[Federal Register Volume 62, Number 120 (Monday, June 23, 1997)]
[Proposed Rules]
[Pages 33784-33785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-16304]
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DEPARTMENT OF THE INTERIOR
Office of Surface Mining Reclamation and Enforcement
30 CFR Part 870
RIN 1029-AB68
Abandoned Mine Land Reclamation Fund--Basis for Coal Weight
Determination; Notice of Withdrawal
AGENCY: Office of Surface Mining Reclamation and Enforcement, Interior.
ACTION: Proposed rule; notice of withdrawal.
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SUMMARY: The Office of Surface Mining Reclamation and Enforcement (OSM)
is withdrawing the proposed rule published on December 29, 1992 (57 FR
62116), regarding the determination of coal weight for calculating
Abandoned Mine Land (AML) reclamation fees. That proposal was intended
to allow operators who transfer run-of-mine coal but are paid on a
calculated clean coal basis to also pay their AML fees on that basis.
In lieu of rulemaking, OSM will recognize such transactions and allow
fees to be paid on the calculated clean basis in certain circumstances,
within the scope of the existing regulations. This approach will
provide us greater latitude in determining the tonnage on which the
first sale or transfer of ownership is based.
DATES: This notice is effective June 23, 1997.
FOR FURTHER INFORMATION CONTACT: Jim Krawchyk, Division of Compliance
Management, Office of Surface Mining Reclamation and Enforcement, 3
Parkway Center, Pittsburgh, PA 15220. Telephone 412-921-2676. E-mail:
[email protected],gov.
SUPPLEMENTARY INFORMATION:
I. Background
II. Reason For Agency Action
I. Background
Section 402(a) of the Surface Mining Control and Reclamation Act of
1977 (SMCRA), 30 U.S.C. 1201 se seq., requires all operators of coal
mining operations subject to its provisions to pay a reclamation fee on
each ton of coal produced. In December 1977 OSM first promulgated
regulations to implement this provision (42 FR 62714; Sec. 13, 1977).
The regulations base the fee on the actual gross weight of the coal at
the first sale, use, or transfer of ownership. This regulation has been
in effect basically unchanged since that time.
In 1982 (47 FR 28593; June 30, 1982) we revised the regulatory
language to clarify the point in time of fee determination and to
stress value and weight parameters for fee calculation purposes. We
added at that time 30 CFR 870.129b) (1), (2), and (3) stating that
these provisions merely restate our policy since the initial
implementation of the fee collection program. The preamble to the
regulations, however, did not specifically discuss these three
provisions.
Of importance to OSM's decision to withdraw the proposed rule are
existing sections 870.12(b)(3) (ii) and (iii) providing:
(ii) Operators selling coal on a clean coal basis shall retain
records that show run-of-mine tonnage, and the basis for the clean
coal transaction.
(iii) Insufficient records shall subject the operator to fees
based on raw coal tonnage data.
Operators and OSM personnel now interpret these provisions as
authorizing OSM to allow operators to pay reclamation fees on a clean
coal tonnage basis if that is the basis of the first transaction and
sale. Many small operators are paid on a clean coal basis by purchasers
when they deliver their run-of-mine coals to preparation plants.
[[Page 33785]]
Accordingly, the operators maintain that OSM should allow them to pay
the AML fee based on the actual per ton payment they receive. They
argue that section 870.12(b)(3) (ii) and (iii) authorizes AML fee
payments in this fashion. The operators say that they should not have
to pay on the higher raw coal tonnage figures unless they do not keep
records sufficient to document the basis of the payment they receive on
clean coal tonnage.
In 1991, OSM commenced a review of the rule's application (Notice
of Inquiry; 56 FR 10404; March 12, 1991). Upon examination of the
comments received, OSM found merit in the position advocated by the
coal producers. OSM had deferred billing amounts that would be due on
the higher raw coal tonnage figure pending resolution of the issue.
To address the matter, OSM proposed a rule revision on December 29,
1992 (57 FR 62116), allowing payment on a calculated clean tonnage
basis if and when the coal was sold to a preparation plant for
cleaning. The preparation plant owner would have assumed some
responsibility for paying AML fees. That rule, however, was never
finalized and is being withdrawn by this notice.
II. Reason for Agency Action
In examining the public comments, our regulations, and past agency
practice with regard to their implementation, it is evident that we
have allowed operators to use calculations and other records to
substantiate their AML fee liability where necessary and reasonable.
For example, in section 870.12(c), if underground and surface mine coal
are mixed prior to the first sale or use, this regulation provides that
the higher surface rate must be used unless the operator can
demonstrate by ``acceptable engineering calculations or other reports''
the amount of coal attributed to surface mining.
Based upon these findings, we believe sections 870.12(b)(3) (ii)
and (iii) allow an operator to pay on a clean coal tonnage basis if the
operator transfers run-of-mine tonnage to an unrelated second party who
cleans the coal, and the operator is paid on only the clean coal
tonnage. The difference in the tonnage amounts must be attributed to
materials extraneous to the coal removed in the cleaning process, such
as dirt and clay, and not to impurities inherent in the coal. This
action is designed to address and accommodate a common business
practice among small coal operators in a segment of the industry, and
does not authorize operators to make arbitrary reductions in the
tonnage to be reported. We expect that the majority of the coal tonnage
will continue to be reported based on the actual weight at the time of
initial sale, transfer, or use as the regulations require. The
following scenarios are provided to illustrate the rule's application:
Example 1: An operator delivers 100 tons of coal to a preparation
plant owner who determines through accepted standard industry analysis
that only 90 tons of coal will be recovered after cleaning. The
preparation plant owner pays the operator for 90 tons. The operator is
liable for fees on 90 tons because that is the basis on which he was
paid.
Example 2: An operator delivers 100 tons of coal to a preparation
plant owner who pays the operator for 100 tons. The operator determines
that the coal if cleaned would have a reject factor of 10 percent and
therefore pays fees on only 90 tons. This would be incorrect and
disallowed. The operator should pay fees on 100 tons because that is
the basis on which he was paid by the preparation plant owner.
Example 3: An operator delivers 100 tons of coal to a preparation
plant owner who determines through accepted standard industry analysis
that only 90 tons will be recovered after cleaning. The preparation
plant owner pays the operator for only 90 tons. The operator determines
that the coal contains 5 tons of ash and therefore pays fees on 85 tons
(90 tons of clean coal minus 5 tons of ash). This would be incorrect
and disallowed. The operator must pay on the tonnage for which he was
paid. No deductions are allowed for matter that is intrinsic to the
coal. The correct tonnage for calculating fee payment would be 90 tons.
We believe that basic market forces coupled with proper
recordkeeping and review will ensure the integrity of the reclamation
fee collection process. A regulatory change is therefore considered
unnecessary at this time.
We would point out that the ability to pay on a clean coal basis,
however, is predicted on the operator maintaining the proper records.
Failure to maintain these records, as specified in 30 CFR
870.12(b)(3)(ii) and 30 CFR 870.16, would result in a fee assessment
based on raw coal tonnage figures.
We recognize that a small number of companies have paid fees on raw
tonnage amounts even though the sales transaction was based on a clean
coal tonnage figure. We will move swiftly to correct inconsistencies
that have occurred in the past, provided that any claims for refunds
are in accord with the limitations proscribed by 28 U.S.C. 2401(a)
(statute of limitations) and the necessary records are available to
substantiate them.
If you have questions concerning this notice, please contact Jim
Krawchyk at the address and telephone number listed above under FOR
FURTHER INFORMATION. If necessary, we will arrange for an audit of the
company's reclamation fee payments.
Dated: May 9, 1997.
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.
[FR Doc. 97-16304 Filed 6-20-97; 8:45 am]
BILLING CODE 4310-05-M
