OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Search conducted by: Terri H. Petruska

Page 1 of 3

COALEX STATE INQUIRY REPORT - 55

September 5, 1985

Floyd Durham, Chief

Surface Mining & Reclamation Division

Department of Pollution Control & Ecology

P.O. Box 9583

Little Rock, Arkansas 72219

TOPIC: PERMIT DENIAL FOR OUTSTANDING FINES AND BOND FORFEITURES

INQUIRY: What authority does the state have to deny a permit for an operation where the 

"Operations Director", but not the owners, has outstanding fines and has had past permit 

revocation and bond forfeiture?

SEARCH RESULTS: The criteria for permit approval or denial under the federal Surface 

Mining Control and Reclamation Act of 1977 (SMCRA) is contained in Sec. 510. In pertinent 

part, this section includes the following requirement:

"Where... any surface coal mining operation owned or controlled by the applicant is currently in 

violation of this Act or such other laws referred to this subsection, the permit shall not be issued 

until the applicant submits proof that such violation has been corrected or is in the process of 

being corrected to the satisfaction of the regulatory authority, department, or agency which has 

jurisdiction over such violation and no permit shall be issued to an applicant after a finding by 

the regulatory authority, after opportunity for hearing, that the applicant, or the operator specified 

in the application, controls or has controlled mining operations with a demonstrated pattern of 

willful violations of this Act of such nature and duration with such resulting irreparable damage 

to the environment as to indicate an intent not to comply with the provisions of this Act."

The requirements of Sec. 510(c) of SMCRA are included in 30 CFR Sec. 773.15 of the OSM 

regulations, which essentially repeats the statutory language. Similar provisions are also included 

in Arkansas Regulations Secs. 786.17 and 786.19. (See attachments.)

Simply put, this review of the violations history consists of two parts: (1) A determination of 

whether the applicant has any outstanding violations, and (2) A determination of whether the 

applicant, or the operator, controls or has controlled operations with a pattern of violations 

indicating an intent not to comply with the Act.

In the example posed, it is assumed that the person or entity named as the applicant for the 

permit has no previous record of violations or any outstanding violations. However, the 

"Operations Director" does have outstanding violations, as well as past permit revocations and 

bond forfeitures. In such a case, the possibility exists that the applicant is, in fact, owned or 

controlled by the "Operations Director".
OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Search conducted by: Terri H. Petruska

Page 2 of 3

On April 5, 1985, the OSM acknowledged the possibility that such practices have been used in 

efforts to circumvent the requirements of the Act and proposed a revision to the federal 

regulations to define "ownership or control" in a manner to help minimize such abuse. The term

"ownership or control" is not defined in SMCRA and neither the federal nor the Arkansas 

regulations currently contain a definition for "ownership or control".

Whether in the example, the "Operations Director" can be found to "own or control" the 

applicant for purposes of the applicability of the first test is unclear under both the existing 

regulations, and under OSM's proposed regulation. OSM in the preamble discussion to the 

proposed rule does, however, request public comment on whether the definitions should contain 

an "express presumption that agents, subcontractors, general managers, foremen, or others who 

exercise independent discretion for directing the day-to-day operations at a mine, have control 

within the meaning of Sec. 510(c)." (50 FR 13726, April 5, 1985)

A prior COALEX search was conducted of the legislative history of the language "operation 

owned or controlled by the applicant", found in this section. A copy of the results of that search 

are attached for your reference.

A COALEX search was also conducted of any U.S. Department of the Interior, ALJ and Board 

of Land Appeals Decisions, to determine whether any prior cases have been decided on the issue 

raised. No cases directly addressing the issue were identified in this search.

The second test contained in Sec. 510(c ) extends not only to the applicant, but also to the 

operator, and any operations controlled or which have been controlled by the operator. Briefly, 

under this section, the following requirements must be met:

"(1) The applicant, or operator, controls or has controlled mining operations with,

(2) A demonstrated pattern of willful violations of such nature and duration with such resulting 

irreparable damage to the environment as to indicate an intent not to comply with the provisions 

of this Act."

Similar provisions are included in both the federal and the Arkansas program.

An "operator" is defined as "any person engaged in coal mining who removes or intends to 

remove more than 250 tons of coal from the earth or from coal refuse piles by mining within 12 

consecutive calendar months in any one location". Presumably, an "Operations Director" could 

be classified as an "operator" within this definition.

The second question that must addressed is whether the "Operations Director" has "controlled 

mining operations with a demonstrated pattern of willful violations of such nature, duration, and 

with such resulting irreparable damage to the environment as to indicate an intent not to comply 

with the applicable provisions. (See 30 CFR Sec. 773.15(b); and Arkansas Regulations Sec. 

786.19(I).)

In the example, the "Operations Director" had controlled prior mines with bond forfeitures and 

permit revocations. Such a history would likely be considered sufficient to support the finding 
OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Search conducted by: Terri H. Petruska

Page 3 of 3

required under Sec. 510(c ) and the applicable regulations. Permit revocations, for example, 

require that a finding be made that a "pattern of violations...exists or has existed and that the 

violations were caused by the permittee willfully or through unwarranted failure to comply". 

(See 30 CFR Sec. 843.13 and Arkansas Regulations Sec. 843.13) The existence of outstanding 

fines and forfeited bonds at the prior mines would also support the required finding.

While no case law was identified in this search on the specific issue raised, it does appear that 

under the example, a permit should be denied to the applicant who has an "Operations Director" 

with a pattern of violations, based upon the second test in Sec. (510(c ) of SMCRA.

ATTACHMENTS

A. COALEX STATE INQUIRY REPORT - 4.

B. 50 FR 13726 (April 5, 1985). 30 CFR Sec. 773.15.

C. Arkansas Surface Coal Mining and Reclamation Code., Reg. Secs. 786.17, 786.19 and 

843.13.