OFFICE OF SURFACE MINING RECLAMATION & ENFORCEMENT

For Release January 29, 1991        
Alan Cole (202) 208-2719

DOCUMENT ON SURFACE MINE BOND POOLS ISSUED

Essential features of sound, stable bond pools, which some states
offer as alternatives to commercial bonds that financially
guarantee surface coal mine reclamation, are outlined for the first
time in a new document from the Interior Department's Office of
Surface Mining Reclamation and Enforcement (OSM).

"Alternative Bond Systems: An Analytical Approach and Identified
Factors to Consider for Evaluating Alternative Bonding Systems," is
the result of a year-long review by OSM and Interior Department
legal staff.   It focuses on how to analyze alternative bond
systems (ABS) effectively and how to recognize various ways of
meeting solvency requirements.   Six states currently use ABS
(Kentucky, Missouri, Ohio, Pennsylvania, Virginia, and We~.t
Virginia).

Under the Surface Mining Control and Reclamation Act (SMCRA),
financial bonds or ABS guaranteeing land reclamation are required
before coal mine permits can be issued.   OSM Director Harry M.
Snyder said the new document should enhance federal regulators'
understanding of the operation of bond pools, which can be a
cost-saving alternative for coal mine operators.

"The document recognizes the positive value of ABS," Snyder said. 
 "It is presented in an effort to help strengthen and reinforce ABS
where necessary so that their continued operation will be assured."

"The potential economic advantage of ABS to coal operators is
important and should be preserved," Snyder added.   "At the same
time,  it is essential to the protection of the coal field
environment that the financial guarantees of reclamation provided
through ABS remain sound and reliable."

The document is organized under three main headings:(1)
Regulatory and Legal,  (2) Financial and Technical, and (3)
Administrative and Procedural.   It presents a conceptual framework
for understanding various ways ABS may maintain solvency and meet
the existing statutory and regulatory requirements to have
sufficient funds at all times and to provide a substantial economic
incentive to comply with reclamation provisions.   The document,
however, is not considered all-inclusive, nor does it contain any
new requirements or any preset formulas for meeting SMCRA
requirements.   Key concepts identified in the report include:

--Considerations for ABS solvency and meeting regulatory
requirements. 
--Management considerations according to prudent and generally
accepted accounting and actuarial principles. 
--Level of risk considerations and documentation. 
Approaches for achieving adequate reserve levels.

Copies of the ABS document can be obtained from the OSM Technical
Services Division, Room 5111-L, 1951 Constitution Avenue N.W.,
Washington, D.C. 20240,  (202) 343-1480.

-DOI-