Ownership and Control; Permit and Application Information; Transfer, Assignment, or Sale of Permit Rights, 68000-68031 [E7-23162]

Agencies

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

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



[[Page 67999]]

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Part II





Department of the Interior





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Office of Surface Mining Reclamation and Enforcement



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30 CFR Parts 701, 773, 774 et al.



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

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

[[Page 68000]]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

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

RIN 1029-AC52


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

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

ACTION: Final Rule.

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

EFFECTIVE DATE: January 2, 2008.

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

SUPPLEMENTARY INFORMATION:

Table of Contents

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

I. Background to the Final Rule

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

[[Page 68001]]

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

II. Public Participation in the Rulemaking Process

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

III. Discussion of the Final Rule

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

[[Page 68002]]

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

A. General Comments

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

[[Page 68003]]

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

B. Section 701.5--Definition: Control or Controller

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

[[Page 68004]]

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

Responses to Comments

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

[[Page 68005]]

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

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

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

[[Page 68006]]

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

Responses to Comments

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

[[Page 68007]]

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

[[Page 68008]]

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

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

    Over the years, we have found that the regulatory provisions 
pertaining to the transfer, assignment, or sale (TAS) of permit rights 
have generated a great deal of confusion. We have discovered that the 
various State regulatory authorities have very different views as to 
what constitutes a transfer, assignment, or sale requiring regulatory 
approval. As mentioned above, in order to settle the litigation 
instituted by NMA, we agreed to propose new transfer, assignment, or 
sale rules. However, we did not agree to propose any specific 
provisions. We viewed the rulemaking called for under the settlement as 
an excellent opportunity to revisit our TAS rules.
    In accordance with the settlement agreement, we published a 
proposed rule on January 26, 2005. 70 FR 3840. In that proposed rule, 
we proposed fairly sweeping changes to our TAS regulations. More 
specifically, we proposed to: revise our regulatory definitions of 
transfer, assignment, or sale of permit rights and successor in 
interest at 30 CFR 701.5; revise our regulatory provisions at 30 CFR 
774.17 relating to the transfer, assignment, or sale of permit rights; 
and create, for the first time, separate rules for successors in 
interest.
    A number of commenters on our 2005 proposal suggested that the 
broad conceptual changes we proposed were not warranted. Several 
commenters stated that our statutory rationales for some of the 
proposed changes, including our reading of the legislative history, 
were flawed. Further, commenters suggested that we did not achieve our 
primary purpose of providing greater clarity in our transfer, 
assignment, or sale regulations. Upon consideration of those and other 
comments, and input from our State co-regulators, we determined that we 
could achieve our purpose of simplifying and clarifying our regulations 
throu