Under SMCRA 509(c) there are several avenues for coal mining companies to provide financial guarantees that mining operations would be reclaimed. There are three major types of reclamation bonds:
- Corporate surety bonds;
- Collateral bonds (cash; certificates of deposit; first-lien interests in real estate; letters of credit; federal, state, or municipal bonds; and investment-grade securities); and
- Self-bonds (legally binding corporate promises without separate surety or collateral, available only to permittees who meet certain financial tests)
State regulatory programs vary somewhat in terms of which financial instruments are acceptable. A few states also have exercised their discretion to exclude the self-bond option.
Regulatory requirements for Self-Bonding
The implementing Federal regulations at 30 CFR 800.23 contain the requirements applicable to self-bonding. To be qualified for self-bond a permittee must have a tangible net worth of at least $10 million, possess fixed assets in the U.S. of at least $20 million, and either meet certain financial ratios or have an "A" or higher bond rating.
Self-Bonding is legal, not mandatory
SMCRA allows the States to assume primacy of the regulation of coal mining and reclamation. To achieve primacy the states must have laws that are no less stringent and regulations that are no less effective than the Federal program.
By the Numbers
Twenty Four states have “primacy” under SMCRA allowing them to administer their own surface mining programs: Alabama, Alaska, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Montana, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Virginia, West Virginia and Wyoming.
Nineteen “primacy states” allow self-bonding: Alabama, Alaska, Arkansas, Colorado, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia and Wyoming.
Ten states and one tribal land currently have self-bonded surface mining permits: Colorado, Illinois, Indiana, Missouri, Navajo Nation, New Mexico, North Dakota, Texas, Virginia, West Virginia and Wyoming.
Five primacy states do not allow self-bonding: Kansas, Kentucky, Maryland, Montana, and Virginia.