Mining Claims Under the General Mining Laws; Surface Management

DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3800

[WO-660-4120-02-24 1A]

RIN 1004-AC40

Mining Claims Under the General Mining Laws; Surface Management

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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SUMMARY: The Bureau of Land Management (BLM) is amending its surface

management regulations at 43 CFR subpart 3809. The final rule requires

submission of financial guarantees for reclamation of all hardrock

mining operations greater than casual use, increases the types of

financial instruments acceptable to satisfy the requirement for a

financial guarantee, and amends the noncompliance section of the

regulations to require the filing of plans of operations by operators

who have a record of noncompliance. In addition, the final rule removes

section 3809.1-8 on existing operations, which is no longer applicable,

because all activities that were in operation in 1980 and continue in

operation have now complied with this section.

EFFECTIVE DATE: March 31, 1997.

ADDRESSES: Inquiries or suggestions should be sent to the Solid

Minerals Group at Director (320), Bureau of Land Management, Room 501

LS, 1849 C Street, N.W., Washington, D.C. 20240.

FOR FURTHER INFORMATION CONTACT: Richard Deery, (202) 452-0350.

SUPPLEMENTARY INFORMATION: On July 11, 1991 (56 FR 31602), BLM

published a proposed rule to require submission of financial guarantees

for reclamation for all hardrock mining operations greater than casual

use, to designate additional financial instruments that would satisfy

the requirement for a financial guarantee, and to amend the

noncompliance section of the regulations to require the filing of plans

of operations by operators who have a record of noncompliance. The

extended 90-day comment period expired on October 9, 1991. The BLM

received 218 comments on the proposed rule, including 3 citizen-

petitions with numerous signatures. Of these comments, 58 were from

public interest groups, 51 were from business entities or associations,

22 were from government agencies, and 135 were from individuals, not

including the petitions. All of the comments were

[[Page 9094]]

carefully considered in developing this final rule.

Three basic points of view as to the proposed rule emerged in the

comments. First, a number of comments dealt with the adequacy of the

bond levels, self-certification, and the number of financial

instruments acceptable under the rule. The comments stated that the

bond levels set in the proposed rule were too low, and that BLM should

require full cost bonding for both notices and plans of operation.

Those expressing concern regarding self-certification and the number of

financial instruments believe the proposed rule could lead to less

security. Others simply objected to self-bonding in any form. Second,

mining associations and some individuals agreed that the proposed rules

were necessary, but argued that the $5,000 bond for notice level

operations is excessive. Third, many of the individuals argued that the

proposal discriminates against small miners and would force them out of

business, if implemented.

In response to the comments regarding bond levels, BLM has amended

the rule to require bonds for 100 percent of the amount that would be

needed to pay for reclamation by a third-party contractor using

equipment from an off-site location. This will ensure that, if the

bonded party fails to perform its reclamation responsibilities, BLM

will have access to adequate funds through these financial guarantee

arrangements to reclaim the lands, and thereby protect the interest of

the public, including Federal taxpayers. Calculation of the amount is

at the operator's expense, and must be certified by a third-party

professional engineer registered to practice in the State in which the

operations are proposed. However, this engineer's certification is not

required when the requirement for a financial guarantee is met by

providing evidence of an instrument held or approved by a State agency.

The comments suggesting that the bonds were insufficient also

raised several other issues. For example, they asserted that the rule

did not contain detailed reclamation and bond release language.

Detailed guidance on reclamation is beyond the scope of this rule.

However, the final rule addresses concerns about bond release in

section 3809.1-9(m), as discussed below. Under the subpart 3809

regulations, further guidance on the standards for reclamation and bond

release will be dealt with on a case-by-case basis at the time a notice

provided for under section 3809.1-3 or a plan of operations provided

for under section 3809.1-4 is received and reviewed, and would be

covered as part of the review of reclamation measures incorporated into

the notice or plan.

The majority of the individual comments objected to the $5,000

minimum bond required for a notice level operation. They stated that

the $5,000 self-certification would be an unnecessary regulation,

because reclamation of any damage caused by small miners occurs

naturally during the first winter. Those who identified themselves as

recreational miners considered the proposal to be unfair, because it

requires too great an expenditure. Many individual comments opposed the

$5,000 financial guarantee, arguing that even self-certification would

be burdensome and force small miners and prospectors out of business.

Two individual comments favored the proposal, citing firsthand

experience of the environmental impact of small mining operations.

The proposed rule was drafted with the assumption that notice-level

operators likely would use the full 5 acres allowed and certify the

existence of the full $5,000 guarantee for the entire acreage at the

$1,000 per acre exploration level cap. The final rule requires the

financial guarantee to cover 100 percent of the estimated costs of

reclamation, with the minimum acceptable amount being $1,000 for each

acre or fraction thereof disturbed.

Specific Comments

In the following portion of the preamble, comments will be

discussed as they relate to various specific sections of the rule.

Section 3809.0-5 Definitions

This section of the proposed rule would have added definitions for

the terms ``exploration operations'' and ``mining operations,'' and

redesignated the other paragraphs to accommodate these additions. These

proposed definitions were to be used to differentiate between the

maximum guarantee amounts ordinarily to be required. However, since the

rule has been changed elsewhere in accordance with public comments to

require financial guarantees to cover 100 percent of the estimated

costs of reclamation for all operations other than casual use, these

definitions are no longer needed. Therefore, the proposed revisions to

section 3809.0-5 are omitted in the final rule.

Section 3809.0-9 Information Collection

This section codifies the note that appeared at the beginning of

Group 3800, and revises it to comply with current OMB regulations. A

notice of BLM's request for approval of the information collections in

subparts 3802 and 3809 was published in the Federal Register on March

5, 1996. Three comments responded to the notice, two within the public

comment period. Two of the comments supported the information

collection. A third objected to perceived redundancies in the

information collection proposal. The supposed repetitiveness was only

apparent; similar information is to be collected under each of two

subparts covered by the request, but will not be collected twice for

the same operation. The comment also seemed to treat the notice as

pertaining to a proposed rule rather than in part to existing

regulations, and objected to provisions dealing with aircraft

operations in subpart 3802, arguing that BLM lacked jurisdiction.

However, BLM managers do in fact manage aircraft landing areas in

wilderness study areas under subpart 3802. These comments did not lead

to changes in the information collection. The estimated public

reporting burden is estimated to be 16 hours per response for notices

and 32 hours per response for plans of operations.

Section 3809.1-9 Financial Guarantees

This section states clearly that obtaining a bond or other

financial guarantee is a prerequisite to operating on an unpatented

mining claim under a notice or plan of operations. It lists the types

of guarantees that are acceptable, and requires that they cover the

entire estimated cost of reclamation. It requires that operators report

their financial guarantees to BLM and include certain enumerated

information with the report. The section also provides for partial

release under the guarantees when phases of reclamation are completed,

and states the consequences of default or bond deficiency.

A new paragraph (a) has been added to this section in the final

rule to make it clear that initiating operations under a notice or

conducting operations under a plan of operations without a required

financial guarantee is prohibited by regulation. Among other remedies

available to the government, such conduct may be prosecuted under

section 303(a) of the Federal Land Policy and Management Act (FLPMA),

which provides criminal penalties for the knowing and willful violation

of the regulations.

Proposed paragraph (a) is redesignated as (b) in the final rule.

This paragraph, as proposed, removed language from the current

regulations

[[Page 9095]]

exempting notice level operations from posting a financial guarantee.

One comment observed that almost any normal mining activity exceeds the

definition of casual use in subpart 3809 and implied that the paragraph

excepting casual use from bonding requirements serves no use. No change

is made in the final rule as a result of this comment. Much exploratory

activity that does not require a notice to be submitted can and does

take place on public lands, whether on mining claims or not: for

example, exploratory activity that does not require mechanized earth-

moving equipment or explosives.

Section 3809.1-9(c). Proposed paragraph (b), which has been

redesignated as paragraph (c) in the final rule, would have: (1)

Required certification of a financial guarantee, (2) established a

guarantee amount of $5,000, (3) allowed a choice of financial

instruments, (4) provided that the guarantee may be met by providing

evidence of a State-held bond, (5) required the certification to

accompany the filed notice, (6) permitted the authorized officer to

return incomplete notices for failure to have the certification, (7)

required the funds to remain available until the authorized officer has

absolved the operator of reclamation responsibilities, and (8) held the

operator to the reclamation standards in section 3809.1-3(d).

A number of comments addressed the various proposed requirements in

this paragraph of the proposed rule.

(1) Certification of a financial guarantee.

Two comments suggested that a better course of action would be for

the BLM to have the guarantee in hand rather than a certification that

a guarantee exists. They cited a perceived tendency for small operators

who commit violations to leave the vicinity or not restart operations

on public lands, because many miners only have one operation in their

lifetime and the possibility of not being able to obtain a financial

guarantee for future operations is not a credible deterrent. They also

cite the high cost of prosecutions.

We acknowledge the potential for such problems. The model for this

proposal is the self-certification system used in administering State

requirements for automobile insurance. Citizens do not customarily hand

the policy to the State, but certify that it has been obtained and is

available for use. Failure to have the insurance brings the imposition

of penalties by the State. Notices and plans of operation will be

required to contain the social security number of the operator or the

employer identification number of operators or agents. Ultimately,

however, the mining claimant will be responsible for the activity on

the mining claim.

There will be a lower administrative cost using the certificate

system since collecting the actual financial instruments necessarily

would require funding for the administrative overhead to accept, sort,

and process the instruments, and maintain facilities for secure

storage. Second, the sanctions for noncompliance can be severe, and can

in appropriate cases include criminal penalties authorized by Section

303(a) of FLPMA for knowing and willful violations of these

regulations. These sanctions will be used against operators who abandon

operations after committing violations.

This rule also incorporates the maximum penalties provided for in

the Sentencing Reform Act of 1989 (18 U.S.C. 3571 et seq.). Penalty

provisions such as those in FLPMA that provide for up to a year in jail

or a fine of $1,000 for violators are classified as Class A

misdemeanors under 18 U.S.C. 3571, and the Sentencing Reform Act

provides for fines for Class A misdemeanors of up to $100,000 for

individuals and $200,000 for organizations.

(2) The guarantee amount of $5,000.

This provision of the proposed rule generated the largest number of

comments. Many stated that the proposed $5,000 guarantee would be

excessive, burdensome, discriminatory, and damaging to small operators.

On the other hand, other comments stated that the amount was

insufficient for complete reclamation.

In drafting the proposed rule, it was assumed that notice level

operators would use the full 5 acres allowed and be bonded for the same

at the proposed exploration level cap, which was $1,000 per acre. Many

comments suggested that financial guarantee requirements should be

based on actual acreage disturbed. This suggestion has been adopted in

the final rule. The final rule requires bonding sufficient to cover 100

percent of the estimated costs of reclamation with a $1,000 minimum

rate for each acre disturbed. The minimum acceptable amount will be

$1,000 if the area disturbed is less than one acre.

(3) Allowing for a choice of financial instruments.

Individual and industry association comments generally approved of

the option to choose the financial instrument. Environmental groups

expressed reservations as to the use of instruments with greater

associated risk, such as mortgages on mining properties and liens on

equipment. We acknowledge the increased risk associated with these

types of instruments. In response, the rule has been amended to remove

the provision for the use of mortgages on mining property and first

liens on equipment.

One comment suggested that whatever financial instrument is

approved, it must be redeemable by the Secretary. For plan level

operations, the suggestion is a logical extension of the BLM holding

the guarantee. The rule has been amended to incorporate this change for

plan-level operations. For notice-level activities, this would be an

unnecessary administrative burden on the operator and the authorized

officer. The authorized officer does not hold the guarantee for notice-

level activities, but rather the certification. If the comment were

adopted in the final rule, operators would be required to get the

instrument released by the authorized officer, creating an unnecessary

administrative burden. Therefore, the comment is not adopted for

notice-level activities.

(4) The guarantee may be met by providing evidence of a State-held

bond.

This continues the provisions of the existing regulations.

(5) The certification is required to accompany the filed notice.

(6) The authorized officer may return incomplete notices for

failure to have the certification.

One comment observed that nothing in the regulations requires the

notice to be complete and that the notice does not have to be approved,

adding that the provision regarding the notice should be modified to

create a completeness review or a notice approval process. The comment

observed that the situation renders the return of the notice

irrelevant. As a clarification and to achieve the same purpose as the

return of a notice submitted without a financial guarantee certificate,

the final rule incorporates language at section 3809.1-9(a) stating

that conducting operations under either a plan or a notice prior to

submission of the appropriate financial guarantee is prohibited.

Section 3809.3-2 on noncompliance has been amended by adding paragraph

(f) to set forth the penalties contained in the statute for those who

commit prohibited acts. For notices filed after the effective date of

the regulations, the certification set out in paragraph (c) of this

section must accompany the notice. For existing notices on file with

BLM that cover active ongoing operations predating the effective date

of this rule (including operations suspended due to weather), no

certification is required until a new notice is filed. For existing

notices on file with BLM, the claimant or operator will have to provide

the certification before initiating operations.

[[Page 9096]]

(7) The funds are required to remain available until the authorized

officer has absolved the operator of reclamation responsibilities.

As discussed below, in response to comments, a procedure for phased

release or reduction of bonds as reclamation phases are completed has

been included in section 3809.1-9(m) of the final rule.

(8) The operator is held to the reclamation standards in section

3809.1-3(d).

Among the general comments were several statements that BLM should

develop ``clear reclamation standards'' and, as a Federal agency,

should take the lead in ``defining performance standards.'' The BLM

currently has regulations at 43 CFR 3809.1-3(d) and 3809.1-5(c) that

govern reclamation standards. Reexamination of their adequacy is beyond

the scope of this rule.

Section 3809.1-9(d). This paragraph was paragraph (c) in the

proposed rule, and has been redesignated as (d) in the final rule. In

the final rule, this provision requires the certification for notice-

level operations to include the name, home address, home and office

phone number, and social security or employer identification number of

the operator, mining claimant, or its agent. It requires the operator,

mining claimant, or its agent to make various statements about the

financial guarantee as part of the certification, including: (1) That

the mining claimant or operator for whom the individual is submitting

the certification is responsible for the reclamation; (2) that the

financial guarantee exists in the required amount, and its location;

(3) that the guarantee will be delivered on demand within 45 days; (4)

a statement acknowledging that surrender of the guarantee does not

absolve the operator, mining claimant, or agent, from responsibility

and does not release or waive any claim BLM may have under the

Comprehensive Environmental Response, Compensation, and Liability Act

of 1980, as amended, 42 U.S.C. 9601 et seq., or any other applicable

statutes, or any regulations; and (5) a statement acknowledging that

failure to have the guarantee as certified, or failure to provide the

guarantee upon demand by the authorized officer may result in

prosecution under the appropriate Federal statutes.

Many of the comments that generally objected to the proposed rule

also objected to the content of this certification, suggesting that it

assumed all operators were guilty until proven innocent. The purpose of

the regulation is, however, to create a set of known standards by which

to judge the performance of the notice-level operator with respect to

having and maintaining the financial guarantee. Because BLM is not now

requiring notice operators to supply the guarantee itself to BLM, but

only to certify its existence, it is important that the operator

understands fully and acknowledges his or her obligations in this

regard.

One comment stated that 45 days (plus an additional 45 days, if

authorized) was too long a period of time for the Government to wait

for the guarantee. The time period is retained in the final rule

because some instruments allowed under the rule may take time to be

liquidated.

One statement observed that there was some confusion in determining

the responsible party in the proposed language. The purpose of the

provision is to designate a responsible party. That party may be a

representative of a corporate operator. If an individual can speak for

the corporation in filing a notice and a guarantee, then the same

individual can bind the company to do the reclamation.

Proposed section 3809.1-9(d), redesignated as (e) in the final

rule, requires each of the statements included with the certification

to be initialed and dated. Failure to initial each statement will

result in return of the certificate. One comment stated that this was

unnecessary and that the signing and the dating of the entire

certificate should suffice. Another comment noted that this procedure

was overly bureaucratic. Section 3809.1-9(e) is retained in the final

rule, because these separate acknowledgments will serve to establish

the knowledge and legal accountability of mining claimants and

operators who will be permitted under the regulations to self-certify

that they have adequate financial guarantees.

Proposed section 3809.1-9(e), redesignated as (f) in the final

rule, has been amended for clarification to limit its application to

notice-level operators.

Proposed paragraphs (f) and (g) of section 3809.1-9, redesignated

as (g) and (h) in the final rule, would have required the plan-level

operator to post a bond, and required the authorized officer to set the

amount at a level sufficient to pay for reclamation if the plan-level

operator fails to perform the work. However, the bond requirements for

exploration and mining would have been limited to $1,000 and $2,000 per

acre, respectively, except that operators in noncompliance with

submitted plans of operations and notices would have been required to

post 100 percent bonds.

Numerous comments opposed the provisions for bond caps in the

proposed rule. Many stated that the caps were far too low. One comment

stated that they were too high. Another stated that there should be no

bonds required of operators who do not have a record of noncompliance.

The BLM has reviewed the bonding requirements proposed in light of

the comments and has decided to amend the bond amounts based on these

comments. The financial guarantee requirements in the rule have been

amended to require the guarantee to cover 100 percent of the estimated

costs of reclamation. The final rule also states the minimum amount

required for a financial guarantee, $1,000 per acre for notice-level

activities and $2,000 per acre for plan-level activities. The role for

financial guarantees required and held by BLM will be to ensure that

money sufficient to cover full reclamation costs is available.

Proposed section 3809.1-9(h) would have required those portions of

operations utilizing cyanide or other leach solutions to be bonded at

100 percent. Several comments said that the failure to include vat

leach and other facilities storing or receiving solutions containing

cyanide or other leach solutions in this section was improper. One

comment considered the entire proposal onerous and objected to the

inclusion of other leach solutions. Other comments suggested that this

section be made discretionary. These comments are resolved by changes

made elsewhere in the final rule, which requires all plan-level

operations to be covered by 100 percent financial guarantees. A

separate specific 100 percent bonding requirement for cyanide and

similar operations is therefore no longer necessary--it is subsumed in

the general requirement. Accordingly, this paragraph has been removed

in the final rule.

Section 3809.1-9(i), as proposed, would have allowed the authorized

officer to review and accept or reject any of the types of financial

instruments offered by the plan level operator, including first lien

security interests on mining equipment. Several comments questioned the

use of this instrument, as well as first mortgages and first deeds of

trust, as too risky. Upon reflection, we agree. The provisions for

allowing such instruments as guarantees have been removed in the final

rule. However, this paragraph has been amended in the final rule to

make clear that, for purposes of the financial guarantee requirements

of this section, BLM will honor the financial guarantees chosen by the

affected State, if the BLM finds

[[Page 9097]]

that the instrument held by the State provides the same guarantee as

that required by the final rule.

Section 3809.1-9(j) allows for review of operations conducted under

an approved plan of operations and readjustment of the financial

guarantee. The final rule allows the operator to submit a new (and less

expensive, if available) form of guarantee subject to the approval of

the authorized officer. This was generally supported by the comments.

Section 3809.1-9(k) allows the use of traditional instruments and

expands the list to include a large number of non-traditional

instruments. Most of the comments that addressed this provision

generally supported it, some suggesting that second mortgages should be

added to the list. One comment suggested that any instrument acceptable

to the State should be acceptable to BLM. So long as the State holds

the instrument the BLM will not intervene, but for security interests

to be held by the United States, acceptable instruments are limited to

those listed in the regulations. One comment suggested that taking a

first mortgage on a mining property might lead to difficulties and

potential liability risk to the United States from with hazardous

materials. Upon reflection, we agree. Therefore, mortgages and liens on

real property will not be acceptable as financial guarantees under this

final rule.

Some comments generally disapproved of this expansion of possible

security instruments, stating that there appeared to be no problem in

getting traditional surety bonds. Contrary to this view, it appears

that there may be a problem for the smaller operator. These same

comments also took exception to the use of instruments that might not

be entirely liquid and which upon liquidation may not cover the full

amount. While the list of acceptable instruments is expanded to include

State and municipal bonds, the final rule also incorporates changes to

ensure that the security provided at the time required is not reduced

by market fluctuations in the value of government-issued and commercial

securities. The BLM has determined that the risk associated with

expanding the range of choice of security instruments is acceptable.

Whatever additional risk may be involved is offset, at least somewhat,

by the amendment requiring that financial guarantees be equal to an

independent professional engineer's estimate of reclamation costs. It

is important to recall, in this connection, that the financial

guarantee and the duty to reclaim are backed up by criminal penalties,

and by the provision that the operator is not free of liability if the

guarantee is cashed in and found insufficient.

By irrevocable letter of credit, section 3809.1-9(k)(3) means a

letter of credit, such as described in 43 CFR 3104.1(c)(5), that

identifies the Secretary of the Interior as sole payee with full

authority to demand immediate payment in case of default. It must be

subject to automatic renewal for periods of not less than 1 year if the

mining claimant or operator fails to notify the proper BLM office of

its nonrenewal and replacement by other suitable financial guarantee

before the originally stated or any extended expiration date. Such

letters of credit must also provide that they can be forfeited and

collected by the authorized officer if not replaced by other suitable

financial guarantee before their expiration date.

Section 3809.1-9(l) continues the current practice of accepting

blanket statewide and nationwide bonds found in the existing

regulations. This provision was generally supported in some comments,

and generally opposed, without stated rationale, in others. No change

is made in the final rule. Failure to reclaim will lead to forfeiture

of an appropriate portion of the statewide or nationwide bond and could

result in the loss of the ability to obtain any future bonds.

Section 3809.1-9(m) covers reclamation and bond release. Two

comments suggested that BLM allow for bond reduction as reclamation

steps are completed. Upon reflection, we agree.

Section 3809.1-9(m) in the final rule includes a procedure for

phased release or reduction of bonds as reclamation phases are

completed, as suggested in the comments. A guarantee will not be

released until successful revegetation has been demonstrated.

Limitations are also placed on release of financial guarantees in order

to protect water quality.

Paragraphs (n) through (p) of section 3809.1-9, were added to the

final rule based on public comment. They describe the procedures used

by BLM to collect financial guarantees in order to carry out or

contract for any needed reclamation not performed by the operator or

mining claimant. These sections are being incorporated in the final

rule to ensure a degree of uniformity in the procedures used by the

various offices of the BLM in the collection and use of financial

guarantees, and to complete the logical sequence of events encouraging

reclamation.

Section 3809.1-9(n) of the proposed rule, redesignated as paragraph

(q) in the final rule, covers release of the operator from the

financial guarantee or a portion thereof upon patenting of a mining

claim. One comment suggested requiring all portions of the patented

claim not then being mined to be reclaimed and the part still being

mined to be covered by the State requirements prior to title transfer.

Such requirements would be unnecessary, because most States have mining

and reclamation programs that require reclamation of private lands,

including lands obtained through patents from the United States. As

elsewhere, references to the mining claimant have been added in this

paragraph to make it consistent with other provisions in the final

rule.

Section 3809.3-1. This proposed section added a requirement in

paragraph (b) for the State Director to review the list of appropriate

and legal financial instruments available in the State and to publish

it on a yearly basis. No significant comments were noted. However, this

section has been amended editorially for purposes of brevity and

clarity in the final rule.

Section 3809.3-2(e). This proposed section explained what is meant

by a record of noncompliance, imposed mandatory BLM-held bonding on

operators with a record of noncompliance, made State-held bonds

unacceptable for those with records of noncompliance, and allowed the

BLM to require all existing and subsequent notice-level operations by

such an operator to be conducted only under a plan. It also allowed the

State Director to determine the length of time that an operator will be

held to the mandatory plan provisions (not less than 1 year and not

more than 3 years).

One comment objected to the proposed language stating that

financial guarantees held by the State would not be acceptable and

would result in the double bonding of operators by the State and the

BLM. We acknowledge this possibility, but additional security is

justified when operators have compiled a record of noncompliance. No

change to accommodate this comment is made in the final rule.

Two comments stated that provisions of section 3809.3-2(e) do not

allow for due process. One suggested alternative language that

incorporated ``due process'' while the other suggested that the

language of the existing section (e) would be more balanced in

protecting the due process rights, because it uses ``may'' rather than

``shall.'' The rule applies to an operator who ignores a notice of

noncompliance. The appeals section of the existing regulations (not

amended in this rule) includes opportunity for appeal at two levels,

State Director and Interior Board of

[[Page 9098]]

Land Appeals. This provides sufficient protection of a party's due

process rights.

One comment stated that the language in the proposed section would

allow an operator to move across a State line and start with a clean

record. This result was not intended in the proposed rule, and nothing

in the rule requires such a narrow reading. The BLM's recordkeeping

system allows proscriptions imposed in one State to be maintained BLM-

wide.

One comment suggested alternative language to define when an

operator has compiled a record of noncompliance and to provide

additional clarity to the rule:

1. To make it clear that operators who establish a record of

noncompliance will be considered in active noncompliance until the

necessary actions required by the notice of noncompliance have been

completed;

2. To include a 30-day time frame for the conversion of existing

notices to plans;

3. To include 90-day deadlines for the filing of the mandatory

financial guarantees with the authorized officer, specifying that

failure to provide the guarantee will result in the withdrawal of all

existing plan approvals;

4. To provide that BLM will approve no new or additional plans or

plan amendments of operators who have established a record of

noncompliance and who remain in active noncompliance;

5. To extend the prohibition to proprietors, partners, principals,

managers, directors, or officers of the operator in active

noncompliance who are responsible for the continuing noncompliance.

Another comment suggested that an operator who has a record of

noncompliance should be denied all additional approvals until all prior

reclamation commitments have been satisfied and all costs incurred by

the surety companies or the government have been reimbursed.

The suggestion that would have BLM bar an operator or mining

claimant in noncompliance, and its responsible affiliates, from

obtaining new or additional approvals has not been adopted in the final

rule. The BLM will study this suggestion further and may propose such a

change in a future rulemaking. With limited modifications to the

suggested language, the remaining suggestions are adopted, so that

proposed section 3809.3-2(e) is revised in the final rule.

Section 3809.3-2(f) is added merely to reiterate the penalties

contained in Section 303 of FLPMA for those who violate the regulations

of subpart 3809. In response to a comment that discussed the weakness

of the proposed language authorizing the return of incomplete notices,

a new paragraph 3809.1-9(a) is being added to prohibit the conduct of

operations without posting the appropriate financial guarantees. Then,

to notify the public of the penalties associated with the violation of

the regulations in subpart 3809, and to codify the penalties contained

in FLPMA, the noncompliance section is also amended by adding paragraph

(f). This paragraph incorporates the maximum penalties provided for in

the Sentencing Reform Act of 1984 (18 U.S.C. 3571 et seq.), in order to

bring the rule into compliance with law, and to avoid the misleading

impression created by the current regulations that penalties are

limited to the minimal amounts provided for in FLPMA. Penalty

provisions such as those in FLPMA that provide for up to a year in jail

or a fine of $1,000 for violators are classified as Class A

misdemeanors under 18 U.S.C. 3561, and the Sentencing Reform Act

provides for fines for Class A misdemeanors of up to $100,000 for

individuals and $200,000 for organizations. As noted in the rule, the

Sentencing Reform Act also authorizes the imposition of alternative

fines based upon a doubling of the pecuniary gain to the defendant or

loss to other persons resulting from a violation.

The principal author of this final rule is Richard Deery of the

Solid Minerals Group, assisted by Ted Hudson of the Regulatory

Management Group, BLM.

Compliance With the National Environmental Policy Act

It is hereby determined that this final rule does not constitute a

major Federal action significantly affecting the quality of the human

environment, and that no detailed statement pursuant to Section

102(2)(C) of the National Environmental Policy Act (NEPA) of 1969 (42

U.S.C. 4332(2)(C)) is required. It has been determined that this final

rule is categorically excluded from further environmental review

pursuant to 516 Departmental Manual (DM), Chapter 2, Appendix 1, Item

1.10. This item states that ``Policies, directives, regulations, and

guidelines of an administrative, financial, legal, technical, or

procedural nature * * *'' are categorically exempt. Because this rule

addresses financial guarantees, we believe that it falls into this

category, thereby obviating any further review under NEPA. It has also

been determined that the proposal would not significantly affect the 10

criteria for exceptions listed in 516 DM 2, Appendix 2. Pursuant to the

Council on Environmental Quality regulations (40 CFR 1508.4) and

environmental policies and procedures of the Department of the

Interior, ``categorical exclusions'' means a category of actions that

do not individually or cumulatively have a significant effect on the

human environment and that have been found to have no such effect in

procedures adopted by a Federal agency and for which neither an

environmental assessment nor an environmental impact statement is

required.

Compliance With Executive Order 12866

This rule has been reviewed under Executive Order 12866. The

Department of the Interior has found, based on the economic analysis

contained in a Determination of Effects of Rule that is available for

inspection in the office of the Solid Minerals Group at the address

given in ADDRESSES, above, that this document is not likely to result

in an annual effect on the economy of $100 million or more or adversely

affect in a material way the economy, a sector of the economy,

productivity, competition, jobs, the environment, public health or

safety, or State, local, or tribal governments or communities.

The current surface management regulations at 43 CFR subpart 3809

provide for 3 levels of activity involving surface use of public lands

for mineral exploration and mining: (1) Casual use, causing no

noticeable surface disturbance, which does not require notification to

BLM of the activity; (2) notice-level activity, exceeding the threshold

of casual use but not disturbing more than 5 acres per calendar year,

which requires a notice to BLM before proceeding but no BLM approval or

operator financial guarantee; (3) plan-level activity, disturbing more

than 5 acres annually, which requires a plan approved by BLM, full NEPA

compliance, and, since 1990, full cost financial guarantees.

Except for Arizona, Nevada, Alaska, and Utah, the public lands

States all require some bonding for notice-level mining and mineral

exploration activities. Under this rule, BLM will accept these State

bonds in satisfaction of the Federal bonding requirement in most

circumstances for notice-level activities--most operations at this

level are bonded at ``full cost bonding'' under State laws. It follows

that this rule will have an effect on notice-level activities in

primarily the four States mentioned above. The effects on activities in

these States cannot be assigned to specific localities within the

States, and are presumed to be distributed evenly

[[Page 9099]]

throughout each State for purposes of this analysis.

BLM expects that corporate operators will use nationwide or

statewide financial instruments, and that individual and other small

operators will use project-specific financial instruments. The total

economic effect of this rule is projected to be $17.10 million. The

Determination of Effects includes details on how BLM reached this

conclusion.

The benefits attributable to this rule result from avoiding future

costs through mandatory bonding. While these savings are not

predictable in the strict benefit-cost analysis sense, we discuss them

here. Primarily, savings will be derived from marginal activities with

limited capitalization being postponed or not carried out, and failures

will not occasion reclamation costs to the public. Remaining operations

would be financially stronger and less likely to fail, and if bonds are

in place, public costs of failure will be minimized. Other savings will

be caused by the discouraging of illegal activities or non-mining

industrial activities that are sometimes disguised as mining on public

lands. The bonding requirement will tend to reduce the initiation of

such activities and pay for costs of cleanup.

The final rule will not adversely affect the ability of the mineral

industry to compete in the world marketplace, nor should it affect

investment or employment factors locally. Major corporations, large-

scale companies with world-wide operations and lines of credit with

commercial banks can easily absorb any additional financial

responsibility created by the rule.

``Junior companies,'' large limited partnerships or wholly-owned

domestic subsidiaries of venture capital-based mining companies, many

of which are based in Canada, tend to grow or merge into smaller major

corporations, or to fail. Generally regarded as risk takers, they are

often found in frontier areas and are willing to acquire properties

overlooked or discarded by majors. Their options for complying with the

rule will range from resorting to established lines of credit to

posting company assets as collateral to internal cash flows. The

amended dollar amounts for notices in the final rule will benefit these

operators by encouraging them to minimize surface disturbance and

reduce the amount of reclamation liability.

Individuals and other small operators will have the fewest options

for funding financial guarantees: operating cash flows, individual or

company assets. The likely effect of this rule will be to limit the

number of notice-level operations for each such operator at any one

time. They may elect to restrict activities under a notice to only the

most promising mineral prospects or to attempt to option out the

property to a junior or major company with a lease agreement that

includes a clause requiring the lessee to obtain and maintain the

necessary financial guarantee with BLM.

Compliance With Regulatory Flexibility Act

The Department has determined under the Regulatory Flexibility Act

(5 U.S.C. 601 et seq.) that the final rule will not have a significant

economic impact on a substantial number of small entities. The reasons

for this determination are stated here and may also be found in the

Determination of Effects cited above.

For the purposes of this analysis, a small entity is considered to

be an individual, small firm, or partnership at arm's length from the

control of any parent companies. The juniors and majors (not considered

small entities), as discussed in the previous paragraphs, and entities

under their direct control, have access to lines of credit and internal

corporate cash flows that are not available to small entities.

The economic effect on these small operators will be either to

require them to acquire a financial guarantee for each new notice or

avoid new operations on claims for which they do not acquire a

financial guarantee. Since small entities often hold several

properties, the practical effect will be the elimination of new

activities on certain claims, especially the marginal ones, and the

removal of some properties from their inventory of holdings, or else

operators will attempt to lease the claim to a junior or major company

that has the financial resources to post financial guarantees.

Therefore, the short-term impact of this rule on small entities will be

to curtail some of their prospective notice-level activities.

Compliance With Executive Order 12630

The Department certifies that this final rule does not represent a

governmental action capable of interference with constitutionally

protected property rights. It does not provide for the taking of any

property rights or interests. Therefore, as required by Executive Order

12630, the Department of the Interior has determined that the rule

would not cause a taking of private property.

Compliance With Paperwork Reduction Act

The information collection requirement(s) contained in this rule

have been approved by the Office of Management and Budget for approval

as required by 44 U.S.C. 3501 et seq., and assigned clearance number

1004-0176.

Compliance With Unfunded Mandates Reform Act

BLM has determined that this rule is not significant under the

Unfunded Mandates Reform Act of 1995, because it will not result in the

expenditure by State, local, and tribal governments, in the aggregate,

or by the private sector, of $100 million or more in any one year.

Further, this rule will not significantly or uniquely affect small

governments.

Compliance With Executive Order 12988

The Department has determined that this rule meets the applicable

standards provided in sections 3(a) and 2(b)(2) of Executive Order

12988.

List of Subjects in 43 CFR Part 3800

Administrative practice and procedure, Environmental protection,

Intergovernmental affairs, Mines, Public lands-mineral resources,

Reporting and recordkeeping requirements, Surety bonds, Wilderness

areas.

For the reasons stated in the preamble, and under the authorities

cited below, Part 3800, Subchapter C, Chapter II, Title 43 of the Code

of Federal Regulations is amended as set forth below.

Dated: February 24, 1997.

Sylvia V. Baca,

Assistant Secretary of the Interior.

1. The authority citation for part 3800 is revised to read as

follows:

Authority: 16 U.S.C. 351; 16 U.S.C. 460y-4; 30 U.S.C. 22; 31

U.S.C. 9701; 43 U.S.C. 154; 43 U.S.C. 299; 43 U.S.C. 1201; 43 U.S.C.

1740; 30 U.S.C. 28k.

Subpart 3809--Surface Management

2. The authority citation for 43 CFR subpart 3809 is removed.

3. Section 3809.0-9 is added to read as follows:

Sec. 3809.0-9 Information collection.

(a) The collections of information contained in subpart 3809 have

been approved by the Office of Management and Budget under 44 U.S.C.

3501 et seq. and assigned clearance number 1004-0176. BLM will use the

information in regulating and monitoring mining and exploration

operations on public lands. Response to requests for information is

[[Page 9100]]

mandatory in accordance with 43 U.S.C 1701 et seq. The information

collection approval expires December 31, 1999.

(b) Public reporting burden for this information is estimated to

average 16 hours per response for notices and 32 hours per response for

plans of operations, including the time for reviewing instructions,

searching existing data sources, gathering and maintaining the data

needed, and completing and reviewing the collection of information.

Send comments regarding this burden estimate or any other aspect of

this collection of information, including suggestions for reducing the

burden, to the Information Collection Clearance Officer (783), Bureau

of Land Management, Washington, D.C. 20240, and the Office of

Management and Budget, Attention Desk Officer for the Interior

Department, Office of Information and Regulatory Affairs, Office of

Management and Budget, Washington, DC 20503, referring to information

collection clearance number 1004-0176.

Sec. 3809.1-8 [Removed]

4. Section 3809.1-8 is removed.

5. Section 3809.1-9 is revised to read as follows:

Sec. 3809.1-9 Financial guarantees.

(a) No operator or claimant shall--

(1) Initiate operations under a notice without providing the

authorized officer certification of the existence of the appropriate

financial guarantee as required by paragraph (c) through (f) of this

section; or

(2) Conduct operations under a plan of operations without providing

the authorized officer with the appropriate financial guarantee as

required by paragraphs (g) through (j) of this section.

(b) No financial guarantee is required for operations that

constitute casual use under Sec. 3809.1-2.

(c) No operations conducted under a notice in accordance with

Sec. 3809.1-3 shall be initiated until the operator or mining claimant

provides to the authorized officer a certification that a financial

guarantee exists to ensure performance of reclamation in accordance

with the requirements of Sec. 3809.1-3(d). Each certification must be

accompanied by a calculation of reclamation costs of the proposed

activities covered by the notice, as if third party contractors were

performing the reclamation after the site is vacated by the operator.

This calculation must be certified at the operator's or mining

claimant's expense by a third party professional engineer registered to

practice within the State in which the activities are proposed.

However, when the requirement for a financial guarantee is met by

providing evidence of an instrument held by a State agency as provided

in this paragraph, the certificaton of costs by a third party

professional engineer is not required. The financial guarantee must be

sufficient to cover 100 percent of the estimate of the costs of

reclamation, as calculated above, required by State and Federal laws

and regulations, and may be in any of the forms described in paragraphs

(k) and (l) of this section. In calculating the amount of the financial

guarantee, each acre of disturbance or fraction thereof shall require

not less than $1,000. The financial guarantee may also be met by

providing evidence of an appropriate instrument held or approved by a

State agency pursuant to State law or regulations so long as the

instrument is equivalent to that required by this section, is

redeemable by the Secretary, acting by and through BLM, and covers the

same area covered by the notice. The certification must accompany the

notice submitted to the proper BLM office having jurisdiction over the

land in which the claim or project area is located. Failure to submit a

complete certification will render the notice incomplete and it will be

returned by the authorized officer. The financial guarantee covered by

the certification must be available, until replaced by another adequate

financial guarantee with the concurrence of the authorized officer or

until released by the authorized officer, for the performance of such

reclamation as required by Sec. 3809.1-3. Such reclamation shall also

include all reasonable measures identified as the result of the

consultation required by the authorized officer under Sec. 3809.1-3(c).

If there is a material change in any financial guarantee on which the

operator or mining claimant's certification is based, the operator or

mining claimant must submit an amended certification to the authorized

officer within 45 days after the material change occurs.

(d) The certification submitted by the operator, mining claimant,

or its authorized agent, for any operations conducted under a notice,

shall include:

(1) The name, home address, office and home telephone numbers, and

social security number or employer identification number of the

operator, mining claimant, or authorized agent;

(2) A statement that the mining claimant or operator for whom the

individual is submitting the certification will be responsible for the

required reclamation;

(3) A statement that the authorized officer will be notified at the

completion of reclamation operations to arrange for a final inspection;

(4) A statement that the financial guarantee in the amount of the

estimated reclamation costs, as calculated under Sec. 3809.1-9(c), or

$1,000 per acre or fraction thereof of disturbance as described in the

attached notice, whichever is greater, exists, followed by a complete

description of the financial guarantee and its location;

(5) A statement that the financial guarantee in the amount of the

estimated reclamation costs, as calculated under Sec. 3809.1-9(c), or

$1,000 per acre or fraction thereof of disturbance, whichever is

greater, will be delivered to the authorized officer within 45 days of

a demand for its surrender, following failure to complete reclamation,

unless an additional period of time not to exceed 45 days is granted in

writing by the authorized officer;

(6) A statement acknowledging that surrender of the financial

guarantee will not release the operator, mining claimant, or authorized

agent from responsibility to ensure completion of the reclamation

should the amount of the guarantee be insufficient to complete all

required reclamation;

(7) A statement acknowledging that release of the requirement to

maintain the financial guarantee does not release or waive any claim

the Bureau of Land Management may have against any person under the

Comprehensive Environmental Response, Compensation, and Liability Act

of 1980, as amended, 42 U.S.C. 9601 et seq., or any other applicable

statutes or any applicable regulations; and

(8) A statement acknowledging that non-existence of the financial

guarantee or the failure to provide the guarantee upon demand for its

surrender by the authorized officer may result in prosecution under 18

U.S.C. 1001, 43 U.S.C. 1733, or other appropriate authorities.

(e) Each statement required by paragraph (d) of this section to be

included with the certification must be initialed and dated by the

individual submitting the certification. Failure to initial all

statements will result in the certification and the notice being

returned as incomplete by the authorized officer.

(f) At any time, the authorized officer may require the notice-

level operator or mining claimant to demonstrate the existence of the

guarantee set out in the certification described in paragraph (c) of

this section.

(g) Each operator or mining claimant who conducts operations under

an approved plan of operations shall furnish to the authorized officer

a

[[Page 9101]]

financial guarantee in an amount specified by the authorized officer.

In determining the amount of the guarantee, the authorized officer

shall consider the estimated cost of reasonable stabilization and

reclamation of areas disturbed, including the cost to the BLM of

conducting the reclamation, using either contract or government

personnel.

(h) For activities conducted under a plan of operations, the

financial guarantee must be sufficient to cover 100 percent of the

costs of reclamation required by State and Federal statutes and

regulations and calculated as if third party contractors were

performing the reclamation after the site is vacated by the operator.

This calculation must be certified at the operator's or mining

claimant's expense by a third party professional engineer registered to

practice within the State in which the activities are proposed, but

when the requirement for a financial guarantee is met by providing

evidence of an instrument held or approved by a State agency, the

certification of costs by a third party professional engineer will not

be required. This calculation must be agreed to by the authorized

officer. In no case shall the financial guarantee be less than $2,000

per acre or fraction thereof.

(i) In lieu of requiring the financial guarantee as provided in

paragraph (g) of this section, the authorized officer may accept

evidence of an existing financial guarantee under State law or

regulations, if it is redeemable by the Secretary, acting by and

through the authorized officer, and held or approved by a State agency

for the same area covered by the plan of operations, upon determining

that the instrument held or approved by the State provides the same

guarantee as that required by this section, regardless of the type of

financial instruments chosen by the State. The operator or mining

claimant proposing a plan of operations may offer for the approval of

the authorized officer any of the financial instruments listed in

paragraphs (k) and (l) of this section. The authorized officer may

reject any of the submitted financial instruments, but will do so by

decision in writing, with a complete explanation of the reasons for the

rejection, within 30 days of the offering. If the State makes a demand

against the financial guarantee, thereby reducing the available

balance, the operator or mining claimant must replace the amount of

reduced financial guarantee with another financial guarantee instrument

acceptable under this subpart.

(j) In the event that an approved plan is modified in accordance

with 3809.1-7, the authorized officer will review the initial financial

guarantee for adequacy and, if necessary, require the operator or

mining claimant to adjust the amount of the financial guarantee to

cover the estimated cost of reasonable stabilization and reclamation of

areas disturbed under the plan as modified. Operators or mining

claimants with an approved financial guarantee may request the

authorized officer to accept a replacement financial instrument at any

time after the approval of an initial instrument. The authorized

officer shall review the offered instrument for adequacy and may reject

any offered instrument, but will do so by a decision in writing, with a

complete explanation of the reasons for the rejection, within 30 days

of the offering.

(k) Provided that the State Director has determined that it is a

legal financial instrument within the State where the operations are

proposed, the financial guarantee may take the form of any of the

following:

(1) Surety bonds, including surety bonds arranged or paid for by

third parties.

(2) Cash in an amount equal to the required dollar amount of the

financial guarantee, to be deposited and maintained in a Federal

depository account of the United States Treasury by the authorized

officer.

(3) Irrevocable letters of credit from a bank or financial

institution organized or authorized to transact business in the United

States.

(4) Certificates of deposit or savings accounts not in excess of

the maximum insurable amount as set by the Federal Deposit Insurance

Corporation.

(5)(i) Any instrument listed in paragraph (k)(5)(i)(A) or (B) of

this section having a market value of not less than the required dollar

amount of the financial guarantee and maintained in a Securities

Investors Protection Corporation insured trust account by a licensed

securities brokerage firm for the benefit of the Secretary of the

Interior, acting by and through the authorized officer.

(A) Negotiable United States Government, State and Municipal

securities or bonds.

(B) Investment-grade rated securities having a Standard and Poor's

rating of AAA or AA or an equivalent rating from a nationally

recognized securities rating service.

(ii) Notwithstanding the provision in paragraph (c) of this section

that an operator or mining claimant conducting operations under a

notice need only provide the authorized officer with a certification of

the existence of the required financial guarantee, and notwithstanding

the provision in paragraph (g) of this section that an operator or

mining claimant conducting operations under an approved plan of

operations must furnish the required financial guarantee to the

authorized officer, any operator or mining claimant who chooses to use

the instruments permitted under this paragraph (k)(5) in satisfaction

of such provisions, must provide the authorized officer, prior to the

initiation of such operations and by the end of each quarter of the

calendar year thereafter, a certified statement describing the nature

and market value of the instruments maintained in that account, and

including any current statements or reports furnished by the brokerage

firm to the operator or mining claimant concerning the asset value of

the account.

(iii) The operator or mining claimant must review the market value

of the account instruments by no later than December 31 of each year to

ensure that their market value continues to be not less than the

required dollar amount of the financial guarantee. When the market

value of the account instruments has declined by more than 10 percent

of the required dollar amount of the financial guarantee, the operator

or mining claimant must, within 10 days after its annual review or at

any time upon the written request of the authorized officer, provide

additional instruments, as defined in paragraphs (k)(5)(i)(A) and (B),

to the trust account so that the total market value of all account

instruments is not less than the required dollar amount of the

financial guarantee. The operator or mining claimant must send a

certified statement to the authorized officer within 45 days thereafter

describing the actions taken by the operator or mining claimant to

raise the market value of its account instruments to the required

dollar amount of the financial guarantee. The operator or mining

claimant must include copies of any statements or reports furnished by

the brokerage firm to the operator or mining claimant documenting such

an increase.

(iv) Whenever, on the basis of a review conducted under paragraph

(k)(5)(iii) of this section, the operator or mining claimant ascertains

that the total market value of its trust account instruments exceeds

110 percent of the required dollar amount of the financial guarantee,

the operator or mining claimant may request and the authorized officer

will authorize a written release of that portion of the account that

exceeds 110 percent of the required financial guarantee, if the

operator or mining claimant is in compliance with the terms and

[[Page 9102]]

conditions of its notice or approved plan of operations.

(l) In place of the individual financial guarantee on each separate

operation, a blanket financial guarantee covering statewide or

nationwide operations may be furnished at the option of the operator or

mining claimant, if the terms and conditions are determined by the

authorized officer to be sufficient to comply with the regulations in

this subpart.

(m) When all or any portion of the reclamation has been completed

in accordance with a notice submitted pursuant to Sec. 3809.1-3 or an

approved plan of operations, the operator or mining claimant may notify

the authorized officer that such reclamation has occurred and may

request a reduction in the financial guarantee or BLM approval of the

adequacy of the reclamation, or both. Upon any such notification, the

authorized officer will promptly inspect the reclaimed area with the

operator. The authorized officer will notify the operator, in writing,

whether the financial guarantee can be reduced, the reclamation is

acceptable, or both. The authorized officer may reduce the financial

guarantee by an appropriate amount, not to exceed 60 percent of the

total estimated costs of reclamation as calculated in accordance with

paragraph (c) or (h) of this section, if the authorized officer

determines that a portion of the reclamation has been completed in

accordance with applicable requirements, including, but not limited to,

requirements for backfilling, regrading, establishment of drainage

control, and stabilization and neutralization of leach pads, heaps,

leach-bearing tailings, and similar facilities. The authorized officer

will not release that portion of the financial guarantee equal to 40

percent of the total estimated costs of reclamation until the area

disturbed by operations has been revegetated to establish a diverse,

effective, and permanent vegetative cover, and until any effluent

discharged from the area has met, without violations and without the

necessity for additional treatment, applicable effluent limitations and

water quality standards for not less than 1 full year. Any such release

of the financial guarantee does not release or waive any claim BLM may

have against any person under the Comprehensive Environmental Response,

Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 et

seq., or under any other applicable statutes or any applicable

regulations.

(n) If an operator or mining claimant refuses or is unable to

conduct reclamation as provided in the reclamation measures

incorporated into its notice or approved plan of operations or the

regulations in this subpart, if the terms of the notice or decision

approving a plan of operation are not met, or if the operator or mining

claimant defaults on the conditions under which the financial guarantee

rests, the authorized officer shall take the following action to

require the forfeiture of all or part of a financial guarantee for any

area or portion of an area covered by the financial guarantee:

(1) Send written notification by certified mail, return receipt

requested, to the operator or mining claimant that provided the

financial guarantee, and the surety on the financial guarantee, if any,

and the State agency holding the financial guarantee, if any, informing

them of the decision to require the forfeiture of all or part of the

financial guarantee. The notification must include the reasons for the

forfeiture and the amount to be forfeited. The amount shall be based on

the estimated total cost of achieving the reclamation plan requirements

for the area or portion of the area affected, including the

administrative costs of the Bureau of Land Management.

(2) In the written notification, advise the operator or mining

claimant and surety, if applicable, of the conditions under which

forfeiture may be avoided. Such conditions may include, but are not

limited to----

(i) Written agreement by the operator, mining claimant, or another

party to perform reclamation operations in accordance with a compliance

schedule which meets the conditions of the notice or decision approving

a plan of operations and the reclamation plan, and a demonstration that

such party has the ability to satisfy the conditions; or

(ii) Written permission from the authorized officer to a surety to

complete the reclamation, or the portion of the reclamation applicable

to the bonded phase or increment, if the surety can demonstrate an

ability to complete the reclamation in accordance with the reclamation

measures incorporated in a notice or approved plan of operations.

(o) In the event the operator or mining claimant fails to meet the

requirements of the written notification provided under paragraph (n)

of this section, the authorized officer will--

(1) Proceed immediately to collect the forfeited amount as provided

by applicable laws for the collection of defaulted bonds or other debts

if actions to avoid forfeiture have not been taken, or if an appeal has

not been filed under Sec. 3809.4, or if such appeal is filed and the

decision appealed is confirmed.

(2) Use funds collected from financial guarantee forfeiture to

implement the reclamation plan, or portion thereof, on the area or

portion of the area to which bond coverage applies.

(p)(1) In the event the estimated amount forfeited is insufficient

to pay for the full cost of reclamation, the operator or mining

claimant is liable for the remaining costs. The authorized officer may

complete or authorize completion of reclamation of the bonded area and

may recover from the operator or mining claimant all costs of

reclamation in excess of the amount forfeited.

(2) In the event the amount of financial guarantee forfeited was

more than the amount necessary to complete reclamation, the unused

funds shall be returned, within a reasonable amount of time, by the

authorized officer to the party from whom they were collected.

(q) When a mining claim is patented, the authorized officer will

release the operator or mining claimant from the portion of the

financial guarantee that applies to operations within the boundaries of

the patented land. The authorized officer shall release the operator or

mining claimant from the remainder of the financial guarantee,

including the portion covering approved means of access outside the

boundaries of the mining claim, when the operator or mining claimant

has completed acceptable reclamation. However, existing access to

patented mining claims, if across Federal lands, shall continue to be

regulated under the approved plan and shall include a financial

guarantee. The provisions of this paragraph do not apply to patents

issued on mining claims within the boundaries of the California Desert

Conservation Area (see Sec. 3809.6).

6. Section 3809.3-1 is amended by revising paragraph (b) to read as

follows:

Sec. 3809.3-1 Applicability of State law.

* * * * *

(b) Each State Director will publish a notice identifying all legal

financial guarantees that may be accepted by any authorized officer

under his or her jurisdiction, after consultation with the appropriate

State authorities to determine which of the financial instruments in

Sec. 3809.1-9(k) are allowable under State law to satisfy the financial

assurance requirements relating to the reclamation requirements of that

State. This list will be updated annually.

* * * * *

7. Section 3809.3-2 is amended by revising paragraph (e) and adding

paragraph (f) to read as follows:

[[Page 9103]]

Sec. 3809.3-2 Noncompliance.

* * * * *

(e) An operator or mining claimant who compiles a record of

noncompliance is one who has been served with a notice of

noncompliance, whose response period has passed, and who has not

commenced the actions required by the authorized officer within the

time frames set forth in the notice of noncompliance. An operator or

mining claimant with a record of noncompliance will continue in

noncompliance status until the actions required in the notice of

noncompliance have been completed. Any operator or mining claimant with

a record of noncompliance must submit a plan of operations within 30

days under Sec. 3809.1-9 of this subpart for all existing and

subsequent operations that would otherwise be conducted pursuant to a

notice under Sec. 3809.1-3 of this subpart. Operators or mining

claimants with a record of noncompliance will be required to post

financial guarantees with the authorized officer under Sec. 3809.1-9

within 90 days after notification for all existing disturbance for

which said operators or mining claimants are responsible. Failure to

post such financial guarantees within the prescribed 90 days will

result in the withdrawal of approval of all existing plans of

operation, except that the authorized officer may approve actions

proposed by an operator with a record of noncompliance to resolve the

cause of the noncompliance or to protect public safety or health or

prevent further unnecessary or undue environmental degradation.

Financial guarantees held by a State will not be acceptable for

purposes of this section, and the calculation must be certified at the

operator's or mining claimant's expense by a third party professional

engineer registered to practice within the State in which the

activities are proposed, and agreed to by the authorized officer. The

requirements of this paragraph continue in force until the operator or

mining claimant has come into and remained in compliance with them and

the regulations of this subpart for a period of not less than 1

calendar year but not more than 3 calendar years. The duration of the

requirement will be determined by the State Director.

(f)(1) Any person constituting an operator, mining claimant, or its

authorized agent, who knowingly and willfully violates any provision of

this subpart is subject to arrest and trial by a United States

magistrate and, if convicted, shall be subject to a fine of not more

than $100,000, or the alternate fine provided for in the applicable

provisions of 18 U.S.C. 3571, or imprisoned for no more than twelve

months, or both.

(2) Any organization constituting an operator, mining claimant, or

its authorized agent, that knowingly and willfully violates any

provision of this subpart is subject to criminal prosecution and, if

convicted, shall be subject to a fine of not more than $200,000, or the

alternative fine provided for in the applicable provisions of 18 U.S.C.

3571.

[FR Doc. 97-5016 Filed 2-27-97; 8:45 am]

BILLING CODE 4310-84-P