OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Research conducted by: Terri H. Petruska Page 1 of 2

COALEX STATE INQUIRY REPORT - 21

October 24, 1984

Ceclea Gier, Legal Assistant 

Office of Attorney General 

Natural Resources Section 

1525 Sherman Street 

Denver, Colorado 80203

TOPIC: DEFINITION OF OPERATOR/PERMIT

INQUIRY: Under the federal regulatory program, who is considered the "operator" on the permit 

application? In the case of two owners with only one responsible for the actual mine operation, 

are both owners required to be included on the permit or only the one responsible for operating 

the mine?

SEARCH RESULTS:

The definition of "operator" relative to the permit application is reasonably straight forward. 

Under the federal regulatory program, "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." (30 CFR 

Sec. 701.5; SMCRA Sec. 701(13)) On the permit application, owner(s), and operator, if different 

from the applicant, must be identified; thus indicating that the three entities may be different 

persons. (30 CFR 7778.13) In response to the question, it would appear that the names of both 

owners would be required. The person responsible for the mine operation would need to be 

designated as the "operator".

Who, however, may be considered the "operator" in terms of ultimate responsibility for the 

payment of Abandoned Mine Land (AML) fees is not as definitive. Under SMCRA, operators of 

coal mining operations subject to the terms of the Act are assessed a fee based on their coal 

production. The fee is deposited in the AML fund for the purpose of reclamation of abandoned 

mine lands. (SMCRA Sec. 402(a); 30 CFR Part 870)

Based on complexities of contractual mining, several commentators raised the question 

when the permanent regulations were originally promulgated concerning who was to be 

considered the "operator" in terms of AML fee responsibility. In response, the Office of 

Surface Mining (OSM), in the preamble to the December 13, 1977 regulations stated that:

"We believe that Congress intended the burden of fee payment to fall upon the person 

who stands to benefit directly from the sale, transfer, or use of the coal. This intent will 

guide the Office in making decisions as to who is liable for the fee. The identification of 

operators will be made in light of the realities of the business world and will not turn 

solely on a literal interpretation of the word removes'." (42 FR 62713 (1977))

Subsequently, on November 30, 1983, OSM proposed a new section, 870.9, be added 

to the permanent regulatory program, delegating specific responsibility for the payment of 

the AML fee beyond the term "operator". Under the proposed section, the party responsible 

for payment of the fee would have been:
OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Research conducted by: Terri H. Petruska Page 2 of 2

"the person or entity in whom is vested the ownership of the coal under State law 

immediately after the coal is severed, without regard to the existence of any contractual 

agreements for the sale or other disposition of the coal or the payment of any royalties 

between the producer and their parties...." (48 FR 54190 (1983))

The proposed section was not adopted. (49 FR 27493 (1984))

OSM is presently applying the guidelines of AML fee responsibility originally presented in the 

December 13, 1977 preamble, basing their interpretation on "business realities" rather than 

"solely on a literal interpretation of the work removes'." (48 FR 27494 (1984))

Mr. David Jones, Office of Surface Mining, in a recent telephone conversation, cited two 

pending cases of possible significance concerning the operator-AML fee responsibility: 

RAPOCA ENERGY (out of the Knoxville office) and U.S. v UNITED COAL CO., et al., Civ. No. 

82-08309-A (SW Va).

Mr. Jones also forwarded a September 27, 1984, District Court decision involving AML 

fee responsibility. A copy of U.S. v BENJAMIN COAL CO., Civ. No. 84-2011, (WD Pa) is 

attached. Benjamin Coal Company had been denied the issuance of mining permits on the 

basis of disputed delinquent reclamation fees. At issue was the question of AML 

responsibility and contractually defined liability. The District Court granted a preliminary 

injunction against OSM, refraining them from preventing the issuance of the permits by 

Pennsylvania on the basis of the reclamation fees. The issue of AML responsibility was not 

addressed. The court decision was based on an argument of a "good faith appeal exception" 

as presented by Benjamin:

"Since neither the Act nor the OSM regulations provide an appeal process for Title IV fee 

assessments, Benjamin argues that its only means of asserting a good faith appeal is to 

defend a collection action brought by the OSM. Consequently, Benjamin argues that its 

specific denial and averments in its answer to the present collection action constitute a 

good faith appeal for purposes of this exception."

ATTACHMENTS:

A. Excerpt from 42 FR 62713 (DECEMBER 13, 1977).

B. 48 FR 54190-54194 (NOVEMBER 30, 1983).

C. 49 FR 27493027494 (JULY 5, 1984).

D. U.S. v BENJAMIN COAL CO., Civ. No. 84-2011, (WD Pa).