The U.S. Office of Surface Mining Reclamation and Enforcement has denied a Montana proposal that would have changed how attorney fees and other litigation costs can be awarded in disputes involving surface coal mining. The decision prevents provisions created through Montana Senate Bill 392 from becoming part of the state's federally approved regulatory program under the Surface Mining Control and Reclamation Act, or SMCRA. The rule takes effect September 24.
SB 392 would have let courts or administrative agencies award reasonable litigation costs, including attorney fees, filing fees and witness costs, to whichever party prevailed, and would have required those provisions to apply equally regardless of whether the party was a mining permittee, permit applicant, government agency or public-interest litigant.
OSM concluded that approach conflicts with federal mining law. SMCRA does not use a prevailing-party standard; it instead directs tribunals to award fees "whenever appropriate," and federal regulations at 43 CFR 4.1294 treat parties differently rather than identically. A person other than a permittee may recover fees after achieving some degree of success and substantially contributing to resolving the issues, while a permittee or OSM can generally recover fees from another party only in cases involving bad faith or harassment. OSM said Montana's proposed system could expose someone bringing a reasonable, good-faith case to the opposing side's legal expenses simply for losing, a structure the agency said could discourage the participation Congress intended SMCRA to protect.
The agency did not dismiss the concern behind the bill. It said it supports efforts to deter frivolous litigation that can slow energy production and consume taxpayer resources, but concluded existing regulations already let mining companies and regulators recover fees when litigation is pursued in bad faith. The decision also addressed a separate issue: SB 392 was written to take effect immediately upon passage by the Montana Legislature, a provision OSM found independently inconsistent with federal requirements, since state program changes cannot take effect for program purposes until OSM reviews and approves them. Environmental groups led by the Montana Environmental Information Center had separately sued in federal court in 2023 to block the state from enforcing SB 392 and a related bill before that federal review concluded.
States with SMCRA authority can administer their own surface mining programs, but changes affecting permitting, enforcement or judicial review still have to remain consistent with the federal statute and its implementing regulations. For mining operators and compliance teams, that means a state legislative change may not immediately alter the rules governing a project, even when the law itself says otherwise. The review took more than three years from Montana's June 2023 submission to the final decision; OSM's own record shows it sent Montana a letter in April 2025 outlining its concerns, to which the state responded that, because the changes stemmed from legislative action, it could not offer further modifications. The result leaves Montana's existing federally approved fee structure in place.
