OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Search conducted by: Joyce Zweben Scall Page 1 of 4

COALEX STATE INQUIRY REPORT - 251

March 1993

Olga Brunning, Esquire

Department of Natural Resources

Tawes Building

580 Taylor Avenue

Annapolis, Maryland 21401

TOPIC: BOND FORFEITURE: INSUFFICIENT FUNDS FOR RECLAMATION

INQUIRY: What information is available on the regulatory authority's ability to seek 

additional remedies after an operator's bond has been forfeited and the permit revoked 

in situations where the amount of the bond was insufficient to cover the cost of the 

completed reclamation? [30 CFR 800.50(d)(1)] 

SEARCH RESULTS: Research was conducted using the COALEX Library and other 

LEXIS materials. A preamble to federal regulations and an OSM Directive were 

identified which state that in the event reclamation costs exceed forfeited bonds, the 

regulatory authority may recover the excess costs from the operator. Several 

administrative decisions were retrieved that address the issues of an operator's 

continued liability for reclamation even after bonds are forfeited and the need to ensure 

that the amount of the bonds are sufficient to cover reclamation in the event of 

forfeiture. Copies of the materials listed below are attached.

NOTE: Several of the retrieved items cite to a Tennessee case. The COALEX 

Researcher was unable to obtain a copy of the case for this Report. 

REGULATION HISTORY

48 FR 32932 (JULY 19, 1983). Final rule. Bond and insurance requirements.

From "The Discussion of Comments and Rules Adopted":

"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 Sec. 800.50 in paragraph (d)(1)."
OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Search conducted by: Joyce Zweben Scall Page 2 of 4

OSM DIRECTIVE, Subject No. REG-10, Transmittal No. 339, "Bond forfeiture" 

(Issued May 26, 1987).

3. Policy/Procedures.... c. Procedures when OSMRE is the Regulatory Authority...(7) 

Completion of Reclamation

"(a) In the event the amount forfeited is insufficient to pay for the full cost of reclamation, 

the AD or FOD [Field Office Director] may complete reclamation of the bonded area to 

the extent the forfeited funds allow and, with assistance from the Field Solicitor, 

implement actions to recover from the permittee the additional funds needed to fully 

reclaim the areas. If changes in the reclamation plan are needed, the ADFO [Assistant 

Director for Field Operations] or FOD will coordinate development of a new reclamation 

plan with the appropriate surface mining Federal agency, surface owner or Indian tribe."

INTERIOR ADMINISTRATIVE DECISIONS

H.C. BOSTIC COAL CO., INC. AND WAYNE BOSTIC v OSM, Docket Nos. NX 88-8-

R. et al. (1991).

Findings, Discussions, Conclusion.... 4. Liability Beyond The Bond Amount.

"Applicants incorrectly argue that after the state sought forfeiture of the bond and fully 

expended the money in attempting to reclaim the site that the state became solely 

responsible for the inadequate reclamation. The permittee's performance bond liability 

lasts until the reclamation requirements of the Act are achieved. See 30 C.F.R. 

800.12(a)(1). When an operator refuses or is unable to reclaim unabated violations, the 

state is required to pursue forfeiture of part or all of the bond. See 30 C.F.R. 800.50(a). 

However, if the bond amount does not satisfy the reclamation need, OSMRE can 

pursue further enforcement actions against the operator. The United States District 

Court for the Eastern District of Tennessee has upheld OSMRE's right to enforce 

reclamation where the bond money fully forfeited to the state was not sufficient. See 

United States v. Queen Mountain Mining, Inc., No. CV-3-85-344, 93 FED 3067 

(December 24, 1986) (OSMRE allowed to seek injunction because this is not the sort of 

situation where the regulators are seeking a double recovery)." 

INNOVATIVE DEVELOPMENT OF ENERGY, INC. v OSM, 110 IBLA 119, IBLA 88-55 

(1989).

HEADNOTES:... 4. Bonds: Forfeiture of

"Neither SMCRA nor Departmental regulations implementing SMCRA contains 

provisions which operate to release a minesite from regulatory enforcement when a 

reclamation bond is forfeited. Under the provisions of 30 U.S.C. Sec. 1259(b) (1982), an 

operator is liable for the duration of the surface coal mining and reclamation operation 

and for a period coincident with operator's responsibility for revegetation. The Act 
OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Search conducted by: Joyce Zweben Scall Page 3 of 4

contains no provision suggesting that the forfeiture of a performance bond creates a 

limitation upon the Federal regulation of a minesite subject to the Act."

ROBERT L. CLEWELL et al., 123 IBLA 253, IBLA 91-321 (1992).

HEADNOTES:... 5. Performance Bond or Deposit: Forfeiture

"Where reclamation costs exceed the amounts forfeited under a bond, the Board will not 

affirm the OSM decision that a state agency has taken appropriate action under 30 

U.S.C. Sec. 1271(a)(1) (1988) simply because a bond was ordered forfeited." 

STATE CASE LAW

STATE OF WEST VIRGINIA EX REL. LAUREL MOUNTAIN/FELLOWSVILLE AREA 

CLEAN WATERSHED ASSOCIATION, INC., et al. v CALLAGHAN, 418 SE 2d 580 

(W Va 1992).

SYLLABUS:

"2. Pursuant to 38 C.S.R Sec. 2-12.4(c) (1991), the Commissioner of the Division of 

Environmental Protection has a duty to utilize the proceeds from forfeited bonds to 

accomplish the completion of reclamation of affected lands of a surface mine." 

Also see STATE OF WEST VIRGINIA EX REL. WEST VIRGINIA HIGHLANDS 

CONSERVANCY, INC., et al. v CALLAGHAN, 447 SE 2d 920 (W Va 1994).

TRUSTEES FOR ALASKA v GORSUCH, 835 P 2d 1239 (Alaska 1992).

Trustees for Alaska challenged Alaska Department of Natural Resources' (DNR) 

issuance of a surface coal mining permit to Diamond Shamrock-Chuitna Coal Joint 

Venture claiming, in part, that DNR "violated ASCMCRA by approving a bond amount 

which 'does not reflect the cost of all reclamation which will need to be performed during 

the life of the permit.'" The court held: 

"DNR should recalculate the bonds so that they are 'sufficient to assure the completion 

of the reclamation plan by [DNR] in the event of forfeiture.' AS 27.21.160(a). This does 

not necessarily mean that DNR must require Diamond to post a bond equal to the total 

reclamation cost. DNR should calculate the bond assuming forfeiture at a time when 

unabated permit violations exist, though it need not assume that no reclamation will 

have taken place."

ATTACHMENTS

A. 48 FR 32932 (JULY 19, 1983). Final rule. Bond and insurance requirements. 
OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

U.S. Department of the Interior

Search conducted by: Joyce Zweben Scall Page 4 of 4

B. OSM DIRECTIVE, Subject No. REG-10, Transmittal No. 339, "Bond forfeiture" 

(Issued May 26, 1987). 

C. H.C. BOSTIC COAL CO., INC. AND WAYNE BOSTIC v OSM, Docket Nos. NX 

88-8-R. et al. (1991). 

D. INNOVATIVE DEVELOPMENT OF ENERGY, INC. v OSM, 110 IBLA 119, IBLA 

88-55 (1989). 

E. ROBERT L. CLEWELL et al., 123 IBLA 253, IBLA 91-321 (1992). 

F. STATE OF WEST VIRGINIA EX REL. LAUREL MOUNTAIN/FELLOWSVILLE 

AREA CLEAN WATERSHED ASSOCIATION, INC., et al. v CALLAGHAN, 418 

SE 2d 580 (W Va 1992). 

G. STATE OF WEST VIRGINIA EX REL. WEST VIRGINIA HIGHLANDS 

CONSERVANCY, INC., et al. v CALLAGHAN, 447 SE 2d 920 (W Va 1994). 

H. TRUSTEES FOR ALASKA v GORSUCH, 835 P 2d 1239 (Alaska 1992).