Ownership and Control; Permit and Application Information; Transfer, Assignment, or Sale of Permit Rights, 59592-59612 [E6-16575]

Agencies

• DEPARTMENT OF THE INTERIOR
• Office of Surface Mining Reclamation and Enforcement
• Surface Mining Reclamation and Enforcement Office

[Federal Register Volume 71, Number 195 (Tuesday, October 10, 2006)]
[Proposed Rules]
[Pages 59592-59612]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-16575]



[[Page 59591]]

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Part II





Department of the Interior





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Office of Surface Mining Reclamation and Enforcement



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



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

Federal Register / Vol. 71, No. 195 / Tuesday, October 10, 2006 / 
Proposed Rules

[[Page 59592]]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

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

RIN 1029-AC52


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

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

ACTION: Proposed Rule.

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SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement 
(OSM), propose to revise certain provisions of our December 19, 2000, 
final ``ownership and control'' and related rules, as well as our rules 
pertaining to the transfer, assignment, or sale of permit rights. More 
specifically, we propose to amend our definitions pertaining to 
ownership, control, and transfer, assignment or sale of permit rights 
and to revise our regulatory provisions governing: permit eligibility 
determinations; improvidently issued permits, ownership or control 
challenges; post-permit issuance actions and requirements; transfer, 
assignment, or sale of permit rights; application and permit 
information; and alternative enforcement. Additionally, we propose to 
remove our current rules pertaining to improvidently issued State 
permits. In order to satisfy our obligations under a settlement 
agreement we entered into with the National Mining Association, we 
previously issued two proposed rules covering these subjects. 
(Ownership and Control Settlement Rule, December 29, 2003; Transfer, 
Assignment, or Sale of Permit Rights, January 26, 2005.) After 
receiving comments on those proposed rules, and holding an outreach 
meeting with our State co-regulators to discuss the ramifications of 
finalizing the proposed rules, we have decided to alter the proposals 
in certain respects and to propose additional revisions. We have also 
decided to combine the two prior proposals into one new proposed rule, 
which will allow the public to review and comment on the proposed 
revisions in context. As with the two prior proposals, our primary 
objective in issuing this proposed rule is to introduce greater clarity 
to our regulations and to achieve regulatory stability with regard to 
aspects of our regulatory program that have been the subject of 
litigation for many years. This proposed rulemaking does not suspend or 
withdraw any of the provisions of our 2000 final ownership and control 
rule or our current rules pertaining to the transfer, assignment, or 
sale of permit rights. We are, however, withdrawing our December 29, 
2003, proposed rule and our January 26, 2005, proposed rule. This 
proposed rule is authorized under the Surface Mining Control and 
Reclamation Act of 1977, as amended (SMCRA or the Act).

DATES: Written comments: Comments on the proposed rule must be received 
by or before 4:30 p.m., Eastern Time, on December 11, 2006 to ensure 
our consideration.
    Public hearings: Upon request, we will hold a public hearing on the 
proposed rule at a date, time, and location to be announced in the 
Federal Register before the hearing. We will accept requests for a 
public hearing until 4:30 p.m., Eastern Time, on October 31, 2006. If 
you wish to attend a hearing, but not speak, you should contact the 
person identified under FOR FURTHER INFORMATION CONTACT before the 
hearing date to verify that the hearing will be held. If you wish to 
attend and speak at the hearing, you should follow the procedures under 
``III. Public Comment Procedures.''

ADDRESSES: You may submit comments, identified by docket number 1029-
AC52, by any of the following methods:
     E-mail: osmregs@osmre.gov. Include docket number 1029-AC52 
in the subject line of the message.
     Mail/Hand Delivery/Courier: Office of Surface Mining 
Reclamation and Enforcement, Administrative Record, Room 252, 1951 
Constitution Avenue, NW., Washington, DC 20240.
     Federal e-Rulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
    You may review the docket (administrative record) for this 
rulemaking, including comments received in response to this proposed 
rule, at the Office of Surface Mining Reclamation and Enforcement, 
Administrative Record Office, Room 101, 1951 Constitution Avenue, NW., 
Washington, DC 20240. The Administrative Record Office is open Monday 
through Friday, excluding holidays, from 8 a.m. to 4 p.m. The telephone 
number is (202) 208-2847.
    Instructions: All written submissions must include the agency name 
and docket number for this rulemaking. For detailed instructions on 
submitting comments and additional information on the rulemaking 
process, see ``III. Public Comment Procedures'' in the SUPPLEMENTARY 
INFORMATION section of this notice.
    If you wish to comment on the information collection aspects of 
this proposed rule, submit your comments to the Office of Management 
and Budget, Office of Information and Regulatory Affairs, Attention: 
Interior Desk Officer, via electronic mail, to OIRA--DOCKET@omb.eop.gov 
or via telefacsimile at (202) 395-6566.
    You may submit a request for a public hearing orally or in writing 
to the person and address specified under FOR FURTHER INFORMATION 
CONTACT. We will announce the address, date, and time for any hearing 
in the Federal Register before the hearing. If you are disabled and 
require reasonable accommodation to attend a public hearing, you should 
contact the person listed under FOR FURTHER INFORMATION CONTACT.

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

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background to the Proposed Rule
II. Discussion of the Proposed Rule
    A. Section 701.5--Definition: Control or Controller
    B. Section 701.5--Definition: Own, Owner, or Ownership
    C. Section 701.5--Definition: Transfer, Assignment, or Sale of 
Permit Rights
    D. Section 773.3--Information Collection
    E. Section 773.7--Review of Permit Applications
    F. Section 773.8--General provisions for Review of Permit 
Application Information and Entry of Information into AVS
    G. Section 773.9--Review of Applicant and Operator Information
    H. Section 773.10--Review of Permit History
    I. Section 773.12--Permit Eligibility Determination
    J. Section 773.14--Eligibility for Provisionally Issued Permits
    K. Section 773.21--Initial review and Finding Requirements for 
Improvidently Issued Permits
    L. Section 773.22--Notice Requirements for Improvidently Issued 
Permits
    M. Section 773.23--Suspension or Rescission Requirements for 
Improvidently Issued Permits
    N. Section 773.26--How to Challenge an Ownership or Control 
Listing or Finding
    O. Section 773.27--Burden of proof for ownership or control 
challenges
    P. Section 773.28--Written Agency Decisions on Challenges to 
Ownership or Control Listings or Findings
    Q. Section 774.9--Information Collection
    R. Section 774.11--Post-permit Issuance Requirements for 
Regulatory Authorities

[[Page 59593]]

and Other Actions Based on Ownership, Control, and Violation 
Information
    S. Section 774.12--Post-permit Issuance Information Requirements 
for Permittees
    T. Section 774.17--Transfer, Assignment, or Sale of Permit 
Rights
    U. Section 778.8--Information Collection
    V. Section 778.11--Providing Applicant and Operator Information
    W. Section 843.21--Procedures for Improvidently Issued State 
Permits
    X. Sections 847.11 and 847.16--Criminal penalties and civil 
actions for relief
III. Clarifications to the Preamble to Our 2000 Ownership and 
Control Final Rule
IV. Public Comments Procedures
V. Procedural Determinations

I. Background to the Proposed Rule

    This proposed rule would amend certain provisions of our 2000 final 
ownership and control rule (65 FR 79582) and our current rules 
pertaining to the transfer, assignment, or sale of permit rights at 30 
CFR 701.5 (definition of transfer, assignment, or sale of permit 
rights) and 30 CFR 774.17 (regulatory requirements). The 2000 final 
rule, which took effect for Federal programs (i.e., SMCRA programs for 
which OSM is the regulatory authority) on January 18, 2001, primarily 
addresses issues concerning and related to ownership or control of 
surface coal mining operations under section 510(c) of SMCRA. 30 U.S.C. 
1260(c). Under section 510(c), an applicant for a permit to conduct 
surface coal mining and reclamation operations (hereafter ``applicant'' 
or ``permit applicant'') is not eligible to receive a permit if the 
applicant owns or controls any surface coal mining operation that is in 
violation of SMCRA or other applicable laws. In addition to 
implementing section 510(c), the rule also addresses, among other 
things, permit application information requirements, post-permit 
issuance information requirements, entry of information into the 
Applicant/Violator System (AVS), application processing procedures, and 
alternative enforcement. See generally 65 FR 79661-71. Our current 
rules pertaining to the transfer, assignment, or sale of permit rights 
contain, among other things, application submission, review, and 
approval criteria. We have historically viewed our transfer, 
assignment, or sale rules as related to our ownership and control rules 
because our current definition of transfer, assignment, or sale of 
permit rights (30 CFR 701.5) incorporates ownership and control 
concepts.
    On February 15, 2001, the National Mining Association (NMA) filed a 
lawsuit in the U.S. District Court for the District of Columbia in 
which it challenged our 2000 final rule on multiple grounds. NMA's 
lawsuit included a challenge to our transfer, assignment, or sale 
rules. Although the 2000 rule did not include any amendments to our 
transfer, assignment, or sale rules, NMA argued that we reopened those 
rules by proposing to revise them in the proposed rule that preceded 
the 2000 final rule. See 63 FR 70580, 70591, 70601 (Dec. 21, 1998).
    As we explained in our 2003 proposed rule, NMA's lawsuit is the 
latest chapter in litigation concerning ownership and control and 
related issues. Litigation in this area--involving, at various times, 
OSM, State regulatory authorities (administering OSM-approved State 
programs), NMA, and environmental groups--has been contentious and 
ongoing, virtually uninterrupted, since at least 1988. The 2000 final 
rule, which we are proposing to revise, replaced a 1997 interim final 
rule (62 FR 19451), which was partially invalidated by the U.S. Court 
of Appeals for the District of Columbia Circuit. National Mining Ass'n 
v. Dep't of the Interior, 177 F.3d 1 (DC Cir. 1999) (NMA v. DOI II). 
The interim final rule replaced three sets of predecessor regulations 
dating back to 1988 and 1989 (53 FR 38868, 54 FR 8982, 54 FR 18438), 
which were invalidated by the DC Circuit because the court found that 
one aspect of the rules was inconsistent with section 510(c) of SMCRA. 
National Mining Ass'n v. Dep't of the Interior, 105 F.3d 691 (D.C. Cir. 
1997) (NMA v. DOI I). The preamble to the 2000 final rule contains a 
detailed discussion of the prior rules and the related litigation. See 
generally 65 FR 79582-84.
    This ongoing cycle of litigation has created a great deal of 
regulatory uncertainty for OSM, State regulatory authorities 
(administering OSM-approved State programs), the regulated community, 
and the public in general. Thus, in an effort to bring the litigation 
between OSM and NMA to an end, we entered into negotiations with NMA in 
an attempt to settle NMA's challenge to the 2000 final rule. 
Ultimately, the parties were able to settle all of the issues presented 
in NMA's rule challenge. Under the terms of the settlement, we agreed 
to publish two proposed rules in the Federal Register in accordance 
with the Administrative Procedure Act's standard notice and comment 
procedures. We did not agree to finalize any of the provisions as 
proposed. In order to fulfill our obligations under the settlement 
agreement, we published the first of the proposed rules--relating to 
ownership and control and related issues--on December 29, 2003. 68 FR 
75036 (2003 proposed rule). The public comment period, as extended, 
closed on March 29, 2004. We published the second proposed rule--
relating to the transfer, assignment, or sale of permit rights--on 
January 26, 2005. 70 FR 3840 (2005 proposed rule). The public comment 
period, as extended, closed on April 15, 2005. In the settlement 
agreement, we also agreed to publish certain clarifications to our 
preamble supporting the 2000 final rule. We published those 
clarifications in the preamble to our December 29, 2003 proposed rule. 
68 FR 75043. However, because we today withdraw our 2003 proposed rule 
(as well as our 2005 proposed rule), we are repeating the 
clarifications in today's proposed rule.
    After the comment periods had closed on the two proposed rules 
described above, we reviewed all comments received and decided it was 
appropriate to meet with representatives of our State co-regulators 
before taking further action on the two proposals. States with OSM-
approved SMCRA programs have primary responsibility for the regulation 
of surface coal mining and reclamation operations within their State 
and must have State rules that are consistent with, and no less 
stringent than, our national rules. Thus, because any new national 
rules could directly affect the primacy States, we deemed it important 
to meet with the States prior to promulgating any new rules. We met 
with the State representatives from June 7-9, 2005, in Cincinnati, OH. 
The results of the outreach meeting are detailed in a report that is 
included in the administrative record supporting this rulemaking 
initiative. After our outreach meeting with the States, we also met 
with representatives of NMA, as a courtesy, to inform them of the 
status of, and our potential future actions with regard to, the two 
proposed rules we issued in accordance with the settlement agreement. 
We deemed this meeting appropriate because the litigation NMA 
instituted over our 2000 final rule is still pending in Federal 
district court, and the parties are still required to file periodic 
joint status reports with the court.
    After meeting with the States, we conducted further internal 
research and deliberations and reassessed our options. Given the 
historic interrelatedness of our ownership and control and transfer, 
assignment, or sale rules, we decided it was best to combine the topics 
covered in the two proposed rules and issue one, new reproposal. This 
approach will allow the public to view the proposed changes in context 
and provide more meaningful comments. With respect to the ownership and 
control amendments we

[[Page 59594]]

propose today, we have considered the comments received on our 2003 
proposed rule and additional input from the States and have concluded 
that, with a few exceptions, we do not need to deviate substantially 
from our 2003 proposal. (We note any significant departures in the 
discussion of the proposed rule, below.) However, our proposed 
transfer, assignment, or sale amendments (discussed under headings C 
and T, below) do differ from our 2005 proposal in material respects.
    As with the 2003 and 2005 proposed rules, our settlement agreement 
with NMA does not obligate us to issue a final rule based on this 
proposal. We will give due consideration to any public comments 
received on the proposed rule before deciding whether to issue a final 
rule and whether to finalize any provisions as proposed. We view this 
rulemaking initiative as an opportunity to ensure we and our State 
counterparts have the tools we need to enforce SMCRA, clarify ambiguous 
provisions in our regulations, and reduce reporting burdens on the coal 
mining industry and regulatory authorities. We are hopeful that any 
final rule resulting from this proposal will introduce a measure of 
regulatory stability to areas that have been in flux since at least 
1988.

II. Discussion of the Proposed Rule

    In this section we discuss the proposed revisions to our rules. 
With relatively few modifications, we are carrying forward the proposed 
ownership and control and related amendments that were the subject of 
our 2003 proposed rule, which was based on our settlement agreement 
with NMA. With regard to the transfer, assignment, or sale issues 
discussed under headings C and T, below, the settlement did not require 
us to propose any specific regulatory language; we committed only to 
propose new transfer, assignment, or sale rules. While we are carrying 
forward some aspects of the proposed transfer, assignment, or sale 
amendments from our 2005 proposed rule, including the key conceptual 
change, today's proposal does differ from the 2005 proposal in some 
material respects.
    Following are discussions of our proposed revisions to certain of 
our definitions at 30 CFR 701.5 and to our rules at 30 CFR parts 773, 
774, 778, 843, and 847.

A. Section 701.5--Definition: Control or Controller

    In the 2000 final rule, we defined control or controller in terms 
of certain circumstances or relationships that establish a person's 
control of a surface coal mining operation. We also provided examples 
of persons who may be, but are not necessarily, controllers. NMA 
challenged the definition of control or controller on multiple grounds, 
including allegations that the definition is vague, arbitrary and 
capricious, and contrary to NMA v. DOI II. Given the alleged vagueness 
of the definition, NMA also objected to the requirement that an 
applicant must list all of its controllers in a permit application.
    In order to settle this claim, we agreed to propose removing from 
the definition of control or controller at 30 CFR 701.5 the following: 
all of paragraph (3) (general partner in a partnership); all of 
paragraph (4) (person who has the ability to commit financial or real 
property assets; from paragraph (5), the phrase ``alone or in concert 
with others,'' the phrase ``indirectly or directly,'' and all of the 
examples at paragraphs (5)(i) through (5)(vi). Both parties agreed that 
if we adopted the proposed revisions, the remaining portion of the 
definition would still allow a regulatory authority to reach any person 
or entity with the ``ability'' to determine the manner in which a 
surface coal mining operation is conducted. Both parties also agreed 
that the ``ability to determine'' standard could encompass indirect and 
direct control, as well as control in concert with others, where there 
is actual ability to control. We are carrying this proposal forward 
from our 2003 proposal.
    Despite our renewed proposal to remove two categories of 
controllers from the definition of control or controller (general 
partner in a partnership; person who has the ability to commit 
financial or real property assets), and the list of examples of persons 
who may be controllers, we stress that, under this proposal, all of 
these persons may still be controllers. In fact, general partners and 
persons who can commit assets are almost always controllers. See, e.g., 
NMA v. DOI II, 177 F.3d at 7. However, because these persons are 
already covered under the ``ability to determine'' standard, we propose 
to remove them from the regulatory text in order to simplify the 
definition. Likewise, although we propose to remove the examples of 
controllers, these persons may still be controllers if they in fact 
have the ability to determine the manner in which a surface coal mining 
operation is conducted. In our experience implementing section 510(c) 
of SMCRA since 1977, the persons identified in the examples are often 
controllers. Therefore, our discussion of these examples in the 
preamble to the 2000 final rule remains instructive, though it is 
important to remember that these examples are not exhaustive. See 65 FR 
79598-600.
    In today's proposed rulemaking, our proposed revision of the 
definition of control or controller is coupled with a proposal to 
remove the requirement to list all controllers in a permit application 
under current 30 CFR 778.11, which is also carried forward from our 
2003 proposal. Instead, as discussed in more detail under heading V, 
below, we propose to modify the information disclosure requirements of 
30 CFR 778.11 so that they more closely resemble certain application 
information requirements of section 507 of SMCRA. We propose this 
revision to the permit application information requirements in order to 
establish an objective standard for both applicants (who must submit 
certain information in a permit application) and regulatory authorities 
(who review applications for completeness and compliance with the Act). 
This proposed revision would also reduce the information collection 
burden for both permit applicants and regulatory authorities.
    The ``ability to determine'' standard discussed above gives 
regulatory authorities flexibility to consider all of the relevant 
facts, on a case-by-case basis, in determining whether control is 
present; regulatory authorities also have the leeway to follow control 
wherever it may exist in a series of business relationships. However, 
while it is important for regulatory authorities to retain this 
flexibility and leeway, it is difficult to have an objective 
information disclosure standard based on this type of definition. By 
removing the requirement for applicants to list all of their 
controllers in a permit application, this proposal would greatly reduce 
any uncertainty or subjectivity associated with the relevant permit 
information disclosure requirements. In sum, the proposals discussed 
above would give regulatory authorities the flexibility they need to 
enforce the Act, while simultaneously making the permit information 
requirements more objective and less burdensome.

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

    In its judicial challenge, NMA claimed that the definition of own, 
owner, or ownership at 30 CFR 701.5 in our 2000 final rule is 
inconsistent with SMCRA, arbitrary and capricious, and contrary to NMA 
v. DOI II. NMA also took issue with the ``downstream'' reach of the 
rule, as it pertains to ownership. The term ``downstream,'' as used by 
the

[[Page 59595]]

DC Circuit in the NMA v. DOI I and NMA v. DOI II litigation, refers to 
surface coal mining operations that are down a corporate (or other 
business) chain from an applicant. For example, if an applicant has a 
subsidiary, the subsidiary would be considered ``downstream'' from the 
applicant; by contrast, if an applicant has a parent company, the 
parent company would generally be considered ``upstream'' from the 
applicant. NMA's claim pertained to how far downstream a regulatory 
authority can look when making a permit eligibility determination based 
on ownership (as distinct from control) of a surface coal mining 
operation.
    In order to settle NMA's claim, we agreed to propose to revise the 
regulatory definition of own, owner, or ownership at 30 CFR 701.5 and 
the provision at 30 CFR 773.12(a)(2) that governs the downstream reach 
of the definition when making a permit eligibility determination. Our 
first proposed revision is to the definition itself. The definition, at 
30 CFR 701.5, includes persons ``possessing or controlling in excess of 
50 percent of the voting securities or other instruments of ownership 
of an entity.'' We concede the definition could be confusing in that it 
uses the word ``controlling,'' which is an intrinsic part of the 
separately defined term control or controller. In order to remove any 
potential confusion, we propose to add the term ``owning of record'' in 
place of ``possessing or controlling.'' The term ``owning of record'' 
is a variant of ``owners of record,'' which is found in section 507(b) 
of the Act. Thus, regulatory authorities and the regulated industry 
will be familiar with the term and its meaning. This proposed revision, 
which is carried forward from our 2003 proposal, would not change the 
substance of our current definition of own, owner, or ownership.
    Our second proposed revision would affect current 30 CFR 
773.12(a)(2), which addresses the downstream reach of the definition 
under the rules pertaining to permit eligibility. In NMA v. DOI II, the 
U.S. Court of Appeals for the District of Columbia Circuit clearly held 
that we can deny a permit based on limitless ``downstream'' control 
relationships. NMA v. DOI II, 177 F.3d at 4-5. That is, if an applicant 
indirectly controls an operation with a violation, through its 
ownership or control of intermediary entities, the applicant is not 
eligible for a permit. Id. at 5. The operation with a violation can be 
limitlessly downstream from the applicant. While we believe the court's 
logic arguably extends to ownership, the NMA v. DOI II decision is not 
entirely clear on this point. See proposed 30 CFR 773.12 for greater 
discussion concerning the effects of the proposed definition on permit 
eligibility determinations.
    Our current rules allow us to reach ``downstream'' with regard to 
both ownership and control. Thus, under the current rules, we can deny 
a permit if an applicant indirectly owns an operation in violation of 
SMCRA or other applicable laws. The operation in violation can be 
infinitely downstream from the applicant--meaning that ownership of the 
operation can be indirect, through intermediary entities--as long as 
there is an uninterrupted chain of ownership between the applicant and 
the operation. NMA argued that this provision is contrary to the plain 
meaning of SMCRA and violates principles of corporate law. NMA claimed 
that ownership of a corporation does not equate to ownership of the 
corporation's assets (including mining operations). Thus, according to 
NMA, we should be able to deny a permit based on ownership only if one 
of the applicant's own operations has a violation.
    While we do not necessarily agree with NMA's analysis, in order to 
settle this claim, we agreed to propose a regulatory revision at 30 CFR 
773.12(a), the effect of which would be to limit the reach of permit 
denials based on ownership to ``one level down'' from the applicant. 
For example, if an applicant directly owns an entity with an unabated 
or uncorrected violation of SMCRA or other applicable laws--meaning 
there are no intermediary entities between the applicant and the entity 
with a violation--the applicant would not be eligible for a permit. In 
other words, the rule would reach one level down from the applicant to 
the entity the applicant owns. However, if the applicant indirectly 
owns an entity with a violation--meaning that there is at least one 
intermediary entity between the applicant and the entity with a 
violation--the applicant would not be ineligible for a permit based on 
ownership of the entity with violations. Of course, the same applicant 
would be ineligible for a permit if it controlled the violator entity. 
This proposed revision is also carried forward from our 2003 proposed 
rule.
    We do not believe this approach is compelled by either SMCRA or the 
decision in NMA v. DOI II. However, we do believe it is a reasonable 
interpretation of the Act. Moreover, with regard to control, the rules 
for determining permit eligibility will continue to reach limitlessly 
``downstream.'' That is, in determining an applicant's eligibility for 
a permit, we may continue to consider violations at ``downstream'' 
operations, as long as there is control by the applicant. Because we 
can still deny a permit based on indirect control of an operation with 
a violation, through intermediary entities, our proposal to limit the 
downstream reach of ownership will not impair our ability to adequately 
enforce section 510(c) of the Act. The proposed revision at 30 CFR 
773.12(a) that pertains to the downstream reach of the definition of 
own, owner, or ownership is further discussed under heading I, below.

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

    As mentioned above, in order to settle the litigation instituted by 
NMA, we agreed to propose new transfer, assignment, or sale rules. In 
accordance with the settlement agreement, we published a proposed rule 
on January 26, 2005. 70 FR 3840. In that proposed rule, we proposed 
fairly sweeping changes to our existing regulations. More specifically, 
we proposed to: revise our regulatory definitions of transfer, 
assignment, or sale of permit rights and successor in interest at 30 
CFR 701.5; revise our regulatory provisions at 30 CFR 774.17 relating 
to the transfer, assignment, or sale of permit rights; and create, for 
the first time, separate rules for successors in interest.
    At various points in the preamble to our 2005 proposed rule, we 
expressly invited comments as to whether such major changes are 
warranted given that the existing regulatory scheme has been in 
existence for more than 25 years. In response, a number of commenters 
suggested that the broad conceptual changes we proposed are not 
warranted. Several commenters stated that our statutory rationales for 
some of the proposed changes, including our reading of the legislative 
history, were flawed. Further, commenters suggested that we did not 
achieve our primary purpose of providing greater clarity in our 
transfer, assignment, or sale regulations. Upon consideration of these 
and other comments, and input from our State co-regulators, we have 
come to believe that we can achieve our purpose of simplifying and 
clarifying our regulations through more modest revisions to our 
existing rules. As a result, today we propose to revise our current 
definition of transfer, assignment, or sale of permit rights at section 
701.5 but to keep our existing regulatory requirements for transfers, 
assignments, or sales of permit rights

[[Page 59596]]

largely intact. As with our 2005 proposed rule, we also seek to 
distinguish clearly the circumstances that will trigger a transfer, 
assignment, or sale of permit rights as opposed to an information 
update under 30 CFR 774.12 (see heading S, below).
    Section 511(b) of SMCRA, 30 U.S.C. 1261(b), provides that ``[n]o 
transfer, assignment, or sale of permit rights granted under any permit 
issued pursuant to this Act shall be made without the written approval 
of the regulatory authority.'' Under our current definition, transfer, 
assignment, or sale of permit rights means ``a change in ownership or 
other effective control over the right to conduct surface coal mining 
operations under a permit issued by the regulatory authority.'' We 
propose to revise our regulatory definition of transfer, assignment, or 
sale of permit rights to mean a change of a permittee. Our proposal is 
informed by a decision of the Department of the Interior's Office of 
Hearing and Appeals (OHA) Peabody Western Coal Co. v. OSM, No. DV 2000-
1-PR (June 15, 2000) (Peabody Western), comments received on our 2005 
proposed rule, and our further discussions with our State co-
regulators.
    In Peabody Western, OHA examined the impact of NMA v. DOI II on 
transfer, assignment, or sale issues. OSM had determined that Peabody 
Western's change of all of its corporate officers and directors 
constituted a transfer, assignment, or sale of permit rights under 30 
CFR 701.5. The administrative law judge disagreed, explaining that, 
after NMA v. DOI II, OSM cannot presume that an officer or director is 
a controller and, therefore, a change of an officer or director, or 
even that a change of all officers and directors, cannot, standing 
alone, automatically constitute a change of ``effective control'' 
triggering a transfer, assignment, or sale of permit rights. The 
administrative law judge also made other observations that we assigned 
particular weight to in developing our 2005 proposed rule and today's 
proposal. The judge noted that the ``other effective control'' language 
is ``vague and imprecise'' and ``discloses no meaningful standard and 
provides no advance notice to a regulated corporate entity'' as to 
which corporate changes will constitute a transfer, assignment, or 
sale. This defect, according to the judge, does not provide ``adequate 
advance notice of the purported regulatory standard'' and leaves 
permittees ``to speculate'' as to when regulatory approval is required.
    Throughout our deliberations, we were mindful of OHA's admonition 
that our existing definition, to the extent it relies on the concept of 
``effective control,'' is ``vague and imprecise'' and ``discloses no 
meaningful standard and provides no advance notice to a regulated 
corporate entity'' as to which corporate changes will constitute a 
transfer, assignment, or sale. We concede that our definition has 
created confusion--among regulatory authorities, the regulated 
industry, and the public--that has led to various interpretations of 
the regulatory requirements. As in our 2005 proposed rule, we conclude 
that the imprecision in our current definition was created largely by 
our inclusion of the phrase ``or other effective control.'' Under 
SMCRA, the concept of control, in the context of permit eligibility, is 
found in section 510(c) of the Act. Under that section, an applicant is 
not eligible to receive a permit if it owns or controls an operation 
with an unabated or uncorrected violation. Our existing definition of 
transfer, assignment, or sale of permit rights imports the ownership 
and control concept from section 510(c), but nothing in the Act compels 
that approach. Because we believe that infusing transfer, assignment, 
or sale issues with the section 510(c) ownership and control concepts 
has created undue confusion as to what constitutes a transfer, 
assignment, or sale of permit rights, we propose to remove ownership 
and control concepts from the definition. As explained in more detail 
below, one of the results of this proposed revision is that a change of 
a permittee's owners or controllers would not constitute a transfer, 
assignment, or sale.
    In addition to responding to the decision in Peabody Western, we 
also believe that revising our definition of transfer, assignment, or 
sale of permit rights to mean a change of a permittee is consistent 
with the objective of section 511(b) of the Act. As explained above, 
section 511(b) requires regulatory approval for a transfer, assignment, 
or sale of permit rights. Those permit rights are held by the 
permittee. As long as the permit continues to be held by the same legal 
entity or ``person''--for example, a corporation or other business 
entity recognized under State law--we see no reason to apply the 
regulatory provisions governing transfer, assignment, or sale of permit 
rights. When the permittee changes--such as when the existing permittee 
sells its assets, including a mining permit or the rights granted under 
a permit, to a new permittee--there clearly has been a transfer, 
assignment, or sale of permit rights that would require regulatory 
approval. However, we propose that if the permittee's owners or 
controllers change, but the permittee remains the same, there has not 
been a transfer, assignment, or sale; in this instance, the existing 
permittee is the entity that will continue mining under the permit and 
will, as such, have to maintain appropriate bond coverage. Under this 
proposed definition, we would be looking for indicia that the existing 
permittee has actually conveyed its permit rights to a new permittee 
that desires to continue mining under the permit. We emphasize that 
while a permittee's change of an officer, director, shareholder, owner, 
controller, or certain other persons in its organizational structure 
would not trigger a transfer, assignment, or sale of permit rights 
under this proposal, the permittee would be required to report certain 
of these changes under proposed 30 CFR 774.12 (see heading S, below). 
Our proposed revision to the definition of transfer, assignment, or 
sale of permit rights at section 701.5 would reduce the reporting 
burden on both the coal mining industry and regulatory authorities due 
to the fact that fewer transactions or events would qualify as a 
transfer, assignment, or sale requiring an application and regulatory 
approval under 30 CFR 774.17. We invite your comments as to whether 
there are legal or practical reasons weighing in favor of or against 
our proposed revision.
    It also bears mention that we are not proposing to revise our 
definition of successor in interest, as we did in our 2005 proposed 
rule. Historically, we have viewed a successor in interest as ``any 
person who succeeds to rights granted under a permit, by transfer, 
assignment, or sale of those rights.'' See 30 CFR 701.5. In our 2005 
proposed rule, we proposed to give the term successor in interest 
independent meaning, apart from our definition of transfer, assignment, 
or sale of permit rights. However, based on comments received on the 
proposed rule, we have determined that there is no benefit in creating 
separate regulatory requirements and that our historic approach is 
preferable.

D. Section 773.3--Information Collection

    Current 30 CFR 773.3 contains a discussion of Paperwork Reduction 
Act requirements and the information collection aspects of 30 CFR part 
773. In keeping with the Office of Management and Budget's guidelines, 
we propose to revise current section 773.3 by streamlining the codified 
information collection discussion. A more detailed discussion of the 
information collection burdens associated with part 773 is

[[Page 59597]]

contained under the Procedural Determinations section (see heading 
V.10.), below.

E. Section 773.7--Review of Permit Applications

    We propose to revise current 30 CFR 773.7(a) in order to correct 
one cross-reference and to eliminate a cross-reference that is no 
longer relevant. In general, section 773.7(a) requires the regulatory 
authority to review certain information developed in connection with an 
application for a permit, revision, or renewal and to issue a written 
decision on the application. The second sentence of the current 
provision reads: ``If an informal conference is held under Sec.  
773.13(c), the decision shall be made within 60 days of the close of 
the conference, unless a later time is necessary to provide an 
opportunity for a hearing under paragraph (b)(2) of this section.'' In 
our 2000 final rule, we redesignated previous section 773.15(a)(1) as 
773.7(a), but made no other revisions to the provision at that time. 
Since the promulgation of our 2000 rule, it has come to our attention 
that the cross-references in that provision are either incorrect or no 
longer applicable.
    We propose to correct the first cross-reference so that it properly 
refers to current section 773.6(c). We also propose to remove the 
language that includes the second cross-reference because it is no 
longer relevant due to certain revisions we adopted in our 2000 final 
rule. More specifically, we propose to remove the qualifier phrase 
``unless a later time is necessary to provide an opportunity for a 
hearing under paragraph (b)(2) of this section'' because ``(b)(2)'' 
refers to a provision--previous 30 CFR 773.15(b)(2)--that no longer 
exists and because the logic behind the current provision is no longer 
applicable. The hearing contemplated by previous section 773.15(b)(2) 
was a hearing held in conjunction with an applicant's appeal of a 
notice of violation. Under today's proposal, if an applicant is 
pursuing a good faith appeal of a violation, and otherwise meets the 
criteria of proposed 30 CFR 773.14 (see heading J, below), the 
applicant will be eligible to receive a provisionally issued permit. 
Under these circumstances, we no longer see a need to delay the 
permitting decision in order to provide an opportunity for a hearing on 
a violation.

F. Section 773.8--General Provisions for Review of Permit Application 
Information and Entry of Information into AVS

    Among other things, current 30 CFR 773.8 requires a regulatory 
authority to enter certain permit application information into AVS. We 
propose to revise current 30 CFR 773.8 by removing the phrase 
``ownership and control'' from paragraph (b)(1). We propose this 
revision because we are also proposing to revise the heading of current 
30 CFR 778.11 by removing the phrase ``ownership and control.'' See 
discussion under heading V, below. Our rationale for these proposed 
revisions is that, under section 778.11, an applicant must submit 
information in addition to what could be called ``ownership and 
control'' information. At paragraph 773.8(b)(1), we are also proposing 
to add language clarifying that the information described (through a 
cross-reference to sections 778.11 and 778.12(c)) is required to be 
disclosed; disclosure of this information is not optional. The entire 
proposed provision at paragraph 773.8(b)(1) would read: ``The 
information you are required to submit under Sec. Sec.  778.11 and 
778.12(c) of this subchapter.''

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

    Current 30 CFR 773.9 requires a regulatory authority to review 
certain information provided by the applicant during the regulatory 
authority's permit eligibility review. Similar to our proposed revision 
to section 773.8, we are proposing to revise the section heading at 
current 30 CFR 773.9 by removing references to ``ownership and 
control'' information. Thus, the revised section heading would read, 
``Review of applicant and operator information.'' We also propose to 
revise current section 773.9(a) by removing the phrase ``applicant, 
operator, and ownership or control.'' Again, these non-substantive 
proposed revisions merely clarify that the information that the 
applicant is required to disclose under section 778.11 is not limited 
to ownership and control information.
    As with the proposed revision to section 773.8, we also propose to 
revise section 773.9(a) by adding language that clarifies that the 
information described in the section (through a cross-reference to 
section 778.11) must be disclosed in a permit application; disclosure 
is not optional. Finally, we propose to revise section 773.9(a) by 
changing the term ``business structure'' to ``organizational 
structure.'' This proposed change is a broader description of the 
entities subject to the review.
    In sum, revised paragraph (a) would read: ``We, the regulatory 
authority, will rely upon the information that you, the applicant are 
required to submit under Sec.  778.11 of this subchapter, information 
from AVS, and any other available information, to review your and your 
operator's organizational structure and ownership and control 
relationships.''

H. Section 773.10--Review of Permit History

    We propose to revise current 30 CFR 773.10, which requires a 
regulatory authority to, among other things, review the permit history 
of an applicant and its operator during the regulatory authority's 
permit eligibility review. More specifically, we propose to revise 
section 773.10(b) by removing the reference to the applicant's 
``controllers disclosed under Sec. Sec.  778.11(c)(5) and 778.11(d) of 
this subchapter.'' Paragraph (b) would then read: ``We will also 
determine if you or your operator have previous mining experience.''
    In paragraph (c), we propose to remove the language ``your 
controllers, or your operator's controllers'' from the first sentence. 
In the second sentence of paragraph (c), we would remove ``and was not 
disclosed under Sec.  778.11(c)(5) of this subchapter.'' Paragraph (c) 
would then read: ``If you or your operator do not have any previous 
mining experience, we may conduct an additional review under Sec.  
774.11(f) of this subchapter. The purpose of this review will be to 
determine if someone else with mining experience controls the mining 
operation.'' We are proposing these revisions because we also propose 
to remove the requirement for an applicant to disclose its controllers 
(including its ``designated controller'') in a permit application. See 
discussion under heading V, below. These proposed revisions differ from 
the proposed revisions in our 2003 proposed rule in that we are 
proposing to remove all references to controllers. In our 2003 proposed 
rule, we proposed to substitute the references to all controllers with 
references to the designated controller an applicant is required to 
disclose under current 30 CFR 778.11(d). See 68 FR 75038. In light of 
today's proposal to remove section 778.11(d), cross-references to that 
section would no longer be necessary.

I. Section 773.12--Permit Eligibility Determination

    We propose to revise our provisions for permit eligibility 
determinations at current 30 CFR 773.12. As indicated above, under our 
discussion of the

[[Page 59598]]

definition of own, owner, or ownership (see heading B), current 30 CFR 
773.12(a) is the provision in our 2000 final rule that determines the 
``downstream'' reach of the rule in terms of permit eligibility. More 
specifically, we propose to revise paragraph (a)(2) so that we can no 
longer deny a permit based on indirect ownership of a surface coal 
mining operation with a violation; we would, however, retain the right 
to deny a permit based on indirect control. In order to simplify the 
rule, we also propose to merge paragraphs (a)(2) and (a)(3), without 
changing the substantive meaning of those provisions. The proposed 
revision to paragraph (a)(2), which would remove the reference to 
ownership, would provide that a permit applicant is not eligible for a 
permit if any surface coal mining operation that the applicant or the 
applicant's operator ``indirectly control[s] has an unabated or 
uncorrected violation and [the applicant's or operator's] control was 
established or the violation was cited after November 2, 1988.'' Thus, 
as explained above under heading B (definition of own, owner, or 
ownership), with respect to ownership, we could only look ``one level 
down'' from the applicant in making a permit eligibility determination. 
This proposed revision is carried forward from our 2003 proposed rule.
    We are also proposing to revise current 30 CFR 773.12(b). 
Consistent with the D.C. Circuit's ruling on retroactivity in NMA v. 
DOI II, 30 CFR 773.12(b) of our 2000 final rule provides that an 
applicant is eligible to receive a permit, notwithstanding the fact 
that the applicant or the applicant's operator indirectly owns or 
controls an operation with an unabated or uncorrected violation, if 
both the violation and the assumption of ownership or control occurred 
before November 2, 1988. However, 30 CFR 773.12(b) also provides that 
the applicant is not eligible to receive a permit under this provision 
if there ``was an established legal basis, independent of authority 
under section 510(c) of the Act, to deny the permit * * * .'' NMA 
challenged 30 CFR 773.12(b), claiming that if there is an ``independent 
authority'' to deny the permit, that authority exists whether or not it 
is referenced in the regulatory language. According to NMA, the 
provision is superfluous and potentially confusing. We agree that any 
``independent authority'' exists independent of this regulatory 
provision. Thus, in order to settle this claim, we propose to remove 30 
CFR 773.12(b). Because we propose to remove 30 CFR 773.12(b), we also 
propose to redesignate paragraphs (c), (d), and (e) as (b), (c), and 
(d), respectively. This proposed revision is carried forward from our 
2003 proposed rule.
    Finally, although we are not proposing any regulatory changes on 
this issue, we want to emphasize an inherent aspect of current section 
773.12: In meeting its obligations under section 510(c) of the Act and 
the State counterparts to that provision, each State, when it processes 
a permit application, must apply its own ownership and control rules to 
determine whether the applicant owns or controls any surface coal 
mining operations with violations. Consistent with the concept of State 
primacy, it is appropriate for the regulatory authority with 
jurisdiction over an application to apply its own ownership or control 
rules when making a permit eligibility determination, since that 
regulatory authority has the greatest interest in whether or not mining 
should commence or continue within its jurisdiction. However, when a 
regulatory authority is applying its ownership or control rules to 
violations in other jurisdictions, it is advisable for the regulatory 
authority to consult and coordinate, as necessary, with the regulatory 
authority with jurisdiction over the violation and our Applicant/
Violator System Office (AVS Office). We also stress that a regulatory 
authority processing a permit application has no authority to make 
determinations relating to the initial existence or current status of a 
violation, or a person's responsibility for a violation, in another 
jurisdiction.

J. Section 773.14--Eligibility for Provisionally Issued Permits

    Section 773.14 of our 2000 final rule allows for the issuance of a 
``provisionally issued permit'' if the applicant meets the criteria 
under 30 CFR 773.14(b). The promulgated regulatory language uses the 
word ``may,'' which indicates that the regulatory authority retains 
discretion to grant a provisionally issued permit, even if the 
applicant otherwise meets the eligibility criteria at 30 CFR 773.14(b). 
While the preamble discussion in our 2000 rule is not explicit on this 
point, we intended in this context that an applicant is eligible to 
receive a provisionally issued permit under the specified 
circumstances. See, e.g., 65 FR 79618-19, 79622-24, 79632, 79634-35, 
and 79638.
    In order to reconcile any ambiguity, today we propose to revise our 
rule language at 30 CFR 773.14(b) to clarify that an applicant who 
meets the 30 CFR 773.14(b) eligibility criteria will be eligible for a 
provisionally issued permit. We stress that an applicant must also meet 
all other permit application approval and issuance requirements before 
receiving a provisionally issued permit and that the provisional 
permittee must comply with all performance standards. See generally 65 
FR 79622. This proposed revision is carried forward from our 2003 
proposed rule.

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

    Sections 773.21 through 773.23 of our rules are the provisions 
governing improvidently issued permits. In this context, these are 
permits we should not have issued in the first instance because of an 
applicant's ownership or control of a surface coal mining operation 
with an unabated or uncorrected violation at the time of permit 
issuance. We propose two substantive revisions to 30 CFR 773.21(c).
    The first revision concerns our burden of proof when making a 
preliminary finding that a permit was improvidently issued. In our 2003 
proposed rule, in accordance with our settlement with NMA, we proposed 
to revise section 773.21(c) so that our preliminary finding that a 
permit was improvidently issued ``must be based on reliable, credible, 
and substantial evidence and establish a prima facie case that [the 
permittee's] permit was improvidently issued.'' See 68 FR 75039. Based 
on input received from our State co-regulators--both in their comments 
on our 2003 proposed rule and in our outreach meeting--and other 
commenters, we have come to believe that requiring a prima facie case 
of improvident permit issuance to be based on ``reliable, credible, and 
substantial'' evidence is too high of a burden on a regulatory 
authority (particularly in the context of a preliminary finding). Thus, 
today we propose that our preliminary finding that a permit was 
improvidently issued ``must be based on evidence sufficient to 
establish a prima facie case that [the permittee's] permit was 
improvidently issued.'' This evidentiary standard, we believe, is more 
in line with traditional notions of what it takes to establish a prima 
facie case and is consonant with the standard that typically applies to 
OSM's regulatory findings. See headings O and R, below, for additional 
discussions on burden of proof issues.
    We also propose to remove current 30 CFR 773.21(c)(2), which 
requires us to post a notice of a preliminary finding of improvident 
permit issuance at our

[[Page 59599]]

office closest to the permit area and on the Internet. This proposed 
revision is carried forward from our 2003 proposed rule. We are also 
carrying forward our 2003 proposal to remove all other Internet posting 
requirements adopted in our 2000 final rule. In addition to 30 CFR 
773.21(c)(2), we propose to remove the Internet posting requirements 
found in current 30 CFR 773.22(d), 773.23(c)(2), and 773.28(d). We also 
propose to remove the requirement to post preliminary decisions ``at 
our office closest to the permit area.'' The requirements to post 
preliminary decisions that we propose to remove are found in current 30 
CFR 773.21(c)(2) and 773.22(d). (Current section 843.21 contains 
additional posting requirements that would be removed as part of our 
proposal to remove 843.21 in its entirety. See discussion under heading 
W, below.) We would retain the current requirement at 30 CFR 
773.23(c)(2) to post a notice of permit suspension or rescission at our 
office closest to the permit area. We also would retain the current 
requirement at 30 CFR 773.28(d) to post a final agency decision on a 
challenge of an ownership or control listing or finding on AVS.
    Our inclusion of the Internet posting requirements in the 2000 rule 
was primarily based on comments that we should expand the public's 
access to our decisions. See, e.g., 65 FR 79632. While public access to 
final decisions remains important, we have come to believe that the 
various Internet posting requirements in the 2000 final rule could be 
unduly burdensome to regulatory authorities, especially when public 
notice of final decisions can be accomplished by the less burdensome, 
conventional method of posting them at our office closest to the permit 
area. Further, regulatory authorities are already required to enter 
much of the relevant information into AVS, which is available to the 
public. Posting preliminary findings by any method could likewise 
become unduly burdensome; further, posting of preliminary findings is 
of questionable value to the public. For these reasons, we propose to 
remove all Internet and preliminary finding posting requirements, but 
retain public posting of our final decisions. In terms of information 
collection burdens on regulatory authorities, we note that we have not 
yet required the States to implement these posting requirements. Thus, 
because we propose to eliminate an information collection that never 
took effect for the States, there is no net change to the information 
collection burden.

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

    As discussed above, we propose to remove 30 CFR 773.22(d), which 
contains posting requirements similar to those found at current 30 CFR 
773.21(c)(2), discussed above under heading K. Specifically, we propose 
to remove the requirement to post a notice of proposed suspension or 
rescission at our office closest to the permit area and on the 
Internet. Because we propose to remove paragraph (d), we further 
propose to redesignate current paragraphs (e) through (h) as paragraphs 
(d) through (g). In the proposed rule language that follows this 
discussion of the proposed rules, our proposed revision to 30 CFR 
773.22 is shown as a Federal Register instruction. This proposed 
revision is carried forward from our 2003 proposed rule.

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

    We propose to revise the posting requirements contained in current 
30 CFR 773.23. Current 30 CFR 773.23(c)(2) requires us to post a final 
notice of permit suspension or rescission (which requires the holder of 
the improvidently issued permit to cease all surface coal mining 
operations on the permit) at our office closest to the permit area and 
on the Internet. We propose to remove the requirement to post final 
notices on the Internet. (Our rationale for removing this and similar 
posting requirements is discussed more fully above under heading K.) 
However, because section 773.23(c)(2) pertains to final findings (as 
opposed to the preliminary and proposed findings under sections 30 CFR 
773.21 and 773.22, respectively), we have decided to retain the 
requirement to post a final notice at our office closest to the permit 
area. We believe it is appropriate to post notices of such final 
actions for public view. These proposed revisions are carried forward 
from our 2003 proposed rule.

N. Section 773.26--How to Challenge an Ownership or Control Listing or 
Finding

    Sections 773.25 through 773.28 of our rules govern challenges to 
ownership or control listing or findings. Generally speaking, an 
ownership or control listing arises when an applicant identifies, or 
``lists,'' a person as an owner or controller in a permit application. 
That information is, in turn, entered into AVS by a regulatory 
authority. By contrast, an ownership or control finding under 30 CFR 
774.11(f) constitutes a regulatory authority's fact-specific 
determination that a person owns or controls a surface coal mining 
operation.
    In its judicial challenge to our 2000 final rule, NMA claimed that 
30 CFR 773.26(a) is confusing. That section explains how and where a 
person may challenge an ownership or control listing or finding. NMA 
claimed that the provision does not clearly delineate the appropriate 
forum in which to bring a challenge. NMA also expressed concern that 
the provision seems to refer only to applicants and permittees, but not 
other persons who are identified in AVS as owners or controllers.
    Section 773.25 of our 2000 final rule provides that any person 
listed in a permit application or in AVS as an owner or controller, or 
found by a regulatory authority to be an owner or controller, may 
challenge the listing or finding. As we explained in the preamble, our 
intent was, in fact, to allow any person listed in a permit application 
or in AVS, or found to be an owner or controller, to initiate a 
challenge at any time, regardless of whether there is a pending permit 
application or an issued permit. See 65 FR 79631. Section 773.26(a) was 
not intended to limit, in any way, the universe of persons who may 
avail themselves of the challenge procedures under 30 CFR 773.25; 
rather, it merely specifies the procedure and forum in which to 
challenge an ownership or control listing or finding.
    Nonetheless, in order to provide greater clarity to the provisions 
in 773.26(a), and in accordance with our settlement with NMA, we 
proposed (in our 2003 proposed rule) to revise our regulations at 30 
CFR 773.26(a) to more clearly specify the forum in which a person may 
initiate an ownership or control challenge. Today, we carry forward 
this aspect of our 2003 proposed rule. Specifically, we propose that 
challenges pertaining to a pending permit application must be submitted 
to the regulatory authority with jurisdiction over the pending 
application. We further propose that all other challenges concerning 
ownership or control of a surface coal mining operation must be 
submitted to the regulatory authority with jurisdiction over the 
relevant surface coal mining operation.
    We note that, in meeting its obligations under section 510(c) of 
the Act and the State counterparts to that provision, each State, when 
it decides an ownership or control challenge under its counterpart to 
30 CFR 773.28, must apply its own ownership and control rules to 
determine whether the applicant owns or controls (or owned or 
controlled) any surface coal mining

[[Page 59600]]

operations with violations. See generally 65 FR 79637. Further, we 
stress that an ownership or control decision by one State is not 
necessarily binding on any other State. This provision comports with 
principles of State primacy, and recognizes that not all States will 
have identical ownership and control rules.
    In our 2003 proposed rule, we also proposed to add new 30 CFR 
773.26(e), in accordance with our settlement with NMA. Today, we carry 
forward this aspect of our 2003 proposed rule. This new provision would 
allow a person who is unsure why he or she is shown in AVS as an owner 
or controller of a surface coal mining operation to request an informal 
explanation from our (AVS Office). The new provision would require us 
to respond to such a request within 14 days. Our response would be 
informal and would set forth in simple terms why the person is shown in 
AVS. In most, if not all, cases, the explanation would be as simple as 
specifying that the person was found to be an owner or controller under 
30 CFR 774.11(f) (of which the person should already be aware due to 
that section's written notice requirement) or was listed as an owner or 
controller in a permit application. Understanding the basis for being 
shown in AVS will give persons a better sense of the type of evidence 
they will need to introduce in an ownership or control challenge. See 
also 30 CFR 773.27(c), which provides examples of materials a person 
may submit in support of his or her ownership or control challenge.

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

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

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

65 FR 79640. Nonetheless, in order to settle NMA's claim and to set 
forth more clearly the relative burdens of the parties, we agreed to 
propose revisions to section 30 CFR 773.27(a) and 774.11(f), as well as 
a related revision to 30 CFR 773.21(c) (see discussion above under 
heading K). The proposed revisions were part of our 2003 proposed rule. 
Today, we are proposing revisions that deviate slightly from the 2003 
proposed revisions but retain the general substance of our prior 
proposals. As explained in more detail below under heading R, we are 
proposing to amend 30 CFR 774.11(f) in order to clarify that a 
regulatory authority's finding of ownership or control must be based on 
evidence sufficient to establish a prima facie case of ownership or 
control. We propose to amend section 773.27(a) so that it reads:

    (a) When you challenge a listing of ownership or control, or a 
finding of ownership or control made under Sec.  774.11(f) of this 
subchapter, you must prove by a preponderanc