OSM Clarifies that Failure to Mine Does not Result in Automatic Forfeiture of Coal Mining Permits

Posted on January 6, 2014 by Eric Fjelstad

The Office of Surface Mining Reclamation and Enforcement (OSM) announced an important policy decision on August 20, 2013, clarifying the circumstances under which a coal mining permit can be terminated due to the permittee’s failure to commence mining operations.  Under Section 506(c) of the Surface Mining Control and Reclamation Act (SMCRA), a surface coal mining permit “shall terminate” if the permittee has not commenced coal mining within three years of the issuance of the permit.  The statute provides for extensions upon a “showing” that extensions are necessary for specified reasons, including for  “reasons beyond the control of the permittee.”  The statute and its counterparts in the approved SMCRA states, however, do not clearly indicate when a failure to mine will be deemed “beyond the control of the permittee.”  Thus, many state permitting agencies and permittees have lacked sufficient guidance on whether permits could terminate automatically with no notice to the permittee and whether extensions had to be in writing or could be obtained through verbal discussions alone.  And this, in turn, forced some permit-holders to review paperwork and interview employees -- in some cases from many years ago -- to determine if needed extension had been sought from regulators.  

The drama came to an end in August when OSM reversed the position of a West Virginia OSM regional office, clarifying that SMCRA permits do not terminate automatically.  Citing the line of cases disfavoring “automatic forfeitures,” OSM indicated that a coal mining permit remains valid, even if not used, unless and until the permitting authority takes an affirmative action to terminate it.  The decision provides much-needed clarity to permittees -- reportedly hundreds -- facing uncertainty on this front.  The battle continues, however, because environmental organizations recently filed suit in federal courts in West Virginia and Washington, D.C., arguing that OSM’s policy clarification constitutes an illegal rule that was issued in violation of the Administrative Procedures Act and SMCRA.  Stay tuned.