COALEX REPORT 124

	Coalex Report 124

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 COMPARISON REPORT - 124
August 7, 1989

Roger T. Hall
West Virginia Department of Energy
1615 Washington Street East
Charleston, West Virginia 25311

TOPIC: BONDING PROGRAMS

INQUIRY: Are there any states with "unusual" bonding schemes, i.e., bonding programs which
assign fees after an evaluation of a specific site, rather than the more typical flat rate fee per acre
bonding structure?

SEARCH RESULTS: Review of the statutory and regulatory material available in the COALEX
Library on LEXIS failed to identify any specific formulas used to assign bonding rates. There are,
however, states which "calculate" a bond rate per acre, as opposed to those which assign a flat
fee per acre. Under this less traditional format, the per acre rate for an operator applying for a
permit is determined by applying the criteria set out in Sec. 509(a) of the Surface Mining Control
and Reclamation Act of 1977 (SMCRA), 30 U.S.C. 1259, and the corresponding regulations, 30
CFR 800.14. 

For example: "The amount of the bond required for each bonded area shall...reflect the probable
difficulty of reclamation, giving consideration to such factors as topography, geology, hydrology,
and revegetation potential; and be based on, but not limited to, the estimated cost submitted by
the permit applicant." 30 CFR 800.14(a)(3) and (4).

Regulatory authorities may add other factors into their calculations. Kentucky, for example,
includes this criteria: "An additional amount based on factors of cost changes during the previous
five (5) years for the types of activities associated with the reclamation to be performed." 405
KAR 10:020E, Sec. 1(4).    

Although this research effort did not identify material which specifically addressed the question
posed by this inquiry, a recent IMCC survey identified eight states with non-traditional bond
forms. The "alternate bonding systems" include bond supplement funds and "bond pools". A
description of these bonding programs and a state-by-state analysis are attached in the form of
testimony by Anthony Abar before the House Interior and Insular Affairs Committee. Also included
for your review are an earlier STATE COMPARISON REPORT on the topic and material on
Kentucky's bond pool system.

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ATTACHMENTS
A.   KENTUCKY SURFACE MINING LAW, KRS Chapter 350, Sec. KRS 350.060 (1986). Permit;
     application; map; transportation plan; proof of public liability insurance coverage; fee;
     bond; mining two acres or less; permit renewal or termination; auger mining of previously
     mined area; exempt operations.
B.   405 KENTUCKY ADMIN REGS. 10:020E, Sec. 1 (1982). Amount and duration of
     performance bond; determination of bond amount.
C.   "Mine Reclamation and Bonding Requirements": Oversight Hearings Before the Subcomm.
     on Mining and Natural Resources of the House Comm. on Interior and Insular Affairs
     (1989) (statement of the Interstate Mining Compact Commission, presented by Anthony
     Abar, Dir., Md. Bur. of Mines).
D.   COALEX COMPARISON REPORT - 37, "Alternative Bonding Programs" (1985).
E.   The KENTUCKY Bond Pool (1986).
F.   KENTUCKY Senate Bill No. 130, 86 RS BR 1392 (January 16, 1986).


Research conducted by: Joyce Zweben Scall

cc: Bruce Williams without KY attachments

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