[Federal Register Volume 60, Number 192 (Wednesday, October 4, 1995)]
[Rules and Regulations]
[Pages 51900-51918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24580]
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DEPARTMENT OF THE INTERIOR
Office of Surface Mining Reclamation and Enforcement
30 CFR Part 948
West Virginia Regulatory Program
agency: Office of Surface Mining Reclamation and Enforcement (OSM),
Interior.
action: Final rule; approval of amendment.
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summary: OSM is approving, with exceptions, an amendment to the West
Virginia permanent regulatory program (hereinafter referred to as the
West Virginia program). The amendment revises the State's bonding
requirements and the acid mine drainage treatment provisions of the
Special Reclamation Fund. The amendment will improve operational
efficiency, clarify ambiguities, and revise the West Virginia program
to be consistent with the Surface Mining Control and Reclamation Act of
1977 (SMCRA) and the corresponding Federal regulations. Further
amendments will be required to being the West Virginia Program into
full compliance with SMCRA.
effective date: October 4, 1995. Approval dates of regulatory program
amendments are listed in Sec. 948.15(o).
for further information contact: Mr. James C. Blankenship, Jr.,
Director, Charleston Field Office, Office of Surface Mining Reclamation
and Enforcement, 1027 Virginia Street East, Charleston, West Virginia
25301, Telephone (304) 347-7158.
supplementary information:
I. Background
II. Submission of the Proposed Amendment
III. Director's Findings
IV. Summary and Disposition of Comments
V. Director's Decision
VI. Procedural Determinations
I. Background
SMCRA was passed in 1977 to address environmental and safety
problems associated with coal mining. Under SMCRA, OSM works with
States to ensure that coal mines are operated in a manner that protects
citizens and the environment during mining, that the land is restored
to beneficial use following mining, and that the effects of past mining
at abandoned coal mines are mitigated.
Many coal-producing States, including West Virginia, have sought
and obtained approval from the Secretary of the Interior to carry out
SMCRA's requirements within their borders. In becoming the primary
enforcers of SMCRA, these ``primacy'' States accept a shared
responsibility with OSM to achieve the goals of SMCRA. Such States join
with OSM in a shared commitment to the protection of citizens--our
primary customers--from abusive mining practices, to be responsive to
their concerns, and to allow them full access to information needed to
evaluate the effects of mining on their health, safety, general
welfare, and property. This commitment also recognizes the need for
clear, fair, and consistently applied policies that are not
unnecessarily burdensome to the coal industry--producers of an
important source of our Nation's energy.
Under SMCRA, OSM sets minimum regulatory and reclamation standards.
Each primacy State ensures that coal mines are operated and reclaimed
in accordance with the standards in its approved State program. The
States serve as the front-line authorities for implementation and
enforcement of SMCRA, while OSM maintains a State performance
evaluation role and provides funding and technical assistance to States
to carry out their approved programs. OSM also is responsible for
taking direct enforcement action in a primacy State, if needed, to
protect the public in cases of imminent harm or, following appropriate
notice to the State, when a State acts in an arbitrary and capricious
manner in not taking needed enforcement actions required under its
approved regulatory program.
Currently there are 24 primacy States that administer and enforce
regulatory programs under SMCRA. These States may amend their programs,
with OSM approval, at any time so long as they remain no less effective
than Federal regulatory requirements. In addition, whenever SMCRA or
implementing Federal regulations are revised, OSM is required to notify
the States of the changes so that they can revise their programs
accordingly to remain no less effective than the Federal requirements.
A major goal of SMCRA is to ensure adequate reclamation of all
areas disturbed by coal mining. To accomplish this, mining is allowed
to proceed only after an operator has filed a performance bond of
sufficient amount to ensure completion of reclamation. In the event of
bond forfeiture, the regulatory authority uses the performance bond
money to contract for the necessary reclamation work. SMCRA also allows
for the adoption of an alternative bonding system so long as it
achieves the purposes and objectives of the conventional bonding system
described above. Under an alternative bonding system, rather than
posting full-cost reclamation bonds, an operator is allowed to
participate in a bond pool or other financial mechanism that is to
provide sufficient revenue at any time to complete reclamation in the
event of bond forfeiture.
As part of their approved programs, primacy States have adopted
procedures consistent with Federal bonding requirements. The Secretary
conditionally approved West Virginia's alternative bonding system on
January 21, 1981 (46 FR 5326). After receipt of a required actuarial
study, the Secretary fully approved the State's alternative bonding
system on March 1, 1983 (48 FR 8448).
Background information on the West Virginia program, including the
Secretary's findings, the disposition of comments, and the conditions
of approval can be found in the January 21, 1981, Federal Register (46
FR 5915). Subsequent actions concerning the conditions of approval and
program amendments can be found at 30 CFR 948.10, 948.12, 948.13,
948.15, and 948.16.
II. Submission of the Proposed Amendment
On October 1, 1991, OSM notified West Virginia that it needed to
amend its alternative bonding system to be in compliance with sections
509(c) and 519(b) and 519(c)(3) of SMCRA (Administrative Record No. WV-
878). OSM's annual reviews of the West Virginia program had found that
the
[[Page 51901]]
State's alternative bonding system no longer met the requirements for
such systems because, as of June 30, 1990, liabilities exceeded assets
by $6.2 million dollars. OSM also informed the State that its
alternative bonding system must provide for the abatement or treatment
of polluted water flowing from permanent program bond forfeiture sites
unless its approved program included another form of financial
guarantee to provide for water treatment. The proposed amendment now
under consideration was submitted to OSM in response to this letter and
concurrent State initiatives to address bonding and water quality
problems.
In a series of three letters dated June 28, 1993, and July 30, 1993
(Administrative Record Nos. WV-888, WV-889 and WV-893), the West
Virginia Division of Environmental Protection (WVDEP) submitted an
amendment to its approved permanent regulatory program that included
numerous revisions to the West Virginia Surface Coal Mining and
Reclamation Act (referred to herein as ``the Act,'' WVSCMRA Sec. 22A-3-
1 et seq.) and the West Virginia Surface Mining Reclamation Regulations
(CSR Sec. 38-2-1 et seq.). OSM grouped the proposed revisions that
concern bonding into one amendment that is the subject of this notice.
The main provisions of the amendment will:
Allow for the selection and prioritization of bond
forfeiture sites to be reclaimed;
Limit administrative expenditures from the Special
Reclamation Fund to an amount not to exceed 10 percent of the total
annual assets in the Fund;
Raise the special reclamation tax from one cent to three
cents per ton and provide for the collection of the tax whenever
liabilities exceed assets;
Require site-specific bonds that reflect the relative
potential cost of reclamation but do not exceed $5,000 per acre;
Allow for the use of incremental and open-acre bonds;
Require penal bonds instead of performance bonds; and
Require bond forfeiture sites to be reclaimed in
accordance with the approved reclamation plan or modifications thereof.
OSM announced receipt of the proposed amendment in the August 12,
1993, Federal Register (58 FR 42903) and invited public comment on its
adequacy. Following this initial comment period, WVDEP revised the
amendment on August 18, 1994, September 1, 1994, and May 16, 1995
(Administrative Record Nos. WV-933, WV-937, and WV-979B). OSM reopened
the comment period on August 31, 1994 (59 FR 44953), September 29, 1994
(59 FR 49619), and May 19, 1995 (60 FR 26855), and held public meetings
in Charleston, West Virginia on September 7, 1993, October 27, 1994,
and May 30, 1995.
III. Director's Findings
A. Proposed Revisions to the West Virginia Surface Coal Mining and
Reclamation Act (WVSCMRA)
1. Sec. 22-3-11: Bonds; Amount and Method of Bonding; Bonding
Requirements; Special Reclamation Tax and Fund; Prohibited Acts; Period
of Bond Liability
a. Sec. 22-3-11(a): Penal Bonds. West Virginia proposes to revise
its Code to require that penal bonds payable to the State of West
Virginia be furnished by each operator before a permit is issued. The
reference to ``performance bond'' has been changed to either ``penal
bond'' or ``bond'' throughout Sec. 22-3-11 to reflect this proposed
revision. Section 509(a) of SMCRA and 30 CFR 800.11(a) require that a
performance bond be furnished by each operator before a permit is
issued. A penal bond differs from a performance bond in that, in the
event of forfeiture, the State retains the entire amount of the bond
without regard to the cost of reclamation. Under a performance bond,
any funds not used to reclaim the site for which the bond was forfeited
must be returned to the operator.
West Virginia's proposed requirement that the total bond or
collateral amount be forfeited and deposited in the State's reclamation
fund lies within the discretion provided to the States by section
509(c) of SMCRA. SMCRA authorizes States to establish alternative
bonding systems that will achieve the objectives and purposes of the
bonding program otherwise required by SMCRA. The penal bond provisions
provide substantial economic incentive for the operator to complete the
required reclamation of the permitted area. This is consistent with 30
CFR 800.11(e)(2) which provides that an alternative bonding system must
include a substantial economic incentive for the permittee to comply
with all reclamation provisions. Also, while the court in In re
Permanent Surface Mining Regulation Litigation held that OSM cannot
approve penal bonds in a State program under SMCRA in a conventional
bonding system, this decision does not prohibit the approval of penal
bonds when the State independently authorizes them by statute, not by a
rule promulgated under the authority of SMCRA. In re Permanent Surface
Mining Regulation Litigation, 14 ERC 1083, 1100-01 (D.D.C., 1980) and
Civ. No. 79-1144, mem. op. at 48-49 (D.D.C., May 16, 1980) as stayed in
part on August 15, 1980. Therefore, the Director finds the proposed
amendment is not inconsistent with SMCRA or the Federal regulations and
is hereby approved.
b. Sec. 22-3-11(g): Special Reclamation Fund. The West Virginia
alternative bonding system was conditionally approved by the Secretary
on January 21, 1981, and the condition on the approval was removed on
March 1, 1983 (46 FR 5954 and 48 FR 8448). This approval was granted
under section 509(c) of SMCRA, which allows for the approval of an
alternative bonding system that will achieve the objectives and
purposes of section 509. In drafting section 509(c), Congress was not
specific on how alternative bonding programs such as West Virginia's
should be financed. The only test applicable is whether the proposed
alternative system achieves the objectives and purposes of a
conventional bonding system as expressed in section 509 of SMCRA and as
implemented by 30 CFR 800.11(e).
(1) West Virginia is revising Sec. 22-3-11(g) to allow development
of a long-range planning process for selection and prioritization of
sites to be reclaimed so as to avoid inordinate short-term obligations
of the fund's assets of such magnitude that the solvency of the fund is
jeopardized.
Section 509(a) of SMCRA requires the operator to post a reclamation
bond that is sufficient to assure completion of the reclamation plan
for that permitted site if the work must be performed by the regulatory
authority. In addition, 30 CFR 800.50(b)(2) requires the regulatory
authority to use funds collected from bond forfeiture to complete the
reclamation plan for the site to which bond coverage applies. Section
509(c) of SMCRA and 30 CFR 800.11(e) are silent on the question of
prioritizing sites for reclamation, but both imply that the funds
necessary for adequate reclamation must be readily available.
Specifically, 30 CFR 800.11(e)(1) specifies that an alternative bonding
system must ensure that ``the regulatory authority will have sufficient
money to complete the reclamation plan for any areas which may be in
default at any time.''
However, since the State's regulations at CSR 38-2-12.4(c) provide
that reclamation operations must be initiated within 180 days following
final forfeiture notice, a planning process for selection and
prioritization of sites to be reclaimed should not adversely impact the
requirement that all sites for which
[[Page 51902]]
bonds are posted be reclaimed in accordance with their reclamation
plans.
Therefore, to the extent that the proposed provision provides only
for a ranking of sites for reclamation without compromising the
requirement that all sites for which bonds were posted be properly and
timely reclaimed, this provision is not inconsistent with the bond
forfeiture provisions at section 509(a) of SMCRA and 30 CFR
800.50(b)(2), or the alternative bonding system criteria of 30 CFR
800.11(e). The proposed provision on the selection and prioritizing of
forfeiture sites is hereby approved.
(2) West Virginia proposes to revise Sec. 22-3-11(g) to specify
that the Director of WVDEP may expend up to 25 percent of the annual
amount of fee collections of the special reclamation fund to design,
construct, and maintain water treatment systems when they are required
to complete reclamation of bond forfeiture sites.
For conventional bonds, 30 CFR 800.14(b) provides that ``the amount
of the bond shall be sufficient to assure the completion of the
reclamation plan if the work had to be performed by the regulatory
authority in the event of forfeiture.'' Under 30 CFR 780.18(b)(9),
780.21(h), 784.13(b)(9), and 784.14(g), the reclamation plan must
include the steps to be taken to comply with all applicable effluent
limitations and State and Federal water quality laws and regulations.
These steps include treatment. Therefore, when the mining and
reclamation plan indicates that treatment will be needed on a temporary
basis during mining and the early stages of reclamation, the bond must
be calculated to include an amount adequate to provide for continued
temporary treatment in the event forfeiture occurs within the timeframe
during which treatment is needed.
Also, under 30 CFR 800.15(a), the regulatory authority is required
to adjust the amount and terms of a conventional bond whenever the cost
of future reclamation changes. Therefore, if an unanticipated treatment
need arises, the regulatory authority has an obligation to order an
increase in the minimum bond required for the site. This amount must be
adequate to cover all foreseeable treatment costs. This interpretation
is consistent with the preamble to 30 CFR 800.17, which under the
heading ``Section 800.17(c)'' states that:
Performance bonding continues to be required at Sec. 800.17(a)
for surface disturbances incident to underground mining to ensure
that the reclamation plan is completed for those areas. Completion
of the reclamation plan as it relates to mine drainage and
protection of the hydrologic balance would continue to be covered by
the bond with respect to requirements included in Sec. 784.14. 48 FR
32948, July 19, 1983.
Sections 780.21(h) and 784.14(g) require a hydrologic reclamation
plan showing how surface and underground mining operations will comply
with applicable State and Federal water quality laws and regulations.
Furthermore, section 519(b) of SMCRA requires the regulatory authority,
when evaluating bond release requests, to consider whether pollution of
surface and ground water is occurring, the probability of any
continuing pollution, and the estimated cost of abating such pollution.
Section 519(c)(3) of SMCRA and the implementing regulations at 30 CFR
800.40(c)(3) provide that no bond shall be fully released until all the
reclamation requirements of the Act, the regulatory program, and the
permit have been met. These requirements include abatement of surface
and ground water pollution resulting from the operation.
The preamble to 30 CFR 700.11(d) clarifies that the regulatory
authority may release the bond and terminate jurisdiction over a site
with ongoing treatment needs, but only if an enforceable mechanism such
as a contract or a trust fund of sufficient duration and with adequate
resources exists to ensure that treatment continues once jurisdiction
is terminated. See 53 FR 44361-62, November 2, 1988.
Section 509(c) of SMCRA authorizes the Secretary to approve an
alternative bonding system if it will achieve the objectives and
purposes of the otherwise mandatory conventional bonding program. As
noted previously in this preamble, Section 519(c)(3) of SMCRA provides
final bond release shall not occur ``until all reclamation requirements
of this Act are fully met.'' The Federal regulations at 30 CFR
800.11(e)(1) require that this system ensure that the regulatory
authority has sufficient funds to assure completion of the reclamation
plan, which includes treatment to meet State and Federal water quality
requirements.
Therefore, to be in accordance with the above-referenced sections
of SMCRA and the Federal regulations, an alternative bonding system
must provide for complete abatement or treatment of water pollution
from bond forfeiture sites. If particular sites were bonded with
conventional bonds, such bonds would have to be sufficient to address
all reclamation obligations on site, and none of these site-specific
bonds could be ``fully released until all reclamation requirements of
this Act are fully met.'' See SMCRA Section 519(c)(3). Similarly, OSM
cannot allow States to set a predetermined limit on the amount of funds
expended on any aspect of bond forfeiture reclamation, including water
treatment. Such a limit, whether it be 25 percent of total annual
revenues or any other predetermined amount, arbitrarily restricts
expenditures for water treatment purposes, without regard to the amount
needed to adequately treat each site so that it meets applicable
effluent limits and water quality standards. In effect, such a limit
means that sites covered by the alternative bonding system would be
covered by bonds which are not ``sufficient to assure the completion of
the reclamation plan if the work had to be performed by the regulatory
authority in the event of forfeiture.'' See SMCRA Section 509(a). In
other words, the State cannot be certain, in advance, that only 25
percent of the total annual revenues of the special reclamation fund
will be needed to accomplish the water treatment objectives for all
bond forfeiture sites, since the alternative bonding system must assume
all reclamation-related responsibilities, including water treatment,
for a participant who defaults on his or her reclamation obligations.
Therefore, the Director is not approving the proposed revision to
the extent that water treatment on bond forfeiture sites is made
discretionary (use of the word ``may'' instead of ``shall'').
Similarly, the Director is not approving this proposed revision to the
extent that it limits expenditures for water treatment to 25 percent of
the fees collected annually for the special reclamation fund. The
Director is requiring West Virginia to amend its program to remove the
25 percent limitation or to otherwise provide for the treatment of
polluted water discharged from all bond forfeiture sites. The cost of
water treatment at existing bond forfeiture sites may be addressed by
program amendments that increase the special reclamation tax or provide
additional funding from other sources. The cost of water treatment at
future bond forfeiture sites may be addressed by adjusting site-
specific bonds for water treatment at future bond forfeiture sites may
be addressed by adjusting site-specific bonds for water treatment where
necessary, or by implementing the environmental security account
envisioned in CSR Sec. 38-2-11.7, or by increasing the special
reclamation tax to cover the additional cost of water treatment.
(3) West Virginia proposes to revise Sec. 22-3-11(g) to require
that monies accrued in the special reclamation fund, including
interest, be used solely and exclusively for the purposes set forth in
[[Page 51903]]
subsection (g). This provision clarifies that the fund can only be used
for specific purposes and cannot be used to finance other State
programs. Furthermore, West Virginia proposes to revise Sec. 22-3-11(g)
by limiting the amount the Director of the WVDEP may expend on
administrative expenses to an amount not to exceed 10 percent of the
total annual assets in the special reclamation fund. Such
administrative funds can only be used to implement and administer the
provisions of articles 2, 3, and 4 of chapter 22 of the West Virginia
Code and, as they apply to the surface mine board, articles 1 and 4 of
chapter 22b of the West Virginia Code. This revision gives the Director
of WVDEP discretionary power to allocate 10 percent of the total annual
assets in the special reclamation fund to administrative costs incurred
under the abandoned mine land program, the mining and reclamation
program, the minerals other than coal program, and the Surface Mine
Board.
OSM expressed concern about the State using money from the fund for
any expense not related to bond forfeiture reclamation since the fund's
liabilities now exceed its assets. In response, the State indicated
that the 10 percent amount generally is expended exclusively for
administration of the bond forfeiture/special reclamation program
(Administrative Record No. WV-916).
While there is no direct Federal counterpart authorizing
expenditures of bond forfeiture funds for the purpose of administrative
expenses, the Director finds that this provision is not inconsistent
with the objectives and purposes of section 509 of SMCRA. The Director
is approving this revision to Sec. 22-3-11(g) to the extent that the
special reclamation fund can withstand administrative cost withdrawals
without hampering the State's ability to complete reclamation of bond
forfeiture a sites.
(4) Special Reclamation Tax
(a) West Virginia proposes to revise Sec. 22-3-11(g) to increase
the fee paid into the special reclamation fund from one cent to three
cents per ton of clean coal mined and to clarify how the fee is to be
collected. Section 509(c) of SMCRA and 30 CFR 800.11(e) of the Federal
regulations do not specify the types of revenue-raising mechanisms. The
Director is therefore approving these revisions because, under SMCRA,
States have discretion in how to collect revenue to support alternative
bonding systems and because the proposed tax increase will improve the
financial condition of the fund.
(b) West Virginia proposes to add a provision to Sec. 22-3-11(g) to
require that every person liable for payment of the special reclamation
tax pay the amount due without notice or demand for payment. The Tax
Commissioner must provide the Director of the WVDEP a quarterly listing
of all persons known to be delinquent in payment of the special tax.
The Director of the WVDEP may take such delinquencies into account in
making determinations on the issuance, renewal, or revision of any
permit. Although there are no direct Federal counterparts to these
provisions, the Director finds that they are a reasonable means of
enforcing fee payment requirements and are hereby approved.
(c) West Virginia also proposes to revise Sec. 22-3-11(g) by adding
a requirement that the special reclamation tax be collected from every
person conducting coal surface mining operations whenever the
liabilities of the State for bond forfeiture reclamation exceed the
accrued amount in the special reclamation fund. In conjunction with
this new provision, the State is proposing to remove the requirement
for a one million dollar cash reserve.
Existing State law requires that the special reclamation tax be
collected whenever the assets in the fund fall below one million
dollars and to continue to be collected until assets exceeded two
million dollars. This provision under normal circumstances enables the
fund to maintain a cash balance to reclaim sites as they were
forfeited.
Section 509(c) of SMCRA requires that, under an alternative bonding
system, the regulatory authority must have available sufficient money
to complete the reclamation plan for any site that may be in default at
any time. An alternative bonding system cannot be allowed to incur a
deficit if it is to have available adequate revenues to complete the
reclamation of all outstanding bond forfeiture sites. Under a
conventional bonding system, an operator must post a full-cost
reclamation bond that is sufficient to cover the cost of reclamation
during the life of the operation. Periodic adjustments in bond amounts
are required to ensure that the bond is adequate to cover the cost of
reclamation, including water treatment, at any time. Under an
alternative bonding system, the sit-specific bond does not have to be
sufficient to cover the cost of reclamation. However, alternative
bonding systems must include reserves and revenue-raising mechanisms
adequate to ensure completion of the reclamation plan and fulfillment
of the permittee's obligations, including any treatment needs.
Although the proposed site-specific bonding rates are significantly
higher than the State's existing flat rate bond of $1,000 per acre and
the State is proposing to increase its special reclamation tax from one
cent to three cents per ton of mined coal to generate more revenue for
the fund, State records indicate that the proposed bonding rates and
the increase in revenues are still insufficient to ensure complete
reclamation, including water treatment, at all bond forfeiture sites.
Therefore, the Director is disapproving the proposal to the extent
that it would allow the special reclamation fund to incur a deficit. He
is requiring West Virginia to remove the provision that allows
collection of the special reclamation tax only when the bond forfeiture
liabilities of the State exceed the fund's assets.
(d) West Virginia proposed new provisions to require the Tax
Commissioner to deposit the fees collected with the State Treasurer to
the credit of the special reclamation fund. Monies in the fund must be
placed in an interest-bearing account with interest being returned to
the fund on an annual basis. This proposed revision will improve the
financial condition of the fund and is hereby approved.
2. Sec. 22-3-12: Site-Specific Bonding
West Virginia proposes to develop and implement a site specific
bonding system. Under the proposed system, the amount of the penal bond
can not be less that $1,000 nor more than $5,000 per acre, and the bond
must reflect the relative cost of reclamation associated with the
activities to be permitted. The types of mining, mining techniques,
mining methods, equipment, support facilities, topography, geology, and
effect on water quality are among the factors that must be considered
in determining the amount of site-specific bond. In addition, type of
application, environmental enhancement, mining experience of the
applicant, and compliance history of the applicant are among the
factors that the Director of WVDEP may consider in determining the
amount of site-specific bond.
The State's development of site-specific bonding requirements
should provide greater assurance that reclamation will be completed by
the permittee and will improve the financial stability of the special
reclamation fund. The increase in bond should also provide a
substantial economic incentive for the permittee to comply with all
reclamation requirements to avoid the economic loss in case of bond
[[Page 51904]]
forfeiture. Therefore, the Director finds this provision is not
inconsistent with the requirements of section 509(c) of SMCRA and 30
CFR 800.11(e) of the Federal regulations. Subsection 12 is hereby
approved.
B. Proposed Revisions to the West Virginia Surface Mining Reclamation
Regulations
1. CSR Sec. 38-2-11.2: All Bonds
a. The State proposes to delete old subsection 11.2(c), which
required a written notification to a permittee who is without bond
coverage and required the cessation of mining until bond replacement.
The State proposes to revise subsection 11.2(d), which requires the
Director of the WVDEP to issue a notice of violation against any
operator who is without bond coverage. The notice of violation now must
provide that bond coverage be replaced within 15 days instead of 90
days. Mining cannot resume until an acceptable form of bond has been
posted.
The Federal regulation at 30 CFR 800.16(e)(2) has provisions which
require the regulatory authority, upon notification that an operator is
without bond coverage, to notify the operator, in writing, to replace
bond coverage within a reasonable period, not to exceed 90 days.
Section 800.16(e)(2) does not specify the form of written notification
and only specifies the maximum period for bond replacement. The
Director considers West Virginia's proposed requirement for replacement
of bond coverage within 15 days of a notice of violation to be a
reasonable period of time as required by 30 CFR 800.16(e)(2). Section
800.16(e)(2) also requires that mining operations shall not resume
until the regulatory authority has determined that an acceptable bond
has been posted. Therefore, the Director finds the deletion of old
subsection 11.2(c) and the resultant revision of CSR Sec. 38-2-11.2(d)
do not render the revised provisions less effective than 30 CFR
800.16(e)(2).
However, the Director notes that new subsection
11.3(b)(1)(G)(vii)(III), in its provision for issuance of a notice of
violation against any operator who is without bond coverage, still
retains the requirement that a notice of violation specify a reasonable
period to replace bond coverage, not to exceed 90 days. The Director
suggests that retention of the 90 day period for replacement of bond
coverage in this provision was probably an oversight by the State, and
it, therefore, should be removed.
b. The State also proposes to add subsection 11.2(e) to allow the
Director of WVDEP to require a showing that the bond is sufficient or
the assignee has the capability or financial resources to assume the
liability for bonds and permits which are transferred, assigned, or
sold and which have significant long-term environmental liability.
Although there is no direct Federal counterpart to this provision in 30
CFR Part 800, the Federal regulations at 30 CFR 774.17(b)(3) require
that an applicant for transfer, assignment, or sale of permit rights
obtain appropriate performance bond coverage in an amount sufficient to
cover the proposed operations. Therefore, the Director finds that CSR
Sec. 38-2-11.2(e) is not inconsistent with the Federal bonding
requirements at 30 CFR Part 800 or the Federal permitting requirements
at 30 CFR 774.17(b)(3). Subsection 11.2(e) is hereby approved.
c. The Director notes that West Virginia needs to amend its
regulations at CSR Sec. 38-2-11.2(b) to delete the word ``performance''
in order to remain consistent with its new penal bond requirements.
2. CSR Sec. 39-2-11.3: Bond Instruments
The State proposes to revise and reorganize its surety bonding,
collateral bonding, escrow bonding, self-bonding, and combined surety/
escrow bonding requirements into new subsection 11.3, entitled ``Bond
Instruments.'' The provisions for surety bonds at old subsection 11.3
are now located at subsection 11.3(a); the provisions for collateral
bond at old subsection 11.4 were reorganized at subsection 11.3(b); the
provisions for escrow bonding at old subsection 11.5 were relocated to
subsection 11.3(c); the provisions for self-bonding at old subsection
11.6 are now at subsection 11.3(d); and the provisions for combined
surety/escrow bonding at old subsection 11.7 were reorganized at
subsection 11.3(e). The substantive revisions proposed for the various
types of bonding instruments are discussed below.
a. Subsection 11.3(a): Surety Bonds
(1) At subsection 11.3(a)(1), West Virginia added the requirement
that a surety bond be approved by the Director of WVDEP. Although the
Federal counterpart regulation at 30 CFR 800.20(a) does not contain
this provision, the Federal regulations at 30 CFR 800.11 do require
that before a permit is issued the operator file a bond which is
acceptable to the regulatory authority. Therefore, the Director finds
that CSR Sec. 38-2-11.3(a)(1) is consistent with 30 CFR 800.20(a) and
is hereby approved.
(2) At subsection 11.3(a)(2), the State proposes to delete the
requirement that the surety be notified within 30 days after receipt of
a request for bond adjustment. This provision is duplicative of a
provision for notification to the surety in the State's regulations at
subsection 12.3. Therefore, since subsection 12.3 is referenced in
subsection 11.3(a)(2), the Director finds this deletion does not render
the surety bond regulation at CSR Sec. 38-2-11.3(a)(2) less effective
than the Federal counterpart at 30 CFR 800.20(b), and he is, therefore,
approving it.
b. Subsection 11.3(b): Collateral Bonds
(1) West Virginia proposed a revision to subsection 11.3(b) to
clarify that collateral bonds ``will be negotiable and guaranteed.''
Although the Federal regulations at 30 CFR 800.21 do not contain this
clarifying language, the collateral bond definition at Sec. 800.5(b)
does require all forms of collateral bond to be negotiable and
guaranteed. Therefore, the Director finds that subsection 11.3(b) does
not render the collateral bond provisions of CSR Sec. 38-2-11.3 less
effective than the counterpart provisions of 30 CFR 800.21. Subsection
11.3(b) is hereby approved.
(2) West Virginia proposes to revise subsection 11.3(b)(1)(A) by
requiring that bonds used as collateral shall be bonds of the United
States or its possessions. These forms of bond satisfy the definition
of ``collateral bond'' at 30 CFR 800.5. The Director therefore finds
the revision of CSR Sec. 38-2-11.3(b)(1)(A) is no less effective than
30 CFR 800.5 and is hereby approved.
The Director notes, however, that Sec. 22-3-11(c)(1) of WVSCMRA
still allows bonds of the Federal Land Bank or of the homeowners' loan
corporation to be used as collateral bond. He is advising West Virginia
that this provision should be removed to eliminate the inconsistency
between the State's statute and regulations. Furthermore, it is the
Director's understanding that such financial institutions no longer
exist in the State.
(3) West Virginia is proposing to add full faith and credit general
obligation bonds of the State of West Virginia, or other States, and
any county, district municipality of the State of West Virginia or
other States as acceptable forms of collateral bond. Since the
definition of ``collateral bond'' at 30 CFR 800.5 includes negotiable
bonds of a State or a municipality, the Director finds West Virginia's
provision for these forms of bond at CSR Sec. 38-2-11.3(b)(1)(B) is no
less effective than the collateral bond provisions at 30 CFR
[[Page 51905]]
800.21. This revision of subsection 11.3(b)(1)(B) is hereby approved.
(4) West Virginia proposes to delete subsection 11.4(a)(2), which
requires the regulatory authority to value collateral at its current
market value, not at face value. West Virginia's Code and regulations
consistently refer to market value in relation to collateral bond. The
State's Code at Sec. 22-3-11(c)(1) requires the market value of
collateral bond to be equal to or greater than the sum of the bond.
This is consistent with 30 CFR 800.21(e)(2), which requires that at no
time can the bond value of collateral exceed the market value. Also,
West Virginia's regulations at CSR Sec. 38-2-11.3(b)(8) require that
bond value be evaluated relative to market value for all collateral
posted. For these reasons, the Director finds that this deletion does
not render West Virginia's collateral bond provisions at CSR Sec. 38-2-
11.3(b) less effective than the Federal provisions at 30 CFR 800.21.
(5) West Virginia proposes to revise CSR Sec. 38-2-
11.3(b)(1)(G)(ii) by changing the phrase ``if not replaced by other
suitable evidence of financial responsibility'' with the phrase ``if
not replaced by other suitable bond or letter of credit.'' This revised
language is substantively identical to 30 CFR 800.21(b)(2) which
requires that letters of credit utilized as securities in areas
requiring continuous bond coverage shall be forfeited and collected, if
not replaced by other suitable bonds or letters of credit. Therefore,
the Director finds West Virginia's revised regulation is no less
effective than the Federal regulation and is hereby approved.
(6) At subsection 11.3(b)(4), the State is requiring the maximum
insurable amount for individual certificates to be determined only by
the Federal Deposit Insurance Corporation (FDIC) by removing its
reference to the Federal Savings and Loan Insurance Corporation
(FSLIC). Because the functions of the FSLIC were transferred to FDIC in
1989, the Director finds West Virginia's revised regulation at CSR
Sec. 38-2-11.3(b)(4) is no less effective than the Federal regulation
at 30 CFR 800.21(a)(4) and is hereby approved.
(7) West Virginia proposes to delete 11.4(a)(7) which required the
applicant to deposit sufficient amounts of certificates of deposit to
assure that the WVDEP could liquidate them prior to maturity, upon
forfeiture, for the amount of the bond required. Neither SMCRA nor the
Federal regulations at 30 CFR 800.21 include a similar provision.
Therefore, the Director finds the deletion of this provision does not
render the West Virginia program less effective than SMCRA or the
Federal regulations.
(8) West Virginia proposed to amend subsection 11.3(b)(8) by
rewording the requirement that ``in no case shall the bond value exceed
the market value'' to ``in no case shall the market value be less than
the required bond value.'' Although the Federal regulation at 30 CFR
800.21(e)(2) retains the replaced language, West Virginia's rewording
does not change the meaning of the requirement. Both require that the
market value of collateral be equal to or greater than the required
bond value. Therefore, the Director finds the revision at CSR Sec. 38-
2-11.3(b)(8) does not render it less effective than 30 CFR 800.21(e)
and is hereby approved.
(9) The State is proposing to add a new provision at subsection
11.3(b)(9) which allows certain collateral bonds for permits issued
prior to January 1, 1993, to remain in effect unless the bond is
determined to be insufficient or otherwise invalid. The West Virginia
program at subsection 2.26 specifically identifies the types of
collateral that could be used as a collateral bond prior to January 1,
1993. Therefore, the Director finds that the new provision at
subsection 11.3(b)(9) does not render West Virginia's collateral bond
provisions at CSR Sec. 38-2-11.3(b) less effective than the Federal
collateral bond provisions at 30 CFR 800.21. Subsection 11.3(b)(9) is
hereby approved.
c. Subsection 11.3(c): Escrow Bonding
At subsection 11.3(c)(2), West Virginia is removing the FSLIC as an
example of a Federal insurance program. This subsection still requires
that escrow funds in Federally insured accounts are not to exceed the
maximum insured amount under applicable Federal insurance programs such
as FDIC. The revised Federal regulations no longer contain separate
provisions governing escrow bonds, as they are now considered to be
cash accounts. Since the FSLIC no longer exists, the Director finds
this deletion does not render CSR 38-2-11.3(c)(2) less effective than
30 CFR 800.21(d)(4) for cash accounts.
d. Subsection 11.3(d): Self-Bonding
(1) West Virginia proposes to revise subsection 11.3(d)(5)(E) by
deleting the phrase ``if permitted under State law.'' The deletion
would clarify that indemnity agreements may operate as judgments under
forfeiture conditions. Since revised subsection 11.3(d)(5)(E) contains
self-bonding provisions which are substantively the same as that of the
Federal counterpart regulation, the Director finds the State's
regulation is no less effective than the Federal regulation at 30 CFR
800.23(e)(4). Subsection 11.3(d)(5)(E) is hereby approved.
(2) The State proposes to delete existing CSR Sec. 38-2-11.6(h)
which requires the issuance of a notice of violation for failure to
have adequate bond coverage. This provision is duplicative of a
provision in subsection 11.2(d) under the general requirements for all
bonds. Therefore, the Director finds this proposed deletion does not
render West Virginia's regulations at new CSR 38-2-11.3(d) less
effective than the Federal regulations at 30 CFR 800.23.
3. CSR Sec. 38-2-11.4: Incremental Bonding
a. West Virginia proposed to revise subsection 11.4(a)(1) to
require a bond in the appropriate amount be filed for the initial
increment and each succeeding increment of land to be mined within the
permit area prior to any land disturbance. Also, existing subsection
11.8(a)(3) was deleted as its substantive requirements are contained in
subsection 11.4(a)(1). The incremental bonding provisions at subsection
11.4(a)(1) are substantively the same as those in the counterpart
Federal regulations at 30 CFR 800.11 (b) and (c). The Federal
regulations at 30 CFR 800.11(b)(1) require that a bond be filed for the
initial increment, at 30 CFR 800.11(b)(2) that additional bond be filed
for succeeding increments as surface coal mining and reclamation
operations are initiated, and at 30 CFR 800.11(c) that an operator not
disturb any surface areas or succeeding increments prior to acceptance
of the bond. Therefore, the Director finds West Virginia's proposed
incremental bonding provisions at CSR Sec. 38-2-11.4(a)(1) are no less
effective than the counterpart Federal provisions at 30 CFR 800.11 (b)
and (c). Subsection 11.4(a)(1) is hereby approved.
b. The State also proposes to revise subsection 11.4(a)(2) to
require that an operator who has chosen to bond either the entire
permit area or in increments must continue the same manner of bonding
during the term of the permit. The minimum amount of bond is $10,000.
While section 509(a) of SMCRA and 30 CFR Part 800 of the Federal
regulations require that the minimum amount of bond for the entire area
under one permit be $10,000, they do not specifically require that the
operator's manner of binding, entire permit area or increments of the
permit area, be continued for the term of the permit.
[[Page 51906]]
Nonetheless, there is nothing in the State's proposal that would
conflict with any Federal requirement or result in less stringent
bonding of disturbed areas. Therefore, the Director finds West
Virginia's proposed regulation at CSR Sec. 38-2-11.4(a)(2) is not
inconsistent with SMCRA or the Federal regulations and is hereby
approved.
c. The State proposes to revise subsection 11.4(a)(3), by adding a
new provision that requires independent increments to be of sufficient
size and configuration so as to provide for efficient and
contemporaneous reclamation operations. Because this provision is
substantively identical to the Federal regulation, the Director finds
that West Virginia's proposed revision is no less effective than 30 CFR
800.11(b)(4) and is hereby approved.
d. The Director notes that West Virginia needs to amend its
regulations at CSR Sec. 38-2-11.4(a)(1) and 11.4(a)(4) to delete the
word ``performance'' in order to remain consistent with its new penal
bond requirements.
4. SCR Sec. 38-2-11.5: Open-Acre Limit Bonding
West Virginia proposes to add new provisions in this subsection
allowing for elective open-acre limit bonding for surface extraction
operations only. These provisions would provide an alternative to
bonding either the entire permit area or bonding the permit area in
increments. Open-acre limit bonding is a mechanism whereby the operator
bonds a designated portion of the total permit area. Only that portion
of the permit area which is bonded may be disturbed. After surface
extraction and reclamation has taken place on this ``open-acre limit''
portion of the permit, the operator is required to verify that that
portion of the permit has been backfilled, graded and revegetated in
accordance with the reclamation plan and the applicable statutory and
regulatory provisions. At that point, the operator may apply the
already established ``open-acre limit'' bond amount to another portion
of the permit. The acreage of the next succeeding portion must not
exceed the acreage of the previous portion. Mining and reclamation
continue in this manner until the entire permit area has been
reclaimed.
Subsection 11.5(a)(1) requires a permittee to post a general bond
in the amount of $750 per acre to ensure successful revegetation of the
entire permitted area. Subsection 11.5(a)(2) requires the permittee to
post an open-acre limit bond in accordance with the site-specific
bonding requirements of subsection 11.6, which require a bond of not
less than $1,000 nor more than $5,000 per acre based on specified
criteria. The minimum amount of the open-acre limit bond will be
$10,000. This subsection also requires the permittee to post an
ancillary facility bond for haulroads, sediment control systems and
other permanent or semi-permanent control systems and other permanent
or semi-permanent ancillary facilities at a rate of $1,000 per acre for
the total proposed disturbed acreage of such facilities.
The general and ancillary facility bonds are to remain in place
until released in accordance with CSR Sec. 38-2-12.2 of the State's
regulations. The open-acre limit bond can be reapplied to an
undisturbed portion of the permit area after the initial open-acre
limit area has been backfilled, regraded, and vegetated in accordance
with the approved reclamation plan and the provisions of CSR Sec. 38-2-
14.15 of the State's regulations.
Subsection 11.5(b) contains permit application requirements for
open-acre limit bonding. The permit application must contain a separate
bonding section which includes: (1) An overlay outline map which
depicts the location and extent of the initial open-acre limit,
remaining permit area for which no initial bond is to be posted, and
ancillary facilities; (2) a description of the bonding instruments for
the three types of bond; and (3) a narrative description for the timing
and sequence of mining and reclamation operations.
Subsection 11.5(c) provides that when mining and reclamation of the
initial or succeeding open-acre limit is nearing completion, the
permittee must submit a request to advance the open-acre limit into the
undisturbed portions of the permit area by an amount of acreage not to
exceed the acreage reclaimed within the existing open-acre limit area.
An overlay map depicting the reclaimed open-acre limit area and the
undisturbed area to which the bond is being transferred and a copy of
the bond release advertisement must accompany the request. Subsection
11.5(d) provides that approval for transfer of the open-acre limit bond
may not be granted until a review of the request and site is made and
verified by the Director of WVDEP.
Subsection 11.5(e) provides that the permittee must apply for bond
release in the same manner as described in section 23 of the Act and
subsection 12.2 of these regulations when all mining and reclamation on
the permit area are completed. As discussed in finding B.7., no portion
of the open-acre bond can be released until all coal extraction
operations are completed and the entire disturbed area is backfilled
and regraded. Therefore, the proposal will not allow for final release
of any open-acre limit bonded area without public notice and
opportunity for comment.
While the Federal conventional bonding regulations do not contain a
counterpart form of West Virginia's proposed open-acre-limit bonding,
section 509(c) of SMCRA and 30 CFR 800.11(e) of the Federal regulations
allow the States wide latitude in establishing alternative bonding
systems. Nothing in the State's proposal is inconsistent with these
requirements since the open-acre bond would replace only the site-
specific component of the alternative bonding system.
The permittee would still have to pay the special reclamation fee
and the alternative bonding system would still remain responsible for
completion of reclamation in the event the permittee defaulted. The
open-acre limit bonding rules at CSR Sec. 38-2-11.5 are hereby
approved.
5. CSR Sec. 38-2-11.6: Site-Specific Bonding
West Virginia proposes adding CSR Sec. 38-2-11.6 to implement the
site-specific bonding provisions of Sec. 22-3-12 of the West Virginia
Code. The proposed rules establish separate requirements for four major
categories of mining permits: surface mines, underground mines, coal
refuse disposal sites, and coal preparation plants. Under the proposed
rules, the site-specific bonds cannot be less than $1,000 nor more than
$5,000 per acre or fraction thereof. This subsection includes tables to
be used to calculate the per-acre bond for each category of mining
included in a permit.
Subsection 11.6(a) provides that the site-specific bond criteria
shall not apply where active or inactive operations are in compliance
with the provisions of subsection 14.15 and where coal extraction
operations are nearly completed, or when the operations are eligible
for or have received Phase I bond release. In its September 1, 1994,
submittal, the State proposed to exempt from the site-specific bonding
criteria only those sites where coal extraction operations were
``completed'' and which met the other above-referenced criteria.
However, this proposed subsection was revised in the May 16, 1995,
submittal to exempt sites from the site-specific bonding requirements
where coal extraction operations are nearly but not totally complete.
Subsection 11.6(a)(1) provides that surface mine permits shall be
reviewed at the time of renewal or midterm review and a determination
made in accordance with specified
[[Page 51907]]
criteria as to whether the site-specific bond will apply. Subsections
11.6(a) (2), (3), and (4) provide that existing permits for underground
mines, preparation plants, and coal refuse sites, respectively, shall
be subject to the site-specific bond criteria at the time of
application for renewal or midterm review and shall not be renewed by
the Director of WVDEP until the appropriate amount of bond is posted.
Subsection 11.6(b) explains the major criteria that will apply to
the four categories of mining permits. The criteria consists of
relative cost factors associated with reclamation of a forfeited site,
the risk of bond forfeiture, the operator's history of performance, and
environmental enhancement potential. Subsections 11.6 (c), (d), (e) and
(f) specify the subcriteria to be considered for computing the bond for
surface mines, underground mines, coal preparation plants, and coal
refuse sites. In the May 16, 1995, submittal, the State proposed to
limit the period of consideration of an applicant's violation history
and acts of environmental enhancement to within five years of the date
of surface mine application approval instead of ten years as first
proposed. Also, coal loading facilities will not be subject to site-
specific bonding criteria applicable to coal preparation plants.
Subsection 11.6(g) provides for an informal conference if the applicant
contests the per-acre amount of the bond. The final decision may be
appealed by the operator in accordance with Sec. 22-5-21 of the West
Virginia Code.
Since participation in West Virginia's alternative bonding system
is mandatory, the requirement of 30 CFR 800.14(b) that the amount of
the bond be sufficient to assure the completion of the reclamation plan
in event of forfeiture is not applicable to the State's site-specific
bonds. The State's development of more detailed site-specific bonding
requirements should result in better reclamation of the mined lands by
providing incentives to design and conduct mining operations in a more
environmentally sound manner.
These bonding requirements should improve the financial condition
of the special reclamation fund. To the extent that the new system
results in an increase in bond amounts, it will provide greater
incentive for the permittee to comply with all reclamation requirements
to avoid the economic loss associated with bond forfeiture, in keeping
with the requirements for alternative bonding systems at 30 CFR
800.11(e)(2). Therefore, the Director finds that the State's site-
specific bonding provisions are not inconsistent with the requirements
of section 509(c) of SMCRA and 30 CFR 800.11(e) for alternative bonding
systems. The site-specific bonding rules at CSR Sec. 38-2-11.6 are
hereby approved.
However, the Director's approval is subject to the stipulation that
nothing in these regulations or this approval may be construed as
altering or authorizing a variance or deviation from the permitting
requirements and performance standards of West Virginia's approved
program.
For example, subsection 11.6(c)(4)(A) could be read to be
inconsistent with the West Virginia program regulations at CSR Sec. 38-
2-14.15 for timely backfilling and grading because the conversion
factor at subsection 11.6(c)(4)(A)(iii) applies in part if the
reclamation plan contains unspecified ``vague'' time and distance
criteria. Subsection 14.15(b) requires that the permit include specific
time, distance, or acreage standards for each type of surface mining
operation. There is no provision anywhere in section 14.15 for
``vague'' time and distance criteria. Hence, the reference to ``vague
criteria'' in subsection 11.6 may not be interpreted as authorizing the
approval of such criteria.
The Director notes that the text of subsection 11.6(c)(1)(B)(ii)
refers to a factor of ``0.5'' while the referenced table identifies a
factor of ``0.6.'' Also, for consistency, subsection 11.6(c)(1)(B)(ii)
and Table 1 probably should be revised to read ``three to six fills'';
otherwise a plan calling for two fills is covered by both subparts (i)
and (ii). Similarly, subsection 11.6(c)(2)(B)(i) and (ii) both apply to
mining plans where two seams of coal are to be mined. To lend
consistency to its regulations, subpart (ii) and Table 1 should
probably be revised to read ``three or four seams of coal.''
6. CSR Sec. 38-2-11.7: Environmental Security Account
Proposed subsection 11.7 requires the WVDEP to study the
feasibility of developing an environmental security account for water
quality. The study is to include: (1) a screening process for
determining which sites have the potential for producing acid mine
drainage, (2) a process for predicting the rate and duration of acid
mine drainage, (3) a method for estimating water treatment costs, (4) a
system to ensure that sufficient monies will be placed in an escrow
account to provide financial assurance that treatment will be
accomplished and maintained, and (5) procedures to ensure the
expenditure of funds from the escrow account in the event of default
will provide water treatment. Furthermore, subsection 11.7(f) provides
that after the study is completed, the Director of WVDEP may propose
regulations to implement the environmental security account for water
quality, but the regulations will not become effective until approved
by the legislature. Subsection 11.7(g) provides that the Director of
WVDEP shall inform the legislature if statutory changes are necessary
to implement an effective system for financial assurances. Subsection
11.7(h) provides that nothing in this subsection authorizes the
issuance of a permit that will violate applicable effluent limitations
or water quality standards without treatment.
Development of an environmental security account for water quality
could enhance the financial status of the State's special reclamation
fund. Therefore, the Director finds the provisions at CSR Sec. 38-2-
11.7, which provides for a feasibility study, are not inconsistent with
509(c) of SMCRA or 30 CFR 800.11(e) of the Federal regulations. The
Director notes that pursuant to 30 CFR 732.17(g), any regulations
proposed to implement the environmental security account as a bonding
mechanism for water quality or to otherwise incorporate it into the
coal regulatory program must also be approved by OSM.
7. CSR Sec. 38-2-12.2: Requirement To Release Bonds
West Virginia proposes to revise subsection 12.2(c) to provide for
the release of all or part of the bond for the permit area or increment
thereof. The State also proposes to revise subsection 12.2(c)(2) to
delete the provision relating to chemical treatment of water at Phase
II bond release and to add a provision at subsection 12.2(c)(2)(B) to
require that the terms and conditions of the NPDES permit be met.
Subsection 12.2(c)(2)(E) now requires that the amount of the remaining
bond must be sufficient to reestablish vegetation and maintain
permanent drainage control structures. These revised provisions are
substantively the same as the Federal counterpart provisions at 30 CFR
800.40(c)(2) and are hereby approved.
The State proposes to add new subsection 12.2(d) to prohibit the
release of any portion of the bonds posted in accordance with
subsection 11.5 (open-acre limit bonding) until all coal extraction
operations are completed and the entire disturbed area has been
completely backfilled and regraded. Because of the floating nature of
this type of bond, this restriction is needed to provide a degree of
protection consistent with other types of site-
[[Page 51908]]
specific bond authorized under the alternative bonding system.
The State proposes to revise newly designated subsection 12.2(e) by
deleting the provision for a qualified exemption to the requirement
that no bond release or reduction be granted if, at the time, water
discharged from or affected by the operation requires chemical
treatment to comply with applicable effluent limitations or water
quality standards.
The Director finds that the revised bond release provisions either
remain substantively the same as the Federal regulations at 30 CFR
800.40 for conventional full-cost bonds or do not conflict with any
Federal requirements or adversely impact other aspects of the West
Virginia program. The changes will not negatively impact the solvency
of the alternative bonding system. Therefore, the proposed revisions
are not inconsistent with section 509(c) of SMCRA or the Federal
regulations at 30 CFR 800.11(e). CSR Sec. 38-2-12.2 is hereby approved.
8. CSR Sec. 38-2-12.3: Bond Adjustments
a. West Virginia proposes to revise subsection 12.3 to provide for
bond adjustments for an overbonded permit area. An overbonded permit
area is an area that was originally bonded by one operator for one
permit, but has subsequently been bonded again for a second permit,
while the original bond remains in effect. Subsection 12.3(a) of the
proposed regulations provides that where a permittee demonstrates on
the basis of a sworn statement and a progress map that a portion of the
permit area will remain undisturbed or has been overbonded, the
Director of WVDEP may adjust the amount of the bond corresponding to
the number of undisturbed or overbonded acres, provided that a minimum
$10,000 bond remains for the disturbed portion of the permit. The
Director of WVDEP must make a decision on the request within 30 days.
If the request is denied, the Director of WVDEP must provide the
permittee with an opportunity for an informal conference. Subsection
12.3(c) now contains the previously approved provision which specifies
that the provisions of subsection 12.3 are not subject to the
provisions of subsection 12.2.
On April 1, 1994 (Administrative Record No. WV-916), OSM requested
the State to explain the term ``overbonded.'' The State replied that
this provision means that when any part of an existing permit is
covered by a new permit, the amount of bond for the ``double bonded
area'' of the existing permit can be terminated and returned to the
existing permittee. Since 30 CFR 800.15(c) provides that a permittee
may request reduction of the amount of bond by submitting evidence that
proves the permittee's method of operation or other circumstances
reduces the estimated cost of reclamation, OSM accepted this
clarification of the proposed revision. The revised State regulations
at subsections 12.3 (a) and (c) are substantively the same as and
therefore no less effective than the corresponding Federal regulations
at 30 CFR 800.15 (b) and (c).
b. West Virginia proposes to revise subsection 12.3(b) by adding a
provision that, upon receipt of a permit revision, the Director of
WVDEP may review the bond adequacy and if necessary increase the amount
of the bond.
Under the Federal counterpart regulation at 30 CFR 800.15(d), the
regulatory authority has a mandatory duty rather than the discretionary
authority to review the bond for adequacy whenever a permit is revised.
However, this mandatory requirement does not apply to bonds under an
alternative bonding system since the alternative bonding system
provides a source of funds other than the site-specific bond for
completion of the reclamation plan in the event of forfeiture. West
Virginia has an alternative bonding system in which participation is
mandatory. Therefore, the Director finds CSR Sec. 38-2-12.3(b), as
revised, is not inconsistent with SMCRA or the Federal regulations, and
he is approving this new provision as proposed.
9. CSR Sec. 38-2-12.4: Bond Forfeiture
a. The State is proposing to revise subsection 12.4(a) to provide
that, when necessary, the Director of WVDEP must forfeit the entire
bond, not just an amount based on the estimated total cost of achieving
the reclamation plan requirements as specified in the current
regulation. These proposed revisions to subsection 12.4(a) are in
accordance with the proposed revision to WV Code Sec. 22-3-11(a), which
requires that all reclamation bonds be penal in nature. For the reasons
discussed in finding A.1.a., the Director finds that the proposed
revisions will not render the State program less stringent than SMCRA
or less effective than the Federal rules.
b. The State also proposes to revise subsection 12.4(a)(2)(B) to
provide that when a surety completes the reclamation, ``no surety
liability shall be released until successful completion of all
reclamation under the terms of the permit and in accordance with the
Act and these regulations to include the revegetation liability
period.'' OSM questioned West Virginia about the meaning of the phrase
``to include the revegetation liability period.'' West Virginia
responded that this phrase merely provides an example and is not
intended to exclude other types of reclamation responsibilities
(Administrative Record No. WV-929).
The Federal regulations at 30 CFR 800.50(a)(2)(ii) provide that,
when the regulatory authority allows a surety to complete the
reclamation plan, no surety liability shall be released until
successful completion of all reclamation under the terms of the permit,
including applicable liability periods of Sec. 800.13. The liability
periods of Sec. 800.13 include the extended responsibility period for
successful revegetation and achievement of the reclamation requirements
of the Act, the permanent regulatory program, and the permit.
Therefore, the Director finds the revised provision of CSR Sec. 38-2-
12.4(a)(2)(B), is substantively identical to and no less effective than
the counterpart Federal provision at 30 CFR 800.50(a)(2)(ii).
c. At CSR Sec. 38-2-12.4(b), West Virginia proposes combining the
provisions of existing subsections 12.4(b) and 12.4(c). West Virginia
revised the provision in new subsection 12.4(b) that provides for the
use of the proceeds to accomplish completion of reclamation by changing
the citation reference of the regulations governing water quality from
subsection 14.5 to subsection 12.5. Subsection 12.5 requires the
establishment of an inventory of bond forfeiture sites and a priority
listing of such sites for water treatment while subsection 14.5
contains general water quality standards for active mining operations.
The Federal regulations at 30 CFR 800.50(b)(2) require the
regulatory authority to use funds collected from bond forfeiture to
complete the reclamation plan. The amended reference pertains to only
one of the requirements for completion of reclamation at a bond
forfeiture site (water quality), however, new subsection 12.4(c)
requires that a bond forfeiture site be reclaimed in accordance with
the reclamation plan. Therefore, the proposed revision will not render
CSR Sec. 38-2-12.4 less effective than the counterpart Federal
regulations at 30 CFR 800.50(b). Furthermore, as discussed in finding
A.1.b(2), the Director is requiring the State to revise its program to
provide for the treatment of polluted water discharging from all bond
forfeiture sites.
d. West Virginia reorganized the provisions of existing paragraph
(d) of
[[Page 51909]]
subsection 12.4 into new paragraphs (c), (d), and (e).
(1) In the June 28, 1993, version of the proposed amendment, as
revised by letter dated July 30, 1993 (Administrative Record Nos. WV-
889 and WV-893), new subsection 12.4(c) [previously 12.4(d)(2)]
required the Director of WVDEP to initiate operations to reclaim a bond
forfeiture site within 180 days after the notice of forfeiture is
served. It also required remediation of acid mine drainage, including
chemical treatment where appropriate.
On April 1, 1994, OSM advised West Virginia that to be no less
effective than 30 CFR 800.50(b)(2), bond forfeiture sites must ``be
reclaimed in accordance with the approved reclamation plans or
modifications thereof.'' (Administrative Record No. WV-916). The
Federal regulations at 30 CFR 800.50(b)(2) and 800.11(e) require bond
forfeiture sites to be reclaimed in accordance with the reclamation
plans of the revoked or suspended permits, including any modifications
approved by the regulatory authority.
In its submission of September 1, 1994, West Virginia revised its
regulations at CSR Sec. 38-2-12.4(c) to clarify that bond forfeiture
sites will be reclaimed in accordance with approved reclamation plans
or modifications thereof (Administrative Record No. WV-937). This
proposal satisfies the requirements at 30 CFR 948.15(k)(8) and
948.16(ww) that reclamation on bond forfeiture sites be completed in
accordance with the approved reclamation plan. Therefore, the Director
is approving this proposed revision, and he is removing the required
amendment at 30 CFR 948.16(ww).
(2) New subsection 12.4(d) retains the provision from existing
subsection 12.4(d)(2) that requires the Director of WVDEP to make
expenditures from the special reclamation fund to complete reclamation
when the proceeds of bond forfeiture are less than the actual cost of
reclamation. New subsection 12.4(d) also includes the new provision
requiring the Director of WVDEP to take the most effective actions
possible to remediate acid mine drainage, including chemical treatment
where appropriate.
Since this revised provision still makes it mandatory that West
Virginia use the special reclamation fund to complete reclamation at
bond forfeiture sites, the Director finds that subsection 12.4(d), as
revised, is consistent with the requirements of section 509(c) of SMCRA
and 30 CFR 800.11(e) of the Federal regulations and is hereby approved.
(3) At subsection 12.4(e) [previously 12.4(d)(1)], the State
proposes to provide that the operator, permittee, or other responsible
party be liable for all costs in excess of the amount forfeited. The
Director of WVDEP may commence civil, criminal, or other appropriate
action to collect such costs.
The Federal regulations at 30 CFR 800.50(d)(1) require that the
operator be liable for costs in excess of the amount forfeited. They
allow the regulatory authority to recover from the operator all costs
of reclamation in excess of the amount forfeited. Although West
Virginia does not define ``other responsible party,'' it is commonly
understood that it would include any other person who may be
responsible for the mining operation.
West Virginia's proposed requirement is neither specifically
authorized nor prohibited by SMCRA. However, it is consistent with the
principles and purposes of SMCRA to ensure the reclamation of surface
areas disturbed by coal mining. See SMCRA section 102(e). Therefore,
since the proposed provision does not conflict with any Federal
requirements under SMCRA, the Director finds that the proposed revision
does not render subsection 12.4(e) inconsistent with SMCRA or the
Federal regulations, and he is approving it.
e. West Virginia deleted existing subsection 12.4(e) pertaining to
the effective date of the provisions within subsection 12.4 relating to
water quality. Because the date has long since passed, the Director
finds this deletion will not render the West Virginia program less
effective than the Federal regulations.
10. CSR Sec. 38-2-12.5: Water Quality Enhancement
a. Prioritization of Forfeited Sites
West Virginia proposes to add a new subsection 12.5 to implement
that portion of Sec. 22-3-11(g) of the West Virginia Code which
authorizes WVDEP to prioritize bond forfeiture sites for reclamation
purposes. Subsection 12.5(a) requires the Director of WVDEP to
establish an inventory of all sites for which bonds have been
forfeited. The inventory is to include data relating to the quality of
water being discharged from the sites. Subsection 12.5(b) requires a
priority listing of these sites based upon the severity of the
discharges, the quality of the receiving stream, effects on downstream
water users, and other factors determined to affect the priority
ranking.
Subsection 12.5(c) provides that, until the legislature supplements
or adjusts the special reclamation fund, the Director of WVDEP can
selectively choose sites from the inventory for water quality
enhancement projects. Subsection 12.5(d) provides that, in selecting
sites for water improvement projects, the Director must consider
relative benefits and costs of the projects.
Subsection 12.5(e) required the Director of WVDEP to submit to the
legislature, a detailed report and inventory of acid mine drainage from
bond forfeiture sites. The report, which was submitted on December 31,
1993, includes cost estimates for long-term chemical treatment of
drainage from each site and proposals for supplementing and adjusting
the special reclamation fund to pay for this treatment (Administrative
Record No. 952).
For the reasons set forth in finding A.1.b.(1), and subject to the
same stipulations, subsection 12.5 is not inconsistent with the
reclamation requirements of 30 CFR 800.50(b)(2) and 800.11(e), except
as discussed in finding B.10.b. below. Subsections 12.5 (a), (b), (c)
and (e) are hereby approved.
b. Limitation on Water Treatment at Bond Forfeiture Sites
Subsection 12.5(d) also provides that expenditures from the special
reclamation fund for water quality enhancement projects may not exceed
25 percent of the fund's gross annual revenue. For the reasons set
forth in finding A.1.b.(2), the Director finds that this limitation is
inconsistent with 30 CFR 800.11(e) and is hereby disapproved. Also, the
Director is requiring that the State revise subsection 12.5(d) to
remove the 25 percent limitation or to otherwise provide for the
treatment of polluted water discharged from all existing and future
bond forfeiture sites.
C. The West Virginia Alternative Bonding System
On October 1, 1991 (Administrative Record No. WV-878), OSM notified
West Virginia in accordance with 30 CFR 732.17 that its regulatory
program no longer met all Federal requirements. Since 1989, OSM's
annual reviews of West Virginia's alternative bonding system had found
the system to be incapable of meeting the Federal requirements at 30
CFR 800.11(e) since its alternative bonding system liabilities exceeded
assets. As of June 30, 1990, the special reclamation fund liabilities
exceeded assets by $6.2 million. Also, a 1993 actuarial study by the
accounting firm of Deloitte and Touche estimated that, by 1997, the
State's special reclamation fund would have a deficit
[[Page 51910]]
of $13.8 million (Administrative Record No. 952). This estimate did not
include the cost of water treatment on bond forfeiture sites.
In addition, on December 31, 1993, the WVDEP submitted an ``Acid
Mine Drainage Bond Forfeiture Report'' to the West Virginia
legislature, as required by CSR Sec. 38-2-12.5(e) (Administrative
Record No. WV-952). The report identified acidic discharges from 89
bond forfeiture sites, which produce approximately 10 percent of the
acid mine drainage in the State. Under the best-case scenario, the
WVDEP estimated that treatment to neutralize only the discharges from
bond forfeiture sites that are affecting receiving streams would
require approximately $2 million annually. Treatment of all discharges
from all sites to meet Federal and State effluent limitations and water
quality standards would cost approximately $4.7 million annually.
Furthermore, State records show that, as of June 30, 1994, 243 bond
forfeiture sites containing 10,996 acres have not been completely
reclaimed. The State estimates that the total liabilities of the fund
exceed total assets by $22.2 million. This estimate does not include
the cost of treating polluted water discharged from bond forfeiture
sites. On July 20, 1994, the West Virginia Supreme Court ruled that the
treatment of acid mine drainage is a component of reclamation and that
the WVDEP has a mandatory nondiscretionary duty to utilize moneys from
the special reclamation fund, up to 25 percent of the annual amount, to
treat acid mine drainage at forfeiture sites when the proceeds from
forfeited bonds are less than the actual cost of reclamation (WVHC v.
WVDEP, No. 22233, July 20, 1994).
An alternative bonding system cannot be allowed to incur a deficit
if it is to have available adequate revenues to complete the
reclamation of all outstanding bond forfeiture sites. Alternative
bonding systems must include reserves and revenue-raising mechanisms
adequate to ensure completion of the reclamation plan and fulfillment
of the permittee's obligations, including any water treatment needs.
Although the proposed site-specific bonding rates are significantly
higher than the State's old flat rate bond of $1,000 per acre and the
State is proposing to increase its special reclamation tax from one
cent to three cents per ton of mined coal to generate more revenue for
the fund, State records indicate that the proposed bonding rates and
the increase in revenues to the special reclamation fund are still
insufficient to ensure complete reclamation, including treatment of
polluted water.
Therefore, the Director finds that West Virginia's alternative
bonding system no longer meets the requirements of 30 CFR 800.11(e).
Furthermore, it is not achieving the objectives and purposes of the
conventional bonding program set forth in section 509 of SMCRA since
the amount of bond and other guarantees under the West Virginia program
are not sufficient to assure the completion of reclamation. Hence, the
Director is requiring West Virginia to eliminate the deficit in the
State's alternative bonding system and to ensure that sufficient funds
will be available to complete reclamation, including the treatment of
polluted water, at all existing and future bond forfeiture sites. The
Director has taken and will take similar actions in all other states
with deficits in alternative bonding systems.
IV. Summary and Disposition of Comments
Public Comments
The Director solicited public comments and provided an opportunity
for public meetings on the proposed amendment on three separate
occasions. Public meetings were held on September 7, 1993, October 27,
1994, and May 30, 1995 (Administrative Record Nos. WV-906, WV-958, and
WV-983). Comments on the special reclamation fund and bonding
provisions were received from GAI Consultants, Inc. (GAI); West
Virginia Coal Association (WVCA); West Virginia Mining and Reclamation
Association (WVMRA); Arch of West Virginia (AWV); Buffalo Coal Company,
Inc. (BCC); National Council of Coal Lessors, Inc. (NCCL); West
Virginia Highlands Conservancy (WVHC); the West Virginia Chapters of
Trout Unlimited (TU) and the Sierra Club (SC); National Citizens Coal
Law Project (NCCLP), and the Downstream Alliance (DA).
Following is a summary of the substantive comments received on the
proposed amendment. Comments identifying errors of a purely
typographical or editorial nature and comments voicing general support
or opposition to the proposed amendments but devoid of any specific
statements are not discussed. The summarized comments and responses to
the comments are organized by the section of the amended statutes and
regulations to which they pertain. All citations to the State statutes
and regulations in comments and responses have been adjusted to reflect
the nomenclature of the August 18, 1994, version of the statutes and
the May 16, 1995, version of the regulations.
WVSCMRA Sec. 22-3-11(c)(2): Alternative Bonding System
WVCA, WVMRA, and the WVHC commented on WVSCMRA Sec. 22-3-11(c)(2)
which provides that the Director of the WVDEP may approve an
alternative bonding system under certain conditions. The State has not
proposed any revisions to this section of the West Virginia statute. In
acting on State program amendments, OSM only addresses those sections
of a State's laws and regulations were revisions are proposed by a
State. OSM will take the comments received into consideration when
reviewing the State's statute and rules pursuant to 30 CFR 732.17.
WVSCMRA Sec. 22-3-11(g): Special Reclamation Fund
1. Comment: WVHC did not generally support the revisions proposed
for the special reclamation fund. WVHC stated the belief that ``the
state has a mandatory duty to treat water as a part of the approved
reclamation plan at all forfeited sites, and that the alternative
bonding system/special reclamation fund is to provide the State
sufficient money to complete all reclamation, at all times, at any and
all forfeited sites, including water treatment where necessary to meet
effluent limitations and water quality standards.'' This belief was
also expressed by the SC which added that the 25 percent limit applied
to expenditures for water treatment explicitly weakens the Federal
requirement for full and prompt reclamation.
WVHC commented that the provisions of section 509(c) of SMCRA, the
provisions of 30 CFR 800.11(e) of the Federal regulations, and the West
Virginia Supreme Court Decision in the Mandamus action (WVHC v. WVDEP,
No. 22233, July 20, 1994) supported its belief [See Administrative
Record No. WV-930 for a copy of the referenced decision]. WVHC pointed
out that the actuarial study of 1993 was not an acceptable assessment
of the adequacy of the special reclamation fund since it asserted the
State was not liable for water treatment at bond forfeiture sites. WVHC
further urged OSM to require the State resolve the issue of inadequate
funds, assess additional monies for the special reclamation fund, and
expend the monies to reclaim existing bond forfeiture sites.
In general, WVHC believed that the codification language used by
OSM left several unanswered questions and that findings contained in
the preamble would be forgotten.
[[Page 51911]]
Response: As discussed in finding A.1.b.(2), the Director is
requiring West Virginia to amend its program to remove the 25 percent
limitation or to otherwise provide for treatment of polluted water
discharged from all bond forfeiture sites. Also, as discussed in
finding A.1.b.(4)(c), the Director is requiring the State to remove the
provision that allows collection of the special reclamation tax only
when the bond forfeiture liabilities of the State exceed the fund's
assets.
This rulemaking does not attempt to answer all potential questions
about bonding and the reclamation of bond forfeiture sites but only to
address the proposed revisions to the West Virginia program. The
findings contained in this preamble should be read in conjunction with
the codification section to fully understand the Director's decision.
2. Comment: The WVHC commented that OSM should not only disapprove
as part of the State program the provision limiting the use of monies
for water treatment at bond forfeiture sites but should also require
the State to remove the restricting language from its rules and law.
WVHC stated that in the eyes of State legislature and State Courts the
provision would continue to be implemented until removed from State law
and regulations. WVHC added that without clear and decisive direction
and actions on the part of OSM, there will be no significant
improvement in the West Virginia program.
Response: As discussed in finding A.1.b.(2), the director is
requiring West Virginia to remove the 25 percent limitation on the use
of special reclamation funds for water treatment at bond forfeiture
sites from its statute and regulations or to otherwise provide for the
treatment of polluted water discharged from all bond forfeiture sites.
3. Comment: WVMRA generally supported the proposed bonding
revisions for Sec. 22-3-11(g). WVMRA argued that the special
reclamation fund revisions, including the 25 percent set aside for
water treatment systems, were not OSM issues since there are no Federal
requirements in these areas. The question of water treatment at
forfeiture sites was thought to be a Clean Water Act issue which should
be handled by the State under the NPDES program. WVMRA pointed out that
West Virginia's bonding provisions were more stringent than Federal
government bonding requirements and cited the State's requirement for
penal bonds as an example. WVMRA commented that ``the bonding program
has been consistent with insuring compliance with the State law and all
regulations promulgated thereunder for more than the 17 year history
since PL 97-87 was passed.''
WVMRA argued that West Virginia has adequate funds to guarantee
that the performance standards of the Act are carried out, and
referenced two actuarial studies as support for this view. WVMRA stated
that any requirements beyond the performance standards of the Act are
not germane to the bonding requirements. WVMRA also stated that ``any
attempt to burden the State of West Virginia, and more particular (sic)
its mining industry, with rules and regulations not supported by
Federal or State law, will not be tolerated nor can the State of West
Virginia be held to any standard not imposed upon other States,
including Tennessee, in which OSM administers the program.'' [WVMRA
referenced text in a letter dated January 15, 1993, to David Callaghan
from former OSM Director Harry Snyder pertaining to requirements for
water treatment as support for its comments. Since this letter was
subsequently rescinded by Acting OSM Director W. Hord Tipton by letter
dated January 25, 1993, it no longer reflects OSM policy and is,
therefore, not being discussed.]
Response: Section 509(c) of SMCRA authorizes the Secretary, acting
through OSM, to approve an alternative bonding system if it will
achieve the objective and purposes of the otherwise mandatory
conventional bonding program. The Federal regulations at 30 CFR
800.11(e)(1) require funds to be sufficient to assure completion of the
reclamation plans for all bond forfeiture sites, which includes
treatment to meet State and Federal water quality requirements. The
Secretary conditionally approved an alternative bonding system as part
of the West Virginia program on January 21, 1981 (46 FR 5924), with
subsequent final approval on March 1, 1983 (48 FR 8448). West
Virginia's approved alternative bonding system includes the special
reclamation fund as one source of money for completing the reclamation
plan for a bond forfeiture site. Also, 30 CFR 732.17(g) requires
changes to laws or regulations that make up the approved State program
be submitted to the Director as an amendment. Therefore, the revisions
pertaining to West Virginia's special reclamation fund are OSM issues,
and OSM is required to make a determination as to whether these
revisions are consistent with section 509(c) of SMCRA and the
implementing Federal regulations at 30 CFR 800.11(e). The Director
disagrees that only performance standards of the Act are germane to
bonding requirements. See discussion in findings A.1.b.(2). The
Director also disagrees that the West Virginia alternative bonding
system has adequate funding. See discussion in finding A.1.b.(4)(c).
4. Comment: The WVHC expressed concern that withdrawals from the
Special Reclamation Fund for administrative purposes for programs other
than bond forfeiture reclamation will deplete the Fund.
Response: As discussed in finding A.1.b(3), the State in Sec. 22-3-
11(g) is proposing to limit the use of the Special Reclamation Fund.
The Director of the WVDEP will have discretionary power to allocate up
to 10 percent of the total annual assets of the Fund to administrative
costs incurred under the abandoned mine land program, the mining and
reclamation program, the minerals other than coal program, and the
Surface Mine Board. While most of these expenditures are unrelated to
the reclamation of bond forfeiture sites, the Director of OSM does not
have the authority under SMCRA to restrict the use of the Fund to only
bond forfeiture reclamation. However, the State is accountable for
ensuring that adequate moneys are available in the special reclamation
fund to complete the reclamation of all forfeiture sites in a timely
manner. Under West Virginia's approved alternative bonding system, any
drawdown of the fund for administrative purposes unrelated to bond
forfeiture reclamation must be compensated for by higher site-specific
bonds, a higher special reclamation tax or both.
5. Comment: The WVMRA commented that OSM had overstated the
magnitude of the backlog in forfeiture sites that need to be reclaimed
by failing to note that of the 243 forfeiture sites, 43 have been
granted Phase I release, 17 have been granted Phase II release and 12
of the forfeitures were for technicalities like failure to have proper
insurance. Also, the special reclamation fund was believed to be
financially sound since as of April 30, 1995, there was a balance of
over $8 million with interest accumulating at a rate of $250,000 per
quarter. Annual payments into the fund by coal operators was more than
$3.7 million. Reclamation costs on forfeiture sites were $2,820 per
acre in 1994--the lowest per acre cost in the history of the program.
Response: The Director acknowledges that some sites on the list of
bond forfeiture sites have been partially reclaimed, however, there is
still a substantial backlog in reclamation work even after allowing for
these sites. The State's estimate that, as of June 30, 1994, total
liabilities of the special
[[Page 51912]]
reclamation fund exceeded assets by $22.2 million takes into account a
cash balance in the fund.
WVSCMRA Sec. 22-3-23(c)(3) Colombo Amendment
WVCA, WVMRA, and SC commented on WVSCMRA Sec. 22-3-23(c)(3). The
State has not proposed any revisions to this section of the West
Virginia statute. In acting on State program amendments, OSM only
addresses those sections of a State's laws and regulations where
revisions are proposed by a State. OSM and the State met on August 16,
1995, to resolve differences concerning this provision and to address
other matters. OSM is conducting a survey of potential Colombo sites to
determine the scope and nature of the problem. The WVDEP has agreed to
cooperate with OSM by providing information they may have and to not
release additional sites under the Colombo provision. The disapproval
of WVSCMRA Sec. 22-3-23(c)(3) found at 30 CFR 948.12(e) and the program
set aside at 30 CFR 948.13(c) remain in effect.
CSR Sec. 38-2-11.2(e) Bond Liability for Permits Transferred,
Assigned, or Sold Under the Provisions of CSR Sec. 38-2-3.25
Comment: AWV pointed out that the provision does not give the
Director of WVDEP the authority to increase bond amounts to address
deficiencies in permits which are transferred or assigned. AWV further
argued that ``this provision should not apply to permits which are
assigned pursuant to 38 W.Va. C.S.R. Sec. 3.25(c), since liability
under the bond and permit under such an arrangement remains with the
original permittee.'' AWV stated that ``the suggestion that bonds, in
themselves, can be transferred is misleading and inconsistent with
other provisions in the regulations.'' AWV also suggested that the
provision should be rewritten to clarify that permits instead of bonds
are transferred and to allow the Director of WVDEP to require bond
adjustment as an alternative to the proposed requirement for assumption
of liability.
Response: The intent of this provision is to ensure that the person
who is to receive the permit has adequate financial resources to manage
long-term environmental liabilities associated with mining such as
water treatment. It is within the State's authority to require such a
demonstration prior to permit transfer. Although the Director agrees
that the provision could be clarified, as discussed in finding B.1.b,
the new provision at CSR Sec. 38-2-11.2(e) is not inconsistent with the
Federal bonding requirements at 30 CFR Part 800 or the Federal
permitting requirements at Sec. 774.17(b)(3).
CSR Sec. 38-2-11.6 Site-Specific Bonding
Comment: AWV expressed support for West Virginia's efforts to
implement site-specific bonding in order to improve its regulatory
program. However, AWV stated that ``the regulation should more clearly
identify how the bonding changes will be implemented and
administered.''
Subsection 11.6(a): AWV commented that the provisions of subsection
11.6 should only apply to permits issued after its effective date. AWV
further commented that considering bond is limited to $5,000 per acre,
West Virginia should add language to subsection 11.6(a) to clarify the
procedures for calculating bond when more than one permit includes the
same area. The DA believed that the $5,000 per acre limit on site-
specific bonds contradicted SMCRA because such a bond is insufficient
to enable the regulatory authority to complete reclamation, especially
in the case of underground mines where there is liability for acid mine
drainage and subsidence. The WVHC commented that site-specific bonds
should be required where coal extraction is complete and for operations
that are eligible for or have received Phase I bond release.
Subsection 11.6 (c), (d), (e), and (f): AWV stated that ``a general
concern with respect to all of the subsection 11.6 tables is that the
factors 0.2, 0.6, and 1.0 produce too many extreme and inequitable
results, thereby distorting the significance of some criteria.'' In
support of its concern, AWV presented three examples and argued that:
(1) factoring under subsection 11.6(c)(1)(B) for three excess spoil
disposal fills is three times higher than a plan for two, while six
fills is the same as three; (2) the provisions at subsection
11.6(c)(2)(C)(ii) and (iii) differentiate between conventional and
highwall auger mining even though the cost per linear foot to reclaim
the highwall would not differ and (3) the provisions at subsection
11.6(d)(1)(A) do not consider the vicinity of backfill material when
factoring for shaft or slope entry backfills. AWV also noted a
typographical error and some inconsistencies in the provisions of
subsection 11.6(c).
Subsection 11.6(c)(5)(A): AWV commented that West Virginia should
clarify the terms ``active permit'' and ``last full calendar year'' as
it relates to this provision. AWV also commented that West Virginia
should add a provision to this subsection specifying that violations
pending review or appeal would not be considered.
Subsection 11.6(v)(5)(B): AWV pointed out that the percentages used
for contemporaneous reclamation were discretionary since they were not
defined. AWV also commented that consideration of an operation's
``contemporaneous reclamation'' status should not be limited to the
permit application review period.
Subsection 11.6(c)(6)(B): AWV commented that national and local
reclamation awards should not be a consideration since they often
depend on other factors not related to success of reclamation. AWV
further suggested that WVDEP factor in the amount of disturbed land
reclaimed in a 24-month period instead of awards.
Subsection 11.6(g): AWV suggested that West Virginia add language
in subparagraph (2) to allow the Director of WVDEP to not hold an
informal conference if he agreed that ``the amount proposed by the
applicant is appropriate.''
Response: Under an alternative bonding system, a State has
considerable latitude in setting site-specific bond amounts and
administering the program. The State may even choose to place a limit
on the per-acre amount of the site-specific bond. The most important
factor that has to be considered is whether the alternative bonding
system has adequate revenue to cover the cost of reclamation of those
sites that may be forfeited and that it provides substantial economic
incentive for the operator to comply with all reclamation requirements.
As discussed in finding B.5., the Director found the State's provisions
for site-specific bonding are not inconsistent with the requirements of
section 509(c) of SMCRA and 30 CFR 800.11(e) of the Federal
regulations.
CSR Sec. 38-2-11.7 Environmental Security Account for Water Quality
1. Comment: WVCA commented that ``OSM appears to mischaracterize
the scope and purpose of this proposed rule, which allows WVDEP to
create an Environmental Security Account. OSM states that this
regulation does not provide any authority for WVDEP to issue permits
for discharges that will violate effluent limitations or water quality
standards `without treatment.' See 58 Fed. Reg. at 42909. If by the
phrase `without treatment' OSM means to say that this proposed
regulation prohibits WVDEP from issuing permits for operations which
may generate acid mine drainage, it is simply wrong. Nothing in either
Sec. 38-2-11.7 or SMCRA contains any such prohibition.
[[Page 51913]]
While both SMCRA and the WVSCMRA require operators to avoid production
of acid mine drainage, they both also specifically recognize water
treatment as one avoidance technique. See 30 U.S.C.
Secs. 1265(b)(10)(A)(ii); W. Va. Code Secs. 22-3-13(b)(10)(A)(ii) &-
14(b)(9)(A)(ii).''
Response: West Virginia included this provision in paragraph (h),
which reads ``nothing in this subsection shall authorize in any way the
issuance of a permit in which acid mine drainage is anticipated, and
which would violate applicable effluent limitations or water quality
standards without treatment.'' The Federal Register notice stated that
this language was part of the proposed State rule. Paragraph (h) of CSR
Sec. 38-2-11.7 clarifies the intent of the West Virginia State
legislature when it authorized the Director of WVDEP to study the
desirability of establishing an environmental security account and in
promulgating rules to implement such an account. OSM has not
mischaracterized the State's proposed rule since the exact language
used by the West Virginia State legislature was repeated in the Federal
Register
2. Comment: WVHC expressed concern that the language in subsection
11.7(f) would allow statutory changes to become effective without the
approval of OSM. WVHC commented that ``while the Supreme Court of W.V.
has reiterated the legal requirement of OSM approval of all statutes
and regulations pertaining to the approved program in footnote 23 of
the Mandamus decision of July 1994 (WVHC v. WVDEP, No. 22233, July 20,
1994), there are frequent debates and sometimes heated discussions of
this matter in Legislative Committee meetings.''
Response: As discussed in finding B.6., any regulations proposed to
implement the environmental security account as a bonding mechanism for
water quality or to otherwise incorporate it into the coal regulatory
program must be approved by OSM. Also, 30 CFR 732.17(g) prohibits the
implementation of any statutory or regulatory changes to a State
program without prior OSM approval.
CSR Sec. 38-2-12.2 Requirement to Release Performance Bonds
1. Comment: Subsection 12.2(a)(1) AWV commented that ``subsection
11.5(a)(1) of these proposed rules states that a general bond in the
amount of seven hundred fifty dollars ($750) per acre will serve as
sufficient financial assurance that the revegetation requirements of
Section 9 of the regulations will be satisfied. Consistent with this
statement, AWV believes that 38 W.V.A. C.S.R. Sec. 12.2(c)(1) should be
modified as that upon meeting the requirements for a Phase I bond
release, a site-specified reassessment should be conducted. Assuming
these requirements are met, the bond amount should be reduced to $750
per acre, as specified in Subsection 11.5(a)(1), instead of the minimum
60 percent bond release now in effect.''
Response: Subsection 11.5(e) provides that the operator will apply
for bond release in accordance with section 23 of the Act and
subsection 12.2 only after completion of all mining and reclamation on
the permit area. In accordance with the State's open-acre limit bonding
requirements at subsection 11.5, the State does not plan to release the
open-acre bond at the completion of the backfilling and grading of each
open-acre unit. This bond will be rolled over to the next increment.
2. Comment: Subsection 12.2(e) WVMRA commented that OSM does not
have any water quality or chemical treatment requirements for bond
releases. BCC and WVMRA both commented that this provision is more
stringent than the OSM requirement since bond cannot be reduced or
released if chemical treatment is required.
Response: The Director disagrees that the Federal regulations do
not have any water quality or chemical treatment requirements for bond
releases. Section 519(b) of SMCRA and the implementing Federal
regulations at 30 CFR 800.40(b)(1) require the regulatory authority,
when evaluating bond release requests, to consider whether pollution of
surface and ground water is occurring, the probability of any
continuing pollution, and the estimated cost of abating such pollution.
Furthermore, section 519(c)(3) of SMCRA and the implementing Federal
regulations at 30 CFR 800.40(c)(3) provide that no bond shall be fully
released until all the reclamation requirements of SMCRA and the permit
are fully met. These requirements include abatement of surface and
ground water pollution resulting from the operation. Both SMCRA and the
Federal regulations effectively require that discharges from the site
be in compliance with all applicable effluent limitations as a
prerequisite for bond release. Therefore, as discussed in finding B.7.,
the revised bond release provisions either remain substantively the
same as the Federal regulations at 30 CFR 800.40 or do not conflict
with any Federal requirements or adversely impact other aspects of the
West Virginia program.
CSR Sec. 38-2-12.3 Bond Adjustments
Comment: WVHC commented that the State's proposed amendment
satisfies 30 CFR 800.15(d) by providing for bond adjustment in the case
of increased area being added to the permit. However, the amendment
should also include language to more adequately reflect compliance with
30 CFR 800.15(a) as well. ``The state must be able to adjust the bond
`from time to time' not only as the area is increased or decreased, but
also `where the cost of future reclamation changes', e.g., at renewal
time, or at any time during the life of a permit that some unforeseen
or unanticipated complication arises that would cause the cost of
reclamation to increase.''
Response: As discussed in finding B.8.b., mandatory review for bond
adequacy is limited to the States with conventional bonding programs
since those States have no other source of funds other then the bond
for completion of the reclamation in the event of forfeiture.
Therefore, since West Virginia has an alternative bonding system with
mandatory participation, which includes other sources of moneys for
reclaiming bond forfeiture sites, the requirement to review bonds for
adequacy is not mandatory. However, bond adjustment would be advisable
so as to ensure the long-term financial soundness of an alternative
bonding system.
CSR Sec. 38-2-12.4 Forfeiture of Bonds
1. Comments: Subsection 12.4(a)
a. GAI stated its opposition to the requirements that all bond
amounts be forfeited rather than an amount based on the estimated total
cost of achieving the reclamation plan requirements. GAI commented that
all bonds not required to reclaim should be returned, since subsection
12.4(e) allows WVDEP to sue for all costs in excess of the amount
forfeited.
Response: As discussed in finding A.1.a., West Virginia's proposed
requirement that the total bond by forfeited, rather than an amount
based on the estimated cost of reclamation, is not inconsistent with
any Federal requirements.
b. WVCA commented that OSM should find the provision at subsection
12.4(a), which would require WVDEP to forfeit the entire amount of
reclamation bonds irrespective of the actual cost to reclaim mine
sites, both unauthorized by the WVSCMRA and inconsistent with SMCRA.
WVCA further stated that this regulation was intended to dovetail with
a statutory amendment which the WVDEP proposed, but which was
[[Page 51914]]
rejected by the West Virginia Legislature in the 1992/1993 legislative
session. WVCA explained that the Circuit Court of Kanawha County
recently ruled that the WVSCMRA does not allow WVDEP to forfeit the
entire amount of a reclamation bond, but only so much as is necessary
to cover the estimated costs of reclamation (Vaco Enterprises, Inc., v.
Callaghan, Civil Action No. 92-Misc-256 (Kanawha County, Nov. 9, 1992).
WVCA further commented that OSM has rejected this form of bond
release since 30 CFR 800.50(d)(2) specifically provides that in the
event the amount of performance bond forfeited was more than the amount
necessary to complete the reclamation, the unused funds would be
returned. WVCA then referenced a Federal court decision in In Re:
Permanent Surface Mining Regulation Litigation, 14 Env't Rep. Cas.
(BNA) 1083, 1100-1101 (D.D.C. 1980). WVCA stated that ``based on the
court's directive, OSM expressly rejected any notion that reclamation
bonds are penal in nature. OSM wrote that: `OSM views a reclamation
bond as one guaranteeing the performance of reclamation work.
Therefore, it is not a penal bond. Upon forfeiture, only the amounts
necessary to complete the reclamation work can be used by the
regulatory authority.' 48 FR 32932, 32957 (July 19, 1983).''
Response: At the time WVCA submitted its comments on September 13,
1993, the referenced Circuit Court ruling was meaningful to the
proposed amendment being reviewed by OSM. However, this amendment was
revised with West Virginia's submitted dated August 18, 1994. The
August 1994 submittal contained House Bill 4065 which was passed by the
West Virginia legislature on or before March 12, 1994. In it, the West
Virginia legislature approved the use of penal bonds, thereby
effectively superseding the Circuit Court ruling. As discussed in
finding A.1.a., the legislature's action creating penal bonds is not
inconsistent with section 509 of SMCRA and the Federal implementing
regulations pertaining to performance bonds.
2. Comments: Subsection 12.4(b)
WVHC commented that the State's duty to meet the requirements of
subsection 14.5 when reclaiming bond forfeiture sites had been replaced
with meeting the requirements of subsection 12.5. Subsection 12.5
establishes an inventory of all sites where bonds have been forfeited
and a priority listing of sites to receive water treatment whereas
subsection 14.5 establishes water quality standards for active mining
operations.
Response: For the reasons given in finding B.9.c., the Director is
approving this revision.
3. Comments: Subsection 12.4(c)
a. GAI argued that instead of West Virginia looking for ``the most
effective method to control acid mine drainage'' that they should be
looking for ``the most cost effective method.'' GAI explained that one
methodology may cost $100,000 and another may cost $3,000,000 with only
one-tenth of one percent difference in remediation between the two
methods.
Response: The Director agrees with the desirability of seeking the
most cost-effective treatment, so long as the site is brought into
compliance with applicable effluent limitations and water quality
standards. It is noted that subsection 12.5(d) requires the Director of
WVDEP to take into consideration the relative benefits and costs of
water enhancement projects for bond forfeiture sites.
b. Comment: WVHC stated that subsection 12.4(c) limits reclamation
and the amount of acid mine drainage treatment to the amount of money
available. WVHC commented that SMCRA 509(c) and 30 CFR 800.11(e)
require that the amount of money be sufficient to match the problem
rather than the other way around as this proposal suggests. WVHC stated
that the last sentence of subsection 12.4(c) should be dropped from the
rule.
Response: As discussed in finding C., the Director is requiring
West Virginia to eliminate the deficit in the State's alternative
bonding system and to ensure that sufficient money will be available to
complete reclamation, including the treatment of polluted water, of all
existing and future bond forfeiture sites.
c. Comment: WVMRA also did not support the revision at subsection
12.4(c) which requires the Director of WVDEP to take the most effective
actions possible to remediate acid mine drainage, including chemical
treatment where appropriate. WVMRA stated that there are no Federal or
State programs which require mandatory water treatment.
Response: The Director disagrees with the commenter. See finding
A.1.b.(2) for a discussion of this issue.
d. WVHC also commented that in its September 1, 1994, submission,
WVDEP has added the phrase to reclaim the site ``in accordance with the
approved reclamation plan or modification thereof.'' WVHC commented
that this could easily allow changes in reclamation plans after
forfeiture to relieve the agency of any undesired expense in land or
water reclamation requirements without public notice or involvement.
WVHC stated that the words ``or modification thereof'' are
inappropriate and should be eliminated. WVHC pointed out that the State
must be held responsible through the alternative bonding system for the
same reclamation plan that it permitted and bonded. Doubts were also
expressed on whether the State would make the proper distinction
between significant and insignificant permit revisions.
Response: As discussed in finding B.9.d.(1), the Director is
approving West Virginia's proposed amendment revising CSR Sec. 38-2-
12.4(c) to require that bond forfeiture sites be reclaimed in
accordance with the approved reclamation plan or modifications thereof.
The Director believes that regulatory authorities need to have the
flexibility to modify reclamation plans for forfeiture sites since
existing approved plans may be technically impossible to implement and
may not satisfy the changing interests of surface landowners. This most
often happens when forfeiture occurs before mining is completed. All
modifications to the reclamation plan by the regulatory authority must
be consistent with the approved State permanent program.
The remainder of the comment pertaining to public notice and
involvement in reclamation plan modifications goes beyond the scope of
this proposed change by West Virginia since the proposed revision
merely acknowledges that modification of reclamation plans can occur.
The amendment is silent as to public participation in the modification
process.
4. Comment: Subsection 12.4(d) WVHC commented that this section
also ends with the sentence that provides for limiting acid mine
drainage treatment to the funds available. WVHC also stated that the
words ``in accordance with the approved reclamation plan'' should be
included, and the last sentence of subsection 12.4(d) should be
deleted.
Response: Since subsection 12.4(c) provides that reclamation for
bond forfeiture sites will be completed in accordance with the approved
reclamation plan, West Virginia does not have to repeat this provision
in paragraph (d).
5. Comment: Subsection 12.4(e) NCCL expressed concerns pertaining
to the insertion of the language ``or other responsible party'' into
this subsection. NCCL stated that ``WVDEP proposes to amend the
regulation to provide that the `operator, permittee or other
responsible party shall be liable for all costs in excess of the [bond]
amount forfeited.'
[[Page 51915]]
The term `other responsible party' is not defined. We believe that this
undefined term is either redundant or intended by WVDEP to extend the
scope of the surface mining laws to land owners and other persons that
SMCRA was intended to protect.''
NCCL stated that ``the term `operator' is defined in broad terms to
include all persons who either should obtain a permit or who engage in
surface mining and reclamation. This term thus includes all persons who
might be liable for reclamation costs incurred by an operator,
including those persons who might individually be liable for the
violations of corporations. Accordingly, there is no need to create
another category of `other responsible persons.' We are concerned that
in situations where a specific bond is insufficient to cover the cost
of reclaiming a site, including potential long term treatment of acid
mine drainage, WVDEP will decline to use the State Special Reclamation
Fund to treat water and will instead try to impose these costs on
landowners pursuant to revised subsection 12.4(e). Whatever its
motivation, the WVDEP's actions are absolutely inconsistent with the
goals of SMCRA.''
NCCL further stated that ``West Virginia has an alternative bonding
system as provided in 30 CFR 800.11(e) funded by a mix of site-specific
bond and `bond pool' (i.e., the State Special Reclamation Fund) monies.
Despite the bifurcated funding mechanism of this system, the full costs
of reclamation are and must nonetheless be borne exclusively by the
operators either through site-specific bonds or the special reclamation
fund (which operators alone fund through a severance fee).'' NCCL also
commented that ``the incentives to reclaim are absent or diminished
when reclamation costs may be transferred from operators to other
parties such as area landowners, which Congress intended to protect,
nor hold liable for, surface mining operations. See 30 U.S.C.
Sec. 1202(b).''
NCCL also stated that ``OSM has even recognized in promulgation of
its expansive `ownership and control' regulations that direct liability
for reclamation costs and for compliance with SMCRA belongs solely to
the operator or permittee.'' To support this statement, NCCL presented
discussions from two Federal Register notices (54 FR 18438-43, April
28, 1989, and 53 FR 38868-85, October 3, 1988).
Response: As discussed in finding B.9.d.(3), the proposed
requirement in CSR Sec. 38-2-12.4(e) is not prohibited by SMCRA. Also,
under the Federal Clean Water Act, a permittee, operator and/or
landowner can be held responsible for the treatment of point source
discharges that do not meet NPDES effluent limitations after
forfeiture.
CSR Sec. 38-2-12.5 Water Quality Enhancement
1. Comment subsection 12.5(d): BCC commented that the proposal for
supplementing and adjusting the special reclamation fund to pay for
long-term acid mine drainage treatment from forfeiture sites goes far
beyond any OSM counterpart.
WVMRA commented that ``this policy sets a priority and inventory
and makes some recommendations, but there is no legal guidance from OSM
regarding what such a program should include. This makes evaluation of
this policy impossible.''
Response: As discussed in finding B.10.a., subsection 12.5 is being
approved to the extent that it provides only for a ranking of sites for
reclamation without compromising the requirement that all sites be
properly reclaimed in a timely manner.
2. Comment subsection 12.5(d): WVHC stated that the alternative
bonding system fund must be increased to address the liability rather
than the liability being adjusted to match the funds available.
Response: As discussed in finding B.10.b., the Director is
requiring the State to revise subsection 12.5(d) to remove the 25
percent limitation or to otherwise provide for the treatment of
polluted water discharged from bond forfeiture sites.
Retroactive Approval of Amendment
Comment: The WVCA and the WVMRA objected to the proposed provision
at 30 CFR 948.15(o)(1) which would make OSM's approval of the State's
program amendment retroactive. WVMRA commented that OSM had no
authority to retroactively approve the amendment.
Response: As discussed in the Director's Decision (Subsection V),
the Director believes he has ample cause and legal basis for making his
decision on this amendment retroactive to the dates when the proposed
revisions were submitted to OSM.
Federal Agency Comments
Pursuant to section 503(b)(1) of SMCRA and 30 CFR 732.17(h)(11)(i),
OSM solicited comments on the proposed amendment from various Federal
agencies with an actual or potential interest in the West Virginia
program on four different occasions (Administrative Record Nos. WV-891,
WV-897, WV-936, and WV-942). Comments were received from the U.S.
Bureau of Land Management, the Mine Safety and Health Administration,
the U.S. Bureau of Mines, and the U.S. Army Corps of Engineers. These
Federal agencies acknowledged receipt of the amendments, but generally
had no comment or acknowledged that the revisions were satisfactory.
Environmental Protection Agency (EPA)
Pursuant to 30 CFR 732.17(h)(11)(ii), OSM is required to obtain the
written concurrence of the EPA with respect to those provisions of the
proposed program amendment that relate to air or water quality
standards promulgated under the authority of the Clean Water Act (33
U.S.C. 1251 et seq.) or the Clean Air Act (42 U.S.C. 7401 et seq.).
On July 2 and August 3, 1993 (Administrative Record Nos. WV-892 and
WV-896), OSM solicited EPA's concurrence with the proposed amendment.
On October 17, 1994 (Administrative Record No. WV-949), EPA gave its
written concurrence with a condition based on subsection 5.4(b)(4) of
West Virginia's regulations. This conditional concurrence does not
pertain to the bonding requirements, which are the subject of this
rulemaking. Therefore, EPA's concurrence will be discussed in the third
and final rulemaking on the proposed amendment.
Pursuant to 30 CFR 732.17(h)(11)(i), the Director solicited
comments on the proposed amendment from EPA on four different occasions
in 1993 and 1994 (Administrative Record Nos. WV-891, WV-897, WV-936,
and WV-942). In its letter dated October 17, 1994 (Administrative
Record No. WV-949), EPA submitted the following comments on the
proposed amendment provisions pertaining to the bonding requirements.
1. Comment: EPA commented that ``the matrices on Tables 1 and 4
[CSR Sec. 38-2-11.6, Site-Specific Bonding] provide a method for
determining reclamation bonds with a maximum of $5,000 per acre. It is
noted that the maximum portions which can be attributed for water
quality concerns are based on overburden/ material analyses and are
only $400 for surface mines and $800 for refuse disposal sites. It is
also understood that, under current State regulations, a maximum of
only 25 percent of the Special Reclamation Fund, or bond pool, can be
used for treatment of forfeiture sites. Considering the experience to
date for long-term treatment of acid discharges from bond forfeiture
sites, the above funding sources are very inadequate. It is apparent
that the answer for preventing
[[Page 51916]]
future acid mine drainage is to scrutinize proposed mining permits for
their acid drainage potentials and deny permits to those with higher
potentials. For proposed mines with lower acid drainage potentials,
funding from the site-specific bonds, Special Reclamation Fund or other
alternative sources should be increased to amounts to provide for the
contingency of long-term treatment.''
Response: As discussed in finding A.1.b.(2), the Director is
requiring West Virginia to amend its program to provide for the
treatment of polluted water discharging from all bond forfeiture sites.
Also, as discussed in finding A.1.b.(4)(c), the Director
disapproved the proposal that would allow the special reclamation fund
to incur a deficit. Furthermore, as discussed in finding C., the
Director found the State's alternative bonding system is not achieving
the objectives and purposes of the conventional bonding program as set
forth in section 509 SMCRA, and he is requiring the State to eliminate
the deficit in the State's alternative bonding system and to ensure
that sufficient money will be available to complete reclamation,
including treatment of polluted water, at existing and future bond
forfeiture sites.
2. Comment: EPA also expressed concern about the potential for acid
seepage from backfills after Phase I bond is released pursuant to the
provisions of section 12.2(c)(1), where 60 percent of the total bond
may be released. EPA recommended that ``Phase I bond release for mines
with acid potential be delayed for a year or sufficient period after
backfilling to determine if acid seepage will occur.'' EPA further
recommended withholding of the entire bond if acid seepage did occur
after this period.
Response: The Director finds that EPA's recommendations have merit.
However, nothing in SMCRA or the Federal regulations require Phase I
bond release to be delayed in order to determine if acid seepage will
occur. It should be noted that compliance with the State's existing
toxic handling and hydrologic reclamation plan requirements should
prevent postmining acid seeps from occurring. Further, subsection
14.7(d) provides that after treatment facilities are removed, a one-
year history of meeting applicable effluent limitations is required to
establish that the hydrologic balance is being preserved.
State Historical Preservation Officer and the Advisory Council on
Historic Preservation (ACHP)
Pursuant to 30 CFR 732.17(h)(4), OSM solicited comments on the
proposed amendment from the West Virginia Division of Culture and
History and the ACHP on four different occasions (Administrative Record
Nos. WV-891, WV-897, WV-936, and WV-942). Neither agency commented on
the proposed amendment.
V. Director's Decision
Based on the above findings, the Director is approving with certain
exceptions and additional requirements the proposed amendment as
submitted by West Virginia on June 28, 1993, as modified on July 30,
1993; August 18, 1994; and September 1, 1994, and May 16, 1995. As
discussed in the findings, there are some exceptions to this approval.
The Director also is requiring the State to make additional changes to
certain provisions to ensure that the program is no less stringent than
SMCRA and no less effective than the Federal regulations.
As discussed in findings A.1.b.(1) and B.10.a., the Director is
approving those portions of Sec. 22-3-11(g) of WVSCMRA and CSR Sec. 39-
2-12.5 that concern prioritization of forfeited sites only to the
extent that these provisions authorize the ranking and prioritization
of bond forfeiture sites for reclamation purposes. Nothing in this
decision shall be construed as compromising the requirement that all
bond forfeiture sites be properly reclaimed in a timely manner.
In addition, as discussed in findings A.1.b.(2), A.1.b.(4)(c), and
B.10.b., the Director is not approving Sec. 22-3-11(g) of WVSCMRA and
CSR Sec. 39-2-12.5(d) to the extent that they limit expenditures on
water treatment at bond forfeiture sites to 25 percent of the assets of
the special reclamation fund and authorize collection of the special
reclamation tax only when the fund's liabilities exceed its assets.
As discussed in finding A.1.b.(3), the Director is approving
Sec. 22-3-11(g) of WVSCMRA concerning administrative expenses only to
the extent that the special reclamation fund can withstand all
authorized administrative cost withdrawals without hampering the
State's ability to complete the reclamation of bond forfeiture sites in
a timely manner and in accordance with their approved reclamation
plans.
As discussed in finding B.5., the Director is approving CSR
Sec. 38-2-11.6 with the stipulation that nothing in these regulations
or this approval may be construed as altering or authorizing a variance
or deviation from the permitting requirements and performance standards
of the approved West Virginia program.
The Director is amending 30 CFR Part 948 to codify this decision.
Under 30 CFR 732.17(g), no changes in State laws or regulations may
take effect for purposes of the State program unless and until they are
approved as a program amendment. With respect to those changes in State
laws and regulations approved in this document, the Director is making
the effective date of his approval retroactive to the date upon which
they took effect in West Virginia for purposes of State law. He is
taking this action in recognition of the extraordinarily complex nature
of the review and approval process for this particular amendment, the
significance of its provisions to the adequacy of the alternative
bonding system, and the need to affirm the validity of State actions
taken during the interval between State implementation and the decision
being announced today. Retroactive approval of these provisions is in
keeping with the purposes of SMCRA relating to State primary and
environmental protection.
To assure consistency with 30 CFR 732.17(g), which states that
``[no] * * * change to laws or regulations shall take effect for
purposes of a State program until approved as an amendment,'' the
Director's approval of the revisions, as noted in the codification
below, includes West Virginia's previous and ongoing implementation of
these revisions. The changes approved in this rulemaking strengthen the
West Virginia program and, as such, are consistent with SMCRA and the
Federal regulations at 30 CFR 732.17(g).
Retroactive approval of the revisions is appropriate because no
detrimental reliance on the previous West Virginia laws or regulations
has occurred for the period involved. OSM is approving these changes
back only to the dates from which West Virginia began enforcing them.
As support for his decision, the Director cites the rationale employed
by the United States Claims Court in McLean Hosp. Corp. v. United
States, 26 Cl. Ct. 1144 (1992). In McLean, the Court held that
retroactive application of a rule was appropriate where the rule was
identical in substance to guidelines which had been in effect anyway
during the period in question. Therefore, the Court concluded, the
plaintiff could not ``claim that it relied to its detriment on a
contrary rule.'' 26 Cl. Ct. at 1148. Likewise, since the Director is
approving changes which the State has
[[Page 51917]]
been enforcing there can be no claim of detrimental reliance on any
contrary West Virginia statutes or regulations in this instance.
Making portions of the approval retroactive does not require
reopening of the comment period under section 553(b)(3) of the
Administrative Procedure Act (APA), 5 U.S.C. Sec. 553(b)(3). The
public, in general, and the coal industry in West Virginia in
particular have had sufficient notice of these revised statutory and
regulatory revisions to support retroactive OSM approval. Retroactive
approval constitutes an acknowledgement of statutory and regulatory
revisions which West Virginia has been implementing since the
respective approval dates of these revisions at the State level, and
would have been expected as a natural outgrowth of the proposal. The
retroactive approval does not apply to earlier versions of these
provisions to the extent that such provisions were inconsistent with
Federal requirements.
Furthermore, ``good cause'' exists both under section 553(b)(3)(B)
of the APA, 5 U.S.C. Sec. 553(b)(3)(B), for retroactive approval (if
notice were not sufficient) and under section 553(d)(3) of the APA, 5
U.S.C. Sec. 553(d)(3), for not delaying the effective date of the
approval for 30 days after the publication of this Federal Register
decision document. As noted in the findings above, most of these
bonding revisions are needed to improve the efficacy and financial
status of West Virginia's bonding program in general, and its
alternative bonding system in particular. See, for example, findings
A.1.a. (penal bonding), A.1.b.(4)(a) (increase in the special
reclamation tax), and B.5 (site-specific bonding). Failure to make OSM
approval of these salutary provisions retroactive could cause
significant disruption to the orderly enforcement and administration by
West Virginia of its bonding program, particularly if the funding of
the alternative bond system was affected. The Director believes that
the desire to avoid such unfortunate consequences, coupled with the
lack of any prejudice to the public or to the regulated community, are
sufficient bases to constitute ``good cause.''
Effect of Director's Decision
Section 503 of SMCRA provides that a State may not exercise
jurisdiction under SMCRA unless the State submits and obtains the
Secretary's approval of a regulatory program. Similarly, 30 CFR
732.17(a) requires that the State submit any alteration of an approved
State program to OSM for review as a program amendment. Thus, any
changes to the State program are not enforceable until approved by OSM.
The Federal regulations at 30 CFR 732.17(g) prohibit any unilateral
changes to approved State programs. In oversight of the West Virginia
program, the Director will recognize only the statutes, regulations and
other materials approved by OSM, together with any consistent
implementing policies, directives and other materials, and will require
the enforcement by West Virginia of only such provisions. The
provisions that the Director is approving today will take effect on the
specified dates for purposes of the West Virginia program.
VI. Procedural Determinations
Executive Order 12866
This rule is exempted from review by the Office of Management and
Budget (OMB) under Executive Order 12866 (Regulatory Planning and
Review).
Executive Order 12778
The Department of the Interior has conducted the reviews required
by section 2 of Executive Order 12778 (Civil Justice Reform) and has
determined that, to the extent allowed by law, this rule meets the
applicable standards of subsections (a) and (b) of that section.
However, these standards are not applicable to the actual language of
State regulatory programs and program amendments since each such
program is drafted and promulgated by a specific State, not by OSM.
Under sections 503 and 504 of SMCRA (30 U.S.C. 1253 and 1255) and 30
CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State
regulatory programs and program amendments submitted by the States must
be based solely on a determination of whether the submittal is
consistent with SMCRA and its implementing Federal regulations and
whether the other requirements of 30 CFR Parts 730, 731, and 732 have
been met.
National Environmental Policy Act
No environmental impact statement is required for this rule since
section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency
decisions on proposed State regulatory program provisions do not
constitute major Federal actions within the meaning of section
102(2)(C) of the National Environmental Policy Act (42 U.S.C.
4332(2)(C)).
Paperwork Reduction Act
This rule does not contain information collection requirements that
require approval by OMB under the Paperwork Reduction Act (44 U.S.C.
3507 et seq.).
Regulatory Flexibility Act
The Department of the Interior has determined that this rule will
not have a significant economic impact on a substantial number of small
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
The State submittal which is the subject of this rule is based upon
corresponding Federal regulations for which an economic analysis was
prepared and certification made that such regulations would not have a
significant economic effect upon a substantial number of small
entities. Accordingly, this rule will ensure that existing requirements
previously promulgated by OSM will be implemented by the State. In
making the determination as to whether this rule would have a
significant economic impact, the Department relied upon the data and
assumptions for the corresponding Federal regulations.
List of Subjects in 30 CFR Part 948
Intergovernmental relations, Surface mining, Underground mining.
Dated: September 27, 1995.
Allen D. Klein,
Regional Director, Appalachian Regional Coordinating Center.
For the reasons set out in the preamble, Title 30, Chapter VII,
Subchapter T of the Code of Federal Regulations is amended as set forth
below:
PART 948--WEST VIRGINIA
1. The authority citation for Part 948 continues to read as
follows:
Authority: 30 U.S.C. 1201 et seq.
2. Section 948.15 is amended by adding paragraph (o) to read:
Sec. 948.15 Approval of regulatory program amendments.
* * * * *
(o)(1) General description and effective dates. Except as noted in
paragraph (o)(3) of this section, the amendment submitted by West
Virginia to OSM by letter dated June 28, 1993, as revised by submittals
dated July 30, 1993; August 18, 1994; September 1, 1994; and May 16,
1995, is approved to the extent set forth in paragraph (o)(2) of this
section. These portions of the amendment pertain to bonding
requirements; the Director will announce a decision on the other
provisions of the amendment at a later time. The effective dates of the
Director's approval of the provisions identified in paragraph (o)(2) of
this section are set forth below:
(i) March 10, 1990, for the statutory changes submitted to OSM by
letter
[[Page 51918]]
dated June 28, 1993 (Administrative Record No. WV-888);
(ii) December 1, 1992, for the rule changes submitted to OSM by
letter dated June 28, 1993 (Administrative Record No. WV-889);
(iii) May 2, 1993, for the rule changes submitted to OSM by letter
dated July 30, 1993 (Administrative Record No. WV-893);
(iv) June 11, 1994, for the statutory changes submitted to OSM by
letter dated August 18, 1994 (Administrative Record No. WV-933); and
(v) October 4, 1995, for the rule changes submitted to OSM by
letters dated September 1, 1994, and May 16, 1995 (Administrative
Record Nos. WV-937 and WV 979B).
(2) Approved revisions. Except as noted in paragraph (o)(3) of this
section, the following provisions of the amendment described in
paragraph (o)(1) of this section are approved:
(i) Revisions to the West Virginia Surface Coal Mining and
Reclamation Act.
Sec. 22-3-11(a) Bond Requirements.
Sec. 22-3-11(g) Special Reclamation Fund.
(The provision authorizing annual diversions of up to 10 percent of
the fund's assets for administrative costs associated with various
State regulatory and reclamation programs is approved only to the
extent that these withdrawals do not hamper the State's ability to
complete the reclamation of bond forfeiture sites in a timely manner
in accordance with the approved reclamation plans.)
Sec. 22-3-12... Site-Specific Bonding.
(ii) Revisions to the West Virginia Code of State Regulations
(CSR).
Sec. 38-2-11.2. General Requirements for All Bonds.
Sec. 38-2-11.3. Collateral Bonds.
Sec. 38-2-11.4. Incremental Bonding.
Sec. 38-2-11.5. Open-Acre Limit Bonding.
Sec. 38-2-11.6. Site-Specific Bonding.
(These regulations are approved with the stipulation that nothing in
CSR Sec. 38-2-11.6 or the Director's approval of this subsection may
be construed as altering or authorizing a variance or deviation from
the permitting requirements and performance standards of the
approved West Virginia program.)
Sec. 38-2-11.7... Environmental Security Account.
Sec. 38-2-12.2... Requirement to Release Bonds.
Sec. 38-2-12.3... Bond Adjustments.
Sec. 38-2-12.4(a) Bond Forfeiture.
Sec. 38-2-12.4(a) Bond Forfeiture.
(2)(B).
Sec. 38-2-12.4(c) Bond Forfeiture.
Sec. 38-2-12.4(d) Bond Forfeiture.
, (e).
Sec. 38-2-12.5... Water Quality Enhancement.
(These regulations are approved with the stipulation that nothing in
CSR Sec. 38-2-12.5 or the Director's approval of this subsection may
be construed as compromising the program requirement that all bond
forfeiture sites be fully reclaimed in a timely manner.)
(3) Exceptions.
(i) Section 22-3-11(g) of the Code of West Virginia is not approved
to the extent that it limits special reclamation fund expenditures on
water treatment at bond forfeiture sites to 25 percent of the fund's
annual fee collections and authorizes collection of the special
reclamation tax only when the fund's liabilities exceed its assets.
(ii) Subsection 38-2-12.5(d) of the West Virginia Code of State
Regulations is not approved to the extent that it limits expenditures
on water treatment at bond forfeiture sites to 25 percent of the
special reclamation fund's gross annual revenue.
3. Section 948.16 is revised by removing and reserving paragraph
(ww) and by adding paragraphs (jjj), (kkk), and (lll) to read:
Sec. 948.16 Required regulatory program amendments.
* * * * *
(jjj) By December 1, 1995, West Virginia must submit either a
proposed amendment or a description of an amendment to be proposed,
together with a timetable for adoption, to revise Sec. 22-3-11(g) of
the Code of West Virginia and Sec. 38-2-12.5(d) of the West Virginia
Code of State Regulations to remove the limitation on the expenditure
of funds for water treatment or to otherwise provide for the treatment
of polluted water discharged from all bond forfeiture sites.
(kkk) By December 1, 1995, West Virginia must submit either a
proposed amendment or a description of an amendment to be proposed,
together with a timetable for adoption, to remove the provision of
Sec. 22-3-11(g) of the Code of West Virginia that allows collection of
the special reclamation tax only when the special reclamation fund's
liabilities exceed its assets.
(lll) By December 1, 1995, West Virginia must submit either a
proposed amendment or a description of an amendment to be proposed,
together with a timetable for adoption, to eliminate the deficit in the
State's alternative bonding system and to ensure that sufficient money
will be available to complete reclamation, including the treatment of
polluted water, at all existing and future bond forfeiture sites.
[FR Doc. 95-24580 Filed 10-3-95; 8:45 am]
BILLING CODE 4310-05-M
