[Federal Register Volume 72, Number 41 (Friday, March 2, 2007)]
[Rules and Regulations]
[Pages 9616-9637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-3649]



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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 Part 942



 Tennessee Federal Regulatory Program; Final Rule

Federal Register / Vol. 72, No. 41 / Friday, March 2, 2007 / Rules 
and Regulations

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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Part 942

RIN 1029-AC50


Tennessee Federal Regulatory Program

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

ACTION: Final rule.

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SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement 
(OSM), are finalizing changes to the Tennessee Federal regulatory 
program regarding performance bonds and revegetation success standards. 
These revisions provide a mechanism to use our statutory authority to 
accept financial assurances in the form of trust funds and annuities in 
Tennessee to fund the treatment of long-term postmining pollutional 
discharges from surface coal mining operations and thus satisfy 
performance bond obligations for treatment of those discharges. Our 
previous regulations also did not facilitate the growth of forests, and 
we are taking a number of steps to ensure the reestablishment of high 
quality hardwood forests where the postmining land uses are related to 
forestry. To minimize competition with woody plants and support 
healthier tree growth, we are removing the 80% ground cover 
revegetation success standard for mine sites with postmining land uses 
of wildlife habitat, undeveloped land, recreation, or forestry; 
limiting the herbaceous ground cover success standards to those 
necessary to control erosion and support the forestry-related 
postmining land use; requiring seed mixes and seeding rates of 
herbaceous vegetation for those land uses to be specified in the 
permit; and removing the limitations on the amount of bare areas that 
can remain after reclamation of mine sites with those land uses.

EFFECTIVE DATE: April 2, 2007.

FOR FURTHER INFORMATION CONTACT: Tim Dieringer, Field Office Director, 
U.S. Department of the Interior, Office of Surface Mining Reclamation 
and Enforcement, Knoxville Field Office, 710 Locust Street, 2nd Floor, 
Knoxville, Tennessee 37902; Telephone: 865-545-4103; E-mail: 
<a href="/cdn-cgi/l/email-protection#097d6d606c7b60676e6c7b49667a647b6c276e667f"><span class="__cf_email__" data-cfemail="394d5d505c4b50575e5c4b79564a544b5c175e564f">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:
I. Background on the Tennessee Federal Program
II. Background on This Rulemaking
III. How and why are we revising the Tennessee Federal program 
regulations?
IV. How did we respond to the comments that we received on the 
proposed rule?
V. Procedural Determinations

I. Background on the Tennessee Federal Program

    Section 503(a) of the Surface Mining Control and Reclamation Act of 
1977 (SMCRA or the Act), 30 U.S.C. 1253, permits a State to assume 
primacy for the regulation of surface coal mining and reclamation 
operations on non-Federal and non-Indian lands within its borders under 
certain conditions. The Secretary of the Interior conditionally 
approved the Tennessee program on August 10, 1982. However, because of 
actions that we took pursuant to 30 CFR Part 733 to correct 
shortcomings in the administration and implementation of the approved 
Tennessee program on May 16, 1984, the State repealed most of the 
Tennessee Coal Surface Mining Law of 1980, Tennessee Code Annotated 59-
8-301-59-8-339, and its implementing regulations, effective October 1, 
1984. As a result, on October 1, 1984, we withdrew approval of the 
Tennessee permanent regulatory program and promulgated a Federal 
program for Tennessee under the authority of section 504(a) of the Act, 
30 U.S.C. 1254(a). This program appears in 30 CFR Part 942, where it 
replaced the disapproved State program. With the promulgation of a 
Federal regulatory program, we became the regulatory authority under 
SMCRA in Tennessee. You can find background information on the 
Tennessee Federal program, including our findings and the disposition 
of comments, in the October 1, 1984, Federal Register. 49 FR 38874.

II. Background on This Rulemaking

    We published the proposed rule underlying this final rule on April 
6, 2006. 71 FR 17682. On May 3, 2006, we extended the public comment 
period until June 30, 2006, and provided notice of a requested public 
hearing that was held on June 1, 2006. 71 FR 25992.

III. How and why are we revising the Tennessee Federal program 
regulations?

A. Section 942.800: Bond and Insurance Requirements for Surface Coal 
Mining and Reclamation Operations

    On April 6, 2006, we published proposed revisions to the Tennessee 
Federal program that provided a mechanism to use our authority to 
implement trust funds and annuities for funding treatment of long-term 
postmining pollutional discharges. 71 FR 17682. Those revisions, which 
we are adopting in slightly revised form in this final rule, reflect 
our efforts to provide a system suitable for the long-term funding of 
the treatment of the postmining pollutional discharges that exist in 
Tennessee and any unanticipated discharges that may occur in the 
future.
    We are adopting new Sec.  942.800(c), which we proposed as Sec.  
942.800(b)(4), to provide us with a mechanism to use our statutory 
authority to accept trust funds and annuities as an alternative system 
as provided for in SMCRA at Section 509(c), 30 U.S.C. 1259(c), by which 
permittees may satisfy the requirement to provide a performance bond to 
cover the treatment of postmining pollutional discharges. Final Sec.  
942.800(c) reads as follows:

    (c) Special consideration for sites with long-term postmining 
pollutional discharges. With the approval of the Office, the 
permittee may establish a trust fund, annuity or both to guarantee 
treatment of long-term postmining pollutional discharges in lieu of 
posting one of the bond forms listed in Sec.  800.12 of this chapter 
for that purpose. The trust fund or annuity will be subject to the 
following conditions:
    (1) The Office will determine the amount of the trust fund or 
annuity, which must be adequate to meet all anticipated treatment 
needs, including both capital and operational expenses.
    (2) The trust fund or annuity must be in a form approved by the 
Office and contain all terms and conditions required by the Office.
    (3) The trust fund or annuity must provide that the United 
States or the State of Tennessee is irrevocably established as the 
beneficiary of the trust fund or of the proceeds from the annuity.
    (4) The Office will specify the investment objectives of the 
trust fund or annuity.
    (5) Termination of the trust fund or annuity may occur only as 
specified by the Office upon a determination that no further 
treatment or other reclamation measures are necessary, that a 
replacement bond or another financial instrument has been posted, or 
that the administration of the trust fund or annuity in accordance 
with its purpose requires termination.
    (6) Release of money from the trust fund or annuity may be made 
only upon written authorization of the Office or according to a 
schedule established in the agreement accompanying the trust fund or 
annuity.
    (7) A financial institution or company serving as a trustee or 
issuing an annuity must be one of the following:
    (i) A bank or trust company chartered by the Tennessee 
Department of Financial Institutions;
    (ii) A national bank chartered by the Office of the Comptroller 
of the Currency;
    (iii) An operating subsidiary of a national bank chartered by 
the Office of the Comptroller of the Currency;
    (iv) An insurance company licensed or authorized to do business 
in Tennessee by the Tennessee Department of Commerce and Insurance 
or designated by the Commissioner of that Department as an eligible 
surplus lines insurer; or

[[Page 9617]]

    (v) Any other financial institution or company with trust powers 
and with offices located in Tennessee, provided that the 
institution's or company's activities are examined or regulated by a 
State or Federal agency.
    (8) Trust funds and annuities, as described in this paragraph, 
must be established in a manner that guarantees that sufficient 
moneys will be available to pay for treatment of postmining 
pollutional discharges (including maintenance, renovation, and 
replacement of treatment and support facilities as needed), the 
reclamation of the sites upon which treatment facilities are located 
and areas used in support of those facilities.
    (9) When a trust fund or annuity is in place and fully funded, 
the Office may approve release under Sec.  800.40(c)(3) of this 
chapter of conventional bonds posted for a permit or permit 
increment, provided that, apart from the pollutional discharge and 
associated treatment facilities, the area fully meets all applicable 
reclamation requirements and the trust fund or annuity is sufficient 
for treatment of pollutional discharges and reclamation of all areas 
involved in such treatment. The portion of the permit required for 
postmining water treatment must remain bonded. However, the trust 
fund or annuity may serve as that bond.

    SMCRA, its implementing regulations, and our policy require that 
the performance bond be sufficient to cover treatment of those 
discharges in the event that the permittee fails to do so. Section 
509(a) of SMCRA, 30 U.S.C. 1259(a), requires that each permittee post a 
performance bond conditioned upon faithful performance of all the 
requirements of the Act and the permit. That section of the Act also 
specifies that ``[t]he amount of the bond shall be sufficient to assure 
the completion of the reclamation plan if the work had to be performed 
by the regulatory authority in the event of forfeiture * * *.'' 30 
U.S.C. 1259(a). Section 509(e) of the Act provides that ``[t]he amount 
of the bond or deposit required and the terms of each acceptance of the 
applicant's bond shall be adjusted by the regulatory authority from 
time to time as affected land acreages are increased or decreased or 
where the cost of future reclamation changes.'' 30 U.S.C. 1259(e). The 
statutory requirements for a ``reclamation plan'' include the measures 
to be taken to ensure water quality. 30 U.S.C. 1258(a)(13).
    Our regulations at 30 CFR Part 800 implement the requirements of 
section 509 of the Act, 30 U.S.C. 1259. Those regulations, first 
promulgated in 1979, were revised in 1983 in a manner that clearly 
implies that performance bonds must be adjusted when unanticipated 
events, such as postmining pollutional discharges, increase the cost of 
reclamation (in this case, treatment of the discharges).
    In our discussion of determining bond amounts in the March 13, 
1979, Federal Register (44 FR 15111), we noted:

    The Office recognizes that the regulatory authority cannot 
reasonably establish the initial bond amount based upon speculative 
events such as the need to abate ground water pollution, since the 
operation must be designed initially to prevent such consequences in 
order to qualify for a permit. However, such unplanned consequences 
occasionally occur due to improper mining or reclamation, or because 
an important variable was not evaluated properly. When such 
consequences are identified prior to the release of all liability 
and termination of the permit in accordance with Part 807, the 
permittee's legal obligation to abate them necessarily adds to the 
cost of reclamation.
    Under such circumstances, the regulatory authority would be 
authorized to impose additional bond liability under that permit, or 
to retain a larger portion of the total liability than otherwise 
required in response to an application for release of bond, in order 
to ensure adequate funding to complete the abatement work required 
(Sections 805.14(a) and 807.12(d)).

    According to this 1979 preamble discussion, regulatory authorities 
have discretionary authority to increase bonds to reflect the increased 
costs of reclamation that result from the occurrence of unanticipated 
events such as postmining pollutional discharges. However, in the 
preamble to our 1983 revisions to the bonding rules, we indicate that 
increases in bond amounts under those circumstances are mandatory, not 
discretionary:

    If at any time the cost of future reclamation under the bond 
changes, the regulatory authority is required to adjust the bond 
accordingly (Sec. 800.15(a)). Thus, the amount of the bond for any 
increment must at all times be sufficient to assure the completion 
of the reclamation plan if the work had to be performed by the 
regulatory authority.

48 FR 32937, July 19, 1983.

    Under 30 CFR 780.21(h) and 784.14(g), one component of the 
reclamation plan is a hydrologic reclamation plan. Among other things, 
this plan must include the provision of ``water-treatment facilities 
when needed.'' Consequently, the bond must be adequate to cover the 
cost of treating long-term pollutional discharges because treatment of 
those discharges is part of the reclamation plan.
    We further affirmed and clarified our position on financial 
guarantees for long-term postmining pollutional discharges in a March 
31, 1997, document entitled, ``Policy Goals and Objectives on 
Correcting, Preventing and Controlling Acid/Toxic Mine Drainage.'' 
Objective 2 under the policy goal concerning environmental protection 
requires that financial responsibility associated with acid mine 
drainage (AMD) be fully addressed. Specifically, the policy includes 
the following strategies:

    Strategy 2.2--If, subsequent to permit issuance, monitoring 
identifies acid- or toxic-forming conditions which were not 
anticipated in the mining and operation plan, the regulatory 
authority should require the operator to adjust the financial 
assurance.
    Strategy 2.3--Where inspections conducted in response to bond 
release requests identify surface or subsurface water pollution, 
bond in an amount adequate to abate the pollution should be held as 
long as water treatment is required, unless a financial guarantee or 
some other enforceable contract or mechanism to ensure continued 
treatment exists.

    When responding to commenters on the policy who objected to the 
requirement that permittees post financial guarantees for treatment of 
pollutional discharges during and after land reclamation (comment 
no.16), we stated:

    Section 509(a) of the Act requires that each permittee post a 
performance bond conditioned upon faithful performance of all the 
requirements of the Act and the permit. Paragraph (b) of this 
Section of the Act specifies that ``[t]he amount of the bond shall 
be sufficient to assure the completion of the reclamation plan if 
the work had to be performed by the regulatory authority in the 
event of forfeiture.'' The hydrologic reclamation plan is part of 
the reclamation plan to which this section refers. Section 519(c) of 
SMCRA authorizes release of this bond only when the regulatory 
authority is satisfied that the reclamation required by the bond has 
been accomplished, and paragraph (c)(3) specifies that ``no bond 
shall be fully released until all reclamation requirements of this 
Act are fully met.'' Furthermore, section 519(b) of the Act provides 
that whenever a bond release is requested, the regulatory authority 
must conduct an inspection to evaluate the reclamation work 
performed, including ``whether pollution of surface or subsurface 
water is occurring, the probability of continuance of future 
occurrence of such pollution, and the estimated cost of abating such 
pollution.'' Therefore, there is no doubt that, under SMCRA, the 
permittee must provide a financial guarantee to cover treatment of 
postmining discharges when such discharges develop and require 
treatment.

    On May 30, 2000, our Knoxville, Tennessee Field Office (KFO) issued 
Field Office Policy Memorandum No. 37 entitled ``Policy for Requiring 
Bond Adjustments on Permitted Sites Requiring Long-Term Treatment of 
Pollutional Discharges.'' This policy described the general procedure 
that the KFO would utilize to require adjustments to performance bonds 
on sites in Tennessee where unanticipated pollutional discharges are 
occurring and

[[Page 9618]]

long-term treatment is required. The policy requires that treatment 
costs be estimated based on an assumption that treatment will be needed 
for at least 75 years, absent convincing evidence to the contrary. 
Between June and September of the year in which the policy was issued, 
the KFO ordered some permittees in Tennessee to submit permit revisions 
to provide for the installation, operation and maintenance of long-term 
treatment systems and to adjust performance bonds accordingly.
    Those permittees then sought administrative review of the KFO's 
orders. However, on October 2, 2000, the National Mining Association 
(NMA) filed suit in the United States District Court for the Northern 
Division of the Eastern District of Tennessee seeking to overturn the 
policy. NMA v. Babbitt, No. 3:00-CV-549 (E.D. Tenn. filed Oct 2, 2000). 
The plaintiffs alleged that the KFO's Policy Memorandum No. 37 was 
unlawfully adopted in violation of the rulemaking requirements of the 
Administrative Procedure Act, is inconsistent with the permitting and 
bonding provisions of SMCRA by requiring retroactive revision of 
permits that have already expired and the posting of performance bond 
for expired permits, and violates the Due Process Clause of the U.S. 
Constitution.
    The Department of the Interior's Office of Hearings and Appeals 
then placed the administrative appeals of the KFO's orders to 
individual permittees in abeyance pending resolution of the Federal 
district court case. On July 24, 2001, the Federal district court 
litigation also was placed in abeyance in response to NMA's request 
that the parties pursue settlement of the case. Settlement negotiations 
are ongoing.
    The Tennessee Federal program regulations at 30 CFR 942.800 
incorporate the Federal bonding regulations in 30 CFR Part 800 by 
reference. In addition, that section of the Tennessee Federal program 
contains a few Tennessee-specific bonding provisions. As adopted on 
October 1, 1984, the Tennessee Federal program relies upon a 
conventional bonding system in which site-specific performance bonds 
must be filed with the KFO. The KFO determines the amount of the 
performance bond based upon the approved reclamation plan and adjusts 
that amount periodically when the cost of future reclamation changes. 
The bond amount must be sufficient to assure completion of the 
reclamation plan if we have to perform the work in the event of bond 
forfeiture.
    A system that provides an income stream may be better suited to 
ensuring the treatment of long-term pollutional discharges, such as 
AMD, than conventional bonds. Surety bonds, the most common form of 
conventional bond, are especially ill-suited for this purpose because 
surety companies normally do not underwrite a bond when there is no 
expectation of release of liability. Further, a mandate that would 
require the permittee to immediately post other forms of conventional 
bonds, such as cash or negotiable bonds, may force insolvency on a 
permittee that is currently treating pollutional discharges but is 
unable to provide the large sums required to guarantee treatment 
through conventional bonding instruments. Insolvency will most likely 
lead to forfeiture of existing bonds and the proceeds of that 
forfeiture may not be sufficient to ensure long-term treatment of 
discharges.
    On May 17, 2002, we published an advance notice of proposed 
rulemaking (ANPR) entitled ``Bonding and Other Financial Assurance 
Mechanisms for Treatment of Long-Term Pollutional Discharges and Acid/
Toxic Mine Drainage (AMD) Related Issues.'' 67 FR 35070. In that ANPR, 
we sought comments on, among other things, the form and amount of 
financial assurance that should be required to guarantee treatment of 
postmining pollutional discharges. Commenters on the ANPR disagreed as 
to whether financial assurance should be required, but they largely 
agreed that, if it was, surety bonds are not the best means--or even an 
appropriate means--of accomplishing that purpose. For instance, the 
Surety Association of America stated that surface coal mining 
operations ``would not be prudently bondable if the scope of the 
obligation included perpetual treatment of discharge[s].'' According to 
the Association, ``the problem of acid mine drainage requires a funding 
vehicle, and a surety bond is not a funding vehicle.''
    Through responses to the ANPR and the experience of Pennsylvania 
(discussed below), we have determined that the best approach to provide 
an alternative for financial assurances for long-term treatment of 
pollutional discharges is to allow the permittee to establish a 
dedicated income-producing account, such as a trust fund or annuity or 
both, that is held by a third party as trustee for the regulatory 
authority. The income stream from a fully funded trust fund or annuity 
will be used to fund treatment of postmining pollutional discharges 
(including maintenance, renovation, and replacement of treatment and 
support facilities as needed), the reclamation of the sites upon which 
treatment facilities are located and areas used in support of those 
facilities. However, until this rulemaking, our regulations did not 
provide for a mechanism to accept such accounts in satisfaction of the 
Tennessee Federal program's bonding requirements. The addition of 
paragraph (c) to 30 CFR 942.800 now implements our statutory authority 
and establishes the parameters under which trust funds and annuities 
must operate.
    By adding paragraph (c), we are building on the experience of 
Pennsylvania, which has successfully implemented similar provisions. 
Pennsylvania amended its Surface Mining Conservation and Reclamation 
Act to include the authority to accept trust funds and annuities to 
fund treatment of postmining discharges. Pennsylvania's statutes allow 
the complete release of any conventional bonds remaining after land 
reclamation has been fully completed and the revegetation 
responsibility period has expired for a site with a pollutional 
discharge if provisions have been made for sound future treatment of 
that discharge. 52 Pa. Cons. Stat. Ann. 1396.4(g)(3). Pennsylvania's 
provisions state that sound future treatment must consist of another 
approved financial instrument, such as a trust fund, that will fully 
secure the long-term treatment obligation and is applicable to the area 
associated with that treatment. 52 Pa. Cons. Stat. Ann. 1396.4(d.2). 
This rule is not intended to mirror the provisions of the Pennsylvania 
program, but rather to adapt the concepts behind Pennsylvania's program 
for use in the Tennessee Federal program.
    When Pennsylvania submitted the amendment to its program 
authorizing the use of trust funds and annuities, it characterized 
those financial instruments as collateral bonds, and we approved them 
as such. 70 FR 25472, amended at 70 FR 52916. However, the Federal 
regulations at 30 CFR 800.11(e) provide another option for approving 
trust funds and annuities. Those regulations implement the provision in 
section 509(c) of SMCRA, 30 U.S.C. 1259(c), authorizing OSM and the 
States to establish an ``alternative system that will achieve the 
objectives and purposes of the bonding program pursuant to this 
section.'' The regulations at 30 CFR 800.11(e) require that those 
alternative systems (1) ``assure that the regulatory authority will 
have available sufficient money to complete the reclamation plan for 
any areas which may be in default at any time;'' and (2) ``provide a 
substantial economic incentive for the permittee to comply with all 
reclamation provisions.'' As we noted in the proposed rule, 
establishment of a

[[Page 9619]]

trust fund or annuity would satisfy the first criterion, while the 
permittee's provision of the moneys needed to establish a trust fund or 
annuity and the express terms of the trust would satisfy the second 
criterion. 71 FR 17684.
    In this rulemaking, we are providing for the use of trust funds and 
annuities in Tennessee as an alternative bonding system (ABS), as 
provided for in section 509(c) of the Act. As an ABS, trust funds and 
annuities are not subject to the provisions of 30 CFR 800.12, 800.20, 
800.21, and 800.23 because those provisions pertain only to various 
types of conventional bonds. Except as otherwise provided in this rule, 
trust funds and annuities will generally be subject to the other 
provisions of 30 CFR Part 800. Specific information on the portions of 
30 CFR Part 800 that apply to individual trust funds and annuities will 
be set forth in a formal written trust fund or annuity agreement made 
between the KFO and the permittee responsible for treating the 
discharge.
    We will allow permittees a reasonable time to fully fund trust 
funds and annuities rather than requiring a lump-sum deposit as would 
be required for collateral bonds. We will use the provisions of 30 CFR 
800.15(a) on a site-specific basis to establish a schedule for periodic 
review to ensure that trusts and annuities contain sufficient funds for 
treatment of the discharge, and maintenance and reclamation of 
associated facilities.
    A permittee with postmining pollutional discharges that establishes 
a trust fund or annuity to guarantee funding for treatment will be able 
to secure release of conventional bonds on the portion of their permit 
that does not support the treatment of the discharge. However, the 
trust fund or annuity must be fully funded before the permittee 
qualifies for release of the conventional bond. A fully funded trust 
fund or annuity would be available to fund treatment and reclamation 
activities in the event of a permittee's bankruptcy or dissolution.
    In implementing this rule, we will first determine whether a 
postmining pollutional discharge requiring long-term treatment exists. 
If so, and if the permittee elects to use a trust fund or annuity to 
satisfy the financial assurance (performance bond) obligation for 
discharge treatment, we, in consultation with the permittee, will 
develop a formal written agreement that sets forth the details of the 
trust fund or annuity. While we will consult in good faith with the 
permittee on the terms of the trust fund or annuity, including the 
selection of the trustee, the investment mix making up the trust fund 
or annuity, and the amount and duration of the trust agreement or 
annuity, we retain the final authority and responsibility to establish 
bond amounts, terms, and conditions, as provided by 30 CFR 800.16 and 
this rule. In determining the amount needed to fully fund the trust 
fund or annuity, we will consider the quality and quantity of the 
discharge, anticipated future changes in discharge quantity and 
quality, treatment options, support facilities needed, treatment 
facility maintenance, renovation, and replacement intervals, current 
and projected investment performance, and any other factors necessary 
to ensure ongoing treatment and reclamation of the discharge. We will 
use this rule, existing OSM policies, and computer software designed to 
estimate treatment and associated costs to calculate the amount of 
funding required to fulfill treatment obligations.
    We anticipate that a fully funded trust or annuity may include 
provisions for payments to the permittee as a mechanism to cover the 
cost of water treatment, especially for those permittees no longer 
generating income from the mining of coal. Payments from the income 
stream of a fully funded trust fund or annuity will not be considered a 
bond release or a bond forfeiture. This rule establishes an ABS 
authorizing the establishment of a trust or annuity that produces an 
income stream that can be transferred to a permittee or other entity to 
pay for the treatment costs provided for in Sec.  942.800(c)(8). The 
trust fund or annuity will also include other provisions that provide 
for the continuation of treatment in the event that the permittee fails 
to meet its treatment obligations.
    This rule does not alter our existing responsibilities or those of 
permittees or any other Federal or State agency relating to postmining 
pollutional discharges. Existing treatment requirements and 
obligations, as well as permitting and enforcement responsibilities, 
are not affected by this rule.
    Because of the adoption of this rule, we will not be pursuing a 
national rulemaking regarding the use of trust funds and annuities in 
response to the ANPR that we published in 2002. The successful 
implementation of trusts and annuities in the Pennsylvania program and 
our explicit addition of trust funds and annuities as an ABS in 
Tennessee with this rulemaking demonstrate that adequate authority for 
the use of trust funds and annuities is already available under SMCRA 
and its implementing regulations. Therefore, a national rule is not 
needed.

B. Sections 942.816(f)(3) and (4) and 942.817(e)(3) and (4): 
Revegetation Success Requirements for Forestry-Related Postmining Land 
Uses

    On April 6, 2006, we proposed revisions to the Tennessee Federal 
program regulations regarding ground-cover revegetation success 
standards for reclaimed lands with postmining land uses of wildlife 
habitat, undeveloped land, recreation, or forestry. In this final rule, 
we are adopting the revisions as proposed, with one technical 
correction and minor editorial modifications to reflect plain language 
principles. The technical correction replaces the term ``mining and 
reclamation plan'' in the proposed rule with ``reclamation plan'' to be 
consistent with terminology used elsewhere throughout the Federal 
regulations.
    The revisions modify 30 CFR 942.816(f)(3) and 942.817(e)(3) by 
eliminating the 80% vegetative ground cover revegetation success 
standard for reclaimed lands with postmining land uses of wildlife 
habitat, undeveloped land, recreation, or forestry. The regulations 
will be changed to state that herbaceous ground cover should be limited 
to that necessary to control erosion and support the postmining land 
use and that the permit will specify the ground cover seed mixes and 
seeding rates to be used. Final Sec. Sec.  942.816(f)(3) and 
942.817(e)(3) read as follows:

    (3) For areas developed for wildlife habitat, undeveloped land, 
recreation, or forestry, the stocking of woody plants must be at 
least equal to the rates specified in the approved reclamation plan. 
To minimize competition with woody plants, herbaceous ground cover 
should be limited to that necessary to control erosion and support 
the postmining land use. Seed mixes and seeding rates will be 
specified in the permit.

    Section 515(b)(19) of SMCRA, 30 U.S.C. 1265(b)(19), requires 
establishment of a diverse, effective, and permanent vegetative cover, 
at least equal to the premining cover, that is capable of self-
regeneration and plant succession. The Federal regulations at 30 CFR 
816.116 (for surface mining activities) and 817.117 (for underground 
mining activities) provide national requirements and parameters for 
revegetation success standards. Sections 816.116(b)(3) and 
817.116(b)(3) establish requirements pertinent to revegetation success 
standards for areas to be developed for postmining land uses of fish 
and wildlife habitat, recreation, undeveloped land, or forest products. 
Those regulations provide that

[[Page 9620]]

``success of vegetation shall be determined on the basis of tree and 
shrub stocking and vegetative ground cover.''
    At the time that we promulgated the Federal program for Tennessee, 
the national rules at Sec. Sec.  816.116(a)(1) and 817.116(a)(1) 
required the regulatory authority to select the standards for 
revegetation success and include them in the regulatory program. 49 FR 
38874. Therefore, we included specific standards in the Tennessee 
Federal program at Sec. Sec.  942.816(f)(3) and 942.817(e)(3) for areas 
with postmining land uses of wildlife habitat, recreation, or forest 
products. Those regulations required a minimum 80% ground cover on 
mined lands reclaimed for those postmining land uses. In the preamble 
discussion of those rules, we noted that a minimum level of 80% 
vegetative coverage was necessary to control erosion on the steep 
terrain that is common to eastern Tennessee. 49 FR 38888.
    In addition, we adopted Sec. Sec.  942.816(f)(4) and 942.817(e)(4) 
which prohibit bare areas larger than one-sixteenth of an acre in size 
and that total more than 10% of the area seeded. We adopted these 
provisions because we believed that they were necessary to prevent the 
release of bonds on lands that meet the overall requirements of 80% or 
90% ground cover, but still have localized areas that are not yet 
stabilized with respect to soil erosion. 49 FR 38888.
    We have learned much more about reestablishing vegetation, 
particularly trees, on mined land in the years since we adopted those 
standards. Permittees generally prefer pasture or grazing land as 
postmining land uses because they do not require the extra work and 
expense of planting trees and ensuring successful tree establishment. 
Thus, the reclamation of mine sites has typically resulted in dense 
grasslands with few trees. Many trees that were planted had low 
survival rates and required replanting, while those that survived often 
did not reach their optimal growth potential, which further discouraged 
operators from considering a land use that required planting trees.
    We recognize the importance and benefits of promoting the 
reestablishment of forests, especially native hardwood forests, on 
mined land. Consequently, we have determined that changes to our 
regulations are necessary to promote and enable the establishment of 
diverse, vigorous forests on reclaimed mine sites. The conventional 
method of mine reclamation typically includes using bulldozers to grade 
and track-in spoil, creating smooth slopes. This method results in a 
compacted soil surface that not only inhibits root growth of seedlings 
and planted stock, but also restricts infiltration of precipitation and 
increases runoff. To prevent erosion from runoff, operators seed the 
regraded areas with aggressive, quick-growing herbaceous ground covers. 
This method of reclamation is very effective in producing dense hayland 
and pastureland. However, it is very detrimental to establishing 
forested land on mine sites for three reasons. First, the dense 
herbaceous ground covers used to control erosion compete with newly 
planted trees and tree seedlings for soil nutrients, water, and 
sunlight. Second, soil compaction inhibits root growth as well as water 
infiltration. Third, the dense ground cover provides habitat for 
rodents and other animals that damage tree seedlings and young trees.
    In summarizing research into ground cover and its effects on 
establishment of trees on mined lands, Jim King and Jeff Skousen of 
West Virginia University noted in 2003:

    The negative effects of overly abundant and aggressive ground 
cover on the survival and growth of trees planted on reclaimed mine 
lands has long been known. Trees planted into introduced, aggressive 
forages [especially tall fescue and sericea lespedeza] often are 
overtopped by the grass or legume and are unable to break free 
(Burger and Torbert, 1992; Torbert et al., 1995). The seedlings are 
pinned to the ground and have little chance for survival. If it is 
known that trees are to be planted, a tree-compatible ground cover 
should be seeded that will be less competitive with trees. Tree-
compatible ground cover should be slow growing, sprawling or low 
growing, not allopathic, and non-competitive with trees (Burger and 
Torbert, 1992). Plass (1968) reported that after four growing 
seasons the height growth of sweetgum and sycamore planted into an 
established stand of tall fescue on spoil banks was significantly 
retarded. Andersen et al. (1989) found that survival and height 
growth for red oak and black walnut was significantly greater on 
sites where ground cover was chemically controlled.\1\
---------------------------------------------------------------------------

    \1\ Tree Survival on a Mountaintop Surface Mine in West Virginia 
King, J., J. Skousen, West Virginia University Morgantown, American 
Society of Mining and Reclamation, 2003.

    Researchers affiliated with the Virginia Polytechnic Institute and 
---------------------------------------------------------------------------
State University also found that:

    The use of tree-compatible ground covers during reclamation can 
allow seedlings to survive at rates exceeding the 70% that is 
necessary to achieve regulatory compliance without the expense of 
follow-up herbicide treatment. Furthermore, our experience indicates 
that sowing tree-compatible ground covers at reduced rates often 
allows invasion by woody vegetation from adjacent forests. The 
results of this study suggest that sowing ground cover at reduced 
rates achieving 50 to 70% cover, instead of 90% currently required 
by Virginia's regulations, would also greatly improve the likelihood 
of hardwood reforestation success.\2\
---------------------------------------------------------------------------

    \2\ Herbaceous Ground Cover Effects on Native Hardwoods Planted 
on Mined Land Burger, J.A., D.O. Mitchem, C.E. Zipper, R. Williams, 
Virginia Polytechnic Institute and State University, American 
Society of Mining and Reclamation, 2005.

    Researchers from the University of Maine determined that even a 
---------------------------------------------------------------------------
small amount of herbaceous ground cover can inhibit tree growth:

    Additional research has found that herbaceous vegetation 
(grasses and broadleaves) in small amounts (<20% cover) around 
seedlings immediately after planting will substantially reduce early 
stand growth.\3\
---------------------------------------------------------------------------

    \3\ Top 10 Principles for Managing Competing Vegetation to 
Maximize Regeneration Success and Long-Term Yields R.G. Wagner, 
University of Maine.

    These researchers are united in their findings that even ground 
cover significantly less than the 80% ground cover standard in 
Tennessee's rules would still be detrimental to tree survival and 
growth.
    We have also determined that dense herbaceous ground cover impedes 
the natural succession of native forest plants, thereby frustrating 
attainment of the requirement in section 515(b)(19) of SMCRA, 30 U.S.C. 
1265(b)(19), for establishment of a diverse, effective, permanent 
vegetative cover of the same seasonal variety native to the area and 
capable of self-regeneration and plant succession. As Burger and Zipper 
noted:

    Another purpose of low ground cover seeding rates is to allow 
the invasion of native plant species such as yellow poplar, red 
maple, birches and other light-seeded trees. Dense ground covers 
prevent the natural seeding-in of native plants.\4\
---------------------------------------------------------------------------

    \4\ How to Restore Forests on Surface-Mined Land Burger, J.A., 
C.E. Zipper, Virginia Polytechnic Institute and State University, 
Powell River Project, Virginia Cooperative Extension Publication 
460-123, Revised 2002.

    While excessive herbaceous ground cover is detrimental to tree 
growth and survival and natural succession, we are cognizant that some 
vegetative cover is often needed to meet the cover requirements of 30 
CFR 816.111(a)(3) and (4) and 817.111(a)(3) and (4). Additional cover 
may be needed to control erosion on newly reclaimed mine sites, as 
required by 30 CFR 816.95(a) and 817.95(a), and to prevent the 
contribution of additional suspended solids to streamflow outside the 
permit area, as required by 30 CFR 816.45(a) and 817.45(a) and section 
515(b)(10)(B)(i) of SMCRA, 30 U.S.C. 1265(b)(10)(B)(i). However, the 
amount of vegetative ground cover necessary to control erosion on any 
particular site is

[[Page 9621]]

a function of the site topography, composition of the surface material, 
precipitation amounts, and the degree of soil compaction. Loosely 
graded or uncompacted material, particularly if placed on a relatively 
gentle slope, may have virtually no runoff or erosion and would require 
little or no herbaceous vegetative ground cover to control erosion. 
Conversely, highly compacted material placed on a steep slope severely 
limits infiltration and increases runoff so that a dense vegetative 
cover may be needed to control erosion.
    Researchers have stated:

    Non-compacted mine soils have higher infiltration rates and 
erode less than graded soils. When using the Forestland Reclamation 
Approach, less ground cover is needed to prevent erosion and protect 
water quality, and in the process, diverse mixes of trees are able 
to survive and grow at rates that will create an economically viable 
forest.\5\
---------------------------------------------------------------------------

    \5\ Herbaceous Ground Cover Effects on Native Hardwoods Planted 
on Mined Land Burger, J.A., D.O. Mitchem, C.E. Zipper, R. Williams, 
Virginia Polytechnic Institute and State University, American 
Society of Mining and Reclamation, 2005.
---------------------------------------------------------------------------

    Third-year results show that intensive grading did not result in 
better ground cover establishment or erosion control. In fact, 
erosion was highest on the intensively graded plots.\6\
---------------------------------------------------------------------------

    \6\ Influence of Grading Intensity on Ground Cover 
Establishment, Erosion, and Tree Establishment on Steep Slopes 
Torbert, J.L., Burger, J.A., Virginia Polytechnic Institute and 
State University, International Land Reclamation and Mine Drainage 
Conference and the Third International Conference on the Abatement 
of Acidic Drainage, 1994.

    Loosely grading the topsoil or topsoil substitutes on reclaimed 
mine sites will result in less compacted growing media, which will 
increase water infiltration and limit the amount of runoff. This in 
turn will limit erosion and sedimentation as well as make more water 
available for tree growth. Limited compaction is also more favorable to 
tree root growth, which will increase survival and growth rates.
    Forestry researchers agree that productive forest land can best be 
created on reclaimed mine land by using techniques that we will refer 
to as the Forestry Reclamation Approach (FRA). The FRA is a series of 
five techniques designed to reestablish healthy productive forests on 
reclaimed mine lands. These techniques include (1) Creating a suitable 
rooting medium for tree growth that is no less than four feet deep and 
that is comprised of topsoil, weathered sandstone and/or the best 
available material; (2) loosely grading the topsoil or topsoil 
substitute to create a non compacted growth medium; (3) using 
herbaceous ground covers that are compatible with growing trees; (4) 
planting two types of trees--early succession species (for wildlife and 
soil stability) and commercially valuable crop trees; and (5) using 
proper tree-planting techniques.
    We examined the factors in Federal and State regulations that may 
act as impediments to implementing the FRA. We determined that there 
were no regulations regarding backfilling and grading that would act as 
impediments to implementation of the provisions of the FRA that require 
a minimum of four feet of topsoil or topsoil substitutes to be loosely 
graded. Thus, we did not propose any changes in our backfilling and 
grading regulations as part of this rulemaking.
    However, we did identify the ground cover standards and bare area 
restrictions adopted as part of the Tennessee Federal program on 
October 1, 1984, as impediments to the FRA and disincentives to forest 
restoration. Elimination of the 80% vegetative ground cover standard 
and bare area restrictions will provide us with the flexibility to 
adjust the amount of vegetative ground cover required on mine sites 
with postmining land uses related to forestry to levels that are 
sufficient to control erosion without impairing tree growth and 
survival. To minimize competition with woody plants while meeting other 
regulatory requirements, we are revising our rules to specify that 
herbaceous ground cover should be limited to that amount necessary to 
control erosion and support the approved postmining land use. We will 
take into account all site characteristics when determining the level 
of vegetative ground cover suitable for a mine site and require 
permittees to specify the ground cover seeding mixes and seeding rates 
in the permit.
    As proposed, we are also expanding the postmining land uses to 
which the regulations at Sec. Sec.  942.816(f)(3) and 942.817(e)(3) 
apply by including undeveloped land and by modifying the postmining 
land use of forest products to forestry. We made these changes to 
accurately reflect the postmining land uses that require the 
establishment of trees and shrubs. The revised version of the national 
regulations at Sec. Sec.  816.116(b)(3) and 817.116(b)(3) that we 
adopted in a separate rulemaking on August 30, 2006, likewise includes 
undeveloped land as a postmining land use to which its requirements 
apply. See 71 FR 51695-51697.
    SMCRA and its implementing regulations clearly require control of 
erosion and prevention of additional sedimentation. They also require 
establishment of a vegetative cover that is capable of stabilizing the 
soil surface from erosion. See 30 CFR 816.111(a)(4) and 817.111(a)(4). 
At the same time, research has demonstrated that many types of 
herbaceous ground cover are detrimental to tree growth and natural 
succession and thus would impede attainment of the postmining land uses 
of wildlife habitat, recreation, or forestry. The regulatory 
modifications that we are adopting in this rule will ensure that the 
FRA can be effectively implemented in Tennessee.

C. Removal of Restrictions on the Amount of Bare Areas for Postmining 
Land Uses of Wildlife Habitat, Undeveloped Land, Recreation, or 
Forestry

    As proposed, we are revising the Tennessee Federal program 
regulations to exempt sites with postmining land uses of wildlife 
habitat, undeveloped land, recreation, or forestry from the 
restrictions of Sec. Sec.  942.816(f)(4) and 942.817(e)(4) concerning 
bare areas. This change facilitates implementation of the FRA, which 
requires the use of less competitive herbaceous vegetative ground 
covers at lower seeding rates, or in some cases no herbaceous ground 
cover at all. Consequently, some areas may be essentially bare except 
for tree seedlings and volunteer herbaceous vegetation. As we noted 
earlier, reduced levels of herbaceous vegetative ground cover are 
necessary for natural succession of native forest plants and to reduce 
competition between grasses and legumes and planted tree seedlings for 
water, nutrients and sunlight. To achieve this goal, some areas must be 
devoid of herbaceous ground cover because many native woody plants and 
forbs require bare soil conditions for seed germination. In addition, 
most traditionally planted herbaceous ground cover species are not 
expected to be part of the mature forest plant community.
    Final Sec. Sec.  942.816(f)(4) and 942.817(e)(4) reads as follows:

    (4) Bare areas shall not exceed one-sixteenth (\1/16\) acre in 
size and total not more than ten percent (10%) of the area seeded, 
except for areas developed for wildlife habitat, undeveloped land, 
recreation, or forestry.

    Nothing in this rule change should be construed as negating the 
requirement in 30 CFR 816.111(a)(3) and 817.111(a)(3) that 
reestablished vegetation on mined lands be at least equal in extent of 
cover to the natural vegetation of the area. Nor does this change alter 
the applicability of the erosion control requirement in 30 CFR 
816.95(a) and 817.95(a).

[[Page 9622]]

IV. How did we respond to the comments that we received on the proposed 
rule?

A. Section 942.800(c), (proposed as Sec.  942.800(b)(4)): Bond and 
Insurance Requirements for Surface Coal Mining and Reclamation 
Operations

    Of the 13 commenters on the proposed revisions to 30 CFR 
942.800(b), which we are adopting as 30 CFR 942.800(c) in this final 
rule, four were coal companies, two were associations representing the 
coal industry, two were government agencies, two were environmental 
groups, one was an association representing mining states, one was an 
organization that administers trusts in other states, and one was a 
private citizen.
    Seven commenters generally supported the concept of using trust 
funds and annuities to satisfy financial assurance requirements for 
treatment of long-term postmining pollutional discharges, but requested 
that we put more details concerning the creation and administration of 
those mechanisms in the rule.
    We appreciate the support from these commenters. However, we do not 
find it necessary or appropriate to adopt the suggestions for more 
specific regulations regarding the creation and administration of trust 
funds and annuities. The purpose of this rule is to provide us with 
mechanism to use our statutory authority to accept trust funds and 
annuities in lieu of conventional performance bond instruments to fund 
treatment of postmining pollutional discharges. The final rule 
establishes a framework (with safeguards) within which we will accept 
trust funds and annuities. It is not, nor was it intended to be, a 
handbook that specifies all the details of how trust funds or annuities 
would work. Those details are best worked out on an individual basis, 
taking into consideration the characteristics of the discharge, the 
mine site, the investment instrument, and economic projections at the 
time that the trust or annuity is finalized. The KFO will address the 
specifics of each trust fund or annuity in formal written agreements 
with permittees. This approach is consistent with the manner in which 
conventional bond amounts are calculated, which is left to the 
discretion of the regulatory authority. In situations where we are the 
regulatory authority, Directive TSR-1, ``Handbook for Calculation of 
Reclamation Bond Amounts,'' governs those calculations.
    Two commenters requested that we either increase bond amounts or 
require both bonds and trusts on the same mine site. We find that there 
is no legal basis or practical reason to do so. Under section 509(a) of 
SMCRA, ``[t]he amount of the bond shall be sufficient to assure the 
completion of the reclamation plan if the work had to be performed by 
the regulatory authority in the event of forfeiture and in no case 
shall the bond for the entire area under one permit be less than 
$10,000.'' 30 U.S.C. 1259(a). In addition, section 509(c) specifies 
that an ABS, such as the trust funds and annuities approved under this 
rule, must ``achieve the objectives and purposes of the bonding program 
pursuant to this section.'' 30 U.S.C. 1259(c). Because Sec.  
942.800(c)(1) requires the trust fund or annuity to ``be adequate to 
meet all anticipated treatment needs, including both capital and 
operating expenses,'' the amount of the trust fund or annuity should be 
sufficient to meet the requirements of section 509(c) of SMCRA. On a 
case-by-case basis, depending upon the stage of mining during which a 
trust fund or annuity is established, a mine may have both conventional 
bonds and a trust fund or annuity. Requiring multiple bonds in all 
cases goes beyond the requirements of section 509(c) and would place an 
unnecessary burden on permittees.
    In the remainder of this section of the preamble, we will discuss 
comments directed at specific sections of our revision to Sec.  
942.800, followed by comments of a more general nature that were 
directed to the use of trust funds and annuities. We will not discuss 
comments that are beyond the scope of this rulemaking, such as comments 
that do not pertain to the rule provisions that we proposed to revise 
on April 6, 2006.
Section 942.800(c)(1), (Proposed as Sec.  942.800(b)(4)(i))
    Subsection 942.800(c)(1) provides that we will determine the amount 
of the trust fund or annuity, which must be adequate to meet all 
anticipated treatment needs, including both capital and operating 
expenses.
    Five commenters suggested that the method for determining the 
amount of the trust fund or annuity must be objective and clearly 
stated in the rule. Two commenters recommend that we use the AMDTreat 
software (a computer program used to estimate costs associated with 
treating discharges) or the Pennsylvania law, as a model, to determine 
the amount needed. One commenter provided two mathematical formulas to 
calculate the present value of the amount needed to fund the trust, 
while another commenter noted that historic operating and capital costs 
for chemical treatment and construction of the treatment systems are 
important indicators of future costs. Also, a commenter indicated that 
data from the permittee should be used to determine the amount of the 
trust fund or annuity because of personal experience with OSM requiring 
excessive bond amounts based on outdated and erroneous information.
    As previously noted, our rule establishes a framework (with 
safeguards) within which we will accept trust funds and annuities. It 
is not, nor was it intended to be, a handbook that specifies all the 
details of how trust funds or annuities would work. Those details are 
best worked out on an individual basis, taking into consideration the 
characteristics of the discharge, the mine site, the method of 
treatment, the investment instruments, and economic projections at the 
time that the trust or annuity is finalized. Consequently, we are not 
making the changes sought by the commenters. We do not believe that it 
is advisable to limit our flexibility by including all the variables 
that may factor in to the determination of the amount of the trust fund 
or annuity in the rule. Doing so could restrict our ability to consider 
the most current information and technology available when determining 
the amount of money needed to fully fund a trust fund or annuity.
    When calculating the amount of a trust fund or annuity, we plan to 
look at, but are not limited to, the following sources: Historic 
treatment cost data (if any) supplied by the permittee; existing 
publicly available software, such as AMDTreat; and publicly available 
policies and guidelines, such as OSM Directive TSR-1, ``Handbook for 
Calculation of Reclamation Bond Amounts.'' For instance, the AMDTreat 
software developed cooperatively by the Pennsylvania Department of 
Environmental Protection, the West Virginia Department of Environmental 
Protection, and OSM is one tool available to the KFO to use to estimate 
the costs of treatment and the costs of constructing and maintaining 
all associated treatment facilities.
Section 942.800(c)(2), (Proposed as Sec.  942.800(b)(4)(ii))
    In subsection 942.800(c)(2), we require that the trust fund or 
annuity be in a form that we approve and contain all the terms and 
conditions that we require. We received no comments on this provision.
Section 942.800(c)(3), (Proposed as Sec.  942.800(b)(4)(iii))
    In subsection 942.800(c)(3), we require that a trust fund or 
annuity

[[Page 9623]]

irrevocably establish the United States or Tennessee as the beneficiary 
of the trust fund or of the proceeds from the annuity. This provision 
is intended to ensure that moneys in the trust fund or annuity will be 
available to the regulatory authority for treatment regardless of an 
operator's financial circumstances or business status.
    The one commenter on this subsection recommended that the rule be 
revised to allow trust accounts established for purposes of termination 
of jurisdiction to name alternative trust beneficiaries, such as the 
State of Tennessee. We disagree with the commenter's assumption that 
trust funds or annuities will be established for purposes of 
termination of jurisdiction. This rulemaking provides for the 
establishment of a trust fund or annuity as an ABS, which means that we 
are retaining jurisdiction over the mine site with respect to treatment 
of the postmining pollutional discharge. However, we are accepting the 
commenter's suggestion to name the State of Tennessee as an alternative 
beneficiary. When OSM became the regulatory authority for the State of 
Tennessee, we stated that the bonds posted for the Federal program for 
Tennessee would be payable to ```The United States or the State of 
Tennessee' * * * so as to ease the transition in the event that 
[Tennessee] reassumes primary regulatory authority.'' 49 FR 38877-
38878. Because conventional bonds in Tennessee are payable to the 
United States and the State of Tennessee, we decided to require trust 
funds and annuities to be treated in a similar fashion to remain 
consistent with existing provisions. We have revised Sec.  
942.800(c)(3) to include this provision to be consistent with Sec.  
942.800(b)(2).
Section 942.800(c)(4), (Proposed as Sec.  942.800(b)(4)(iv))
    Subsection 942.800(c)(4) requires that we specify the investment 
objectives of the trust fund or annuity. Four commenters stated that 
the investment objectives of the trust fund should be both defined in 
the rule and spelled out in the trust agreement. The commenters 
asserted that the permittee should choose the investment objectives 
subject to approval by the regulatory authority. The commenters opined 
that if the regulatory authority alone selects the investment 
objectives, it may use an overly conservative mix of assets that may 
adversely impact the investment performance of the trust. Additionally, 
one commenter stated that trusts created under these rules should allow 
Tennessee law to regulate the duties and obligations of the trustees, 
which would include making proper investment decisions. Another 
commenter recommended deleting this subparagraph entirely because OSM 
is not equipped to control the investment objectives of the trust fund 
or annuity. The commenter argued that the investment objectives of the 
trust should be established by the trust agreements themselves and by 
professionals with experience in managing trust accounts.
    We are adopting the rule as proposed because (1) We see no benefit 
to restricting our flexibility by specifying investment objectives in 
the rule, and (2) we must retain final control of the investment 
objectives to protect the assets of the trust or annuity and ensure 
that sufficient funds will be available for treatment. However, nothing 
in this rule will prevent us from implementing this provision in a 
manner consistent with the other comments that we received on this 
subparagraph, should we determine that it would be appropriate and 
beneficial to do so. Also, while we retain ultimate control of the 
investment objectives, which will be defined in the trust or annuity 
agreement, the trustee will make decisions regarding the investment of 
the assets of the trust fund or annuity. Trustees have an inherent 
obligation to comply with Tennessee law, so there is no need for us to 
add that requirement to this rule.
Section 942.800(c)(5), (Proposed as Sec.  942.800(b)(4)(v))
    Subsection 942.800(c)(5) provides that termination of the trust 
fund or annuity may occur only as specified by OSM upon a determination 
that no further treatment or other reclamation measures are necessary, 
that a replacement bond or another financial instrument has been 
posted, or that the trust fund or annuity can no longer be administered 
to carry out the purpose for which it was established. As an example of 
a trust fund or annuity that is terminated because it can no longer 
carry out the purpose for which it was established, the trust documents 
may specify that a trust will be terminated if the regulatory authority 
determines that it is too small to be administered effectively. This 
provision allows us to keep the trust fund or annuity in place as long 
as necessary and practical to maintain and reclaim treatment 
facilities.
    Five commenters asserted that the rule should address the duration 
of the trust and the criteria for termination of the trust fund or 
annuity. The commenters requested the establishment of objective 
criteria, based on time or other factors, to establish the point at 
which the trust fund or annuity must be terminated and the remaining 
assets of the trust or annuity must be returned to the permittee. One 
commenter suggests that we modify the rule to require the regulatory 
authority to make a determination, based on site-specific information, 
of how long treatment is anticipated. The commenter further suggests 
that we modify the rule to provide for monitoring of the untreated 
discharge for a period not to exceed two years after treatment is 
completed. After two years, the trust should be terminated and the 
proceeds returned to the operator.
    We do not agree that the suggested provisions should be part of the 
rule. In order to meet the purposes of Sec.  509 of the Act, the 
alternative system should meet the objectives and purposes of the 
bonding program established by SMCRA, including the requirement that 
liability ``be for the duration of the surface coal mining and 
reclamation operation,'' 30 U.S.C. 1259(b). Consequently, each 
agreement for a trust fund or annuity will specify the anticipated 
length of treatment, based on site-specific information. Defining 
treatment goals is an integral part of determining the funds necessary 
for sustaining the trust fund or annuity. Furthermore, if appropriate, 
the formal trust fund or annuity agreement may define a post-treatment 
monitoring program and the program's anticipated duration. We intend 
for trust funds and annuities to be an additional option for permittees 
to fulfill their bonding obligations, while providing greater 
flexibility than conventional bonds.
    It is important to distinguish the duration of the trust or annuity 
from the duration of the obligation to the permittee to perform 
treatment of a pollutional discharge. We are providing that a trust 
fund or annuity may be terminated if replaced by another bond or 
financial instrument in Sec.  942.800(c)(5), consistent with Sec.  
800.30 and other provisions of part 800. Thus, we anticipate that a 
trust or annuity of limited duration may need to be replaced by another 
bond or financial instrument if the permittee's obligation to treat a 
pollutional discharge extends beyond the term of the trust or annuity. 
Rather than establishing an arbitrary duration in this rule, we have 
chosen to set the duration of the trust fund or annuity on a case-by-
case basis, which will allow us to consider the anticipated need for 
treatment for each site, the permittee's proposals for meeting the 
treatment obligations, and other considerations, such as the 
requirements of Tennessee law.
    One commenter noted that the specification of objective performance

[[Page 9624]]

standard criteria, such as reestablishment of biologic integrity, would 
eliminate any potential dispute between the permittee and OSM as to 
when it is appropriate to terminate the trust fund or annuity. 
According to the commenter, these types of objective performance 
standards exist in provisions of the Act detailing when a bond may be 
released.
    In response, we note that the trust or annuity agreement will 
specify treatment goals and requirements. We see no need or purpose to 
limit our flexibility by incorporating specific criteria in the rule 
itself. Indeed, doing so may be impossible or impractical, given the 
variation in discharges and the treatment standards applicable to those 
discharges. The KFO will evaluate whether the permittee has met the 
treatment goals in the agreements before terminating the trust or 
annuity. In order to provide a structure for how and when a trust fund 
or annuity will be released, we intend to incorporate the procedures 
for bond release under 30 CFR 800.40 into the formal agreement creating 
the trust fund or annuity. This provision will provide a permittee with 
a mechanism for terminating the trust fund or annuity in the event that 
the permittee believes that no further treatment or other reclamation 
measures are necessary. We also intend to incorporate the notification 
procedures of Sec.  519 of the Act and 30 CFR 800.40 into the trust 
documents in order to inform the public about any request to release 
the trust fund or annuity.
Section 942.800(c)(6), (Proposed as Sec.  942.800(b)(4)(vi))
    Subsection 942.800(c)(6) provides that the release of money from 
the trust fund or annuity may be made only upon our written 
authorization. As discussed below, we have modified this provision to 
require that release of money from the trust fund or annuity to any 
source may be made only upon our written authorization or as a 
disbursement according to a schedule established in the agreement 
accompanying the trust fund or annuity. As we noted in the preamble to 
the proposed rule, we included this provision in our rule to ensure 
that we are aware of all expenditures from the trust fund or annuity 
and that the disbursements are used for their intended purpose, 71 FR 
17684. While we expect that the permittee will be treating the 
discharge with funds from the trust fund or annuity, we also intend 
that the trustee have the authority to employ other entities to 
continue treatment in the event that the permittee cannot or does not 
undertake the actions required for compliance.
    One commenter stated that we should allow withdrawal or release of 
funds according to the terms of the trust or annuity agreement instead 
of requiring written authorization to release money from the trust fund 
or annuity to the permittee. Another commenter suggested that we allow 
distributions of the funds on an annual basis to reimburse the 
permittee for capital investments and operating and maintaining 
treatment facilities. Similarly, another commenter stated that the 
trust fund or annuity agreements should include specific payment 
schedules for treatment costs. Finally, one commenter suggested that we 
modify this subsection to indicate the criteria that we will follow to 
release funds from the trust fund or annuity and clarify that release 
of funds to a permittee will not impair the ability of the fund to 
guarantee treatment.
    We have modified the rule to include the option of disbursing funds 
according to a schedule established in the trust fund or annuity 
agreement. That schedule could provide for annual payments if desired. 
Disbursement according to a schedule established in the trust fund or 
annuity agreement would meet our objective of ensuring that we are 
aware of withdrawals from the trust fund or annuity and that those 
funds are disbursed only for legitimate purposes.
    However, we do not agree that establishing release criteria in the 
rules would be beneficial or appropriate. Those details are best 
determined on a case-by-case basis; they will be set forth in the 
agreement accompanying the trust fund or annuity. The commenter's 
concern that release of funds to the permittee may impair the ability 
of the trust fund or annuity to guarantee treatment is misplaced. We 
will use our authority under 30 CFR 800.15(a) to periodically evaluate 
all trust funds and annuities to ensure that sufficient funds will be 
available to meet the treatment mandate. If that evaluation indicates 
that a shortfall exists or will develop, we will require that the 
permittee provide additional funds to supplement the trust fund or 
annuity.
Section 942.800(c)(7), (Proposed as Sec.  942.800(b)(4)(vii))
    In subsection 942.800(c)(7), we specify which financial 
institutions and companies may serve as trustees or issue annuities. 
These requirements are intended to ensure that only qualified 
businesses and institutions administer the trust funds and annuities, 
thus reducing the possibility that the trust funds and annuities could 
be mismanaged. In a change from the proposed rule, we are adding 
insurance companies licensed or authorized to do business in Tennessee 
to the list of acceptable financial institutions to issue annuities for 
the treatment of long-term postmining pollutional discharges. This 
addition reflects the fact that insurance companies are major providers 
of annuities.
    One commenter suggested changing the rule to allow the permittee to 
pick the trustee subject to OSM approval. In response, we note that 
nothing in the rule would prohibit this arrangement. We expect to 
collaborate with a permittee in the establishment of a trust fund or 
annuity, including the selection of the trustee.
    Three commenters suggested that we allow entities organized as non-
profit organizations under 26 U.S.C. 501(c)(3), such as The Clean 
Streams Foundation, Inc. (CSF), to act as trustees through a 
participation agreement. CSF currently acts as a trustee for trust 
funds for water treatment systems in Pennsylvania. The commenters were 
concerned that organizations such as CSF might not meet the 
requirements of this subsection and would not be eligible to serve as 
trustees in Tennessee. One commenter stated that organizations like CSF 
are in a better position to administer trusts because most financial 
institutions are unwilling to take title to real property or to oversee 
the operation of treatment facilities. According to the commenter, 
organizations such as CSF can perform these and other functions that 
financial institutions are unwilling to undertake. In addition, the 
commenter recommended that Sec.  942.800(c)(7) (proposed as Sec.  
942.800(b)(4)(vii)) be revised to allow any organization to serve as a 
trustee as long as the custodian of the financial assets of the trust 
fund is an appropriate financial institution. Another commenter stated 
that the use of non-profit organizations would provide tax advantages 
to permittees and noted that Pennsylvania has extensive experience 
setting up charitable trusts for this purpose.
    As we noted in the preamble to our proposed rule, we want to ensure 
that institutions eligible to serve as trustees or to issue annuities 
are qualified business institutions capable of administering the trust 
funds or annuities in a competent manner so that the trust fund or 
annuity will remain solvent for the long-term treatment of pollutional 
discharges, 71 FR 17684. We recognize that Pennsylvania's regulations 
allow for State or Federally regulated trust companies to act as 
trustees and issue annuities. Finally, 30

[[Page 9625]]

CFR 942.800(c)(7) likewise provides that any financial institution or 
company with trust powers and offices located in Tennessee is eligible 
to participate in the program as long as the activities of the 
institution are examined or regulated by a State or Federal agency. 
This rule does not prohibit non-profit organizations from becoming 
trustees provided the organization meets the qualifications set forth 
in the rule. Nor does it prohibit the permittee or the institution 
acting as the trustee from contracting with a non-profit organization 
to administer the treatment system if the permittee elects not to 
operate that system.
Section 942.800(c)(8), (Proposed as Sec.  942.800(b)(4)(viii))
    Subsection 942.800(c)(8) provides that trust funds and annuities 
must be established in a manner that guarantees that sufficient moneys 
will be available to pay for treatment of postmining pollutional 
discharges (including maintenance, renovation, and replacement of 
treatment and support facilities as needed), the reclamation of the 
sites upon which treatment facilities are located and areas used in 
support of those facilities. The language of the final rule is more 
precise than that of the proposed rule, which would have required that 
``trust funds and annuities be established to guarantee that funds are 
available to pay for treatment of postmining pollutional discharges or 
reclamation of the mine site or both.'' As discussed below, commenters 
found the proposed rule language too broad.
    One commenter stated that the use of trust funds and annuities as 
an alternative bonding mechanism should be limited to treatment of 
postmining pollutional discharges exclusively. According to the 
commenter, the proposed rule would allow us to use moneys from trust 
funds and annuities on lands that previously met performance standards 
and have received release of all conventional bonds. Consequently, the 
commenter recommended deletion of the phrase ``or reclamation of the 
mine site or both'' from this subsection. Similarly, a different 
commenter requested that we clarify in the rule that trust funds and 
annuities are not available to meet general reclamation requirements.
    Another commenter stated that we have inconsistently described the 
scope of activities for which the trust fund or annuity is established. 
The commenter noted that while proposed Sec.  942.800(b)(4)) states 
that the scope of the rule is limited to ``treatment of long-term 
postmining pollutional discharges;'' proposed subparagraph Sec.  
942.800(b)(4)(i) references ``all anticipated treatment needs,'' 
proposed subparagraph Sec.  942.800(b)(4)(v) references ``treatment or 
reclamation measures,'' and proposed Sec.  942.800(b)(4)(viii) 
references ``treatment of postmining pollutional discharges or 
reclamation of the mine site, or both.'' The commenter recommended that 
we delete the reference to ``reclamation'' in subparagraphs (v) (as 
proposed) and (viii) (as proposed) and use the term ``long-term 
postmining pollutional discharge.''
    We do not agree with the commenters that the trust fund or annuity 
should be used exclusively for treatment of long-term postmining 
pollutional discharges. While that is its primary purpose, we also need 
to ensure that funds are available for maintenance, renovation, and 
replacement of the treatment system as necessary and, once there is no 
longer a need for treatment, for reclamation of the land upon which 
treatment facilities are sited, together with any areas used to support 
those facilities, such as access roads. Further, we agree with the 
commenters that a trust fund or annuity is not intended to be used for 
the reclamation of portions of the mine site not associated with a 
treatment facility or used in support of such a facility. We recognize 
that the proposed language may have been too broad and subject to 
misinterpretation. Consequently, we have used revised Sec.  
942.800(c)(8) to specify the activities which may be funded as 
treatment and reclamation.
Section 942.800(c)(9), (Proposed as Sec.  942.800(b)(4)(ix))
    In subsection 942.800(c)(9), we allow the release of conventional 
bonds posted for the mine site as a whole if, apart from the 
pollutional discharge and associated treatment facilities, the 
permittee has met all applicable reclamation requirements and has fully 
funded a trust fund or annuity adequate for treatment of long-term 
postmining pollutional discharges and reclamation of areas associated 
with that treatment. The establishment of trust funds or annuities for 
treatment of long-term pollutional discharges will constitute a 
replacement of bonds under 30 CFR 800.30 for the areas upon which the 
discharge and treatment and support facilities are located. Once a 
fully funded trust fund or annuity exists, there is no need to retain 
bonds for other areas for which all reclamation requirements have been 
met and the revegetation responsibility period has expired. 
Conventional bonds for those areas may be released, subject to the 
requirements of 30 CFR 800.40.
    Two commenters requested that we clarify this subsection to 
emphasize the long-term nature of the problem. These commenters also 
found our use of the word ``reclamation'' in the final phrase of this 
subsection confusing. According to the commenters, the term 
``reclamation'' should refer only to the removal of the treatment 
facility and reclamation of the ground where it was located, not mining 
impacts in the area. The commenters recommend modifying the final part 
of subparagraph (ix) (as proposed) to state, ``* * * and the sum in the 
trust fund is sufficient to guarantee the treatment of the pollutional 
discharges for as long as it will be needed and to reclaim the 
treatment facilities at the end of that time.''
    While we have made minor wording changes in subparagraph (9) for 
clarity, we do not find it necessary or appropriate to adopt the 
language proposed by the commenters. Like the proposed rule, the final 
rule requires that the trust fund or annuity be ``sufficient for 
treatment of pollutional discharges and reclamation of all areas 
involved in such treatment.'' This language establishes the appropriate 
scope of the trust fund or annuity, which includes treatment of the 
discharge and reclamation of areas upon which treatment facilities are 
located and areas used in support of those facilities. The language 
proposed by the commenters would not necessarily include reclamation of 
areas used in support of treatment facilities. We also find it 
unnecessary to add the qualifier ``long-term'' before ``pollutional 
discharge'' in subparagraph (9) because the heading of paragraph (c) 
clearly states that the entire paragraph applies only to sites with 
long-term postmining pollutional discharges.
    Another commenter requested that we replace the word ``may'' with 
the word ``shall'' in this subparagraph to remove any uncertainty 
concerning approval of final bond release once the trust fund or 
annuity to address long-term pollutional discharges is established. A 
different commenter stated that the rule should be revised to clarify 
that the final bond release would occur when the trust fund or annuity 
was fully funded.
    Both section 519(c) of SMCRA, 30 U.S.C. 1269(c), and the Federal 
regulations regarding approval of bond release applications at 30 CFR 
800.40(c) provide that the regulatory authority may release all or part 
of the bond for the entire permit area or an incremental area if it is 
satisfied that reclamation has been accomplished. Therefore, a change 
from ``may'' to ``shall'' in this rule would be inconsistent with the 
bond

[[Page 9626]]

release provisions of both the Act and our bond release rules. 
Consequently, we are not making the requested change. However, in 
response to the second comment, we are changing the language of the 
rule slightly to specify that the trust fund or annuity must be fully 
funded before conventional bonds may be released and to make it clear 
that release of the conventional bond will not extend to the treatment 
of discharges.
    Other comments referring to subsection 942.800(c)(9) were primarily 
concerned with termination of jurisdiction. We discuss the relationship 
between termination of jurisdiction and this rulemaking in the General 
Comments on Sec.  942.800(c) below.
General Comments on Sec.  942.800(c), (Proposed as Sec.  942.800(b)(4))
    One commenter stated that the proposed rule contained insufficient 
detail about the mechanics of how trusts will be created and 
administered. As a result, the commenter argued that he could not 
adequately comment on the proposal. Additionally, the commenter 
asserted that by not including those details, we violated the 
Administrative Procedure Act (APA). The commenter noted that the 
purpose of the notice requirement in Sec.  553(b) of the APA is to 
allow potentially affected members of the public to file meaningful 
comments under Sec.  553(c) of the APA. According to the commenter, it 
was impossible to submit meaningful comments on the proposed rule 
because of the lack of detail on how the process would work.
    As we noted above and in the preamble to the proposed rule, we 
proposed the regulations at Sec.  942.800(b)(4) (now Sec.  942.800(c)) 
to provide the KFO with a mechanism to use our statutory authority to 
establish trust funds and annuities. 71 FR 17684. The rule included 
nine criteria that all trust funds and annuities would be required to 
meet, as well as an extensive preamble discussion. We believe that this 
information was sufficient to provide a basis for informed comment, 
both on the concept of trust funds and annuities for the treatment of 
long-term postmining pollutional discharges and on the criteria for 
those funding mechanisms. The comments that we received from other 
persons support that conclusion.
    We also complied with the other notice requirements of Sec.  553(b) 
of the APA by stating the time, place, and nature of public rulemaking 
proceedings, by referring to the legal authority under which the rule 
was proposed, and by providing the terms or substance of the proposed 
rule or a description of the subjects and issues involved. We provided 
instructions on how to submit comments on the proposed rule, extended 
the public comment period, and provided notice of a requested public 
hearing that was held on June 1, 2006. 71 FR 17682; 71 FR 25992.
    Two commenters stated a preference for approval of the use of trust 
funds and annuities as an ABS rather than as a collateral bond. One of 
those commenters stated that trust instruments are not traditional 
bonds that would fit the collateral bond provisions of Sec.  800.21. 
The other commenter noted that although he preferred treating trust 
accounts as an ABS, they could also qualify as collateral bonds.
    As previously stated in this preamble, we are approving trust funds 
and annuities as an ABS. Trust funds and annuities meet the 
requirements for an ABS as set forth in 30 CFR 800.11(e) because once 
they are fully funded, the trust accounts or annuities will ensure that 
we will have sufficient funds to complete the reclamation plan for any 
areas on which the permittee may be in default on reclamation 
obligations at any time. Additionally, the permittee provides the money 
needed to establish a trust fund or annuity. Thus, the permittee has a 
substantial economic incentive to comply with all reclamation 
provisions as required by the second criterion for establishing an ABS 
under 30 CFR 800.11(e).
    Three commenters stated that the rule contained no explanation as 
to which site-specific circumstances qualify as a long-term pollutional 
discharge. According to the commenters, failure to define the term 
``pollutional discharge'' would allow the rule to be extended to 
situations beyond its intended scope. Two commenters stated that the 
term should mean only discharges that will exist after reclamation has 
been completed and will not meet applicable standards for point-source 
discharges that are subject to the Clean Water Act (CWA). Another 
commenter proposed that we define pollutional discharges as 
``discharges that cannot meet State water quality standards or approved 
alternative standards.'' This commenter stated that such a definition 
would limit the applicability of this rule to the postmining situations 
for which it was intended.
    We do not agree with the commenters that the term ``pollutional 
discharge'' needs to be defined as part of this regulation, nor do we 
understand how the lack of a definition could result in misuse of this 
rule. We have used this term for more than a decade without confusion. 
Any discharge that is not in compliance with applicable standards is a 
pollutional discharge.
    Three commenters noted that the method of treatment could have a 
major influence on the amount and terms and conditions of the required 
trust fund or annuity. According to the commenters, the rule should 
recognize that multiple upstream discharges can be treated more 
efficiently with a single downstream treatment facility when 
circumstances warrant. In addition, four commenters stated that we 
should address passive treatment systems as an option for treating 
discharges.
    Nothing in the proposed or final rules restricts the type of 
treatment systems that permittees may use or where they may be located. 
Consequently, we find that there is no need to revise the rule in 
response to these comments.
    Two commenters stated that we should consider allowing operators to 
bank credits for water treatment. As an example, operators could treat 
discharges that are not required by law and then use this treatment as 
a credit towards any other water treatment obligations that they may 
have.
    This comment is beyond the scope of this rulemaking. We did not 
propose any changes regarding a permittee's water treatment 
obligations, nor do we have the authority to do so under SMCRA. Section 
702(a) of the Act, 30 U.S.C. 1292(a), in essence provides that nothing 
in SMCRA (and by extrapolation its implementing regulations) may be 
construed as superseding, amending, modifying, or repealing the CWA and 
its implementing regulations.
    Two commenters stated that the rule should specify that the trust 
fund or annuity can be funded over time by the permittee, in some cases 
over a period of several years.
    Nothing in the final rule prohibits the funding of a trust fund or 
annuity over time. In addition, the preambles to both the proposed and 
final rules clearly state that we will allow a reasonable amount of 
time for permittees to fund trust funds and annuities. However, both 
the proposed and final rules do specify that any conventional bonds for 
the mine site may not be released until the trust fund or annuity is 
fully funded.
    Two commenters indicated that the rule should be revised to clarify 
how the trust funds are used, such as allowing the operator to be 
reimbursed directly from the trust for all expenses of treatment and 
capital expenditures that are incurred. Additionally, five commenters 
indicated that the rule should provide for the periodic evaluation of 
the trust funds or

[[Page 9627]]

annuities to ensure that they have the appropriate amount of assets to 
treat AMD. These commenters also suggested that the rule state how 
underfunded or overfunded trusts will be adjusted.
    Trust funds and annuities can have different disbursement 
requirements. Therefore, we are not modifying the rule to establish 
rigid disbursement criteria. We will specify the mechanics of 
disbursements from the trust fund or annuity in the formal trust 
agreements with the permittee.
    With regard to comments pertaining to the periodic evaluation of 
the trust fund or annuity amounts, the formal agreement with the 
permittee will make the trust fund or annuity subject to the provisions 
of 30 CFR 800.15(a), which require periodic adjustment by the 
regulatory authority when the cost of future reclamation changes. That 
paragraph of the bonding regulations further allows the regulatory 
authority to specify periodic times or set a schedule for reevaluating 
and adjusting the bond amount. We will set such a schedule in the 
formal trust or annuity agreement. Therefore, we do not find it 
necessary to modify the Tennessee Federal program rules in the manner 
advocated by the commenters.
    Four commenters stated that conventional SMCRA reclamation bonds 
should be released on a schedule according to existing regulations.
    We agree, with one caveat. As stated above, the March 31, 1997, 
policy statement provides that no bond should be released for any 
permit with a long-term postmining pollutional discharge until there is 
adequate financial assurance for treatment of that discharge. 
Therefore, subsection 942.800(c)(9) of this final rule requires that a 
fully funded trust fund or annuity be in place before conventional 
bonds for the mine site may be released.
    One commenter expressed concern that we intend to keep both a 
conventional reclamation bond and a trust fund or annuity in place for 
the same area. Two other commenters stated that it was their 
understanding that if treatment of a discharge was required before land 
reclamation was complete, we would require a conventional bond for land 
reclamation and a trust fund for the discharge.
    In response, we note that Sec.  942.800(c) of this final rule 
authorizes the use of trust funds and annuities only for the treatment 
of long-term postmining pollutional discharges and reclamation of the 
areas upon which discharge treatment systems and support facilities are 
located. Under the Tennessee Federal program regulations at 30 CFR 
942.800, the permittee must post conventional performance bonds for all 
other portions of the mine site and all other reclamation 
responsibilities. The final rule allows the release of all conventional 
bonds for a site with a postmining pollutional discharge once a fully 
funded trust fund or annuity is in place, provided the site otherwise 
qualifies for bond release under 30 CFR 800.40. There could be a period 
where both conventional bonds and a partially funded trust fund or 
annuity exist simultaneously for the same mine site. As examples, if a 
permittee is funding a trust fund or annuity over time, or if other 
areas of the mine do not qualify for release under 30 CFR 800.40, then 
both a conventional bond and a trust fund or annuity could cover the 
permit.
    Three commenters requested that we clarify that the effluent limits 
of 40 CFR Part 434 are no longer applicable after termination of 
jurisdiction and bond release and when a trust fund or annuity is fully 
funded. In contrast, two other commenters expressed concern that 
treatment to meet the effluent limits in 40 CFR Part 434 may not be 
sufficient to protect classified uses designated for waters of the 
State of Tennessee.
    In response, we note that, in keeping with section 702(a) of SMCRA, 
30 U.S.C. 1292(a), we have no authority to modify discharge treatment 
standards established under the authority of the CWA or its 
implementing regulations. Issuance of a National Pollutant Discharge 
Elimination System (NPDES) permit for point-source discharges and 
establishment of effluent limits for those discharges is the 
responsibility of the agency charged with administering the CWA in 
Tennessee.
    Five commenters requested that we add a provision requiring 
termination of OSM jurisdiction once a fully funded trust fund or 
annuity has been established. One of those commenters cited the 
language from the preamble to our termination of jurisdiction rule in 
support of his argument. 53 FR 44361-62 (November 2, 1988). The 
commenter asserted that adequate provisions could be made in the trust 
agreement to provide us with the ability to inspect and monitor the 
treatment process. Another commenter stated that we should make a 
distinction between those trust accounts that are posted as 
alternatives to surety bonds for active permits and those trust 
accounts that are established in accordance with the preamble to the 
termination of jurisdiction rule to meet the requirements for ``a 
contract or other mechanism enforceable under other provisions of law'' 
to provide financial assurance for long term treatment. This commenter 
suggested an approach similar to that used by Pennsylvania where 
consent orders are enforceable agreements that do not depend on the 
regulatory authority retaining jurisdiction under SMCRA to oversee 
compliance. The commenter urged us to consider other alternatives to 
provide financial assurance for purposes of terminating jurisdiction.
    For the reasons set forth below, we are not making the changes 
sought by the commenters. In response to a question about sites with 
postmining pollutional discharges, the preamble to our termination of 
jurisdiction rule at 30 CFR 700.11(d) discussed the possibility of full 
bond release (and hence termination of jurisdiction) if there are 
``assurances which provide through a contract or other mechanism 
enforceable under other provisions of law to provide, for example, long 
term treatment of an alternative water supply or acid discharge.'' 53 
FR 44361, November 2, 1988. We have not determined whether trust funds 
and annuities could be structured to qualify for full bond release and 
termination of jurisdiction. We do not find such a determination 
necessary because termination of jurisdiction is a discretionary action 
on the part of the regulatory authority. As provided in 30 CFR 
700.11(d)(1), a ``regulatory authority may terminate its jurisdiction 
under the regulatory program over the reclaimed site of a completed 
surface coal mining and reclamation operation, or increment thereof * * 
* .'' (emphasis added.)
    We have elected not to exercise that discretion with respect to 
postmining pollutional discharges and associated treatment facilities 
and support areas. We believe that our decision to classify trust funds 
and annuities established for the long-term treatment of postmining 
pollutional discharges as an ABS and to retain jurisdiction over the 
treatment site is a superior means of achieving the purpose of SMCRA 
set forth at section 102(a) of the Act. 30 U.S.C. 1202(a) (``to protect 
society and the environment from the adverse effects of surface coal 
mining operations''). By retaining jurisdiction over the discharge and 
associated treatment and support facilities, we can monitor the site, 
its treatment needs, and the adequacy of the trust fund or annuity. 
Contrary to the commenters' assertions, we would have no such authority 
if we terminated jurisdiction. Similarly, because we have classified 
trust funds and annuities as an ABS, we have authority under the bond 
adjustment provisions of 30 CFR 800.15(a) to order the permittee to 
contribute more funds if the assets of the trust fund or annuity 
require

[[Page 9628]]

adjustment to reflect changes in discharge quality or quantity or 
investment performance or projections. We could not do so if we 
terminated jurisdiction. Indeed, in the absence of complaints from the 
public, we probably would not be aware of the situation because we 
would have no inspection or monitoring authority.
    Our decision to retain jurisdiction and classify trust funds and 
annuities as an ABS avoids these problems. However, nothing in this 
rule would prohibit us from terminating jurisdiction over the portion 
of the mine site that is not involved with treatment of the discharge 
once the requirements of Sec.  942.800(c)(9) are met and bond is fully 
released on that portion of the mine site.
    One commenter suggested that the proposed rule should not be 
applied retroactively, but prospectively only. The commenter reasoned 
there is currently no requirement for bond or other financial 
assurances for treatment of AMD. The commenter cited Bowen v. 
Georgetown University Hospital, 488 U.S. 204 (1988) and NMA v. DOI, 177 
F. 3d 1 (D.C. Cir. 1999), for the proposition that retroactive 
application of rulemaking is prohibited unless specifically authorized 
by Congress.
    As explained at length in the preamble to both this rule and the 
proposed rule, we disagree with the commenter's assertion that there is 
no existing Federal regulation requiring bond or financial assurances 
for treatment of postmining pollutional discharges. We interpret the 
1983 changes to the Federal bonding regulations in 30 CFR Part 800 as 
confirming that requirement. The final rule that we are adopting today 
does not alter that requirement or otherwise modify the national 
bonding regulations. Instead, it merely provides permittees in 
Tennessee with the option of replacing conventional bonds with trust 
funds or annuities as a means of satisfying the bonding requirements 
for treatment of long-term postmining pollutional discharges.
    Five commenters stated that the rule must specify standards for 
termination of the trust fund or annuity, such as requiring that the 
untreated discharge meet Tennessee water quality standards or approved 
alternative standards, thus demonstrating that no further treatment is 
necessary.
    In response, we note that Sec.  942.800(c)(5) of this rule provides 
that, apart from replacement with a different financial assurance or 
administrative necessity, termination may only occur if we determine 
``that no further treatment or other reclamation measures are 
necessary.'' This rule language should be sufficient to ensure that 
premature termination does not occur. The formal trust fund or annuity 
agreement will contain specific treatment standards for each discharge, 
which will reflect the standards in the NPDES permit. Under section 
702(a) of SMCRA, 30 U.S.C. 1292, we have no authority to deviate from 
those standards. The formal agreement also will specify the steps that 
must be taken to demonstrate that treatment is no longer needed, which 
may vary with site conditions and the nature of the discharge.
    Two commenters stated that the proposed rule failed to address 
formal participation by the permittee. According to the commenters, the 
rule should require that we provide notice to the permittee under the 
permit revision provisions of section 511(c) of SMCRA, 30 U.S.C. 
1261(c), when we determine that a long-term postmining pollutional 
discharge exists.
    We find that no rule change is needed in response to these 
comments. Whenever an unanticipated postmining pollutional discharge 
develops, we will order the permittee to revise the reclamation plan to 
address the discharge. In those cases, the permit revision notification 
requirements of the Act and regulations will apply.
    Two commenters noted that because the Tennessee Department of 
Environment and Conservation (TDEC) has primary authority to regulate 
discharges to waters of Tennessee under the CWA as well as State law, 
there is overlapping jurisdiction between OSM and TDEC. The commenters 
found the rule to be unclear on how the proposed trust funds would mesh 
with TDEC's responsibilities. The commenters requested that decisions 
regarding the terms of the trust be made jointly with TDEC and OSM. 
Specifically, the commenters request that the proposed rule be changed 
to indicate that TDEC's approval is needed for the determinations made 
under our proposal at Sec.  942.800(b)(4)(i), (v), (vi), and (viii) 
(now designated as Sec.  942.800(c)(1), (5), (6), and (8)).
    We can find no reason to modify the rule in the manner that the 
commenters advocate. Discharge treatment standards will be established 
based upon the permits issued by TDEC as the CWA authority. Under 
section 702(a) of SMCRA, 30 U.S.C. 1292(a), we have no authority to 
establish different treatment standards or requirements for point-
source discharges regulated under the CWA. Conversely, TDEC has no 
jurisdiction over the bonding of surface coal mining operations in 
Tennessee under SMCRA. Therefore, there is no need to seek TDEC 
approval for actions related to trust funds and annuities, which we are 
approving as an ABS under section 509(c) of SMCRA, 30 U.S.C. 1259(c).
    Another commenter expressed concerns about the workload that the 
rule would impose on the Tennessee's CWA authority and the State's 
ability to meet those demands. As we explained in the preceding 
paragraph, this rule places no demands upon Tennessee's CWA authority.
    Two commenters stated that the rule appears to be internally 
inconsistent about who is responsible for treatment of pollutional 
discharges and how the funds are to be released for treatment. The 
commenters point out that proposed 30 CFR 942.800(b)(4)(vi) allows 
funds from the trust to be released to the permittee, while proposed 30 
CFR 942.800(b)(4)(viii) provided that the trust fund or annuity must 
guarantee that moneys are available for OSM to pay for treatment. Two 
commenters also stated that the rule should specify that the permittee 
remains liable for the costs of the long-term treatment. According to 
the commenters, this clarification would diminish any incentive to 
underfund the trust.
    We understand why the commenters described a potential internal 
inconsistency, but we do not agree that proposed subsections (b)(4)(vi) 
and (viii) (final subparagraphs (c)(6) and (8)) are, in fact, 
inconsistent. However, we have made minor revisions to address the 
commenters' concern. Final subparagraph (c)(6) allows release of funds 
for treatment purposes (but only according to a set schedule or when 
authorized by OSM), while final subparagraph (c)(8) requires that the 
trust fund or annuity be structured in a manner that guarantees that 
sufficient funds will be available for treatment and reclamation needs. 
We removed the phrase ``to the permittee'' from (c)(6) (proposed as 
Sec.  942.800(b)(4)(vi)) so now this provision requires our written 
authorization for release of funds from the trust fund or annuity to 
any entity. We also removed the unnecessary reference to OSM in 
subparagraph (c)(8) that appeared in the proposed rule.
    Nothing in this rule alters a permittee's responsibility for the 
treatment of discharges under SMCRA or the Federal regulations. 
Permittees are responsible for reclamation obligations under their 
permits, including treatment of discharges, regardless of whether those 
obligations are secured by a bond, a trust fund, or an annuity. In the 
event the permittee defaults on those reclamation obligations, we will 
use the bond, trust

[[Page 9629]]

fund, or annuity to fulfill the reclamation obligation. Therefore, 
there is no incentive for the trust to be underfunded.
    Two commenters inquired whether OSM, Tennessee or the trustee would 
be responsible for complying with NPDES permit provisions if the 
permittee failed to do so. In response, we note that the formal trust 
fund or annuity agreement will set forth the procedure to be followed 
in the event that the permittee does not fulfill its obligations, 
which, at a minimum, will include ensuring that funds are available to 
continue treatment of the discharge. That is one of the purposes of 
establishing a trust fund or annuity, which is structured to provide an 
income stream and continuation of treatment in the event the permittee 
fails to fulfill its treatment obligations. If we are required to 
forfeit a trust fund or annuity, we are acting in our capacity as the 
regulatory authority. However, that is the extent of our responsibility 
under SMCRA and these rules. We are not the permittee, and we do not 
become the permittee when the permittee defaults on reclamation 
obligations, which means that we do not assume the permittee's NPDES 
compliance duties. The State of Tennessee is not a party to these trust 
funds and annuities, so it would not have any NPDES compliance duties 
if the permittee defaults on reclamation obligations.
    Two commenters asserted that OSM should consult with the 
Environmental Protection Agency (EPA) with regard to the proposed rule 
because EPA has designated coal mining as a primary industry. The 
commenters stated that another reason for consulting with EPA is that 
EPA must approve all NPDES permits for coal mining prior to issuance by 
TDEC.
    This rule pertains only to the means by which permittees may comply 
with the bonding requirements of SMCRA and the Tennessee Federal 
regulatory program with respect to funding the treatment of postmining 
pollutional discharges. EPA has no jurisdiction over performance bond 
requirements under SMCRA, nor does SMCRA require consultation with EPA 
on regulations concerning those requirements.
    Two commenters suggested that the wording of the proposed rule 
might unintentionally create a broader exception from bonding 
requirements than we intended. The commenters noted that 30 CFR 
942.800(a) states that the general rules for bond and insurance 
requirements apply ``except as provided in paragraph (b) of this 
section * * * .'' The commenters assert that the addition of proposed 
subparagraph (b)(4) (now designated as paragraph (c)) would expand the 
situations in which the bonding requirements do not apply and appears 
to exempt the entire mine site from the bonding requirements, rather 
than just the pollutional discharge. The commenters suggested moving 
our proposed requirements for trust funds and annuities from 
subparagraph (b)(4) to a new paragraph (c) and modifying the first two 
sentences to read, ``If OSM makes a determination that a site will need 
to have long-term treatment of pollutional discharges, it may require 
the permittee to establish a trust fund to guarantee such treatment 
will be provided as long as it is necessary.''
    The commenters raise a potentially valid point, in part. All three 
subparagraphs of existing paragraph (b) refer to the transition from 
the defunct Tennessee State regulatory program to the current Federal 
regulatory program for Tennessee. Consequently, the provisions of 
proposed 30 CFR 942.800(b)(4) do not logically belong in paragraph (b). 
Therefore, in the final rule, we are codifying proposed subparagraph 
(b)(4) as paragraph (c) and slightly revising paragraph (a) to 
incorporate the new paragraph (c). We are also adding language that 
clarifies that the provisions of paragraph (c) may be used in lieu of 
posting one of the forms of conventional bonds listed in 30 CFR 800.12. 
We have revised proposed Sec.  942.800(b)(4)(viii) (now Sec.  
942.800(c)(8)) to avoid any possibility that paragraph (c) could be 
construed as applying to the entire mine site. We also revised proposed 
Sec.  942.800(b)(4)(ix) (now Sec.  942.800(c)(9)) to make it clear that 
the treatment and reclamation obligation on the portion of the mine 
site associated with treatment of the discharges remains secured under 
the trust fund or annuity in the event conventional bonds for the 
permit are released. These changes should remedy the potential problem 
identified by the commenters.
    One commenter requested that we add a provision to prescribe a 
process for transferring responsibilities under a trust agreement to 
another permittee, a landowner, or a lessee. The commenter stated that 
the provisions of 30 CFR 942.774 regarding revision, renewal and 
transfer, assignment, or sale of permit rights do not cover or relate 
to situations where another permittee, the landowner, or a subsequent 
lessee desires to assume the permittee's responsibilities under an 
existing trust agreement.
    We do not interpret SMCRA or our regulations as allowing the 
transfer of reclamation liability from the permittee to other persons 
by any mechanism other than transfer of the permit itself in accordance 
with the process established at 30 CFR 774.17 for the transfer, 
assignment or sale of permit rights. Paragraphs (b)(3) and (d)(2) of 
that section require that any successor to a permit submit a bond or 
other guarantee or obtain the bond coverage of the original permittee 
before the regulatory authority can approve the transfer, assignment, 
or sale of the permit. Those regulations also apply in situations in 
which the bond takes the form of trust funds and annuities approved as 
an ABS. However, if a landowner, lessee, or another permittee wishes to 
assume the permittee's responsibilities under the trust fund or annuity 
agreement, nothing in the rule that we are adopting today would 
prohibit the permittee and that person from entering into a contractual 
agreement separate from the trust or annuity agreement, although 
ultimate responsibility would still reside with the permittee in 
accordance with the terms of the trust or annuity document.
    A commenter suggested that we might want to require permittees to 
provide rights to the real property needed to facilitate water 
treatment as part of the trust. According to the commenter, the rights 
to real property may be necessary to ensure successful treatment of 
discharges.
    The acquisition of property rights may or may not be required in 
every trust situation. In general, the rights that allow mining provide 
access to the site for reclamation. In the event a right-of-entry issue 
arises, it can be addressed in the individual trust agreement.
    One commenter stated that trust funds are unlikely to generate 
enough capital to meet all SMCRA reclamation requirements.
    We agree that there may be some situations in which the permittee 
is unable to obtain the capital needed to establish a trust fund or 
annuity. However, that fact should not operate to preclude the 
establishment of trust funds or annuities in situations in which the 
permittee can obtain the necessary capital. Furthermore, trust funds 
and annuities are not intended to meet all SMCRA reclamation 
requirements as this commenter suggests. Rather, we are approving the 
use of these mechanisms as a means of providing financial assurance for 
the long-term treatment of postmining pollutional discharges and 
reclamation of associated facilities. The regulations continue to 
require the posting of a conventional bond for land reclamation on the 
remainder of the site.

[[Page 9630]]

    One commenter noted that the adequacy of the bond is more important 
than the bonding instrument.
    We agree that adequacy of the bond is important, but we cannot 
discount the importance of the instrument to secure long-term treatment 
of postmining pollutional discharges. An income-producing financial 
instrument, such as a trust fund or annuity, is a more appropriate 
method of funding treatment of these discharges than a conventional 
bond.
    One commenter stated that we need to increase bonds because bond 
forfeitures have allowed mining companies to avoid their reclamation 
obligations and have placed those obligations on OSM. The commenter 
argued that permittees should post both bonds and annuities because 
annuities based on stock market performance can shrink as well as grow. 
Thus, if the annuities shrink, they may not be funded sufficiently to 
provide the necessary treatment.
    We disagree that permittees should be required to post both 
conventional bonds and trust funds or annuities for the same 
reclamation liability. Under section 509 of SMCRA, 30 U.S.C. 1259, and 
30 CFR 800.14, we have no basis for requiring bond amounts in excess of 
the amount that we determine may reasonably be needed if the permittee 
defaults on reclamation obligations and we need to contract with a 
third party to complete the reclamation plan. We recognize that 
investment performance is subject to fluctuations that may adversely 
impact the assets of trust funds and annuities. Consequently, like 
Pennsylvania, we will structure trust funds and annuities to maintain a 
cushion against those times when investment performance does not 
approach the target rate. In addition, as authorized by 30 CFR 
800.15(a) and incorporated by the trust documents, we will conduct 
periodic reviews of trust funds and annuities and require that the 
permittee make additional contributions if the cushion proves to be an 
inadequate safeguard against market fluctuations.

B. Sections 942.816(f)(3) and 942.817(e)(3): Revegetation Success 
Standards What Are the Revisions to Sec. Sec.  942.816(f)(3) and 
942.817(e)(3)

    Of the 56 commenters submitting comments on the proposed revisions 
to 30 CFR 942.816(f)(3) and 942.817(e)(3), twenty-three were from 
environmental groups, one was from an association representing the coal 
industry, two were from coal companies, two were from government 
agencies, one was from an association representing mining states, and 
27 did not provide an affiliation. While six of the comments were 
favorable, fifty commenters were opposed to what the commenters viewed 
as a weakening of the revegetation success standards of the Tennessee 
Federal program.
    Numerous commenters expressed their opposition to changes in the 
shrub and tree stocking standards, even though the proposed rules did 
not alter the existing tree and shrub stocking standards under the 
Tennessee Federal program. The modified revegetation requirements that 
we proposed on April 6, 2006, apply only to vegetative ground cover on 
sites with a postmining land use requiring the planting of trees, i.e., 
wildlife habitat, undeveloped land, recreation, or forestry. The 
regulations at 30 CFR 942.816(f)(3)(i) and (ii) and 942.817(e)(3)(i) 
and (ii), which address the stocking levels of woody plants for those 
postmining land uses, are not affected by these changes.
    Twenty-six commenters expressed concern that the proposed rules 
would ``waive'' the revegetation requirements for postmining land uses 
of wildlife habitat, undeveloped land, recreation, or forestry. The 
commenters generally suggest that we specify minimal planting 
requirements for trees and shrubs, require that trees and shrub 
plantings be species native to the area, and require that functional 
tests measuring the number of trees and shrubs that must survive be 
conducted years after planting and prior to any bond release.
    As we have noted, the only changes regarding revegetation in this 
rulemaking are the elimination of the 80% ground cover requirement from 
30 CFR 942.816(f)(3) and 942.817(e)(3) for postmining land uses of 
wildlife habitat, undeveloped land, recreation, or forestry. In 
addition, we are eliminating the bare area restriction of 30 CFR 
942.816(f)(4) and 942.817(e)(4) for those lands with a forestry-related 
postmining land use.
    We did not propose to modify the tree and shrub stocking and 
planting arrangement requirements of the Tennessee Federal program at 
Sec. Sec.  942.816(f)(3)(i)-(ii) and 942.817(e)(3)(i)-(ii). Therefore, 
comments regarding tree and shrub planting standards are outside the 
scope of this rulemaking, which means we will not discuss them.
    Additionally, the elimination of the 80% vegetative ground cover 
standard does not constitute a ``waiver'' of the ground cover 
vegetation success standards. We are retaining the ground cover success 
standards of the Tennessee Federal program at 30 CFR 942.816(f)(3)(iii) 
and 30 CFR 942.817(e)(3)(iii), which provide that vegetative ground 
cover must not be less than that required to achieve the postmining 
land use. That requirement is the same as the one found in our national 
regulations at 30 CFR 816.116(b)(3)(iii) and 817.116(b)(3)(iii) 
regarding vegetative ground cover success standards for areas with 
postmining land uses requiring the planting of trees and shrubs. 
Removing the 80% vegetative ground cover requirement from 30 CFR 
942.816(f)(3) and 30 CFR 942.817(e)(3) is consistent with our national 
regulations at 816.116(b)(3)(iii) and 817.116(b)(3)(iii), which do not 
require a fixed percentage of vegetative ground cover. Instead, the 
national rules, and now the Tennessee Federal program rules, provide 
that, to achieve revegetation success, vegetative ground cover must not 
be less than that required to achieve the approved postmining land use.
    One commenter argued that the scientific studies cited in the 
proposed rule to justify elimination of the 80% vegetative ground cover 
requirement mistakenly identify ground cover density as the cause of 
forest regeneration failure. According to the commenter, the altered 
hydrology and soil conditions of reclaimed mine sites, not excessive 
ground cover, prevent long-term survival of trees. The commenter notes 
that any area receiving sufficient precipitation in eastern Tennessee 
will proceed by secondary succession from grassland to forest 
regardless of the amount of herbaceous ground cover. However, the 
commenter also asserts that mined mountaintops, which have no forested 
slopes above them to provide a seed source, would require human seeding 
or tree planting.
    The research we cited does not identify vegetative ground cover 
density alone as the cause of tree growth failure and mortality, but 
rather identifies it as a significant contributing factor. Because 
traditional mine reclamation typically includes compacting surface soil 
materials, application of fertilizers and other soil amendments at high 
rates, and then seeding the site with quick-growing, aggressive grasses 
and legumes, the resulting vegetative ground cover is so dense that 
most tree seedlings and newly planted trees cannot compete effectively 
for nutrients, water and sunlight. In addition, the dense herbaceous 
cover provides favorable habitat for small mammals that eat tree seeds 
and damage tree seedlings and saplings.
    We agree with the commenter that trees will eventually volunteer on 
mine sites, but dense vegetative ground covers will inhibit their 
growth and

[[Page 9631]]

increase mortality. Our objective is to establish, as quickly as 
practicable, vigorous and healthy forests of native species on 
reclaimed mine lands. Our removal of the 80% ground cover success 
standard eliminates one of the regulatory barriers that we have 
determined inhibits the reestablishment of high-quality hardwood 
forests.
    In addition to reducing competition from aggressive herbaceous 
ground covers, loosely graded surface soil materials increase water 
infiltration and make more water available for tree growth as well as 
providing a favorable medium for root growth and development. While we 
agree with the commenter's views on how hydrology and soil conditions 
affect tree growth on conventionally reclaimed mines, mine sites with 
reduced compaction and less aggressive ground cover are more likely to 
overcome these obstacles.
    One commenter agreed that some types of herbaceous ground covers 
inhibit tree seedling growth less than others do. However, the 
commenter stated that, rather than relaxing vegetative ground cover 
standards, we should study the types of ground covers and specify which 
herbaceous ``tree-friendly'' ground covers should be used to balance 
erosion control and tree establishment.
    As previously discussed in this preamble, we have found that the 
80% ground cover success requirement is not only in conflict with tree 
establishment and regeneration, it also interferes with the statutory 
requirement to establish a diverse, effective, permanent vegetative 
cover comprised of species native to the area. In addition, in most 
cases, it is not needed to control erosion if the FRA is followed. Our 
rules at 30 CFR 816.111(a)(4) and 817.111(a)(4) continue to provide 
that vegetative ground cover must be sufficient to control erosion and 
to maintain soil stability. We will continue to encourage the use of 
those types of ground cover that achieve that requirement without 
substantially inhibiting the growth, survival, and regeneration of 
trees and shrubs.
    One commenter expressed concern that the proposed rule language was 
vague and that we did not provide substitute requirements for the 80% 
ground cover rule or the bare area restrictions. The commenter 
suggested that we incorporate guidelines for tree planting or 
monitoring of natural succession to achieve tree coverage goals before 
bond release. The commenter also requested that we include specific 
runoff-monitoring procedures. Other commenters stated that the 
regulations should specify the number of trees, shrubs, and other 
vegetation that must be planted on reclaimed mine sites, including the 
number of species to be planted and the survival rate by which success 
will be judged.
    The existing regulations for the Tennessee Federal program at 30 
CFR 942.816(f)(3)(i) and 942.817(e)(3)(i), which were not affected by 
this rulemaking, provide that we must specify stocking levels and 
planting arrangements on the basis of local and regional conditions 
after consultation with the State agencies responsible for the 
administration of forestry and wildlife programs. Subparagraph (ii) of 
those rules contains standards for evaluating the success of tree and 
shrub growth and survival. Our surface water monitoring requirements 
are found at 30 CFR 780.21(j), 784.14(i), 816.41(e), and 817.41(e). We 
do not agree that separate runoff monitoring is needed to evaluate the 
requirement that ground cover be adequate to control erosion. Visual 
inspection of the site for rills and gullies will suffice.
    A commenter characterized the rule as promoting ``patchwork'' 
revegetation upon a larger-scale mining site. The commenter expresses a 
belief that we should focus on reforestation of the entire mine site as 
was intended by SMCRA.
    First, SMCRA does not allow us to require that mined lands be 
returned to forest conditions. Section 515(b)(2), 30 U.S.C. 1265(b)(2), 
requires that mined lands be reclaimed to a condition capable of 
supporting the uses that they were capable of supporting prior to 
mining or to higher or better uses. Consequently, the regulations that 
we are adopting in this rulemaking only apply to mine sites with a 
postmining land use requiring the planting of trees and shrubs. For 
those mine sites, the rule eliminates the arbitrary 80% ground cover 
requirement and the limitation on the maximum amount of bare area. The 
revised regulations seek to encourage tree growth and survival by 
limiting competition from excessive herbaceous ground cover. Research 
and an examination of reclaimed mine sites has demonstrated that 
competition from herbaceous ground cover, along with excessive soil 
compaction during backfilling, regrading, and topsoiling, has resulted 
in the creation of grasslands with few trees on most reclaimed mine 
sites. We believe that adoption of this rule, which removes 
requirements that make it difficult to establish woody plants, will 
increase the probability that permittees will return mined lands to 
forestry-related postmining land uses.
    In Tennessee, most mine sites were originally forested prior to 
mining and the surrounding land is, for the most part, still forested. 
Conventional reclamation has resulted in forest fragmentation and the 
``patchwork'' revegetation that is the subject of the commenter's 
concern. We anticipate that adoption of the rule changes discussed in 
this preamble will lessen the occurrence of ``patchwork'' revegetation 
by creating more favorable conditions in which mine sites can and will 
be returned to healthy, productive forests consistent with surrounding 
lands.
    One commenter stated that we have not identified how past hardwood 
tree-planting failures can be avoided in the future.
    We disagree with this comment. In our April 6, 2006, notice, we 
identified the major factors that negatively affect tree growth on 
reclaimed mine lands, such as compaction and competition from grasses. 
We also explained that forestry researchers have agreed that productive 
forestland can best be created on reclaimed mine land by using the FRA. 
Specific comments regarding the FRA are discussed under the General 
Comments section below.
    A commenter expressed concern that implementation and enforcement 
of compaction requirements would no longer be a priority on reclaimed 
landforms where compaction is necessary to stabilize the backfilled 
spoils or to prevent settlement-related highwall exposure.
    The regulations we are approving in this rulemaking do not replace 
or supersede any existing stability or highwall elimination 
requirements. Mined-out areas must still be backfilled in a manner that 
meets all stability and highwall elimination requirements.
    One commenter stated that the proposed rule changes fail to provide 
information on tree-compatible groundcover species and do not require 
the use of low levels of nitrogen fertilizer (to avoid stimulating 
overly lush herbaceous vegetation).
    We believe that these details are best addressed through the permit 
application submission and review process rather than in our 
regulations.
    A commenter stated that if OSM intends to leave all or part of mine 
sites devoid of vegetation, the reclamation plan should specify how the 
resultant increase in sediment will be controlled. Alternatively, we 
should produce credible models demonstrating that an increase in 
sedimentation will not occur. According to the commenter, failure to do 
so will cause pollution to Tennessee's waters.

[[Page 9632]]

    As discussed earlier in this preamble, non-compacted mine soils 
have higher infiltration rates and erode less than graded soils, which 
generally translates to lower runoff rates. Thus, when using the FRA, 
less ground cover is needed to prevent erosion and protect water 
quality. Regardless, nothing in the rules that we are adopting today 
supersedes the existing regulations at 30 CFR 816.45(a) and 817.45(a), 
which require the use of appropriate sediment control measures that 
prevent, to the extent possible, using the best technology currently 
available, additional contributions of sediment to streamflow or to 
runoff outside the permit area. Also, under 30 CFR 816.42 and 817.42, 
point-source discharges must comply with applicable State or Federal 
effluent limitations.
    Many commenters referred to removal of the 80% requirement as a 
``waiver'' of revegetation ground cover success standards. As we noted 
earlier, we are not promulgating regulations that create a ``waiver'' 
of revegetation ground cover success standards. Instead, we are 
revising the vegetative ground cover success standards for mine sites 
where the postmining land uses are related to forestry. These revisions 
will support the growth and survivability of trees on those postmining 
land uses. The rule that we are adopting today does not alter the 
existing ground cover requirements in our revegetation rules at 30 CFR 
816.111(a)(3), 817.111(a)(3), 942.816(f)(3)(iii), and 
942.817(e)(3)(iii), which remain in effect.
    Several commenters mentioned that we should ensure that native 
trees, shrubs, and other vegetation were planted to help the 
revegetation of mine sites. For example, one commenter recommended that 
we require revegetation using native grasses, forbs, shrubs, and trees 
because these would likely not be as competitive with native trees and 
they would have beneficial effects on wildlife. Another commenter 
requested that we specify in the regulations that the permittee must 
plant a diverse mix of trees, shrubs, and herbs native to the area to 
qualify for the new revegetation requirements.
    Our regulations at 30 CFR 816.111 and 817.111 provide that the 
species planted must be native to the area and that introduced species 
are only allowed where necessary to achieve the approved postmining 
land use when authorized by the regulatory authority. Therefore, it 
would be redundant to include a requirement for native species 
selection as part of this rulemaking.
    One commenter asked whether the removal of the 80% ground cover 
standard would apply to existing sites where the fill was compacted and 
the site could not meet the prior 80% ground cover success standard or 
whether it would only apply to new mines that are permitted after the 
rule is in effect.
    The revised regulations will apply to existing or future permits 
approved with postmining land uses of wildlife habitat, undeveloped 
land, recreation, or forestry, but existing mines must conform to the 
requirements in their reclamation plans. If an existing permit's 
reclamation plan incorporates or adopts the 80% ground cover success 
standard or limits the amount of bare area, the permittee must either 
comply with the existing permit requirements or seek a permit revision 
under 30 CFR 942.774 to modify those requirements.

C. Sections 942.816(f)(4) and 942.817(e)(4): Revegetation Success 
Standards--Bare Area Restrictions

    We received nine comments on our proposal to exempt mine sites 
reclaimed for the purposes of wildlife habitat, undeveloped land, 
recreation, or forestry from the bare area limitation requirements of 
30 CFR 942.816(f)(4) and 942.817(e)(4). Seven of these comments were 
unfavorable and two comments were favorable. Of the nine commenters, 
three were from environmental groups, three were from academic 
institutions, one was from an association representing mining States, 
one was from a government agency, and one was from industry. The seven 
unfavorable comments were primarily concerned about the potential for 
erosion from the bare areas that the revised rules allow on reclaimed 
mine sites. The commenters suggested that eliminating this standard for 
mine sites reclaimed for forestry-related postmining land uses would 
allow permittees to completely forego revegetation on mine sites.
    We exempted mine sites with postmining land uses related to 
forestry from the bare area limitation requirements of Sec. Sec.  
942.816(f)(4) and 942.817(e)(4) because portions of mine sites 
reclaimed using the FRA may have sparse vegetative ground cover. These 
potential bare areas are desirable because they allow planted trees to 
grow without the threat of competition from aggressive ground covers. 
Bare areas also allow native grasses, shrubs, and trees from 
surrounding areas to voluntarily reseed the reclaimed mine site.
    With respect to the commenters' concerns over increased erosion and 
sedimentation, our regulations will not allow reclaimed mine sites to 
be completely devoid of vegetation. While the change we are making as 
part of this rulemaking may result in some portions of mine sites 
without vegetation, the reclamation plan and the permittee will still 
have to comply with all existing regulations, including 30 CFR 
816.111(a)(4) and 817.111(a)(4), which state that permittees must 
establish a vegetative cover that is capable of stabilizing the soil 
surface from erosion; 30 CFR 816.116(a)(3) and 817.116(a)(3), which 
require that the extent of cover be at least equal in extent of cover 
to the natural vegetation of the area, and 30 CFR 816.95(a) and 
817.95(a), which require control of erosion on exposed surfaces.
    Additionally, our bond release regulations at 30 CFR 800.40(c)(2) 
provide that ``[n]o part of the bond or deposit shall be released under 
this paragraph so long as the lands to which the release would be 
applicable are contributing suspended solids to streamflow or runoff 
outside the permit area in excess of the requirements set by section 
515(b)(1)) of the Act * * *.''
    One commenter noted that the proposed rule would allow bare areas 
not just on sites developed for forestry, but also for wildlife 
habitat, undeveloped land, and recreation. According to the commenter, 
it is not clear that trees would be used in the latter three land uses. 
Consequently, the commenter recommended that all three of those uses be 
deleted from the regulations.
    We disagree with the commenter's premise that trees would not be a 
part of the reclamation plan for postmining land uses of wildlife 
habitat, undeveloped land, and recreation. By including these land uses 
in 30 CFR 942.816(f)(3) and 942.817(e)(3), we are requiring that the 
revegetation success standards for those land uses be based primarily 
on the establishment of trees and shrubs. In addition, our regulations 
at 30 CFR 816.111 and 817.111 require, among other things, the 
establishment of a diverse, effective, permanent vegetative cover that 
is at least equal in extent of cover to the natural vegetation of the 
area and capable of stabilizing the soil surface from erosion. Those 
requirements apply to all mined lands regardless of the postmining land 
use.
    One commenter recommended that the exemption from the restriction 
on bare areas be limited to those lands where trees or shrubs will 
ultimately provide the majority of the ground cover.
    The change in our regulations removing the bare area restriction 
applies only to those postmining mine uses for which we anticipate that 
trees and shrubs will provide the majority of

[[Page 9633]]

the ground cover. Therefore, there is no need to modify the rule as the 
commenter suggested.
    Our experience has shown that plants and trees will voluntarily 
germinate on any bare areas. In fact, sites mined prior to the passage 
of the Act before revegetation requirements were in effect have 
reverted to forest from volunteer reseeding. Consequently, we 
anticipate that bare areas will encourage natural succession, which 
will assist in fulfilling the requirement of Sec.  515(b)(19) of the 
Act, 30 U.S.C. 1265(b)(19), to establish a diverse, effective, 
permanent vegetative cover of the seasonal variety native to the land 
to be affected and capable of self-regeneration and plant succession.

D. General Comments on the Proposed Revisions to the Tennessee 
Revegetation Requirements

    We received numerous comments that did not address the specific 
changes to the revegetation portion of the Tennessee Federal program 
that we set forth in our April 6, 2006, proposed rule. Many of these 
comments focused on aspects of FRA other than the ground cover change 
contained in this rulemaking. While these comments are not directly 
responsive to this rulemaking, we have decided to respond.
    The use of the FRA is voluntary in Tennessee. However, through the 
Appalachian Regional Reforestation Initiative, we are encouraging the 
use of the FRA in reclaiming mine sites that include planting trees. We 
believe that as more operators become aware of the effectiveness of the 
FRA, an increasing number of operators will use the method to 
successfully restore forests.
    Several commenters stated that we are implementing the FRA without 
providing any specifics about how it should be considered in the 
reclamation plan, or which standards apply to lands reclaimed under the 
FRA. These commenters requested that the rule include such details as 
the amount and type of grading and compaction, the type and number of 
trees species planted, which sites or types of mines would qualify for 
the FRA, and other criteria the commenters deemed necessary for 
successful implementation of the FRA.
    For example, one commenter generally supported the attempt to 
promote reforestation on reclaimed mine sites, but expressed concern 
that we were revising our rules to adopt the FRA. The commenter pointed 
out that we neither defined the FRA in the rule nor defined what 
constitutes successful implementation of the FRA as a mine reclamation 
practice. The commenter asserted that the rule should set forth 
performance standards that must be attained in order to determine if 
the FRA was implemented successfully. The commenter also suggested that 
we establish performance standards that include a ``minimum stand 
density'' of trees and shrubs growing with sufficient vigor to 
demonstrate long-term survival and regeneration. Furthermore, the 
commenter opined that the bond release term for forestry-related 
reclamation should be increased to allow more time to determine whether 
the reclaimed mine site has met the performance standards.
    The purpose of this rulemaking is to remove regulatory barriers to 
effective tree establishment and growth for those areas where trees 
will be planted as part of the reclamation. With the exception of the 
changes being made by this final rule, the reclamation practices 
advocated by the FRA can be implemented within existing regulations. 
Whether the other aspects of FRA are or are not implemented as a part 
of tree planting is beyond the scope of this rulemaking since those 
other aspects are within the existing performance standards related to 
backfilling, grading, and revegetation. For example, the Tennessee 
Federal program at 30 CFR 942.816(f)(3)(i) and (ii) and 30 CFR 
942.817(e)(3)(i) and (ii) already provides that revegetation success 
standards for postmining land uses involving woody plants must include 
stocking and planting arrangement requirements. Additionally, section 
515(b)(20) of SMCRA, 30 U.S.C. 1265(b)(20), establishes the 
revegetation responsibility period at five years after the last year of 
augmented seeding, fertilizing, irrigation, or other work (excluding 
normal husbandry practices).
    Several commenters noted that the FRA and the changes made by this 
rulemaking should be conducted first as a pilot program. Specifically, 
one commenter stated that this rule should be considered experimental 
and provisionally implemented only on a predetermined, relatively small 
area until its feasibility and efficacy can be documented. Similarly, 
another commenter stated that permits should only be granted when a 
permittee can demonstrate that the proposed reclamation techniques have 
proven successful on mine sites with similar characteristics. In 
addition, another commenter suggested that we should reevaluate whether 
any mine can comply with SMCRA's revegetation requirements rather than 
embark upon another unproven experiment. The commenter noted that some 
permittees have previously attempted reforestation of postmining land 
and have either failed or met with something far less than success.
    The benefits of reduced ground cover for tree seedling 
establishment and growth have been demonstrated by research conducted 
by major universities throughout the United States. In further support 
of our conclusion, one commenter submitted additional research in 
support of the FRA's techniques. The research provided by the commenter 
indicates that native trees often show poor growth in areas with heavy 
ground cover and that the use of less-competitive native grasses can 
aid in forest succession.
    Various commenters expressed their opinions regarding aspects of 
the potential effects of reduced compaction. Some commenters expressed 
concerns that the language of the rule did not address compaction and 
grading and suggested that we promulgate new regulations specific to 
the reduced grading and compaction of the soil under the FRA. One 
commenter asserted that the preamble to our proposed rule created a 
hidden rule setting forth guidance for grading and reduced compaction 
of soil on mine sites.
    Our revision to these rules only removes regulatory barriers that 
impede successful establishment of trees. While minimizing compaction 
is a critical part of successful forest restoration, there is 
sufficient flexibility within existing rules to provide for it. Our 
existing rules provide specific standards addressing erosion control, 
sedimentation, water quality, and other related issues that are not 
affected by this rulemaking. Further, the rule promulgated here is 
designed to address variations in compaction. As compaction is reduced, 
infiltration is increased and runoff is reduced. This rule requires 
that ground cover in areas where trees are planted be limited to that 
necessary to control erosion and support the postmining land use. 
Therefore, where compaction and runoff are high, more ground cover will 
be required. Where compaction and runoff are low, less ground cover 
will be required.
    Some commenters expressed concerns that loose grading of the 
topsoil or topsoil substitute would cause erosion and sedimentation, 
especially on steep slopes. One commenter, for example, expressed 
concerns that the rule change would allow placement of loose or 
uncompacted soil on mine sites with steep slopes, which would cause 
high levels of erosion. The commenter noted that nothing in the rule 
requires mine operators to increase the capacity of

[[Page 9634]]

erosion and sedimentation controls to accommodate the increased 
sedimentation.
    Again, there is nothing in this rule that modifies existing 
regulatory requirements related to compaction and the rule continues to 
require ground cover sufficient to control erosion.
    Another commenter expressed concerns about the effects that 
sedimentation from mining will have on populations of rare and 
endangered species in streams. In response, we note that this rule 
still requires control of erosion and that nothing in this rule alters 
our regulations concerning protection of fish and wildlife, including 
threatened and endangered species. See 30 CFR 780.16, 784.21, 816.97 
and 817.97. All operations must continue to comply with those 
regulations. Furthermore, this rule will promote more rapid restoration 
of forest cover on mined lands, which will benefit stream quality and 
associated wildlife.
    Another commenter suggested that the provisions of the FRA for 
loose grading of topsoil or topsoil substitutes would lead to more 
water infiltration into reclaimed backfill areas and that excessive 
water in the backfill would contribute to landslides.
    In response, we again note that this rule does not alter existing 
stability requirements, including the regulations related to 
backfilling and grading. For example, 30 CFR 816.102(c) requires spoils 
to be compacted where advisable to ensure stability.
    One commenter expressed concerns about the difference in 
sedimentation between tree-only plantings versus plantings with a more 
diverse cover. In addition, the commenter questioned how these 
differences in cover related to sequestering nutrients, controlling 
flooding, capturing water for recharging aquifers, and developing 
fertile soils.
    Our changes to the ground cover standards in the Tennessee Federal 
program do not alter any regulations regarding soil erosion. The 
regulations at 30 CFR 816.45(a) and 30 CFR 817.45(a) require the use of 
appropriate sediment control measures to prevent, to the extent 
possible, additional contributions of suspended solids to streamflow or 
to runoff outside the permit area. Additionally, the regulations at 30 
CFR 816.111(a)(4) and 30 CFR 817.111(a)(4) require all permittees to 
establish a vegetative cover on all reclaimed areas that is capable of 
stabilizing the soil surface from erosion. All Tennessee mine sites 
must still comply with these regulations.
    One commenter also suggested that permittees might not adopt the 
FRA because they would have to dispose of the extra spoil resulting 
from not compacting soil materials. Again, there is nothing in this 
rulemaking that alters backfilling or compaction standards. This 
rulemaking is limited to the ground cover aspect of FRA.
    Several commenters suggested types of materials that could be used 
to provide or enhance a tree-friendly growing medium. For example, one 
commenter recommended that we require permittees to gather fallen 
leaves from urban areas to amend soils on reclaimed surface mines. 
Another commenter advocated the use of biosolids for reclaiming mine 
lands. The commenter noted that biosolids counteract the sulfur and 
other pyrite and acidic materials in mine spoils, bring the pH back to 
neutral, and provide large amounts of organic materials. Another 
commenter advocated requiring permittees to improve mine soils.
    We acknowledge that the soil supplements advocated by the 
commenters may have value, but these comments are outside the scope of 
this rulemaking.
    One commenter advocated saving all the topsoil or organic matter on 
mine sites. In response, we note that the Federal regulations at 30 CFR 
816.22 and 30 CFR 817.22 already require the salvage of topsoil, 
including the organic layer, unless the regulatory authority approves 
the use of a topsoil substitute that is equal to or more suitable for 
sustaining vegetation than the original topsoil.
    One commenter requested increased permittee maintenance of sites 
after planting because animals and landslides destroy trees and shrubs.
    Our existing regulations provide sufficient safeguards to ensure 
the stability of the land and the adequacy of revegetation on reclaimed 
mine sites. At 30 CFR 942.816(f)(3) and 942.817(e)(3), the Tennessee 
Federal program provides success standards for trees and shrubs on 
sites with a postmining land use of wildlife habitat, undeveloped land, 
recreation, or forestry. These regulations require that at least 80% of 
trees and shrubs have been in place for at least three growing seasons 
and that the trees and shrubs must be healthy. According to those 
regulations, no trees and shrubs in place for less than two growing 
seasons may be counted in determining stocking adequacy. Those 
regulations also provide that vegetative ground cover must not be less 
than that required to achieve the approved postmining land use. In 
addition, under 30 CFR 816.116(c) and 817.116(c), the revegetation 
responsibility period in Tennessee extends for five full years after 
the last year of augmented seeding, fertilization, irrigation or work 
other than normal husbandry practices. This rulemaking does not affect 
any of these rules.
    One commenter expressed concern that mining operations would cause 
the death of small animals. The commenter noted, for example, that 
there are genetically isolated, evolutionarily distinct, and unique 
species of amphibians and reptiles in the Cumberland Mountains. The 
commenter stated that OSM needs to consider the effect of mining on the 
biological heritage of animals as well as plants.
    While these comments are outside the scope of this rulemaking, the 
existing Federal regulations at 30 CFR 780.16 and 784.21 provide that 
applications for surface coal mining operations must include a fish and 
wildlife protection and enhancement plan. This plan must include a 
description of how, to the extent possible, using the best technology 
currently available, the operator will minimize disturbances and avoid 
adverse impacts on fish and wildlife and related environmental values, 
including compliance with the Endangered Species Act, during the 
operations and how enhancement of these resources will be achieved 
where practicable.
    A commenter suggested that we require public review of reclamation 
plans and regular inspections of mine sites.
    Again, while this comment is outside the scope of today's rule, 
existing Federal regulations and the Tennessee Federal program already 
provide for public review. Sections 30 CFR 773.6 and 942.773 provide 
for public participation in the permitting process including procedures 
for filing objections to applications. In addition, 30 CFR 842.11 and 
942.842 set forth procedures for periodic Federal inspections and 
monitoring.
    Two commenters suggested that the rules would result in degraded 
water quality at mine sites.
    This rule, which limits excess ground cover where trees are 
planted, still requires ground cover sufficient to control erosion. 
Further, existing Federal regulations regarding control of sediment 
from mine sites require prevention, to the extent possible, of 
additional contributions of suspended solids to streamflow. 
Additionally, under 30 CFR 816.42 and 817.42, discharges from mine 
sites must comply with all applicable State and Federal water quality 
laws and regulations and

[[Page 9635]]

with the effluent limitations for coal mining promulgated by the EPA as 
set forth in 40 CFR Part 434. The regulations at 30 CFR 780.21 provide 
for the assessment of water quality prior to mining and require a 
ground and surface water monitoring plan and a hydrologic reclamation 
plan. This information is to be used to minimize disturbance to the 
hydrologic balance, prevent material damage outside the permit area, 
and to protect the rights of present water users.
    One commenter stated that the proposed amendments to the Tennessee 
Federal program constitute a major Federal action that requires 
detailed cumulative impact analysis and preparation of an environmental 
impact statement (EIS) under the National Environmental Policy Act 
(NEPA). The commenter stated that the proposed rule or an EIS should 
have better addressed reforestation and revegetation reclamation 
concerns and provided evidence that the proposed actions will not 
affect Tennessee's watersheds, reservoirs and water resources.
    We disagree with the commenter's assertions. Section 702(d) of 
SMCRA specifies that the promulgation of a Federal regulatory program 
for a State under section 504 of SMCRA does not constitute a major 
action within the meaning of Sec.  102(2)(C) of NEPA. Therefore, there 
is no need to prepare an EIS for those programs. Consequently, the 
adoption of amendments to the Tennessee Federal program, which we 
adopted under section 504 of SMCRA, 30 U.S.C. 1254, does not constitute 
a major action within the meaning of Sec.  102(2)(C) of NEPA and does 
not require preparation of an EIS.
    The commenter also stated that OSM must determine the effects of 
the proposed rules on the Tennessee Valley Authority's recent 
Programmatic EIS and the U.S. Army Corps of Engineers' Floodplain 
Management Program in Tennessee's coalfields and consult with those 
agencies before enacting this rule. The commenter also stated that the 
results of any consultation with various government agencies and with 
individuals and organizations having an interest in the proposed 
amendment are missing.
    In response, we note that there is no requirement that we address 
the effect of the rule on documents prepared by other agencies, and we 
have addressed any comments that we received from State and Federal 
agencies.
    One commenter stated that the revisions to the rules give the KFO 
too much discretion in determining the appropriate herbaceous 
vegetative ground cover success standards.
    While the revisions in this rulemaking do provide discretion to the 
KFO to approve ground cover success standards, that discretion is 
tempered with the existing regulations that require control of erosion. 
The KFO cannot approve a reclamation plan that does not provide for 
adequate erosion control from the site. For mine sites with postmining 
land uses related to forestry, the KFO will require that the 
permittee's reclamation plans carefully balance the need for erosion 
control with a vegetative ground cover that does not interfere with 
tree growth and survival.
    Other commenters discussed a wide range of issues that are 
unrelated to the proposed rule. We are not addressing those comments 
because they are beyond the scope of this rulemaking.

V. Procedural Determinations

Executive Order 12866--Regulatory Planning and Review

    This document is not a significant rule and is not subject to 
review by the Office of Management and Budget under Executive Order 
12866.
    a. This rule will not have an effect of $100 million or more on the 
economy. The revisions to the bonding requirements and revegetation 
standards will not adversely affect in a material way the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or Tribal governments or communities.
    As discussed in the preamble to the proposed rule and the preamble 
to the final rule, the bonding provisions should benefit coal operators 
who experience unanticipated pollutional discharges by providing them 
with an alternative financial mechanism for the treatment of AMD. The 
bonding revisions will not add to the operator's cost of doing business 
since the existing regulations in 30 CFR 942.800 and 30 CFR Part 800 
already require that a bond amount be adequate for the cost of 
reclamation and, when necessary, be adjusted to insure that adequate 
funds are available. The trust funds or annuities will allow continued 
treatment of postmining pollutional discharges by the operator and will 
assist in preventing bankruptcies and potential bond forfeitures since 
sureties will not likely fund treatment. There are approximately 52 
mining operations in Tennessee with AMD problems that may avail 
themselves of the new bonding provisions.
    Our estimates have found that approximately 10 companies will take 
advantage of the rule that eliminates the arbitrary ground cover 
requirements on mine sites to be reclaimed for wildlife habitat, 
undeveloped land, recreation, or forestry. Approximately 1000-1500 
acres are eligible for Phase III bond release annually in Tennessee. 
The changes to the rules will encourage reforestation of this acreage 
and provide the basis for healthy, vigorous tree growth. While economic 
benefits of reforestation to mine operators are limited, the benefits 
to the environment are numerous and include: Creating diverse, 
productive forests that provide watershed protection, wildlife habitat, 
recreational opportunities, and remove carbon dioxide from the air. 
Additionally, there are economic benefits of reforested sites because 
forests can offer substantial revenue for landowners who own the trees 
and job opportunities for local residents who harvest the trees and use 
the lumber.
    b. This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency.
    c. This rule does not alter the budgetary effects of entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients.
    d. This rule does not raise novel legal or policy issues.

Regulatory Flexibility Act

    The Department of the Interior certifies that this rule will not 
have a significant economic impact on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
As previously stated, the revisions to the existing regulations may 
benefit the regulated industry by allowing an alternative source of 
bonding. Further, the rule produces no adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
United States enterprises to compete with foreign-based enterprises in 
domestic or export markets.

Small Business Regulatory Enforcement Fairness Act

    For the reasons previously stated, this rule is not a major rule 
under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement 
Fairness Act. This rule:
    a. Does not have an annual effect on the economy of $100 million or 
more.
    b. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    c. Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to

[[Page 9636]]

compete with foreign-based enterprises for the reasons stated above.

Unfunded Mandates

    This rule does not impose an unfunded mandate on State, Tribal, or 
local governments or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State, 
Tribal, or local governments or the private sector. A statement 
containing the information required by the Unfunded Mandates Reform Act 
(2 U.S.C. 1501 et seq.) is not required.

Executive Order 12630--Takings

    The revisions to the Tennessee Federal program governing the use of 
trust funds or annuities to fund treatment of postmining pollutional 
discharges and the changes to the revegetation success standards do not 
have any significant takings implications under Executive Order 12630. 
Therefore, a takings implication assessment is not required.

Executive Order 12988--Civil Justice Reform

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

Executive Order 13132--Federalism

    In accordance with Executive Order 13132, the rule does not have 
significant Federalism implications to warrant the preparation of a 
Federalism Assessment for the reasons discussed above.

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

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

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

    This rule is not considered a significant energy action under 
Executive Order 13211. The revisions to the Tennessee Federal program 
that govern use of trust funds or annuities to fund treatment of 
postmining pollutional discharges and the changes to the revegetation 
success standards will not have a significant effect on the supply, 
distribution, or use of energy.

Paperwork Reduction Act

    This rule does not contain collections of information which require 
approval by the Office of Management and Budget under 44 U.S.C. 3501 et 
seq.

National Environmental Policy Act

    This rule does not require an environmental impact statement 
because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that 
promulgation of Federal programs do not constitute major Federal 
actions within the meaning of section 102(2)(C) of the NEPA (42 U.S.C. 
4332(2)(C)). This rulemaking was promulgated under section 504 of 
SMCRA, 30 U.S.C. 1254, and therefore is not subject to NEPA 
requirements.

List of Subjects in 30 CFR Part 942

    Intergovernmental relations, Surface mining, Underground mining.

    Dated: February 21, 2007.
C. Stephen Allred,
Assistant Secretary, Land and Minerals Management.


0
Accordingly, we are amending 30 CFR Part 942 as set forth below.

PART 942--TENNESSEE

0
1. The authority citation for 30 CFR Part 942 continues to read as 
follows:

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

0
2. Amend Sec.  942.800 by revising paragraph (a) and adding paragraph 
(c) to read as follows:


Sec.  942.800  Bond and insurance requirements for surface coal mining 
and reclamation operations.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
part 800 of this chapter, Bond and Insurance Requirements for Surface 
Coal Mining and Reclamation Operations Under Regulatory Programs, shall 
apply to any person conducting surface mining and reclamation 
operations.
    (b) * * *
    (c) Special consideration for sites with long-term postmining 
pollutional discharges. With the approval of the Office, the permittee 
may establish a trust fund, annuity or both to guarantee treatment of 
long-term postmining pollutional discharges in lieu of posting one of 
the bond forms listed in Sec.  800.12 of this chapter for that purpose. 
The trust fund or annuity will be subject to the following conditions:
    (1) The Office will determine the amount of the trust fund or 
annuity, which must be adequate to meet all anticipated treatment 
needs, including both capital and operational expenses.
    (2) The trust fund or annuity must be in a form approved by the 
Office and contain all terms and conditions required by the Office.
    (3) The trust fund or annuity must provide that the United States 
or the State of Tennessee is irrevocably established as the beneficiary 
of the trust fund or of the proceeds from the annuity.
    (4) The Office will specify the investment objectives of the trust 
fund or annuity.
    (5) Termination of the trust fund or annuity may occur only as 
specified by the Office upon a determination that no further treatment 
or other reclamation measures are necessary, that a replacement bond or 
another financial instrument has been posted, or that the 
administration of the trust fund or annuity in accordance with its 
purpose requires termination.
    (6) Release of money from the trust fund or annuity may be made 
only upon written authorization of the Office or according to a 
schedule established in the agreement accompanying the trust fund or 
annuity.
    (7) A financial institution or company serving as a trustee or 
issuing an annuity must be one of the following:
    (i) A bank or trust company chartered by the Tennessee Department 
of Financial Institutions;
    (ii) A national bank chartered by the Office of the Comptroller of 
the Currency;
    (iii) An operating subsidiary of a national bank chartered by the 
Office of the Comptroller of the Currency;
    (iv) An insurance company licensed or authorized to do business in 
Tennessee by the Tennessee Department of Commerce and Insurance or 
designated by the Commissioner of that Department as an eligible 
surplus lines insurer; or
    (v) Any other financial institution or company with trust powers 
and with offices located in Tennessee, provided that the institution's 
or company's activities are examined or regulated by a State or Federal 
agency.
    (8) Trust funds and annuities, as described in this paragraph, must 
be established in a manner that guarantees that sufficient moneys will 
be available to pay for treatment of postmining pollutional discharges 
(including maintenance, renovation, and replacement of treatment and 
support facilities as needed), the reclamation of the sites upon which 
treatment facilities are located and areas used in support of those 
facilities.

[[Page 9637]]

    (9) When a trust fund or annuity is in place and fully funded, the 
Office may approve release under Sec.  800.40(c)(3) of this chapter of 
conventional bonds posted for a permit or permit increment, provided 
that, apart from the pollutional discharge and associated treatment 
facilities, the area fully meets all applicable reclamation 
requirements and the trust fund or annuity is sufficient for treatment 
of pollutional discharges and reclamation of all areas involved in such 
treatment. The portion of the permit required for postmining water 
treatment must remain bonded. However, the trust fund or annuity may 
serve as that bond.

0
3. In Sec.  942.816, revise paragraph (f)(3) introductory text and 
paragraph (f)(4) as follows:


Sec.  942.816  Performance standards--Surface mining activities.

* * * * *
    (f) * * *
    (3) For areas developed for wildlife habitat, undeveloped land, 
recreation, or forestry, the stocking of woody plants must be at least 
equal to the rates specified in the approved reclamation plan. To 
minimize competition with woody plants, herbaceous ground cover should 
be limited to that necessary to control erosion and support the 
postmining land use. Seed mixes and seeding rates will be specified in 
the permit.
* * * * *
    (4) Bare areas shall not exceed one-sixteenth (1/16) acre in size 
and total not more than ten percent (10%) of the area seeded, except 
for areas developed for wildlife habitat, undeveloped land, recreation, 
or forestry.

0
4. In Sec.  942.817, revise paragraph (e)(3) introductory text and 
paragraph (e)(4) as follows:


Sec.  942.817  Performance standards--Underground mining activities.

* * * * *
    (e) * * *
    (3) For areas developed for wildlife habitat, undeveloped land, 
recreation, or forestry, the stocking of woody plants must be at least 
equal to the rates specified in the approved reclamation plan. To 
minimize competition with woody plants, herbaceous ground cover should 
be limited to that necessary to control erosion and support the 
postmining land use. Seed mixes and seeding rates will be specified in 
the permit.
* * * * *
    (4) Bare areas shall not exceed one-sixteenth (1/16) acre in size 
and total not more than ten percent (10%) of the area seeded, except 
for areas developed for wildlife habitat, undeveloped land, recreation, 
or forestry.
[FR Doc. E7-3649 Filed 3-1-07; 8:45 am]
BILLING CODE 4310-05-P


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