COALEX REPORT 32

	Coalex Report 32

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 - 32
February 19, 1985

Anthony F. Abar, Director
Maryland Bureau of Mines
69 Hill Street
Frostburg, Maryland 21532

TOPIC: BOND FORFEITURE (Addendum to COALEX STATE INQUIRY REPORT - 5)

BACKGROUND: COALEX STATE INQUIRY REPORT - 5 asked whether regulatory authorities had
the authority to forfeit the entire amount of a reclamation bond when the actual cost of
reclamation was less than the bonded sum.  Two jurisdictions, Kentucky and Pennsylvania, were
identified as recently deciding the issue.  Courts in both states decided the bond was penal in
nature and that failure to perform all reclamation requirements resulted in total bond forfeiture,
even if reclamation costs were less than the bonded sum.  The purpose of this Report is to
update the previous report with the recent decisions.

SEARCH RESULT: The Supreme Court of Tennessee recently decided whether a reclamation bond
was penal in nature in TENNESSEE v GULF AM. FIRE & CASUALTY CO., slip op. (Tenn November
5, 1984).  The Court, holding that such a bond was penal, found opinions from Kentucky,
Pennsylvania and West Virginia to be persuasive.

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

AM. DRUGGISTS INS. CO. v COM. DEPT. FOR NAT. RES., 670 SW 2d 485 (Ky Ct App 1983) and
MORCOAL CO. v PENNSYLVANIA, 459 A 2d 1303 (Pa Commw Ct 1983) were the Kentucky and
Pennsylvania decisions, respectively, upon which the Supreme Court of Tennessee relied.  Both of
these cases were identified in COALEX STATE INQUIRY - 5.

STATE v ELDER, 165 SE 2d 108 (WVA 1968).  The West Virginia decision referred to by the
Tennessee Supreme Court, also held that such bonds were penal in nature.

To date, four jurisdictions -- West Virginia, Pennsylvania, Kentucky and Tennessee -- have been
identified as having addressed the issue of whether reclamation bonds are penal in nature.  All
four states have resolved the issued in the same manner, holding that such bonds are indeed
penal, and that the total bonded sum may be forfeited.


ATTACHMENTS
A    TENNESSEE v GULF AM. FIRE & CASUALTY CO., slip op. (Tenn  November 5, 1984).
B    STATE v ELDER, 165 SE 2d 108 (W Va 1968).


Search conducted by: A. Michael Tucker

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