# Approval of West Virginia regulatory program amendment.
**AGENCY:**
Office of Surface Mining Reclamation and Enforcement, Interior.
**ACTION:**
Final rule.
**SUMMARY:**
We, the Office of Surface Mining Reclamation and Enforcement (OSMRE), are approving an amendment to the West Virginia regulatory program (the West Virginia program) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act). This amendment revises West Virginia's regulatory program provisions related to entities authorized to issue surety bonds and the repair and compensation of damage resulting from subsidence.
**DATES:**
Effective September 9, 2024.
**FOR FURTHER INFORMATION CONTACT:**
Mr. Michael Castle, Acting Director, Charleston Field Office Telephone: (304) 347-7158. *Email: [email protected]* .
**SUPPLEMENTARY INFORMATION:**
I. Background on the West Virginia Program
II. Submission of the Amendment
III. OSMRE's Findings
IV. Summary and Disposition of Comments
V. OSMRE's Decision
VI. Statutory and Executive Order Reviews
**I. Background on the West Virginia Program**
Section 503(a) of the Act 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 by demonstrating that its approved State program includes, among other things, State laws and regulations that govern surface coal mining and reclamation operations in accordance with the Act and consistent with the Federal regulations. *See* 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the West Virginia program on January 21, 1981. You can find additional background information on the West Virginia program, including the Secretary's findings, the disposition of comments, and conditions of approval of the West Virginia program in the January 21, 1981, *Federal Register* (46 FR 5915). You can also find later actions concerning the West Virginia program and program amendments at 30 CFR 948.10, 948.12, 948.13, 948.15, and 948.16.
**II. Submission of the Amendment**
By letter dated May 5, 2020 (Administrative Record No. 1640), West Virginia sent us an amendment to its program under SMCRA (30 U.S.C. 1201 *et seq.* ), docketed as WV-127-FOR. The amendment consists of revisions made by West Virginia House Bill 4217 (HB 4217), which was signed by the Governor on March 25, 2020. HB 4217 seeks to modify language in West Virginia's regulations relating to companies that execute surety bonds and modify language relating to the correction of material damage from subsidence to a landowner's structures or facilities.
We announced receipt of the proposed amendment in the December 16, 2020, *Federal Register* (85 FR 81436). In the same document, we opened the public comment period and provided an opportunity for a public hearing or meeting on the adequacy of the amendment. Due to the COVID-19 restrictions, a virtual public hearing was held on January 14, 2021. The public comment period ended on January 15, 2021.
**III. OSMRE's Findings**
The following are the findings we made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. We are approving the amendment as described below. The full text of the program amendment is available for review at *https://www.regulations.gov* .
**A. Surety Bonds—CSR 38-2-11.3.a.3**
West Virginia seeks to revise CSR 38-2-11.3.a.3, which requires any company that executes surety bonds in the State to either: (i) be included on the United States Department of the Treasury's (Treasury Department) listing of approved sureties; or (ii) to submit proof to the West Virginia Department of Environmental Protection (WVDEP) that it holds a valid license issued by the West Virginia Insurance Commissioner and meets certain reporting obligations. The existing provision further requires any company not included on the Treasury Department's listing of approved sureties to diligently pursue application for such listing, submit proof of its efforts, and become listed within 4 years. The revision would specify that only those companies electing to qualify under the first part must diligently pursue application for listing with the Treasury Department if they do not currently possess that certification. In other words, companies that elect to submit proof of a valid license from the West Virginia Insurance Commissioner and meet certain reporting obligations would no longer be required to diligently pursue application for listing or be listed with the Treasury Department.
*OSMRE Finding:* West Virginia's existing requirement has no counterpart under SMCRA or the Federal implementing regulations. Section 509(b) of SMCRA, 30 U.S.C. 1259(b), requires that a coal mining operator execute a surety bond with a corporate surety licensed to do business in the State where the operation is located. *See also* 30 CFR 800.20(a). West Virginia first began requiring surety companies to hold a current certificate of authority from the Treasury Department in 2001. *See* 68 FR 67035, 67038 (Dec. 1, 2003). WVDEP stated at the time that the requirement “was adopted to address concerns about the financial solvency of sureties providing reclamation bonds in West Virginia. The WVDEP did not have the necessary resources or expertise to regularly and timely monitor the financial condition of sureties doing business in West Virginia.” 70 FR 77321, 77321-22 (Dec. 30, 2005). West Virginia then modified the requirement in 2005 to allow surety companies to diligently pursue a certificate from the Treasury Department, thereby removing a barrier to sureties that were in good financial condition but did not yet have the Treasury Department certificate, from providing reclamation bonds in West Virginia. West Virginia filed an emergency rule with the West Virginia Secretary of State on September 21, 2005, which the Secretary of State approved on an emergency basis on October 11, 2005. WVDEP also filed a legislative rule containing the same language with the Secretary of State on September 21, 2005 (Administrative Record No. WV-1442). WVDEP provided OSMRE with a copy of that proposed rule for an informal review, and we recommended revisions. West Virginia adopted our suggested revisions, and we approved the amendment on December 30, 2005 (70 FR 77321).
Since 2005, WVDEP has learned that under W.Va. Code sec. 33-4-14, corporate sureties must annually submit to the West Virginia Insurance Commissioner a true quarterly statement of their financial condition, transactions, and affairs as of March 31, June 30, and September 30 in order to do business in West Virginia. As a consequence of the current amendment, WVDEP will be relying on the expertise and review of the West Virginia Insurance Commission, because it is responsible for the licensing, financial monitoring, and financial examination of the companies admitted to do business in West Virginia. As amended, we find the revision to be no less effective than the Federal regulation at 30 CFR 800.20(a), which states that a surety bond shall be executed by the operator and a corporate surety licensed to do business in the State where the operation is located, and no less stringent than section 509(b) of SMCRA. Therefore, we approve this amendment.
**B. Owner Compensation—CSR 38-2-16.2.c.2**
West Virginia seeks to revise CSR 38-2-16.2.c.2 relating to the correction of material damage to any structures or facilities resulting from subsidence. The existing regulation requires operators to either repair the damage or compensate the owner for the full amount of diminution in value resulting from the subsidence. West Virginia proposes to revise this provision to state explicitly that the choice of remedy is the owners' and to replace the option of repair with an option to be compensated in the amount of the repair, subject to the limitation that the compensation not exceed one hundred and twenty percent (120%) of the pre-mining value of the structure or facility. The proposal also inserts new language clarifying that this section neither creates additional property rights nor can it be construed as vesting in WVDEP's secretary the jurisdiction to adjudicate property rights disputes.
*OSMRE Finding:* Currently, the language of West Virginia's requirement at CSR 38-2-16.2.c.2 is substantively identical to section 720(a)(1) of SMCRA, 30 U.S.C. 1309a(a)(1), and 30 CFR 817.121(c)(2). Section 720(a)(1) of SMCRA states that underground coal mining operations must promptly repair, or compensate for, material damage resulting from subsidence caused to any occupied residential dwelling and related structures and any noncommercial buildings. Section 720(a)(1) further elaborates that repair includes rehabilitation, restoration, or replacement; that compensation must be in the full amount of the diminution in value resulting from the subsidence; and that compensation may be accomplished by the purchase, prior to mining, of a noncancellable premium-prepaid insurance policy.
OSMRE revised its subsidence control regulations in 1995 to implement the Energy Policy Act of 1992 (the Energy Policy Act), enacted on October 24, 1992, which amended SMCRA by adding section 720. 60 FR 16722 (Mar. 31, 1995). Section 720(a) of SMCRA itself specifically focuses on the operators' obligations, providing, in relevant part: “Underground coal mining operations . . . shall comply with each of the following requirements: (1) Promptly repair, or compensate for, material damage resulting from subsidence. . . .” 30 U.S.C. 1309a(a). The final regulation did likewise, providing in relevant part: “The permittee must promptly repair, or compensate the owner for, material damage resulting from subsidence. . . .” 30 CFR 817.121(c)(2). These provisions only reference the owners of materially damaged structures with respect to how they must be compensated should compensation occur in lieu of repair. While the preamble to our 1995 final rule did not explicitly state that the option to repair or replace is the operator's, that interpretation is evident in our discussion of 30 CFR 817.121(c)(5) (Adjustment of bond amount for subsidence damage), in which we state: “Further, the final rule provides that if the permittee intends to repair the damage, the required additional bond would amount to the estimated cost of the repairs. If the permittee intends to compensate the owner, the additional bond would amount to the diminution in value of the protected land or structures.” 60 FR at 16741. This reading is also consistent with the preamble to our initial program regulations, written before the Energy Policy Act was enacted, which indicated the operator had the choice between repair and compensation. *See* 44 FR 14902, 15275 (March 13, 1979) (explaining that “insurance is one alternative from which operators can choose to meet the requirements of this Section,” and further explaining the elimination of landowner “consultation” from the proposed regulation in favor of options for the operator and protections for the surface owner).
OSMRE has approved alternatives to the options provided under SMCRA, including Pennsylvania's omission of compensation for the decrease in value of the structure in favor of compensation for the reasonable cost of repair or reasonable cost of replacement. *See* 66 FR 67010, 67020, 67037 (Dec. 27, 2001). As OSMRE acknowledged in its 2001 approval of Pennsylvania's provisions, and as one commenter to this amendment points out, the cost of repair or replacement may in some cases greatly exceed the diminution in the structure or facility's value. ( *See* 66 FR at 67020). However, as discussed above, section 720(a) of SMCRA allows the operator to choose the remedy. Under most circumstances, an operator would be expected to, and is only required to, choose the remedy with the lesser cost. In other words, under SMCRA, if the cost to repair or replace a structure far exceeds the pre-mining value of the structure, a mining operator who materially damages the structure need only compensate the owner for the loss in value. OSMRE's 2001 approval of Pennsylvania's provisions is consistent. Pennsylvania's provisions do not require compensation for repair or replacement at any cost but instead only require compensation for “reasonable” cost of repair or “reasonable” cost of replacement. The operator's option to fulfill the requirement by obtaining a premium-prepaid insurance policy is also evidence that the operator's liability is not without limit.
In West Virginia, if the cost of repair or replacement exceeds 120% of the pre-mining value of the structure, the operator retains the alternative option to compensate the owner for the loss in value rather than pursue repair or replacement. By allowing the landowner to choose the greater compensation that would otherwise be available under section 720(a)(1) of SMCRA, though not without limit, West Virginia's proposed amendment is not less stringent than SMCRA nor less effective than 30 CFR 817.121, and, therefore, we are approving it. We are also approving the revision clarifying that CSR 38-2-16.2.c.2 does not create additional property rights or vest in the WVDEP Secretary the jurisdiction to adjudicate property rights. Nothing in SMCRA creates property rights or vests in, or requires, any State regulatory authority to adjudicate property rights, which are typically adjudicated in State court.
**IV. Summary and Disposition of Comments**
**Public Comments**
On December 16, 2020, we published a *Federal Register* notice (85 FR 81436) (Administrative Record Number 1652) and requested comments on the proposed revisions to the program. We received comments from West Virginia Coal Association (WVCA) by hardcopy and one comment by a citizen through a public meeting held virtually on January 14, 2022. These comments are summarized and addressed below.
A. WVCA stated in its letter that the plain language of the Federal regulations make clear that the operator decides whether to repair a structure or facility or pay compensation in the amount of the diminution in value. WVCA traced much of the regulatory history of our regulation at 30 CFR 817.121 from 1979 to present in support of its assertion. WVCA asserts that the current amendment, which gives the surface landowner the power to choose the remedy, makes CSR 38-2-16.2.c.2 more stringent than the Federal requirement and strikes a fair and equitable balance between common law property rights and the duty to protect surface owners from the potentially adverse impacts of coal extraction.
*OSMRE Response:* Because the comments support the approval of the amendment, a position with which OSMRE agrees, we are making no response. A discussion of our findings is in Section III.B., above.
B. WVCA stated that the revision to CSR 38-2-11.3.a.3 makes this regulation functionally identical to the corresponding provision of the Federal regulations and supports its approval.
*OSMRE Response:* Because the comments support the approval of the amendment, a position with which OSMRE agrees, we are making no response. A discussion of our findings is in section III.A., above.
C. A commenter stated that the rights of the surface and mineral owners and other persons with legal interest in the land should be adequately protected. The commenter noted that CSR 38-2-16.2.c.2 is similar, if not verbatim, to the correlating Federal regulation and asserted that under these provisions, if a monetary settlement cannot be reached, the surface owner can require the coal operator to repair the structures or facilities without a stated restriction as to cost. The commenter argued that eliminating the operator's obligation to repair the structure or facility and placing a limit on the amount of compensation for repair is inequitable due to the variability and difficulty of appraising the value of certain structures and facilities, including homes on different acreages, barns, utility buildings, and bridges that allow access to the property. The commenter stated that this has led to scenarios where the cost of repair greatly exceeded 120% of the pre-mining value of the structure or facility.
*OSMRE Response:* While we acknowledge that under certain circumstances the cost to repair a structure or facility could exceed 120% of both the pre-mining value and the diminution in value, we disagree that the Federal program allows the surface landowner to require repair without any stated restriction as to cost. We have never interpreted section 720(a)(1) to require an operator to repair a structure or facility at any cost, as evidenced by the regulatory history of 30 CFR 817.121 and the operator's option under section 720(a)(1) to fulfill this requirement with a premium-prepaid insurance policy. We agree that variability and difficulties exist in the process of appraising the value of structures and facilities, but operators and landowners that disagree over those issues may seek resolution in a court with jurisdiction to adjudicate them.
**Federal Agency Comments**
On May 5, 2020 (Administrative Record No. WV-1646), under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, we requested comments on the amendment from various Federal agencies with an actual or potential interest in the West Virginia program. We did not receive any comments.
**Environmental Protection Agency (EPA) Concurrence and Comments**
Under 30 CFR 732.17(h)(11)(ii), we are required to obtain written concurrence from EPA for those provisions of the program amendment that relate to air or water quality standards issued under the authority of the Clean Water Act (33 U.S.C. 1251 *et seq.* ) or the Clean Air Act (42 U.S.C. 7401 *et seq.* ). OSMRE determined that none of the proposed State revisions pertained to air or water quality standards; therefore, EPA's concurrence was not requested on this amendment. EPA did not respond with any comments to this amendment.
**State Historical Preservation Officer (SHPO) and the Advisory Council on Historic Preservation (ACHP)**
Under 30 CFR 732.17(h)(4), we are required to request comments from the SHPO and ACHP on amendments that may have an effect on historic properties. On May 5, 2020, we requested comments on West Virginia's amendment (Administrative Record No. 1646). We did not receive comments from the SHPO or ACHP.
**V. OSMRE's Decision**
Based on the above findings, we are approving the West Virginia amendment that was submitted on May 5, 2020 (Administrative Record No. 1640). To implement this decision, we are amending the Federal regulations at 30 CFR part 948 that codify decisions concerning the West Virginia program. In accordance with the Administrative Procedure Act (5 U.S.C. 533), this rule will take effect 30 days after the date of publication.
**VI. Statutory and Executive Order Reviews**
**Executive Order 12630—Governmental Actions and Interference With Constitutionally Protected Property Rights**
This rule would not effect a taking of private property or otherwise have taking implications that would result in public property being taken for government use without just compensation under the law. Therefore, a takings implication assessment is not required. This determination is based on an analysis of the corresponding Federal regulations.
**Executive Orders 12866—Regulatory Planning and Review, Executive Order 13563—Improving Regulation and Regulatory Review, and Executive Order 14094—Modernizing Regulatory Review**
Executive Order 12866, as amended by Executive Order 14094, provides that the Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB) will review all significant rules. Pursuant to OMB guidance, dated October 12, 1993 (OMB Memo M-94-3), the approval of State program amendments is exempted from OMB review under Executive Order 12866, as amended by Executive Order 14094. Executive Order 13563, which reaffirms and supplements Executive Order 12866, retains this exemption.
**Executive Order 12988—Civil Justice Reform**
The Department of the Interior has reviewed this rule as required by section 3 of Executive Order 12988. The Department determined that this *Federal Register* document meets the criteria of section 3 of Executive Order 12988, which is intended to ensure that the agency review its legislation and proposed regulations to eliminate drafting errors and ambiguity; that the agency write its legislation and regulations to minimize litigation; and that the agency's legislation and regulations provide a clear legal standard for affected conduct rather than a general standard, and promote simplification and burden reduction. Because section 3 focuses on the quality of Federal legislation and regulations, the Department limited its review under this Executive Order to the quality of this *Federal Register* document and to changes to the Federal regulations. The review under this Executive Order did not extend to the language of the State regulatory program or the amendment that the State of West Virginia drafted.
**Executive Order 13132—Federalism**
This rule has potential Federalism implications as defined under section 1(a) of Executive Order 13132. Executive Order 13132 directs agencies to “grant the States the maximum administrative discretion possible” with respect to Federal statutes and regulations administered by the States. West Virginia, through its approved regulatory program, implements and administers SMCRA and its implementing regulations at the State level. This rule approves an amendment to the West Virginia program submitted and drafted by the State, and thus is consistent with the direction to provide maximum administrative discretion to States.
**Executive Order 13175—Consultation and Coordination With Indian Tribal Governments**
The Department of the Interior strives to strengthen its government-to-government relationship with Tribes through a commitment to consultation with Tribes and recognition of their right to self-governance and Tribal sovereignty. We have evaluated this rule under the Department's consultation policy and under the criteria in Executive Order 13175 and have determined that it has no substantial direct effects on the distribution of power and responsibilities between the Federal government and Tribes. The basis for this determination is that our decision on the West Virginia program does not include Indian lands as defined by SMCRA or other Tribal lands and it does not affect the regulation of activities on Indian lands or other Tribal lands. Indian lands under SMCRA are regulated independently under the applicable approved Federal Indian program. The Department's consultation policy also acknowledges that our rules may have Tribal implications where the State proposing the amendment encompasses ancestral lands in areas with mineable coal. We are currently working to identify and engage appropriate Tribal stakeholders to devise a constructive approach for consulting on these amendments.
**Executive Order 13211—Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use**
Executive Order 13211 requires agencies to prepare a Statement of Energy Effects for a rulemaking that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not a significant energy action under the definition in Executive Order 13211, a Statement of Energy Effects is not required.
**National Environmental Policy Act**
Consistent with sections 501(a) and 702(d) of SMCRA (30 U.S.C. 1251(a) and 1292(d), respectively) and the U.S. Department of the Interior Departmental Manual, part 516, section 13.5(A), State program amendments are not major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C).
**Paperwork Reduction Act**
This rule does not include requests and requirements of an individual, partnership, or corporation to obtain information and report it to a Federal agency. As this rule does not contain information collection requirements, a submission to the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501 *et seq.* ) is not required.
**Regulatory Flexibility Act**
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.* ). The State submittal, which is the subject of this rule, is based upon corresponding Federal regulations for which an economic analysis was prepared, and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the corresponding Federal regulations.
**Small Business Regulatory Enforcement Fairness Act**
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; (b) will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (c) does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This determination is based on an analysis of the corresponding Federal regulations, which were determined not to constitute a major rule.
**Unfunded Mandates Reform Act**
This rule does not impose an unfunded mandate on State, local, or Tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or Tribal governments or the private sector. This determination is based on an analysis of the corresponding Federal regulations, which were determined not to impose an unfunded mandate. Therefore, a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 *et seq.* ) is not required.
**List of Subjects in 30 CFR Part 948**
Intergovernmental relations, Surface mining, Underground mining.
Thomas D. Shope,
Regional Director, North Atlantic—Appalachian Region.
For the reasons set out in the preamble, 30 CFR part 948 is amended as set forth below:
**PART 948—WEST VIRGINIA**
**30 CFR Part 948**
1. The authority citation for part 948 continues to read as follows:
**Authority:**
30 U.S.C. 1201 *et seq.*
**30 CFR Part 948**
2. Section 948.15 is amended in the table by adding a new entry in chronological order by “Date of final publication” to read as follows:
§ 948.15
| Original amendment | Date of final publication | Citation/description |
| --- | --- | --- |
| | | |
| * * * * * * * | | |
| May 5, 2020 | August 8, 2024 | 11.3.a.3—(Surety Bonds; quarterly statements; corporate surety licensed in the State.) |