COALEX REPORT 251

	Coalex Report 251

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 - 251
March, 1993

Olga Brunning, Esquire
Department of Natural Resources
Tawes Building
580 Taylor Avenue
Annapolis, Maryland 21401

TOPIC: BOND FORFEITURE: INSUFFICIENT FUNDS FOR RECLAMATION

INQUIRY: What information is available on the regulatory authority's ability to seek additional
remedies after an operator's bond has been forfeited and the permit revoked in situations where
the amount of the bond was insufficient to cover the cost of the completed reclamation? [30 CFR
800.50(d)(1)]

SEARCH RESULTS:  Research was conducted using the COALEX Library and other LEXIS materials.
A preamble to federal regulations and an OSM Directive were identified which state that in the
event reclamation costs exceed forfeited bonds, the regulatory authority may recover the excess
costs from the operator. Several administrative decisions were retrieved that address the issues of
an operator's continued liability for reclamation even after bonds are forfeited and the need to
ensure that the amount of the bonds are sufficient to cover reclamation in the event of forfeiture.
Copies of the materials listed below are attached.

  NOTE: Several of the retrieved items cite to a Tennessee case. The COALEX Researcher was
unable to obtain a copy of the case for this Report.

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

REGULATORY HISTORY
48 FR 32932 (JULY 19, 1983). Final rule. Bond and insurance requirements.
   From "The Discussion of Comments and Rules Adopted":
 
"The operator does have the underlying obligation to fully reclaim disturbed lands. A regulatory
authority, in having reclamation performed on which the operator has defaulted in his obligation,
may incur costs in excess of the forfeited amount. To make clear that the  regulatory authority
may recover that excess amount from the operator, the suggested addition is made to Sec. 800.50
in paragraph (d)(1)."


OSM DIRECTIVE, Subject No. REG-10, Transmittal No. 339, "Bond forfeiture" (Issued May 26,
1987).
   3. Policy/Procedures.... c. Procedures when OSMRE is the Regulatory Authority
(7) Completion of Reclamation
"(a) In the event the amount forfeited is insufficient to pay for the full cost of reclamation, the AD
or FOD [Field Office Director] may complete reclamation of the bonded area to the extent the
forfeited funds allow and, with assistance from the Field Solicitor, implement actions to recover
from the permittee the additional funds needed to fully reclaim the areas. If changes in the
reclamation plan are needed, the ADFO [Assistant Director for Field Operations] or FOD will
coordinate development of a new reclamation plan with the appropriate surface mining Federal
agency, surface owner or Indian tribe."


INTERIOR ADMINISTRATIVE DECISIONS
H.C. BOSTIC COAL CO., INC. AND WAYNE BOSTIC v OSM, Docket Nos. NX 88-8-R. et al. (1991).
   Findings, Discussions, Conclusion....  4. Liability Beyond The Bond Amount.
"Applicants incorrectly argue that after the state sought forfeiture of the bond and fully expended
the money in attempting to reclaim the site that the state became solely responsible for the
inadequate reclamation. The permittee's performance bond liability lasts until the reclamation
requirements of the Act are achieved. See 30 C.F.R. 800.12(a)(1). When an operator refuses or is
unable to reclaim unabated violations, the state is required to pursue forfeiture of part or all of the
bond. See 30 C.F.R. 800.50(a). However, if the bond amount does not satisfy the reclamation
need, OSMRE can pursue further enforcement actions against the operator. The United States
District Court for the Eastern District of Tennessee has upheld OSMRE's right to enforce
reclamation where the bond money fully forfeited to the state was not sufficient. See United States
v. Queen Mountain Mining, Inc., No. CV-3-85-344, 93 FED 3067 (December 24, 1986) (OSMRE
allowed to seek injunction because this is not the sort of situation where the regulators are seeking
a double recovery)." 


INNOVATIVE DEVELOPMENT OF ENERGY, INC. v OSM, 110 IBLA 119, IBLA 88-55 (1989).
   HEADNOTES:... 4. Bonds: Forfeiture of
"Neither SMCRA nor Departmental regulations implementing SMCRA contains provisions which
operate to release a minesite from regulatory enforcement when a reclamation bond is forfeited.
Under the provisions of 30 U.S.C. Sec. 1259(b) (1982), an operator is liable for the duration of the
surface coal mining and reclamation operation and for a period coincident with operator's
responsibility for revegetation. The Act contains no provision suggesting that the forfeiture of a
performance bond creates a limitation upon the Federal regulation of a minesite subject to the
Act."


ROBERT L. CLEWELL et al., 123 IBLA 253, IBLA 91-321 (1992).
   HEADNOTES:... 5. Performance Bond or Deposit: Forfeiture
"Where reclamation costs exceed the amounts forfeited under a bond, the Board will not affirm the
OSM decision that a state agency has taken appropriate action under 30 U.S.C. Sec. 1271(a)(1)
(1988) simply because a bond was ordered forfeited."


STATE CASE LAW
STATE OF WEST VIRGINIA EX REL. LAUREL MOUNTAIN/FELLOWSVILLE AREA CLEAN WATERSHED
ASSOCIATION, INC., et al. v CALLAGHAN, 418 SE 2d 580 (W Va 1992).
   SYLLABUS:
"2. Pursuant to 38 C.S.R Sec. 2-12.4(c) (1991), the Commissioner of the Division of Environmental
Protection has a duty to utilize the proceeds from forfeited bonds to accomplish the completion of
reclamation of affected lands of a surface mine."

   Also see STATE OF WEST VIRGINIA EX REL. WEST VIRGINIA HIGHLANDS CONSERVANCY, INC.,
et al. v CALLAGHAN, 447 SE 2d 920 (W Va 1994).


TRUSTEES FOR ALASKA v GORSUCH, 835 P 2d 1239 (Alaska 1992).
   Trustees for Alaska challenged Alaska Department of Natural Resources' (DNR) issuance of a
surface coal mining permit to Diamond Shamrock-Chuitna Coal Joint Venture claiming, in part, that
DNR "violated ASCMCRA by approving a bond amount which 'does not reflect the cost of all
reclamation which will need to be performed during the life of the permit.'" The court held:

"DNR should recalculate the bonds so that they are 'sufficient to assure the completion of the
reclamation plan by [DNR] in the event of forfeiture.' AS 27.21.160(a). This does not necessarily
mean that DNR must require Diamond to post a bond equal to the total reclamation cost. DNR
should calculate the bond assuming forfeiture at a time when unabated permit violations exist,
though it need not assume that no reclamation will have taken place."


ATTACHMENTS
A.   48 FR 32932 (JULY 19, 1983). Final rule. Bond and insurance requirements.
B.   OSM DIRECTIVE, Subject No. REG-10, Transmittal No. 339, "Bond forfeiture" (Issued May
     26, 1987).
C.   H.C. BOSTIC COAL CO., INC. AND WAYNE BOSTIC v OSM, Docket Nos. NX 88-8-R. et al.
     (1991).
D.   INNOVATIVE DEVELOPMENT OF ENERGY, INC. v OSM, 110 IBLA 119, IBLA 88-55 (1989).
E.   ROBERT L. CLEWELL et al., 123 IBLA 253, IBLA 91-321 (1992).
F.   STATE OF WEST VIRGINIA EX REL. LAUREL MOUNTAIN/FELLOWSVILLE AREA CLEAN
     WATERSHED ASSOCIATION, INC., et al. v CALLAGHAN, 418 SE 2d 580 (W Va 1992).
G.   STATE OF WEST VIRGINIA EX REL. WEST VIRGINIA HIGHLANDS CONSERVANCY, INC., et
     al. v CALLAGHAN, 447 SE 2d 920 (W Va 1994).
H.   TRUSTEES FOR ALASKA v GORSUCH, 835 P 2d 1239 (Alaska 1992).


Research conducted by: Joyce Zweben Scall

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