FEDERAL REGISTER: 48 FR 32932 (July 19, 1983)

DEPARTMENT OF THE INTERIOR

AGENCY: Office of Surface Mining Reclamation and Enforcement (OSM)

30 CFR Parts 800, 801, 805, 806, 807, 808, and 809

Bond and Insurance Requirements for Surface Coal Mining and Reclamation Operations

ACTION: Final rule. 

SUMMARY: The Office of Surface Mining Reclamation and Enforcement (OSM) is revising its rules on bonding and 

insurance requirements for surface coal mining and reclamation operations. The new rules continue to require sufficient 

bonding to assure completion of the reclamation plan, but have been revised to afford flexibility to the regulatory 

authority and to the coal mine operator in choosing a bonding plan. These final rules are adopted for the permanent 

regulatory program. 

EFFECTIVE DATE: August 18, 1983. 

FOR FURTHER INFORMATION CONTACT: Adele Merchant, Division of Economic Analysis, Office of Surface 

Mining, U.S. Department of the Interior; 202/343-2156. 

SUPPLEMENTARY INFORMATION: 

I. Background 

II. Discussion of Comments and Rules Adopted 

III. Procedural Matters 

 

I. BACKGROUND 

 The Surface Mining Control and Reclamation Act of 1977 (the Act), Pub. L. 95-87, 30 U.S.C. 1201 et seq., requires a 

bond sufficient to cover the cost of reclamation if it had to be performed by a regulatory authority in the event of 

forfeiture (Section 509(a) of the Act). The Act requires that a bond be posted as a condition of issuance of a permit to an 

operator. Id. Section 519 of the Act sets criteria for release of a bond upon completion of several phases of reclamation. 

Regulations are required by Section 501 of the Act to implement a bonding program necessary for a State program or a 

Federal program. 

 On March 13, 1979, OSM promulgated the permanent program bonding rules, 30 CFR Chapter VII, Subchapter J, 

Parts 800-809 (44 FR 15385). A number of the rules were challenged in litigation filed on May 9, 1979, In re: Permanent 

Surface Mining Regulation Litigation, Civ. No. 79-1144 (D.D.C.). Before a decision was made on two of the bonding 

issues raised, the following provisions of the rules were suspended by the Director: Sections 806.12(e)(6)(iii) and 

(g)(7)(iii), which required the immediate cessation of operations upon insolvency of a surety or revocation of a surety's 

license; and Section 808.12(c), which limited bond liability on the permit area to only the hydrologic balance (November 

27, 1979, 44 FR 67942) and (December 31, 1979, 44 FR 77455). 

 The district court ruled on four other issues in its decision of February 26, 1980 (summary available in Environmental 

Resource Council publication, 14 Envir. Rep. Cas. 1083, 1099-1101). The district court upheld the rules in Section 

808.13(a)(2) on forfeiture and Section 808.14(a) on adjustment of the bond amount. It remanded, however, the rules for 

public participation in bond release because Section 807.11(e) lacked a provision for informal conferences, and the rules 

in Section 808.14(b) because they lacked a provision for return of excess forfeited bond amounts. 

 As a result of an April 1979, petition for rulemaking, OSM concluded that several sections of Subchapter J needed 

revision (see 44 FR 28005, May 14, 1979, and 44 FR 52098, September 6, 1979). These revisions were proposed on 

January 24, 1980 (44 FR 6028) and became final on August 6, 1980 (45 FR 52306). 

 Because of considerable controversy over lack of collateral support in the proposed revision offered for self-bonding 

rules, the original self-bonding provisions, which included requirements for 100 percent collateral, were retained in the 

final rules of August, 1980 (45 FR 52314). Rather than proceed with further rulemaking, OSM proposed to undertake a 
study of self-bonding (45 FR 71815). This study was subsequently cancelled because of budgetary problems and the 

proposed bonding revision of September 9, 1981 (46 FR 45096) called for the States to design their own self-bonding 

programs. 

 The August 6, 1980, rulemaking also precipitated litigation -- National Coal Association, American Mining Congress v. 

Andrus, Civ. No. 80-2530 and Penn. Coal Mining Ass'n v. Dept. of Interior, Civ. No. 80-2544, U.S. District Court, D.C. 

This litigation has resulted in the suspension of most of the self-bonding rules and of the requirement to bond subsidence 

control measures (46 FR 59934, December 7, 1981). On August 19, 1981, as the result of another rulemaking petition, 

OSM suspended the availability of a bond amount for reclamation work anywhere within the permit area as authorized by 

Section 808.12(c) (46 FR 42082, 42063). 

 OSM again prepared a draft rule of all bonding requirements and sent it out for comment on March 25, 1981. Based on 

comments and recommendations received, OSM developed the proposed rules published on September 9, 1981 (46 FR 

45082) and which are being made final in this rulemaking. 

 The rules being published in this rulemaking replace all of the existing and suspended bonding requirements for surface 

and underground mining and related surface facilities, except Section 806.14 -- Self Bonding. These rules consolidate 

into Part 800, the provisions of previous Parts 800, 801, 805, 806, 807, 808 and 809. As discussed below under Section 

800.23, self-bonding rules were reproposed in a separate rulemaking on August 20, 1982 (47 FR 36570). After 

consideration of comments received, the self-bonding rules will be made final in a separate rulemaking notice and will be 

added to Section 800.23. 

 

II. DISCUSSION OF COMMENTS AND RULES ADOPTED 

 The comments largely favored the proposed changes in the bonding rules. Most of the comments came from State 

regulatory agencies, the coal industry, the surety industry and environmental organizations. The public comment period 

for these bonding rules opened September 9, 1981, and closed October 9, 1981. A total of 31 commenters filed written 

statements resulting in over 180 comments. A public hearing was held September 24, 1981, in Washington, D.C., in 

which one witness, the Joint Committee of the National Coal Association/American Mining Congress, appeared and 

generally supported the proposed rules. Three public meetings were also held. Because of the general support for the 

amendments to the rules, they are being made final in the same form as proposed except as noted in the following 

discussion. The reasons for the changes discussed in the preamble to the proposed rules are incorporated into this 

document where applicable. 

 

GENERAL COMMENTS 

 A surety commenter generally favored the proposed rules, but said that as welcome as the changes are "they will do 

little to alleviate the bonding problems in the coal industry, particularly those of the small to medium size mine operation.

Bonding, especially surety bonding, will not be generally available to the coal industry, as long as the reclamation 

requirements can be changed in mid-term of the permit, the bond amounts can be increased in mid-term of the permit, the 

liability period stays so long and the bond release procedures remain so burdensome." OSM notes that the various 

concerns the commenter mentioned are requirements set in Sections 509 and 519 of the Act which cannot be modified by 

the agency's rulemaking. 

 A surety commenter urged OSM to investigate the possibility of "grandfathering" existing permits and bonds. The 

commenter said that as primacy is granted to the eastern States the "repermitting" requirement is going to cause much 

anguish to those operators working on existing permits who will not be able to qualify for the revised bonds under the 

new requirements. The commenter felt because of the increased enforcement by the States, the grandfathering of some of 

these permits and bonds should not greatly compromise the intent of the Act and would save all concerned much trouble. 

 There is no provision in the bonding rules that would prevent a regulatory authority from considering a reclamation 

bond already posted as valid for the permitting of the same area under a State program. However, the regulatory 

authority will still have to determine the amount of bond and should the outstanding bond amount be inadequate, it will 

have to be supplemented. Furthermore, since surety bonds are contracts between the operators and the surety, any 

change in the conditions under which a bond is posted would likely be subject to surety approval. OSM cannot by this 

rulemaking unilaterally modify the terms of those contracts without surety company approval. 
 One commenter disagreed with OSM's effort in these proposed rules to increase the States' flexibility in establishing 

bonding programs and suggested that OSM retain all its previous bonding rules so as to maintain specific, enforceable 

standards. The commenter said to do less would be to leave to the industry, the public and the States the necessity of

having to make "ad hoc, standardless decisions on crucial regulatory matters." 

 OSM disagrees with this comment. The permanent program rules form the benchmark for State programs. As such 

they provide the minimum standards which State programs must meet. There is no requirement in the Surface Mining Act 

that the permanent program rules must provide for every possible situation that may arise and as a consequence remove 

all discretion from the regulatory authorities. Not only do these rules provide for the bonding requirements set in 

Sections 509 and 519 of the Act, they also provide for the required public involvement in the bonding program. 

 A commenter noted that the proposed rules for bonding are primarily applicable to private lands and do not adequately 

address performance bonding for permits on Federal lands, especially where a permit might straddle the border between 

two States. The commenter suggested that in such a border-straddling situation there would be inconsistent bonding 

policies because of the difference in the two State bonding programs. 

 The recently adopted rules revising OSM's permanent program on Federal lands (48 FR 6912, February 16, 1983) 

make a State program, including its bonding provisions, applicable to surface coal mining and reclamation operations on 

Federal lands in that State. 30 CFR 740.11. Admittedly if an operation borders two States bonding requirements may 

differ for different parts of a permit area in some instances, and these cases will have to be resolved on a site-specific 

basis. However, each State's program must have bonding provisions which are consistent with OSM's permanent 

program regulations adopted today. In no case may the amount of the bond be less than that required to cover the 

anticipated costs of reclamation. 

 

SECTION 800.1 - SCOPE AND PURPOSE. 

 The scope and purpose of Part 800 is to set the minimum requirements and responsibilities for filing and maintaining 

bonds and insurance for surface coal mining and reclamation operations. OSM chose to use only one section, Section 

800.1, to state the scope and purpose of this part. Proposed Sections 800.1 and 800.2 were basically the same, so the 

basic language of Section 800.2 was chosen to represent the scope and purpose of Part 800 in the final rule, Section 

800.1. No comments were received on these sections. 

 

SECTION 800.4 - REGULATORY AUTHORITY RESPONSIBILITIES. 

 Section 800.4 lists all the responsibilities of the regulatory authority in the performance bonding of coal mine 

operations. 

 

SECTION 800.4(a) 

 Proposed Section 800.4(a), which makes it a responsibility of the regulatory authority to furnish performance bonding 

forms, is retained in the final rule unchanged. No comments were received on this provision, which follows Section 

509(a) of the Act. 

 

SECTION 800.4(b) 

 Proposed Section 800.4(b) gives the regulatory authority the responsibility for prescribing the terms and conditions for 

performance bonds and insurance, which meet the requirements of Part 800. 

 In the preamble for this proposed rule, OSM omitted the explanation for the removal of the phrase "by regulation" from

this rule. A commenter called OSM's attention to the lack of explanation and suggested that it was "both illegal and 

unwise to encourage the States to prescribe terms and conditions for performance bonds in anything less than statutes 

and regulations." This comment has been accepted and the language of Section 800.4(b) revised accordingly. 

 In the final rule, OSM has deleted the proposed phrase "which meet, at a minimum, the requirements of this Part," from 

Section 800.4(b), as unnecessary since each State program must be consistent with the Federal regulations. 
 

SECTION 800.4(c) 

 Proposed Section 800.4(c) required the regulatory authority to set the initial bond amount in accordance with Section 

800.14. The final provision follows Section 509(a) of the Act and is unchanged from the proposal. Two commenters 

objected to the deletion of bond adjustments from the listing of regulatory authority responsibilities. Since this 

responsibility is enumerated by the Act in Section 509(e), it has been reinserted into this paragraph. 

 

SECTION 800.4(d) 

 In the proposed rule this provision allowed the regulatory authority to accept self-bonds if the permittee met the 

requirements of Section 800.23 and any additional rules of the State or Federal program. Even though the self-bonding 

rules in Section 800.23 are not being made final in this rulemaking, this paragraph will refer to Section 800.23 with the 

understanding that Section 800.23 does not have the force of law until it becomes final. Those requirements of the selfbonding rules in existing Section 806.14 that were left after the suspension notice of December 7, 1981 (46 FR 59934),

will remain in effect until they are replaced by a new set of final self-bonding rules. Further discussion of OSM's decision 

to repropose the self-bonding rules is available under Section 800.23 of this preamble. The authority of the regulatory 

authority to accept self-bonds is described in Section 509(c) of the Act. 

 Because a self-bond may be accepted together with other types of bonds in a form of combination bonding, the 

proposed phrase "in lieu of a surety or collateral bond" is an incorrect limitation and is deleted from final Section 

800.4(d). 

 

SECTION 800.4(e) 

 Proposed Section 800.4(e), which established the regulatory authority's responsibility in releasing bond liability, 

received no comments and is unchanged in the final rule. This rule follows Section 519(b) of the Act. 

 

SECTION 800.4(f) 

 Proposed Section 800.4(f), which required the regulatory authority to take action to cause forfeiture according to 

Section 800.50, has been revised to clarify that the regulatory authority must cause forfeiture only under conditions set 

forth in Section 800.50. 

 This change resulted from comments pointing out that the paragraph seemed to require that every bond be forfeited to 

some extent. They suggested that the real intent was that a bond be forfeited under certain conditions as outlined by 

Section 800.50. OSM recognizes the confusion the proposed wording would have caused and therefore has rephrased 

the reference to Section 800.50 to clarify that the regulatory authority is to follow the condition and procedures for 

forfeiture in Section 800.50 of this part. 

 Several commenters objected to the mandatory provision in proposed Section 800.4(f) that the regulatory authority 

"shall" cause all or part of a bond to be forfeited, instead of a more discretionary phrasing. 

 It is the intent of the Act that the regulatory authority complete the reclamation in the event of forfeiture (see Section 

509(a) of the Act) by doing the work itself or having it done through a contract with a third party. This being the case, 

the regulatory authority must cause the bond to be forfeited in the event of operator default in order to have the funds to 

complete the reclamation. Thus the mandatory language has been adopted. 

 One commenter suggested adding the phrase "notify the operator of the intention" to cause forfeiture to give the 

operator a reasonable time to correct the problems. This is already a part of Section 800.50 where notification is the 

initial step in the forfeiture procedures. Section 800.50 also offers an opportunity for the operator to avoid forfeiture 

through compliance. 

 
SECTION 800.4(g) 

 In proposed Section 800.4(g) the regulatory authority had the responsibility to require adequate bond coverage at all 

times. 

 There were no comments on this rule and it is promulgated as proposed. This provision follows Section 509(a) of the 

Act. 

 

SECTION 800.5 - DEFINITIONS. 

 Section 800.5 establishes definitions in addition to those in 30 CFR 700.5 and 701.5. The definitions in this section are 

specific to the bonding program. Two important changes will be made as the result of comments. Personal property is 

removed from being accepted as collateral and an escrow account bond is eliminated as a separate definition since it is a 

type of collateral bond. 

 

SURETY BOND 

 A surety bond is defined in Section 800.5 as an indemnity agreement made payable to the regulatory authority and 

supported by a performance guarantee of a surety licensed in the State where the operation is located. The definition is 

retained as proposed. 

 One commenter objected to the requirement that the surety bond be supported by performance guarantees of a 

corporation "licensed to do business as a surety in the State where the operation is located." The commenter requested 

acceptance of an insurance bond issued by an insurance exchange such as Lloyd's of London. Because this licensing 

provision in Section 800.5 is taken directly from Section 509(b) of the Act it will remain unchanged. 

 However, acceptance of a bond issued by an insurance exchange may be treated as an alternate system under Section 

509(c) of the Act. The commenter cited New Mexico's acceptance of such bonds as a form of self-bond. The regulatory 

authority may accept bonds issued by an insurance exchange under Section 509(c) of the Act if it is allowed under a 

provision included as part of an approved State program. 

 

COLLATERAL BOND 

 A collateral bond was defined in the proposed provision as an indemnity agreement supported by deposit with the 

regulatory authority of one or more of the following: Cash; negotiable bonds of the United States, a State or a 

municipality; negotiable certificates of deposit; a letter of credit; a perfected first-lien security interest in real or personal 

property; or investment-grade rated securities having a rating of AAA, AA or A or an equivalent rating. Three changes 

are made to this definition. First, the use of personal property as collateral is deleted from paragraph (e). Also, the phrase 

"federally insured or equivalently protected accounts" is added to paragraph (a) to provide protection to the regulatory 

authority on cash deposits accepted as collateral, and certain editorial changes have been made so that escrow accounts 

will be included as collateral under cash accounts. 

 The reasons for these changes are discussed with the comments that initiated them. 

 A commenter felt that the proposed definition of collateral implied that the regulatory authority may, in the case of 

forfeiture, obtain collateral upon demand without a hearing. The commenter pointed out that most of the proposed forms 

of collateral were made payable or endorsed to the regulatory authority upon deposit. The commenter felt this was 

inconsistent with the proposed provision for hearings in Section 800.50, in that the regulatory authority could collect 

collateral upon demand prior to the hearing. 

 The provisions in Section 800.50 protect the operator from the possibility of the regulatory authority obtaining 

collateral upon forfeiture without allowing opportunity to avoid forfeiture. They do not prevent the regulatory authority 

from collecting collateral as soon as possible so that reclamation may proceed. It is the responsibility of the operator to 

be aware of any right of appeal provided under applicable laws. 
 In Section 800.5(a) the phrase "or the deposit of cash directly with the regulatory authority" is added to the definition 

of collateral bond since the provision was in the definition of escrow account, now included in the collateral definition. 

 Cash can be deposited either in an account in a bank, savings and loan, or credit union of directly with regulatory 

authority. 

 The same commenter also suggested that a mechanism of collateral assignment be used in place of making collateral 

directly payable to the regulatory authority. According to the commenter, using this mechanism would place the 

regulatory authority in the customary position of a secured party, thus allowing better interface between the rules and 

existing State laws governing foreclosure of collateral. It would also allow the regulatory authority the flexibility to avoid 

acting as custodian of the collateral. 

 Under the final rules, the regulatory authority has the necessary flexibility to avoid acting as custodian, since collateral 

need not remain in direct possession of the regulatory authority, but can be placed in a bank. Also, in regard to 

certificates of deposit the regulatory authority can use the assignment mechanism. 

 Two commenters felt that the addition of language giving the regulatory authority the option to accept negotiable 

certificates of deposit "payable or assigned" weakens the guarantee that the amount and form of bond will cover the costs 

of reclamation. The commenters felt that placing the regulatory authority in the role of assignee adds problems attendant 

to the assignee position and that such certificates should be payable directly to the regulatory authority. 

 OSM agrees that the assignee position can be somewhat riskier and has added language at Section 800.21(a)(3) to 

protect the regulatory authority against rights of setoff or liens. 

 Two commenters objected to the proposed inclusion in Section 800.5(f) of securities, other than negotiable 

government bonds, as collateral bonds. The commenters stated that this was in violation of Section 509(b) of the Act in 

that the aforementioned securities are not within the scope of permissible types of collateral bonds listed by the Act. The 

commenters also suggested that using securities not noted in the Act would be more appropriately covered as an 

alternative bonding system under Section 509(c) of the Act. 

 The rule as adopted will include the types of securities enumerated in Section 509(b) of the Act, along with alternative 

types of securities. The additional types of securities noted in paragraph (f) will provide an equivalent assurance against 

risk of forfeiture as those listed in the Act. Including the alternatives of paragraph (f) will achieve the objectives and 

purposes of the bonding program and is consistent with Section 509(c) of the Act, which allows alternative systems. To 

the extent OSM may approve alternative bonding programs as part of individual State programs, OSM also may 

incorporate acceptable alternatives as part of its nationwide permanent bonding program. Also, the Secretary, in Section 

201(c)(2) of the Act, is directed to promulgate rules that are necessary to carry out the purposes of the Act. This 

provides additional authority for adding other types of collateral that may be accepted as a bond where the protection 

afforded is equivalent to those specified types listed in the Act. 

 Several commenters noted that OSM in the preamble of the proposed rule (46 FR 45085) suggested that States could 

add their own requirement that cash be deposited only in the "federally-insured" accounts. OSM also suggested in the 

preamble that a federally-insured account requirement would be "more stringent" than the proposed Federal rule, which 

did not include the requirement for a federally-insured account as in the previous rule. The commenters pointed out that 

placing cash bonds in federally-insured accounts is really no additional burden and should not be considered "more 

stringent." Also, the commenters noted, by deleting the provision and calling it "more stringent," OSM is preventing 

those States which are bound by State law not to have State programs more stringent than Federal minimum criteria from 

using the safer federally-insured accounts. One commenter pointed out that the only flexibility that the proposed rule 

offered was the flexibility to use riskier accounts. 

 In this final rule, OSM is requiring that each deposit used as collateral be deposited in "federally-insured or equivalently 

protected" accounts. This is in response to commenters who felt that the proposed deletion of this requirement added an 

element of risk for the regulatory authority without providing appreciable flexibility to the regulatory authority or to the 

operator. OSM agrees that addition of this requirement does not impose a hardship on operators and it reduces the risk 

to the regulatory authority. OSM has added the option of "equivalently protected" 
accounts in order to allow for deposit of cash in accounts that are protected by State-operated insurance programs which 

provide the same level of protection as federally-insured accounts. 

 Two commenters suggested that a perfected first-lien security interest in real or personal property proposed in 

Paragraph (a) cannot be included as a collateral bond under Section 509(b) of the Act. The rule as adopted will include 

the types of securities listed in Section 509(b) of the Act as well as real property and other identified rated securities. 

Including real property as a form of collateral achieves the objectives and purposes of the bonding program. The 

authority for allowing other forms of security and real property as collateral is found in Section 509(c), allowing 

alternative bonding methods. OSM views the authorization of Section 509(c) as allowing for separate systems of bonding 

and for separate forms of bonds, such as collateral bonds supported by a perfected first-lien security interest in real 

property. 

 OSM has determined, however, that accepting a perfected first-lien security interest in personal property as collateral 

may present problems. These problems could include situations such as loss of the property, obtaining appraisals of such 

items, fluctuations in value, and the attachment of liens. Therefore, OSM has deleted personal property as a general form 

of collateral from the definition of collateral bond in final rule Section 800.5(e) 

 

SELF BOND 

 A self-bond was defined in proposed Section 800.5 as an indemnity agreement executed by the permittee and made 

payable to the regulatory authority without separate surety. A commenter noted that the phrase "without separate surety" 

limited the ability of the State to develop a self-bonding program which includes forms of collateral. The commenter also 

noted that OSM had approved the State program of New Mexico, which allows a surety bond to be included in a selfbond. The commenter asked that the definition of "self-bond" be modified to include the phrase "with or without separate 

surety." 

 OSM agrees that the States should have the flexibility to choose whether to use other forms of surety within their selfbonding programs. Therefore, OSM has changed the self-bond definition to include the phrase, "with or without separate 

surety." 

 Another commenter to the proposed self-bonding rules suggested that the definition of self-bond be revised to reflect 

that under the proposed new self-bonding rules, self-bonds could be executed by a permittee's parent guarantor. This 

comment has been accepted in the expectation that the final revision to the self-bonding rules will allow such actions. 

 

ESCROW ACCOUNT BOND 

 An escrow account bond was defined in proposed Section 800.5 as cash deposited in accounts made payable only to 

the regulatory authority or deposited with the regulatory authority. 

 A State regulatory authority objected to the separate definition of "escrow account bond" as distinguished from 

"collateral bond." OSM agrees with the reasoning that an escrow account is a form of collateral bond and should not be 

separately defined. OSM has deleted the definition of "escrow account bond." Escrow accounts will be included as "cash 

accounts" in Section 800.5(a) and Section 800.21(d) under the general provisions for collateral bonds. 

 

SECTION 800.10 - INFORMATION COLLECTION. 

 This new section has been added in order to comply with the Paperwork Reduction Act, Pub. L. 96-511 (44 U.S.C. 

3507). No substantive provisions are added by this section. It only describes the Office of Management and Budget 

clearance of the bonding program information collection requirements mandated by Sections 509 and 519 of the Act. 

SECTION 800.11 - REQUIREMENTS TO FILE A BOND. 

 Section 800.11 sets the basic bonding requirements for the operator, establishing the time at which a bond must be 

posted and alternative methods the operator may choose. The section requires the operator to post a bond before 

receiving a permit to mine. It allows that a bond may be posted for all of the permit area or that the permit area may be 

divided into increments and bonded separately or cumulatively. 
 In the preamble discussion for final Section 800.11 which follows OSM explains the authorization and practical reasons 

for having incremental and phase bonding. OSM will also clarify that the State has the option of accepting or not 

accepting a bonding scheme offered by an applicant and has the responsibility to review and approve the specific terms 

and size of increments to be bonded. A provision is added to allow State and Federal programs to have alternative 

bonding systems if approved by the Secretary. 

 A number of other changes have been made for clarity, including some redesignations in Section 800.11(c). Section 

800.11 is further discussed with the following comments. 

 

SECTION 800.11(a) 

 Section 800.11(a) sets the requirement that before a permit is issued the applicant shall file with the regulatory 

authority, on a form prescribed and furnished by the regulatory authority, a bond or bonds made payable to the 

regulatory authority and conditioned on performance of all requirements of the Act, the regulatory program and the 

permit. Section 800.11(a) follows the provisions in Section 509(a) of the Act. No comments were received on Section 

800.11(a), and it has been retained as proposed with minor clarifications. 

 The phrase "After a surface coal mining and reclamation permit application * * *" is being replaced by the phrase 

"After a permit application under Subchapter G of this chapter * * *." This is to clarify the type of permit application to 

which this rule refers. 

 The term "reclamation plan" has been added at the end of Section 800.11(a) as one of the performance requirements on 

which the bond must be conditioned. It is the requirements of the reclamation plan that the operator must fulfill in order 

to complete the requirements set by the Act, the regulatory program, and the permit. 

 

BONDING SCHEMES 

 In final Section 800.11(d), OSM provides three forms of bonds under the bonding rules: One bond which covers the 

whole permit area; cumulative bonding; and incremental bonding. 

 The meaning of a single bond for the entire area is self-evident. If an operator chooses to post such a bond and the 

regulatory authority elects to accept such a bond, it is posted at the time of permit issuance and covers all of the permit 

area, even though discrete areas within the permit area may not be disturbed until some time later. 

 Cumulative bonding is described in detail in the preamble to the proposed revision of the bonding rules of January 24, 

1980, 45 FR 6028-6030. Under cumulative bonding, a bond is posted covering the initial area to be disturbed. As 

successive incremental areas are to be disturbed the operator posts additional bond in accordance with a schedule 

submitted at the time the initial bond is posted. Additions are made to the initial bond so that there is, at any one time, 

only one bond, which covers the entire area disturbed. 

 Incremental bonding recognizes a permit area divided into discrete portions, each separate from and independent of 

another insofar as reclamation work is concerned. Thus, bonding of an increment under this alternative necessarily 

implies that if there is a default in reclamation responsibility on one increment within the permit area, the regulatory 

authority cannot forfeit the bond or bonds posted for any other increment and apply those proceeds to the increment on 

which default has occurred. 

 Besides these bonding systems, OSM proposed in September 1981 and provides in these new bonding rules, a new 

concept of separate bonds for separate phases of reclamation. That is, under Section 800.13(a)(2) operators will be 

allowed, with the approval of the regulatory authority, to post a bond to cover Phase I backfilling, regrading and drainage

control work, and another bond to cover Phases II and III requirements. 

 The total of the phase bonds must be sufficient to cover costs to the regulatory authority to complete the reclamation 

plan, and bond covering all three phases must be posted before disturbance of the area or increment bonded. 
 Under Section 800.11(d) the operator has the option of selecting which bond scheme he or she wishes to file. The 

regulatory authority has the discretion to accept or not accept that which the operator files. 

 

DISCUSSION OF INCREMENTAL BONDING 

 Incremental bonding finds its authority in Section 509 of the Act, and has been incorporated in the permanent program

regulations. Conflicting views have resulted, however, from wording in the March 13, 1979 regulations concerning the 

area required to be covered by the bond on any increment. One commenter on the initial bonding proposal, 43 FR 41872

(September 18, 1978), argued that allowing a bond, posted for an increment, to be forfeited for any part of the entire 

permit area flew in the face of contract law principles on which insurance and bonding are based. In short, the commenter 

argued that if a bond is posted for a discrete area, it should only be forfeited for work to be done on that area. The March 

13, 1979 final rule acknowledged the comment and provided in Section 808.12(c) that bond coverage under an increment 

would apply to the entire permit area only with respect to the protection of the hydrologic balance. (44 FR 15393, March 

13, 1979). However, in apparent conflict with the provision included in Section 808.12(c), Section 800.11(b) and the 

accompanying preamble indicated that a bond posted for an increment must be available for reclamation work throughout 

the permit area. The reason given was that water pollution or other unanticipated problems could occur on increments 

for which bond had been partially released such that the remaining amount would be inadequate. 

 The bond liability provisions of Section 808.12(c) were challenged in re: Permanent Surface Mining Regulation 

Litigation, supra. Subsequently, a rulemaking petition was filed by the Mining and Reclamation Council of America 

(MARC) and two insurance carriers to amend the bonding regulations, 44 FR 28005 (May 14, 1979). 

 Because it appeared that the bonding regulation should be subjected to further rulemaking, the Director of OSM 

submitted an affidavit to the district court informing it that the contested phrase of Section 808.12(c) would be 

suspended. See affidavit of Walter N. Heine, October 29, 1979, submitted in Appendix I to Government Round I brief in 

No. 79-1144, October 29, 1979. On November 27, 1979, the phrase "with respect to protection of the hydrologic 

balance" was suspended from Section 808.12(c). A proposed revision appeared on January 24, 1980 (45 FR 6028), to 

delete the language limiting bond protection to the hydrologic balance and making it discretionary whether an incremental

bond must apply to the entire permit area. 

 On August 6, 1980 (45 FR 52306), a final rule was adopted which deleted the phrase pertaining to protection of the 

hydrologic balance but retaining the concept that the bond on an increment must apply to the entire permit area. 

 After the August, 1980 final rule, another rulemaking petition was submitted by MARC, joined by the Surety 

Association of America, requesting that the requirement extending liability to the entire permit area be modified (46 FR 

16277, March 12, 1981). Their argument was that the provision extending liability under a bond to the entire permit area 

prevents sureties from writing bonds for increments. They urged that the section be revised to provide that under 

forfeiture a bond may be used only for those reclamation operations for which it was posted. By a notice appearing in the 

Federal Register on August 19, 1981 (46 FR 42082), the petition was granted and Section 808.12(c) was suspended in 

its entirety pending revised rulemaking. 

 That administrative action was followed by the proposed revision of all bonding rules on September 9, 1981 (46 FR 

45082). The proposed rule would have made clear that when a bond, posted for an increment, is forfeited, it would be 

available only for reclamation work for which it was posted. 

 The history presented above shows that OSM has gone through various changes with respect to precise requirements 

and methods of acceptable incremental bonding. Congress intended to provide assurance that mined lands would be 

reclaimed even in the case of an operator default; it did not intend to impose on operators and sureties excessive bonding 

requirements that could not be implemented. These final bonding rules set forth standards for incremental bonding and 

release of incrementally bonded areas which fulfill the intent and purpose of the Act. Allowing for incremental bonding is 

not required by these rules, but is an option that may be adopted by the regulatory authority. 

 A number of comments were received with respect to incremental bonding. Three commenters urged that the 

proposed rule be changed and provisions reinstated requiring that the incremental bond cover the entire permit area, 

rather than bonds being applied to individual increments of the permit area. One commenter was concerned about the 

possibility that due to unforeseen problems the actual cost of reclamation may be higher than the estimated cost and 
subsequent bond. The commenter felt that allowing the regulatory authority to forfeit bonds from other increments for 

reclamation work on any part of the permit area would allow the bond posted for other increments to make up for the 

error. 

 Two commenters further suggested that in the event problems occur on an increment already released from bond 

liability, but still within the permit area, a fund sufficient to assure completion of all reclamation work must be available. 

The commenters were also concerned that releasing bonds in increments may not leave enough funds to meet emergency 

reclamation contingencies affecting the permit area. 

 These commenters' concerns are addressed by the bond adjustment mechanism provided in these rules. The Act and 

OSM regulations require that the bonding amount posted be sufficient to cover the cost of reclamation. The bond may 

not be released until all of the reclamation requirements of the Act and the permit have been met. There is no evidence 

that Congress intended the operator to carry the burden of bonding not only the cost of anticipated reclamation but also 

an additional unspecified amount to cover unforeseen problems. Each regulatory authority should be able to estimate the 

cost of all potential reclamation with reasonable accuracy. If at any time the cost of future reclamation under the bond 

changes, the regulatory authority is required to adjust the bond accordingly ( Section 800.15(a)). Thus, the amount of the 

bond for any increment must at all times be sufficient to assure the completion of the reclamation plan if the work had to 

be performed by the regulatory authority. Additionally, prior to release of the bond, the regulatory authority must 

consider, among other factors, the degree of difficulty to complete any remaining reclamation and the probability of any 

future reclamation work being required. 

 A surety, who in good faith enters into a surety contract for a performance bond, is entitled to a reasonable degree of 

certainty with respect to that bond and a reasonable ability to verify performance under the bond. By allowing a bond to 

be written for a specific defined increment, the final rule provides this reasonable level of certainty while ensuring that a

sufficient bond is required for each increment to cover the costs of reclamation in the event of forfeiture. 

 A commenter argued that the incremental bonding program in West Virginia, where the bond is set at a flat rate of 

$1,000/acre, would probably result in insufficient funds to complete reclamation. The commenter felt that bonding of the 

entire permit area on the other hand would probably cover the cost of all reclamation work. 

 The commenter apparently misunderstands the West Virginia program. The West Virginia bonding program is an 

alternative bonding program under Section 509(c) of the Act which establishes a central fund to cover the cost of 

reclamation work that is not covered by forfeited bond amounts. OSM conditionally approved the West Virginia 

program, but required the State to submit proof that the per-acre bond amounts, as supplemented by the amount in the 

fund, will be adequate for all potential forfeitures. See 46 FR 5915, January 20, 1981. 

 Two commenters suggested that proposed Section 800.11(b) was inconsistent with Section 509 of the Act, which 

states "the applicant shall file * * * a bond for performance * * * conditional upon faithful performance of all the 

requirements of this Act and the permit." The commenters said this requires that liability, under even an incremental 

bonding plan, cover the entire permit area. The commenters also cited a Senate Report in support of inserting a provision 

that the bond cover the entire permit area. The Senate report states: "The bond must cover the entire area to be mined 

during the initial term of the permit." S. Rep. No. 95-128, 95th Cong., 1st Sess., 78 (1977). 

 Another commenter argued that Section 519(c) of the Act, which provides that a bond may not be released until all 

reclamation requirements of the Act are fully met, prohibited release of incremental bonds until all requirements within 

the entire permit area are met. 

 The Act has two primary sections dealing with bonding: Sections 509 and 519. Section 509 of the Act deals with the 

posting of a bond or bonds to ensure completion of reclamation -- work which the permittee under Section 515 of the 

Act (for surface mines) and Section 516 of the Act (for underground mines) is obligated to perform. The pertinent 

provisions of Section 509(a) specify that: 

 [T]he bond shall cover that area of land within the permit area upon which the operator will initiate and conduct 

surface coal mining and reclamation operations within the initial term of the permit. As succeeding increments of surface 

coal mining and reclamation operations are to be initiated and conducted within the permit area, the permittee shall file 

with the regulatory authority an additional bond or bonds to cover such increments in accordance with this section. The 
amount of the bond required for each bonded area shall depend upon the reclamation requirements of the approved 

permit; * * *." (Emphasis added.) 

 

Although the legislative history on the precise requirements for incremental bonding is vague, based on the quoted 

language it is OSM's view that separate bonds covering separate increments of the permit area are authorized. 

 The Act in Section 509(a) clearly intends that additional bonds for increments of the permit area can be filed as 

succeeding increments are mined. But, the Act does not explicitly address whether increments can be bonded and 

released separately and independently from other increments within the permit area. 

 The statement in Section 509(a) that the first bond posted is to be for operations "within" the "initial" permit term, 

leads OSM to conclude that Congress did not intend to exclude consideration of a bond which covers an area less than 

the whole of the area to be mined during the entire permit term so long as at any point in time each portion of disturbed 

land is subject to a bond covering the cost of reclamation for that area. This is consistent with the statement in the Senate 

Report cited by the commenter which was a generic statement addressing the scope of bond coverage and not dealing 

specifically with the question of incremental bonding. A House Report on H.R. 13950, a predecessor to the Act (H. Rep. 

No. 94-1445, 94th Cong. 2d Sess. (1976) at 114), states that the bond is to cover all or part of the area under permit but 

must cover the land on which operations are conducted. The use of the phrase "or bonds" in the second quoted sentence 

from the Act indicates that Congress authorized the posting of more than one bond for a permit area. And the last 

underscored phrase, "each bonded area," further strengthens the argument for the bonding of separate increments. 

 The Act provides that a balance should be struck between assuring a coal supply essential to the nation's energy needs 

and protecting the environment. The intent of the bonding provision is to insure performance of the reclamation plan. In 

some cases, the area to be mined during a 5-year permit term can require substantial bond amounts to cover costs of 

reclamation. Requiring a performance bond at the beginning of a permit term for areas which are not to be disturbed until 

the later years of the permit term could be excessive. Incremental bonding of areas within the permit area helps to avoid 

excessive bonding requirements while continuing to ensure a bond sufficient to cover the costs of reclamation. 

 One commenter complained that in its proposal OSM was reversing the position taken in 1979 in the litigation on the 

permanent program regulations promulgated March 13, 1979. (In re: Permanent Surface Mining Regulation Litigation, 

supra. ) In accordance with the petition for rulemaking received from MARC and the Surety Association of America, and 

in accordance with Executive Order 12291, OSM agreed to reconsider this issue. Thus, a new proposed rule was 

published on September 9, 1981. In addition, in accordance with the February 1, 1983 remand Order of the U.S. Court of

Appeals in In re: Permanent Surface Mining Regulation Litigation, No. 80-1810 (D.C. Cir.), OSM has been directed to 

consider the issues raised in the briefs of the parties to that action. OSM has concluded that its prior position was not 

warranted and that the Act does not require a bonding system that imposes excessive and unnecessary burdens on the 

operator and sureties. For this reason, the March 13, 1979 regulations as amended on August 6, 1980 and suspended in 

part on August 19, 1981, are being revised in this rulemaking. 

 A commenter suggested that proposed Section 800.11(b) seems to require the regulatory authority to approve any 

proposal for incremental bonding rather than allowing the regulatory authority discretion in accepting only appropriate 

incremental bonding schemes. OSM agrees with the concern. The Act allows the regulatory authority discretion in 

accepting or rejecting various bonding schemes. The rule at Section 800.11(d) has been revised to require regulatory 

authority approval of an applicant's bond under one of the prescribed schemes and Section 800.11(b) is revised to include 

all proposed types of bonds. 

 Some commenters referred to the National Coal Policy Project recommendations on the first bonding rulemaking 

petition as support for their contention that bonds should be available for work throughout the permit area. (See 

comment of National Coal Policy Project of Georgetown University, dated June 15, 1979.) Those recommendations do 

not specifically deal with the issue raised in suspended Section 808.12(c). Rather they are directed at the issue in previous 

Section 807.12(c) of complete release of a bond on an increment of a permit area versus release of that increment from 

the permit area. Their recommendation, which was subsequently adopted in the August 6, 1980 rulemaking, was that all 

of the bond on an increment should be released but that increments should not be released from the permit area until the 

final increment was released from its bond. The purpose of keeping an increment in the permit area is to retain operator 

responsibility for any failure that may occur. 
 OSM in these final bonding rules is retaining similar requirements. All of the bond on an increment may be released 

following the extended liability period if the regulatory authority concludes that reclamation on the increment has been 

completed and the requirements of Section 800.40 are satisfied for that increment. The regulatory authority may then 

retain the increment as part of the permit area if operator liability on the increment is still necessary, or, upon application, 

the regulatory authority may approve a permit revision to release the increment from the permit area. 

 

DISCUSSION OF PHASE BONDING 

 A related issue raised by one commenter with respect to proposed Section 800.13 is that in his view separate phases of 

reclamation cannot be bonded separately. The basis of his opposition is that such phase bonding is not permitted by the 

Act. 

 The Act is silent on whether bonding of separate phases is permitted. The phase bonding concept was proposed as a 

possible solution to objections from the surety industry to the excessive length of time a performance bond must be held. 

Under the phase bonding system of Section 800.13(a)(2), an operator who may not be able to obtain surety bonding for 

his entire operation, may have a better chance to obtain surety bonding on one or more phases of the bonding. The 

operator could post another bond, such as a collateral bond, for the phases of bonding that the surety finds objectionable, 

e.g., Phases II and III. As with incremental bonding, the use of phase bonding does not negate the requirement that the 

total amount of the bond on the area at one time must be sufficient to cover all of the reclamation requirements for that 

area. 

 If the regulatory authority does not wish to allow phase bonding, it is under no obligation to do so. In setting phase 

bond amounts, the Phase I amount must be sufficient to complete Phase I reclamation activities, but, in order to be totally 

released after the completion of Phase I reclamation, cannot exceed 60 percent of the combined bond amount. A second 

bond would be posted for Phase II and III requirements which must be in an amount sufficient to complete the remaining 

reclamation. The bond amount retained for Phase III must at least be enough to reestablish vegetation. Release of phase 

bonds will be handled in much the same way as phased release of regular bonds, in accordance with Section 800.40. For 

example, after Phase I reclamation is complete on an area or increment and bond release procedures have been followed, 

the regulatory authority, if satisfied that Phase I reclamation is complete, could release the entire Phase I bond for the 

area or increment for which it was posted if it did not exceed 60 percent of total bond amount. After Phase II 

reclamation, an additional amount could be released if sufficient bond is retained, for the period of extended liability, to 

reestablish revegetation. 

 

REDESIGNATION OF PROPOSED SECTION 800.11 (b) AND (c) 

 Proposed Section 800.11 (b) and (c) have been reordered and redesignated as Section 800.11 (b), (c) and (d). 

 Proposed Section 800.11(b) has been separated into Section 800.11(b) (1) and (2). Specifically, Section 800.11(b)(1) 

requires a bond to cover the entire permit area or that land upon which the operator will conduct surface coal mining and 

reclamation operations within an identified increment of the permit area. The modification from the proposal specifies 

that the entire permit area may be covered instead of increments. If the entire permit area is not covered by one bond, 

Section 800.11(b)(2) calls for additional bonds to be posted as succeeding increments of mining operations are conducted

within the permit area. 

 The introductory language in proposed Section 800.11(c) required that the operator not disturb any land until a 

performance bond has been accepted by the regulatory authority. Proposed paragraphs (c)(1) (i), (ii) and (iii) explained 

the types of bonds and schedules an operator may file: (i) Entire permit area performance bond, (ii) cumulative bond and 

(iii) incremental bond. Proposed paragraph (c)(2) required an applicant to submit a map identifying the incremental areas 

for bonding and specify the bonds to be filed. Proposed Section 800.11(c)(2) also specified when bonds must be filed. 

 OSM received a number of comments on proposed paragraph (c) and is making some changes and redesignations to 

reflect those comments. Two commenters objected to the inclusion of two provisions, Section 800.11 (c)(1) and (c)(2), 

as part of proposed paragraph (c) suggesting instead that each provision stand on its own as a separate paragraph. 

 OSM agrees that a better order of the provisions is needed and has redesignated proposed paragraphs (b) and (c) as 

follows: 
____________________________________________________________________________________________

PROPOSED PARAGRAPH NEW PARAGRAPH

(b) (b)(1), (b)(2).

(c) (introduction) (c).

(c)(1)(i) (d)(1).

(c)(1)(ii) (d)(2).

(c)(1)(iii) (d)(3).

(c)(2) (b)(3).

____________________________________________________________________________________________

 The introductory language in proposed Section 800.11(c) is the entire final Section 800.11(c). 

 Proposed Section 800.11(c)(1) (i), (ii) and (iii) are included in final Section 800.11(d). Paragraph (d) requires the 

applicant to file with the approval of the regulatory authority, a bond under one of three schemes, listed as (d)(1), 

(d)(2) and (d)(3). Paragraph (d)(1) refers to performance bonds for the entire permit area. Paragraph (d)(2) refers to 

cumulative bonds and Paragraph (d)(3) refers to incremental bonds. These three schemes were described earlier in 

this preamble. 

 Proposed Section 800.11(c)(2) has been adopted in part in final Section 800.11(b)(3). It requires identification of 

bonding areas or increments on maps submitted with the permit application and the bond amount for each area or 

increment. The proposal for filing each bond amount 30 days in advance of beginning operations in an increment has 

not been adopted. This provision is unnecessary in light of Section 800.11(c) which prohibits the disturbance of any 

area prior to acceptance by the regulatory authority of the required bond. 

 A commenter was concerned about possible administrative problems in keeping track of a large number of 

increments, especially if there are cutbacks in personnel and funding at the State level. The commenter also 

recommended that increments be limited to a manageable size, perhaps to set the minimum limit of an increment's size 

as the area of land to be disturbed in 1 year. 

 An optimum increment size must be developed on a site-specific basis. However, a provision has been added, new 

Section 800.11(b)(4), to require that increments shall be of sufficient size and configuration for efficient reclamation. 

 A State regulatory authority noted that since there is no requirement that the regulatory authority accept all types of 

bonds, the first line in proposed Section 800.11(c)(1) (new Section 800.11(d)) should read "After the amount of the 

bond has been determined * * * the [regulatory authority] may accept in fulfillment of the bond requirement either * * 

*." 

 OSM agrees that the regulatory authority is not required to accept all types of bonds. Language in new Section 

800.11(d) has been changed to reflect this and to require regulatory authority approval of the bond or bonds filed. 

 The same commenter noted that proposed Section 800.11(c)(1)(i) (new Section 800.11(d)(1)) would require a 

bond only for the term of the permit. The commenter noted an inconsistency of this rule with proposed Section 

800.13 which required that bond liability be for the duration of the mining and reclamation operations. The 

commenter asked that the first line of Paragraph (c)(1)(i) be changed to read "A performance bond or bonds for the 

entire permit area; or * * *." The commenter also felt the operator should have the option to post a bond for the 

entire area which the proposed rule did not specify. OSM agrees with these comments and has adopted the 

suggestion in new Section 800.11(d)(1) and also in Section 800.11(b)(1). 

 The State regulatory authority also noted that it was inappropriate to require a schedule for release of acreage 

(proposed Section 800.11(c)(1)(ii)) in the section concerning "Requirement to file a bond." OSM agrees and has 

deleted the requirement for a schedule of release of acreage. 

 The State further commented that, using the proposed definition in 46 FR 45086 and 45090, a cumulative bond 
would cover the total disturbed area in the permit and that there would be no release of acreage until the entire permit 

area is reclaimed. Thus, it was concluded that only an incremental bond scheme would have liability released on parts 

of the permit area. On this point, OSM must disagree. Partial release of bond on a cumulatively bonded permit area is 

not prohibited by these rules, although liability of a cumulative bond extends over the entire permit area. OSM has 

added the requirement under the cumulative bond option in Section 800.11(d)(2) that the applicant file not only a 

cumulative bond schedule, but also a performance bond or bonds in the amount necessary to cover reclamation of the 

initial area to be affected. 

 The same regulatory authority felt that in proposed Section 800.11(c)(2) (new Section 800.11(d)(3)) the phrase 

"proportion of total amount" implied a percentage of bond amount for the entire permit area and was not relevant to 

the objective of incremental bonding. The amount of bond on an increment is determined and posted only for the 

reclamation work needed on that particular increment. 

 OSM agrees and has changed language in new Section 800.11(b)(3) of the final rule to read that the operator shall 

"specify the bond amount to be filed for each increment." Incremental bonding is based on calculating bond amounts 

for specific increments and is not based on assigning proportions of a total amount to the individual increments. 

 The regulatory authority also did not agree with the inclusion in proposed Section 800.11(c)(2) of the phrase 

"required for the term of the permit" in referring to the amount of bond needed. 

 OSM agrees that this phrase should not be included. The phrase is unnecessary and confusing, and is not adopted in 

the final rule. 

 The Kentucky Coal Association joined the National Coal Association (NCA) in recommending the addition of a 

new paragraph to Section 800.11 to allow for entire permit areas, increments, or portions of increments to be 

transferred from the permittee to an agency involved in research to encourage advances in mining and reclamation. 

The NCA noted that there is neither a specific statutory requirement for bonding of research parcels in Section 711 of 

the Act nor one excluding them from being bonded. The commenters noted that the present bonding rules do not 

mention research parcels even though Sections 511(a)(2) and 509(c) of the Act allow for revision of a permit and 

alternative bonding systems. The NCA suggested that provisions should be made for an alternative bonding system 

that will achieve the objectives and purposes of the bonding program while encouraging the use of research parcels. 

 OSM believes that, while it may be advisable to waive bonding requirements for research parcels, neither Section 

711 or Section 509(c) allows a waiver of the financial guarantees required under Section 509 of the Act. Thus, no 

separate provisions have been included in the final rules for research parcels. The amount of bond for the research will

depend on the stage (phase) and the complexity of reclamation, the problems to be encountered, and the amount of 

work to be done if required to be completed by a third party. 

 The ability of the party seeking transfer to carry out the terms of the permit is a well-stated requirement in the 

transfer of permit areas under 30 CFR Part 788. The transferee must post a bond and comply with the permit 

conditions. Transfer of permits to research organizations is already provided for under permit revision and transfer 

procedures and is not necessary as a separate provision of bonding. 

 

SECTION 800.11(e) 

 The final rule retains language found in previous 30 CFR 806.11(b) and moved it to new Section 800.11(e) with 

minor revisions. A modified version of this paragraph appeared as proposed Section 800.12(b), but is not adopted. 

Section 800.11(e) allows State and Federal programs to have alternative bonding systems if they are approved by 

OSM and meet certain objectives. These objectives include assuring that sufficient money will be available to the 

regulatory authority to complete the reclamation if a default should occur. The alternative bond must also provide a 

substantial economic incentive for the permittee to comply with all reclamation provisions. This paragraph derives its 

authority from Section 509(c) of the Act. The modifications from the proposal include the explicit reference to OSM 

approval of alternative programs rather than Secretarial approval, and use of the phrase "reclamation plan," rather 

than "reclamation, restoration and abatement." The latter change recognizes that bonding obligations are tied 
specifically to reclamation. 

 A State regulatory authority objected to the original placement of this provision on alternative bonding in Section 

800.12 -- "Forms of bonds." The commenter suggested that moving the provision to Section 800.11 would allow 

both different bond procedures or schemes as well as bond forms. Another commenter objected to omission in 

proposed Section 800.12(b) of the specific alternative bonding systems that were in previous Section 806.11(b) (1) 

and (2). Sections 806.11(b) (1) and (2) listed the objectives that alternative bonding systems must meet if OSM is to 

approve their inclusion in a State program. OSM accepts these suggestions and has added the provision to Section 

800.11 as discussed above in order to allow for an alternate system of bonding as well as an alternate bond form. 

 The alternative bonding provision is in more detail than in the proposed rule because it retains language and 

objectives from previous Section 806.11(b) in order to clarify what is required from the States in establishing 

alternative bonding programs. 

 

SECTION 800.12 - FORM OF THE PERFORMANCE BOND. 

 Section 800.12 is promulgated as proposed except that paragraph (b) concerning acceptability of alternative 

bonding systems is moved to Section 800.11(e) and proposed Section 800.12(a) has been redesignated. Section 

800.12 lists the three types of bonds that may be posted: Surety, collateral or self-bond. These three types are 

authorized under Section 509 of the Act. Section 800.12 also allows the regulatory authority to accept any 

combination of these three types of bonds. 

 Two commenters objected to allowing combinations of bonds to include self-bonds on the grounds that it is not 

consistent with proper business practices and Section 509(b) of the Act which allows only for the deposit of collateral 

in the place of a surety bond. The commenters suggested that accepting a self-bond in a bond combination would 

permit the operator to dilute the "full showing" required in Section 509(c) of the Act and to "bootstrap" a self-bond 

onto a posting of collateral or surety. 

 The final rule is consistent with Section 509 of the Act, including Section 509(c). Allowing a combination of selfbond with other bond forms allows the regulatory authority to limit self-bonding to specific levels depending on 

financial qualifications of a self-bond applicant. This could allow limited self- bonding for an operator who qualifies 

for a certain dollar amount of self-bond but whose required bond exceeds this amount. Self-bonding should be 

allowed for applicants who qualify, but self-bond levels must reflect a sound assurance of ability to perform the 

reclamation. 

 A commenter requested the addition of the following provision to Section 800.12: "Where the mining operation is 

owned by two or more persons or entities, the regulatory authority shall allow each person to provide separate 

financial assurance provided that the total of such assurance is sufficient to accomplish reclamation." 

 There is no language in the rules that prevents a regulatory authority from accepting separate bonds or financial 

guarantees from persons or entities who are jointly involved in an operation. The suggested provision would require 

the regulatory authority to accept separate bonds. OSM would rather keep the flexibility in the rule giving the 

regulatory authority discretion to accept or not accept separate bonds. Therefore, the provision offered has not been 

included in the final rule. 

 The same commenter offered another provision for inclusion in Section 800.12 which would allow for a "'blanket" 

bond concept. It reads as follows: 

 A blanket bond covering Statewide or countrywide operations may be furnished if the terms and conditions thereof 

are sufficient to comply with the regulations in this part and if approved by the regulatory authority. 

 Insufficient detail as to the amount, liability, and extent of control over forfeiture was furnished to adequately 

evaluate the proposal and to include it in the final rules. OSM does not see any advantage to allowing "blanket" 
bonds. If such bonds were allowed, the bond coverage required could be no less than the total amount to cover costs 

to a third party to complete the reclamation plans of all bonded areas. Therefore, the blanket bond would not offer an 

appreciable advantage over individual bonds. 

 

SECTION 800.13 - PERIOD OF LIABILITY. 

 Proposed Section 800.13 required that the liability of the bond be for the duration of the surface coal mining and 

reclamation operation and for a period coincident with the operator's revegetation responsibility. The proposed 

section set the liability periods for revegetation completion and agricultural postmining land use and allowed small 

areas requiring extended liability to be bonded separately with the regulatory authority's approval. Proposed Section 

800.13 stated that bond liability is to cover only those actions obligated under the permit and reclamation plan and 

within the control of the permittee. 

 A few language changes have been made to clarify requirements of this section. Also, the provisions allowing that 

the liability period for certain bonds "may be limited," and establishing the periods of extended responsibility for 

revegetation have not been adopted. Language has been added to clarify that "actions of third parties" for which the 

operator is not responsible refers to implementation of alternative postmining land use plans. 

 

SECTION 800.13(a) 

 The first sentence of proposed Section 800.13(a) has been adopted as Section 800.13(a)(1), with one change. Both 

the proposed and final rules require performance bond liability to extend through the surface coal mining and 

reclamation operation and the period of extended responsibility for successful revegetation provided in 30 CFR 

816.116 or 817.119. The change recognizes that liability under the Act must also continue until achievement of the 

reclamation requirements of the Act, regulatory program and permit. These obligations, recognized in Section 

519(c)(3) of the Act, are independent of the revegetation responsibility. 

 The remainder of proposed Section 800.13(a) is included in Section 800.13(a)(2) and implements the concept of 

phase bonding. Specifically, it provides that, with the approval of the regulatory authority, a bond may be posted and 

approved to guarantee specific phases of reclamation within the permit area provided the sum of phase bonds posted 

equals or exceeds the total amount required under Section 800.14 and 800.15. 

 Two commenters objected to allowing liability for bonds on specific phases or increments in proposed Section 

800.13(a). The commenters cited Section 509(b) of the Act, which states the "liability under the bond shall be for the 

duration of the surface coal mining and reclamation operation and for a period coincident with the operator's 

responsibility for revegetation requirement in Section 515." Therefore, the commenters stated, liability may not be 

limited to only specific phases or increments. OSM disagrees with the comment. "Liability" is not relieved merely 

because some of the bond amount for an increment is released. The implementation of phase bonding does not affect 

the requirement that at all times, the remaining bond must be sufficient to cover the cost of future reclamation. 

 A State regulatory authority requested clarification as to why in the second sentence of proposed Section 800.13(a) 

OSM allowed limited liability for specific "increments" when Section 509(b) of the Act clearly states the period of 

liability and this statement is reiterated in the first sentence of Section 800.13(a). Another commenter stated that the 

"provision for bonding individual phases of operation is not permitted by the Act. The Act permits only that bonds 

may be incremented to cover 'areas of land within a permit area' or 'succeeding increments'." 

 One commenter stated it would greatly help a surety to understand what he is bonding if liability in incremental 

bonding can be limited to each bonded increment. 

 Another commenter requested that the second sentence in Section 800.13(a) be changed so that it reads "the 

liability period for certain bonds 'shall' be limited if * * *." The commenter's reasoning was, if the bond is posted to 

guarantee only a specific increment, the liability period should be correspondingly limited. 

 OSM realizes that proposed Section 800.13(a) was confusing as to limiting the period of liability on "certain" 

bonds. The liability period required in Section 515(b)(20) of the Act must be met before the total performance bond 
can be totally released for an area or increment. However, as discussed earlier in the preamble, if phase bonding is 

implemented, it is possible to release the entire amount of a phase bond while maintaining liability and bond coverage 

on the area or increment to which that phase bond applies. OSM has made changes to new Section 800.13(a)(2) to 

clarify its intent that bond may be approved to guarantee a specific phase of reclamation. The proposed language 

concerning limiting the liability period has not been adopted. 

 Other comments were more specifically addressed in the discussion on incremental and phase bonding under 

Section 800.11. 

 A State regulatory authority, in evaluating the provisions for limited bonds, recommended clarifying Section 

800.13(a) to ensure that the regulatory authority has all the bonds needed to complete all phases of reclamation 

within each increment should forfeiture occur. The commenter said bonds posted to cover phases within an increment 

should all be posted at the same time, so that all phases are covered by bonds prior to the beginning of operations. 

OSM agrees that this should be clearly stated and has added language at Section 800.13(a) to provide that the sum of 

phase bonds posted must equal the total bond required. 

 Another State regulatory authority, in anticipation of problems in accepting bonds covering phases, requested 

clarification in Section 800.13(a) that a State is not required to accept this bonding method. The regulatory authority 

was also concerned that allowing different sureties to bond the separate phases of an increment would create a 

problem should the reclamation in Phase I fail after release of the bond. The sureties posting bonds for Phases II and 

III would not want to assume the problems of Phase I, leaving the State without funds to repair the damage. The 

regulatory authority also said that under its program, bond liability is not released after Phase I even though the bond 

amount may be released and that the bonds specifically held for Phases II and III reclamation may be applied to Phase 

I reclamation. 

 OSM provides in new Section 800.11(d) that the regulatory authority has the discretion to approve or disapprove 

the bond of an operator. New Section 800.13(a)(2) provides that a bond may be posted "with the approval of the 

regulatory authority," to further clarify that the regulatory authority decides whether to accept phase or incremental 

bonding. Phase bonding should not create new problems of extending liability of a bond to other areas or to 

reclamation requirements for which the bond has already been released. Whether a bond covered all phases and 

increments or specific phases and increments, its funds are no longer available to the regulatory authority after the 

bond amount is released. Therefore, the regulatory authority must be satisfied with Phase I reclamation before 

allowing release of the bond amount associated with the reclamation. After the release of either a separate Phase I 

bond or the Phase I portion of a bond covering all phases, the remaining monies are only supposed to be sufficient to 

cover Phases II and III. Thus, while the problem of failed reclamation is real, it is not exacerbated by the use of phase 

bonding. In any event, new Section 800.50(d) requires that the operator be liable for all costs of reclamation in the 

event that forfeited bond amounts are insufficient. 

 

PROPOSED SECTION 800.13(b) 

 Proposed Section 800.13(b) would have set the liability period of 5 or 10 years for completion of vegetation 

requirements after the last year of augmented seeding, fertilizing, irrigating or other work. This liability period begins 

again whenever augmented seeding, etc., is required. Proposed Section 800.13(b), which was taken from Section 

515(b)(20) of the Act, is not adopted because it is duplicative of the revegetation provisions of the regulations at 30 

CFR 816.116 and 817.116. 

 

PROPOSED SECTION 800.13(c) 

 Proposed Section 800.13(c) would have allowed the regulatory authority to approve selected supplemental 

reclamation practices after the 5 or 10 year liability period has begun without extending the liability period if they 

conform to the revegetation standards of Sections 816.116 and 817.116. This provision is not being adopted because 

it would have duplicated the provisions of draft final Sections 816.116 and 817.116 as these provisions appear in 

OSM's "Final Environmental Impact Statement OSM-EIS-1: Supplement," (FEIS) Volume III, pp. 152 and 204. If 

these rules are not finalized, OSM will adopt amendments that, at the least, would incorporate the provisions of 
previous Section 805.13(b)(3). 

 A commenter, comparing the proposed Section 800.13(c) with the draft version of Sections 816.116 and 817.116, 

objected to the situations set out as acceptable reclamation practices which would not be considered augmentation 

and would not cause the liability period to be extended. The commenter said the draft revegetation rules and preamble

of June 26, 1981 define the following situations when the bond liability period does not have to start over: 

 

-- Reseeding or refertilizing small spots where vegetation fails; 

-- Filling gullies; 

-- Interseeding and supplemental fertilizing in the West; 

-- Additional planting of trees and shrubs if this may continue as part of the postmining land use. 

 

The commenter felt these revegetation provisions were vague, easily abused and should be deleted. As an alternative 

the commenter suggested that OSM rely on Section 800.13(d) which allows problems areas to be separately 

rebounded. 

 The commenter also felt the combination of proposed Section 800.13(b) and the revegetation rules was not 

consistent with the Act's intent to prevent release of part of the bond until vegetation shows itself to be successful. 

According to the commenter, the Act requires that when a vegetation problem develops which necessitates additional 

seeding or fertilizer, the 5 or 10 year liability period must start over. 

 OSM, in proposing revisions to its bond liability rules, has referenced existing revegetation requirements. At this 

time, the proposed changes to the revegetation rules (47 FR 12596, March 23, 1982) have not yet been finalized. 

References in these final bonding rules to revegetation incorporate the existing revegetation rules that are currently in 

effect. The comments summarized above refer to draft proposed revegetation rules, some of which may not have 

been proposed. To the extent applicable, these comments will be addressed in final revisions to the revegetation rules. 

 

FINAL SECTION 800.13(b) 

 Proposed Section 800.13(d) allowed small areas of the permit, limited in extent and requiring extended liability, to 

be bonded separately with the approval of the regulatory authority. Access to these small areas could be included as a 

part of the area requiring extended liability. Final Section 800.13(d) has been revised and adopted in final Section 

800.13(b) as discussed below. 

 Two commenters found the proposal "too open-ended" and said the proposal makes no attempt to discern if the 

intent of the operator to rebond small areas comes after a legitimate reclamation effort or after failure of a halfhearted attempt. The commenters also noted the proposal limits these types of areas only to ones which are "limited 

in extent." 

 Final Section 800.13(b) will allow for the extension of bond liability on limited portions of the bonded area 

requiring extended liability so as not to delay bond release of the rest of the area. This provision represents a revision 

of Section 805.13(c) promulgated August 6, 1980, 45 FR 52319. The regulatory authority will be in the best position 

to determine whether the operator should be allowed to separate areas from the permit area to be bonded separately 

when extended liability is required. Because the areas must be "limited in extent," it is not necessary to characterize 

them also as "small." Thus, the proposed descriptor "small" has not been adopted. 

 Another commenter requested clarification of the phrase "small, isolated, clearly defined portions" in proposed 

Section 800.13(d). Because this phrase is not defined, the commenter said, it raises problems of inconsistent 

management policies by States responsible for Federal lands within their borders. 

 Mining on Federal land in States which have entered into cooperative agreements requires implementation of the 

provision by one agency within each such State, the State regulatory authority. Under the revisions to OSM's Federal 

lands program, referenced earlier, all non-Indian lands within a State will be subject to the same standards. Thus, the 

rules will not cause inconsistent management. 
 A commenter objected to the use of the term "checkerboard pattern of failure" in proposed Section 800.13(d) to 

describe those areas of vegetation failure which may not be considered small and isolated and be separately rebonded. 

The commenter suggested that the term implies a regularity of failure that may never occur. The commenter noted the 

failure could be scattered and irregular and this should not be allowed to be separated and approved for rebonding 

either. 

 OSM agrees with the commenter and has changed the section to read "such areas shall be limited in extent and not 

constitute a scattered, intermittent, or checkerboard pattern * * *." 

 A commenter found that the last sentence of proposed Section 800.13(d) was not clear as to whether the access 

had to be included in the areas of extended liability or could be in the area which may be released from liability. Two 

other commenters also felt the last sentence of Section 800.13(d) should be amended so that additional acreage need 

not be assigned extended liability to cover access disturbances if access to an area of failure is possible from a public 

road, by foot, by using a hydroseeder or other means that would not disturb vegetation. 

 OSM agrees with the commenters and has changed the sentence to state clearly that access to the separated areas 

may be included in the area of extended liability if the regulatory authority determines this is necessary. 

 

FINAL SECTION 800.13(c) 

 Final Section 800.13(c), proposed as Section 800.13(e), provides that if the regulatory authority approves a longterm agriculture postmining land use in accordance with 30 CFR 816.133 or 817.133, the 5 or 10 year period of 

liability will begin at the date of initial planting for such long-term agricultural use. There were no comments on this 

provision and it remains unchanged from the proposed rule except for the addition of the last phrase "for such longterm agricultural use." This provision parallels Section 515(b)(20) of the Act. 

 

SECTION 800.13(d) 

 Proposed Section 800.13(f) would have stated that the bond liability shall include only obligations under the permit, 

including completion of the reclamation plan, in such a manner that the land is capable of supporting a postmining 

land use approved under 30 CFR 816.133(c) or 817.133(c). It also would have provided that actions beyond the 

control and influence of the permittee which are not responsibilities under the permit need not be covered by the 

bond. 

 OSM has revised the corresponding final rule, Section 800.13(d), to clarify that the permittee is excused from 

bonding for third party actions only insofar as they relate to implementation of approved alternative land use plans by 

the third party. Final Section 800.13(d) recognizes that only alternative postmining land uses may be approved under 

draft final Sections 816.133(c) and 817.133(c) as set forth in Volume III of the FEIS. If the postmining land use is 

not changed, such approval would be made under Sections 816.133(a) or 817.133(a). Thus, the first sentence 

references Section 816.133, rather than Section 816.133(c). 

 A commenter objected to the use of the term "capable" in proposed Section 800.13(f), citing this as insufficient to 

guarantee successful revegetation. The term is taken from Section 515(b)(2) of the Act, and its use here does not 

establish a performance standard separate from those standards in Parts 816 and 817 for reclamation and revegetation 

success. A sentence has been added to Section 800.13(d) to clarify that bond liability for prime farmland has a 

different standard established in Section 519(c)(2) of the Act and Section 800.40(c)(2). 

 Another commenter requested deletion of the words "and influence" with respect to the permittee's control of third 

party actions on the grounds that influence is beyond the common law definition of control. 

 OSM has accepted this request because control provides a sufficient standard upon which the regulatory authority 

may decide whether the permittee is responsible. Influence is an amorphous standard too difficult to apply. 
 One commenter was concerned that the coal operator have some protection against disturbance of his reclamation 

efforts on land that he has leased. The commenter said: "After an operator has completed his mining activities and has 

properly backfilled, regraded and seeded an area, what recourse does this coal operator have over the fee owner or 

leasers [sic] to the surface who decide to use this newly reclaimed area for their own purposes. Surely the regulatory 

authority recognizes this potential problem and we trust that they will provide some means to insure that fairness will 

prevail. Where a landowner disturbs that surface before the full 5-year period of successful revegetation expires, some 

means of protection should be afforded the coal operator." 

 For the regulatory authority to relieve the operator of liability in this case would be a violation of Sections 515(b) 

(19) and (20) of the Act. However, in answer to the commenter's concern, the terms of the lease and surface owner 

consent to the postmining land use should delineate the operator and landowner's responsibilities. The reclamation 

plan should address acceptable practices which may be conducted during the liability period. Reclamation success is 

subject to performance criteria in Sections 816.116 and 816.133 of the rules. Surface owner consent should require 

the surface owner to cooperate with the operator in fulfilling reclamation responsibilities. 

 A State regulatory authority objected to the provision of proposed Section 800.13(f) which allowed that actions not 

under the control of the permittee or for which he or she is not responsible under the permit need not be covered by 

the bond. The regulatory authority stated that in its experience many permittees charged with failure to reclaim offer 

the defense of the "phantom wildcatter" and that the language proposed in Section 800.13(f) encourages this defense. 

The regulatory authority proposed the provision be changed to read: "Actions of third parties which are demonstrated 

by the permittee to be beyond the control and influence of the permittee * * *" 

 Another commenter suggested there must be a limit as to how far the operator's control and influence is assumed to 

extend. The commenter said the "No Trespassing" signs around reclaimed areas may or may not in a regulatory 

authority's view be adequate influence and control over the reclamation site. Under some circumstances, additional 

controls, such as fencing, may not be reasonable or feasible for the operator to install. 

 OSM did not intend by this provision to relieve the permittee from responsibility for third party actions except for 

those related to implementation of approved alternative postmining land use plans. OSM regrets any confusion which 

has been caused and has attempted to clarify its intent in new Section 800.13(d). 

 

SECTION 800.14 - DETERMINATION OF BOND AMOUNT. 

 Section 800.14 describes those situations and analyses which must be taken into account when the regulatory 

authority determines the amount of a bond. This section also implements the requirements of the Act that the bond 

amount be adequate to ensure completion of the reclamation if the work had to be performed by the regulatory 

authority and that in no event can the bond for an entire permit area be less than $10,000. Section 800.14 has been 

slightly restructured, but remains substantively unchanged from the proposed rule. This section follows Section 

509(a) of the Act. 

 A State regulatory authority urged that Section 800.14(a) specify that the cost estimate submitted by the operator 

to help determine the bond amount should reflect, not today's cost of reclamation, but rather the cost 5 plus years in 

the future when the bond is near release. 

 Two other commenters also noted this confusion on estimated costs and suggested Section 800.14(a) was a 

misinterpretation of Section 509 of the Act by not making it clear the "estimated cost" should be calculated in the 

context of potentially years and many disturbed acres later. The two commenters felt the cost estimate should only be 

one factor in determining the bond and that the regulatory authority should also consider historical cost changes, 

projections based on trends, and administrative overhead in contracting for the reclamation work. 

 The bond amount, in order to be sufficient to assure completion of the reclamation plan by the regulatory authority, 

must include administrative costs to the regulatory authority. However, OSM does not agree that the operator should 
necessarily have to post a bond in an amount that incorporates inflation factors for 5 years. The section as written 

provides the regulatory authority with the discretion to consider the potential impact of inflation, but does not 

require it. Rather, Section 800.15 may be used to provide for adjustment of the bond amount as necessary to cover 

such problems as inflation. 

 A commenter objected to omission from Section 800.14 of a provision in previous Section 805.11(a) which 

required that the amount of the bond reflect an additional amount to restore land to its original premining use if a 

permittee does not implement the approved alternative postmining land use within the first 2 years. 

 Final Section 800.14(b) requires instead that the bond amount be sufficient to complete the reclamation plan. The 

reclamation plan, as defined in 30 CFR 780.23 and 784.15, must include any alternative postmining land uses. 

Therefore, because the term "reclamation plan" includes the approved alternative postmining land use plans, Section 

800.14(b) need only require that the bond amount be sufficient to complete the reclamation plan. If the reclamation 

plan were to change, bond adjustments could be required. It is unnecessary to include a specific additional provision 

in the bonding regulations similar to previous Section 805.11(a). 

 A commenter asked how the requirement in Section 800.14(b) that no bond be less than $10,000 for an entire 

permit area fits in with a phase bonding scheme. The commenter wanted to know if the $10,000 was an initial filing 

amount or had to be retained in the Phase III bond. 

 The Act requires in Section 509(a) that "in no case shall the bond for the entire area under one permit be less than 

$10,000." This language refers to the total bond initially posted for a permit area. Section 519(c) of the Act further 

provides for release of bond as reclamation activities are completed, with the requirement that, after the initial 60 

percent release of bond, and the successful establishment of revegetation, sufficient bond amount be retained to 

reestablish revegetation. Section 519(c) does not mention retention of a $10,000 minimum amount. Therefore, OSM 

is of the view that the $10,000 minimum applies to the total bond amount initially posted and need not apply to the 

bond amount retained following completion of a phase or phases of reclamation and partial bond release. The final 

rule reflects this view. However, a regulatory authority may choose to require that a $10,000 bond amount be 

retained. 

 

SECTION 800.15 - ADJUSTMENT OF AMOUNT. 

 Section 800.15 implements Section 509(e) of the Act which authorizes the regulatory authority to adjust the bond 

amount. It sets the notification actions required when a bond is proposed for adjustment and terms under which a 

permittee may request a reduction of a bond. This section also requires the regulatory authority to review the bond 

for possible adjustments from time to time and when an approved operation and reclamation plan is modified. Section 

800.15 is revised to clarify the difference between bond adjustments and bond release. A provision is also added to 

allow the regulatory authority to set times for periodic review of the bond. 

 

SECTION 800.15(a) 

 Proposed Section 800.15(a) requires the regulatory authority to adjust the amount of the bond from time to time as 

affected land acreage is increased or decreased or cost of future reclamation changes. 

 A regulatory authority recommended a change to Section 800.15(a) specifying that bond adjustments be made at 

the time of permit review rather than from "time to time" as proposed. The regulatory authority suggested that "time 

to time" adjustment of the bond amount creates an irregular and unknown administrative burden. Since bonding is 

essentially a permit condition, the regulatory authority suggested bond adjustments could easily be included as part of 

the normal permit review, precluding arbitrary and unfounded requests for bond adjustments. 

 Two other commenters agreed, adding further that the bond should be reviewed for adjustment only when 

documentation supports the request. One of the commenters suggested the following change in Section 800.15(a): 
 The amount of bond * * * shall be adjusted by the regulatory authority when, during review of the permit by the 

regulatory authority, it is determined that significant changes have been made in the number of acres of affected land 

or where the cost of future reclamation changes significantly. 

 As noted Section 800.15(a) follows the requirements of Section 509(e) of the Act. The Act specifies that 

adjustments be made from "time to time" as necessary. However, to clarify that the regulatory authority may establish 

a schedule of adjustments, language is added to the final rule to this effect. Such a schedule could be tied to permit 

review as the regulatory authority urged if such a schedule related to the likely need for adjustments. 

 

SECTION 800.15(b) 

 Section 800.15(b) requires that when a bond adjustment is proposed the regulatory authority shall notify the 

permittee, the surety, and any other persons with a property interest in the collateral and provide the permittee with 

an opportunity for an informal conference. 

 Section 800.15(b) received no comments. However, a clause is added consistent with new Section 800.21(f), so 

that persons with an interest in collateral who wish to be notified of proposed bond adjustments, must request such 

notification. This provision follows Sections 509(e), 519, and 513 of the Act. 

 

SECTION 800.15(c) 

 Final Section 800.15(c) allows the permittee to request a bond reduction if the permittee submits evidence that a 

reduction may be warranted. The reduction of bond is considered a bond adjustment if the reduction is based on a 

change in method of operation or other circumstances which reduces the estimated cost for the regulatory authority 

to reclaim. Final Section 800.15(c) has been revised to clarify the difference between bond "adjustments" and bond 

"release" as discussed with the comments below. 

 A commenter objected to proposed Section 800.15(c) and suggested that the request for adjustment of the bond on 

acres already disturbed should not be considered a bond release subject to the complicated requirements of Section 

800.40. Rather, the commenter recommended replacing the general reference to Section 800.40 for bond 

adjustments of disturbed acres in Section 800.15 with a rule limiting the applicability of Section 800.40 only to 

requests for bond adjustments on disturbed acres in Phases II and III of reclamation. The commenter suggests that 

defining bond release and bond adjustments in the same manner ignores the procedural and economic considerations 

inherent in the distinction. 

 OSM disagrees that bond release procedures should or could be applied under Section 800.15 only bond 

adjustments are requested for land in Phase II or III of reclamation. Section 519 of the Act provides for formal 

release after completion of Phase I reclamation. Completion of Phase I reclamation cannot result in an adjustment of 

the bond amount. 

 Two commenters objected to proposed Section 800.15(c) because it exempted bond adjustment proceedings from 

public participation when those proceedings involved bond reductions based on a change in method of operation or a 

decrease in the number of acres to be disturbed. 

 The commenters stated that the shift from underground to contour surface mining or from stripping to augering 

does not warrant a reduction of amount without the same degree of scrutiny accorded the original bond determination

-- full disclosure and maximum participation by the public. 

 The commenters also felt that to bypass bond release procedures of Section 800.40, merely because the bond 

reduction is based on an area not to be mined, had no rational basis. The commenters said a reduction of acreage, 

where the acreage is a buffer, or a potential drainage area, could have a serious impact that might be overlooked 

without the public scrutiny and participation. 

 The commenters stated that the Act was specific in that in any bond release context, citizen participation may not 
be abridged. They stated that proposed Section 800.15(c) was not merely illegal, but open-ended and unfounded. 

 Additionally, the commenters asserted that Section 509(e) of the Act allows only for an upward adjustment of 

inadequate bonds as explained by a Senate Report: "Subsection (e) provides that the bond or deposit may be adjusted 

at any time if as a result of experience or changed circumstances, it is determined to be inadequate." S. Rep. No. 95-

128, 95th Cong., 1st Sess. 78 (1977). 

 Another commenter asked for a clarification of Section 800.15(c) as to how a reduction can be due to a decrease in 

the number of acres already disturbed. The commenter also did not agree with OSM's differentiation between bond 

adjustment and partial bond release. The commenter suggested instead a previous OSM interpretation that 

adjustments in bond amounts at the request of the permittee, as opposed to those adjustments made on the motion of 

the regulatory authority, should be considered bond release request. The commenter said OSM's proposed split in 

Section 800.15(c) is "not justifiable and flies in the face of Congressional concern for citizen participation." 

 Section 509(e) of the Act allows for either upward or downward adjustment of the bond amount. Section 509(e) 

allows for adjustments "as affected land acreage are increased or decreased" and also allows for adjustments "where 

the cost of future reclamation changes." The Act does not qualify "changes" to mean only upward or only downward 

changes in cost. 

 OSM has not included in the final rule any provision characterizing as an adjustment any reduction in bond amount 

for reclamation work performed on disturbed areas since bond for disturbed areas can only be released or reduced 

through formal release procedures of Section 800.40. The discussion did not belong in the section pertaining to 

adjustment of bond amount. This language was confusing and redundant. A sentence has been added to clarify that 

bond adjustments which involve only undisturbed land or revision of the cost estimate of reclamation are not 

considered bond release subject to procedures of Section 800.40. 

 The commenter's concern about operator financial responsibility for buffer zones is addressed as follows: If there is 

no disturbance to a buffer zone and there will be no surface coal mining and reclamation operations in the buffer 

zone, it will neither be permitted nor bonded. However, the operator's liability insurance policy under Section 800.60 

must cover damage to the buffer zone resulting from the operations. The policy covers all personal injury and 

property damage for which the operator is responsible under State law. 

 

SECTION 800.15(d) 

 Section 800.15(d) requires that when an approved permit is revised, the regulatory authority will review the bond 

for adequacy and, if necessary, call for an adjustment to the bond. 

 Two commenters felt that in Section 800.15(d) the regulatory authority should also have the responsibility to 

regularly review and adjust the bond at the time of permit review. The commenters stated that according to Section 

511(c) of the Act the permit bond must be reviewed for adequacy in form and amount as part of the permit review. 

Section 511(c) says "The regulatory authority shall * * * review outstanding permits and may require reasonable

revision or modification of the permit provisions during the term of such permit." 

 Requirements at Sections 800.4 and 800.15 establish regulatory authority responsibility to adjust the bond as 

necessary. Paragraphs (a) and (d) of Section 800.15 require that the regulatory authority adjust the bond amount as 

acreage is increased or decreased and, if necessary, as the permit is revised. 

 

SECTION 800.16 - GENERAL TERMS AND CONDITIONS OF THE BOND. 

 Section 800.16 describes five general terms and conditions for acceptance of a bond. OSM has revised a few 

phrases in Section 800.16 for clarity and has deleted the provision in proposed Paragraph (e)(2) requiring issuance of 

a notice of violation (NOV) for loss of bond coverage. 

 
SECTION 800.16 (a) and (b) 

 Paragraphs (a) and (b) of Section 800.16, which require the bond to be an amount determined by the regulatory 

authority, received no comments and are unchanged from the proposed rule. These two paragraphs follow Section 

509(a) of the Act. 

 

SECTION 800.16(c) 

 Section 800.16(c), which requires the bond to be conditioned upon faithful performance of all the requirements of 

the Act, 30 CFR Chapter VII, the regulatory program and the conditions of the permit, has been amended for clarity. 

 Completion of the "reclamation plan" is added to Section 800.16(c) as a requirement to make clear that the bond is 

conditioned on performance of the reclamation plan, as well as the other performance requirements. This parallels the 

addition of similar language at Section 800.11(a). 

 

SECTION 800.16(d) 

 Section 800.16(d), which requires the bond to be held for a time period provided in Section 800.13, received no 

comments and is unchanged from the proposed rule. This paragraph follows Section 509(b) of the Act. 

 

SECTION 800.16(e) 

 Proposed Section 800.16(e)(1) required that the bond provide a mechanism for a bank or surety to give prompt 

notice to the regulatory authority and permittee of insolvency, bankruptcy or suspensions of license. Proposed 

Section 800.16(e)(1) has been adopted without change. Proposed Section 800.16(e)(2) would have required that (1) 

a regulatory authority issue an NOV if the permittee is found to be without bond coverage; (2) if the violation is 

abated during the allowed time period the violation need not be reported in permit applications as a past violation; 

and (3) if it is not abated a cessation order will be issued. 

 In final Section 800.16(e)(2) the term "person" has been deleted, since the term could only have applied to a person 

who had posted collateral, and, in the case of a bankruptcy of such person, the regulatory authority is protected 

against claims on the collateral through possession or a perfected security interest. 

 Industry commenters strongly objected to the proposed provision in Section 800.16(e) for issuing an NOV for loss 

of bond coverage due to failure of the surety, a bank, a third party providing collateral or a guarantee, or the 

permittee's self-bond. 

 The commenters noted that OSM has no power under Section 509 of the Act to issue notices of violation upon the 

incapacity of the operator's bonding agent. They said the proposed rule was unfair because the operator would have 

to suffer the civil penalties of Section 518 of the Act that the NOV automatically triggers. The operator must then 

defend against a penalty proceeding brought against him which may be based on an event that has nothing to do with 

his own compliance with mining and reclamation standards. The commenters said the proposed automatic NOV 

would have served no purpose, since the danger that the reclamation will not be achieved is presented only when the 

operator is unable to pay for the work. As long as mining and reclamation operations are being conducted in 

compliance with the rules, there is no need for issuing the NOV. 

 The commenters suggested instead that the regulatory authority "notify any operator who is without bond coverage 

and specify a reasonable period to replace bond coverage, not to exceed 90 days." 

 A State regulatory authority felt it should have the power to issue a notice of violation, including specific conditions 

for continued operation, and should also have the ability to terminate operations when necessary to protect the 

environment and comply with the Act. 

 In the final rule for Section 800.16(e)(2), OSM has not adopted the provision for mandatory issuance of an NOV, 

and instead has specified that a notice must be given by the regulatory authority which specifies a reasonable period 
of up to 90 days within which the bond must be replaced. If the bond is not replaced by the end of that period, the 

operator must cease coal extraction under provisions of Sections 816.132 and 817.132 and immediately begin to 

reclaim the permit area in accordance with the reclamation plan. Mining operations can resume only upon the posting 

of a bond acceptable to the regulatory authority. 

 These changes answer industry's concern for unfair treatment of an operator following loss of bond due to 

incapacity of the operator's bonding agent. Under the new language the operator will not be penalized for 

circumstances beyond his or her control, and will be given a reasonable period of time to obtain replacement bond 

before mining operations must cease and reclamation activities must begin. The regulatory authority will have the 

power to issue a notice of violation after the period granted for replacement bond has expired if the operator does not 

obtain a replacement bond and does not cease mining operations and begin reclamation as required. The regulatory 

authority would have the power to terminate an operation during the replacement period if the environment or public 

safety is endangered; but such an action would not necessarily stem from loss of bond coverage. 

 Another commenter was concerned that the proposed references Sections 778.14 and 782.14 should be changed to 

reflect the renumbering that will occur when the draft proposed permit application rules are finalized. The new 

Section 800.16(e)(2) does not contain references to the permitting sections since a notice of violation is no longer 

required for loss of bond coverage pursuant to Section 800.16(e). Therefore, the comment is no longer applicable. 

 

SECTION 800.17 - BONDING REQUIREMENTS FOR UNDERGROUND COAL MINES AND OTHER 

LONG-TERM COAL-RELATED FACILITIES AND STRUCTURES. 

 Final Section 800.17 gives the regulatory authority the responsibility to require bond coverage for long-term 

surface facilities and disturbed surface areas of underground mines. The proposed section set the terms and conditions

for these bonds, their liability period, forfeiture conditions and would have included provisions for bonding of 

subsidence control measures. Language has been added to clarify which facilities and structures are included in this 

section. Other editorial changes are made. Bonding requirements for subsidence control measures have not been 

adopted. 

 A surety company objected to proposed Section 800.17 because it required processing plants and support facilities 

to be permitted and bonded. The commenter said that this provision exceeds the provisions of the Act and that tipples 

and processing plants should be considered factories, not surface mining operations. The commenter said he did not 

believe it was "Congress' intent to require demolition of industrial complexes [for reclamation] just because they may 

not be used from time to time." 

 Since the bonding provisions apply only to those areas permitted, these long-term bonding provisions may apply to 

coal preparation plants which fall within the definition of a surface coal mining operation in Section 701(28) of the 

Act. A more extensive discussion of which facilities are included in that definition appears in the preamble to the rule 

revising that definition. The permitting rules in 30 CFR Subchapter G cover facilities and operations to be permitted. 

The provisions of Section 800.17 apply to those long-term facilities which are permitted under Subchapter G. 

Language to indicate this has been added to Section 800.17(a). 

 

SECTION 800.17(a) 

 Final Section 800.17(a) gives the regulatory authority the responsibility to require a bond for all long-term coalrelated surface facilities and structures, and for areas disturbed by surface impacts incident to underground mines, for 

which a permit is required. It also requires the regulatory authority to determine the bond according to Section 

800.14, taking into consideration special reclamation techniques that may be used. In Section 800.17(b)(2) OSM has 

further clarified what is meant by long-term coal-related surface facilities and structures. Generally, the facilities, 

structures and activities provided for in this section are not expected to be reclaimed within the first few permit terms. 

 Several commenters suggested further explanation of the proposed phrase "disturbed surface areas of underground" 

in Section 800.17(a) to make certain it only addresses activities conducted on the surface of lands in connection with 

underground activities. One of the commenters suggested the following language: "surface areas disturbed by 
activities conducted on the surface in connection with underground mining such as surface features of shaft and slope 

facilities, power lines, bore holes, ventilation shafts, preparation plants, machine shops, etc." OSM agrees that further 

clarification of the terms proposed in Section 800.17(a) is necessary and has revised Section 800.17(a) accordingly 

and added language to final Section 800.17(b)(2) providing examples of long-term surface disturbances. 

 One of the commenters pointed out that areas of potential subsidence should not be included in "disturbed surface 

areas of underground mines" because those requirements are set out separately in Section 800.17(c). OSM does not 

include areas of potential subsidence in this phrase. Further discussion follows under Section 800.17(c). 

 

SECTION 800.17(b) 

 Proposed Section 800.17(b)(1) provided that the liability period for bonds on long-term surface facilities would 

begin when the permit is issued and extend until all reclamation under the permit has been completed or the bond is 

replaced or extended. Final Section 800.17(b)(1) adopts the proposal, with two modifications. The word 

"disturbances" is substituted for the proposed word "facilities." The other modification is described below. Proposed 

Section 800.17(b)(2) would have provided for long-term continuous coverage by providing that the bond would 

commence with the issuance of the permit, cover the initial term of the bond permit, and be conditioned to extend, 

replace or pay the full amount of the bond 120 days before the bond term expires. The corresponding provision of the 

final rule is Section 800.17(b)(3). The proposed replacement of the bond 120 days before the term expires has been 

revised to 30 days to parallel the requirement of Section 800.21(b)(2). In addition final Section 800.17(b)(3) does not 

reference the issuance of the permit for the reason discussed below. 

 A commenter suggested the wording be changed in proposed Section 800.17(b) (1) and (2) to require the liability 

period on long-term facilities to begin with the start of construction or disturbances of the surface. This comment has 

been accepted in part. Section 509(a) of the Act requires a bond to be filed before a permit is issued. Thus, the period 

of bond liability commences with the issuance of a permit. However, if an incremental or cumulative bonding scheme 

is used, the bond liability for succeeding increments or areas begins when the bond is posted for the succeeding 

increments or areas before the initial surface disturbance on those increments or areas. Final Section 800.17(b)(1) has 

been revised to account for the instances where long-term surface disturbances will occur on succeeding increments. 

Rather than incorporating a parallel change in new Section 800.17(b)(3), the proposed provision requiring the bond 

to be posted prior to permit issuance has not been adopted. This change recognizes the incremental bonding 

provisions of Section 800.11. Since the initial increment may not include the long-term surface disturbance, it is not 

necessary in such instances that the bond be posted prior to issuance of the permit. The bond must, however, be 

posted prior to disturbance of the increment including the long-term surface disturbance. 

 A regulatory authority suggested clarifying that the continuous bond coverage must extend through the 5 or 10 year 

vegetation liability period. OSM has added Paragraph (b)(4) to Section 800.17 to make it clear the bond coverage 

must extend through the vegetation liability period and until the bond release provisions of Section 800.40 are 

satisfied. Bond coverage is required since Section 515(b)(20) of the Act establishes operator responsibility for the 

extended liability period. 

 A commenter stated that there are substantial problems with using only a bond renewal mechanism for long-term 

bonding and suggested instead OSM follow the recommendations of the Mining Task Force of the National Coal 

Policy Project which urged renewable bonds be tied to a growing escrow account. 

 The Mining Task Force pointed out in its comments on a May 1979 petition by MARC on the bonding rules, 44 FR 

28005, that the shortcomings of both the fixed period bond and the escrow fund could be corrected if they were used 

in tandem. 

 OSM agrees with the commenter that the idea of a fixed term bond to be replaced by an escrow bond could be a 

good way to establish continuous long-term bonding. This method is allowed under these final bonding rules. 

However, the bond renewal or replacement mechanism is also a viable mechanism for establishing continuous bond 
coverage and will continue to be allowed under the new rule. 

 A commenter noted that proposed Section 800.17 (b)(2) and (d) allowed bonds to be posted for a period of time 

rather than the duration of the operation, and that this type of bonding could be accomplished through the normal 

permitting process. 

 The bonds posted for long-term operations must cover a specific period and are conditioned to be extended, 

replaced or paid in full at least 30 days before expiration, in order to assure continuous coverage. The special 

provision in Section 800.17(b)(3) provides an opportunity to bond a long-term operation for a specific time period. 

A fixed term surety bond with termination must have a mechanism for continuous coverage. Thus, forfeiture of the 

bond is required under final Section 800.17(c) [proposed Section 800.17(d)] if a renewal bond is not posted 30 days 

before expiration of the bond term. 

 

SUBSIDENCE CONTROL MEASURES 

 

SECTION 800.17(c) 

 Proposed Section 800.17(c) required that an operator not extend any underground shaft, tunnel or operation until 

measures to prevent subsidence have been completed or a bond guaranteeing completion of such work is accepted by 

the regulatory authority. 

 This paragraph has been deleted from the final rule. 

 A commenter asked that Section 800.17(c) be revised to reflect that mining measures may call for planned 

subsidence and that the operator may purchase a structure as a method of preventing subsidence from causing 

material damage on public or private land. The commenter noted that Section 516(b)(1) of the Act allows for planned 

subsidence in underground mining. 

 Additionally, the commenter felt that it would be wasteful to construct preventive measures as required in Section 

800.17(c) if the operator had purchased the structure in jeopardy of being damaged by the planned subsidence. 

 Two commenters recommended deletion of Section 800.17(c). They stated that bonding of subsidence control 

measures was inappropriate because protection from subsidence is provided under other provisions relating to the 

operator's permit, subsidence plan and insurance requirements. 

 In a public meeting a commenter argued against inclusion of subsidence control bonding, Section 800.17(c). He 

stated that the purpose of Section 509 of the Act on bonding is to assure the completion of reclamation and since 

subsidence control measures are taken before mining even begins they have nothing to do with postmining 

reclamation. Therefore, the commenter concluded, subsidence should not be included as a bonding responsibility. The 

commenter reasoned that the omission of the word "subsidence" in reference to bonding in the Act was obviously 

intentional on the part of Congress since it dealt with "subsidence" specifically in Section 516 of the Act. 

 A further argument was that damage to persons or property caused by subsidence is already covered by the liability 

insurance required under Section 507(f) of the Act and Section 800.60 of the bonding rules. 

 Lastly, the commenter noted that the proposed rule did not explain what would trigger forfeiture of subsidence 

bonds, how the money would be used, and that determining the cost of subsidence control measures to set the proper 

bond amount is impossible. 

 A regulatory authority felt that the proposed Section 800.17(c) was not clear and the existing provision in 30 CFR 

801.16, as amended on August 6, 1981, more adequately describes bonding of subsidence control measures. The 

commenter said if Section 801.16 is not retained, certain changes should be made in proposed Section 800.17(c). 

 The regulatory authority felt "measures to prevent subsidence" should be clarified to mean "surface measures to 
prevent subsidence," based on OSM's preamble at 46 FR 45088. Secondly, the regulatory authority felt reference to 

Section 784.20 which details the measures to prevent subsidence, was too broad and made the rule more burdensome 

than any previously proposed rule. The regulatory authority recommended the reference be limited to provisions in 

Section 784.20(b)(3). Lastly, the regulatory authority felt the completed surface measures for control of subsidence 

should be approved by the regulatory authority before the operator is allowed to extend underground shafts and 

tunnels, etc. 

 A commenter suggested that the bond should cover the performance of all requirements contained in the 

performance standards related to underground mines, including bonds to ensure the performance of required efforts 

to control or prevent subsidence and mine drainage. The commenter said that eliminating performance bonding for 

subsidence control measures and mine drainage is illegal. 

 OSM, on December 7, 1981, suspended Section 801.16(a) which required bonding for subsidence control measures 

in conjunction with underground mining (46 FR 59934). In explaining the suspension, OSM recognized the need to 

require completion of surface measures to be taken to prevent subsidence, but determined that bonding of these 

measures was not necessary. The preamble of the suspension notice explained that bonding is unnecessary because 

these surface measures are not part of the reclamation plan on which the bond amount is based. Surface measures 

taken to prevent subsidence are completed before the mining operation begins, and the work would not be required if 

operations ceased due to forfeiture proceedings on the bonded area (46 FR 59934). 

 Bonding for subsidence control measures is neither necessary nor required by the Act. OSM has not adopted 

proposed Section 800.17(c) which would have required bonding for subsidence control measures. Performance 

bonding is posted to guarantee performance of a reclamation plan following the mining of an area, while subsidence 

control measures are completed before mining begins in an area. 

 Performance bonding continues to be required at Section 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 Section 784.14. 

 OSM has added a new paragraph (c) in Section 800.14 both to establish and to clarify an operator's financial 

responsibility for ensuring that material damage resulting from subsidence will be repaired. It is apparent from the 

comments that the suspension of Section 801.16 left unclear an operator's responsibility to bond to cover subsidence 

causing material damage. The new provision states that an operator's financial responsibility under Section 817.121(c) 

for repairing material damage resulting from subsidence may be satisfied by the liability insurance policy required by 

Section 800.60. 

 Protection from subsidence damage is better covered by liability insurance, since bonding is only intended to 

guarantee performance of the reclamation plan, while insurance protects against damage to surface owners and 

property. 

 Moreover, techniques for estimating the extent of necessary land restoration that may result from subsidence have 

not been developed and the amount of a performance bond based on estimated costs would be pure conjecture. 

Furthermore, if it is intended in a particular area that there will be no disturbances resulting from surface coal mining 

operations, that area need not be included in the permit area. 

 Section 516(d) of the Act requires that the Secretary consider differences between surface and underground coal 

mining and promulgate any modifications to bonding provisions as necessary to accommodate these differences. The 

modifications made in this rulemaking recognize these differences. 

 In response to the commenter who asserted that subsidence control measures are not necessary in situations where 

subsidence is planned and any structures in jeopardy of damage had been purchased, the final revisions to Sections 

785.20 and 817.121 are expected to alleviate such concern. 

 
SECTION 800.17(d) 

 Proposed Section 800.17(d) required the regulatory authority to cause forfeiture of a bond pursuant to Section 

800.17, if 120 days prior to expiration of the bond, the operator has not filed a bond to cover the revegetation period, 

has not filed a bond for a new permit term, or the regulatory authority determines the operator is subject to the 

forfeiture conditions of Section 800.50. 

 Because proposed Section 800.17(c) is not adopted, proposed Section 800.17(d) is redesignated Section 800.17(c). 

No comments were received on proposed Section 800.17(d)(1), and it has been promulgated as proposed with minor 

editorial changes for clarity and the substitution of "30 days" rather than "120 days" prior to bond expiration. 

Proposed Section 800.17(d)(2) which referenced forfeiture under Section 800.50 is not adopted because it was 

redundant. 

 New Section 800.17(c) does not affect the regulatory authority's responsibility for forfeiture actions pursuant to 

Section 800.50, but gives the regulatory authority the added ability to begin forfeiture actions prior to actual 

expiration of a bond. Thus, under the final rule, if no replacement bond is supplied before 30 days before bond 

expiration, the regulatory authority would take forfeiture action during the period before the bond expires. The period 

of 30 days is considered adequate to ensure that a replacement bond is posted in a timely manner. 

 

SECTION 800.20 - SURETY BONDS. 

 This section includes conditions specifically set for surety bonds. Minor editorial changes have been made to final 

Section 800.20 for clarity. 

 Section 800.20(a) requires a corporate surety to be licensed to do business in the State where the bonded operation 

is located. No comments were received on Section 800.20(a) and it is unchanged from the proposed. This rule 

follows Section 509(b) of the Act. 

 Proposed Section 800.20(b) provided that surety bonds are noncancellable during their terms, except, with approval 

of the regulatory authority, they may be cancelled for lands not disturbed. 

 One commenter asked that a provision be included in Section 800.20(b) to preclude a surety bond from expiring 

during any administrative or judicial proceeding regarding forfeiture. 

 The addition of such a provision is not necessary. Bonds are posted for performance of reclamation activities 

including the extended liability period and are conditioned on performance of the activities or on replacement by other 

suitable bond. Bonds posted under Section 800.17 for specific time periods are conditioned upon bond extension, 

replacement or payment. 

 The surety industry raised a concern over provision in proposed Section 800.20(b) for bond cancellation on 

undisturbed lands. The proposed rule required regulatory authority consent prior to cancellation. The surety industry 

recommended instead that only a 90-day notice be required for cancellation of a bond on undisturbed lands. The 

surety industry noted OSM had approved such a cancellation provision in the North Dakota State program. (Section 

38-14. 1-16, Part 6 of North Dakota House Bill 1252). 

 The surety industry's suggestion has not been accepted as a national standard. The provision in Section 800.20(b) 

for regulatory authority approval for cancellation of bond has been retained. However, a sentence is added requiring 

the regulatory authority to advise the surety within 30 days of receipt of notice to cancel if cancellation of the bond is 

to be authorized. This requirement will require timely notification to the surety of the proposed action. 

 A commenter objected to the omission in proposed Section 800.20(b) of the specific cancellation procedures in 

previous Section 806.12(e)(1), stating that it increases the possibility of under-coverage for disturbed acreage of gaps 

in coverage of an area that may not appear at first glance. The commenter suggested that the regulatory authority 

may not allow a bond to be cancelled if to do so would make the remaining bond insufficient within the meaning of 
Section 509(a) of the Act. 

 Cancellation of a bond posted on land which will not be disturbed may be allowed if the regulatory authority is 

satisfied that such cancellation is not a violation of the permit and that sufficient bond amount is retained on the 

permit area to ensure completion of the reclamation plan. If an operator decides not to disturb certain bonded areas 

that the regulatory authority is satisfied will not be disturbed by other mining operations, there is no need to keep the 

bond for this area, since reclamation on the area will not be necessary. This is analogous to the bond adjustment 

provision for undisturbed land. 

 The exact procedure for cancellation and the precise steps that must be taken are matters that need not be covered 

in detail in these rules. States may add as much detail as they believe is necessary. 

 A commenter asked that the phrase "during their terms" in Section 800.20(b) be clarified in light of Section 509(b) 

of the Act. 

 The phrase "during their terms" in Section 800.20(b) refers to the term for which the bond is posted, which will be 

stated in the conditions of the bond as agreed to by the parties involved. Section 509(b) of the Act requires bond 

liability for the duration of the operation and the extended liability period specified in Section 515. The Act allows for 

the replacement of the bond or bonds during the period of operation and extended liability. Therefore, although 

liability under the bond is continuous during the surface coal mining and reclamation operations and the extended 

liability period, the phrase "during their terms" in Section 800.20(b) refers to the terms for which the individual bonds 

have been written. 

 

SECTION 800.21 - COLLATERAL BONDS. 

 Proposed Section 800.21 set the specific conditions for acceptance of collateral bonds, letters of credit and escrow 

accounts. 

 OSM has made some editorial changes to Section 800.21 for clarity and added a provision giving the regulatory 

authority the option to have certificates of deposit made payable or assigned. The provision limiting individual 

deposits to levels of the Federal Deposit Insurance Corporation (FDIC) or of the Federal Savings and Loan Insurance 

Corporation (FSLIC) is retained from previous Section 806.12(f)(4) and is included in Sections 800.21 (a)(4) and 

(d)(4). "Escrow" accounts are changed to "cash" accounts. A provision is added at Section 800.21(f) concerning 

notification to persons with an interest in collateral of actions pursuant to the bond. Further discussion of these 

changes follows below with a discussion of the comments. 

 

SECTION 800.21(a) 

 Proposed Section 800.21(a) set three conditions that must be followed when collateral is used for the reclamation 

bond. This paragraph stated that collateral except letters of credit and escrow accounts, will be deposited with the 

regulatory authority by the applicant until authorized for release or replacement, that the value of the collateral will be 

its current market value and that certificates of deposit will be assigned to the regulatory authority both in writing and 

upon the books of the bank. These provisions have been adopted as discussed below. 

 A commenter recognized a problem in requiring the regulatory authority to maintain possession of real and personal 

property offered as collateral as provided in proposed Section 800.21(a), which excepted only letters of credit and 

case accounts from having to be directly deposited with the regulatory authority. To remedy this, OSM has added 

real property to collateral excepted from the requirements of Section 800.21(a). The term "escrow" accounts is 

changed to "cash" accounts. 

 As explained in the discussion of Section 800.5, only real property will be included as a form of acceptable 

collateral in the final rule. Thus, the term "personal property" has been deleted in Section 800.21. Personal property, 

other than that specifically listed in the definitions of collateral bond in Section 800.5 (a)-(d) and (f), may not be 

posted as bond. Possession cannot be required of the regulatory authority with respect to real property. 
 Two commenters disagreed with the provision of proposed Section 800.21(a)(3) which allowed assignment of 

certificates of deposit (CD's) used as collateral because it did not specify that the issuing bank must waive rights of 

setoff or liens. The commenters felt that a negotiable certificate which is encumbered, such as with a lien, or whose 

validity is challenged does not provide assurances equal to a surety bond, as required by Section 509 of the Act. 

Additionally, the commenters noted the certificates must be of sufficient amount and liquidity as to allow for total 

reclamation as a forfeiture situation demands even if they are negotiated prior to stated maturity date. 

 Section 800.21(a)(2) requires that the collateral be valued at market value. Any problems with respect to maturity 

or liquidity must be considered in setting the value of the collateral. Final Section 800.21(a)(3) has been amended to 

allow the certificate of deposit to be made payable or assigned, consistent with the definition of collateral bond in 

Section 800.5. In response to the comment, a sentence is added to protect the regulatory authority from rights of 

setoff or liens. 

 A commenter objected to proposed Section 800.21(a) because, with the proposed omission of the previous 

provision in Section 806.12(f)(4), it would have allowed the regulatory authority to accept collateral bonds which 

exceed the levels of Federal insurance, i.e., $100,000 per person per bank under current FDIC protection. Previous 

Section 806.12(f)(4) required that the regulatory authority not accept an individual certificate for a denomination in 

excess of $40,000 or maximum insurable amount as determined by FDIC or FSLIC. OSM agrees with the 

commenter. Allowing acceptance of certificates of deposits in excess of the maximum protected amount unnecessarily 

exposes the regulatory authority to liability should the bank fail. Therefore OSM is inserting in the final Section 

800.21 the provisions from previous rule Section 806.12(f)(4) as new paragraph (a)(4) for certificates of deposit and 

at Section 800.21(d)(4) for cash accounts. 

 

SECTION 800.21(b) 

 Final Section 800.21(b) sets three conditions for letters of credit. The paragraph requires that the letter be issued 

only by a bank authorized to do business in the United States, that the letter be irrevocable during its term and must 

be payable upon demand to the regulatory authority upon receipt from the regulatory authority of a notice of 

forfeiture under Section 800.50. Language is added at Section 800.21(b)(2) to assure continuous bond coverage 

when using a letter of credit. Other changes are made for clarity. A commenter was concerned about the notification 

of maturity dates for letters of credit in Section 800.21(b) and asked that the procedures for "draw down" by the 

regulatory authority be delineated. 

 Section 800.21(b) requires suitable replacement of a letter of credit at least 30 days before the expiration date and 

that the letter of credit must be payable to the regulatory authority upon receipt of notice of forfeiture. Procedures for 

"draw down" in event of forfeiture are best left to the regulatory authority's determination. 

 Another commenter suggested Section 800.21(b)(3) would be better understood if it read: "The letter must be 

payable to the regulatory authority upon demand, in part or in full, upon receipt from the regulatory authority * * *" 

 OSM agrees that this language clarifies the meaning of the paragraph and has adopted similar language in final 

Section 800.21(b)(3). 

 

SECTION 800.21(c) 

 Final Section 800.21(c), which generally is adopted as proposed, sets three conditions for use of real property as a 

collateral bond. The applicant must grant the regulatory authority a first mortgage, first deed of trust or perfected 

first-lien security interest in real property with the right to sell or otherwise dispose of the property in the event of 

forfeiture under Section 800.50. The applicant must supply a schedule of the real property involved, including a 

description of the property, the fair market value as determined by an independent, certified appraiser and proof of 

possession and title to the real property. The proposed paragraph also stated that land pledged as security could not 

be mined under any permit. 

 A commenter pointed out that proposed Section 800.21(c)(2)(iii) only required proof of ownership for real 
property, and not personal property offered as collateral. This appears to have been an oversight by OSM in the 

proposed rule. However, except for specifically listed types, OSM has eliminated personal property as collateral in the 

final rule. The proof of ownership is handled in rules dealing specifically with those types of acceptable personal 

property, that is, certificates of deposits, securities and cash. The commenter also felt OSM had made a mistake by 

eliminating some of the specific protections found in the previous rules ( Section 806.12) for collateral bonds. The 

commenter agreed the State should have flexibility in establishing its programs, but felt the proposed rules did not set 

appropriate minimums to ensure that the State rules adequately protect the public and the environment. 

 The commenter does not specify which of the protections found in OSM's previous rules should not have been 

eliminated. New Section 800.21 establishes adequate guidelines for the regulatory authority to use in accepting 

collateral bonds. These guidelines give adequate assurance that the intent and purpose of the Act are fulfilled. 

 A State regulatory authority commented that the provisions of Section 800.21(c)(2), which require assessing 

collateral at fair market value, was burdensome and contrary to State law. 

 This provision is not burdensome. To the extent that this regulation may be inconsistent with a particular State law, 

the provisions of Section 505 of the Act apply. This can be examined in the context of the approval of an individual 

State program amendment. The provisions at Section 800.21(c)(2) established the minimum standards of protection 

necessary to ensure the regulatory authority that collateral posted is adequate. 

 Another commenter suggested adding language to proposed Section 800.21(c)(3) to clarify that land within the 

permit area which is offered as collateral could be mined once all liability for the operation for which it was serving as 

security has been released. The commenter believed the wording of the proposed rule prevented land offered as 

security from ever being mined. Specifically, the commenter offered the following language change for Section 

800.21(c)(3): "* * * land pledged as security shall not be mined under any permit while it is serving as security." 

 OSM agrees and has added similar language to this paragraph to clarify this, but has used the word "disturbed" 

rather than "mined." 

 

SECTION 800.21(d) 

 Proposed Section 800.21(d) set three conditions for use of escrow accounts as collateral bonds. This proposed 

paragraph allowed the operator to supplement a bond with an escrow account deposited in an account made payable 

only to the regulatory authority or deposited directly with the regulatory authority. It required interest paid on an 

escrow account to be retained in the escrow account and applied to the bond value of the account unless, with 

regulatory authority approval, the interest is paid to the operator. Under the proposal, certificates of deposit could be 

substituted for an escrow account with approval of the regulatory authority. The proposal has been adopted with the 

following changes. 

 In new Section 800.21(d), all references to "escrow" have been changed to read "cash," to reflect the change in the 

definition of collateral at Section 800.5. 

 The provision requiring a cash account to be deposited in a federally-owned or equivalently protected account is 

added to final Section 800.21(d)(1). New Section 800.21(d)(4) is added to protect the regulatory authority from 

uninsured cash accounts. 

 A regulatory authority commented that the provision of Section 800.21(d)(2), which requires paying out interest on 

escrow accounts, was an administrative burden and contrary to some State laws. 

 Section 800.21(d)(2) does not require interest to be paid on cash accounts, but requires that interest amounts that 

are paid will be retained in the account unless otherwise approved by the regulatory authority. This provision offers 

sufficient regulatory authority discretion. 

 
SECTION 800.21(e) 

 Proposed Section 800.21(e) required the estimated bond value of all collateral posted be subject to a margin --

bond value to market value ratio -- determined by the regulatory authority. The margin would reflect legal and 

liquidation fees, value depreciation, marketability and fluctuations affecting the net cash available to the regulatory 

authority for completing reclamation. The proposal also provided that the bond value of the collateral be evaluated as 

part of the permit renewal and the performance bond increased or decreased, if necessary. 

 No comments were received on proposed Section 800.21(e). Editorial changes have been made for clarification. 

This paragraph also retains language similar to previous Section 806.12(i) requiring evaluation of the bond value at 

the time of permit renewal. 

 

SECTION 800.21(f) 

 A new Section 800.21(f) is added to provide that persons with an interest in collateral posted as bond who desire 

notification of actions pursuant to the bond must request such notification at the time collateral is offered. 

 

SECTION 800.23 - SELF-BONDING. 

 In the September 9, 1981 notice, proposed Section 800.23 would have given the State regulatory authority the 

discretion to establish self-bonding programs and to set their own criteria. Those criteria would have had to provide 

guarantees equivalent to other bonding methods. 

 Because the majority of commenters requested more detailed Federal guidance for development of self-bonding in 

State programs and due to the concern of surety companies that loosely administered self-bonding programs may 

preclude surety industry involvement in surface coal mining reclamation bonds, the self-bonding section, Section 

800.23, was reproposed in a separate rulemaking on August 20, 1982. (47 FR 36570). 

 Two commenters noted that surety representatives testifying on the 1979 MARC bonding petition stated that, if 

self-bonding becomes too prevalent among large firms, the surety agencies may simply pull out of the mining 

business, stranding small companies altogether. A surety commenter reiterated these previous remarks of the surety 

industry and also pointed out that the establishment of self-bonding criteria is a complex process and without 

guidance at the Federal level it will make it very difficult for the States to meet the purpose of the Act. 

 A State regulatory authority suggested that by withholding further guidance in self-bonding, OSM leaves the States 

extremely vulnerable. Another commenter added what without minimum self-bonding standards OSM would be 

creating a patchwork of conflicting State programs, subject to external pressures. 

 Another State regulatory authority liked the flexibility but asked for more detailed provisions to ensure that 

businesses are not allowed to bond themselves with a mere promise to pay. 

 Two commenters noted that without more detailed self-bonding rules any State provision interpreting or controlling 

the alternative of self-bonding will be more stringent than the OSM rule thus making it unavailable to States forbidden 

to exceed the Federal minimum criteria. 

 The same commenters pointed out that the phrase "regulatory authority" as used in Section 509 of the Act does not 

mean exclusively a State or Federal program since the provisions of Section 509 are applicable during the interim 

program. The commenter said, therefore, it is entirely rational to assume that OSM should promulgate minimum 

criteria for self-bonding, which has a great potential for abuse. Two commenters said the proposed rules grant the 

operator the right to bypass Section 509 of the Act and obviate OSM's responsibility to promulgate national selfbonding minimum criteria. 

 As a result of these comments and other more specific suggestions, OSM has reproposed the self-bonding rules in 
an effort to maintain flexibility for development of State programs, while giving the States more detailed standards 

on which to build their programs. 

 Therefore, because of the reproposal, those portions of the self-bonding rules in Section 806.14 which were not 

suspended will remain in effect under Section 806.14 until the reproposed self-bonding rules (47 FR 36570) are 

adopted as final and designated as Section 800.23. Section 806.14 would be deleted at that time. 

 

SECTION 800.30 - REPLACEMENT OF BONDS. 

 Section 800.30 provides that the regulatory authority may allow the permittee to replace existing bonds with bonds 

of equivalent coverage. The section also requires the regulatory authority to release the existing bonds only after the 

regulatory authority has approved and accepted the replacement bond. The section provides that replacement of a 

bond does not constitute release of a bond covered by Section 800.40. This section contains minor editorial changes 

from the proposed rule. The purpose of this section is to allow for the substitution of equivalent bonds without 

altering the amount of coverage, so that an operator can substitute, for example, a cash account bond for a surety 

bond. The provision has been adopted as proposed. 

 The surety industry asked that the change they requested for proposed Section 800.20 be made to proposed Section 

800.30 to allow a surety bond to be released before a replacement bond has been approved if the existing bond covers 

only undisturbed land and a 90-day notice is given to the regulatory authority. 

 OSM is retaining the provision for regulatory authority approval of cancellation of a surety bond on undisturbed 

lands in Section 800.20. Inclusion of such a provision is not properly part of Section 800.30. 

 

SECTION 800.40 - REQUIREMENTS TO RELEASE PERFORMANCE BONDS. 

 Proposed Section 800.40 set the information requirements and procedures for applying for bond release and set 

procedures for the regulatory authority to process the bond release requests. The section provides the procedures the 

regulatory authority follows in making a decision to release or not release a bond -- inspections, public hearings, and 

notifications. It also sets the qualifications for release of a bond by phases. It implements the requirements of Sections 

513 and 519 of the Act. 

 OSM has made a number of changes to proposed Section 800.40, most of which were initiated by comments. 

Provisions are added regarding more precise information in advertisements announcing permits under review for bond 

release, citizen involvement in that review, notification of bond release proceedings, recordkeeping requirements at 

informal conferences, location of public hearings and a provision precluding fractionalization of an increment for bond 

release. Inclusion of topsoil replacement activities in phased release of bonds is clarified, as well as the use of soil 

surveys and the phrase "equivalent management practices." The order of proposed Paragraphs (g) and (h) is reversed. 

Additional discussion of these changes is included with the discussion of comments below. The phrase "or deposit" 

has been eliminated in a number of places because performance bonds include deposits. 

 

SECTION 800.40(a) 

 Proposed Section 800.40(a)(1) provided that the permittee could file an application with the regulatory authority 

for release of all or part of a performance bond and that the application may be filed only at specific times of the year 

identified in the reclamation plan. The review periods set had to allow for proper evaluation of the reclamation and be 

approved by the regulatory authority. 

 Proposed Section 800.40(a)(2) required that the permittee place an advertisement which includes the description of 

the land, opportunity for comments and other particulars for release of bond. The bond release applicant was also 

required to write letters to those persons, agencies, etc., affected by the coal mining operations as to the applicant's 

intention to seek release from the bond. 

 One commenter found the newspaper advertisement requirements in proposed Section 800.40(a)(2) overly detailed 
and restrictive. 

 These requirements are taken from Section 519(a) of the Act and are retained in the final rule. 

 A commenter objected to the provision in proposed Section 800.40(a)(1) which limited the times when bond 

release applications may be filed to only times or seasons that allows for proper evaluations of reclamation 

operations. 

 Because the regulatory authority is required to conduct an inspection and evaluation of reclamation work within a 

specified period after the bond release request, requests should be submitted at appropriate times in the growing 

season. 

 Identification of the times and seasons when evaluation is most effective assists both the operator and the public. It 

gives the operator a chance to plan for reclamation operations to be completed during the most effective evaluation 

period, and gives the regulatory authority the authority to set the most appropriate time to properly evaluate 

revegetation success and thereby assure the proper reclamation of the land. The provision gives discretion to the 

regulatory authority to accept requests for bond releases at different times and seasons. Therefore, Section 

800.40(a)(1) is retained from the proposed rule. The final rule has been revised, however, to allow the times for an 

operator to request bond release to be established either in the regulatory program or in the mining and reclamation 

plan. This change will give the regulatory authority the flexibility to establish such time periods on a programmatic 

rather than a case-by-case basis. 

 A coal company objected to the involvement of the public in the final inspection findings and hearings required in 

proposed Section 800.40(a)(2). The commenter felt the better time for public participation is during the approval of 

the reclamation plan. 

 Another commenter took the opposite view feeling instead that the early stages of the bonding process can be 

adequately handled by the regulatory authority and that citizen involvement is necessary and more useful at bond 

release. 

 Opportunity for public participation at the time of bond release is specifically required in Section 519 of the Act. 

Therefore, this provision is retained in Section 800.40(a)(2). 

 A commenter pointed out that in proposed Section 800.40(a)(2) an operator seeking bond release must provide 

copies of letters to adjoining property owners, local governmental bodies, etc., to prove his or her compliance with 

public participation requirements. The commenter contends that this provision does not require the operator to 

actually send the letters, but merely to send copies of letters which may have been sent. The commenter suggested the 

following change to proposed Section 800.40(a)(2): "the applicant shall provide notice in writing to adjoining 

property owners and shall provide copies of such notices to the regulatory authority * * *." 

 OSM disagrees with the commenter. The provision states that the applicant "shall submit copies of letters which he 

or she has sent * * *." (emphasis added). This language clearly requires that the letters be sent to the appropriate 

parties. OSM is adding "or she" following "which he" for clarity. 

 The substance of the portion of Section 800.40(a)(2) regarding notice to adjoining owners, governments, etc., is 

provided for in Section 519(a) of the Act. 

 Two commenters objected to the contents of the advertisement for bond release listed in proposed Section 

800.40(a)(2), stating the permittee's name should also be included, as well as the permit number and date of issuance 

or renewal. It was the commenters' contention that such information is essential in aiding the public in recognizing the 

precise permit in question and is consistent with Sections 513 and 519 of the Act in maximizing citizen participation. 

 OSM agrees that more precise identification of the permit in question would be helpful and has added requirements 
to include the permit number and approval date. 

 

SECTION 800.40(b) 

 Proposed Section 800.40(b) provided that the regulatory authority upon receipt of the bond release request will 

within 30 days, or as soon as weather conditions permit, conduct an inspection and evaluation of the reclamation 

work involved. The surface owner, agent or lessee could accompany the regulatory authority on the inspection. The 

paragraph also required the regulatory authority to consider the difficulty of reclaiming any remaining areas, the 

presence of any surface or subsurface water pollution, the probability of the future occurrence of water pollution and 

estimated cost of its abatement. Proposed Section 800.40(b)(2) required that after requirements for public hearings 

have been met, the regulatory authority is to notify the permittee, the surety or other person with an interest in 

collateral in writing of its decision to release or not release the bond. Proposed Section 800.40(b) has been adopted 

with certain revisions discussed below. 

 A regulatory authority commented that the requirement in proposed Section 800.40(b)(1) to notify the surface 

owner, agent or lessee of the inspection was beyond the requirements of Section 519 of the Act and appears to 

require solicitation of citizen inspections. The regulatory authority agreed this notification may be a desirable practice 

but should be left to the discretion of the regulatory authority. 

 OSM agrees that this is not an express requirement of the Act. These persons specified in Section 800.40(b)(1) will 

be apprised of the intent to request bond release through the newspaper advertisement and the notice other parties 

receive. However, there is no specific notification of when an inspection will be made. Such persons are ones having a 

direct interest in the lands and are not the general public. Therefore, the language is retained. A sentence has been 

added to Section 800.40(b)(1) to allow any person, with an interest in the bond release, access to the areas subject to 

bond release at the discretion of the regulatory authority. The permittee cannot prevent surface owner access to the 

area in question. This new provision parallels that under Section 513 of the Act pursuant to the informal conference 

on permit applications. As written, no right of citizen access is presumed; but the procedure is set forth to assist 

citizens in supporting their possible contention of reclamation inadequacy. 

 A regulatory authority objected to the requirement in proposed Section 800.40(b)(2) to advise "a person with 

collateral interest" of the decision on the release of the bond because the regulatory authority might not know all 

parties with an interest and the list might be extensive. 

 OSM agrees with this comment and has included a provision requiring notification to only those persons specifically 

requesting such notice when posting the collateral. A person posting collateral may want such a stipulation, especially 

when relying on release of the collateral at a predetermined time. In addition to the change in Section 800.40, OSM 

has added a new Section 800.21(f) requiring that persons who contribute collateral to an applicant's bond and wish to 

be notified of bond release proceedings and decisions, must request, in writing at the time they are posting the 

collateral, to be so notified. 

 OSM has also included a provision requiring a regulatory authority to notify persons who either filed objections in 

writing or who were a party to the hearing proceedings, if any, of its decision to release or not to release all or part of 

the performance bond. 

 

SECTION 800.40(c) 

 Final Section 800.40(c) allows the regulatory authority to release the bond in whole or in part if it is satisfied the 

reclamation or phase of reclamation had been accomplished as required by the Act. The paragraph also sets 

conditions for bond release after successful completion of each of three phases of reclamation. This paragraph 

implements Section 519(c) of the Act. 

 A State regulatory authority suggested the addition of a statement to Section 800.40(c) which would require bond 

releases be considered only for entire increment areas, precluding any fractional release of an increment. To allow 

bond releases on fractions of increments, the regulatory authority said, would necessitate surveys to determine the 
extent of the disturbed acreage. 

 OSM agrees that, at a minimum, release should only be considered for a phase or phases of reclamation on an entire 

incremental area. OSM has added language at Section 800.40(c) to reflect this. 

 A commenter suggested proposed Section 800.40(c) be clarified to show that the regulatory authority has the 

authority to release bonds on both the entire permit area and on increments. The commenter suggested that the 

phrase "the bond or deposit for the entire permit area or incremental area" replace the proposed phrase "said bond or 

deposit" in proposed Section 800.40(c). 

 The commenter also felt the above change should be carried through to proposed Section 800.40(c)(1). Proposed 

Section 800.40(c)(1) allowed release of 60 percent of the bond on the applicable permit area after completion of 

Phase I reclamation, that is, after the operator completes the backfilling, regrading and drainage control for the 

bonded area. The commenter suggested the word "permit" be deleted from the phrase "applicable permit area" in 

Section 800.40(c)(1). OSM agrees with this commenter and has incorporated the suggested changes into the final 

rule. 

 A State regulatory authority indicated that in the proposed rule preamble, 46 FR 45089, OSM incorrectly referred 

to the Act as specifically "excluding topsoil replacement" from Phase I bond release and incorrectly carried this 

interpretation to its proposed Section 800.40(c)(1). Prior to this proposal, OSM had included topsoil in Phase I 

reclamation work, but reconsidered its inclusion because commenters noted that topsoil replacement is seasonal and 

may require different equipment than that used in the overburden replacement process. 

 However, the regulatory authority felt Phase I reclamation under the Act is meant to "define that portion of total 

reclamation that entails the bulk of the expense involved in reclaiming a minesite." The regulatory authority said that 

when this major portion of reclamation is completed, the Act then allows the regulatory authority to release 60 

percent of the bond. 

 Another commenter agreed with the regulatory authority's belief that topsoil replacement could be an integral part 

of the backfilling and grading operation and, most importantly, because topsoil replacement is a major expense it 

should be considered as Phase I reclamation. 

 It was the regulatory authority's opinion that OSM should not define Phase I reclamation except to state that it 

must include backfilling and regrading (including replacement of topsoil if the regulatory so chooses), drainage 

control and any other items specified by the regulatory authority. 

 OSM agrees and wishes to clarify its interpretation of Section 519(c) of the Act regrading topsoil replacement 

noted in the proposed rule preamble. OSM did not intend to state that the Act excludes topsoil replacement from 

Phase I, but meant to say that the Act did not necessarily include topsoil replacement in Phase I operations. OSM has 

attempted to revise the rules on phase release of bonds to more closely reflect the wording of the Act. OSM has 

inserted in Section 800.40(c)(1) the phrase "regarding (which may include replacement of topsoil)" to further clarify 

that the regulatory authority has discretion to include or not include topsoil replacement in Phase I reclamation. 

 Proposed Section 800.40(c)(2) provided that after successful completion of Phase II reclamation the regulatory 

authority may release part of the bond, but must retain sufficient funds in case a third party is to reestablish 

revegetation and to cover the 5- to 10-year revegetation liability period. The proposed paragraph required that no 

part of the bond be released if the applicable lands are contributing suspended solids to streamflow or runoff in 

excess of requirements of Section 816.49, and if soil productivity for prime farmlands has not been returned to 

equivalent levels of yield as nonmined lands. Proposed Section 800.40(c)(2) also required that where a silt dam is to 

be permanent, part of the bond may be released only if provisions for sound future maintenance have been made with 

the regulatory authority. 

 A commenter believed that additional guidance is necessary in proposed Section 800.40(c)(2) to estimate the 
percent of total bond which would be required to cover only Phases I and II. Not knowing the specific percentage 

that the bond may be reduced after Phase II could create problems at the time the Phase I and II bonds are first being 

considered. 

 Another commenter supported the provision in Section 800.40(c)(2) giving States flexibility in establishing bond 

release percentages after Phase II reclamation because it allows the States to set strong economic incentives for the 

operator to complete reclamation properly and on schedule. 

 A commenter opposed the elimination in proposed Section 800.40(c)(2) of the 25 percent limit on Phase II bond 

release. The proposed rule required that enough of the bond be retained to cover the cost of a third party 

reestablishing the vegetation and for the 5 or 10 year liability period. The commenter felt that 15 percent is the 

minimum bond that should be retained after Phase II and noted that the Mining Task Force of the National Coal 

Policy Project also supported this opinion. (Pages 5-6 of June 15, 1979 report.) 

 Land reclamation costs vary greatly not only from different regions of the country but even within the same mining 

operation. The establishment of the 25 percent Phase II maximum bond release amount was arbitrary. Its elimination 

ties the setting of the remaining bond amount to the actual projected remaining reclamation costs involved. Thus, in 

some instances, the amount retained after Phase II release could exceed 15 percent. For the final rule, the amount that 

may be released after Phase II focuses on the cost to the regulatory authority of reestablishing vegetation. That is the 

precise requirement of Section 519(c)(2) of the Act. Under this final rule the regulatory authority will have the 

discretion to determine the actual cost of the reclamation work that may need to be done should a failure occur. 

 A commenter indicated that the reference in proposed Section 800.40(c)(2) to suspended solids should refer to 

Section 816.42 on water quality standards and effluent limitations, rather than Section 816.49, which deals with 

permanent and temporary impoundments. 

 In new Section 800.40(c)(2) OSM has changed the references to specific sections to reference the Act and 30 CFR 

Chapter VII, Subchapter K, in order to avoid confusion that may be caused by rule changes to that Subchapter. 

 A commenter was concerned because proposed Section 800.40(c)(2) did not specifically state that the standards for 

successful revegetation must be met prior to bond release. The commenter stated the provision contained standards 

for only sediment loads and prime farmland and that additional success standards must be added to cover the massive 

amount of mined land in the West which is rangeland or federally-owned. 

 Section 800.40(c)(2) is taken directly from the Act, Section 519(c)(2). The paragraph does require that the 

regulatory authority retain an amount sufficient to reestablish revegetation when "determining the amount to be 

released after successful revegetation has been established." (Emphasis added.) Standards for success are established 

in the permit. 

 A commenter felt that because the phrase "under equivalent management practices" was not included in the 

provision for bond release on prime farmlands in proposed Section 800.40(c)(2) the rule is in conflict with the Act. 

The phrase "under equivalent management practices" has been added in the final Section 800.40(c)(2). 

 A State regulatory authority was also concerned that it was OSM's intention to limit proof of productivity to 

information contained in soil surveys and that such a position by OSM would have serious consequences in its State. 

The regulatory authority felt that Section 800.40(c)(2) is too ambiguous and allows the reader to believe that soil 

productivity can only be determined through a soil survey. The authority suggested the following language change "* 

* * until soil productivity from prime farmland has returned to equivalent levels of yield as non-mined land of the 

same soil type in the surrounding area under equivalent management practices. Soil types are to be determined from 

soil surveys pursuant to section 507(b)(16) of the Act." 

 The language in question is taken directly from the Act, Section 519(c)(2). Therefore, OSM has retained the 

language as proposed. However, the final rule has also been revised to refer to the standards in 30 CFR Part 823 

which includes requirements for determining productivity levels on prime farmlands. 
 A regulatory authority objected to the provision in proposed Section 800.40(c)(2) for "sound future maintenance" 

of silt dams to be made permanent contending that it appears to conflict with section 519(c) of the Act, which 

authorizes bond release once reclamation has been accomplished. The regulatory authority felt that if the pond [silt 

dam] or any other facility is part of the approved postmining land use and meets the standards of the Act, there is no 

authority or any need for a requirement regarding future maintenance. 

 Section 800.40(c)(2) repeats verbatim the provision of section 519(c)(2) of the Act except that a citation to 

Subchapter K is made instead of section 515(b)(8) of the Act. While a rule need not always repeat requirements of 

the Act, deletion of the provision as the regulatory authority urges would not change the Act's requirements for 

"sound future maintenance" of permanent silt dams. Therefore, the rule is not revised as suggested. 

 A commenter requested an additional requirement in Section 800.40(c)(2) to provide that the amount retained be 

sufficient to also cover the reclamation of the land if the proposed postmining land use does not occur. 

 If the proposed postmining land use does not occur, the operator is required to establish proper vegetation and 

otherwise reclaim the mined land to its original or higher use. In reviewing an operator permit application and in 

assessing the bond amounts required to complete the reclamation plan contained therein, the regulatory authority 

must consider that in the event a postmining land use described in the reclamation plan is not achieved, an alternate 

plan for reclamation is necessary. Bond amounts required should reflect this possibility. 

 

SECTION 800.40(c)(3) 

 Final Section 800.40(c)(3) allows for bond release at completion of Phase II after successfully completing all 

surface coal mining and reclamation activities, but not before the expiration of the 5 or 10 year liability period 

specified in Section 816.116 and Section 817.116. The paragraph also requires that no bond be fully released until all 

reclamation requirements of the Act and the permit are met. 

 A commenter indicated that proposed Section 800.40(c)(3) may conflict with provisions of proposed Section 

800.13(a) by preventing complete release of the final portion of a bond until the entire reclamation plan has been 

completed. 

 Another commenter also spotted the confusion between the two provisions and suggested the following change be 

made to proposed Section 800.40(c)(3): "* * * that no bond shall be fully released until all reclamation requirements 

of the Act and the permit are fully met for the area for which the bond was posted." 

 The wording for Section 800.40(c)(3) comes from section 519(c)(3) of the Act. As stated above with respect to a 

bonding of separate increments, OSM interprets this provision to allow release of the final portion of a bond posted 

on an increment if the regulatory authority determines that all requirements of the Act and the permit have been fully 

met for the increment. As described earlier, the period of liability described in Section 800.13(a) has been modified to 

reflect the requirements of Section 519(c) of the Act. 

 

SECTION 800.40(d) 

 Proposed Section 800.40(d) required that if the regulatory authority disapproves the bond or portion of the bond 

for release the regulatory authority shall notify the permittee in writing, stating the reasons for the disapproval and 

corrective action that can be taken. 

 A commenter believed that the provision in proposed Section 800.40(d) for persons to be notified of bond release 

was not consistent with the notification provision in Section 800.40(b)(2), which requires the permittee, the surety or 

other persons with an interest in the collateral be notified. 

 OSM has corrected this inconsistency by adding to Section 800.40(d) the requirement to notify the surety or other 

person interested in the collateral if they have requested notification. OSM has also required that persons with an 
interest in collateral who want notification of bond release must request such a notice in writing with the posting of 

collateral. (See Section 800.21(f).) Section 800.40(d) is derived from Section 519(d) of the Act. 

 

SECTION 800.40(e) 

 Section 800.40(e) requires that the regulatory authority notify the appropriate municipalities when a bond or part of 

a bond is to be released for surface coal mining operations within those municipalities. This notification is to be by 

certified mail at least 30 days prior to release of the bond. 

 No comments were received on proposed Section 800.40(e) and the provisions will become final as proposed. This 

provision is taken directly from Section 519(e) of the Act. 

 

SECTION 800.40(f) 

 Proposed Section 800.40(f) allowed written objections to the release of a bond and requests for a public hearing to 

be filed with the regulatory authority by any person with a valid legal interest which may be adversely affected by the 

release, or any responsible officer of a Federal, State or local government agency which has jurisdiction by law, 

special expertise with respect to the environmental, social or economic impacts of the operation, or is authorized to 

develop or enforce environmental standards. The objections must be filed within 30 days after the final publication of 

the bond release notice. Should a public hearing be requested, the regulatory authority shall within 30 days after the 

request inform all interested parties as to the time and place of the hearing. The public hearing is to be held in the 

locality of the surface coal mining operation involved or at the State capital, at the option of the objector. The 

regulatory authority shall also advertise the time and place of the hearing in a newspaper of general circulation. 

Changes were made from the proposed paragraph to delete redundant language and to clarify requirements. Also, the 

option for the objector to have the hearing held at the location of the regulatory authority, is added. 

 A commenter objected to the provisions of proposed Section 800.40(f) because the regulatory authority was not 

required to forward comments from persons objecting to bond release to the permittee for review and response. 

Inclusion of such provision is unnecessary. Such comments would be open to the operator to review and respond to if 

he desires. It may not be necessary to forward copies of comments to the permittee in each instance. If after 

reviewing the comments, the regulatory authority decides not to release the bond, the permittee will be notified of the 

actions required to correct any problems and will be afforded an opportunity for a hearing as provided for under 

Section 519(d) of the Act and Section 800.40(d) of these rules. 

 A State regulatory authority took issue with the provision in proposed Section 800.40(f) that allows for the bond 

release public hearing to be located at the State capital at the option of the objector. The authority suggested an 

amendment to allow for the hearing to be held at the regulatory authority's office at the option of the regulatory 

authority. 

 An industry commenter also objected to the hearing being held at the State capital because it would impose a 

burden on the permittee and would "effectively exclude" local citizen participation due to distance and travel costs. 

The commenter suggested that the burden of travel be placed on the hearing requestor. 

 Another regulatory authority wanted all public hearings to be held at the State capital with the objector's consent. 

 OSM based proposed Section 800.40(f) on Section 519(f) of the Act, which requires a hearing in the locality of the 

land to be released from bond and offers the option of the State capital to objectors. It is not clear whether the 

drafters of the Act envisioned that all regulatory authorities would be located in their State capitals. Many, in fact, are 

located there. However, for those cases where the State capital is not near either the locality or the offices of the 

regulatory authority, OSM has inserted an additional option with the phrase "at the office of the regulatory authority."

But, since the Act specifically offers the discretion of choosing the State capital to the objector, no other change 

relating to this provision has been made to Section 800.40(f). 

 A State regulatory authority asked for clarification of the phrase "Any person with a valid legal interest which might 
be affected by release of the bond * * *" in the first part of Section 800.40(f). The regulatory authority wanted to 

know who has the authority to make the judgment whether a person has a valid legal interest affected by the release 

of the bond. 

 The term "person" is defined in Section 701(19) of the Act as "an individual, partnership, association, society, joint 

stock company, firm, company, corporation, or other business organization." The term "person with a valid legal 

interest" is defined in 30 CFR 700.5. The regulatory authority has the responsibility to make the determination on 

whether a person has such an interest. 

 Section 800.40(f) quotes the provisions of Section 519(f) of the Act in regard to this provision. 

 A commenter suggested that the language of proposed Section 800.40(f) be revised to specify what was required 

within the 30-day period following the receipt of a request for public hearing. 

 As proposed, it appeared that the public notice of hearing as well as the hearing itself was required within the same 

30-day period. 

 Neither the previous rule nor the proposed revision specified the time period in which notice must be given of a 

planned hearing. The commenter is correct in assuming that public notice of hearings as well as the hearing are 

required within the same 30-day period. Section 519(f) of the Act requires that the hearing be held within that period. 

OSM will not add provision for a time period within which the hearing date must be announced, but believes this is 

better left to the discretion of the regulatory authority. 

 

PROPOSED SECTION 800.40(g) [Final Section 800.40(h)] 

 Proposed Section 800.40(g) provided that the regulatory authority may hold an informal conference as provided in 

Section 513 of the Act to resolve written objections to a bond release. Proposed paragraph (g) has been redesignated 

as paragraph (h) in the final rule and proposed paragraph (h) has been redesignated as final paragraph (g). This is 

done to keep related provisions together. 

 A commenter objected to proposed Section 800.40(g) because it did not have a provision whereby persons who 

participated in an informal conference may be advised as to its outcome. The commenter noted that Section 514(a) of 

the Act specifically requires that after an informal conference the regulatory authority shall furnish to all parties of 

the proceedings a written finding of the regulatory authority and the reasons for said finding. 

 A provision has been added to the rule to require a finding of the regulatory authority based on the informal 

conference and the reason for such finding to be furnished to parties who participate in the conference. Section 

513(b) of the Act also requires a record be made of the informal conference, unless waived by all parties, and made 

available to those parties. OSM has added a sentence in final Section 800.40(h) to emphasize this requirement. 

 

PROPOSED SECTION 800.40(h) (Final Section 800.40(g)) 

 Final Section 800.40(g), proposed as Section 800.40(h), allows that for the purposes of a hearing on bond release 

the regulatory authority shall have the authority to administer oaths, subpoena witnesses or printed materials and take 

evidence including but not limited to inspections of the land affected. A verbatim record of each public hearing shall 

be made and a transcript made available. 

 A commenter suggested that proposed Section 800.40(h) should be tied more directly to Section 800.40(f) since 

the provisions apply to hearings and not to informal conferences of the preceding paragraph, Section 800.40(g). OSM 

agrees with this comment and has switched the position of the two paragraphs as described above. A reference to 

Section 800.40(f) on public hearings has been included in final Section 800.40(g) implements Section 519(h) of the 

Act. 

 

SECTION 800.50 - FORFEITURE OF BONDS. 
 Proposed Section 800.50 required that the regulatory authority cause forfeiture when conditions of the reclamation 

plan, the permit or the bond are not met. This section allowed the regulatory authority to withhold forfeiture 

proceedings if a third party or surety company agrees to complete reclamation. It also set the procedures for 

forfeiture and the restrictions in using the funds obtained in forfeiture. The provisions of Section 800.50 have been 

rearranged for clarity. 

 

SECTION 800.50(a) 

 Proposed Section 800.50(a) required the regulatory authority to take action to forfeit all or part of a bond for any 

permit area or increment if reclamation operations are not conducted according to the reclamation plan or the permit, 

or the operator defaults on conditions of the bond. Final Section 800.50(a) also includes operator refusal or inability 

to reclaim an unabated violation as cause for forfeiture. The reclamation plan is not mentioned in final Section

800.50(a) because it is incorporated in the permit. 

 Final Section 800.50(a)(1), which was proposed as Section 800.50(b), sets the procedures the regulatory authority 

must follow in the event it must cause forfeiture of a bond. Section 800.50(a)(1) requires the regulatory authority to 

notify the permittee and the surety by certified mail of the determination to cause forfeiture of all or part of the bond 

including the reasons for such determination and amount to be forfeited. Final Section 800.50(a)(2), which was 

proposed as Section 800.50(b)(2), requires that the permittee and surety be advised under what conditions the 

forfeiture may be avoided. 

 A commenter objected to proposed Section 800.50(a), which made bond forfeitures mandatory rather than 

discretionary. The commenter said Section 509 of the Act does not provide for a bond to be automatically subject to 

forfeiture. The commenter suggested the following language change to provide the operator a chance to correct any 

conditions alleged by the regulatory authority to constitute a default without triggering a bond forfeiture proceeding: 

"The regulatory authority shall take action to notify the operator of its intention to forfeit all or part of a bond for any 

permit area or an increment of a permit area for unabated violations or conditions of the reclamation plan, or terms of 

the permit * * *." 

 Mandatory language in this rule has been retained so that when forfeiture action is necessary it is enforceable. The 

grounds for mandatory forfeiture are similar to those in previous Section 808.13(a). 

 The surety industry asked that OSM clarify how phase bonds are handled in forfeiture under Section 800.50(a). 

 Forfeiture under phase bonds will not differ greatly from other forfeiture proceedings. Forfeiture of bond for an 

area or increment that has not had any bond release will require forfeiture on Phase I bond as well as the bond for 

Phases II and III, in order to provide sufficient funds for complete reclamation. Forfeiture of phase bonds after partial 

release will involve forfeiture of the total of the phase bonds remaining for the area or increment for which forfeiture 

is necessary. Any excess funds remaining after reclamation will be distributed to the parties from whom they were 

collected, as determined by the regulatory authority, or as previously agreed to by the parties. 

 Two commenters objected to the proposed elimination of specific mandatory and discretionary forfeiture provisions 

of previous Sections 808.13 (a) and (b). The commenters felt that an operator who is complying with the rules in 

correcting violations and conducting reclamation as specified in the permit should not be threatened by forfeiture. 

Only the operator who cannot continue to comply, refuses to reclaim, or defaults on the conditions of the bond 

should be subject to forfeiture action. 

 The commenters also noted that previous Section 800.13(b) set out situations where informal adjustment of the 

economic situation short of bond forfeiture is possible. The commenters felt that failure to set our criteria for 

forfeiture as was done in the previous rules hampers regulatory flexibility and aids neither industry nor the public. 

 Another commenter, also concerned with the elimination of the criteria of Section 808.13, asked for clarification as 

to whether OSM meant to deny the regulatory authority the right to forfeit bonds if the permittee has been 
adjudicated bankrupt, become insolvent, subject to attachments and liens on equipment and collateral or the permittee 

cannot demonstrate the ability to continue to operate. 

 In considering actions in which forfeiture is required, OSM has included refusal or inability to conduct reclamation 

of unabated violations, failure to fulfill the terms of the permit and default on the conditions of the bond. Other 

factors may apply to the need for forfeiture, but these three are the major grounds for forfeiture action. Whether a 

specific set of facts will lead to forfeiture depends upon whether the permit terms are met and bond conditions are 

satisfied. The factors mentioned by the commenter may be considered within that context. General terms and 

conditions of bonds are set forth in Section 800.16 and another specific forfeiture condition is contained in Section 

800.17(c). Other specific instances when forfeiture may be initiated may be added by States in their programs. 

 Compliance, even after the initial notice of forfeiture, is preferable to forfeiture. The final rules have been amended 

to add conditions under which forfeiture may be avoided. Section 800.50(a)(2)(i) provides for withholding forfeiture 

if the permittee or a third party agrees to perform reclamation operations under a compliance schedule which meets 

the permit conditions. Final Section 800.50(a)(2)(ii) allows the surety to complete the reclamation plan or the relevant

portion of the reclamation plan, if the surety demonstrates an ability to complete such reclamation. These two means 

of avoiding forfeiture were taken from previous Section 808.11(b) and provide discretion to the regulatory authority 

about which the commenters were concerned. These had been proposed as Section 800.50(a) (1) and (2). 

 A State regulatory authority questioned whether in accepting a permittee's obligation for reclamation after 

forfeiture, the State or the surety assumes the obligation for phase releases, water quality control, National Pollution 

Discharge Elimination System (NPDES) monitoring, and revegetation. 

 All plans and specifications found in the permit must be met in contracting for completion of reclamation. However, 

neither the regulatory authority nor the contractor assumes the liability of the permittee. 

 A regulatory authority requested the phrase "except for partial releases authorized under 30 CFR 800.40 * * *" be 

amended in proposed Section 800.50(a)(2) to make partial release discretionary because it had no intention of making 

partial releases once bond forfeiture was initiated. The regulatory authority suggested the following language: "* * * 

except that the regulatory authority may approve partial releases under 30 CFR 800.40 * * *." OSM recognizes that 

there could have been a potential problem in Section 800.50(a)(2)(ii) and has inserted a provision clearly giving the 

regulatory authority discretion in authorizing partial releases of bond. 

 A regulatory authority objected to the notification requirements in proposed Section 800.50(b)(1) (final Section 

800.50(a)(1)) on the grounds that the permittee would have already received notice of the forfeiture by way of a 

notice of violation. The regulatory authority also objected to the requirement in proposed Section 800.50(b)(2) that it 

also advise the permittee and the surety of a right of appeal, reasoning that it was not the position of the regulatory 

authority to advise these parties of their legal rights to appeal. 

 Ordinarily the permittee will be on notice with respect to his or her failure to reclaim prior to forfeiture. However, 

bond forfeiture is a separate action by the regulatory authority for which separate notice is required. Whereas the 

permittee would have likely received previous notices, a surety will probably not receive notice until forfeiture is to be 

taken. A surety in such an instance must be apprised of the pending forfeiture and due process requirements which 

dictate that the permittee receive notice of the action as well. 

 OSM agrees with the commenter on proposed Section 800.50(b)(2) that the requirement of notification of rights of 

appeal should not be included as a regulatory authority responsibility. The regulatory authority should notify the 

permittee and surety, if any, that there is an opportunity for an administrative appeal to be taken, but recognizes that 

affected parties should be presumed to be aware of their rights. 

 

SECTION 800.50(b) 
 Final Section 800.50(b)(1), proposed as Section 800.50(b)(3), requires a regulatory authority to proceed to collect 

the forfeited amount if actions to avoid forfeiture have not been taken, or if appeal rights are not exercised within a 

time established by the regulatory authority or are unsuccessful. Final Section 800.50(b)(2), proposed Section 

80.50(d), requires the use of collected funds for reclamation. 

 The surety industry objected to the lack of guidelines in proposed Section 800.50(b)(1) for the regulatory authority 

in determining how much of the bond needs to be forfeited. The commenter asked that the amount of the forfeited 

bond be based on the estimated cost to complete reclamation. The surety industry cited a decision in an Ohio State 

Court (In re: Travellers Indemnity Company vs. Charles Call, No. 80-CV-07-4107, Franklin County Court of 

Common Pleas, Nov. 25, 1980) in which it was held that the surety was entitled to an estimate of the cost to 

complete the reclamation upon which the amount of bond to be forfeited would be based. 

 The manner in which the regulatory authority arrives at the amount to be forfeited is best left to its discretion. The 

amount proposed has to be reasonable and cannot be arbitrary or capricious. To require that the regulatory authority 

provide an estimate of the amount would be premature because the costs may not be known in advance. Furthermore, 

the entire bond has to be available for the necessary reclamation. Conditioning its availability upon the accuracy of a 

cost estimate runs counter to congressional intent that the bond will assure that reclamation will be accomplished. In 

addition, final Section 800.50(d)(2) requires the return of funds unused in the reclamation effort. Therefore, the 

comment is not accepted. 

 Two commenters felt that in proposed Section 800.50(b)(1) the regulatory authority should determine the amount 

of bond that is to be forfeited based on "total" contracting costs -- administrative as well as operational. 

 The regulatory authority may determine the amount to be forfeited based on the total costs it will incur in either 

using State employees to do the reclamation work or contracting with an outside party. In either case, the State could 

include its administrative and other costs routinely allowed under cost accounting principles. However, should the 

amount forfeited be greater than the actual costs, the excess must be remitted to the surety or permittee. 

 

SECTION 800.50 (c) and (d) 

 Proposed Section 800.50(c) provided that upon default the regulatory authority may forfeit any and all bonds to 

complete the reclamation operations for which the bonds were posted. This has been adopted with one addition. 

 Proposed Section 800.50(d) required the regulatory authority to use the forfeited funds to contract for completion 

of the reclamation plan on the permit area or increment to which the bond coverage applies. This has been adopted in 

Section 800.50(b)(2), as noted above. 

 Final Section 800.50(d)(1) recognizes the operator's continuing liability for reclamation costs if the bond amount is 

insufficient and it authorizes reclamation to be conducted prior to collection of additional funds from the operator. 

 Several commenters found Section 800.50 (c) and (d) too restrictive in allowing forfeited funds to be used only for 

reclamation operations for which the bond applies. This prohibits the use of forfeited funds to cover reclamation costs 

of another increment or for other situations not included in the reclamation plan. The commenters said the proposal 

derogates from the meaning of the Act which states that the bond is conditional upon faithful performance of all 

requirements of the Act and the permit. They said the proposal was "entirely inconsistent with the goal of successful 

reclamation of the entire permit area." 

 The commenters were concerned that under proposed Section 800.50 (c) and (d) that situations will arise where the 

bond has been released on a given increment and no funds are available to perform reclamation occasioned by an 

emergency or cumulative impact appearing after that phase or increment is finished and bond released. 

 One commenter further noted that the only time there would be problems in extending incremental bond coverage 

to the entire permit area is when different sureties bond different increments and when different bonding methods are 
used on different increments. The commenter felt these two problems could be specifically dealt with allowing for 

coverage of the entire permit area. 

 These comments are addressed in the earlier discussion on incremental and phase bonds. As noted there, although 

the bonds for separate increments may be limited to the discrete increments, in order to comply with Section 

519(c)(3) of the Act, the bond on an increment may not be fully released until the reclamation plan, including 

extended liability, is fully completed for the increment for which the bond is posted. 

 One commenter felt the existence of phase bonds in forfeiture proceedings should be recognized in proposed 

Section 800.50(d). The commenter recommended the following word change " * * * contract for completion of the 

reclamation plan * * * on the permit area, incremental acreage or bonded phase on which * * * ." 

 The commenter's recommendation is accepted and a phrase added to recognize separate bonding of phases in final 

Section 800.50(b)(2). 

 Several commenters disagreed with OSM's response in the proposed rule, 46 FR 45091, to the decision of the 

district court. (In re: Permanent Surface Mining Regulation Litigation, 14 Envir. Rep. Cas. 1100-1101, February 26, 

1980). The district court remanded OSM's rule for not having a provision for returning unused portions of a forfeited

bond. 

 OSM proposed in Section 800.50 to allow the regulatory authority to determine amounts to be forfeited, and 

omitted a provision requiring unused portions to be returned. In response to the comment and the district court 

decision, OSM is adding the following provision to final Section 800.50(d)(2): "In the event the amount of 

performance bond forfeited is more than the amount necessary to complete reclamation operations, the unused funds 

shall be returned by the regulatory authority to the party from whom they were collected." 

 One of the commenters was further confused by OSM's statement at 46 FR 45091, in explaining that funds not used 

to contract for reclamation would be refunded. OSM stated, "However, this rationale may not apply if bond forfeiture 

renders a penal sum rather than a performance guarantee." The commenter wanted to know if this statement meant 

that unused funds will not be refunded if bond forfeiture is a penalty action. The commenter felt penalty assessment 

and collection processes are separate and distinct from bond forfeiture actions and questioned the power of the 

regulatory authority to keep unused bond money and call it a penalty. 

 A surety commenter also noted OSM's preamble statement and wanted to ensure that no misconception arose 

regarding the term "penal sum" when used in performance bond forms. The commenter explained as follows: 

 [In] the explanatory comments with regard to this section which appeared on 46 FR 45091 there seems to be some 

confusion with respect to the terms "penal sum" and "performance guarantee." In the surety industry, the term "penal 

sum" when used in conjunction with the amount of bond is not meant to convey that the entire bond can be construed 

to be a penalty. Most bonds use the term "penal sum" and they are only "penalty" bonds when the provisions of the 

bonds specifically provide this. Surface mining bonds in most instances are considered to be bonds that guarantee 

performance of the reclamation work required by the permit. They are damage bonds and respond by guaranteeing to 

pay the cost of the necessary reclamation work up to the bond penalty even if they use the term "penal sum." 

 In order to clarify the matter, OSM views a reclamation bond as one guaranteeing the performance of reclamation 

work. Therefore, it is not a penal bond. Upon forfeiture only the amount necessary to complete the reclamation work 

can be used by the regulatory authority. Use of the term "penal sum" has no bearing on the amount of the bond which 

the regulatory authority may retain. OSM concurs in the view expressed by the surety commenter. 

 A State regulatory authority requested an amendment of proposed Section 800.50(d) regarding the provision 

requiring forfeited funds be used only within the permit area to which they apply. The State said it intends to include 

the administrative costs of securing a reclamation contract as part of the initial bond amount. Therefore, they argued 

the regulatory authority should have the option of allocating forfeited funds not needed for reclamation to a general 

fund for administrative costs associated with contracting for reclamation. Only the administrative portion of the bond 

would be allocated to the fund. The State felt this general fund for handling contract costs would best suit their 
practice of seeking a bid for several permit areas in the same general region at the same time. 

 A State may establish a certain percentage of any contract for its administrative costs, but such a practice has to 

have a sound accounting basis, including distribution of costs, to avoid retaining more of the forfeited funds than the 

costs involved. Should the costs of reclamation, including properly allowable and allocable costs, be less than the 

amount of the forfeited bond, the excess must be returned to the surety or operator. 

 A State regulatory authority requested an addition of a new paragraph (e) to Section 800.50 to clearly establish that 

the operator's liability is not limited to the amount of the performance bond and is not necessarily satisfied by that 

bond's forfeiture. The regulatory authority felt the performance bond requirement was not meant to supplant the 

operator's underlying obligation to reclaim all the land disturbed under his permit. The following language was 

suggested: 

 In the event the forfeited bond is insufficient to pay for the full cost of reclamation, the operator shall be liable for 

remaining costs. The regulatory authority may complete, or authorize to be completed, reclamation of the bonded 

parcel and may recover from the operator all costs of reclamation in excess of the forfeited bond. 

 The operator does have the underlying obligation to fully reclaim disturbed lands. A regulatory authority, in having 

reclamation performed on which the operator has defaulted in his obligation, may incur costs in excess of the forfeited 

amount. To make clear that the regulatory authority may recover that excess amount from the operator, the 

suggested addition is made to Section 800.50 in paragraph (d)(1). 

SECTION 800.60 - TERMS AND CONDITIONS FOR LIABILITY INSURANCE. 

 Proposed Section 800.60 implements the requirements of Section 507(f) of the Act that each permittee have 

liability insurance providing coverage for personal injury and property damage. This section sets the minimum 

coverage required, the duration of the policy, notification procedures and provides for an exception when the 

operator meets the requirements of State self-insurance provisions. 

 

SECTION 800.60(a) 

 Final Section 800.60(a) provides that the regulatory authority must require the applicant to submit with the permit 

application a certificate issued by an insurance company authorized to do business in the United States certifying that 

the applicant has a public liability insurance policy in force for the surface coal mining and reclamation operations for 

which the permit is sought. The certificate shall provide for personal injury and property damage protection in an 

amount adequate to compensate any persons injured or property damaged as a result of the surface coal mining and 

reclamation operations and who are entitled to compensation under State law. Minimum coverage for bodily injury 

and property damage shall be $300,000 for each occurrence and $500,000 aggregate. 

 A commenter objected to the minimum dollar amounts specified in proposed Section 800.60(a) and states that 

OSM has given no justification for setting them. The commenter noted it is a common and preferred practice by coal 

companies to insure all their operation locations under one policy rather than allocating specific minimum amounts to 

each location as required in Section 800.60(a). The commenter said the operator may carry liability insurance that is 

"adequate to compensate any persons damaged * * * and entitled to compensation" as required by Section 507(f) of 

the Act, but would not comply with the individual minimum requirements of Section 800.60(a). The commenter felt 

that, in light of Section 101(f) of the Act, the State regulatory authority should be given the discretion to decide what 

type of coverage is "adequate." 

 Section 800.60(a) does not prohibit the type of policy which the commenter states is commonly purchased by 

companies having more than one operation. One policy could cover multiple operations. However, Section 507(f) 

requires that the policy be written "in an amount adequate to compensate any person damaged * * *." Thus, it is 

appropriate to provide for minimum amounts of liability coverage. See also the discussion in connection with the 

original rule, Section 806.14, at 44 FR 15119. 
 A commenter requested that the sentence in proposed Section 800.60(a) that begins "The certificate shall provide * 

* *" be rewritten and clarified. The commenter notes that a certificate cannot "compensate property damaged" as the 

phrase "shall provide for" implies. The commenter also felt the phrase "to all persons" is not needed. 

 OSM agrees with this comment and has revised Section 800.60(a) for clarity but no substantive changes have been 

made. The proposed term "all persons" has been changed to "any persons" to parallel the statutory language. 

 

SECTION 800.60(b) 

 Final Section 800.60(b) requires that the policy be maintained in full force during the life of the permit or any 

renewal, including completion of all reclamation operations. This paragraph is adopted as proposed, with one revision 

discussed below. 

 A State regulatory authority was concerned that Section 800.60(b) requires that the policy need only remain in 

effect during the term of the permit or any renewal. The regulatory authority noted that reclamation may continue 

after the permit term has expired, but feels the insurance policy should remain in effect during the reclamation period. 

 OSM agrees with this comment and has made a change to Section 800.60(b) to specify that the liability insurance 

policy must continue in force until the end of the liability period for completion of reclamation. Section 800.60(b) 

follows Section 507(f) of the Act, which provides that it is to remain in effect during the length of all reclamation 

operations. This includes the period of extended liability under Section 515(b)(20) of the Act. 

 

SECTIONS 800.60 (c) and (d) 

 Section 800.60(c) provides that the policy have a rider requiring the insurer to notify the regulatory authority when 

major changes are made to the policy. Section 800.60(d) allows the regulatory authority to accept, in lieu of proof of 

a public liability insurance policy, evidence from the applicant that it satisfies State self-insurance requirements 

approved by the regulatory program. No comments were received on these two provisions, which follow Section 

507(f) of the Act, and they are unchanged from the proposed. They also retain the provisions of previous Section 

806.16 (c) and (d). 

 

SECTION 800.70 - BONDING FOR ANTHRACITE OPERATIONS IN PENNSYLVANIA. 

 Section 800.70(a) provides that all the provisions of Subchapter J shall apply to bonding and insuring anthracite 

surface operations in Pennsylvania except that the specified bond limits and the period of liability shall be determined 

and established according to Pennsylvania State law and rules. Section 800.70(b) also provides that should the 

Pennsylvania State regulatory program be amended, persons engaged in anthracite surface mining shall comply with 

the additional rules the Secretary may issue in order to meet the purposes of the Act. Lastly, the proposed Section 

800.70(c) requires that nothing in this part shall exempt anthracite operations from requirements of Subchapter J 

except as set forth in Section 800.70. 

 No comments were received on this section but editorial changes have been made for clarity. Proposed Section 

800.70(c) is not adopted because it was redundant. Section 800.70 is necessary to implement the provision of Section 

519 of the Act which allows State standards to be applicable to anthracite surface coal mines and makes some of the 

bonding provisions in Sections 509 and 519 of the Act applicable. 
REFERENCE MATERIALS 

 Reference materials used to develop these final rules are as follows: 

 The American Law Institute, 1978. Uniform Commercial Code. National Conference of Commissioners on Uniform 

State Laws. 994 pp. 

 Baughn, William H. and Charles E. Walker, 1978. The Bankers' Handbook. Homewood, Illinois: Dow Jones --

Irwin. 1205 pp. 

 

III. PROCEDURAL MATTERS 

 

Federal Paperwork Reduction Act 

 The information collection requirements contained in Part 800, as enumerated in Section 800.10 of this rule, have 

been approved by the Office of Management and Budget under 44 U.S.C. 3507 and assigned clearance number 1029-

0043. The information required will be collected and used by the regulatory authority in implementing bonding 

responsibilities for surface and underground mining activities to ensure that companies have suitable bonding and that 

the reclamation is completed. The information being collected is to meet requirements of Sections 509 and 519 of the 

Act and the obligation to respond is mandatory. 

 

Executive Order 12291 and Regulatory Flexibility Act 

 The DOI has determined that this document is not a major rule and does not require a regulatory impact analysis 

under Executive Order 12291. The DOI certifies that this document will not have a significant economic effect on a 

substantial number of small entities and therefore does not require a regulatory flexibility analysis under Public Law 

96-354. The flexibility of these rules should provide availability of surety bonding to small operators. 

 

National Environmental Policy Act 

 An environmental assessment (EA) was prepared analyzing the individual impacts on the human environment which 

the revision of bonding rules in Part 800 will have. On the basis of this EA, it was determined that adopting these 

rules will not constitute a major Federal action significantly affecting the quality of the human environment. In 

addition, an EA was prepared which analyzed the cumulative impacts of adopting these rules in relation to certain 

other proposed revised rules. In a Finding of No Significant Impact (FONSI) based on this latter EA, the revision of 

the bonding rules was considered to be in category I, a category of revisions for which the analysis of impacts was 

sufficiently certain to support a finding of no significant impact. Both EAs and FONSIs are on file in the 

Administrative Record located at 1100 L Street NW., Room 5315, Washington, D.C. 

 

LIST OF SUBJECTS IN 30 CFR PART 800 

 Administrative practice and procedure, Coal mining, Insurance, Reporting and recordkeeping requirements, Surety 

bonds, Surface mining, Underground mining. 

 For the reasons set forth in the preamble, 30 CFR Parts 800, 801, 805, 806, 807, 808 and 809 are amended as set 

forth herein. 

Dated: July 14, 1983. 

J. J. Simmons III, Under Secretary. 
 1. Subchapter J is revised to read as follows: 

SUBCHAPTER J -- BONDING AND INSURANCE REQUIREMENTS FOR SURFACE COAL MINING 

AND RECLAMATION OPERATIONS 

PART 800 -- BOND AND INSURANCE REQUIREMENTS FOR SURFACE COAL MINING AND 

RECLAMATION OPERATIONS UNDER REGULATORY PROGRAMS 

Section 

800.1 Scope and purpose. 

800.4 Regulatory authority responsibilities. 

800.5 Definitions. 

800.10 Information collection. 

800.11 Requirement to file a bond. 

800.12 Form of the performance bond. 

800.13 Period of liability. 

800.14 Determination of bond amount. 

800.15 Adjustment of amount. 

800.16 General terms and conditions of bond. 

800.17 Bonding requirements for underground coal mines and long-term coal-related surface facilities and

structures. 

800.20 Surety bonds. 

800.21 Collateral bonds. 

800.30 Replacement of bonds. 

800.40 Requirement to release performance bonds. 

800.50 Forfeiture of bonds. 

800.60 Terms and conditions for liability insurance. 

800.70 Bonding for anthracite operations in Pennsylvania. 

 Authority: 30 U.S.C. 1201 et seq., Pub. L. 95-87. 

SECTION 800.1 - SCOPE AND PURPOSE. 

 This part sets forth the minimum requirements for filing and maintaining bonds and insurance for surface coal 

mining and reclamation operations under regulatory programs in accordance with the Act. 

SECTION 800.4 - REGULATORY AUTHORITY RESPONSIBILITIES. 

(a) The regulatory authority shall prescribe and furnish forms for filing performance bonds. 

(b) The regulatory authority shall prescribe by regulation terms and conditions for performance bonds and insurance. 

(c) The regulatory authority shall determine the amount of the bond for each area to be bonded, in accordance with 

Section 800.14. The regulatory authority shall also adjust the amount as acreage in the permit area is revised, or when 

other relevant conditions change according to the requirements of Section 800.15. 

(d) The regulatory authority may accept a self-bond if the permittee meets the requirements of Section 800.23 and 

any additional requirements in the State or Federal program. 

(e) The regulatory authority shall release liability under a bond or bonds in accordance with Section 800.40. 
(f) If the conditions specified in Section 800.50 occur, the regulatory authority shall take appropriate action to cause 

all or part of a bond to be forfeited in accordance with procedures of that section. 

(g) The regulatory authority shall require in the permit that adequate bond coverage be in effect at all times. Except as 

provided in Section 800.16(e)(2), operating without a bond is a violation of a condition upon which the permit is 

issued. 

SECTION 800.5 - DEFINITIONS. 

(a) SURETY BOND means an indemnity agreement in a sum certain payable to the regulatory authority, executed 

by the permittee as principal and which is supported by the performance guarantee of a corporation licensed to do 

business as a surety in the State where the operation is located. 

(b) COLLATERAL BOND means an indemnity agreement in a sum certain executed by the permittee as principal 

which is supported by the deposit with the regulatory authority of one or more of the following: 

(1) A cash account, which shall be the deposit of cash in one or more federally-insured or equivalently 

protected accounts, payable only to the regulatory authority upon demand, or the deposit of cash directly with the 

regulatory authority; 

(2) Negotiable bonds of the United States, a State, or a municipality, endorsed to the order of, and placed in 

the possession of, the regulatory authority; 

(3) Negotiable certificates of deposit, made payable or assigned to the regulatory authority and placed in its 

possession or held by a federally-insured bank; 

(4) An irrevocable letter of credit of any bank organized or authorized to transact business in the United 

States, payable only to the regulatory authority upon presentation; 

(5) A perfected, first-lien security interest in real property in favor of the regulatory authority; or 

(6) Other investment-grade rated securities having a rating of AAA, AA, or A or an equivalent rating issued 

by a nationally recognized securities rating service, endorsed to the order of, and placed in the possession of, the 

regulatory authority. 

(c) SELF-BOND means an indemnity agreement in a sum certain executed by the permittee or the parent company 

guarantor and made payable to the regulatory authority, with or without separate surety. 

SECTION 800.10 - INFORMATION COLLECTION. 

 The information collection requirements contained in Sections 800.11, 800.15(c), 800.21, 800.40, 800.50(a), and 

800.60 have been approved by the Office of Management and Budget under 44 U.S.C. 3507 and assigned clearance 

number 1029-0043. The information is being collected to meet the requirements of Sections 509 and 519 of the Act, 

which require all applicants to file a bond with the regulatory authority prior to a permit being issued, and require 

written requests for bond release. This information will be used by the regulatory authority to ensure that sufficient 

funds are available for reclamation. The obligation to respond is mandatory. 

SECTION 800.11 - REQUIREMENT TO FILE A BOND. 

(a) After a permit application under Subchapter G of this chapter has been approved, but before a permit is issued, 

the applicant shall file with the regulatory authority, on a form prescribed and furnished by the regulatory authority, a 

bond or bonds for performance made payable to the regulatory authority and conditioned upon the faithful 

performance of all the requirements of the Act, the regulatory program, the permit, and the reclamation plan. 

(b)(1) The bond or bonds shall cover the entire permit area, or an identified increment of land within the permit area 

upon which the operator will initiate and conduct surface coal mining and reclamation operations during the initial 

term of the permit. 
(2) As surface coal mining and reclamation operations on succeeding increments are initiated and conducted 

within the permit area, the permittee shall file with the regulatory authority an additional bond or bonds to cover such 

increments in accordance with this section. 

(3) The operator shall identify the initial and successive areas or increments for bonding on the permit 

application map submitted for approval as provided in the application (under Parts 780 and 784 of this chapter), and 

shall specify the bond amount to be provided for each area or increment. 

(4) Independent increments shall be of sufficient size and configuration to provide for efficient reclamation 

operations should reclamation by the regulatory authority become necessary pursuant to Section 800.50. 

(c) An operator shall not disturb any surface areas, succeeding increments, or extend any underground shafts, tunnels 

or operations prior to acceptance by the regulatory authority of the required performance bond. 

(d) The applicant shall file, with the approval of the regulatory authority, a bond or bonds under one of the following 

schemes to cover the bond amounts for the permit area as determined in accordance with Section 800.14: 

(1) A performance bond or bonds for the entire permit area; 

(2) A cumulative bond schedule and the performance bond required for full reclamation of the initial area to 

be disturbed; or 

(3) An incremental bond schedule and the performance bond required for the first increment in the schedule. 

(e) OSM may approve, as part of a State or Federal program, an alternative bonding system, if it will achieve the 

following objectives and purposes of the bonding program: 

(1) The alternative must assure that the regulatory authority will have available sufficient money to complete

the reclamation plan for any areas which may be in default at any time; and 

(2) The alternative must provide a substantial economic incentive for the permittee to comply with all 

reclamation provisions. 

SECTION 800.12 - FORM OF THE PERFORMANCE BOND. 

 The regulatory authority shall prescribe the form of the performance bond. The regulatory authority may allow for: 

(a) A surety bond; 

(b) A collateral bond; 

(c) A self-bond; or 

(d) A combination of any of these bonding methods. 

SECTION 800.13 - PERIOD OF LIABILITY. 

(a)(1) Performance bond liability shall be for the duration of the surface coal mining and reclamation operation and 

for a period which is coincident with the operator's period of extended responsibility for successful revegetation 

provided in Section 816.116 or Section 817.116 of this chapter or until achievement of the reclamation requirements 

of the Act, regulatory programs, and permit, whichever is later. 

(2) With the approval of regulatory authority, a bond may be posted and approved to guarantee specific 

phases of reclamation within the permit area provided the sum of phase bonds posted equals or exceeds the total 

amount required under Sections 800.14 and 800.15. The scope of work to be guaranteed and the liability assumed 

under each phase bond shall be specified in detail. 

(b) Isolated and clearly defined portions of the permit area requiring extended liability may be separated from the 

original area and bonded separately with the approval of the regulatory authority. Such areas shall be limited in extent 
and not constitute a scattered, intermittent, or checkerboard pattern of failure. Access to the separated areas for 

remedial work may be included in the area under extended liability if deemed necessary by the regulatory authority. 

(c) If the regulatory authority approves a long-term, intensive agricultural postmining land use, in accordance with 

Section 816.133 or Section 817.133 of this chapter, the applicable 5 or 10 year period of liability shall commence at 

the date of initial planting for such long-term agricultural use. 

(d)(1) The bond liability of the permittee shall include only those actions which he or she is obligated to take under 

the permit, including completion of the reclamation plan, so that the land will be capable of supporting the postmining 

land use approved under Section 816.133 or Section 817.133 of this chapter. 

(2) Implementation of an alternative postmining land use approved under Sections 816.133(c) and 

817.133(c) which is beyond the control of the permittee, need not be covered by the bond. Bond liability for prime 

farmland shall be as specified in Section 800.40(c)(2). 

SECTION 800.14 - DETERMINATION OF BOND AMOUNT. 

(a) The amount of the bond required for each bonded area shall: 

(1) Be determined by the regulatory authority; 

(2) Depend upon the requirements of the approved permit and reclamation plan; 

(3) Reflect the probable difficulty of reclamation, giving consideration to such factors as topography, 

geology, hydrology, and revegetation potential; and 

(4) Be based on, but not limited to, the estimated cost submitted by the permit applicant. 

(b) The amount of the bond shall be sufficient to assure the completion of the reclamation plan if the work has to be 

performed by the regulatory authority in the event of forfeiture, and in no case shall the total bond initially posted for 

the entire area under one permit be less than $10,000. 

(c) An operator's financial responsibility under Section 817.121(c) of this chapter for repairing material damage 

resulting from subsidence may be satisfied by the liability insurance policy required under Section 800.60. 

SECTION 800.15 - ADJUSTMENT OF AMOUNT. 

(a) The amount of the bond or deposit required and the terms of the acceptance of the applicant's bond shall be 

adjusted by the regulatory authority from time to time as the area requiring bond coverage is increased or decreased 

or where the cost of future reclamation changes. The regulatory authority may specify periodic times or set a 

schedule for reevaluating and adjusting the bond amount to fulfill this requirement. 

(b) The regulatory authority shall -- 

(1) Notify the permittee, the surety, and any person with a property interest in collateral who has requested 

notification under Section 800.21(f) of any proposed adjustment to the bond amount; and 

(2) Provide the permittee an opportunity for an informal conference on the adjustment. 

(c) A permittee may request reduction of the amount of the performance bond upon submission of evidence to the 

regulatory authority proving that the permittee's method of operation or other circumstances reduces the estimated 

cost for the regulatory authority to reclaim the bonded area. Bond adjustments which involve undisturbed land or 

revision of the cost estimate of reclamation are not considered bond release subject to procedures of Section 800.40. 

(d) In the event that an approved permit is revised in accordance with Subchapter G of this chapter, the regulatory 

authority shall review the bond for adequacy and, if necessary, shall require adjustment of the bond to conform to the 

permit as revised. 
SECTION 800.16 - GENERAL TERMS AND CONDITIONS OF BOND. 

(a) The performance bond shall be in an amount determined by the regulatory authority as provided in Section 

800.14. 

(b) The performance bond shall be payable to the regulatory authority. 

(c) The performance bond shall be conditioned upon faithful performance of all the requirements of the Act, this 

chapter, the regulatory program, and the approved permit, including completion of the reclamation plan. 

(d) The duration of the bond shall be for the time period provided in Section 800.13. 

(e)(1) The bond shall provide a mechanism for a bank or surety company to give prompt notice to the regulatory 

authority and the permittee of any action filed alleging the insolvency or bankruptcy of the surety company, the bank, 

or the permittee, or alleging any violations which would result in suspension or revocation of the surety or bank 

charter or license to do business. 

(2) Upon the incapacity of a bank or surety company by reason of bankruptcy, insolvency, or suspension or 

revocation of a charter or license, the permittee shall be deemed to be without bond coverage and shall promptly 

notify the regulatory authority. The regulatory authority, upon notification received through procedures of paragraph 

(e)(1) of this section or from the permittee, shall, in writing, notify the operator who is without bond coverage and 

specify a reasonable period, not to exceed 90 days, to replace bond coverage. If an adequate bond is not posted by 

the end of the period allowed, the operator shall cease coal extraction and shall comply with the provisions of Section 

816.132 or Section 817.132 of this chapter and shall immediately begin to conduct reclamation operations in 

accordance with the reclamation plan. Mining operations shall not resume until the regulatory authority has 

determined that an acceptable bond has been posted. 

SECTION 800.17 - BONDING REQUIREMENTS FOR UNDERGROUND COAL MINES AND LONGTERM COAL-RELATED SURFACE FACILITIES AND STRUCTURES. 

(a) Responsibilities. The regulatory authority shall require bond coverage, in an amount determined under Section 

800.14, for long-term surface facilities and structures, and for areas disturbed by surface impacts incident to 

underground mines, for which a permit is required. Specific reclamation techniques required for underground mines 

and long-term facilities shall be considered in determining the amount of bond to complete the reclamation. 

(b) Long-term period of liability. 

(1) The period of liability for every bond covering long-term surface disturbances shall commence with the 

issuance of a permit, except that to the extent that such disturbances will occur on a succeeding increment to be 

bonded, such liability will commence upon the posting of the bond for that increment before the initial surface 

disturbance of that increment. The liability period shall extend until all reclamation, restoration, and abatement work 

under the permit has been completed and the bond is released under the provisions of Section 800.40, or until the 

bond has been replaced or extended in accordance with Section 800.17(b)(3). 

(2) Long-term surface disturbances shall include long-term coal-related surface facilities and structures, and 

surface impacts incident to underground coal mining, which disturb an area for a period that exceeds 5 years. Longterm surface disturbances include, but are not limited to: surface features of shafts and slope facilities, coal refuse 

areas, powerlines, bore-holes, ventilation shafts, preparation plants, machine shops, roads, and loading and treatment 

facilities. 

(3) To achieve continuous bond coverage for long-term surface disturbances, the bond shall be conditioned 

upon extension, replacement, or payment in full, 30 days prior to the expiration of the bond term. 

(4) Continuous bond coverage shall apply throughout the period of extended responsibility for successful 

revegetation and until the provisions of Section 800.40 have been met. 
(c) Bond forfeiture. The regulatory authority shall take action to forfeit a bond pursuant to this section, if 30 days 

prior to bond expiration, the operator has not filed: (1) A performance bond for a new term as required for 

continuous coverage, or (2) a performance bond providing coverage for the period of liability, including the period of 

extended responsibility for successful revegetation. 

SECTION 800.20 - SURETY BONDS. 

(a) A surety bond shall be executed by the operator and a corporate surety licensed to do business in the State where 

the operation is located. 

(b) Surety bonds shall be noncancellable during their terms, except that surety bond coverage for lands not disturbed 

may be cancelled with the prior consent of the regulatory authority. The regulatory authority shall advise the surety, 

within 30 days after receipt of a notice to cancel bond, whether the bond may be cancelled on an undisturbed area. 

SECTION 800.21 - COLLATERAL BONDS. 

(a) Collateral bonds, except for letters of credit, cash accounts, and real property, shall be subject to the following 

conditions: 

(1) The regulatory authority shall keep custody of collateral deposited by the applicant until authorized for 

release or replacement as provided in this subchapter. 

(2) The regulatory authority shall value collateral at its current market value, not at face value. 

(3) The regulatory authority shall require that certificates of deposit be made payable to or assigned to the 

regulatory authority, both in writing and upon the records of the bank issuing the certificates. If assigned, the 

regulatory authority shall require the banks issuing these certificates to waive all rights of setoff or liens against those 

certificates. 

(4) The regulatory authority shall not accept an individual certificate of deposit in an amount in excess of 

$100,000 or the maximum insurable amount as determined by the Federal Deposit Insurance Corporation or the 

Federal Savings and Loan Insurance Corporation. 

(b) Letters of credit shall be subject to the following conditions: 

(1) The letter may be issued only by a bank organized or authorized to do business in the United States; 

(2) Letters of credit shall be irrevocable during their terms. A letter of credit used as security in areas 

requiring continuous bond coverage shall be forfeited and shall be collected by the regulatory authority if not replaced 

by other suitable bond or letter of credit at least 30 days before its expiration date. 

(3) The letter of credit shall be payable to the regulatory authority upon demand, in part or in full, upon 

receipt from the regulatory authority of a notice of forfeiture issued in accordance with Section 800.50. 

(c) Real property posted as a collateral bond shall meet the following conditions: 

(1) The applicant shall grant the regulatory authority a first mortgage, first deed of trust, or perfected firstlien security interest in real property with a right to sell or otherwise dispose of the property in the event of forfeiture 

under Section 800.50. 

(2) In order for the regulatory authority to evaluate the adequacy of the real property offered to satisfy 

collateral requirements, the applicant shall submit a schedule of the real property which shall be mortgaged or pledged 

to secure the obligations under the indemnity agreement. The list shall include -- 

(i) A description of the property; 

(ii) The fair market value as determined by an independent appraisal conducted by a certified 

appraiser; and 

(iii) Proof of possession and title to the real property. 

(3) The property may include land which is part of the permit area; however, land pledged as collateral for a 

bond under this section shall not be disturbed under any permit while it is serving as security under this section. 
(d) Cash accounts shall be subject to the following conditions: 

(1) The regulatory authority may authorize the operator to supplement the bond through the establishment 

of a cash account in one or more federally-insured or equivalently protected accounts made payable upon demand to, 

or deposited directly with, the regulatory authority. The total bond including the cash account shall not be less than 

the amount required under terms of performance bonds including any adjustments, less amounts released in 

accordance with Section 800.40. 

(2) Any interest paid on a cash account shall be retained in the account and applied to the bond value of the 

account unless the regulatory authority has approved the payment of interest to the operator. 

(3) Certificates of deposit may be substituted for a cash account with the approval of the regulatory 

authority. 

(4) The regulatory authority shall not accept an individual cash account in an amount in excess of $100,000 

or the maximum insurable amount as determined by the Federal Deposit Insurance Corporation or the Federal 

Savings and Loan Insurance Corporation. 

(e)(1) The estimated bond value of all collateral posted as assurance under this section shall be subject to a margin 

which is the ratio of bond value to market value, as determined by the regulatory authority. The margin shall reflect 

legal and liquidation fees, as well as value depreciation, marketability, and fluctuations which might affect the net cash 

available to the regulatory authority to complete reclamation. 

(2) The bond value of collateral may be evaluated at any time but it shall be evaluated as part of permit 

renewal and, if necessary, the performance bond amount increased or decreased. In no case shall the bond value of 

collateral exceed the market value. 

(f) Persons with an interest in collateral posted as a bond, and who desire notification of actions pursuant to the bond, 

shall request the notification in writing to the regulatory authority at the time collateral is offered. 

SECTION 800.30 - REPLACEMENT OF BONDS. 

(a) The regulatory authority may allow a permittee to replace existing bonds with other bonds that provide equivalent 

coverage. 

(b) The regulatory authority shall not release existing performance bonds until the permittee has submitted, and the 

regulatory authority has approved, acceptable replacement performance bonds. Replacement of a performance bond 

pursuant to this section shall not constitute a release of bond under Section 800.40. 

SECTION 800.40 - REQUIREMENT TO RELEASE PERFORMANCE BONDS. 

(a) Bond release application. 

(1) The permittee may file an application with the regulatory authority for the release of all or part of a 

performance bond. Applications may be filed only at times or during seasons authorized by the regulatory authority in 

order to properly evaluate the completed reclamation operations. The times or seasons appropriate for the evaluation 

of certain types of reclamation shall be established in the regulatory program or identified in the mining and 

reclamation plan required in Subchapter G of this chapter and approved by the regulatory authority. 

(2) Within 30 days after an application for bond release has been filed with the regulatory authority, the 

operator shall submit a copy of an advertisement placed at least once a week for four successive weeks in a 

newspaper of general circulation in the locality of the surface coal mining operation. The advertisement shall be 

considered part of any bond release application and shall contain the permit number and approval date, notification of 

the precise location of the land affected, the number of acres, the type and amount of the bond filed and the portion 

sought to be released, the type and appropriate dates of reclamation work performed, a description of the results 

achieved as they relate to the operator's approved reclamation plan, and the name and address of the regulatory 

authority to which written comments, objections, or requests for public hearings and informal conferences on the 

specific bond release may be submitted pursuant to Section 800.40 (f) and (h). In addition, as part of any bond release 

application, the applicant shall submit copies of letters which he or she has sent to adjoining property owners, local 

governmental bodies, planning agencies, sewage and water treatment authorities, and water companies in the locality 
in which the surface coal mining and reclamation operation took place, notifying them of the intention to seek release 

from the bond. 

(b) Inspection by regulatory authority. 

(1) Upon receipt of the bond release application, the regulatory authority shall, within 30 days, or as soon 

thereafter as weather conditions permit, conduct an inspection and evaluation of the reclamation work involved. The 

evaluation shall consider, among other factors, the degree of difficulty to complete any remaining reclamation, 

whether pollution of surface and subsurface water is occurring, the probability of future occurrence of such pollution, 

and the estimated cost of abating such pollution. The surface owner, agent, or lessee shall be given notice of such 

inspection and may participate with the regulatory authority in making the bond release inspection. The regulatory 

authority may arrange with the permittee to allow access to the permit area, upon request by any person with an 

interest in bond release, for the purpose of gathering information relevant to the proceeding. 

(2) Within 60 days from the filing of the bond release application, if no public hearing is held pursuant to 

paragraph (f) of this section, or, within 30 days after a public hearing has been held pursuant to paragraph (f) of this 

section, the regulatory authority shall notify in writing the permittee, the surety or other persons with an interest in 

bond collateral who have requested notification under Section 800.21(f), and the persons who either filed objections 

in writing or objectors who were a party to the hearing proceedings, if any, of its decision to release or not to release 

all or part of the performance bond. 

(c) The regulatory authority may release all or part of the bond for the entire permit area or incremental area if the 

regulatory authority is satisfied that all the reclamation or a phase of the reclamation covered by the bond or portion 

thereof has been accomplished in accordance with the following schedules for reclamation of Phases I, II, and III: 

(1) At the completion of Phase I, after the operator completes the backfilling, regrading (which may include 

the replacement of topsoil) and drainage control of a bonded area in accordance with the approved reclamation plan, 

60 percent of the bond or collateral for the applicable area. 

(2) At the completion of Phase II, after revegetation has been established on the regraded mined lands in 

accordance with the approved reclamation plan, an additional amount of bond. When determining the amount of bond 

to be released after successful revegetation has been established, the regulatory authority shall retain that amount of 

bond for the revegetated area which would be sufficient to cover the cost of reestablishing revegetation if completed 

by a third party and for the period specified for operator responsibility in Section 515 of the Act for reestablishing 

revegetation. No part of the bond or deposit shall be released under this paragraph so long as the lands to which the 

release would be applicable are contributing suspended solids to streamflow or runoff outside the permit area in 

excess of the requirements set by Section 515(b)(10) of the Act and by Subchapter K of this chapter or until soil 

productivity for prime farmlands has returned to the equivalent levels of yield as nonmined land of the same soil type 

in the surrounding area under equivalent management practices as determined from the soil survey performed 

pursuant to Section 507(b)(16) of the Act and Part 823 of this chapter. Where a silt dam is to be retained as a 

permanent impoundment pursuant to Subchapter K of this chapter, the Phase II portion of the bond may be released 

under this paragraph so long as provisions for sound future maintenance by the operator or the landowner have been 

made with the regulatory authority. 

(3) At the completion of Phase III, after the operator has completed successfully all surface coal mining and 

reclamation activities, the release of the remaining portion of the bond, but not before the expiration of the period 

specified for operator responsibility in Section 816.116 or Section 817.116 of this chapter. However, no bond shall be 

fully released under provisions of this section until reclamation requirements of the Act and the permit are fully met. 

(d) If the regulatory authority disapproves the application for release of the bond or portion thereof, the regulatory 

authority shall notify the permittee, the surety, and any person with an interest in collateral as provided for in Section 

800.21(a)(4), in writing, stating the reasons for disapproval and recommending corrective actions necessary to secure 

the release and allowing an opportunity for a public hearing. 

(e) When any application for total or partial bond release is filed with the regulatory authority, the regulatory 

authority shall notify the municipality in which the surface coal mining operation is located by certified mail at least 30 

days prior to the release of all or a portion of the bond. 
(f) Any person with a valid legal interest which might be adversely affected by release of the bond, or the responsible 

officer or head of any Federal, State, or local governmental agency which has jurisdiction by law or special expertise 

with respect to any environmental, social, or economic impact involved in the operation or which is authorized to 

develop and enforce environmental standards with respect to such operations, shall have the right to file written 

objections to the proposed release from bond with the regulatory authority within 30 days after the last publication of 

the notice required by Section 800.40(a)(2). If written objections are filed and a hearing is requested, the regulatory 

authority shall inform all the interested parties of the time and place of the hearing, and shall hold a public hearing 

within 30 days after receipt of the request for the hearing. The date time, and location of the public hearing shall be 

advertised by the regulatory authority in a newspaper of general circulation in the locality for two consecutive weeks. 

The public hearing shall be held in the locality of the surface coal mining operation from which bond release is sought, 

at the location of the regulatory authority office, or at the State capital, at the option of the objector. 

(g) For the purpose of the hearing under paragraph (f) of this section, the regulatory authority shall have the authority 

to administer oaths, subpoena witnesses or written or printed material, compel the attendance of witnesses or the 

production of materials, and take evidence including, but not limited to, inspection of the land affected and other 

surface coal mining operations carried on by the applicant in the general vicinity. A verbatim record of each public 

hearing shall be made, and a transcript shall be made available on the motion of any party or by order of the 

regulatory authority. 

(h) Without prejudice to the right of an objector or the applicant, the regulatory authority may hold an informal 

conference as provided in Section 513(b) of the Act to resolve such written objections. The regulatory authority shall 

make a record of the informal conference unless waived by all parties, which shall be accessible to all parties. The 

regulatory authority shall also furnish all parties of the informal conference with a written finding of the regulatory 

authority based on the informal conference, and the reasons for said finding. 

SECTION 800.50 - FORFEITURE OF BONDS. 

(a) If an operator refuses or is unable to conduct reclamation of an unabated violation, if the terms of the permit are 

not met, or if the operator defaults on the conditions under which the bond was accepted, the regulatory authority 

shall take the following action to forfeit all or part of a bond or bonds for any permit area or an increment of a permit 

area: 

(1) Send written notification by certified mail, return receipt requested, to the permittee and the surety on 

the bond, if any, informing them of the determination to forfeit all or part of the bond, including 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. 

(2) Advise the permittee and surety, if applicable, of the conditions under which forfeiture may be avoided. 

Such conditions may include, but are not limited to -- 

(i) Agreement by the permittee or another party to perform reclamation operations in accordance 

with a compliance schedule which meets the conditions of the permit, the reclamation plan, and the regulatory 

program and a demonstration that such party has the ability to satisfy the conditions; or 

(ii) The regulatory authority may allow a surety to complete the reclamation plan, or the portion of 

the reclamation plan applicable to the bonded phase or increment, if the surety can demonstrate an ability to complete 

the reclamation in accordance with the approved reclamation plan. Except where the regulatory authority may 

approve partial release authorized under Section 800.40, no surety liability shall be released until successful 

completion of all reclamation under the terms of the permit, including applicable liability periods of Section 800.13. 

(b) In the event forfeiture of the bond is required by this section, the regulatory authority shall -- 

(1) Proceed 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 rights of appeal, if any, have not been 

exercised within a time established by the regulatory authority, or if such appeal, if taken, is unsuccessful. 

(2) Use funds collected from bond forfeiture to complete the reclamation plan, or portion thereof, on the 

permit area or increment, to which bond coverage applies. 
(c) Upon default, the regulatory authority may cause the forfeiture of any and all bonds deposited to complete 

reclamation for which the bonds were posted. Unless specifically limited, as provided in Section 800.11(d)(3), bond 

liability shall extend to the entire permit area under conditions of forfeiture. 

(d)(1) In the event the estimated amount forfeited is insufficient to pay for the full cost of reclamation, the operator 

shall be liable for remaining costs. The regulatory authority may complete, or authorize completion of, reclamation of 

the bonded area and may recover from the operator all costs of reclamation in excess of the amount forfeited. 

(2) In the event the amount of performance bond forfeited was more than the amount necessary to complete 

reclamation, the unused funds shall be returned by the regulatory authority to the party from whom they were 

collected. 

SECTION 800.60 - TERMS AND CONDITIONS FOR LIABILITY INSURANCE. 

(a) The regulatory authority shall require the applicant to submit as part of its permit application a certificate issued 

by an insurance company authorized to do business in the United States certifying that the applicant has a public 

liability insurance policy in force for the surface coal mining and reclamation operations for which the permit is 

sought. Such policy shall provide for personal injury and property damage protection in an amount adequate to 

compensate any persons injured or property damaged as a result of the surface coal mining and reclamation 

operations, including the use of explosives, and who are entitled to compensation under the applicable provisions of 

State law. Minimum insurance coverage for bodily injury and property damage shall be $300,000 for each occurrence 

and $500,000 aggregate. 

(b) The policy shall be maintained in full force during the life of the permit or any renewal thereof, including the 

liability period necessary to complete all reclamation operations under this chapter. 

(c) The policy shall include a rider requiring that the insurer notify the regulatory authority whenever substantive 

changes are made in the policy including any termination or failure to renew. 

(d) The regulatory authority may accept from the applicant, in lieu of a certificate for a public liability insurance 

policy, satisfactory evidence from the applicant that it satisfies applicable State self-insurance requirements approved 

as part of the regulatory program and the requirements of this section. 

SECTION 800.70 - BONDING FOR ANTHRACITE OPERATIONS IN PENNSYLVANIA. 

(a) All of the provisions of this Subchapter shall apply to bonding and insuring anthracite surface coal mining and 

reclamation operations in Pennsylvania except that -- 

(1) Specified bond limits shall be determined by the regulatory authority in accordance with applicable 

provisions of Pennsylvania statutes, rules and regulations promulgated thereunder, and implementing policies of the 

Pennsylvania Department of Environmental Resources. 

(2) The period of liability for responsibility under each bond shall be established for those operations in 

accordance with applicable laws of the State of Pennsylvania, rules and regulations promulgated thereunder, and 

implementing policies of the Pennsylvania Department of Environmental Resources. 

(b) Upon amendment of the Pennsylvania permanent regulatory program with respect to specified bond limits and 

period of revegetation responsibility for anthracite surface coal mining and reclamation operations, any person 

engaging in or seeking to engage in those operations shall comply with additional regulations the Secretary may issue 

as are necessary to meet the purposes of the Act. 
PARTS 801, 805, 807, 808, and 809 -- [REMOVED] 

 2. 30 CFR Parts 801, 805, 807, 808, and 809 are removed. 

PART 806 -- FORM, CONDITIONS, AND TERMS OF PERFORMANCE BONDS AND LIABILITY 

INSURANCE -- [AMENDED] 

SECTIONS 806.1, 806.11, 806.12, 806.13, 806.15, 806.16, AND 806.17 [REMOVED] 

 3. SECTIONS 806.1, 806.11, 806.12, 806.13, 806.15, 806.16, and 806.13 are removed. 

 

(Pub. L. 95-87, 30 U.S.C. 1201 et seq. ) 

[FR Doc. 83-19480 Filed 7-18-83; 8:45 am] 

BILLING CODE 4310-05-M