposed 
to add a new paragraph (c) to this section requiring you to use each 
type of funds according to the provisions in Part 872 of this chapter. 
This proposed paragraph listed each type of funds that may be awarded 
in an AML grant to an uncertified State or Tribe and referenced the 
section number which governs its use. We also proposed to move existing 
paragraph (c) to paragraph (d), reword it using plain English, and 
correct a spelling error. Finally, we proposed to add paragraph (e) 
requiring you to use grant funds only for costs that are allowable 
according to OMB cost principles in Circular A-87. We did not receive 
any comments on this section. For the reasons explained

[[Page 67620]]

in the preamble to the proposed rule, we are adopting it as proposed.
What are the maximum grant amounts? (Sec.  886.13)
    As proposed, this new section established and clarified our current 
grant procedures. Proposed paragraph (a) allowed you to apply for a 
grant of any or all funds distributed to you at any time. Proposed 
paragraph (b) set forth a calculation for determining the amount of 
funds available to your State or Tribe. Proposed paragraph (c) provided 
that current FY funds are not available for award until after we 
complete the annual distribution, which occurs after we receive fee 
collections for coal produced in the final quarter of the previous 
fiscal year. Moreover, proposed paragraph (d) required us to give you 
current information on the amounts and types of funds that are 
available for award.
Responses to Comments
    We received comments from IMCC/NAAMLP and one State suggesting that 
we change the wording of Sec.  886.13(a) that you may apply at any time 
for a grant of any or all of the program funds ``that are distributed 
to you'' to funds ``to which you are entitled'' because this wording is 
more accurate and reflects a more appropriate perspective. We agree 
with the commenters that ``distributed'' is not the most accurate word 
as funds may also become available through deobligation or carry-over. 
However, we disagree that ``entitled'' is a more appropriate word 
because the amount we can award in a grant is limited to the funds 
actually available for obligation. We changed the wording to funds 
``which are available to you'' because that is consistent with the 
parallel language in Sec.  885.13 for grants to certified States and 
Indian tribes.
    IMCC/NAAMLP also commented that the list of all available funds in 
the preamble for Sec.  886.13(b) should include minimum program make up 
funds and carryover funds from previous years. The regulatory text as 
proposed includes these types of funds, so the preamble should have 
explained the calculation as:
     The current annual AML distribution, including State 
share, Tribal share, historic coal funds, minimum program make up 
funds, and prior balance replacement funds;
     Plus any funds distributed in previous years that were not 
awarded in a grant (``carryover'');
     Plus any funds distributed in previous years that were 
awarded but were subsequently deobligated from a grant 
(``recoveries''); but
     Minus any funds already awarded to you this fiscal year.
    One state commented that the information we give States and Indian 
tribes on funds currently available for award should be provided to the 
States and Indian tribes between October 1 and December 15 of each 
year, and on an as-needed basis. For the immediate future, we intend to 
provide an annual report to all States and Indian tribes on current 
funds available as part of the annual distribution process. 
Furthermore, we intend to provide additional information to each State 
and Indian tribe upon request throughout the year. However, we decided 
not to add this requirement to the regulations because we expect that 
future system changes will allow us to give you direct access to this 
information rather than relying on requests and scheduled reports.
How long will my grant be? (Sec.  886.14)
    We proposed deleting existing Sec.  886.14, recodifying existing 
Sec.  886.13 as Sec.  886.14, and revising it to reflect the simplified 
grant process that we use for AML grants. Paragraph 886.14(a) is the 
existing Sec.  886.13(b) which we are rewording using plain English. 
Paragraph (b) establishes three years as the normal grant period. 
Paragraph (c) allows us to extend the grant period, typically for a 
year, if requested. Paragraph (d), which establishes one year as the 
normal period for administrative accounts, is the existing Sec.  
886.13(a) and is reworded using plain English.
    We also proposed to add Sec.  886.14(e), which would have allowed 
us to lengthen the time period for new or amended AML grants that 
contain State or Tribal share funds distributed during FY 2008, 2009, 
and 2010 for up to five years at your request. This paragraph 
incorporated the new provision in section 402(g)(1)(D) of SMCRA that 
requires that State share and Tribal share funds that are not expended 
within 3 years after the date of any grant award (except for grants 
during FY 2008, 2009, and 2010 to the extent not expended within 5 
years), will be transferred to historic coal funds. 30 U.S.C. 
1232(g)(1)(D). After consideration of the comments received on this 
section, we are modifying proposed paragraph (e), as described below, 
but are otherwise adopting this section as proposed.
Responses to Comments
    We received comments from one State about the provision in 
paragraph (c) that we normally limit extensions of the grant 
performance period to one extension for up to one additional year, 
which was expanded in the preamble to the proposed rule with the 
explanation that we may allow more or longer extensions in special or 
unusual circumstances. The State notes that it currently has at least 
one construction contract longer than three years and expects to have 
many contracts lasting five years or longer as program funding 
increases. The commenter suggests we allow grant extensions on the 
basis of the needs of the projects so that States and Indian tribes can 
run their programs efficiently. We agree that we must consider the 
needs of the projects when we review a grant extension request. 
However, we also have a responsibility to encourage States and Indian 
tribes to use program funds efficiently and to minimize unobligated 
fund balances. We did not change the regulation because we believe the 
word ``normally'' allows us to consider project needs, as evidenced by 
the fact that the State currently has a longer project. Thus, we still 
are able to allow more or longer grant extensions in special 
circumstances.
    We received comments from IMCC/NAAMLP and two States about 
paragraph (e) of our proposed rule. We proposed that, although grants 
are normally awarded for three years, we may award or extend grants 
containing State or Tribal share funds distributed in FY 2008, 2009, or 
2010 for up to five years at your request. IMCC/NAAMLP and one State 
noted that section 402(g)(1)(D) of SMCRA states that States and Indian 
tribes shall have up to five years to expend State and Tribal share 
funds awarded in FY 2008 through 2010. These commenters suggested that 
we award grants with these funds for a five year period, which may be 
decreased to three years at your request. However, another State 
commented that they supported the proposed language because in many 
cases States and Indian tribes will be able to expend the funds within 
that period and the additional years would add more administrative 
burden. To reflect that State opinions differ on the most efficient 
length of these grants, we revised the rule to give individual States 
the flexibility to choose whether we award these grants for three or 
five years.
    IMCC/NAAMLP also commented that section 411 of SMCRA does not 
establish any timelines on grant performance periods for uncertified 
States' or Indian tribes' use of prior balance replacement funds. The 
commenter concluded that ``an annual distribution payment in the full 
amount due under section 411 should be available as an option for 
grants to each State/Tribe, which in turn could be

[[Page 67621]]

deposited into a separate State/Tribal account and considered State/
Tribal funds and used without restriction for any section 403 priority 
(including AMD treatment).'' We agree that section 411 does not 
establish any time limits but disagree with the commenter's conclusion 
for the reasons explained in the preamble to Sec.  872.30.
How do I apply for a grant? (Sec.  886.15)
    In paragraph (a), we are removing the existing provision that a 
preapplication is not required under certain conditions. We do not 
require a preapplication for AML grants. In paragraph (b), we are 
removing the requirement that we must prepare and sign the grant 
agreement because this provision was duplicated in Sec.  886.16, which 
is a more appropriate location. We are rewording this entire section 
using plain English. We did not receive any comments on this section. 
For the reasons explained in the preamble to the proposed rule, we are 
adopting it as proposed.
After OSM approves my grant, what responsibilities do I have? (Sec.  
886.16)
    This section reflects the electronic processing of our grant awards 
and has been reworded in plain English. Paragraph (a) requires us to 
send you a written grant agreement. Paragraph (b) allows you to 
subgrant functions and funds, but you retain responsibility for them. 
Paragraph (c) explains how you accept an award. Paragraph (d) concerns 
our Authorization to Proceed and NEPA review process. Paragraph (f) 
relates to fuel used at public facilities, and paragraph (g) states 
that we are not obligated to provide any more funds to you in new or 
revised grants. We did not receive any comments on any of these 
paragraphs. For the reasons explained in the preamble to the proposed 
rule, we are adopting these provisions as proposed.
    We are revising paragraph (e) to conform to section 403(c) of 
SMCRA, which now requires that OSM, acting for the Secretary, must 
approve proposed amendments to the AML inventory that are made by 
States and Indian tribes. 30 U.S.C. 1233(c). In this paragraph, we 
define ``amendment'' to mean any new coal problem under section 403(a) 
or section 403(b) of SMCRA that is added to the system after December 
20, 2006. In addition, we define the term ``amendment'' to include 
instances where you, the State or Indian tribe, elevate a Priority 3 
coal problem contained in the AML inventory to either Priority 1 or 
Priority 2 status. We are making these changes to be consistent with 
section 403(c) of SMCRA, and also section 402(g)(2), which requires us 
to ensure strict compliance by uncertified States and Indian tribes 
with the priorities described in section 403(a) of SMCRA. Problems are 
normally approved and entered in the AML inventory when identified, 
before you begin development, design and construction activities, but 
our approval may occur during the ATP process if the problem has not 
previously been approved. Non-emergency problems must be approved and 
entered in the AML inventory before we approve the ATP.
    We do not intend for this provision to require our approval for a 
30% AMD set-aside, or noncoal work conducted by uncertified States 
under section 409 of SMCRA, or for salaries or administrative costs of 
the AML program. With the exception of those instances where Priority 3 
AML inventory problems are being elevated to a Priority 1 or Priority 
2, we also do not intend for this provision to require our approval for 
subsequent revisions to coal problems once they have been included in 
the AML inventory. This provision does not change existing procedures 
where States and Indian tribes routinely update the AML inventory at 
the time projects are funded or completed.
    Under Sec.  886.16(e)(1), we provide that our approval of an 
emergency project under section 410 of SMCRA, which is our ATP for an 
emergency project, also constitutes our approval to place the coal 
problems being addressed by the emergency into the AML inventory. We 
are establishing this process for emergency projects because our 
declaration of an emergency confirms that the problem is a danger to 
the public health, safety, or general welfare under section 410(a)(1) 
of SMCRA.
    In paragraph (e)(2), we are adding an approval requirement 
consistent with that in section 403(c) so that you cannot use funds for 
project development, design, or construction of new coal reclamation 
projects before we have approved the problems for inclusion in the AML 
inventory. We do not intend this requirement to limit your ability to 
use funds to assess a problem and to determine its eligibility and 
feasibility for reclamation. This paragraph applies only to coal 
reclamation problems added to the AML inventory after December 20, 
2006. We believe this requirement helps fulfill our responsibility 
under section 402(g)(2) to ensure strict compliance by uncertified 
States and Indian tribes with the priorities described in section 
403(a) of SMCRA. 30 U.S.C. 1232(g)(2). Requiring AML coal problems to 
be in the AML inventory prior to the development of designs promotes 
coordination between us and uncertified States and Indian tribes early 
in the planning process. This early coordination will help eliminate 
the potential for agency conflict after property owners have been 
promised reclamation and substantial design funding has been spent. 
Finally, requiring AML coal problems to be in the AML inventory before 
the development of designs will spread out our review workload and 
potentially expedite later project ATP reviews because field staff will 
already be familiar with the proposed project area.
Responses to Comments
    We received multiple comments about paragraph (e) and its 
subparagraphs relating to the AML inventory. IMCC/NAAMLP and one State 
commented that the term ``coal problem'' in paragraph (e) should be 
clarified. They asked if this phrase was synonymous with an AML feature 
or with additional units. They suggested it would be helpful to add to 
the preamble examples of the types of changes which would and would not 
constitute amendments and require our approval. We agree with the 
commenters that it could be helpful to discuss these questions here, 
but we note that we make decisions on individual problem sites case by 
case. Generally, we consider a coal problem to be anything on lands 
eligible under section 404 of SMCRA and that meets the priority 
requirements of section 403(a), and we consider the addition of another 
AML feature or units to the AML inventory to be a new coal problem 
requiring our approval. The examples provided by the commenters of 
adding a new portal or other problem type in the same location as an 
existing dangerous highwall, or increasing the length of an existing 
dangerous highwall to include a previously undocumented segment as a 
Priority 3 highwall, would likely constitute amendments. However, the 
commenters' other example of increasing the length of an existing 
dangerous highwall to include a previously undocumented segment likely 
would not constitute an amendment.
    One State noted that requiring AML inventory entry and approval for 
new problems would prohibit or slow the reclamation of problems 
identified during the actual reclamation construction. We do not intend 
this provision to require that you enter these newly discovered 
problems into the AML inventory if they are found during reclamation. 
After reclamation begins, any newly discovered coal problems on the 
site would not be entered into the AML inventory until after 
reclamation is

[[Page 67622]]

completed when you report the problems which have been reclaimed.
    IMCC/NAAMLP and one State commented that this definition of 
amendment is inconsistent with the definition we provided in Change 
Notice AML 1-2, which defined ``amendment'' as a new Problem Area, and 
that this change significantly increases the administrative burden. We 
agree that the directive, issued shortly after enactment of the 2006 
amendments, contained a narrower definition, but we now believe that 
our definition in this rule is more appropriate because it better 
enables us to fulfill our responsibility under section 402(g)(2) to 
ensure strict compliance by uncertified States and Indian tribes with 
the priorities described in section 403(a) of SMCRA.
    IMCC/NAAMLP and one State suggested three changes to reduce the 
number of required inventory approval actions, and the administrative 
burden that would come with the regulation as proposed:
     Make our new definition effective on the effective date of 
this rule rather than December 20, 2006, so States don't have to go 
back and re-process all the inventory changes between these two dates.
     Add a dollar threshold provision, so States don't have to 
request approval for changes made simply for nominal additional costs.
     Do not consider the addition of Priority 3 problems to be 
an amendment to the AML inventory.
    We appreciate these comments and are sensitive to the additional 
administrative burdens this statutory requirement may impose on 
uncertified States and Indian tribes, but we do not agree with the 
recommendations and have not changed the regulation. Generally, after 
reviewing our process for our approval, we do not believe this section 
will be unduly burdensome. Therefore, the measures suggested by the 
commenters are not necessary. In addition, delaying the effective date 
is not an option because the 2006 amendments became effective on 
December 20, 2006, and using this date recognizes that, as required by 
the law, our regulation must apply to the entire period since enactment 
of the 2006 amendments. We are not adopting the suggestion for a dollar 
threshold at this time because we believe that we need more experience 
with this process to be able to determine if we should accept this 
proposal. Such a threshold could be the subject of future rulemaking. 
Finally, we believe that if you plan to expend funds on a problem, even 
if it is Priority 3, it must be in the AML inventory.
    IMCC/NAAMLP and one State commented that AML inventory requirements 
should not apply to water supply projects under section 403(b) of SMCRA 
or to Priority 3 problems because section 403(c) of SMCRA only requires 
the AML inventory to include eligible lands and waters which meet the 
priorities in 403(a)(1) and (a)(2). We agree that SMCRA limits the AML 
inventory to Priority 1 and 2 coal problems. However, we have for many 
years required you to enter all types of projects into the AML 
inventory, including water supply and priority 3 problems, before you 
expend AML funds on them. This information needs to be in the AML 
inventory so that we can track and report on projects funded and 
completed with AML funds. We therefore disagree with this comment and 
did not change the regulation.
    IMCC/NAAMLP and three States also suggested that we delete the 
provisions in paragraphs (e) and (e)(2) that require problems to be 
entered into the AML inventory before you can spend AML funds on 
project development and design. The commenters asserted that this 
requirement is overly burdensome and could waste time if a project 
turns out not to be feasible. One State commented that some project 
development and design work is necessary to assess a problem and 
identify its eligibility and feasibility for reclamation. Another State 
notes that there are many instances when programs can receive 
substantial savings by doing design work prior to or in conjunction 
with a problem being entered into the AML inventory. These commenters 
conclude that our historic requirement that projects be entered into 
the AML inventory prior to NEPA processing and project construction has 
proven to be efficient and effective and there is no need to change it.
    After consideration of these comments, we have concluded that 
significant amounts of AML funds should not be spent on a project until 
we have approved its entry into the AML inventory. Thus, we are 
adopting the regulation as proposed. However, we recognize that 
programs must expend funds to assess a coal problem, to determine 
whether it is eligible and feasible for reclamation, and to collect the 
information needed to enter the problem into the AML inventory. We do 
not believe that we need to add specific language to the regulations 
for you to use AML funds for project assessment.
How can my grant be amended? (Sec.  886.17)
    We are moving the requirement that grant amendment procedures must 
follow the Grants Common Rule from the last sentence of existing 
paragraph (a) to paragraph (c). In paragraph (b), we are deleting the 
second sentence, with specific conditions which require an advance 
amendment, because we believe it is unnecessary. We are renumbering 
existing paragraph (c) to (d). We are also rewording this section using 
plain English. We did not receive any comments on this section. For the 
reasons explained in the preamble to the proposed rule, we are adopting 
it as proposed.
What audit and administrative requirements must I meet? (Sec.  886.18)
    We are moving and dividing existing Sec.  886.18 into Sec. Sec.  
886.20, 886.23, 886.24, 886.25, and 886.26. New Sec.  886.18 is a 
combination of two short existing sections, Sec. Sec.  886.19 and 
886.20. Paragraph (a) contains the audit requirement from existing 
Sec.  886.19, which we are updating by deleting the reference to the 
General Accounting Office and adding one to OMB Circular A-133. 
Paragraph (b) comes from the existing Sec.  886.20 on administrative 
procedures. We are deleting the existing requirement that you use our 
property inventory form because the form is now optional. In addition, 
this section now refers to the Grants Common Rule, which provides 
sufficient information on property management requirements. We will 
address specific requirements and forms in our directives. We are also 
rewording this section using plain English. We did not receive any 
comments on this section. For the reasons explained in the preamble to 
the proposed rule, we are adopting it as proposed.
How must I account for grant funds? (Sec.  886.19)
    As explained above, we are moving existing Sec.  886.19 to Sec.  
886.18(a). We are moving the content of existing Sec.  886.22, 
``Financial management,'' to this section and rewording it using plain 
English. We did not receive any comments on this section. For the 
reasons explained in the preamble to the proposed rule, we are adopting 
it as proposed.
What happens to unused funds from my grant? (Sec.  886.20)
    As proposed, we are moving existing Sec.  886.20 to Sec.  886.18(b) 
and adding a new section here to clarify how we treat unused grant 
funds. However, portions of this section are based on existing Sec.  
886.18(a)(2) and on the fourth and fifth

[[Page 67623]]

sentences of existing Sec. Sec.  872.11(b)(1) and (b)(2). Grant funds 
may be left unexpended at the end of a grant due to changes occurring 
during the grant period such as increases or decreases in project scope 
or reclamation costs. Changes may also occur after the end of a grant 
period that reduce the total funds expended under the grant, such as 
the receipt of funds from the sale of property. We also consider 
unawarded funds, moneys which have been distributed to a State or 
Indian tribe but not awarded in a grant, as unused funds.
    In paragraph (a), we explain that we deobligate all unexpended 
funds from a completed grant agreement in order to close it out and 
describe how we treat unexpended funds. Paragraph (a)(1) is based on 
existing Sec.  886.18(a)(2), which allows us to reduce your grant if 
you fail to obligate funds within three years of the grant award. We 
are modifying this provision to address section 402(g)(1)(D) of SMCRA, 
as revised in the 2006 amendments, which mandates that State and Tribal 
share funds that are not spent within 3 years, or 5 years for funds 
distributed in FY 2008, 2009, or 2010, must be made available for 
expenditure as historic coal funds. 30 U.S.C. 1232(g)(1)(D). Our 
paragraph (a)(1) requires us to transfer any State share funds or 
Tribal share funds that uncertified States and Indian tribes do not 
expend within 3 years, or 5 years for FY 2008, 2009, or 2010 funds, 
from that State or Indian tribe to historic coal funds. We distribute 
transferred funds to uncertified States and Indian tribes at the next 
annual distribution using the prescribed historic coal formula 
described in Sec.  872.22. In paragraph (a)(2), we explain that we hold 
any unused Federal expense funds, such as State emergency program 
funds, for distribution to any State or Indian tribe that needs them 
for the specific activity for which Congress appropriated the funds. 
Finally, in paragraph (3) we specify that unused funds of all other 
types are made available for inclusion in a grant to the State or 
Indian tribe for which we originally distributed the funds.
    Paragraph (b) provides that we will transfer any State or Tribal 
share funds that have not been awarded in a grant within three years of 
the date we distributed them to you, or five years for funds 
distributed in FY 2008, 2009, or 2010, to historic coal funds in the 
same way that we transfer unused funds under paragraph (a)(1). We are 
adding this paragraph because we believe that funds that have not been 
requested and approved for award within 3 or 5 years of the 
distribution date are unneeded and should be transferred to other 
States and Indian tribes that can use them more efficiently. After 
consideration of the comments, we are adopting this section as 
proposed.
Responses to Comments
    IMCC/NAAMLP commented that Sec.  886.20(a) should say we ``may'' 
deobligate any unexpended funds after your grant is completed, rather 
than ``will.'' They say that deobligating the funds is a discretionary 
function rather than a statutory requirement. Moreover, they asserted 
that Treasury payments should not be subject to deobligation, and we 
should ensure that funds do not revert to Treasury. They concluded that 
if we work together with the States and Indian tribes to monitor the 
situation closely, provide maximum flexibility in designing payment 
protocols, and allow appropriate grant periods and applicable 
requirements, there should be no need for payments to revert to 
Treasury.
    We respond that if Treasury funds are deobligated, they will not 
revert to Treasury because section 402(i)(4) of SMCRA specifies that 
Treasury funds remain available until expended. Similarly, moneys from 
the Fund, except for State and Tribal share and Federal expenses as 
provided in paragraphs (a)(1) and (a)(2), remain available to you. 
Paragraph (a)(3), as proposed, requires us to reaward any deobligated 
historic coal, minimum program make up or prior balance replacement 
funds to the same State or Indian tribe in another grant on request. So 
you will not lose access to these funds. We enthusiastically endorse 
the position that we work closely with you to ensure the most efficient 
use of grant funds and avoid deobligations.
    We received a comment from IMCC/NAAMLP and one State on Sec.  
879.15 which we discuss here because it relates to this section and to 
the procedures that we must use for Federal funds. The commenters 
asserted that paying unused funds back to the Federal government then 
awarding them back to the State is unnecessary bureaucratic paper 
shuffling. We recognize that those controls impose additional 
processing costs. Our financial systems, however, are designed with 
internal controls to ensure that the systems function properly and to 
protect Federal funds against waste, fraud and abuse. If your grant's 
performance period has ended and you have unexpended funds, it is not 
an allowable cost to obligate more funds under the expired grant. In 
order for you to use the funds we must reaward them into a grant with a 
current performance period, and we cannot reaward the funds until we 
have deobligated them from the expired grant. We will work with you to 
minimize the needed paperwork and simplify the processing, possibly 
through offsetting cash drawdown actions.
    One State supported our proposal in paragraph (a)(1) to transfer 
any State share or Tribal share funds which you do not expend within 3 
years, or 5 years for FY 2008, 2009, or 2010 funds, to historic coal 
funds because they need more funding for high priority coal 
reclamation. The State also supported our proposal in paragraph (a)(2) 
that we hold and redistribute unused Federal expense funds because 
almost every year some State needs additional AML emergency funding and 
redistributing unused funds allows us to meet those needs. We 
appreciate these comments, and the final regulation includes these 
provisions as proposed.
What must I report? (Sec.  886.21)
    We are deleting existing Sec.  886.21 because that topic is 
addressed in Sec.  886.12. We transferred existing Sec.  886.23 in an 
effort to group related topics in a more logical manner. The existing 
paragraph (a) in Sec.  886.23 required you to submit to us every year 
the reporting forms that we specified. We are replacing this paragraph 
with a requirement that each year you report to us the program 
performance and financial information that we specify. We are not 
establishing a uniform method for you to submit this information 
because allowing you to use various forms, formats, and methods to 
submit your annual reports will make it less of a burden on you.
    The existing paragraph (b) combines two different reporting 
requirements by requiring you to submit an OSM-76 inventory form upon 
project completion and any other closeout reports we specify. We are 
clarifying this requirement by separating the AML inventory and grant 
closeout requirements. Paragraph (b) describes the reports you must 
provide us upon completion of each grant. These are final performance 
and financial reports, as well as property and any other reports that 
we specify. Paragraph (c) requires you to update the AML inventory upon 
completing each reclamation project. We are removing this item from the 
grant closeout requirements to emphasize that you must update the AML 
inventory as you complete each project rather than waiting until the 
grant is completed. After reviewing the comment, we decided to adopt 
this provision as proposed.

[[Page 67624]]

Responses to Comments
    We received a comment from one State which disagrees with our 
conclusion in the preamble for paragraph (a) of this section that 
allowing a variety of forms and formats for reporting program and 
financial information will make it less of a burden for you. They 
believe there needs to be consistency in reporting because program and 
financial information sent to OSM from 26 States and Indian tribes 
using different forms, formats, or methods is not useful. We did not 
change the language of this section because we believe the requirement 
to report the ``performance and financial information that we 
specify,'' would allow us to standardize reporting forms if we were to 
decide that was appropriate. At this time, we believe our current 
position, originally based on recommendations from grantee staff, 
provides usable data which we standardize into our annual oversight 
reports, but we will continue to seek input from you on the most 
efficient ways to meet our information needs.
    The State also expressed support of our proposal in paragraph (c) 
that you must update the AML inventory as each project is completed 
rather than waiting until the grant is completed. We agree with this 
commenter and did not change this provision in the final regulation.
What records must I maintain? (Sec.  886.22)
    As proposed, this section covers all records related to your grant, 
including programmatic and accounting information. We did not receive 
any comments on this section. For the reasons explained in the preamble 
to the proposed rule, we are adopting it as proposed.
What actions can OSM take if I do not comply with the terms of my 
grant? (Sec.  886.23)
    As proposed, this section described circumstances when your grant 
could be subject to remedial actions or termination. We did not receive 
any comments on this section. For the reasons explained in the preamble 
to the proposed rule, we are adopting it as proposed.
What procedures will OSM follow to reduce, suspend, or terminate my 
grant? (Sec.  886.24)
    As proposed, this section described the procedures we would use to 
reduce, suspend, or terminate your grant. We did not receive any 
comments on this section. For the reasons explained in the preamble to 
the proposed rule, we are adopting it as proposed.
How can I appeal a decision to reduce, suspend, or terminate my grant? 
(Sec.  886.25)
    As proposed, this section provided your administrative appeal 
rights if your grant is reduced, suspended, or terminated. We did not 
receive any comments on this section. For the reasons explained in the 
preamble to the proposed rule, we are adopting it as proposed.
When and how can my grant be terminated for convenience? (Sec.  886.26)
    As proposed, this section describes the much simpler procedures for 
terminating a grant for convenience. We did not receive any comments on 
this section. For the reasons explained in the preamble to the proposed 
rule, we are adopting it as proposed.
What special procedures apply to Indian lands not subject to an 
approved tribal reclamation program? (Sec.  886.27)
    As proposed this section describes special procedures applying to 
Indian lands not subject to an approved Tribal reclamation program. We 
did not receive any comments on this section. For the reasons explained 
in the preamble to the proposed rule, we are adopting it as proposed.
Part 887--Subsidence Insurance Program Grants
    We proposed to make changes to this Part to add references to 
Indian tribes to clarify that they may choose to establish a subsidence 
insurance program under the same rules as States. We received no 
comments on our proposed changes to this part, and are adopting them as 
proposed.

IV. Procedural Determinations

Executive Order 12866--Regulatory Planning and Review

    This rule is considered an ``economically significant regulatory 
action'' under the criteria of section 3(f) of Executive Order 12866 
and has been reviewed by the Office of Management and Budget. Based on 
the criteria for an ``economically significant regulatory action'' 
found in section 3(f), we have made a determination that:
    a. The rule raises novel legal or policy issues arising from legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    b. The rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency.
    c. The rule will not materially alter the budgetary impacts of 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients. However, as discussed below, grants to 
States and Indian tribes have increased, as required by the provisions 
of the 2006 amendments.
    d. The rule 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 rule will align our regulations with statutory 
provisions contained in the 2006 amendments pertaining to the 
collection of reclamation fees and the distribution of money from the 
Fund and Treasury in the form of mandatory grants to States and Indian 
tribes. The provisions of the 2006 amendments have an annual effect on 
the economy of $100 million or more. Coal operators subject to the 
extension of the fee and the new rates received actual notice before 
they became effective. These new fees have already been collected for 
the quarters beginning October 1, 2007 and ending September 30, 2008. 
In addition, we have already distributed approximately $274 million in 
FY 2008 mandatory grants to the States and Indian tribes.

Assessment of Potential Costs and Benefits

    Executive Order 12866 requires OSM to conduct an assessment of the 
potential costs and benefits of any regulatory action deemed 
significant under Executive Order 12866. OMB Circular A-4 provides 
guidance to Federal agencies on the development of a regulatory 
analysis. It requires us to identify a baseline because benefits and 
costs are defined in comparison with a clearly stated alternative. OMB 
has stated that ``this normally will be a `no action' baseline: what 
the world will be like if the proposed rule is not adopted.'' OMB 
Circular A-4, Regulatory Analysis (Sept. 17, 2003). As previously 
stated, the new fee rates have gone into effect and are being paid and 
the grant distributions mandated by the 2006 amendments have been made 
for FY 2008. These statutory changes are already in effect. For 
comparison purposes, OSM will use as the ``no action baseline'' the fee 
rates paid by operators and grant distribution requirements for States 
and Indian tribes that would have been in effect if the 2006 amendments 
had not been signed into law. We will refer to this as the ``old law'' 
or the ``no action alternative.'' The second alternative we will 
analyze consists of the requirements pertaining to fee collections and 
grant distributions to States and Indian tribes established by the 2006 
amendments. We will refer to

[[Page 67625]]

this as the 2006 amendments alternative.
    The basic difference between the two alternatives is the cost to 
the coal operators and the Treasury and the resulting benefits 
quantified in terms of the acres of environmental problems that can be 
reclaimed. Under the old law, the fee rates that would have been in 
effect on October 1, 2007, would have been the rates established using 
the formula specified in our existing regulations at 30 CFR 870.13(b). 
Those fee rates would be paid for approximately 13-14 years. They would 
be established before the start of each fiscal year and would be based 
on estimates of coal production and the amount of the interest 
transferred to the CBF for that year. The fees for each year would have 
been structured to replace the amount of money transferred to the CBF 
at the beginning of the year (generally the amount of interest that the 
Fund earns that year, subject to a $70 million cap, with corrections 
for adjustments to previous transfers and differences between estimated 
and actual coal production in prior years). The purpose of the fee was 
to reimburse the Fund for the interest transferred to the CBF. Under 
the old law alternative, the money in the Fund would have been 
exhausted in approximately 13-14 years--after which time, no more money 
would have been available for reclamation projects and no interest 
would have been transferred to the CBF.
    Under the old law, grants would have been made based on the amount 
of money appropriated each year by Congress. Uncertified States and 
Indian tribes would be required to use the money for AML reclamation 
projects. Certified States and Indian tribes would be required to use 
the money for noncoal reclamation as specified in existing Sec.  
875.15. Under existing Sec.  875.15, certified States and Indian tribes 
could use any money that they received for reclamation projects 
involving the restoration of lands and water adversely affected by past 
mineral mining, projects involving the protection, repair, replacement, 
construction, or enhancement of utilities (such as those relating to 
water supply, roads, and other such facilities serving the public 
adversely affected by mineral mining and processing practices), and the 
construction of public facilities in communities impacted by coal or 
other mineral mining and processing practices.
    As explained in the preamble, the 2006 amendments both extended the 
reclamation fee for 14 years and provided for a two-step reduction in 
the amount of the fee rate from the rate originally established in 
1977. The statutory fee rates were reduced by 10 percent from the 
levels established in 1977, for the period from October 1, 2007, 
through September 30, 2012. The fee rates will again be reduced by 
another 10 percent from the levels established in 1977 for the period 
from October 1, 2012, through September 30, 2021. The fee rates under 
2006 amendments are specified in the rule at Sec.  870.13. The fee 
rates for 2007-2012 range from 31.5 cents per ton down to 9 cents per 
ton.
    While the rates established by the 2006 amendments are lower than 
the 1977 rates, they are higher than the rates that would have been 
established under existing Sec.  870.13(b), which would have gone into 
effect had the 2006 amendments not been enacted into law. Fee rates 
under existing Sec.  870.13(b) for years 2007-2012 were estimated to 
range as follow:

----------------------------------------------------------------------------------------------------------------
                                                                   Fees for non-   Fees for non-
                                                                   lignite coal    lignite coal
                                                                    produced by     produced by      Fees for
                           Fiscal year                                surface       underground    lignite coal
                                                                      methods         methods       (cents per
                                                                    (cents per      (cents per      short ton)
                                                                    short ton)      short ton)
----------------------------------------------------------------------------------------------------------------
2007............................................................             8.5             3.7             2.4
2008............................................................             8.5             3.6             2.4
2009............................................................             7.8             3.4             2.2
2010............................................................             7.3             3.1             2.1
2011............................................................             2.6             1.1             0.7
2012............................................................             2.0             0.9             0.6
----------------------------------------------------------------------------------------------------------------

    In addition to the fee rate extension, the 2006 amendments also 
require that:
    1. Once fully phased in, the majority of the distributions to 
States and Indian tribes of moneys annually collected from the 
reclamation fee are made outside of the appropriations process. 30 
U.S.C. 1231(d).
    2. All States and Indian tribes with approved reclamation programs 
are paid amounts equal to their portion of the unappropriated prior 
balance of State and Tribal share funds as of September 30, 2007. 30 
U.S.C. 1240a(h)(1)(A). These payments are mandatory distributions from 
Treasury funds and are made in seven equal annual installments that 
began in FY 2008. 30 U.S.C. 1232(i)(2) and 1240a(h)(1)(C). Uncertified 
States and Indian tribes must use these prior balance replacement funds 
for the purposes of section 403 of SMCRA. 30 U.S.C. 1240a(h)(1)(D)(ii). 
Certified States and Indian tribes must use these payments for purposes 
established by their State legislature or Tribal council, ``with 
priority given for addressing the impacts of mineral development.'' 30 
U.S.C. 1240a(h)(1)(D)(i).
    3. Subject to certain limitations, to the extent premium payments 
and other revenue sources do not meet the financial needs of the UMWA 
health care plans, all unappropriated past interest earnings and all 
future interest earned by the Fund must be transferred to these plans, 
together with any remaining unappropriated balance in the RAMP 
allocation, which the 2006 amendments repealed. 30 U.S.C. 1232(h). In 
addition, the three UMWA health care plans are eligible to receive 
Treasury transfers to cover any remaining deficit, subject to certain 
limitations. 30 U.S.C. 1232(i).
    In general, under the old law and the 2006 amendments, the type of 
coal reclamation problems that would be remediated, mainly by the 
uncertified States and Indian tribes, would be the most serious AML 
problems (Priority 1 and Priority 2 also referred to as ``high 
priority'' problems). High priority AML problems include:
     Clogged Streams;
     Clogged Stream Lands;
     Dangerous Piles or Embankments;
     Dangerous Highwalls;
     Dangerous Impoundments;
     Dangerous Slides;
     Hazardous or Explosive Gases;
     Hazardous Equipment or Facilities;
     Hazardous Recreational Water Bodies;
     Industrial or Residential Waste;

[[Page 67626]]

     Portals;
     Polluted Water: Agricultural/Industrial;
     Polluted Water: Human Consumption;
     Subsidence-Prone Areas;
     Surface Burning;
     Underground Mine Fires; and
     Vertical Openings.
    Under the old law, certified States and Indian tribes were required 
to use grant money for noncoal reclamation. Under the 2006 amendments, 
certified States and Indian tribes must use prior balance replacement 
funds for purposes established by the State legislature or Tribal 
council, with priority given for addressing the impacts of mineral 
development. Exactly what these purposes will be is undetermined at 
this time.
    In the rule, certified States and Indian tribes are allowed to use 
certified in lieu funds for any purpose they deem appropriate. We 
assume that States and Indian tribes use the money for the public good 
but the wide discretion given to the States and Indian tribes makes any 
meaningful discussion of the effects too speculative.

Summary of Costs and Benefits

    The following two tables summarize the costs and benefits under the 
no action alternative and the 2006 amendments alternative.
    Table 1 indicates the estimated costs associated with each 
alternative. Under the no action alternative, the cost to operators is 
approximately $612 million. This sum consists of the fees that 
operators would pay under our current regulations at Sec.  870.13(b). 
Under the 2006 amendments alternative, the estimated cost is 
approximately $6.9 billion. This sum consists of: (1) The fees 
operators pay under the rates established by the 2006 amendments; (2) 
money from the general fund of the Treasury that we are required to 
transfer to certified and uncertified States and Indian tribes for 
their share of the prior unappropriated balance; and (3) Treasury funds 
that are transferred to certified States and Tribes as in lieu funds 
equal to 50% of fees collected on coal produced in their State or on 
Tribal lands. This sum does not include money that we pay to the UMWA 
under the 2006 amendments because those payments are not addressed in 
this rule.

        Table 1--Estimated Costs Associated With the Alternatives From October 1, 2007-September 30, 2021
----------------------------------------------------------------------------------------------------------------
                                           A                   B                   C                   D
                                 -------------------------------------------------------------------------------
                                  Estimated costs to
                                  operators for fees
                                  paid under the old
                                   law from October
                                     1, 2007 thru
                                  September 30, 2021
                                     (the 1977 fee    Estimated costs to  Estimated costs to
                                     rates at Sec.    operators for fees      the Federal
          Alternatives                 870.13(a)        paid under the      Treasury  (for      Estimated total
                                     terminate on       2006 amendments      prior balance           costs
                                     September 30,      from October 1,    replacement funds
                                     2007; new fee         2007 thru       and certified in
                                     rates at Sec.    September 30, 2021      lieu funds)
                                       870.13(b)
                                     sufficient to
                                  replenish interest
                                  transferred to CBF
                                     take effect)
----------------------------------------------------------------------------------------------------------------
(1) No action or old law........  $612 million......  ..................  ..................  $612 million.
(2) 2006 Amendments.............  ..................  $4.1 billion......  $2.8 billion......  $6.9 billion.
----------------------------------------------------------------------------------------------------------------

    Table 2 indicates the estimated benefits expressed in acres of land 
reclaimed. Column A indicates the estimated total amount of money 
available for reclamation under each alternative. Column B indicates 
acres of high priority sites that need to be reclaimed under each 
alternative. Column C indicates the estimated acres of high priority 
sites that can be reclaimed with the funds available under each 
alternative. In Column D, D1 indicates the estimated acres of high 
priority coal sites that would not be reclaimed under the no action 
alternative because of insufficient funds. D2 indicates the estimated 
additional reclamation that could be achieved under the 2006 
amendments. For uncertified States and Indian tribes, the additional 
reclamation would be at Priority 1 and 2 sites, Priority 3 sites, and 
noncoal reclamation. For certified States and Indian tribes, the 
reclamation could be at newly discovered Priority 1, 2, and 3 coal 
sites, and noncoal reclamation. However, as previously discussed, under 
the 2006 amendments, certified States and Indian tribes may use prior 
balance replacement funds for purposes established by the State 
legislature or Tribal council, with priority given for addressing the 
impacts of mineral development; we are providing in the rule that they 
may use certified in lieu funds for any purpose. Therefore, the $1.981 
billion dollars that will come from Treasury funds may be used for coal 
and noncoal reclamation but it also may be used for other undetermined 
purposes. We assume that certified States and Indian tribes use the 
money for the public good, as they have in the past, but the wide 
discretion given to the States and Indian tribes make any meaningful 
discussion of the actual benefits speculative.

                        Table 2--Estimated Benefits Expressed in Acres of Land Reclaimed
----------------------------------------------------------------------------------------------------------------
                                            A                   B                  C                   D
                                 -------------------------------------------------------------------------------
                                                                                               Estimated number
                                                         P1 and P2 sites    Estimated number   of acres of land
                                     Amount of money     Acres identified     of acres of      unreclaimed (D1)
          Alternatives               estimated to be        with high          identified        or additional
                                      available for          priority           problems          reclamation
                                     reclamation  ($      environmental      reclaimed with    possible after P1
                                  rounded in millions)    problems that     available funds      and P2 sites
                                                         need reclamation                       completed (D2)
----------------------------------------------------------------------------------------------------------------
(1) No Action or Old Law........  $2,110.4............            210,379            157,937  (52,442).

[[Page 67627]]

 
1977 Fee Rates (Sec.              (Source: collections
 870.13(a)) terminate on           prior to September
 September 30, 2007; new fee       30, 2007 plus
 rates.                            interest earned on
(Sec.   870.13(b)) sufficient to   prior collections).
 replenish interest transferred
 to CBF take effect.
(2) 2006 Amendments.............  $6,027.6............            210,379            210,379  210,257
Uncertified States and Indian     $4,045.7............            208,131            208,131  60,284.
 tribes.                          (Source: prior
                                   balance replacement
                                   funds, 50% State
                                   share, 30% historic
                                   coal funds and 3%
                                   estimated minimum
                                   program funds).
Certified States and Indian       $1,981.9............              2,248              2,248  149,973.
 tribes.
                                  (Source: prior        .................  .................  (Under 2006
                                   balance replacement                                         amendments, funds
                                   funds and certified                                         are not committed
                                   in lieu funds).                                             to reclamation).
----------------------------------------------------------------------------------------------------------------
Note: For activity beyond FY 2023, an additional estimated amount available for reclamation of $1.6 billion is
  projected to be used to reclaim an additional 106,000 acres.

    As can be seen from the above tables, under the no action 
alternative the cost to industry would be approximately $612 million, 
but there would be approximately 52,442 acres of Priority 1 and 
Priority 2 coal sites left unreclaimed. Under the 2006 amendments 
alternative, the cost to industry would be substantially greater, 
approximately $4.1 billion, but that amount in combination with the 
$2.8 billion in Treasury funds would be sufficient to reclaim all 
Priority 1 and Priority 2 sites. In addition, there would be additional 
funds remaining which could be used for reclamation at Priority 3 
sites, for noncoal reclamation projects, construction of public 
facilities, and for other purposes deemed appropriate by the State or 
Indian tribe. It should be noted that this analysis assumes that all 
funds are used for high priority coal reclamation.
    In addition to the quantifiable benefits expressed in acres 
reclaimed, unquantifiable benefits also result. These include:
     Reduction or elimination in health and safety problems, 
which would benefit nearby residents;
     Reduction or elimination of adverse environmental effects 
such as acid mine drainage and erosion and sedimentation;
     Improved habitat for fish and wildlife;
     Increased employment opportunities for those employed by 
the reclamation projects;
     An increase in the number of potential land uses at these 
sites and a reduction or elimination of hazardous features that are 
often attractive but dangerous to outdoor recreationists; and
     General increase in the quality of life in nearby 
communities and adjacent property values.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
requires that a Federal agency, when developing proposed and final 
regulations, consider the impact of its regulations on small entities. 
If a rule is expected to have a significant economic impact on a 
substantial number of small entities, the agency must prepare an 
initial regulatory flexibility analysis. If a rule is not expected to 
have a significant economic impact on a substantial number of small 
entities the agency is not required to perform an initial regulatory 
flexibility analysis and may certify in the rule that the rule would 
not have a significant economic impact on a substantial number of small 
entities under the RFA.
    The Small Business Administration size standards for small 
businesses in the coal mining industry are established by the North 
American Industry Classification System Codes (NAICS). NAICS classifies 
the ``coal mining'' industry under Code 2121; subsets of this sector 
include ``Bituminous Coal and Lignite Surface Mining'' code 212111; 
``Bituminous Coal Underground Mining'' code 212112; and ``Anthracite 
Mining'' code 212113. The size standards established for each of these 
categories is 500 employees or less for each business concern and 
associated affiliates. Data available from the U.S. Census Bureau and 
from the Mine Safety and Health Administration indicates that over 90 
percent of those engaged in coal mining operations are considered small 
entities.
    As previously stated, it is the 2006 amendments that require coal 
operators to pay reclamation fees. Those subject to the fees received 
individual letters informing them of the fee and the extension of time 
during which the fee must be paid. Over $200 million has already been 
collected. The rule merely reflects the extension of our statutory 
authority to collect reclamation fees for an additional fourteen years. 
Based on these facts, the Department of the Interior certifies that the 
rule would not have a significant economic impact on a substantial 
number of small entities under the RFA.
    The administrative and procedural provisions in the rule are not 
expected to have an adverse economic impact on the regulated industry 
including small entities. The increased grant funding to States and 
Indian tribes required by the 2006 amendments is expected to provide 
increased contracting opportunities for firms, including small 
entities, to do reclamation-related work. Further, the rule is not 
expected to produce adverse effects on competition,

[[Page 67628]]

employment, investment, productivity, innovation, or the ability of 
United States enterprises to compete with foreign-based enterprises in 
domestic or export markets.

Small Business Regulatory Enforcement Fairness Act

    The rule is considered a major rule under 5 U.S.C. 804(2), the 
Small Business Regulatory Enforcement Fairness Act for the following 
reasons.
    a. As discussed above under the heading Executive Order 12866--
Regulatory Planning and Review, the provisions of the 2006 amendments 
have an annual effect on the economy of $100 million or more.
    b. The rule would not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    c. The rule would not have significant adverse effects on 
competition, employment, investment, productivity, innovation, or the 
ability of U.S.-based enterprises to compete with foreign-based 
enterprises for the reasons stated above.

Unfunded Mandates

    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, 
Tribal, or local governments or the private sector. A statement 
containing the information required by the Unfunded Mandates Reform Act 
(2 U.S.C. 1501 et seq.) is not required.

Executive Order 12630--Takings

    In accordance with Executive Order 12630, the rule does not have 
significant takings implications. Contrary to the view of one 
commenter, nothing contained in this rule is a governmental action 
capable of interference with constitutionally protected property 
rights. Thus, a takings implication assessment is not required.

Executive Order 12988--Civil Justice Reform

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

Executive Order 13132--Federalism

    We have reviewed the rule under the criteria specified in Executive 
Order 13132 and have determined that the rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment. The rule does not preempt State law, it does not impose 
substantial direct compliance costs on State and local governments, and 
it does not have substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.
    As required by section 6 of the executive order, we consulted with 
representatives of States and Indian tribes early in the process of 
developing the rule. In January, February, and May 2007, we met with 
representatives of States and Indian tribes with approved reclamation 
programs at meetings hosted by IMCC and NAAMLP to notify the States and 
Indian tribes of the 2006 amendments' changes to SMCRA and to seek 
their input on the amendments. IMCC and NAAMLP subsequently submitted 
joint written comments on specific provisions of the amendments. We 
considered these comments in developing the proposed rule. The 
consultations and concerns that were expressed are discussed above in 
``II. Outreach, Guidance, and Comments.'' Based on input the Department 
received after issuance of the Solicitor's M-Opinion, one or more 
States may object to several provisions in these rules, but we believe 
that the 2006 amendments and other applicable statutes mandate adoption 
of these particular provisions. We do not have the option of adopting 
any other interpretation. As discussed above in ``IIIA. General 
Comments,'' we received comments on the proposed rule from 9 States and 
1 Indian tribe as well as joint comments from IMCC/NAAMLP. We have 
considered all these comments in developing this final rule.

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

    Executive Order 13175 requires that Federal agencies consult with 
potentially affected Indian Tribal governments before taking any 
actions (including promulgation of regulations) that may have a 
substantial direct effect on one or more Indian tribes, 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. In addition, section 5 of that order 
requires the agency to prepare a Tribal summary impact statement for 
regulations that impose compliance costs on Tribal governments or that 
preempt Tribal law. The summary statement must be included in the 
preamble to the final rule.
    We have determined that this rule will have some effect on the 
three Indian tribes with AML programs, with changes in annual funding 
and increased discretion over the use of funds, but that this effect is 
not substantial. The rule does not impose compliance costs on Tribal 
governments or preempt Tribal law. Indian Tribal representatives were 
invited to informal meetings in January, February, and May of 2007, in 
which OSM met with State and Indian Tribal reclamation programs to get 
input on the 2006 amendments. Indian Tribal representatives are members 
of NAAMLP and had the opportunity to participate in the IMCC/NAAMLP 
comments on draft regulations in 2007 and on the proposed rule. One 
Indian tribe commented on the proposed rule, and we considered their 
comments in developing this final rule.

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. The revisions would not have a significant 
effect on the supply, distribution, or use of energy.

Paperwork Reduction Act

    OSM sought comments on the collection of information contained in 
the AML Program proposed rule for modified Part 785. No comments were 
received from the public regarding the collection of information. The 
collection of information contained in this final rule has been 
approved by the Office of Management and Budget under 44 U.S.C. 3501 et 
seq. and assigned control number 1029-0040. The expiration date for 
this collection in 30 CFR Part 785 is November 30, 2011. This 
collection estimates that the applicant burden is 5.3 hours, and the 
burden for State regulatory authorities is 3.4 hours per response. 
These burden estimates include time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information. We 
may not conduct or sponsor and you are not required to respond to a 
collection of information unless it displays a currently valid OMB 
control number. You should direct comments regarding the burden 
estimate or any other aspect of this collection to the Information 
Collection Clearance Officer, OSM,

[[Page 67629]]

Room 202 SIB, 1951 Constitution Ave., NW., Washington, DC 20240.

National Environmental Policy Act

    OSM has determined that these regulations are categorically 
excluded from the National Environmental Policy Act (NEPA), 42 U.S.C. 
4332(2)(C), pursuant to Department Manual 516 DM 2.3A(2), section 1.10 
of 516 DM 2, Appendix 1. In addition, we have determined that none of 
the ``extraordinary circumstances'' exceptions to the categorical 
exclusion applies.

Data Quality Act

    In developing this rule we did not conduct or use a study, 
experiment, or survey requiring peer review under the Data Quality Act 
(Pub. L. 106-554).

List of Subjects

30 CFR Part 700

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

30 CFR Part 724

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

30 CFR Part 773

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

30 CFR Part 785

    Reporting and recordkeeping requirements, Surface mining, 
Underground mining.

30 CFR Part 816

    Environmental protection, Reporting and recordkeeping requirements, 
Surface mining.

30 CFR Part 817

    Environmental protection, Reporting and recordkeeping requirements, 
Underground mining.

30 CFR Part 845

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

30 CFR Part 846

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

30 CFR Part 870

    Abandoned Mine Reclamation Fund, Reclamation fees; Reporting and 
recordkeeping requirements, Surface mining, Underground mining.

30 CFR Part 872

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Surface mining, Underground mining.

30 CFR Part 873

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Surface mining, Underground mining.

30 CFR Part 874

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 875

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 876

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 879

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Surface mining, Underground mining.

30 CFR Part 880

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 882

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 884

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 885

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 886

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

30 CFR Part 887

    Abandoned Mine Reclamation Fund, Indian lands, Reclamation fees, 
Reporting and recordkeeping requirements, Surface mining, Underground 
mining.

    Dated: October 14, 2008.
C. Stephen Allred,
Assistant Secretary, Land and Minerals Management.


0
For the reasons given in the preamble, we are amending 30 Chapter VII 
as set forth below:

PART 700--GENERAL

0
1. The authority citation for part 700 continues to read as follows:

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


0
2. Amend Sec.  700.5, by revising the definition for the term ``Fund'' 
and adding definitions for the terms ``AML,'' ``AML inventory,'' 
``Eligible lands and water,'' ``Emergency,'' ``Expended,'' ``Extreme 
danger,'' ``Left or abandoned in either an unreclaimed or inadequately 
reclaimed condition,'' ``Project,'' ``Reclamation activity,'' and 
``Reclamation program'' in alphabetical order to read as follows:


Sec.  700.5  Definitions.

* * * * *
    AML means abandoned mine land(s).
    AML inventory means OSM's listing of abandoned mine land problems 
eligible to be reclaimed using moneys from the Abandoned Mine 
Reclamation Fund or the Treasury as appropriate.
* * * * *
    Eligible lands and water means lands and water eligible for 
expenditures under title IV of SMCRA and this chapter. Eligible lands 
and water for reclamation or drainage abatement expenditures under the 
Abandoned Mine Land program contained in this chapter are those which 
were mined for coal or which were affected by such mining, wastebanks, 
coal processing, or other coal mining processes and left or abandoned 
in either an unreclaimed or inadequately reclaimed condition prior to 
August 3, 1977, and for which there is no continuing reclamation 
responsibility. However, lands and water damaged by coal mining 
operations after that date and on or before November 5, 1990, may also 
be eligible for reclamation if they meet the

[[Page 67630]]

requirements specified in Sec.  874.12(d) and (e) of this chapter. 
Following certification of the completion of all known coal problems, 
eligible lands and water for noncoal reclamation purposes are those 
sites that meet the eligibility requirements specified in Sec.  875.14 
of this chapter. For additional eligibility requirements for water 
projects, see Sec.  874.14 of this chapter, and for lands affected by 
remining operations, see section 404 of SMCRA.
    Emergency means a sudden danger or impairment that presents a high 
probability of substantial physical harm to the health, safety, or 
general welfare of people before the danger can be abated under normal 
program operation procedures.
* * * * *
    Expended means that moneys have been obligated, encumbered, or 
committed by contract by the State, Tribe, or us for work to be 
accomplished or services to be rendered.
    Extreme danger means a condition that could reasonably be expected 
to cause substantial physical harm to persons, property, or the 
environment and to which persons or improvements on real property are 
currently exposed.
* * * * *
    Fund means the Abandoned Mine Reclamation Fund established on the 
books of the U.S. Treasury for the purpose of accumulating revenues 
designated for reclamation of abandoned mine lands and other activities 
authorized by section 401 of SMCRA.
* * * * *
    Left or abandoned in either an unreclaimed or inadequately 
reclaimed condition means, for Abandoned Mine Land programs, lands and 
water:
    (1) Which were mined or which were affected by such mining, 
wastebanks, processing or other mining processes prior to August 3, 
1977, or between August 3, 1977, and November 5, 1990, as authorized 
pursuant to section 402(g)(4) of SMCRA, and on which all mining has 
ceased;
    (2) Which continue, in their present condition, to degrade 
substantially the quality of the environment, prevent or damage the 
beneficial use of land or water resources, or endanger the health and 
safety of the public; and
    (3) For which there is no continuing reclamation responsibility 
under State or Federal laws, except as provided in sections 402(g)(4) 
and 403(b)(2) of SMCRA.
* * * * *
    Project means a delineated area containing one or more abandoned 
mine land problems. A project may be a group of related reclamation 
activities with a common objective within a political subdivision of a 
State or within a logical, geographically defined area, such as a 
watershed, conservation district, or county planning area.
* * * * *
    Reclamation activity means the reclamation, abatement, control, or 
prevention of adverse effects of past mining by an Abandoned Mine Land 
program.
    Reclamation program means a program established by a State or an 
Indian tribe in accordance with Title IV of SMCRA for reclamation of 
lands and water adversely affected by past mining, including the 
reclamation plan and annual applications for grants under the plan.
* * * * *

PART 724--INDIVIDUAL CIVIL PENALTIES

0
3. The authority citation for part 724 continues to read as follows:

    Authority: 28 U.S.C. 2461, 30 U.S.C. 1201 et seq., and 31 U.S.C. 
3701.

0
4. Amend Sec.  724.18 by revising paragraph (d) to read as follows:


Sec.  724.18  Payment of penalty.

* * * * *
    (d) Delinquent payment. Following the expiration of 30 days after 
the issuance of a final order assessing an individual civil penalty, 
any delinquent penalty shall be subject to interest at the rate 
established by the U.S. Department of the Treasury for late charges on 
late payments to the Federal Government. The Treasury current value of 
funds rate is published by the Fiscal Service in the notices section of 
the Federal Register and on Treasury's Web site. Interest on unpaid 
penalties will run from the date payment first was due until the date 
of payment. Failure to pay overdue penalties may result in one or more 
of the actions specified in Sec.  870.23(a) through (f) of this 
chapter. Delinquent penalties are subject to late payment penalties 
specified in Sec.  870.21(c) of this chapter and processing and 
handling charges specified in Sec.  870.21(d) of this chapter.

PART 773--REQUIREMENTS FOR PERMITS AND PERMIT PROCESSING

0
5. 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
6. Amend Sec.  773.13 by revising paragraph (a)(2) to read as follows:


Sec.  773.13  Unanticipated events or conditions at remining sites.

    (a) * * *
    (2) Resulted from an unanticipated event or condition at a surface 
coal mining and reclamation operation on lands that are eligible for 
remining under a permit that was held by the person applying for the 
new permit.
* * * * *

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

0
7. The authority citation for part 785 continues to read as follows:

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

0
8. Revise Sec.  785.10 to read as follows:


Sec.  785.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 785 and assigned it control number 1029-0040. The information 
is being collected to meet the requirements of sections 507, 508, 510, 
515, 701 and 711 of Public Law 95-87, which requires applicants for 
special types of mining activities to provide descriptions, maps, plans 
and data of the proposed activity. This information will be used by the 
regulatory authority in determining if the applicant can meet the 
applicable performance standards for the special type of mining 
activity. Persons must respond to obtain a benefit. A Federal agency 
may not conduct or sponsor, and you are not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number.


Sec.  785.25  [Amended]

0
9. In Sec.  785.25, remove paragraph (c).

PART 816--PERMANENT PROGRAM PERFORMANCE STANDARDS--SURFACE MINING 
ACTIVITIES

0
10. The authority citation for part 816 continues to read as follows:

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

0
11. In Sec.  816.116, revise paragraphs (c)(2)(ii) and (c)(3)(ii) to 
read as follows:


Sec.  816.116  Revegetation: Standards for success.

* * * * *
    (c) * * *
    (2) * * *
    (ii) Two full years for lands eligible for remining included in a 
permit for which a finding has been made under Sec.  773.15(m) of this 
chapter. To the extent that the success standards are established by 
paragraph (b)(5) of this

[[Page 67631]]

section, the lands must equal or exceed the standards during the 
growing season of the last year of the responsibility period.
    (3) * * *
    (ii) Five full years for lands eligible for remining included in a 
permit for which a finding has been made under Sec.  773.15(m) of this 
chapter. To the extent that the success standards are established by 
paragraph (b)(5) of this section, the lands must equal or exceed the 
standards during the growing seasons of the last two consecutive years 
of the responsibility period.
* * * * *

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

0
12. The authority citation for part 817 continues to read as follows:

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


0
13. In Sec.  817.116, revise paragraphs (c)(2)(ii) and (c)(3)(ii) to 
read as follows:


Sec.  817.116  Revegetation: Standards for success.

* * * * *
    (c) * * *
    (2) * * *
    (ii) Two full years for lands eligible for remining included in a 
permit for which a finding has been made under Sec.  773.15(m) of this 
chapter. To the extent that the success standards are established by 
paragraph (b)(5) of this section, the lands must equal or exceed the 
standards during the growing season of the last year of the 
responsibility period.
    (c) * * *
    (3) * * *
    (ii) Five full years for lands eligible for remining included in a 
permit for which a finding has been made under Sec.  773.15(m) of this 
chapter. To the extent that the success standards are established by 
paragraph (b)(5) of this section, the lands must equal or exceed the 
standards during the growing seasons of the last two consecutive years 
of the responsibility period.
* * * * *

PART 845--CIVIL PENALTIES

0
14. The authority citation for part 845 continues to read as follows:

    Authority: 28 U.S.C. 2461, 30 U.S.C. 1201 et seq., 31 U.S.C. 
3701, Pub. L. 100-202, and Pub. L. 100-446.


0
15. In Sec.  845.21, revise paragraph (b)(1) to read as follows:


Sec.  845.21  Use of civil penalties for reclamation.

* * * * *
    (b) * * *
    (1) Emergency projects as defined in Sec.  700.5 of this chapter;
* * * * *

PART 846--INDIVIDUAL CIVIL PENALTIES

0
16. The authority citation for part 846 continues to read as follows:

    Authority: 28 U.S.C. 2461, 30 U.S.C. 1201 et seq., and 31 U.S.C. 
3701.


0
17. Amend Sec.  846.18 by revising paragraph (d) to read as follows:


Sec.  846.18  Payment of penalty.

* * * * *
    (d) Delinquent payment. Following the expiration of 30 days after 
the issuance of a final order assessing an individual civil penalty, 
any delinquent penalty shall be subject to interest at the rate 
established by the U.S. Department of the Treasury for late charges on 
late payments to the Federal Government. The Treasury current value of 
funds rate is published by the Fiscal Service in the notices section of 
the Federal Register and on Treasury's Web site. Interest on unpaid 
penalties will run from the date payment first was due until the date 
of payment. Failure to pay overdue penalties may result in one or more 
of the actions specified in Sec.  870.23(a) through (f) of this 
chapter. Delinquent penalties are subject to late payment penalties 
specified in Sec.  870.21(c) of this chapter and processing and 
handling charges specified in Sec.  870.21(d) of this chapter.

PART 870--ABANDONED MINE RECLAMATION FUND--FEE COLLECTION AND COAL 
PRODUCTION REPORTING

0
18. The authority citation for part 870 continues to read as follows:

    Authority: 28 U.S.C. 1746, 30 U.S.C. 1201 et seq., and Pub. L. 
105-277, sections 1701-1710.


0
19. Revise Sec.  870.1 to read as follows:


Sec.  870.1  Scope.

    This Part sets out our procedures to collect fees for the Fund and 
to report coal production.


0
20. Amend Sec.  870.5 as follows:
0
a. Revise the introductory text as set forth below; and
0
b. Remove the following definitions: ``Abandoned Mine Reclamation Fund 
or Fund'', ``Agency'', ``Allocate'', ``Eligible lands and water'', 
``Emergency'', ``Extreme danger'', ``Indian Abandoned Mine Reclamation 
Fund or Indian Fund'', ``Indian reclamation program'', ``Left or 
abandoned in either an unreclaimed or inadequately reclaimed 
condition'', ``OSM'', ``Permanent facility'', ``Project'', ``Qualified 
hydrologic unit'', ``Reclamation activity'', ``Reclamation plan'', 
``State Abandoned Mine Reclamation Fund or State Fund'', and ``State 
reclamation program''.


Sec.  870.5  Definitions.

    As used in this Part--
* * * * *

0
21. Revise Sec.  870.10 to read as follows:


Sec.  870.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 870 and the OSM-1 Form and assigned control number 1029-0063. 
The information is used to maintain a record of coal produced 
nationwide each calendar quarter, the method of coal removal, the type 
of coal, and the basis for coal tonnage reporting. Persons must respond 
to meet the requirements of SMCRA. A Federal agency may not conduct or 
sponsor, and you are not required to respond to, a collection of 
information unless it displays a currently valid OMB control number.


Sec.  870.11  [Amended]

0
22. Amend Sec.  870.11 by removing paragraph (b) and redesignating 
paragraphs (c), (d), and (e) as paragraphs (b), (c), and (d), 
respectively.

0
23. In Sec.  870.13, revise the heading of paragraph (a), revise 
paragraph (b) and add paragraph (c) to read as follows:


Sec.  870.13  Fee rates.

    (a) Fees for coal produced for sale, transfer, or use through 
September 30, 2007.
* * * * *
    (b) Fees for coal produced for sale, transfer, or use from October 
1, 2007, through September 30, 2012. Fees for coal produced for sale, 
transfer, or use from October 1, 2007, through September 30, 2012, are 
shown in the following table:

[[Page 67632]]



------------------------------------------------------------------------
          Type of fee              Type of coal        Amount of fee
------------------------------------------------------------------------
(1) Surface mining fee........  Anthracite,        (i) If value of coal
                                 bituminous, and    is $3.15 per ton or
                                 subbituminous,     more, fee is 31.5
                                 including          cents per ton.
                                 reclaimed.        (ii) If value of coal
                                                    is less than $3.15
                                                    per ton, fee is 10
                                                    percent of the
                                                    value.
(2) Underground mining fee....  Anthracite,        (i) If value of coal
                                 bituminous, and    is $1.35 per ton or
                                 subbituminous.     more, fee is 13.5
                                                    cents per ton.
                                                   (ii) If value of coal
                                                    is less than $1.35
                                                    per ton, fee is 10
                                                    percent of the
                                                    value.
(3) Surface and underground     Lignite..........  (i) If value of coal
 mining fee.                                        is $4.50 per ton or
                                                    more, fee is 9 cents
                                                    per ton.
                                                   (ii) If value of coal
                                                    is less than $4.50
                                                    per ton, fee is 2
                                                    percent of the
                                                    value.
(4) In situ coal mining fee...  All types other    13.5 cents per ton
                                 than lignite.      based on Btu's per
                                                    ton in place equated
                                                    to the gas produced
                                                    at the site as
                                                    certified through
                                                    analysis by an
                                                    independent
                                                    laboratory.
(5) In situ coal mining fee...  Lignite..........  9 cents per ton based
                                                    on the Btu's per ton
                                                    of coal in place
                                                    equated to the gas
                                                    produced at the site
                                                    as certified through
                                                    analysis by an
                                                    independent
                                                    laboratory.
------------------------------------------------------------------------

    (c) Fees for coal produced for sale, transfer, or use from October 
1, 2012, through September 30, 2021. The fees for coal produced for 
sale, transfer, or use from October 1, 2012, through September 30, 
2021, are shown in the following table:

------------------------------------------------------------------------
          Type of fee              Type of coal        Amount of fee
------------------------------------------------------------------------
(1) Surface mining fee........  Anthracite,        (i) If value of coal
                                 bituminous, and    is $2.80 per ton or
                                 subbituminous,     more, fee is 28
                                 including          cents per ton.
                                 reclaimed coal.   (ii) If value of coal
                                                    is less than $2.80
                                                    per ton, fee is 10
                                                    percent of the
                                                    value.
(2) Underground mining fee....  Anthracite,        (i) If value of coal
                                 bituminous, and    is $1.20 per ton or
                                 subbituminous.     more, fee is 12
                                                    cents per ton.
                                                   (ii) If value of coal
                                                    is less than $1.20
                                                    per ton, fee is 10
                                                    percent of the
                                                    value.
(3) Surface and underground     Lignite..........  (i) If value of coal
 mining fee.                                        is $4.00 per ton or
                                                    more, fee is 8 cents
                                                    per ton.
                                                   (ii) If value of coal
                                                    is less than $4.00
                                                    per ton, fee is 2
                                                    percent of the
                                                    value.
(4) In situ coal mining fee...  All types other    12 cents per ton
                                 than lignite.      based on Btu's per
                                                    ton in place equated
                                                    to the gas produced
                                                    at the site as
                                                    certified through
                                                    analysis by an
                                                    independent
                                                    laboratory.
(5) In situ coal mining fee...  Lignite..........  8 cents per ton based
                                                    on the Btu's per ton
                                                    of coal in place
                                                    equated to the gas
                                                    produced at the site
                                                    as certified through
                                                    analysis by an
                                                    independent
                                                    laboratory.
------------------------------------------------------------------------


0
24. Revise Sec. Sec.  870.14 through 870.17 to read as follows:


Sec.  870.14  Determination of percentage-based fees.

    (a) If you pay a fee based on a percentage of the value of coal, 
you must include documentation supporting the claimed coal value with 
your fee payment and production report. We may review this information 
and any additional documentation we may require, including examination 
of your books and records. We may accept the valuation you claim, or we 
may determine another value of the coal.
    (b) If we determine that a higher fee must be paid, you must pay 
the additional fee together with interest computed under Sec.  870.21.


Sec.  870.15  Reclamation fee payment.

    (a) You must pay the reclamation fee based on calendar quarter 
tonnage no later than 30 days after the end of each calendar quarter.
    (b) Along with any fee payment due, you must submit to us a 
completed Coal Sales and Reclamation Fee Report (OSM-1 Form). You can 
file the OSM-1 Form either in paper format or in electronic format as 
specified in Sec.  870.17. On the OSM-1 Form, you must report:
    (1) The tonnage of coal sold, used, or transferred;
    (2) The name and address of any person or entity who is the owner 
of 10 percent or more of the mineral estate for a given permit; and
    (3) The name and address of any person or entity who purchases 10 
percent or more of the production from a given permit, during the 
applicable quarter.
    (c) If no single mineral owner or purchaser meets the 10 percent 
criterion in paragraphs (b)(2) and (b)(3) of this section, then you 
must report the name and address of the largest single mineral owner 
and purchaser. If several persons have successively transferred the 
mineral rights, you must include on the OSM-1 Form information on the 
last owner(s) in the chain before the permittee, i.e. the person or 
persons who have granted the permittee the right to extract the coal.
    (d) At the time of reporting, you may designate the information 
required by paragraphs (b) and (c) of this section as confidential.


Sec.  870.16  Acceptable payment methods.

    (a) If you owe total quarterly reclamation fees of $25,000 or more 
for one or more mines, you must:
    (1) Use an electronic fund transfer mechanism approved by the U.S. 
Department of the Treasury;
    (2) Forward payments by electronic transfer;
    (3) Include the applicable Master Entity No.(s) (Part 1-Block 4 on 
the OSM-1 Form), and OSM Document No.(s) (Part 1-upper right corner of 
the OSM-1 Form) on the wire message; and
    (4) Use our approved form or approved electronic form to report 
coal

[[Page 67633]]

tonnage sold, used, or for which ownership was transferred to the 
address indicated in the Instructions for Completing the OSM-1 Form.
    (b) If you owe less than $25,000 in quarterly reclamation fees for 
one or more mines, you may:
    (1) Forward payments by electronic transfer in accordance with the 
procedures specified in paragraph (a) of this section; or
    (2) Submit a check or money order payable to the Office of Surface 
Mining Reclamation and Enforcement in the same envelope with the OSM-1 
Form to: Office of Surface Mining Reclamation and Enforcement, P.O. Box 
360095M, Pittsburgh, Pennsylvania 15251.
    (c) If you pay more than $25,000 by a method other than an 
electronic fund transfer mechanism approved by the U.S. Department of 
the Treasury, you will be in violation of the Surface Mining Control 
and Reclamation Act of 1977, as amended.


Sec.  870.17  Filing the OSM-1 Form.

    (a) Filing an OSM-1 Form electronically. You may submit a quarterly 
electronic OSM-1 Form in place of a quarterly paper OSM-1 Form. 
Submitting the OSM-1 Form electronically is optional. If you submit 
your form electronically, you must use a methodology and medium 
approved by us and do one of the following:
    (1) Maintain a properly notarized paper copy of the identical OSM-1 
Form for review and approval by our Fee Compliance auditors (in order 
to comply with the notary requirement in SMCRA); or
    (2) Submit an electronically signed and dated statement made under 
penalty of perjury that the information contained in the OSM-1 Form is 
true and correct.
    (b) Filing a paper OSM-1 Form. Alternatively, you may submit a 
quarterly paper OSM-1 Form. If you choose to submit your form on paper, 
you must do one of the following:
    (1) Submit a properly notarized copy of the OSM-1 Form; or
    (2) Submit the OSM-1 Form with a signed and dated statement made 
under penalty of perjury that the information contained in the form is 
true and correct. Under the unsworn statement option, you must sign the 
following statement: ``I declare under penalty of perjury that the 
foregoing is true and correct. Executed on [date].''

0
25. In Sec.  870.18, revise paragraph (b) to read as follows:


Sec.  870.18  General rules for calculating excess moisture.

* * * * *
    (b) If OSM disallows any or all of an allowance for excess 
moisture, you must submit an additional fee plus interest computed 
according to Sec.  870.21(a) and penalties computed according to Sec.  
870.21(c).
* * * * *

0
26. Add new Sec. Sec.  870.21 through 870.23 to read as follows:


Sec.  870.21  Late payments.

    (a) Fee payments postmarked later than 30 days after the calendar 
quarter for which the fee was owed are subject to interest. Late 
reclamation fee payments are subject to interest at the rate 
established by the U.S. Department of the Treasury for late charges on 
payments to the Federal Government. The Treasury current value of funds 
rate is published annually in the Federal Register and on Treasury's 
Web site.
    (b) We will charge interest on unpaid reclamation fees from the 
31st day following the end of the calendar quarter for which the fee 
payment is owed to the date of payment. If you are delinquent, we will 
bill you monthly and initiate whatever action is necessary to collect 
full payment of all fees and interest.
    (c) When a reclamation fee debt is more than 91 days overdue, a 6 
percent annual penalty on the amount owed for fees will begin and will 
run until the date of payment. This penalty is in addition to the 
interest described in paragraph (a) of this section.
    (d) For all delinquent fees, interest, and penalties, you must pay 
a processing and handling charge that we will set based upon the 
following components:
    (1) For debts referred to a collection agency, the amount charged 
to us by the collection agency;
    (2) For debts we processed and handled, a standard amount we set 
annually based upon similar charges by collection agencies for debt 
collection;
    (3) For debts referred to the Office of the Solicitor within the 
U.S. Department of the Interior, but paid before litigation, the 
estimated average cost to prepare the case for litigation as of the 
time of payment;
    (4) For debts referred to the Office of the Solicitor within the 
U.S. Department of the Interior, and litigated, the estimated cost to 
prepare and litigate a debt case as of the time of payment; and
    (5) If not otherwise provided for, all other administrative 
expenses associated with collection, including, but not limited to, 
billing, recording payments, and follow-up actions.
    (e) We will not charge prejudgment interest on any processing and 
handling charges.


Sec.  870.22  Maintaining required production records.

    (a) If you engage in or conduct a surface coal mining operation, 
you must maintain up-to-date records that contain at least the 
following information:
    (1) The tons of coal you produced, bought, sold, or transferred, 
the amount of money you received per ton, the name of person to whom 
you sold or transferred the coal, and the date of each sale or 
transfer;
    (2) The tons of coal you used and your date of your consumption;
    (3) The tons of coal you stockpiled or inventoried that are not 
classified as sold for fee computation purposes under Sec.  870.12; and
    (4) For in situ coal mining operations, the total Btu value of gas 
you produced, the Btu value of a ton of coal in a place certified at 
least semiannually by an independent laboratory, and the amount of 
money you received for gas sold, transferred, or used.
    (b) We must have access to your records of any surface coal mining 
operation for review. Your records must be available to us at 
reasonable times.
    (c) We may inspect and copy any of your books or records that are 
necessary to substantiate the accuracy of your OSM-1 Form and payments. 
If the fee is paid at the maximum rate, we will not copy information 
relative to price. We will protect all copied information as authorized 
or required by the Privacy Act (5 U.S.C. 552a) and the Freedom of 
Information Act (5 U.S.C. 552).
    (d) You must maintain your books and records for 6 years from the 
end of the calendar quarter in which the fee was due or paid, whichever 
is later.
    (e) If you do not maintain or make available your books and records 
as required in this section, we will estimate the fee due under this 
Part through use of average production figures based upon the nature 
and acreage of your coal mining operation.
    (1) We will assess the fee at the amount we estimate plus an 
additional 20 percent to account for possible error in our fee 
liability estimate.
    (2) After you receive our fee liability estimate, you may request 
that we revise that estimate based upon your information. However, you 
must demonstrate that our fee liability estimate is incorrect. You may 
do this by providing adequate documentation that we find to be 
acceptable and comparable to the information required in Sec.  
870.19(a).

[[Page 67634]]

Sec.  870.23  Consequences of noncompliance.

    If you do not maintain adequate records, provide us with access to 
records of a surface coal mining operation, or pay overdue reclamation 
fees, including interest on late payments or underpayments, we may take 
one or more of the following actions:
    (a) Start a legal action against you;
    (b) Report you to the Internal Revenue Service;
    (c) Report you to State agencies responsible for taxation;
    (d) Report you to credit bureaus;
    (e) Refer you to collection agencies; or
    (f) Take some other appropriate action against you.

0
27. Revise part 872 to read as follows:

PART 872--MONEYS AVAILABLE TO ELIGIBLE STATES AND INDIAN TRIBES

Sec.
872.1 What does this Part do?
872.5 Definitions.
872.10 Information collection.
872.11 Where do moneys in the Fund come from?
872.12 Where do moneys distributed from the Fund and other sources 
go?
872.13 What moneys does OSM distribute each year?
872.14 What are State share funds?
872.15 How does OSM distribute and award State share funds?
872.16 Are there any restrictions on how States may use State share 
funds?
872.17 What are Tribal share Funds?
872.18 How does OSM distribute and award Tribal share funds?
872.19 Are there any restrictions on how Indian tribes may use 
Tribal share funds?
872.20 What will OSM do with unappropriated AML funds currently 
allocated to the Rural Abandoned Mine Program?
872.21 What are historic coal funds?
872.22 How does OSM distribute and award historic coal funds?
872.23 Are there any restrictions on how you may use historic coal 
funds?
872.24 What are Federal expense funds?
872.25 Are there any restrictions on how OSM may use Federal expense 
funds?
872.26 What are minimum program make up funds?
872.27 How does OSM distribute and award minimum program make up 
funds?
872.28 Are there any restrictions on how you may use minimum program 
make up funds?
872.29 What are prior balance replacement funds?
872.30 How does OSM distribute and award prior balance replacement 
funds?
872.31 Are there any restrictions on how you may use prior balance 
replacement funds?
872.32 What are certified in lieu funds?
872.33 How does OSM distribute and award certified in lieu funds?
872.34 Are there any restrictions on how you may use certified in 
lieu funds?
872.35 When will OSM reduce the amount of prior balance replacement 
funds or certified in lieu funds distributed to you?

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


Sec.  872.1  What does this Part do?

    This Part sets forth procedures and general responsibilities for 
managing funds received under Title IV of the Surface Mining Control 
and Reclamation Act of 1977, as amended.


Sec.  872.5  Definitions.

    As used in this Part--
    Allocate means to identify moneys in our records at the time they 
are received by the Fund. The allocation process identifies moneys in 
the Fund by the type of funds collected, including the specific State 
or Indian tribal share.
    Award means to approve our grant agreement authorizing you to draw 
down and expend program funds.
    Distribute means to annually assign funds to a specific State or 
Indian tribe. After distribution, funds are available for award in a 
grant to that specific State or Indian tribe.
    Indian Abandoned Mine Reclamation Fund or Indian Fund means a 
separate fund that an Indian tribe established to account for moneys we 
award under Parts 885 or 886 of this chapter or other moneys these 
regulations authorize to be deposited in the Indian Fund.
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.
    State Abandoned Mine Reclamation Fund or State Fund means a 
separate fund that a State established to account for moneys we award 
under Parts 885 or 886 of this chapter or other moneys these 
regulations authorize to be deposited in the State Fund.


Sec.  872.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 872 and assigned it control number 1029-0054. The information 
is used to determine whether States and Indian tribes will be granted 
funds for reclamation activities. States and Indian tribes must respond 
to obtain a benefit in accordance with SMCRA. A Federal agency may not 
conduct or sponsor, and you are not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number.


Sec.  872.11  Where do moneys in the Fund come from?

    Revenue to the Fund includes--
    (a) Reclamation fees we collect under section 402 of SMCRA and Part 
870 of this chapter;
    (b) Amounts we collect from charges for use of land acquired or 
reclaimed with moneys from the Fund under Part 879 of this chapter;
    (c) Moneys we recover through satisfaction of liens filed against 
privately owned lands reclaimed with moneys from the Fund under Part 
882 of this chapter;
    (d) Moneys we recover from the sale of lands acquired with moneys 
from the Fund or by donation;
    (e) Moneys donated to us for the purpose of abandoned mine land 
reclamation; and
    (f) Interest and any other income earned from investment of the 
Fund. We will credit interest and other income only to the Secretary's 
share.


Sec.  872.12  Where do moneys distributed from the Fund and other 
sources go?

    (a) Each State or Indian tribe with an approved reclamation plan 
must establish an account to be known as a State or Indian Abandoned 
Mine Reclamation Fund. These funds will be managed in accordance with 
the OMB Circular A-102.
    (b) Revenue for the State and Indian Abandoned Mine Reclamation 
Funds will include--
    (1) Amounts we granted for purposes of conducting the approved 
reclamation plan;
    (2) Moneys collected from charges for uses of land acquired or 
reclaimed with moneys from the State or Indian Abandoned Mine 
Reclamation Fund under Part 879 of this chapter;
    (3) Moneys recovered through the satisfaction of liens filed 
against privately owned lands;
    (4) Moneys the State or Indian tribe recovered from the sale of 
lands acquired under Title IV of SMCRA; and
    (5) Such other moneys as the State or Indian tribe decides should 
be deposited in the State or Indian Abandoned Mine Reclamation Fund for 
use in carrying out the approved reclamation program.
    (c) Moneys deposited in State or Indian Abandoned Mine Reclamation 
Funds must be used to carry out the reclamation plan approved under 
Part 884 of this chapter and projects approved under Sec.  886.27 of 
this chapter.


Sec.  872.13  What moneys does OSM distribute each year?

    (a) Under Title IV of SMCRA, each Federal fiscal year we must 
distribute to you, the States and Indian tribes with approved 
reclamation plans, the moneys listed in this section. We distribute all

[[Page 67635]]

Fund moneys and other moneys from the Treasury that have been 
designated for mandatory distribution. We provide information to you 
showing how we calculated your distribution. We distribute the 
following moneys:
    (1) State share funds to uncertified States as described in Sec.  
872.14;
    (2) Tribal share funds to uncertified Indian tribes as described in 
Sec.  872.17;
    (3) Historic coal funds to uncertified States and Indian tribes as 
described in Sec.  872.21;
    (4) Minimum program make up funds to eligible uncertified States 
and Indian tribes as described in Sec.  872.26;
    (5) Prior balance replacement funds to certified and uncertified 
States and Indian tribes as described in Sec.  872.29; and
    (6) Certified in lieu funds to certified States and Indian tribes 
as described in Sec.  872.32.
    (b) We calculate annual fee collections for coal produced in the 
previous Federal fiscal year on a net cash basis. This means that we 
use collections that are paid for the current Federal fiscal year to 
adjust fees that were overpaid or underpaid in prior fiscal years.
    (c) We distribute any Congressionally-appropriated funds for grants 
to you out of the Federal expense funds when the appropriation becomes 
available.
    (d) You may apply for any or all distributed funds at any time 
after the distribution using the procedures in Part 885 of this chapter 
for certified States and Indian tribes or Part 886 for uncertified 
States and Indian tribes.


Sec.  872.14  What are State share funds?

    ``State share funds'' are moneys we distribute to you from your 
State share of the Fund each Federal fiscal year under section 
402(g)(1)(A) of SMCRA. Your State share of the Fund is 50 percent of 
the reclamation fees we collected from within your State (excluding 
fees collected on Indian lands) and allocated to you, the State, in the 
Fund for coal produced in the previous fiscal year.


Sec.  872.15  How does OSM distribute and award State share funds?

    (a) To be eligible to receive State share funds, you must meet the 
following criteria:
    (1) You must have and maintain an approved reclamation plan under 
Part 884 of this chapter; and
    (2) You cannot be certified under section 411(a) of SMCRA.
    (b) If you meet the eligibility requirements in paragraph (a) of 
this section, we will distribute and award these State share funds to 
you as follows:
    (1) We annually distribute State share funds to you as shown in the 
following table:

------------------------------------------------------------------------
                                         The amount of State share funds
     For the Federal fiscal year(s)       we annually distribute to you
            beginning . . .                       will be . . .
------------------------------------------------------------------------
(i) October 1, 2007 and October 1, 2008  50 percent of your 50 percent
                                          share of reclamation fees
                                          collected on prior fiscal year
                                          coal production.
(ii) October 1, 2009 and October 1,      75 percent of your 50 percent
 2010.                                    share of reclamation fees
                                          collected on prior fiscal year
                                          coal production.
(iii) October 1, 2011 and continuing      100 percent of your 50 percent
 through September 30, 2022.              share of reclamation fees
                                          collected on prior fiscal year
                                          coal production.
(iv) October 1, 2022 (fiscal year 2023)  The amount remaining in your
                                          State share of the Fund.
------------------------------------------------------------------------

    (2) We award these funds to you in grants according to the 
provisions of Part 886 of this chapter.


Sec.  872.16  Are there any restrictions on how States may use State 
share funds?

    Yes. You may only use State share funds for:
    (a) Coal reclamation under Sec.  874.12 of this chapter;
    (b) Water supply restoration under Sec.  874.14 of this chapter;
    (c) Noncoal reclamation under Sec.  875.12 of this chapter that is 
requested under section 409(c) of SMCRA;
    (d) Deposit into an acid mine drainage abatement and treatment fund 
under Part 876 of this chapter;
    (e) Land acquisition under Sec.  879.11 of this chapter; and
    (f) Maintenance of the AML inventory under section 403(c) of SMCRA.


Sec.  872.17  What are Tribal share funds?

    ``Tribal share funds'' are moneys we distribute to you from your 
Tribal share of the Fund each Federal fiscal year under section 
402(g)(1)(B) of SMCRA. Your Tribal share of the Fund is 50 percent of 
the reclamation fees we collected and allocated to you, the Indian 
tribe(s), in the Fund for coal produced in the previous fiscal year 
from the Indian lands in which you have an interest.


Sec.  872.18  How will OSM distribute and award Tribal share funds?

    (a) To be eligible to receive Tribal share funds, you must meet the 
following criteria:
    (1) You must have and maintain an approved reclamation plan under 
Part 884 of this chapter; and
    (2) You cannot be certified under section 411(a) of SMCRA.
    (b) If you meet the eligibility requirements in paragraph (a) of 
this section, we will distribute and award these Tribal share funds to 
you as follows:
    (1) We annually distribute Tribal share funds to you as shown in 
the following table:

------------------------------------------------------------------------
                                            The amount of Tribal share
     For the Federal fiscal year(s)      funds we annually distribute to
            beginning . . .                     you will be . . .
------------------------------------------------------------------------
(i) October 1, 2007 and October 1, 2008  50 percent of your 50 percent
                                          share of reclamation fees
                                          collected on prior fiscal year
                                          coal production.
(ii) October 1, 2009 and October 1,      75 percent of your 50 percent
 2010.                                    share of reclamation fees
                                          collected on prior fiscal year
                                          coal production.
(iii) October 1, 2011 and continuing     100 percent of your 50 percent
 through September 30, 2022.              share of reclamation fees
                                          collected on prior fiscal year
                                          coal production.
(iv) October 1, 2022 (fiscal year 2023)  The amount remaining in your
                                          Tribal share of the Fund.
------------------------------------------------------------------------


[[Page 67636]]

    (2) We award these funds to you in grants according to the 
provisions of Part 886 of this chapter.


Sec.  872.19  Are there any restrictions on how Indian tribes may use 
Tribal share funds?

    Yes. You may only use Tribal share funds for:
    (a) Coal reclamation under Sec.  874.12 of this chapter;
    (b) Water supply restoration under Sec.  874.14 of this chapter;
    (c) Noncoal reclamation under Sec.  875.12 of this chapter that is 
requested under section 409(c) of SMCRA;
    (d) Deposit into an acid mine drainage abatement and treatment fund 
under Part 876 of this chapter;
    (e) Land acquisition under Sec.  879.11 of this chapter; and
    (f) Maintenance of the AML inventory under section 403(c) of SMCRA.


Sec.  872.20  What will OSM do with unappropriated AML funds currently 
allocated to the Rural Abandoned Mine Program ?

    Under section 402(h)(4)(B) of SMCRA, we will make available any 
moneys that remain allocated to RAMP and that were not appropriated or 
moved to other allocations before December 20, 2006, for possible 
transfer to the three United Mine Workers of America (UMWA) health care 
plans described in section 402(h)(2) of SMCRA.


Sec.  872.21  What are historic coal funds?

    (a) ``Historic coal funds'' are moneys provided under section 
402(g)(5) of SMCRA based on the amount of coal produced before August 
3, 1977, in your State or on Indian lands in which you have an 
interest. Under the Surface Mining Control and Reclamation Act 
Amendments of 2006, which were enacted as Division C, Title II, 
Subtitle A of P.L. 109-432, each year we allocate and distribute 30 
percent of annual AML fee collections for coal produced in the previous 
fiscal year plus 60 percent of any other revenue to the Fund as 
historic coal funds to supplement grants to States and Indian tribes.
    (b) Historic coal funds also include moneys we reallocate under 
sections 401(f)(3)(A)(i), 411(h)(1)(A)(ii), and 411(h)(4) of SMCRA, 
including:
    (1) The moneys we reallocate based on prior balance replacement 
funds distributed under Sec.  872.29, which will be available to 
supplement grants beginning with Federal fiscal year 2023; and
    (2) The moneys we reallocate based on certified in lieu funds 
distributed under Sec.  872.32, which will be available to supplement 
grants in Federal fiscal years 2009 through 2022.


Sec.  872.22  How does OSM distribute and award historic coal funds?

    (a) To be eligible to receive historic coal funds, you must meet 
the following criteria:
    (1) You must have and maintain an approved reclamation plan under 
Part 884 of this chapter;
    (2) You cannot be certified under section 411(a) of SMCRA; and
    (3) You must have unfunded Priority 1 and 2 coal problems remaining 
under sections 403(a)(1) and (2) of SMCRA.
    (b) If you meet the eligibility requirements in paragraph (a) of 
this section, we distribute these moneys to you using a formula based 
on the amount of coal historically produced before August 3, 1977, in 
your State or from the Indian lands concerned.
    (c) We annually distribute historic coal funds to you as shown in 
the following table:

------------------------------------------------------------------------
                                           The amount of historic coal
 For the Federal fiscal years beginning  funds we annually distribute to
                 . . .                          you will be . . .
------------------------------------------------------------------------
 (1) October 1, 2007 and October 1,       50 percent of the amount we
 2008.                                    calculate using the formula
                                          described in paragraph (b) of
                                          this section.
 (2) October 1, 2009 and October 1,       75 percent of the amount we
 2010.                                    calculated using the formula
                                          described in paragraph (b) of
                                          this section.
 (3) October 1, 2011 and continuing       100 percent of the amount we
 through September 30, 2022.              calculate using the formula
                                          described in paragraph (b) of
                                          this section.
 (4) October 1, 2022 (fiscal year         100 percent of the amount we
 2023), and thereafter.                   calculate using the formula
                                          described in paragraph (b) of
                                          this section until funds are
                                          no longer available or you
                                          have reclaimed your remaining
                                          Priority 1 and 2 coal
                                          problems.
------------------------------------------------------------------------

    (d) In any given year, we will only distribute to you the historic 
coal funds that you need to reclaim your unfunded Priority 1 or 2 coal 
problems. Your distribution of State or Tribal share funds under Sec.  
872.14 or Sec.  872.17 plus your distribution of historic coal funds 
along with unused funds from prior allocations could be more than you 
need to reclaim your remaining high priority problems. If that occurs, 
we will reduce the historic coal funds we distribute to you to the 
amount that you need to fully fund reclamation of all your remaining 
Priority 1 or 2 coal problems.
    (e) We award these funds to you in grants according to the 
provisions of Part 886 of this chapter.


Sec.  872.23  Are there any restrictions on how you may use historic 
coal funds?

    Yes. You may only use historic coal funds for:
    (a) Coal reclamation under Sec.  874.12 of this chapter;
    (b) Water supply restoration under Sec.  874.14 of this chapter;
    (c) Noncoal reclamation under Sec.  875.12 of this chapter that is 
requested under section 409(c) of SMCRA;
    (d) Deposit into an acid mine drainage abatement and treatment fund 
under Part 876 of this chapter;
    (e) Land acquisition under Sec.  879.11 of this chapter; and
    (f) Maintenance of the AML inventory under section 403(c) of SMCRA.


Sec.  872.24  What are Federal expense funds?

    ``Federal expense funds'' are moneys available in the Fund that are 
not allocated or distributed as State share funds (Sec.  872.14), 
Tribal share funds (Sec.  872.17), historic coal funds (Sec.  872.21), 
or minimum program make up funds (Sec.  872.26). Congress must 
appropriate Federal expense funds before we may expend them.


Sec.  872.25  Are there any restrictions on how OSM may use Federal 
expense funds?

    (a) We may use Federal expense funds only for the purposes in 
sections 402(g)(3)(A) through (D) and 402(g)(4) of SMCRA, which include 
the following:
    (1) The Small Operator Assistance Program under section 507(c) of 
SMCRA (not more than $10 million annually);
    (2) Emergency projects under State, Tribal, and Federal programs 
under section 410 of SMCRA;
    (3) Nonemergency projects in States and on lands within the 
jurisdiction of Indian tribes that do not have an approved abandoned 
mine reclamation program under section 405 of SMCRA;
    (4) The Secretary's administration of Title IV of SMCRA and this 
subchapter; and

[[Page 67637]]

    (5) Projects authorized under section 402(g)(4) in States and on 
lands within the jurisdiction of Indian tribes that do not have an 
approved abandoned mine reclamation program under section 405 of SMCRA.
    (b) We will not deduct moneys that we have annually allocated or 
distributed as Federal expense funds under sections 402(g)(3)(A) 
through (D) or (4) of SMCRA for any State or Indian tribe from moneys 
we annually allocate or distribute to a State or Indian tribe under the 
authority of sections 402(g)(1) or (5) of SMCRA.
    (c) We expend moneys under the authority in section 402(g)(3)(C) of 
SMCRA only in States or on Indian lands where the State or Indian tribe 
does not have an abandoned mine reclamation program approved under 
section 405 of SMCRA.


Sec.  872.26  What are minimum program make up funds?

    (a) ``Minimum program make up funds'' are additional moneys we 
distribute each Federal fiscal year to eligible States and Indian 
tribes to make up the difference between their total distribution of 
other funds and $3 million. The source of these funds is moneys in the 
Secretary's 20 percent share of the Fund that are authorized for 
mandatory distribution.
    (b) To be eligible to receive funds under this section, you must 
meet the following criteria:
    (1) You must have and maintain an approved reclamation plan under 
Part 884 of this chapter;
    (2) You cannot have certified under section 411(a) of SMCRA;
    (3) The total amount you receive annually from State share funds 
(Sec.  872.14) or Tribal share funds (Sec.  872.17), historic coal 
funds (Sec.  872.21), and prior balance replacement funds (Sec.  
872.29) must be less than $3 million; and
    (4) You must need more than the total of funds you will receive 
from State or Tribal share, historic coal, and prior balance 
replacement funds to reclaim Priority 1 and 2 coal problems under 
sections 403(a)(1) and (2) of SMCRA in your State or on Indian lands 
within your jurisdiction.
    (c) We will make funds available to the States of Missouri and 
Tennessee under this section to reclaim Priority 1 and 2 coal problems 
included in the AML inventory, provided each State has a reclamation 
plan approved under Part 884 of this chapter.


Sec.  872.27  How does OSM distribute and award minimum program make up 
funds?

    (a) If you meet the eligibility requirements in Sec.  872.26(b), we 
will distribute these minimum program make up funds to you as follows:
    (1) We calculate your total distribution under this Part by first 
adding, in order, your prior balance replacement funds distribution 
(Sec.  872.29), your applicable State or Tribal share funds 
distribution (Sec.  872.14 or Sec.  872.17), and your historic coal 
funds distribution (Sec.  872.21). If the sum of these funds is less 
than $3 million, we calculate the amount of minimum program make up 
funds to add to your distribution under this section to increase it to 
that level.
    (2) For each of the Federal fiscal years 2007 through 2022, we add 
minimum program make up funds to your combined distribution of prior 
balance replacement, State or Tribal share, and historic coal funds as 
shown in the following table:

------------------------------------------------------------------------
                                          The amount of minimum program
  For each of the Federal fiscal years     make up funds we add to your
            beginning . . .                 distribution will be . . .
------------------------------------------------------------------------
(i) October 1, 2007 and October 1, 2008  50 percent of the amount that
                                          we calculated should be added
                                          under paragraph (a)(1) of this
                                          section.
(ii) October 1, 2009 and October 1,      75 percent of the amount that
 2010.                                    we calculated should be added
                                          under paragraph (a)(1) of this
                                          section.
(iii) October 1, 2011 and continuing     100 percent of the amount that
 through September 30, 2022.              we calculated should be added
                                          under paragraph (a)(1) of this
                                          section as long as you have at
                                          least $3 million of Priority 1
                                          and 2 coal problems remaining.
(iv) October 1, 2022 and thereafter....  to the extent funds are
                                          available, 100 percent of the
                                          amount that we calculated
                                          should be added under
                                          paragraph (a)(1) until you
                                          have less than $3 million of
                                          Priority 1 and 2 coal problems
                                          remaining.
------------------------------------------------------------------------

    (b) We award these funds to you in grants according to the 
provisions of Part 886 of this chapter.


Sec.  872.28  Are there any restrictions on how you may use minimum 
program make up funds?

    Yes. You may only use minimum program make up funds for:
    (a) Priority 1 and 2 coal reclamation under sections 403(a)(1) and 
(2) of SMCRA;
    (b) Priority 3 reclamation that is part of Priority 1 or 2 coal 
reclamation under sections 403(a)(1) or (2) of SMCRA and Sec.  874.13 
of this chapter;


Sec.  872.29  What are prior balance replacement funds?

    ``Prior balance replacement funds'' are moneys we must distribute 
to you instead of the moneys we allocated to your State or Tribal share 
of the Fund before October 1, 2007, but did not distribute to you 
because Congress did not appropriate them. They come from general funds 
of the United States Treasury that are otherwise unappropriated. Under 
section 411(h)(1) of SMCRA, we distribute prior balance replacement 
funds to you, the State or Indian tribe, for seven years starting in 
the Federal fiscal year beginning October 1, 2008.


Sec.  872.30  How does OSM distribute and award prior balance 
replacement funds?

    (a) We distribute prior balance replacement funds to you as 
follows:
    (1) In an amount equal to the aggregate, unappropriated amount 
allocated to you before October 1, 2007, under sections 402(g)(1)(A) or 
(B) of SMCRA;
    (2) If you are, or are not, certified under section 411(a) of 
SMCRA; and
    (3) Subject to Sec.  872.35, in seven equal annual installments 
beginning with the 2008 Federal fiscal year which starts on October 1, 
2007.
    (b) We award these funds to you in grants according to the 
provisions of Part 885 of this chapter for certified States and Indian 
tribes or Part 886 of this chapter for uncertified States and Indian 
tribes.
    (c) At the same time we distribute prior balance replacement funds 
to you under this section, we transfer the same amount to historic coal 
funds from moneys in your State or Tribal share of the Fund that were 
allocated to you before October 1, 2007. The transferred funds will be 
available for annual grants under Sec.  872.21 for the Federal fiscal 
year beginning October 1, 2022, and annually thereafter. We will 
allocate, distribute, and award the transferred

[[Page 67638]]

funds according to the provisions of Sec. Sec.  872.21, 872.22, and 
872.23.


Sec.  872.31  Are there any restrictions on how you may use prior 
balance replacement funds?

    (a) Yes. If you are certified under section 411(a) of SMCRA, you 
may only use prior balance replacement funds for those purposes your 
State legislature or Tribal council establishes, giving priority to 
addressing the impacts of mineral development.
    (b) Yes. If you are not certified under section 411(a) of SMCRA, 
you may only use prior balance replacement funds for the purposes in 
section 403 of SMCRA, which include:
    (1) Reclamation of coal problems under Sec.  874.12 of this 
chapter;
    (2) Water supply restoration under Sec.  874.14 of this chapter; 
and
    (3) Maintenance of the AML inventory.


Sec.  872.32  What are certified in lieu funds?

    ``Certified in lieu funds'' are moneys that we distribute to you, 
the certified State or Indian tribe, in lieu of moneys allocated to 
your State or Tribal share of the Fund after October 1, 2007. Certified 
in lieu funds come from general funds of the United States Treasury 
that are otherwise unappropriated. Beginning with the 2009 Federal 
fiscal year which starts on October 1, 2008, we distribute certified in 
lieu funds to you under section 411(h)(2) of SMCRA.


Sec.  872.33  How does OSM distribute and award certified in lieu 
funds?

    (a) You must be certified under section 411(a) of SMCRA to receive 
certified in lieu funds.
    (b) If you meet the eligibility requirement in paragraph (a) of 
this section, we distribute these certified in lieu funds to you as 
follows:
    (1) Starting in the Federal fiscal year that begins on October 1, 
2008, we annually distribute funds to you based on 50 percent of 
reclamation fees received for coal produced during the previous Federal 
fiscal year in your State or on Indian lands within your jurisdiction;
    (2) The funds we annually distribute to you are in lieu of moneys 
we otherwise would distribute to you from State share funds under Sec.  
872.14 or Tribal share funds under Sec.  872.17 had you not been 
excluded from receiving those funds under section 401(f)(3)(B) of 
SMCRA; and
    (3) Subject to Sec.  872.35, we annually distribute certified in 
lieu funds to you as shown in the following table:

------------------------------------------------------------------------
                                         The amount of certified in lieu
In the Federal fiscal year(s) beginning  funds we annually distribute to
                on . . .                    you will be equal to . . .
 
------------------------------------------------------------------------
(i) October 1, 2008....................  25 percent of your 50 percent
                                          share of annual reclamation
                                          fee collections.
(ii) October 1, 2009...................  50 percent of your 50 percent
                                          share of annual reclamation
                                          fee collections.
(iii) October 1, 2010..................  75 percent of your 50 percent
                                          share of annual reclamation
                                          fee collections.
(iv) October 1, 2011, and thereafter...  100 percent of your 50 percent
                                          share of annual reclamation
                                          fee collections.
------------------------------------------------------------------------

    (c) We award these funds to you in grants according to the 
provisions of Part 885 of this chapter.
    (d) At the same time we distribute certified in lieu funds to you 
under this section, we transfer the same amount to historic coal funds 
and make those funds available for annual grants under Sec.  872.21 
that same Federal fiscal year. We allocate, distribute, and award the 
transferred funds according to the provisions of Sec. Sec.  872.21, 
872.22, and 872.23.
    (e) We will distribute to you the amounts we withhold under 
paragraph (b) of this section in two equal annual installments. We will 
do this in Federal fiscal years 2018 and 2019.


Sec.  872.34  Are there any restrictions on how you may use certified 
in lieu funds?

    There are no limitations or restrictions on the use of certified in 
lieu funds in the Surface Mining Control and Reclamation Act Amendments 
of 2006 which were enacted as Division C, Title II, Subtitle A of P.L. 
109-432.


Sec.  872.35  When will OSM reduce the amount of prior balance 
replacement funds or certified in lieu funds distributed to you?

    (a) In any fiscal year in which the amount of Treasury funds 
required to be transferred under Sec. Sec.  872.30 and 872.33 of this 
chapter and under section 402(i)(1) of SMCRA exceeds the maximum annual 
limit of $490 million, we will adjust the amount of these payments to 
reduce them to the level of the cap. Each distribution or transfer for 
the FY will be reduced by the same percentage.
    (b) We will not include amounts under section 402(h)(5)(A) as part 
of this calculation.

PART 873--FUTURE RECLAMATION SET-ASIDE PROGRAM

0
28. The authority citation for part 873 is revised to read as follows:

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


0
29. Revise Sec. Sec.  873.11 and 873.12 to read as follows:


Sec.  873.11  Applicability.

    The provisions of this part apply to funds awarded, as defined in 
Sec.  872.5 of this chapter, under section 402(g)(6)(A) of SMCRA before 
its amendment on December 20, 2006, and their use by the States or 
Indian tribes for coal reclamation purposes after September 30, 1995.


Sec.  873.12  Future set-aside program criteria.

    (a) Any State or Indian tribe may receive and retain, without 
regard to the limitation referred to in section 402(g)(1)(D) of SMCRA, 
up to 10 percent of the total of the funds distributed annually to such 
State or Indian tribe under sections 402(g)(1) and (5) of SMCRA for a 
future set-aside fund if such amounts were awarded before December 20, 
2006. The State or Indian tribe must deposit all set-aside funds 
awarded into a special fund established under State or Indian tribal 
law. The State or Indian tribe must expend amounts awarded (together 
with all interest earned on such amounts) solely to achieve the 
priorities stated in section 403(a) of SMCRA.
    (b) Moneys the State or Indian tribe deposited in the special fund 
account, together with any interest earned, are considered State or 
Indian tribal moneys.

PART 874--GENERAL RECLAMATION REQUIREMENTS

0
30. The authority citation for part 874 continues to read as follows:

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


0
31. Add Sec.  874.5 to read as follows:

[[Page 67639]]

Sec.  874.5  Definitions.

    As used in this Part--
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.

0
32. Revise Sec. Sec.  874.10 and 874.11 to read as follows:


Sec.  874.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 874 and assigned it control number 1029-0113. This information 
is used to ensure that appropriate reclamation projects involving the 
incidental extraction of coal are conducted under the authority of 
section 528(2) of SMCRA and that selected projects contain sufficient 
environmental safeguards. Persons must respond to obtain a benefit. A 
Federal agency may not conduct or sponsor, and you are not required to 
respond to, a collection of information unless it displays a currently 
valid OMB control number.


Sec.  874.11  Applicability.

    You must comply with the requirements in this Part for--
    (a) Reclamation projects using moneys from the Fund;
    (b) Reclamation projects using prior balance replacement funds 
provided to uncertified States and Indian tribes under Sec.  872.29 of 
this chapter; or
    (c) Coal reclamation projects by certified States and Indian tribes 
required to maintain certification under section 411(a) of SMCRA and 
the agreement required by Sec. Sec.  875.13(a)(3) and 875.14(b) of this 
chapter to maintain that certification.

0
33. Amend Sec.  874.12 by revising paragraphs (c), (e), and (f) to read 
as follows:


Sec.  874.12  Eligible coal lands and water.

* * * * *
    (c) There is no continuing responsibility for reclamation by the 
operator, permittee, or agent of the permittee under statutes of the 
State or Federal government, or as a result of bond forfeiture. Bond 
forfeiture will render lands or water ineligible only if the amount 
forfeited is sufficient to pay the total cost of the necessary 
reclamation. In cases where the forfeited bond is insufficient to pay 
the total cost of reclamation, additional moneys from the Fund or any 
prior balance replacement funds provided under Sec.  872.29 of this 
chapter may be used.
* * * * *
    (e) An uncertified State or Indian tribe may expend funds made 
available under paragraphs 402(g)(1) and (5) of SMCRA and prior balance 
replacement funds under section 411(h)(1) of SMCRA for the reclamation 
and abatement of any site eligible under paragraph (d) of this section, 
if the State or Indian tribe, with the concurrence of the Secretary, 
makes the findings required in paragraph (d) of this section and the 
State or Indian tribe determines that the reclamation priority of the 
site is the same or more urgent than the reclamation priority for the 
lands and water eligible under paragraphs (a), (b), or (c) of this 
section that qualify as a Priority 1 or 2 site under section 403(a) of 
SMCRA.
    (f) With respect to lands eligible under paragraph (d) or (e) of 
this section, moneys available from sources outside the Fund or that 
are ultimately recovered from responsible parties must either be used 
to offset the cost of the reclamation or transferred to the Fund if not 
required for further reclamation activities at the permitted site.
* * * * *

0
34. Revise Sec.  874.13 to read as follows:


Sec.  874.13  Reclamation objectives and priorities.

    (a) When you conduct reclamation projects under this Part you may 
follow OSM's ``Final Guidelines for Reclamation Programs and Projects'' 
(66 FR 31250, June 11, 2001) and the expenditures must reflect the 
following priorities in the order stated:
    (1) Priority 1: The protection of public health, safety, and 
property from extreme danger of adverse effects of coal mining 
practices, including the restoration of land and water resources and 
the environment that:
    (i) Have been degraded by the adverse effects of coal mining 
practices; and
    (ii) Are adjacent to a site that has been or will be addressed to 
protect the public health, safety, and property from extreme danger of 
adverse effects of coal mining practices.
    (2) Priority 2: The protection of public health and safety from 
adverse effects of coal mining practices, including the restoration of 
land and water resources and the environment that:
    (i) Have been degraded by the adverse effects of coal mining 
practices; and
    (ii) Are adjacent to a site that has been or will be addressed to 
protect the public health and safety from adverse effects of coal 
mining practices.
    (3) Priority 3: The restoration of land and water resources and the 
environment previously degraded by adverse effects of coal mining 
practices, including measures for the conservation and development of 
soil, water (excluding channelization), woodland, fish and wildlife, 
recreation resources, and agricultural productivity. Priority 3 land 
and water resources that are geographically contiguous with existing or 
remediated Priority 1 or 2 problems will be considered adjacent under 
paragraphs (a)(1)(ii) or (a)(2)(ii) of this section.
    (b) This paragraph applies to State or Tribal share funds available 
under Sec. Sec.  872.14 and 872.17 of this chapter and historic coal 
funds available under Sec.  872.21 of this chapter. You may expend 
these funds to reclaim Priority 3 lands and waters, if either of the 
following conditions applies:
    (1) You have completed all of the Priority 1 and Priority 2 
reclamation in the jurisdiction of your State or Indian tribe; or
    (2) The expenditure for Priority 3 reclamation is made in 
conjunction with the expenditure of funds for Priority 1 or Priority 2 
reclamation projects including past, current, and future Priority 1 or 
Priority 2 reclamation projects. Expenditures under this paragraph must 
either:
    (i) Facilitate the Priority 1 or Priority 2 reclamation; or
    (ii) Provide reasonable savings towards the objective of reclaiming 
all Priority 3 land and water problems within the jurisdiction of your 
State or Indian tribe.

0
35. Amend Sec.  874.14 by revising the section heading and paragraph 
(a) to read as follows:


Sec.  874.14  Water supply restoration.

    (a) Any State or Indian tribe that has not certified completion of 
all coal-related reclamation under section 411(a) of SMCRA may expend 
funds under Sec. Sec.  872.16, 872.19, 872.23, and 872.31 of this 
chapter for water supply restoration projects. For purposes of this 
section, ``water supply restoration projects'' are those that protect, 
repair, replace, construct, or enhance facilities related to water 
supplies, including water distribution facilities and treatment plants 
that have been adversely affected by coal mining practices. For funds 
awarded before December 20, 2006, any uncertified State or Indian tribe 
may expend up to 30 percent of the funds distributed to it for water 
supply restoration projects.
* * * * *

0
36. Revise Sec.  874.16 to read as follows:


Sec.  874.16  Contractor eligibility.

    To receive moneys from the Fund or Treasury funds provided to 
uncertified States and Indian tribes under Sec.  872.29 of this chapter 
or to certified States or

[[Page 67640]]

Indian tribes for coal AML reclamation as required to maintain 
certification under section 411(a) of SMCRA, every successful bidder 
for an AML contract must be eligible under Sec. Sec.  773.12, 773.13, 
and 773.14 of this chapter at the time of contract award to receive a 
permit or be provisionally issued a permit to conduct surface coal 
mining operations.

PART 875--CERTIFICATION AND NONCOAL RECLAMATION

0
37. The authority citation for part 875 continues to read as follows:

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


0
38. Revise the heading for Part 875 to read as set forth above:
0
39. Add Sec.  875.5 to read as follows:


Sec.  875.5  Definitions.

    As used in this Part--
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.

0
40. Revise Sec. Sec.  875.10 and 875.11 to read as follows:


Sec.  875.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 875 and assigned it control number 1029-0103. This information 
establishes procedures and requirements for State and Indian tribes to 
conduct noncoal reclamation under abandoned mine land funding. The 
information is needed to assure compliance with SMCRA and the Omnibus 
Budget Reconciliation Act of 1990. Persons must respond to obtain a 
benefit. A Federal agency may not conduct or sponsor, and you are not 
required to respond to, a collection of information unless it displays 
a currently valid OMB control number.


Sec.  875.11  Applicability.

    (a) If you are a State or Indian tribe that has not certified under 
section 411(a) of SMCRA, you must follow these noncoal reclamation 
requirements when you use State share funds under Sec.  872.16, Tribal 
share funds under Sec.  872.19, or historic coal funds under Sec.  
872.23 to conduct reclamation projects on lands or water affected by 
mining of minerals and materials other than coal.
    (b) If you are a State or Indian tribe that has certified under 
section 411(a) of SMCRA:
    (1) you must use State or Tribal share funds distributed to you 
under section 402(g)(1) of SMCRA before October 1, 2007 in accordance 
with this part; and
    (2) you may use prior balance replacement funds distributed to you 
under section 411(h)(1) of SMCRA, certified in lieu funds distributed 
to you under section 411(h)(2), or both to maintain certification as 
required by Sec. Sec.  875.13 and 875.14. The noncoal reclamation 
requirements of this Part do not apply to the use of prior balance 
replacement funds or certified in lieu funds.

0
41. Amend Sec.  875.12 by revising paragraph (c) to read as follows:


Sec.  875.12  Eligible lands and water before certification.

* * * * *
    (c) There is no continuing responsibility for reclamation by the 
operator, permittee, or agent of the permittee under statutes of the 
State or Federal Government or by the State as a result of bond 
forfeiture. Bond forfeiture will render lands or water ineligible only 
if the amount forfeited is sufficient to pay the total cost of the 
necessary reclamation. In cases where the forfeited bond is 
insufficient to pay the total cost of reclamation, moneys sufficient to 
complete the reclamation may be sought under Part 886 of this chapter;
* * * * *

0
42. Amend Sec.  875.13 by revising paragraph (a) introductory text and 
paragraph (a)(1) and by adding paragraph (d) to read as follows:


Sec.  875.13  Certification of completion of coal sites.

    (a) The Governor of a State, or the equivalent head of an Indian 
tribe, may submit to the Secretary a certification of completion of 
coal sites. The certification must express the finding that the State 
or Indian tribe has achieved all existing known coal-related 
reclamation objectives for eligible lands and waters under section 404 
of SMCRA or has instituted the necessary processes to reclaim any 
remaining coal related problems. In addition to the above finding, the 
certification of completion must contain:
    (1) A description of both the rationale and the process used to 
arrive at the above finding for the completion of all coal-related 
reclamation under section 403(a)(1) through (3).
* * * * *
    (d) The Director may, on his or her own initiative, make the 
certification referred to in paragraph (a) of this section on behalf of 
your State or Indian tribe if:
    (1) Based upon information contained in the AML inventory, the 
Director determines that all coal reclamation projects meeting the 
priorities described in Sec.  874.13(a) of this chapter in the 
jurisdiction of your State or Indian tribe have been completed; and
    (2) Before making any determination, the Director provides the 
public an opportunity to comment through a notice in the Federal 
Register.

0
43. Revise Sec.  875.14 to read as follows:


Sec.  875.14  Eligible lands and water after certification.

    (a) Following certification, eligible noncoal lands, waters, and 
facilities are those--
    (1) Which were mined or processed for minerals or which were 
affected by such mining or processing, and abandoned or left in an 
inadequate reclamation status before August 3, 1977. However, for 
Federal lands, waters, and facilities under the jurisdiction of the 
Forest Service, the eligibility date is August 28, 1974. For Federal 
lands, waters and facilities under the jurisdiction of the Bureau of 
Land Management, the eligibility date is November 26, 1980; and
    (2) For which there is no continuing reclamation responsibility 
under State or other Federal laws.
    (b) If eligible coal problems are found or occur after 
certification, you must submit to us a plan that describes the approach 
and funds that will be used to address those problems in a timely 
manner. You may address any eligible coal problems with the certified 
in lieu funds that you have already received or will receive from Sec.  
872.32 of this chapter. You may also use the prior balance replacement 
funds received from Sec.  872.29 of this chapter to address coal 
problems subsequent to certification. Any coal reclamation projects 
that you do must conform to sections 401 through 410 of SMCRA and Part 
874 of this chapter.
0
44. Revise Sec.  875.16 to read as follows:

Sec.  875.16  Exclusion of certain noncoal reclamation sites.

    (a) You, the uncertified State or Indian tribe, may not use moneys 
from the Fund or from prior balance replacement funds provided under 
Sec.  872.29 of this chapter for the reclamation of sites and areas 
designated for remedial action under the Uranium Mill Tailings 
Radiation Control Act of 1978 (42 U.S.C. 7901 et seq.) or that have 
been listed for remedial action under the Comprehensive Environmental 
Response Compensation and Liability Act of 1980 (42 U.S.C. 9601 et 
seq.).
    (b) You, the certified State or Indian tribe, may not use moneys 
distributed from the Fund under section 402(g)(1) of

[[Page 67641]]

SMCRA for the reclamation of sites and areas designated for remedial 
action under the Uranium Mill Tailings Radiation Control Act of 1978 
(42 U.S.C. 7901 et seq.) or that have been listed for remedial action 
under the Comprehensive Environmental Response Compensation and 
Liability Act of 1980 (42 U.S.C. 9601 et seq.).

0
45. Revise Sec.  875.20 to read as follows:


Sec.  875.20  Contractor eligibility.

    Every successful bidder for any contract by an uncertified State or 
Indian tribe under this Part, or for a contract by a certified State or 
Indian tribe to undertake noncoal reclamation using moneys distributed 
from the Fund under section 402(g)(1) of SMCRA, must be eligible under 
Sec. Sec.  773.12, 773.13, and 773.14 of this chapter at the time of 
contract award to receive a permit or be provisionally issued a permit 
to conduct surface coal mining operations. This section does not apply 
to any contract by a certified State or Indian tribe that is not for 
coal reclamation.

PART 876--ACID MINE DRAINAGE TREATMENT AND ABATEMENT PROGRAM

0
46. The authority citation for part 876 is revised to read as follows:

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


0
47. Revise Sec.  876.10 to read as follows:


Sec.  876.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 876 and assigned it control number 1029-0104. OSM will use the 
information to determine if the State's or Indian tribe's Acid Mine 
Drainage Abatement and Treatment Programs is in compliance with 
legislative mandate. States and Indian tribes are required to respond 
to obtain a benefit in accordance with SMCRA. A Federal agency may not 
conduct or sponsor, and you are not required to respond to, a 
collection of information unless it displays a currently valid OMB 
control number.

0
48. Revise Sec.  876.12 to read as follows:


Sec.  876.12  Eligibility.

    (a) Beginning December 20, 2006, any uncertified State or Indian 
tribe having an approved reclamation program may receive and retain, 
without regard to the limitation in section 402(g)(1)(D) of SMCRA, up 
to 30 percent of the total of the funds distributed annually to that 
State or Indian tribe under section 402(g)(1) of SMCRA (State or Tribal 
share) and section 402(g)(5) of SMCRA (historic coal funds). For funds 
awarded before December 20, 2006, any uncertified State or Indian tribe 
may retain up to 10 percent of the funds distributed to it for an acid 
mine drainage fund. All amounts set aside under this section must be 
deposited into an acid mine drainage abatement and treatment fund 
established under State or Indian tribal law.
    (b) Before depositing funds under this Part, an uncertified State 
or Indian tribe must:
    (1) Establish a special fund account providing for the earning of 
interest on fund balances; and
    (2) Specify that moneys in the account may only be used for the 
abatement of the causes and treatment of the effects of acid mine 
drainage in a comprehensive manner within qualified hydrologic units 
(as defined in paragraph (c) of this section) affected by coal mining 
practices.
    (c) As used in paragraph (b) of this section, ``qualified 
hydrologic unit'' means a hydrologic unit:
    (1) In which the water quality has been significantly affected by 
acid mine drainage from coal mining practices in a manner that 
adversely impacts biological resources; and
    (2) That contains lands and waters that are:
    (i) Eligible under section 404 of SMCRA and include any of the 
priorities described in section 403(a) of SMCRA; and
    (ii) The subject of the expenditure from the forfeiture of a bond 
required under section 509 of SMCRA or from other State sources to 
abate and treat acid mine drainage.
    (d) After the conditions specified in paragraphs (a) and (b) of 
this section are met, OSM may approve a grant and the State or Indian 
tribe may deposit moneys into the special fund account. The moneys so 
deposited, together with any interest earned, must be considered State 
or Indian tribal moneys.


Sec. Sec.  876.13 and 876.14  [Removed]

0
49. Remove Sec. Sec.  876.13 and 876.14.

PART 879--ACQUISITION, MANAGEMENT, AND DISPOSITION OF LANDS AND 
WATER

0
50. The authority citation for part 879 is revised to read as follows:

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


0
51. Revise Sec.  879.1 to read as follows:


Sec.  879.1  Scope.

    This part establishes procedures for acquisition of eligible land 
and water resources for emergency abatement activities and reclamation 
purposes by you, a State or Indian tribe with an approved reclamation 
program which has not certified completion of coal reclamation, or by 
us. It also provides for the management and disposition of lands 
acquired by the OSM, State, or Indian tribe.

0
52. Add Sec.  879.5 to read as follows:


Sec.  879.5  Definitions.

    As used in this Part--
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.


Sec.  879.10  [Removed]

0
53. Remove Sec.  879.10.

0
54. Amend Sec.  879.11 by revising paragraph (a) introductory text, 
paragraph (a)(2), paragraph (b), and paragraph (c) to read as follows:


Sec.  879.11  Land eligible for acquisition.

    (a) We may acquire land adversely affected by past coal mining 
practices with moneys from the Fund. If approved in advance by us, you, 
an uncertified State or Indian tribe, may also acquire land adversely 
affected by past coal mining practices with moneys from the Fund or 
with prior balance replacement funds provided under Sec.  872.29 of 
this chapter. Our approval must be in writing, and we must make a 
finding that the land acquisition is necessary for successful 
reclamation and that--
* * * * *
    (2) Permanent facilities will be constructed on the land for the 
restoration, reclamation, abatement, control, or prevention of the 
adverse effects of past coal mining practices. For the purposes of this 
paragraph, ``permanent facility'' means any structure that is built, 
installed or established to serve a particular purpose or any 
manipulation or modification of the site that is designed to remain 
after the reclamation activity is completed, such as a relocated stream 
channel or diversion ditch.
    (b) You, an uncertified State or Indian tribe, if approved in 
advance by us, may acquire coal refuse disposal sites, including the 
coal refuse, with moneys from the Fund and with prior balance 
replacement funds provided under Sec.  872.29 of this chapter. We, OSM, 
also may use moneys from the Fund to acquire coal refuse disposal 
sites, including the coal refuse.
    (1) Before the approval of the acquisition, the reclamation program 
seeking to acquire the site will make a

[[Page 67642]]

finding in writing that the acquisition is necessary for successful 
reclamation and will serve the purposes of their reclamation program.
    (2) Where an emergency situation exists and a written finding as 
set out in Sec.  877.14 of this chapter has been made, we may acquire 
lands where public ownership is necessary and will prevent recurrence 
of the adverse effects of past coal mining practices.
    (c) Land adversely affected by past coal mining practices may be 
acquired by us if the acquisition is an integral and necessary element 
of an economically feasible plan or project to construct or 
rehabilitate housing which meets the specific requirements in section 
407(h) of SMCRA.
* * * * *

0
55. Amend Sec.  879.15 by revising paragraph (h) to read as follows:


Sec.  879.15  Disposition of reclaimed land.

* * * * *
    (h) We will handle all moneys received under this paragraph as 
unused funds in accordance with Sec.  886.20 of this chapter.

PART 880--MINE FIRE CONTROL

0
56. The authority citation for part 880 is revised to read as follows:

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


0
57. Amend Sec.  880.5, by adding paragraph (h) to read as follows.


Sec.  880.5  Definitions.

* * * * *
    (h) Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.

PART 882--RECLAMATION ON PRIVATE LAND

0
58. The authority citation for part 882 is revised to read as follows:

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


0
59. Revise Sec.  882.10 to read as follows:


Sec.  882.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 882 and assigned it control number 1029-0057. This information 
is being collected to meet the mandate of section 408 of SMCRA, which 
allows the State or Indian tribe to file liens on private property that 
has been reclaimed under certain conditions. This information will be 
used by the regulatory authority to ensure that the State or Indian 
tribe has sufficient programmatic capability to file liens to recover 
costs for reclaiming private lands. States and Indian tribes are 
required to respond to obtain a benefit in accordance with SMCRA. A 
Federal agency may not conduct or sponsor, and you are not required to 
respond to, a collection of information unless it displays a currently 
valid OMB control number.

0
60. Amend Sec.  882.13 by revising paragraph (a)(1) to read as follows:


Sec.  882.13  Liens.

* * * * *
    (a) * * *
    (1) A lien must not be placed against the property of a surface 
owner who did not consent to, participate in or exercise control over 
the mining operation which necessitated the reclamation work.
* * * * *

PART 884--STATE RECLAMATION PLANS

0
61. The authority citation for part 884 is revised to read as follows:

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


0
62. Add Sec.  884.5 to read as follows:


Sec.  884.5  Definitions.

    As used in this Part--
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.

0
63. Revise Sec.  884.11 to read as follows:


Sec.  884.11  State eligibility.

    You, a State or Indian tribe, are eligible to submit a reclamation 
plan if you have eligible lands or water as defined in Sec.  700.5 of 
this chapter within your jurisdiction. We may approve your proposed 
reclamation plan if you have an approved State regulatory program under 
section 503 of SMCRA, and you meet the other requirements of this 
chapter and SMCRA. The States of Tennessee and Missouri are exempt from 
the requirement for an approved State regulatory program by section 
402(g)(8)(B) of SMCRA. The Navajo, Hopi, and Crow Indian tribes are 
exempt from the requirement for an approved regulatory program by 
section 405(k) of SMCRA.

0
64. In Sec.  884.13, revise the introductory text and paragraph (a) to 
read as follows:


Sec.  884.13  Content of proposed State reclamation plan.

    You must submit each proposed State reclamation plan to the 
Director in writing. A proposed plan for a certified State or Indian 
tribe must include the designation described in paragraph (a) below and 
a commitment to address eligible coal problems found or occurring after 
certification as required in Sec. Sec.  875.13(a)(3) and 875.14(b) of 
this chapter. A proposed plan for an uncertified State or Indian tribe 
must include the following information.
    (a) A designation by the Governor of the State or the governing 
authority of the Indian tribe of the agency authorized to administer 
the State or Tribal reclamation program and to receive and administer 
grants under Part 885 or Part 886 of this chapter.
* * * * *

0
65. Amend Sec.  884.17 by revising the section heading and paragraph 
(b) to read as follows:


Sec.  884.17  Other uses by certified States and Indian tribes.

* * * * *
    (b) Grant applications for uses other than coal reclamation by 
certified States and Indian tribes may be submitted in accordance with 
Sec.  885.15 of this chapter.

0
66. Add part 885 as follows:

PART 885--GRANTS FOR CERTIFIED STATES AND INDIAN TRIBES

Sec.
885.1 What does this Part do?
885.5 Definitions.
885.10 Information collection.
885.11 Who is eligible for a grant?
885.12 What can I use grant funds for?
885.13 What are the maximum grant amounts?
885.14 How long is my grant?
885.15 How do I apply for a grant?
885.16 After OSM approves my grant, what responsibilities do I have?
885.17 How can my grant be amended?
885.18 What audit, accounting, and administrative requirements must 
I meet?
885.19 What happens to unused funds from my grant?
885.20 What must I report?
885.21 What happens if I do not comply with applicable Federal law 
or the terms of my grant?
885.22 When and how can my grant be terminated for convenience?

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

Sec.  885.1  What does this Part do?

    This Part sets forth procedures for grants to you, a State or 
Indian tribe that has certified under Sec.  875.13 of this chapter that 
all known coal reclamation problems in your State or on Indian lands 
within your jurisdiction have been addressed. OSM's ``Final Guidelines 
for Reclamation Programs and Projects'' (66 FR 31250, June 11, 2001) 
may be used if applicable.

[[Page 67643]]

Sec.  885.5  Definitions.

    As used in this Part--
    Award means to approve our grant agreement authorizing you to draw 
down and expend program funds.
    Distribute means to annually assign funds to a specific State or 
Indian tribe. After distribution, funds are available for award in a 
grant to that specific State or Indian tribe.
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.


Sec.  885.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
for all Title IV grants and assigned clearance number 1029-0059. This 
information is being collected to obtain an estimate from you, the 
certified State or Indian tribe, of the funds you believe necessary to 
implement your program and to provide OSM with a means to measure 
performance results under the Government Performance and Results Act 
through your obligations of funds. Certified States and Indian tribes 
are required to respond to obtain a benefit in accordance with SMCRA. A 
Federal agency may not conduct or sponsor, and you are not required to 
respond to, a collection of information unless it displays a currently 
valid OMB control number.


Sec.  885.11  Who is eligible for a grant?

    You are eligible for grants under this Part if:
    (a) You are a State or Indian tribe with a reclamation plan 
approved under Part 884 of this chapter; and
    (b) You have certified under Sec.  875.13 of this chapter that all 
known coal problems in your State or on Indian lands in your 
jurisdiction have been addressed.


Sec.  885.12  What can I use grant funds for?

    (a) For all awards under this Part, you must use moneys for 
activities authorized in SMCRA and included in your approved 
reclamation plan or described in the grant application. In addition, 
you may use moneys granted under this Part to administer your approved 
reclamation program.
    (b) You may use grant funds as established for each type of funds 
you receive. You may use prior balance replacement funds as provided 
under Sec.  872.31 of this chapter. You may use certified in lieu funds 
as provided under Sec.  872.34 of this chapter. You may use any moneys 
which may be available to you from the Fund for noncoal reclamation as 
authorized under section 411 of SMCRA and Part 875 of this chapter.
    (c) You may use grant funds for any allowable cost as determined by 
the OMB cost principles in Circular A-87.


Sec.  885.13  What are the maximum grant amounts?

    (a) You may apply at any time for a grant of any or all of the 
Title IV funds that are available to you.
    (b) We will not award an amount greater than the total funds 
distributed to your State or Indian tribe in the current annual fund 
distribution less any previous awards of current year funds, plus any 
funds distributed to you in previous years but not awarded, plus any 
unexpended funds recovered from previous grants and made available to 
you under Sec.  885.19 of this chapter.
    (c) Funds for the current fiscal year are available for award after 
the annual fund distribution described in Sec.  872.13 of this chapter.
    (d) Whenever you request it, we will give you information on the 
amounts and types of funds that are currently available to you.


Sec.  885.14  How long is my grant?

    The performance period for your grant will be the time period you 
request in your grant application.


Sec.  885.15  How do I apply for a grant?

    (a) You must use application forms and procedures specified by OSM.
    (b) We award your grant as soon as practicable but no more than 30 
days after we receive your complete application.
    (c) If your application is not complete, we inform you as soon as 
practicable of the additional information we need to receive from you 
before we can process the award.
    (d) You must agree to expend the funds of the grant in accordance 
with SMCRA, applicable Federal laws and regulations, and applicable OMB 
and Treasury Circulars.


Sec.  885.16  After OSM approves my grant, what responsibilities do I 
have?

    (a) When we award your grant, we send you a written grant agreement 
stating the terms of the grant.
    (b) After you are awarded a grant, you may assign functions and 
funds to other Federal, State, or local organizations. However, we will 
hold you responsible for the overall administration of that grant, 
including the proper use of funds and reporting.
    (c) The grant award constitutes an obligation of Federal funds. You 
accept the grant and its conditions once you initiate work under the 
agreement or draw down awarded funds.
    (d) Although we have approved the grant agreement, you must ensure 
that any applicable laws, clearances, permits, or requirements are met 
before you expend funds for projects other than coal reclamation under 
Part 874.
    (e) If you conduct a coal reclamation project under Part 874 of 
this chapter, you must not expend any funds until we have ensured that 
all necessary actions have been taken by you and us to ensure 
compliance with the National Environmental Policy Act of 1969 (NEPA) 
(42 U.S.C. 4321 et seq.) and any other applicable laws, clearances, 
permits or requirements.
    (f) To the extent technologically and economically feasible, you 
must use fuel other than petroleum or natural gas for all public 
facilities that are planned, constructed, or modified in whole or in 
part with Title IV grant funds.
    (g) You must not expend more funds than we have awarded. Our award 
of any grant does not commit or obligate the United States to award any 
continuation grant or to enter into any grant revision, including grant 
increases to cover cost overruns.


Sec.  885.17  How can my grant be amended?

    (a) A grant amendment is a change of terms or conditions of the 
grant agreement. An amendment may be initiated by you or by us.
    (b) You must promptly notify us in writing, or we must promptly 
notify you in writing, of events or proposed changes that may require a 
grant amendment.
    (c) All requirements and procedures for grant amendments follow 43 
CFR Part 12.
    (d) We must award your amended grant agreement within 20 days of 
receiving your request.


Sec.  885.18  What audit, accounting, and administrative requirements 
must I meet?

    (a) You must comply with the audit requirements of the OMB Circular 
A-133.
    (b) You must follow procedures governing grant accounting, payment, 
records, property, and management contained in 43 CFR Part 12.


Sec.  885.19  What happens to unused funds from my grant?

    All program grant funds are available until expended. If there are 
any unexpended funds after your grant is completed, we deobligate the 
funds when we close your grant. We make these unused funds available 
for re-award to the same certified State or Indian tribe to which they 
were

[[Page 67644]]

originally distributed. You may apply for unused funds whenever you 
choose to request them either in a new grant award or as an amendment 
to an existing open grant.


Sec.  885.20  What must I report?

    (a) For each grant, you must annually report to us the performance 
and financial information that we request.
    (b) Upon completion of each grant, you must report to us final 
performance and financial information that we request.
    (c) You must use the AML inventory to maintain a current list of 
AML problems and to report annual reclamation accomplishments with 
grant funds.
    (1) If you conduct reclamation projects, you must update the AML 
inventory for each reclamation project you complete as you complete it.
    (2) We must approve any amendments to the AML inventory after 
December 20, 2006. We define ``amendment'' as any coal problems added 
to the AML inventory in a new or existing problem area.


Sec.  885.21  What happens if I do not comply with applicable Federal 
law or the terms of my grant?

    If you or your subgrantee materially fails to comply with an award, 
a reclamation plan, or a Federal statute or regulation, including 
statutes relating to nondiscrimination, we may take appropriate 
remedial actions. Enforcement actions and procedures must follow 43 CFR 
Part 12.


Sec.  885.22  When and how can my grant be terminated for convenience?

    Either you or we may terminate the grant for convenience following 
the procedures in 43 CFR Part 12.

0
67. Revise part 886 to read as follows:

PART 886--RECLAMATION GRANTS FOR UNCERTIFIED STATES AND INDIAN 
TRIBES

Sec.
886.1 What does this Part do?
886.5 Definitions.
886.10 Information collection.
886.11 Who is eligible for a grant?
886.12 What can I use grant funds for?
886.13 What are the maximum grant amounts?
886.14 How long will my grant be?
886.15 How do I apply for a grant?
886.16 After OSM approves my grant, what responsibilities do I have?
886.17 How can my grant be amended?
886.18 What audit and administrative requirements must I meet?
886.19 How must I account for grant funds?
886.20 What happens to unused funds from my grant?
886.21 What must I report?
886.22 What records must I maintain?
886.23 What actions can OSM take if I do not comply with the terms 
of my grant?
886.24 What procedures will OSM follow to reduce, suspend, or 
terminate my grant?
886.25 How can I appeal a decision to reduce, suspend, or terminate 
my grant?
886.26 When and how can my grant be terminated for convenience?
886.27 What special procedures apply to Indian lands not subject to 
an approved Tribal reclamation program?

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


Sec.  886.1  What does this Part do?

    This Part sets forth procedures for grants to you, an uncertified 
State or Indian tribe, to reclaim eligible lands and water and conduct 
other activities necessary to carry out your approved reclamation plan. 
OSM's ``Final Guidelines for Reclamation Programs and Projects'' (66 FR 
31250, June 11, 2001) may be used as applicable.


Sec.  886.5  Definitions.

    As used in this Part--
    Award means to approve our grant agreement authorizing you to draw 
down and expend program funds.
    Distribute means to annually assign funds to a specific State or 
Indian tribe. After distribution, funds are available for award in a 
grant to that specific State or Indian tribe.
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.


Sec.  886.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the Office of Management 
and Budget (OMB) has approved the information collection requirements 
of Part 886, and Forms OSM-47, OSM-49, and OSM-51, and assigned 
clearance number 1029-0059. This information is being collected to 
obtain an estimate from you the uncertified State or Indian tribe of 
the funds you believe necessary to implement your reclamation program 
and to provide OSM with a means to measure performance results under 
the Government Performance and Results Act through State and Tribal 
obligations of funds. Uncertified States and Indian tribes are required 
to respond to obtain a benefit in accordance with SMCRA. A Federal 
agency may not conduct or sponsor, and you are not required to respond 
to, a collection of information unless it displays a currently valid 
OMB control number.


Sec.  886.11  Who is eligible for a grant?

    You are eligible for grants under this Part if:
    (a) You are a State or Indian tribe with a reclamation plan 
approved under Part 884 of this chapter; and
    (b) You have not certified that all known coal problems in your 
State or on Indian lands in your jurisdiction have been addressed.


Sec.  886.12  What can I use grant funds for?

    (a) You must use moneys granted under this Part to administer your 
approved reclamation program and to carry out the specific reclamation 
and other activities authorized in SMCRA as included in your 
reclamation plan or your grant application.
    (b) We award grants for reclamation of eligible lands and water in 
accordance with sections 404 and 409 of SMCRA and Sec. Sec.  874.12 and 
875.12 of this chapter, and in accordance with the priorities stated in 
section 403 of SMCRA and Sec.  874.13 of this chapter.
    (c) You may use grant funds as established in this chapter for each 
type of funds you receive in your AML grant. You may use State share 
funds as provided in Sec.  872.16 of this chapter; Tribal share funds 
as in Sec.  872.19 of this chapter; historic coal funds as in Sec.  
872.23 of this chapter; minimum program make up funds as in Sec.  
872.28 of this chapter; prior balance replacement funds as in Sec.  
872.31 of this chapter; and Federal expense funds as in Sec.  872.25 of 
this chapter and in the appropriation.
    (d) You may use grant funds for acquisition of land or interests in 
land, and any mineral or water rights associated with the land, for up 
to 90 percent of the costs.
    (e) You may use grant funds only for costs which are allowable as 
determined by OMB cost principles in Circular A-87.


Sec.  886.13  What are the maximum grant amounts?

    (a) You may apply at any time for a grant of any or all of the 
program funds that are available to you.
    (b) We will not award an amount greater than the total funds 
distributed to your State or Indian tribe in the current annual fund 
distribution, less any previous awards of current year funds, plus any 
funds distributed to you in previous years but not awarded, plus any 
unexpended funds recovered from previous grants and made available to 
you under Sec.  886.20 of this chapter.
    (c) Funds for the current fiscal year are available for award after 
the annual fund distribution described in Sec.  872.13 of this chapter.
    (d) Whenever you request it, we will give you information on the 
amounts and types of funds that are currently available to you.

[[Page 67645]]

Sec.  886.14  How long will my grant be?

    (a) We approve a grant period on the basis of the information 
contained in the grant application showing that projects to be funded 
will fulfill the objectives of SMCRA and the approved reclamation plan.
    (b) The grant period is normally for 3 years.
    (c) We may extend the grant period at your request. We normally 
approve one extension for up to one additional year.
    (d) The grant period for funding your administrative costs does not 
normally exceed the first year of the grant.
    (e) We award grants containing State or Tribal share funds 
distributed to you in Fiscal Years 2008, 2009, or 2010 for a budget 
period of five or three years at your request.


Sec.  886.15  How do I apply for a grant?

    (a) You must use application forms and procedures specified by OSM.
    (b) We approve or disapprove your grant application within 60 days 
of receipt.
    (c) If we do not approve your application, we inform you in writing 
of the reasons for disapproval. We may propose modifications if 
appropriate. You may resubmit the application or appropriate revised 
portions of the application. We process the revised application as an 
original application.
    (d) You must agree to carry out activities funded by the grant in 
accordance with SMCRA, applicable Federal laws and regulations, and 
applicable OMB and Treasury Circulars.
    (e) We do not require complete copies of plans and specifications 
for projects either before the grant is approved or at the start of the 
project. However, after the start of the project, we may review your 
plans and specifications at your office, the project site, or any other 
appropriate site.


Sec.  886.16  After OSM approves my grant, what responsibilities do I 
have?

    (a) When we award your grant, we send you a written grant agreement 
stating the terms of the grant.
    (b) After you are awarded a grant, you may assign functions and 
funds to other Federal, State, or local agencies. However, we will hold 
you responsible for the overall administration of that grant, including 
the proper use of funds and reporting.
    (c) The grant award constitutes an obligation of Federal funds. You 
accept the grant and its conditions once you initiate work under the 
agreement or draw down awarded funds.
    (d) Although we have approved the grant agreement, you must not 
expend any construction funds until you receive a written authorization 
to proceed with reclamation on the individual project. Our 
Authorization to Proceed ensures that both you and we have taken all 
actions necessary to ensure compliance with the National Environmental 
Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.) and any other 
applicable laws, clearances, permits, or requirements.
    (e) You must enter coal problems in the AML inventory before you 
expend funds on design or construction activities for a site. We must 
approve any amendments to the AML inventory made after December 20, 
2006. For purposes of this section, we define ``amendment'' as any coal 
problem added to the AML inventory in a new or existing problem area 
and any Priority 3 coal problem in the AML inventory that is elevated 
to either Priority 1 or Priority 2 status.
    (1) For emergency projects conducted under section 410 of SMCRA, 
our finding that an emergency condition exists constitutes our approval 
for the abandoned mine lands problem to be entered into the AML 
inventory.
    (2) We must approve amendments to the AML inventory for non-
emergency coal problems before you, the State or Indian tribe, begin 
project development or design or use funds for construction activities. 
In projects where development and design is minimal, this approval may 
occur during the Authorization to Proceed process.
    (f) To the extent technologically and economically feasible, you 
must use fuel other than petroleum or natural gas for all public 
facilities that are planned, constructed, or modified in whole or in 
part with abandoned mine land grant funds.
    (g) You must not expend more funds than we have awarded. Our award 
of any grant does not commit or obligate the United States to award any 
continuation grant or to enter into any grant revision, including grant 
increases to cover cost overruns.


Sec.  886.17  How can my grant be amended?

    (a) A grant amendment is a change of the terms or conditions of the 
grant agreement. An amendment may be initiated by you or by us.
    (b) You must promptly notify us in writing, or we must promptly 
notify you in writing, of events or proposed changes that may require a 
grant amendment.
    (c) All procedures for grant amendments follow 43 CFR Part 12.
    (d) We must approve or disapprove the amendment within 30 days of 
receiving your request.


Sec.  886.18  What audit and administrative requirements must I meet?

    (a) You must comply with the audit requirements of the OMB Circular 
A-133.
    (b) You must follow administrative procedures governing grant 
payments, property, and related requirements contained in 43 CFR Part 
12.


Sec.  886.19  How must I account for grant funds?

    You must do all of the following in accordance with the 
requirements of 43 CFR Part 12:
    (a) Accurately and timely account for grant funds;
    (b) Adequately safeguard all funds, property, and other assets and 
assure that they are used solely for authorized purposes;
    (c) Provide a comparison of actual amounts spent with budgeted 
amounts for each grant;
    (d) Request any cash advances as closely as possible to the actual 
time of the disbursement; and
    (e) Design a systematic method to assure timely and appropriate 
resolution of audit findings and recommendations.


Sec.  886.20  What happens to unused funds from my grant?

    (a) If there are any unexpended funds after your grant is 
completed, we deobligate the funds when we close your grant. We treat 
unused funds as follows:
    (1) We transfer any State share funds under Sec.  872.14 of this 
chapter or Tribal share funds under Sec.  872.17 that were not expended 
within three years of the date they were awarded in a grant, except 
five years for funds awarded in Fiscal Years 2008, 2009, and 2010, to 
historic coal funds, Sec.  872.21 of this chapter. We distribute any 
funds transferred to historic coal in the next annual distribution in 
the same way as historic coal funds from fee collections during that 
fiscal year.
    (2) We hold any unused Federal expense funds under Sec.  872.24 of 
this chapter for distribution to any State or Indian tribe as needed 
for the activity for which the funds were appropriated.
    (3) We make unused funds of all other types available for re-award 
to the same State or Indian tribe to which they were originally 
distributed. This includes historic coal funds under Sec.  872.21 of 
this chapter, minimum program make up funds under Sec.  872.26 of this 
chapter, and prior balance replacement funds under Sec.  872.29 of this 
chapter.
    (b) If you have any State share funds or Tribal share funds that 
were distributed to you in an annual distribution under Sec.  872.15 or 
Sec.  872.18

[[Page 67646]]

of this chapter but that were not awarded to you in grant within 3 
years of the date they were distributed, or 5 years for funds 
distributed in Fiscal Years 2008, 2009, and 2010, we transfer the 
unawarded funds to the historic coal fund under Sec.  872.21 of this 
chapter and distribute them in the next annual distribution.


Sec.  886.21  What must I report?

    (a) For each grant, you must annually report to us the performance 
and financial information that we specify.
    (b) Upon completion of each grant, you must submit to us final 
performance, financial, and property reports, and any other information 
that we specify.
    (c) When you complete each reclamation project, you must update the 
AML inventory.


Sec.  886.22  What records must I maintain?

    You must maintain complete records in accordance with 43 CFR Part 
12. Your records must support the information you reported to us. This 
includes, but is not limited to, books, documents, maps, and other 
evidence. Accounting records must document procedures and practices 
sufficient to verify:
    (a) The amount and use of all Title IV funds received; and
    (b) The total direct and indirect costs of the reclamation program 
for which you received the grant.


Sec.  886.23  What actions can OSM take if I do not comply with the 
terms of my grant?

    (a) If you, or your subgrantee, fail to comply with the terms of 
your grant, we may take one or more of the following remedial actions, 
as appropriate in the circumstances:
    (1) Temporarily withhold cash payments pending your correction of 
the deficiency;
    (2) Disallow (that is, deny both use of Federal funds and matching 
credit for non-Federal funds) all or part of the cost of the activity 
or action not in compliance;
    (3) Wholly or partly reduce, suspend or terminate the current award 
for your program;
    (4) Withhold further grant awards for the program; or
    (5) Take other remedies that may be legally available.
    (b) If we terminate your State regulatory administration and 
enforcement grant, provided under Part 735 of this chapter, for failure 
to implement, enforce, or maintain an approved State regulatory program 
or any part thereof, we will terminate the grant awarded under this 
Part. This paragraph does not apply to the States of Missouri or 
Tennessee under section 402(g)(8)(B) of SMCRA, or to the Navajo, Hopi 
and Crow Indian tribes under section 405(k) of SMCRA.
    (c) If you fail to enforce the financial interest provisions of 
Part 705 of this chapter, we will terminate the grant.
    (d) If you fail to submit reports required by this Part or Part 705 
of this chapter, we take appropriate remedial actions. We may terminate 
the grant.
    (e) If you fail to submit a reclamation plan amendment as required 
by Sec.  884.15 of this chapter, we may reduce, suspend, or terminate 
all existing AML grants in whole or in part or may refuse to process 
all future grant applications.
    (f) If you are not in compliance with all Federal statutes relating 
to nondiscrimination, including but not limited to the following, we 
will terminate the grant:
    (1) Title VI of the Civil Rights Act of 1964, Public Law 88-352, 78 
Stat. 252 (42 U.S.C. 2000d et seq.). ``Nondiscrimination in Federally 
Assisted Programs,'' which provides that no person in the United States 
shall on the grounds of race, color, or national origin be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination under any program or activity receiving Federal 
financial assistance, and the implementing regulations in 43 CFR Part 
17.
    (2) Executive Order 11246, as amended by Executive Order 11375, 
``Equal Employment Opportunity,'' requiring that employees or 
applicants for employment not be discriminated against because of race, 
creed, color, sex, or national origin, and the implementing regulations 
in 40 CFR Part 60.
    (3) Section 504 of the Rehabilitation Act of 1973, Public Law 93-
112, 87 Stat. 355 (29 U.S.C. 794), as amended by Executive Order 11914, 
``Nondiscrimination with Respect to the Handicapped in Federally 
Assisted Programs.''


Sec.  886.24  What procedures will OSM follow to reduce, suspend, or 
terminate my grant?

    We will use the following procedures to reduce, suspend, or 
terminate your grant:
    (a) We must give you at least 30 days written notice of intent to 
reduce, suspend, or terminate a grant. An OSM official authorized to 
approve your grant must sign our notice of intent. We must send this 
notice by certified mail, return receipt requested. Our notice must 
include the reasons for the proposed action and the proposed effective 
date of the action.
    (b) We must give you opportunity for consultation and remedial 
action before we reduce or terminate a grant.
    (c) We must notify you in writing of the termination, suspension, 
or reduction of the grant. The notice must be signed by the authorized 
approving official and sent by certified mail, return receipt 
requested.
    (d) Upon termination, you must refund to us that remaining portion 
of the grant money not encumbered. However, you may retain any portion 
of the grant that is required to meet contractual commitments made 
before the effective date of termination.
    (e) You must not make any new commitments of grant funds after 
receiving notification of our intent to terminate the grant without our 
approval.
    (f) We may allow termination costs as determined by applicable 
Federal cost principles listed in OMB Circular A-87.


Sec.  886.25  How can I appeal a decision to reduce, suspend, or 
terminate my grant?

    (a) Within 30 days of our decision to reduce, suspend, or terminate 
a grant, you may appeal the decision to the Director.
    (1) You must include in your appeal a statement of the decision 
being appealed and the facts that you believe justify a reversal or 
modification of the decision.
    (2) The Director must decide the appeal within 30 days of receipt.
    (b) Within 30 days of a decision by the Director to reduce, 
suspend, or terminate a grant, you may appeal the decision to the 
Department of the Interior's Office of Hearings and Appeals. You must 
include in the appeal a statement of the decision being appealed and 
the facts that you believe justify a reversal or modification of the 
decision.


Sec.  886.26  When and how can my grant be terminated for convenience?

    Either you or we may terminate or reduce a grant if both parties 
agree that continuing the program would not produce benefits worth the 
additional costs. We will handle a termination for convenience as an 
amendment to the grant to be approved by the OSM official authorized to 
approve your grant.


Sec.  886.27  What special procedures apply to Indian lands not subject 
to an approved Tribal reclamation program?

    (a) This section applies to Indian lands not subject to an approved 
Tribal reclamation program. The Director is authorized to mitigate 
emergency situations or extreme danger situations arising from past 
mining practices and begin reclamation of other areas

[[Page 67647]]

determined to have high priority on such lands.
    (b) The Director is authorized to receive proposals from Indian 
tribes for projects that should be carried out on Indian lands subject 
to this section and to carry out these projects under parts 872 through 
882 of this chapter.
    (c) For reclamation activities carried out under this section on 
Indian lands, the Director shall consult with the Indian tribe and the 
Bureau of Indian Affairs office having jurisdiction over the Indian 
lands.
    (d) If a proposal is made by an Indian tribe and approved by the 
Director, the Tribal governing body shall approve the project plans. 
The costs of the project may be charged against Federal expense funds 
under Sec.  872.25 of this chapter.
    (e) Approved projects may be carried out directly by the Director 
or through such arrangements as the Director may make with the Bureau 
of Indian Affairs or other agencies.

PART 887--SUBSIDENCE INSURANCE PROGRAM GRANTS

0
68. The authority citation for part 887 continues to read as follows:

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



0
69. Revise Sec.  887.1 to read as follows:


Sec.  887.1  Scope.

    This part sets forth the procedures for grants to you, a State or 
Indian tribe with an approved reclamation plan to establish, 
administer, and operate a self-sustaining individual State or Indian 
tribe administered program to insure private property against damages 
caused by land subsidence resulting from underground coal mining.


Sec.  887.3  [Removed]

0
70. Remove Sec.  887.3.

0
71. Amend Sec.  887.5 by revising the definition of ``Self-
sustaining,'' removing the definition of ``State Administered'' and 
adding the definitions of ``reclamation plan or State reclamation 
plan'' and ``State or Indian tribe administered'' to read as follows:


Sec.  887.5  Definitions.

* * * * *
    Reclamation plan or State reclamation plan means a plan that a 
State or Indian tribe submitted and that we approved under section 405 
of SMCRA and Part 884 of this chapter.
    Self-sustaining means maintaining an insurance rate structure which 
is designed to be actuarially sound. Self-sustaining requires that 
State or Indian tribal subsidence insurance programs provide for 
recovery of payments made in settlement for damages from any party 
responsible for the damages under the law of the State or Indian tribe. 
Actuarial soundness implies that funds are sufficient to cover expected 
losses and expenses including a reasonable allowance for underwriting 
services and contingencies. Self-sustaining must not preclude the use 
of funds from other non-Federal sources.
    State or Indian tribe administered means administered either 
directly by a State or Indian tribe or for a State or Indian tribe 
through a State or Indian tribal authorized commission, board, 
contractor such as an insurance company, or other entity subject to 
State or Indian tribal direction.

0
72. Revise Sec. Sec.  887.10 through 887.13 to read as follows:


Sec.  887.10  Information collection.

    In accordance with 44 U.S.C. 3501 et seq., the OMB has approved the 
information collection requirements of Part 887 and assigned it control 
number 1029-0107. This information is being collected to support State 
and Indian tribal grant requests for moneys for the establishment, 
administration, and operation of self-sustaining State or Indian tribal 
administered subsidence insurance programs. States and Indian tribes 
are required to respond to obtain a benefit in accordance with SMCRA. A 
Federal agency may not conduct or sponsor, and you are not required to 
respond to, a collection of information unless it displays a currently 
valid OMB control number.


Sec.  887.11  Eligibility for grants.

    You are eligible for grants under this Part if you are a State or 
Indian tribe with a reclamation plan approved under Part 884 of this 
chapter. If you are uncertified, you must have State share funds 
available under Sec.  872.14 of this chapter or Tribal share funds 
available under Sec.  872.17 of this chapter. If you have certified 
completion of coal reclamation under section 411(a) of SMCRA, you must 
have certified in lieu funds available under Sec.  872.32 of this 
chapter, or prior balance replacement funds available under Sec.  
872.29 of this chapter if the State legislature or Tribal council has 
established this purpose.


Sec.  887.12  Coverage and amount of grants.

    (a) You may use moneys granted under this Part to develop, 
administer, and operate a subsidence insurance program to insure 
private property against damages caused by subsidence resulting from 
underground coal mining. The moneys may be used to cover your costs for 
services and materials according to OMB cost principles, Circular A-87. 
You may use eligible grant moneys to cover capitalization requirements 
and initial reserve requirements mandated by applicable State or Tribal 
law provided use of such moneys is consistent with the 43 CFR Part 12.
    (b) You must submit a grant application under the procedures of 
Part 885 of this chapter for certified States and Indian tribes or Part 
886 of this chapter for uncertified States or Indian tribes. Your 
application must include the following:
    (1) A narrative statement describing how the subsidence insurance 
program is ``State or Indian tribe administered''; and
    (2) A narrative statement describing how the funds requested will 
achieve a self-sustaining individual State or Indian tribe administered 
program to insure private property against subsidence resulting from 
underground coal mining.
    (c) Grants awarded to you under this Part cannot exceed a 
cumulative total over the lifetime of the program of $3 million.
    (d) You may not use grant moneys from the Fund for lands that are 
ineligible for reclamation funding under Title IV of SMCRA.
    (e) Insurance premiums must be considered program income and must 
be used to further eligible subsidence insurance program objectives in 
accordance with 43 CFR Part 12.


Sec.  887.13  Grant period.

    The grant funding period must not exceed 8 years from the time we 
approve the grant. You must return any unexpended funds remaining at 
the end of any grant period to us according to 43 CFR Part 12.

0
73. Revise Sec.  887.15 to read as follows:


Sec.  887.15  Grant administration requirements and procedures.

    The requirements and procedures for grant administration set forth 
in Part 885 of this chapter for reclamation grants to certified States 
and Indian tribes or in Part 886 of this chapter for reclamation grants 
to uncertified States and Indian tribes must be used for subsidence 
insurance funds in grants.

[FR Doc. E8-26458 Filed 11-13-08; 8:45 am]
BILLING CODE 4310-05-P