West Virginia Regulatory Program

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.

-----------------------------------------------------------------------

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