COALEX REPORT 102

	Coalex Report 102

This is the Office of Surface Mining's library of COALEX Research Reports. COALEX is a database of mining and reclamation information, including the Surface Mining Law and regulations, maintained in LEXIS-NEXIS -- a commercial, on-line research service. These reports have been compiled under a cooperative agreement between the Office of Surface Mining and the Interstate Mining Compact Commission, which represents most U.S. coal producing states. The following report includes an analysis of a specific issue requested by a state regulatory authority with responsibility for carrying out the Surface Mining Law. Copies of the research reports and attachments are available to the public, upon request. For additional information, or to obtain copies of the listed attachments, contact Ron Tarquinio by phone at (202) 208-2882 or by e-mail at rtarquin@osmre.gov.

                   
COALEX STATE INQUIRY REPORT - 102
January 19, 1989

John B. Purcell, Jr., Esquire
Assistant Attorney General
Office of the Attorney General
Supreme Court Building
101 North Eighth Street
Richmond, Virginia 23219

Research was conducted on two topics.  The inquiries and research results are listed separately.

TOPIC I: FORFEITURE OF RECLAMATION BONDS; LIABILITY PERIOD

INQUIRY I:  The Commonwealth is suing the surety of a now defunct coal company on its
reclamation bond.  The company has stated as its defense that the bond covers only work
contemplated to be done within one year of the issuance of the permit and does not include the
entire permitted site or any additions to the permitted site.  Locate cases which support a
contrary position.

SEARCH RESULTS:  Using LEXIS, several searches were conducted in state case law.  An article
on bankrupt operators written by an Assistant Counsel in the Office of Chief Counsel,
Pennsylvania Office of Environmental Resources was located.

A list of the relevant materials identified as a result of the research and the topics they address
follows.  Copies of the cases and the article are attached.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

1. "Regulating Financial Responsibility For Bankrupt Operators", Douglas F. Brennan, July, 1987.
Major relevant issues discussed are: 
a.   Nature of bonding requirements. 
b.   Trustee's "duty to comply with state law, including permit/license requirements...".
c.   Forfeiture of bonds.  


2. COMMONWEALTH v OGDEN, 501 A. 2d 311 (Pa. Commw. Ct. 1985). 
a.   Bonds are "penal" in nature.  "Bonds became part of the permits issued by DER
     [Departmental of Environmental Resources]."  Their purpose "is to reimburse the
     Commonwealth for damages which may arise from non-compliance with the requirements
     of SMCRA insofar as the non-compliance relates to the permitted area."

b.   Limitations on forfeiture of bonds.  "...each bond was issued as part of a specific permit
     and not as an umbrella to cover all mining being performed by the operator...", affirming
     the Environmental Hearing Board conclusion "...forfeiture was appropriate in an amount
     equal to the number of acres affected and not reclaimed multiplied by the per acre liability
     specified in the applicable bonds."

c.   Off-permit mining. "...off-permit mining and/or the failure to reclaim this area does not
     justify the forfeiture of all the bonds posted for other permitted areas. It is more
     appropriate that a portion of the bond or the entire bond be forfeited to complete
     reclamation in a non-permitted area only when the permitted area is adjacent to or
     contiguous to the affected off-permit area, or is one in which the ecological harm may be
     traced directly to the specifically permitted area."


3. PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1986) [No. 85
CA 1, Fourth Appellate Dist.].
a.   Limitations on forfeiture of bonds. "...release of bond for reclaimed areas prior to
     forfeitiure of bond for unreclaimed areas."  Bonds should be released on a per-permit
     basis, not "floated" over the entire permit area.
b.   Election of performance versus payment mentioned.


4. PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1985) [No.418,
Fourth Appellate District].
a.   Application of statutes is central issue.
b.   Limitations on forfeiture of bonds discussed.
c.   Election of performance versus payment mentioned.


5. PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1985) [No. 419,
Fourth Appellate District].
a.   Election of performance versus payment. "It is the surety's right to elect performance
     instead of payment if it wished to save money. But if performance is not timely completed
     [the Division of Reclamation has the statutory right "to terminate PSI's right to    
     reclaim...].


6. PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1985) [No. CA-85-1, Fifth Appellate District]. PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion
(Ohio Ct. App. 1985) [No. CA-85-4, Fifth Appellate District).
a.   Statutory changes and assessment of civil penalties.
b.   Election of performance versus payment mentioned.


7. NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION CABINET v INTEGRITY
INSURANCE CO., 759 S.W. 2d 67 (Ky. Sup. Ct. 1988).
a.   Limitations on forfeiture of bonds.

 
8. ALLIED FIDELITY INSURANCE CO. v ENVIRONMENTAL QUALITY COUNCIL, 753 P. 2d 1038
(Wyo. Sup. Ct. 1988).
a.   Legal subrogation. The surety has the right to step "into the shoes of a defunct operator
     to request a forfeiture hearing."   

===========================================================

TOPIC II:
a.   Constitutionality of the abandoned mine reclamation program
b.   Liability for failure to give notice    

INQUIRY II:
a.   Are there any cases dealing with the constitutionality of Section 45.1-263 of the Code of
     Virginia, 30 U.S.C. Sec. 1237 or similar state legislation [abandoned mine reclamation
     program]?
b.   Are there any cases dealing with the government's liability for failure to give the notice
     required under Sec. 45.1-263 of the Code of Virginia or comparable federal or state
     statute?

SEARCH RESULTS:  Searches were conducted using LEXIS.  No relevant cases were identified
that directly addressed the issues raised in the second set of inquiries.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

ATTACHMENTS
A    "Regulating Financial Responsibility For Bankrupt Operators", Douglas F. Brennan, July,
     1987.
B    COMMONWEALTH v OGDEN, 501 A. 2d 311 (Pa. Commw. Ct. 1985).
C    PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1986) [No.
     85 CA 1, Fourth Appellate Dist.].
D    PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1985)
     [No.418, Fourth Appellate District].
E    PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1985) [No.
     419, Fourth Appellate District].
F    PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1985) [No.
     CA-85-1, Fifth Appellate District].
G.   PERSONAL SERVICE INSURANCE CO. v MAMONE, Slip Opinion (Ohio Ct. App. 1985) [No.
     CA-85-4, Fifth Appellate District).
H    NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION CABINET v INTEGRITY
     INSURANCE CO., 759 S.W. 2d 67 (Ky. Sup. Ct. 1988).
I.   ALLIED FIDELITY INSURANCE CO. v ENVIRONMENTAL QUALITY COUNCIL, 753 P. 2d
     1038 (Wyo. Sup. Ct. 1988).


Reearch conducted by: S. Michele Manning & Joyce Zweben Scall

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