[Federal Register Volume 60, Number 192 (Wednesday, October 4, 1995)]
[Rules and Regulations]
[Pages 51900-51918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24580]



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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Part 948


West Virginia Regulatory Program

agency: Office of Surface Mining Reclamation and Enforcement (OSM), 
Interior.

action: Final rule; approval of amendment.

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summary: OSM is approving, with exceptions, an amendment to the West 
Virginia permanent regulatory program (hereinafter referred to as the 
West Virginia program). The amendment revises the State's bonding 
requirements and the acid mine drainage treatment provisions of the 
Special Reclamation Fund. The amendment will improve operational 
efficiency, clarify ambiguities, and revise the West Virginia program 
to be consistent with the Surface Mining Control and Reclamation Act of 
1977 (SMCRA) and the corresponding Federal regulations. Further 
amendments will be required to being the West Virginia Program into 
full compliance with SMCRA.

effective date: October 4, 1995. Approval dates of regulatory program 
amendments are listed in Sec. 948.15(o).

for further information contact: Mr. James C. Blankenship, Jr., 
Director, Charleston Field Office, Office of Surface Mining Reclamation 
and Enforcement, 1027 Virginia Street East, Charleston, West Virginia 
25301, Telephone (304) 347-7158.

supplementary information:

I. Background
II. Submission of the Proposed Amendment
III. Director's Findings
IV. Summary and Disposition of Comments
V. Director's Decision
VI. Procedural Determinations

I. Background

    SMCRA was passed in 1977 to address environmental and safety 
problems associated with coal mining. Under SMCRA, OSM works with 
States to ensure that coal mines are operated in a manner that protects 
citizens and the environment during mining, that the land is restored 
to beneficial use following mining, and that the effects of past mining 
at abandoned coal mines are mitigated.
    Many coal-producing States, including West Virginia, have sought 
and obtained approval from the Secretary of the Interior to carry out 
SMCRA's requirements within their borders. In becoming the primary 
enforcers of SMCRA, these ``primacy'' States accept a shared 
responsibility with OSM to achieve the goals of SMCRA. Such States join 
with OSM in a shared commitment to the protection of citizens--our 
primary customers--from abusive mining practices, to be responsive to 
their concerns, and to allow them full access to information needed to 
evaluate the effects of mining on their health, safety, general 
welfare, and property. This commitment also recognizes the need for 
clear, fair, and consistently applied policies that are not 
unnecessarily burdensome to the coal industry--producers of an 
important source of our Nation's energy.
    Under SMCRA, OSM sets minimum regulatory and reclamation standards. 
Each primacy State ensures that coal mines are operated and reclaimed 
in accordance with the standards in its approved State program. The 
States serve as the front-line authorities for implementation and 
enforcement of SMCRA, while OSM maintains a State performance 
evaluation role and provides funding and technical assistance to States 
to carry out their approved programs. OSM also is responsible for 
taking direct enforcement action in a primacy State, if needed, to 
protect the public in cases of imminent harm or, following appropriate 
notice to the State, when a State acts in an arbitrary and capricious 
manner in not taking needed enforcement actions required under its 
approved regulatory program.
    Currently there are 24 primacy States that administer and enforce 
regulatory programs under SMCRA. These States may amend their programs, 
with OSM approval, at any time so long as they remain no less effective 
than Federal regulatory requirements. In addition, whenever SMCRA or 
implementing Federal regulations are revised, OSM is required to notify 
the States of the changes so that they can revise their programs 
accordingly to remain no less effective than the Federal requirements.
    A major goal of SMCRA is to ensure adequate reclamation of all 
areas disturbed by coal mining. To accomplish this, mining is allowed 
to proceed only after an operator has filed a performance bond of 
sufficient amount to ensure completion of reclamation. In the event of 
bond forfeiture, the regulatory authority uses the performance bond 
money to contract for the necessary reclamation work. SMCRA also allows 
for the adoption of an alternative bonding system so long as it 
achieves the purposes and objectives of the conventional bonding system 
described above. Under an alternative bonding system, rather than 
posting full-cost reclamation bonds, an operator is allowed to 
participate in a bond pool or other financial mechanism that is to 
provide sufficient revenue at any time to complete reclamation in the 
event of bond forfeiture.
    As part of their approved programs, primacy States have adopted 
procedures consistent with Federal bonding requirements. The Secretary 
conditionally approved West Virginia's alternative bonding system on 
January 21, 1981 (46 FR 5326). After receipt of a required actuarial 
study, the Secretary fully approved the State's alternative bonding 
system on March 1, 1983 (48 FR 8448).
    Background information on the West Virginia program, including the 
Secretary's findings, the disposition of comments, and the conditions 
of approval can be found in the January 21, 1981, Federal Register (46 
FR 5915). Subsequent actions concerning the conditions of approval and 
program amendments can be found at 30 CFR 948.10, 948.12, 948.13, 
948.15, and 948.16.

II. Submission of the Proposed Amendment

    On October 1, 1991, OSM notified West Virginia that it needed to 
amend its alternative bonding system to be in compliance with sections 
509(c) and 519(b) and 519(c)(3) of SMCRA (Administrative Record No. WV-
878). OSM's annual reviews of the West Virginia program had found that 
the 

[[Page 51901]]
State's alternative bonding system no longer met the requirements for 
such systems because, as of June 30, 1990, liabilities exceeded assets 
by $6.2 million dollars. OSM also informed the State that its 
alternative bonding system must provide for the abatement or treatment 
of polluted water flowing from permanent program bond forfeiture sites 
unless its approved program included another form of financial 
guarantee to provide for water treatment. The proposed amendment now 
under consideration was submitted to OSM in response to this letter and 
concurrent State initiatives to address bonding and water quality 
problems.
    In a series of three letters dated June 28, 1993, and July 30, 1993 
(Administrative Record Nos. WV-888, WV-889 and WV-893), the West 
Virginia Division of Environmental Protection (WVDEP) submitted an 
amendment to its approved permanent regulatory program that included 
numerous revisions to the West Virginia Surface Coal Mining and 
Reclamation Act (referred to herein as ``the Act,'' WVSCMRA Sec. 22A-3-
1 et seq.) and the West Virginia Surface Mining Reclamation Regulations 
(CSR Sec. 38-2-1 et seq.). OSM grouped the proposed revisions that 
concern bonding into one amendment that is the subject of this notice. 
The main provisions of the amendment will:
     Allow for the selection and prioritization of bond 
forfeiture sites to be reclaimed;
     Limit administrative expenditures from the Special 
Reclamation Fund to an amount not to exceed 10 percent of the total 
annual assets in the Fund;
     Raise the special reclamation tax from one cent to three 
cents per ton and provide for the collection of the tax whenever 
liabilities exceed assets;
     Require site-specific bonds that reflect the relative 
potential cost of reclamation but do not exceed $5,000 per acre;
     Allow for the use of incremental and open-acre bonds;
     Require penal bonds instead of performance bonds; and
     Require bond forfeiture sites to be reclaimed in 
accordance with the approved reclamation plan or modifications thereof.
    OSM announced receipt of the proposed amendment in the August 12, 
1993, Federal Register (58 FR 42903) and invited public comment on its 
adequacy. Following this initial comment period, WVDEP revised the 
amendment on August 18, 1994, September 1, 1994, and May 16, 1995 
(Administrative Record Nos. WV-933, WV-937, and WV-979B). OSM reopened 
the comment period on August 31, 1994 (59 FR 44953), September 29, 1994 
(59 FR 49619), and May 19, 1995 (60 FR 26855), and held public meetings 
in Charleston, West Virginia on September 7, 1993, October 27, 1994, 
and May 30, 1995.

III. Director's Findings

A. Proposed Revisions to the West Virginia Surface Coal Mining and 
Reclamation Act (WVSCMRA)

1. Sec. 22-3-11: Bonds; Amount and Method of Bonding; Bonding 
Requirements; Special Reclamation Tax and Fund; Prohibited Acts; Period 
of Bond Liability
    a. Sec. 22-3-11(a): Penal Bonds. West Virginia proposes to revise 
its Code to require that penal bonds payable to the State of West 
Virginia be furnished by each operator before a permit is issued. The 
reference to ``performance bond'' has been changed to either ``penal 
bond'' or ``bond'' throughout Sec. 22-3-11 to reflect this proposed 
revision. Section 509(a) of SMCRA and 30 CFR 800.11(a) require that a 
performance bond be furnished by each operator before a permit is 
issued. A penal bond differs from a performance bond in that, in the 
event of forfeiture, the State retains the entire amount of the bond 
without regard to the cost of reclamation. Under a performance bond, 
any funds not used to reclaim the site for which the bond was forfeited 
must be returned to the operator.
    West Virginia's proposed requirement that the total bond or 
collateral amount be forfeited and deposited in the State's reclamation 
fund lies within the discretion provided to the States by section 
509(c) of SMCRA. SMCRA authorizes States to establish alternative 
bonding systems that will achieve the objectives and purposes of the 
bonding program otherwise required by SMCRA. The penal bond provisions 
provide substantial economic incentive for the operator to complete the 
required reclamation of the permitted area. This is consistent with 30 
CFR 800.11(e)(2) which provides that an alternative bonding system must 
include a substantial economic incentive for the permittee to comply 
with all reclamation provisions. Also, while the court in In re 
Permanent Surface Mining Regulation Litigation held that OSM cannot 
approve penal bonds in a State program under SMCRA in a conventional 
bonding system, this decision does not prohibit the approval of penal 
bonds when the State independently authorizes them by statute, not by a 
rule promulgated under the authority of SMCRA. In re Permanent Surface 
Mining Regulation Litigation, 14 ERC 1083, 1100-01 (D.D.C., 1980) and 
Civ. No. 79-1144, mem. op. at 48-49 (D.D.C., May 16, 1980) as stayed in 
part on August 15, 1980. Therefore, the Director finds the proposed 
amendment is not inconsistent with SMCRA or the Federal regulations and 
is hereby approved.
    b. Sec. 22-3-11(g): Special Reclamation Fund. The West Virginia 
alternative bonding system was conditionally approved by the Secretary 
on January 21, 1981, and the condition on the approval was removed on 
March 1, 1983 (46 FR 5954 and 48 FR 8448). This approval was granted 
under section 509(c) of SMCRA, which allows for the approval of an 
alternative bonding system that will achieve the objectives and 
purposes of section 509. In drafting section 509(c), Congress was not 
specific on how alternative bonding programs such as West Virginia's 
should be financed. The only test applicable is whether the proposed 
alternative system achieves the objectives and purposes of a 
conventional bonding system as expressed in section 509 of SMCRA and as 
implemented by 30 CFR 800.11(e).
    (1) West Virginia is revising Sec. 22-3-11(g) to allow development 
of a long-range planning process for selection and prioritization of 
sites to be reclaimed so as to avoid inordinate short-term obligations 
of the fund's assets of such magnitude that the solvency of the fund is 
jeopardized.
    Section 509(a) of SMCRA requires the operator to post a reclamation 
bond that is sufficient to assure completion of the reclamation plan 
for that permitted site if the work must be performed by the regulatory 
authority. In addition, 30 CFR 800.50(b)(2) requires the regulatory 
authority to use funds collected from bond forfeiture to complete the 
reclamation plan for the site to which bond coverage applies. Section 
509(c) of SMCRA and 30 CFR 800.11(e) are silent on the question of 
prioritizing sites for reclamation, but both imply that the funds 
necessary for adequate reclamation must be readily available. 
Specifically, 30 CFR 800.11(e)(1) specifies that an alternative bonding 
system must ensure that ``the regulatory authority will have sufficient 
money to complete the reclamation plan for any areas which may be in 
default at any time.''
    However, since the State's regulations at CSR 38-2-12.4(c) provide 
that reclamation operations must be initiated within 180 days following 
final forfeiture notice, a planning process for selection and 
prioritization of sites to be reclaimed should not adversely impact the 
requirement that all sites for which 

[[Page 51902]]
bonds are posted be reclaimed in accordance with their reclamation 
plans.
    Therefore, to the extent that the proposed provision provides only 
for a ranking of sites for reclamation without compromising the 
requirement that all sites for which bonds were posted be properly and 
timely reclaimed, this provision is not inconsistent with the bond 
forfeiture provisions at section 509(a) of SMCRA and 30 CFR 
800.50(b)(2), or the alternative bonding system criteria of 30 CFR 
800.11(e). The proposed provision on the selection and prioritizing of 
forfeiture sites is hereby approved.
    (2) West Virginia proposes to revise Sec. 22-3-11(g) to specify 
that the Director of WVDEP may expend up to 25 percent of the annual 
amount of fee collections of the special reclamation fund to design, 
construct, and maintain water treatment systems when they are required 
to complete reclamation of bond forfeiture sites.
    For conventional bonds, 30 CFR 800.14(b) provides that ``the amount 
of the bond shall be sufficient to assure the completion of the 
reclamation plan if the work had to be performed by the regulatory 
authority in the event of forfeiture.'' Under 30 CFR 780.18(b)(9), 
780.21(h), 784.13(b)(9), and 784.14(g), the reclamation plan must 
include the steps to be taken to comply with all applicable effluent 
limitations and State and Federal water quality laws and regulations. 
These steps include treatment. Therefore, when the mining and 
reclamation plan indicates that treatment will be needed on a temporary 
basis during mining and the early stages of reclamation, the bond must 
be calculated to include an amount adequate to provide for continued 
temporary treatment in the event forfeiture occurs within the timeframe 
during which treatment is needed.
    Also, under 30 CFR 800.15(a), the regulatory authority is required 
to adjust the amount and terms of a conventional bond whenever the cost 
of future reclamation changes. Therefore, if an unanticipated treatment 
need arises, the regulatory authority has an obligation to order an 
increase in the minimum bond required for the site. This amount must be 
adequate to cover all foreseeable treatment costs. This interpretation 
is consistent with the preamble to 30 CFR 800.17, which under the 
heading ``Section 800.17(c)'' states that:

    Performance bonding continues to be required at Sec. 800.17(a) 
for surface disturbances incident to underground mining to ensure 
that the reclamation plan is completed for those areas. Completion 
of the reclamation plan as it relates to mine drainage and 
protection of the hydrologic balance would continue to be covered by 
the bond with respect to requirements included in Sec. 784.14. 48 FR 
32948, July 19, 1983.

    Sections 780.21(h) and 784.14(g) require a hydrologic reclamation 
plan showing how surface and underground mining operations will comply 
with applicable State and Federal water quality laws and regulations. 
Furthermore, section 519(b) of SMCRA requires the regulatory authority, 
when evaluating bond release requests, to consider whether pollution of 
surface and ground water is occurring, the probability of any 
continuing pollution, and the estimated cost of abating such pollution. 
Section 519(c)(3) of SMCRA and the implementing regulations at 30 CFR 
800.40(c)(3) provide that no bond shall be fully released until all the 
reclamation requirements of the Act, the regulatory program, and the 
permit have been met. These requirements include abatement of surface 
and ground water pollution resulting from the operation.
    The preamble to 30 CFR 700.11(d) clarifies that the regulatory 
authority may release the bond and terminate jurisdiction over a site 
with ongoing treatment needs, but only if an enforceable mechanism such 
as a contract or a trust fund of sufficient duration and with adequate 
resources exists to ensure that treatment continues once jurisdiction 
is terminated. See 53 FR 44361-62, November 2, 1988.
    Section 509(c) of SMCRA authorizes the Secretary to approve an 
alternative bonding system if it will achieve the objectives and 
purposes of the otherwise mandatory conventional bonding program. As 
noted previously in this preamble, Section 519(c)(3) of SMCRA provides 
final bond release shall not occur ``until all reclamation requirements 
of this Act are fully met.'' The Federal regulations at 30 CFR 
800.11(e)(1) require that this system ensure that the regulatory 
authority has sufficient funds to assure completion of the reclamation 
plan, which includes treatment to meet State and Federal water quality 
requirements.
    Therefore, to be in accordance with the above-referenced sections 
of SMCRA and the Federal regulations, an alternative bonding system 
must provide for complete abatement or treatment of water pollution 
from bond forfeiture sites. If particular sites were bonded with 
conventional bonds, such bonds would have to be sufficient to address 
all reclamation obligations on site, and none of these site-specific 
bonds could be ``fully released until all reclamation requirements of 
this Act are fully met.'' See SMCRA Section 519(c)(3). Similarly, OSM 
cannot allow States to set a predetermined limit on the amount of funds 
expended on any aspect of bond forfeiture reclamation, including water 
treatment. Such a limit, whether it be 25 percent of total annual 
revenues or any other predetermined amount, arbitrarily restricts 
expenditures for water treatment purposes, without regard to the amount 
needed to adequately treat each site so that it meets applicable 
effluent limits and water quality standards. In effect, such a limit 
means that sites covered by the alternative bonding system would be 
covered by bonds which are not ``sufficient to assure the completion of 
the reclamation plan if the work had to be performed by the regulatory 
authority in the event of forfeiture.'' See SMCRA Section 509(a). In 
other words, the State cannot be certain, in advance, that only 25 
percent of the total annual revenues of the special reclamation fund 
will be needed to accomplish the water treatment objectives for all 
bond forfeiture sites, since the alternative bonding system must assume 
all reclamation-related responsibilities, including water treatment, 
for a participant who defaults on his or her reclamation obligations.
    Therefore, the Director is not approving the proposed revision to 
the extent that water treatment on bond forfeiture sites is made 
discretionary (use of the word ``may'' instead of ``shall''). 
Similarly, the Director is not approving this proposed revision to the 
extent that it limits expenditures for water treatment to 25 percent of 
the fees collected annually for the special reclamation fund. The 
Director is requiring West Virginia to amend its program to remove the 
25 percent limitation or to otherwise provide for the treatment of 
polluted water discharged from all bond forfeiture sites. The cost of 
water treatment at existing bond forfeiture sites may be addressed by 
program amendments that increase the special reclamation tax or provide 
additional funding from other sources. The cost of water treatment at 
future bond forfeiture sites may be addressed by adjusting site-
specific bonds for water treatment at future bond forfeiture sites may 
be addressed by adjusting site-specific bonds for water treatment where 
necessary, or by implementing the environmental security account 
envisioned in CSR Sec. 38-2-11.7, or by increasing the special 
reclamation tax to cover the additional cost of water treatment.
    (3) West Virginia proposes to revise Sec. 22-3-11(g) to require 
that monies accrued in the special reclamation fund, including 
interest, be used solely and exclusively for the purposes set forth in 

[[Page 51903]]
subsection (g). This provision clarifies that the fund can only be used 
for specific purposes and cannot be used to finance other State 
programs. Furthermore, West Virginia proposes to revise Sec. 22-3-11(g) 
by limiting the amount the Director of the WVDEP may expend on 
administrative expenses to an amount not to exceed 10 percent of the 
total annual assets in the special reclamation fund. Such 
administrative funds can only be used to implement and administer the 
provisions of articles 2, 3, and 4 of chapter 22 of the West Virginia 
Code and, as they apply to the surface mine board, articles 1 and 4 of 
chapter 22b of the West Virginia Code. This revision gives the Director 
of WVDEP discretionary power to allocate 10 percent of the total annual 
assets in the special reclamation fund to administrative costs incurred 
under the abandoned mine land program, the mining and reclamation 
program, the minerals other than coal program, and the Surface Mine 
Board.
    OSM expressed concern about the State using money from the fund for 
any expense not related to bond forfeiture reclamation since the fund's 
liabilities now exceed its assets. In response, the State indicated 
that the 10 percent amount generally is expended exclusively for 
administration of the bond forfeiture/special reclamation program 
(Administrative Record No. WV-916).
    While there is no direct Federal counterpart authorizing 
expenditures of bond forfeiture funds for the purpose of administrative 
expenses, the Director finds that this provision is not inconsistent 
with the objectives and purposes of section 509 of SMCRA. The Director 
is approving this revision to Sec. 22-3-11(g) to the extent that the 
special reclamation fund can withstand administrative cost withdrawals 
without hampering the State's ability to complete reclamation of bond 
forfeiture a sites.
(4) Special Reclamation Tax
    (a) West Virginia proposes to revise Sec. 22-3-11(g) to increase 
the fee paid into the special reclamation fund from one cent to three 
cents per ton of clean coal mined and to clarify how the fee is to be 
collected. Section 509(c) of SMCRA and 30 CFR 800.11(e) of the Federal 
regulations do not specify the types of revenue-raising mechanisms. The 
Director is therefore approving these revisions because, under SMCRA, 
States have discretion in how to collect revenue to support alternative 
bonding systems and because the proposed tax increase will improve the 
financial condition of the fund.
    (b) West Virginia proposes to add a provision to Sec. 22-3-11(g) to 
require that every person liable for payment of the special reclamation 
tax pay the amount due without notice or demand for payment. The Tax 
Commissioner must provide the Director of the WVDEP a quarterly listing 
of all persons known to be delinquent in payment of the special tax. 
The Director of the WVDEP may take such delinquencies into account in 
making determinations on the issuance, renewal, or revision of any 
permit. Although there are no direct Federal counterparts to these 
provisions, the Director finds that they are a reasonable means of 
enforcing fee payment requirements and are hereby approved.
    (c) West Virginia also proposes to revise Sec. 22-3-11(g) by adding 
a requirement that the special reclamation tax be collected from every 
person conducting coal surface mining operations whenever the 
liabilities of the State for bond forfeiture reclamation exceed the 
accrued amount in the special reclamation fund. In conjunction with 
this new provision, the State is proposing to remove the requirement 
for a one million dollar cash reserve.
    Existing State law requires that the special reclamation tax be 
collected whenever the assets in the fund fall below one million 
dollars and to continue to be collected until assets exceeded two 
million dollars. This provision under normal circumstances enables the 
fund to maintain a cash balance to reclaim sites as they were 
forfeited.
    Section 509(c) of SMCRA requires that, under an alternative bonding 
system, the regulatory authority must have available sufficient money 
to complete the reclamation plan for any site that may be in default at 
any time. An alternative bonding system cannot be allowed to incur a 
deficit if it is to have available adequate revenues to complete the 
reclamation of all outstanding bond forfeiture sites. Under a 
conventional bonding system, an operator must post a full-cost 
reclamation bond that is sufficient to cover the cost of reclamation 
during the life of the operation. Periodic adjustments in bond amounts 
are required to ensure that the bond is adequate to cover the cost of 
reclamation, including water treatment, at any time. Under an 
alternative bonding system, the sit-specific bond does not have to be 
sufficient to cover the cost of reclamation. However, alternative 
bonding systems must include reserves and revenue-raising mechanisms 
adequate to ensure completion of the reclamation plan and fulfillment 
of the permittee's obligations, including any treatment needs.
    Although the proposed site-specific bonding rates are significantly 
higher than the State's existing flat rate bond of $1,000 per acre and 
the State is proposing to increase its special reclamation tax from one 
cent to three cents per ton of mined coal to generate more revenue for 
the fund, State records indicate that the proposed bonding rates and 
the increase in revenues are still insufficient to ensure complete 
reclamation, including water treatment, at all bond forfeiture sites.
    Therefore, the Director is disapproving the proposal to the extent 
that it would allow the special reclamation fund to incur a deficit. He 
is requiring West Virginia to remove the provision that allows 
collection of the special reclamation tax only when the bond forfeiture 
liabilities of the State exceed the fund's assets.
    (d) West Virginia proposed new provisions to require the Tax 
Commissioner to deposit the fees collected with the State Treasurer to 
the credit of the special reclamation fund. Monies in the fund must be 
placed in an interest-bearing account with interest being returned to 
the fund on an annual basis. This proposed revision will improve the 
financial condition of the fund and is hereby approved.
2. Sec. 22-3-12: Site-Specific Bonding
    West Virginia proposes to develop and implement a site specific 
bonding system. Under the proposed system, the amount of the penal bond 
can not be less that $1,000 nor more than $5,000 per acre, and the bond 
must reflect the relative cost of reclamation associated with the 
activities to be permitted. The types of mining, mining techniques, 
mining methods, equipment, support facilities, topography, geology, and 
effect on water quality are among the factors that must be considered 
in determining the amount of site-specific bond. In addition, type of 
application, environmental enhancement, mining experience of the 
applicant, and compliance history of the applicant are among the 
factors that the Director of WVDEP may consider in determining the 
amount of site-specific bond.
    The State's development of site-specific bonding requirements 
should provide greater assurance that reclamation will be completed by 
the permittee and will improve the financial stability of the special 
reclamation fund. The increase in bond should also provide a 
substantial economic incentive for the permittee to comply with all 
reclamation requirements to avoid the economic loss in case of bond 

[[Page 51904]]
forfeiture. Therefore, the Director finds this provision is not 
inconsistent with the requirements of section 509(c) of SMCRA and 30 
CFR 800.11(e) of the Federal regulations. Subsection 12 is hereby 
approved.

B. Proposed Revisions to the West Virginia Surface Mining Reclamation 
Regulations

1. CSR Sec. 38-2-11.2: All Bonds
    a. The State proposes to delete old subsection 11.2(c), which 
required a written notification to a permittee who is without bond 
coverage and required the cessation of mining until bond replacement. 
The State proposes to revise subsection 11.2(d), which requires the 
Director of the WVDEP to issue a notice of violation against any 
operator who is without bond coverage. The notice of violation now must 
provide that bond coverage be replaced within 15 days instead of 90 
days. Mining cannot resume until an acceptable form of bond has been 
posted.
    The Federal regulation at 30 CFR 800.16(e)(2) has provisions which 
require the regulatory authority, upon notification that an operator is 
without bond coverage, to notify the operator, in writing, to replace 
bond coverage within a reasonable period, not to exceed 90 days. 
Section 800.16(e)(2) does not specify the form of written notification 
and only specifies the maximum period for bond replacement. The 
Director considers West Virginia's proposed requirement for replacement 
of bond coverage within 15 days of a notice of violation to be a 
reasonable period of time as required by 30 CFR 800.16(e)(2). Section 
800.16(e)(2) also requires that mining operations shall not resume 
until the regulatory authority has determined that an acceptable bond 
has been posted. Therefore, the Director finds the deletion of old 
subsection 11.2(c) and the resultant revision of CSR Sec. 38-2-11.2(d) 
do not render the revised provisions less effective than 30 CFR 
800.16(e)(2).
    However, the Director notes that new subsection 
11.3(b)(1)(G)(vii)(III), in its provision for issuance of a notice of 
violation against any operator who is without bond coverage, still 
retains the requirement that a notice of violation specify a reasonable 
period to replace bond coverage, not to exceed 90 days. The Director 
suggests that retention of the 90 day period for replacement of bond 
coverage in this provision was probably an oversight by the State, and 
it, therefore, should be removed.
    b. The State also proposes to add subsection 11.2(e) to allow the 
Director of WVDEP to require a showing that the bond is sufficient or 
the assignee has the capability or financial resources to assume the 
liability for bonds and permits which are transferred, assigned, or 
sold and which have significant long-term environmental liability. 
Although there is no direct Federal counterpart to this provision in 30 
CFR Part 800, the Federal regulations at 30 CFR 774.17(b)(3) require 
that an applicant for transfer, assignment, or sale of permit rights 
obtain appropriate performance bond coverage in an amount sufficient to 
cover the proposed operations. Therefore, the Director finds that CSR 
Sec. 38-2-11.2(e) is not inconsistent with the Federal bonding 
requirements at 30 CFR Part 800 or the Federal permitting requirements 
at 30 CFR 774.17(b)(3). Subsection 11.2(e) is hereby approved.
    c. The Director notes that West Virginia needs to amend its 
regulations at CSR Sec. 38-2-11.2(b) to delete the word ``performance'' 
in order to remain consistent with its new penal bond requirements.
2. CSR Sec. 39-2-11.3: Bond Instruments
    The State proposes to revise and reorganize its surety bonding, 
collateral bonding, escrow bonding, self-bonding, and combined surety/
escrow bonding requirements into new subsection 11.3, entitled ``Bond 
Instruments.'' The provisions for surety bonds at old subsection 11.3 
are now located at subsection 11.3(a); the provisions for collateral 
bond at old subsection 11.4 were reorganized at subsection 11.3(b); the 
provisions for escrow bonding at old subsection 11.5 were relocated to 
subsection 11.3(c); the provisions for self-bonding at old subsection 
11.6 are now at subsection 11.3(d); and the provisions for combined 
surety/escrow bonding at old subsection 11.7 were reorganized at 
subsection 11.3(e). The substantive revisions proposed for the various 
types of bonding instruments are discussed below.
a. Subsection 11.3(a): Surety Bonds
    (1) At subsection 11.3(a)(1), West Virginia added the requirement 
that a surety bond be approved by the Director of WVDEP. Although the 
Federal counterpart regulation at 30 CFR 800.20(a) does not contain 
this provision, the Federal regulations at 30 CFR 800.11 do require 
that before a permit is issued the operator file a bond which is 
acceptable to the regulatory authority. Therefore, the Director finds 
that CSR Sec. 38-2-11.3(a)(1) is consistent with 30 CFR 800.20(a) and 
is hereby approved.
    (2) At subsection 11.3(a)(2), the State proposes to delete the 
requirement that the surety be notified within 30 days after receipt of 
a request for bond adjustment. This provision is duplicative of a 
provision for notification to the surety in the State's regulations at 
subsection 12.3. Therefore, since subsection 12.3 is referenced in 
subsection 11.3(a)(2), the Director finds this deletion does not render 
the surety bond regulation at CSR Sec. 38-2-11.3(a)(2) less effective 
than the Federal counterpart at 30 CFR 800.20(b), and he is, therefore, 
approving it.
b. Subsection 11.3(b): Collateral Bonds
    (1) West Virginia proposed a revision to subsection 11.3(b) to 
clarify that collateral bonds ``will be negotiable and guaranteed.'' 
Although the Federal regulations at 30 CFR 800.21 do not contain this 
clarifying language, the collateral bond definition at Sec. 800.5(b) 
does require all forms of collateral bond to be negotiable and 
guaranteed. Therefore, the Director finds that subsection 11.3(b) does 
not render the collateral bond provisions of CSR Sec. 38-2-11.3 less 
effective than the counterpart provisions of 30 CFR 800.21. Subsection 
11.3(b) is hereby approved.
    (2) West Virginia proposes to revise subsection 11.3(b)(1)(A) by 
requiring that bonds used as collateral shall be bonds of the United 
States or its possessions. These forms of bond satisfy the definition 
of ``collateral bond'' at 30 CFR 800.5. The Director therefore finds 
the revision of CSR Sec. 38-2-11.3(b)(1)(A) is no less effective than 
30 CFR 800.5 and is hereby approved.
    The Director notes, however, that Sec. 22-3-11(c)(1) of WVSCMRA 
still allows bonds of the Federal Land Bank or of the homeowners' loan 
corporation to be used as collateral bond. He is advising West Virginia 
that this provision should be removed to eliminate the inconsistency 
between the State's statute and regulations. Furthermore, it is the 
Director's understanding that such financial institutions no longer 
exist in the State.
    (3) West Virginia is proposing to add full faith and credit general 
obligation bonds of the State of West Virginia, or other States, and 
any county, district municipality of the State of West Virginia or 
other States as acceptable forms of collateral bond. Since the 
definition of ``collateral bond'' at 30 CFR 800.5 includes negotiable 
bonds of a State or a municipality, the Director finds West Virginia's 
provision for these forms of bond at CSR Sec. 38-2-11.3(b)(1)(B) is no 
less effective than the collateral bond provisions at 30 CFR 

[[Page 51905]]
800.21. This revision of subsection 11.3(b)(1)(B) is hereby approved.
    (4) West Virginia proposes to delete subsection 11.4(a)(2), which 
requires the regulatory authority to value collateral at its current 
market value, not at face value. West Virginia's Code and regulations 
consistently refer to market value in relation to collateral bond. The 
State's Code at Sec. 22-3-11(c)(1) requires the market value of 
collateral bond to be equal to or greater than the sum of the bond. 
This is consistent with 30 CFR 800.21(e)(2), which requires that at no 
time can the bond value of collateral exceed the market value. Also, 
West Virginia's regulations at CSR Sec. 38-2-11.3(b)(8) require that 
bond value be evaluated relative to market value for all collateral 
posted. For these reasons, the Director finds that this deletion does 
not render West Virginia's collateral bond provisions at CSR Sec. 38-2-
11.3(b) less effective than the Federal provisions at 30 CFR 800.21.
    (5) West Virginia proposes to revise CSR Sec. 38-2-
11.3(b)(1)(G)(ii) by changing the phrase ``if not replaced by other 
suitable evidence of financial responsibility'' with the phrase ``if 
not replaced by other suitable bond or letter of credit.'' This revised 
language is substantively identical to 30 CFR 800.21(b)(2) which 
requires that letters of credit utilized as securities in areas 
requiring continuous bond coverage shall be forfeited and collected, if 
not replaced by other suitable bonds or letters of credit. Therefore, 
the Director finds West Virginia's revised regulation is no less 
effective than the Federal regulation and is hereby approved.
    (6) At subsection 11.3(b)(4), the State is requiring the maximum 
insurable amount for individual certificates to be determined only by 
the Federal Deposit Insurance Corporation (FDIC) by removing its 
reference to the Federal Savings and Loan Insurance Corporation 
(FSLIC). Because the functions of the FSLIC were transferred to FDIC in 
1989, the Director finds West Virginia's revised regulation at CSR 
Sec. 38-2-11.3(b)(4) is no less effective than the Federal regulation 
at 30 CFR 800.21(a)(4) and is hereby approved.
    (7) West Virginia proposes to delete 11.4(a)(7) which required the 
applicant to deposit sufficient amounts of certificates of deposit to 
assure that the WVDEP could liquidate them prior to maturity, upon 
forfeiture, for the amount of the bond required. Neither SMCRA nor the 
Federal regulations at 30 CFR 800.21 include a similar provision. 
Therefore, the Director finds the deletion of this provision does not 
render the West Virginia program less effective than SMCRA or the 
Federal regulations.
    (8) West Virginia proposed to amend subsection 11.3(b)(8) by 
rewording the requirement that ``in no case shall the bond value exceed 
the market value'' to ``in no case shall the market value be less than 
the required bond value.'' Although the Federal regulation at 30 CFR 
800.21(e)(2) retains the replaced language, West Virginia's rewording 
does not change the meaning of the requirement. Both require that the 
market value of collateral be equal to or greater than the required 
bond value. Therefore, the Director finds the revision at CSR Sec. 38-
2-11.3(b)(8) does not render it less effective than 30 CFR 800.21(e) 
and is hereby approved.
    (9) The State is proposing to add a new provision at subsection 
11.3(b)(9) which allows certain collateral bonds for permits issued 
prior to January 1, 1993, to remain in effect unless the bond is 
determined to be insufficient or otherwise invalid. The West Virginia 
program at subsection 2.26 specifically identifies the types of 
collateral that could be used as a collateral bond prior to January 1, 
1993. Therefore, the Director finds that the new provision at 
subsection 11.3(b)(9) does not render West Virginia's collateral bond 
provisions at CSR Sec. 38-2-11.3(b) less effective than the Federal 
collateral bond provisions at 30 CFR 800.21. Subsection 11.3(b)(9) is 
hereby approved.
c. Subsection 11.3(c): Escrow Bonding
    At subsection 11.3(c)(2), West Virginia is removing the FSLIC as an 
example of a Federal insurance program. This subsection still requires 
that escrow funds in Federally insured accounts are not to exceed the 
maximum insured amount under applicable Federal insurance programs such 
as FDIC. The revised Federal regulations no longer contain separate 
provisions governing escrow bonds, as they are now considered to be 
cash accounts. Since the FSLIC no longer exists, the Director finds 
this deletion does not render CSR 38-2-11.3(c)(2) less effective than 
30 CFR 800.21(d)(4) for cash accounts.
d. Subsection 11.3(d): Self-Bonding
    (1) West Virginia proposes to revise subsection 11.3(d)(5)(E) by 
deleting the phrase ``if permitted under State law.'' The deletion 
would clarify that indemnity agreements may operate as judgments under 
forfeiture conditions. Since revised subsection 11.3(d)(5)(E) contains 
self-bonding provisions which are substantively the same as that of the 
Federal counterpart regulation, the Director finds the State's 
regulation is no less effective than the Federal regulation at 30 CFR 
800.23(e)(4). Subsection 11.3(d)(5)(E) is hereby approved.
    (2) The State proposes to delete existing CSR Sec. 38-2-11.6(h) 
which requires the issuance of a notice of violation for failure to 
have adequate bond coverage. This provision is duplicative of a 
provision in subsection 11.2(d) under the general requirements for all 
bonds. Therefore, the Director finds this proposed deletion does not 
render West Virginia's regulations at new CSR 38-2-11.3(d) less 
effective than the Federal regulations at 30 CFR 800.23.
3. CSR Sec. 38-2-11.4: Incremental Bonding
    a. West Virginia proposed to revise subsection 11.4(a)(1) to 
require a bond in the appropriate amount be filed for the initial 
increment and each succeeding increment of land to be mined within the 
permit area prior to any land disturbance. Also, existing subsection 
11.8(a)(3) was deleted as its substantive requirements are contained in 
subsection 11.4(a)(1). The incremental bonding provisions at subsection 
11.4(a)(1) are substantively the same as those in the counterpart 
Federal regulations at 30 CFR 800.11 (b) and (c). The Federal 
regulations at 30 CFR 800.11(b)(1) require that a bond be filed for the 
initial increment, at 30 CFR 800.11(b)(2) that additional bond be filed 
for succeeding increments as surface coal mining and reclamation 
operations are initiated, and at 30 CFR 800.11(c) that an operator not 
disturb any surface areas or succeeding increments prior to acceptance 
of the bond. Therefore, the Director finds West Virginia's proposed 
incremental bonding provisions at CSR Sec. 38-2-11.4(a)(1) are no less 
effective than the counterpart Federal provisions at 30 CFR 800.11 (b) 
and (c). Subsection 11.4(a)(1) is hereby approved.
    b. The State also proposes to revise subsection 11.4(a)(2) to 
require that an operator who has chosen to bond either the entire 
permit area or in increments must continue the same manner of bonding 
during the term of the permit. The minimum amount of bond is $10,000.
    While section 509(a) of SMCRA and 30 CFR Part 800 of the Federal 
regulations require that the minimum amount of bond for the entire area 
under one permit be $10,000, they do not specifically require that the 
operator's manner of binding, entire permit area or increments of the 
permit area, be continued for the term of the permit. 

[[Page 51906]]
Nonetheless, there is nothing in the State's proposal that would 
conflict with any Federal requirement or result in less stringent 
bonding of disturbed areas. Therefore, the Director finds West 
Virginia's proposed regulation at CSR Sec. 38-2-11.4(a)(2) is not 
inconsistent with SMCRA or the Federal regulations and is hereby 
approved.
    c. The State proposes to revise subsection 11.4(a)(3), by adding a 
new provision that requires independent increments to be of sufficient 
size and configuration so as to provide for efficient and 
contemporaneous reclamation operations. Because this provision is 
substantively identical to the Federal regulation, the Director finds 
that West Virginia's proposed revision is no less effective than 30 CFR 
800.11(b)(4) and is hereby approved.
    d. The Director notes that West Virginia needs to amend its 
regulations at CSR Sec. 38-2-11.4(a)(1) and 11.4(a)(4) to delete the 
word ``performance'' in order to remain consistent with its new penal 
bond requirements.
4. SCR Sec. 38-2-11.5: Open-Acre Limit Bonding
    West Virginia proposes to add new provisions in this subsection 
allowing for elective open-acre limit bonding for surface extraction 
operations only. These provisions would provide an alternative to 
bonding either the entire permit area or bonding the permit area in 
increments. Open-acre limit bonding is a mechanism whereby the operator 
bonds a designated portion of the total permit area. Only that portion 
of the permit area which is bonded may be disturbed. After surface 
extraction and reclamation has taken place on this ``open-acre limit'' 
portion of the permit, the operator is required to verify that that 
portion of the permit has been backfilled, graded and revegetated in 
accordance with the reclamation plan and the applicable statutory and 
regulatory provisions. At that point, the operator may apply the 
already established ``open-acre limit'' bond amount to another portion 
of the permit. The acreage of the next succeeding portion must not 
exceed the acreage of the previous portion. Mining and reclamation 
continue in this manner until the entire permit area has been 
reclaimed.
    Subsection 11.5(a)(1) requires a permittee to post a general bond 
in the amount of $750 per acre to ensure successful revegetation of the 
entire permitted area. Subsection 11.5(a)(2) requires the permittee to 
post an open-acre limit bond in accordance with the site-specific 
bonding requirements of subsection 11.6, which require a bond of not 
less than $1,000 nor more than $5,000 per acre based on specified 
criteria. The minimum amount of the open-acre limit bond will be 
$10,000. This subsection also requires the permittee to post an 
ancillary facility bond for haulroads, sediment control systems and 
other permanent or semi-permanent control systems and other permanent 
or semi-permanent ancillary facilities at a rate of $1,000 per acre for 
the total proposed disturbed acreage of such facilities.
    The general and ancillary facility bonds are to remain in place 
until released in accordance with CSR Sec. 38-2-12.2 of the State's 
regulations. The open-acre limit bond can be reapplied to an 
undisturbed portion of the permit area after the initial open-acre 
limit area has been backfilled, regraded, and vegetated in accordance 
with the approved reclamation plan and the provisions of CSR Sec. 38-2-
14.15 of the State's regulations.
    Subsection 11.5(b) contains permit application requirements for 
open-acre limit bonding. The permit application must contain a separate 
bonding section which includes: (1) An overlay outline map which 
depicts the location and extent of the initial open-acre limit, 
remaining permit area for which no initial bond is to be posted, and 
ancillary facilities; (2) a description of the bonding instruments for 
the three types of bond; and (3) a narrative description for the timing 
and sequence of mining and reclamation operations.
    Subsection 11.5(c) provides that when mining and reclamation of the 
initial or succeeding open-acre limit is nearing completion, the 
permittee must submit a request to advance the open-acre limit into the 
undisturbed portions of the permit area by an amount of acreage not to 
exceed the acreage reclaimed within the existing open-acre limit area. 
An overlay map depicting the reclaimed open-acre limit area and the 
undisturbed area to which the bond is being transferred and a copy of 
the bond release advertisement must accompany the request. Subsection 
11.5(d) provides that approval for transfer of the open-acre limit bond 
may not be granted until a review of the request and site is made and 
verified by the Director of WVDEP.
    Subsection 11.5(e) provides that the permittee must apply for bond 
release in the same manner as described in section 23 of the Act and 
subsection 12.2 of these regulations when all mining and reclamation on 
the permit area are completed. As discussed in finding B.7., no portion 
of the open-acre bond can be released until all coal extraction 
operations are completed and the entire disturbed area is backfilled 
and regraded. Therefore, the proposal will not allow for final release 
of any open-acre limit bonded area without public notice and 
opportunity for comment.
    While the Federal conventional bonding regulations do not contain a 
counterpart form of West Virginia's proposed open-acre-limit bonding, 
section 509(c) of SMCRA and 30 CFR 800.11(e) of the Federal regulations 
allow the States wide latitude in establishing alternative bonding 
systems. Nothing in the State's proposal is inconsistent with these 
requirements since the open-acre bond would replace only the site-
specific component of the alternative bonding system.
    The permittee would still have to pay the special reclamation fee 
and the alternative bonding system would still remain responsible for 
completion of reclamation in the event the permittee defaulted. The 
open-acre limit bonding rules at CSR Sec. 38-2-11.5 are hereby 
approved.
5. CSR Sec. 38-2-11.6: Site-Specific Bonding
    West Virginia proposes adding CSR Sec. 38-2-11.6 to implement the 
site-specific bonding provisions of Sec. 22-3-12 of the West Virginia 
Code. The proposed rules establish separate requirements for four major 
categories of mining permits: surface mines, underground mines, coal 
refuse disposal sites, and coal preparation plants. Under the proposed 
rules, the site-specific bonds cannot be less than $1,000 nor more than 
$5,000 per acre or fraction thereof. This subsection includes tables to 
be used to calculate the per-acre bond for each category of mining 
included in a permit.
    Subsection 11.6(a) provides that the site-specific bond criteria 
shall not apply where active or inactive operations are in compliance 
with the provisions of subsection 14.15 and where coal extraction 
operations are nearly completed, or when the operations are eligible 
for or have received Phase I bond release. In its September 1, 1994, 
submittal, the State proposed to exempt from the site-specific bonding 
criteria only those sites where coal extraction operations were 
``completed'' and which met the other above-referenced criteria. 
However, this proposed subsection was revised in the May 16, 1995, 
submittal to exempt sites from the site-specific bonding requirements 
where coal extraction operations are nearly but not totally complete. 
Subsection 11.6(a)(1) provides that surface mine permits shall be 
reviewed at the time of renewal or midterm review and a determination 
made in accordance with specified 

[[Page 51907]]
criteria as to whether the site-specific bond will apply. Subsections 
11.6(a) (2), (3), and (4) provide that existing permits for underground 
mines, preparation plants, and coal refuse sites, respectively, shall 
be subject to the site-specific bond criteria at the time of 
application for renewal or midterm review and shall not be renewed by 
the Director of WVDEP until the appropriate amount of bond is posted.
    Subsection 11.6(b) explains the major criteria that will apply to 
the four categories of mining permits. The criteria consists of 
relative cost factors associated with reclamation of a forfeited site, 
the risk of bond forfeiture, the operator's history of performance, and 
environmental enhancement potential. Subsections 11.6 (c), (d), (e) and 
(f) specify the subcriteria to be considered for computing the bond for 
surface mines, underground mines, coal preparation plants, and coal 
refuse sites. In the May 16, 1995, submittal, the State proposed to 
limit the period of consideration of an applicant's violation history 
and acts of environmental enhancement to within five years of the date 
of surface mine application approval instead of ten years as first 
proposed. Also, coal loading facilities will not be subject to site-
specific bonding criteria applicable to coal preparation plants. 
Subsection 11.6(g) provides for an informal conference if the applicant 
contests the per-acre amount of the bond. The final decision may be 
appealed by the operator in accordance with Sec. 22-5-21 of the West 
Virginia Code.
    Since participation in West Virginia's alternative bonding system 
is mandatory, the requirement of 30 CFR 800.14(b) that the amount of 
the bond be sufficient to assure the completion of the reclamation plan 
in event of forfeiture is not applicable to the State's site-specific 
bonds. The State's development of more detailed site-specific bonding 
requirements should result in better reclamation of the mined lands by 
providing incentives to design and conduct mining operations in a more 
environmentally sound manner.
    These bonding requirements should improve the financial condition 
of the special reclamation fund. To the extent that the new system 
results in an increase in bond amounts, it will provide greater 
incentive for the permittee to comply with all reclamation requirements 
to avoid the economic loss associated with bond forfeiture, in keeping 
with the requirements for alternative bonding systems at 30 CFR 
800.11(e)(2). Therefore, the Director finds that the State's site-
specific bonding provisions are not inconsistent with the requirements 
of section 509(c) of SMCRA and 30 CFR 800.11(e) for alternative bonding 
systems. The site-specific bonding rules at CSR Sec. 38-2-11.6 are 
hereby approved.
    However, the Director's approval is subject to the stipulation that 
nothing in these regulations or this approval may be construed as 
altering or authorizing a variance or deviation from the permitting 
requirements and performance standards of West Virginia's approved 
program.
    For example, subsection 11.6(c)(4)(A) could be read to be 
inconsistent with the West Virginia program regulations at CSR Sec. 38-
2-14.15 for timely backfilling and grading because the conversion 
factor at subsection 11.6(c)(4)(A)(iii) applies in part if the 
reclamation plan contains unspecified ``vague'' time and distance 
criteria. Subsection 14.15(b) requires that the permit include specific 
time, distance, or acreage standards for each type of surface mining 
operation. There is no provision anywhere in section 14.15 for 
``vague'' time and distance criteria. Hence, the reference to ``vague 
criteria'' in subsection 11.6 may not be interpreted as authorizing the 
approval of such criteria.
    The Director notes that the text of subsection 11.6(c)(1)(B)(ii) 
refers to a factor of ``0.5'' while the referenced table identifies a 
factor of ``0.6.'' Also, for consistency, subsection 11.6(c)(1)(B)(ii) 
and Table 1 probably should be revised to read ``three to six fills''; 
otherwise a plan calling for two fills is covered by both subparts (i) 
and (ii). Similarly, subsection 11.6(c)(2)(B)(i) and (ii) both apply to 
mining plans where two seams of coal are to be mined. To lend 
consistency to its regulations, subpart (ii) and Table 1 should 
probably be revised to read ``three or four seams of coal.''
6. CSR Sec. 38-2-11.7: Environmental Security Account
    Proposed subsection 11.7 requires the WVDEP to study the 
feasibility of developing an environmental security account for water 
quality. The study is to include: (1) a screening process for 
determining which sites have the potential for producing acid mine 
drainage, (2) a process for predicting the rate and duration of acid 
mine drainage, (3) a method for estimating water treatment costs, (4) a 
system to ensure that sufficient monies will be placed in an escrow 
account to provide financial assurance that treatment will be 
accomplished and maintained, and (5) procedures to ensure the 
expenditure of funds from the escrow account in the event of default 
will provide water treatment. Furthermore, subsection 11.7(f) provides 
that after the study is completed, the Director of WVDEP may propose 
regulations to implement the environmental security account for water 
quality, but the regulations will not become effective until approved 
by the legislature. Subsection 11.7(g) provides that the Director of 
WVDEP shall inform the legislature if statutory changes are necessary 
to implement an effective system for financial assurances. Subsection 
11.7(h) provides that nothing in this subsection authorizes the 
issuance of a permit that will violate applicable effluent limitations 
or water quality standards without treatment.
    Development of an environmental security account for water quality 
could enhance the financial status of the State's special reclamation 
fund. Therefore, the Director finds the provisions at CSR Sec. 38-2-
11.7, which provides for a feasibility study, are not inconsistent with 
509(c) of SMCRA or 30 CFR 800.11(e) of the Federal regulations. The 
Director notes that pursuant to 30 CFR 732.17(g), any regulations 
proposed to implement the environmental security account as a bonding 
mechanism for water quality or to otherwise incorporate it into the 
coal regulatory program must also be approved by OSM.
7. CSR Sec. 38-2-12.2: Requirement To Release Bonds
    West Virginia proposes to revise subsection 12.2(c) to provide for 
the release of all or part of the bond for the permit area or increment 
thereof. The State also proposes to revise subsection 12.2(c)(2) to 
delete the provision relating to chemical treatment of water at Phase 
II bond release and to add a provision at subsection 12.2(c)(2)(B) to 
require that the terms and conditions of the NPDES permit be met. 
Subsection 12.2(c)(2)(E) now requires that the amount of the remaining 
bond must be sufficient to reestablish vegetation and maintain 
permanent drainage control structures. These revised provisions are 
substantively the same as the Federal counterpart provisions at 30 CFR 
800.40(c)(2) and are hereby approved.
    The State proposes to add new subsection 12.2(d) to prohibit the 
release of any portion of the bonds posted in accordance with 
subsection 11.5 (open-acre limit bonding) until all coal extraction 
operations are completed and the entire disturbed area has been 
completely backfilled and regraded. Because of the floating nature of 
this type of bond, this restriction is needed to provide a degree of 
protection consistent with other types of site-

[[Page 51908]]
specific bond authorized under the alternative bonding system.
    The State proposes to revise newly designated subsection 12.2(e) by 
deleting the provision for a qualified exemption to the requirement 
that no bond release or reduction be granted if, at the time, water 
discharged from or affected by the operation requires chemical 
treatment to comply with applicable effluent limitations or water 
quality standards.
    The Director finds that the revised bond release provisions either 
remain substantively the same as the Federal regulations at 30 CFR 
800.40 for conventional full-cost bonds or do not conflict with any 
Federal requirements or adversely impact other aspects of the West 
Virginia program. The changes will not negatively impact the solvency 
of the alternative bonding system. Therefore, the proposed revisions 
are not inconsistent with section 509(c) of SMCRA or the Federal 
regulations at 30 CFR 800.11(e). CSR Sec. 38-2-12.2 is hereby approved.
8. CSR Sec. 38-2-12.3: Bond Adjustments
    a. West Virginia proposes to revise subsection 12.3 to provide for 
bond adjustments for an overbonded permit area. An overbonded permit 
area is an area that was originally bonded by one operator for one 
permit, but has subsequently been bonded again for a second permit, 
while the original bond remains in effect. Subsection 12.3(a) of the 
proposed regulations provides that where a permittee demonstrates on 
the basis of a sworn statement and a progress map that a portion of the 
permit area will remain undisturbed or has been overbonded, the 
Director of WVDEP may adjust the amount of the bond corresponding to 
the number of undisturbed or overbonded acres, provided that a minimum 
$10,000 bond remains for the disturbed portion of the permit. The 
Director of WVDEP must make a decision on the request within 30 days. 
If the request is denied, the Director of WVDEP must provide the 
permittee with an opportunity for an informal conference. Subsection 
12.3(c) now contains the previously approved provision which specifies 
that the provisions of subsection 12.3 are not subject to the 
provisions of subsection 12.2.
    On April 1, 1994 (Administrative Record No. WV-916), OSM requested 
the State to explain the term ``overbonded.'' The State replied that 
this provision means that when any part of an existing permit is 
covered by a new permit, the amount of bond for the ``double bonded 
area'' of the existing permit can be terminated and returned to the 
existing permittee. Since 30 CFR 800.15(c) provides that a permittee 
may request reduction of the amount of bond by submitting evidence that 
proves the permittee's method of operation or other circumstances 
reduces the estimated cost of reclamation, OSM accepted this 
clarification of the proposed revision. The revised State regulations 
at subsections 12.3 (a) and (c) are substantively the same as and 
therefore no less effective than the corresponding Federal regulations 
at 30 CFR 800.15 (b) and (c).
    b. West Virginia proposes to revise subsection 12.3(b) by adding a 
provision that, upon receipt of a permit revision, the Director of 
WVDEP may review the bond adequacy and if necessary increase the amount 
of the bond.
    Under the Federal counterpart regulation at 30 CFR 800.15(d), the 
regulatory authority has a mandatory duty rather than the discretionary 
authority to review the bond for adequacy whenever a permit is revised. 
However, this mandatory requirement does not apply to bonds under an 
alternative bonding system since the alternative bonding system 
provides a source of funds other than the site-specific bond for 
completion of the reclamation plan in the event of forfeiture. West 
Virginia has an alternative bonding system in which participation is 
mandatory. Therefore, the Director finds CSR Sec. 38-2-12.3(b), as 
revised, is not inconsistent with SMCRA or the Federal regulations, and 
he is approving this new provision as proposed.
9. CSR Sec. 38-2-12.4: Bond Forfeiture
    a. The State is proposing to revise subsection 12.4(a) to provide 
that, when necessary, the Director of WVDEP must forfeit the entire 
bond, not just an amount based on the estimated total cost of achieving 
the reclamation plan requirements as specified in the current 
regulation. These proposed revisions to subsection 12.4(a) are in 
accordance with the proposed revision to WV Code Sec. 22-3-11(a), which 
requires that all reclamation bonds be penal in nature. For the reasons 
discussed in finding A.1.a., the Director finds that the proposed 
revisions will not render the State program less stringent than SMCRA 
or less effective than the Federal rules.
    b. The State also proposes to revise subsection 12.4(a)(2)(B) to 
provide that when a surety completes the reclamation, ``no surety 
liability shall be released until successful completion of all 
reclamation under the terms of the permit and in accordance with the 
Act and these regulations to include the revegetation liability 
period.'' OSM questioned West Virginia about the meaning of the phrase 
``to include the revegetation liability period.'' West Virginia 
responded that this phrase merely provides an example and is not 
intended to exclude other types of reclamation responsibilities 
(Administrative Record No. WV-929).
    The Federal regulations at 30 CFR 800.50(a)(2)(ii) provide that, 
when the regulatory authority allows a surety to complete the 
reclamation plan, no surety liability shall be released until 
successful completion of all reclamation under the terms of the permit, 
including applicable liability periods of Sec. 800.13. The liability 
periods of Sec. 800.13 include the extended responsibility period for 
successful revegetation and achievement of the reclamation requirements 
of the Act, the permanent regulatory program, and the permit. 
Therefore, the Director finds the revised provision of CSR Sec. 38-2-
12.4(a)(2)(B), is substantively identical to and no less effective than 
the counterpart Federal provision at 30 CFR 800.50(a)(2)(ii).
    c. At CSR Sec. 38-2-12.4(b), West Virginia proposes combining the 
provisions of existing subsections 12.4(b) and 12.4(c). West Virginia 
revised the provision in new subsection 12.4(b) that provides for the 
use of the proceeds to accomplish completion of reclamation by changing 
the citation reference of the regulations governing water quality from 
subsection 14.5 to subsection 12.5. Subsection 12.5 requires the 
establishment of an inventory of bond forfeiture sites and a priority 
listing of such sites for water treatment while subsection 14.5 
contains general water quality standards for active mining operations.
    The Federal regulations at 30 CFR 800.50(b)(2) require the 
regulatory authority to use funds collected from bond forfeiture to 
complete the reclamation plan. The amended reference pertains to only 
one of the requirements for completion of reclamation at a bond 
forfeiture site (water quality), however, new subsection 12.4(c) 
requires that a bond forfeiture site be reclaimed in accordance with 
the reclamation plan. Therefore, the proposed revision will not render 
CSR Sec. 38-2-12.4 less effective than the counterpart Federal 
regulations at 30 CFR 800.50(b). Furthermore, as discussed in finding 
A.1.b(2), the Director is requiring the State to revise its program to 
provide for the treatment of polluted water discharging from all bond 
forfeiture sites.
    d. West Virginia reorganized the provisions of existing paragraph 
(d) of 

[[Page 51909]]
subsection 12.4 into new paragraphs (c), (d), and (e).
    (1) In the June 28, 1993, version of the proposed amendment, as 
revised by letter dated July 30, 1993 (Administrative Record Nos. WV-
889 and WV-893), new subsection 12.4(c) [previously 12.4(d)(2)] 
required the Director of WVDEP to initiate operations to reclaim a bond 
forfeiture site within 180 days after the notice of forfeiture is 
served. It also required remediation of acid mine drainage, including 
chemical treatment where appropriate.
    On April 1, 1994, OSM advised West Virginia that to be no less 
effective than 30 CFR 800.50(b)(2), bond forfeiture sites must ``be 
reclaimed in accordance with the approved reclamation plans or 
modifications thereof.'' (Administrative Record No. WV-916). The 
Federal regulations at 30 CFR 800.50(b)(2) and 800.11(e) require bond 
forfeiture sites to be reclaimed in accordance with the reclamation 
plans of the revoked or suspended permits, including any modifications 
approved by the regulatory authority.
    In its submission of September 1, 1994, West Virginia revised its 
regulations at CSR Sec. 38-2-12.4(c) to clarify that bond forfeiture 
sites will be reclaimed in accordance with approved reclamation plans 
or modifications thereof (Administrative Record No. WV-937). This 
proposal satisfies the requirements at 30 CFR 948.15(k)(8) and 
948.16(ww) that reclamation on bond forfeiture sites be completed in 
accordance with the approved reclamation plan. Therefore, the Director 
is approving this proposed revision, and he is removing the required 
amendment at 30 CFR 948.16(ww).
    (2) New subsection 12.4(d) retains the provision from existing 
subsection 12.4(d)(2) that requires the Director of WVDEP to make 
expenditures from the special reclamation fund to complete reclamation 
when the proceeds of bond forfeiture are less than the actual cost of 
reclamation. New subsection 12.4(d) also includes the new provision 
requiring the Director of WVDEP to take the most effective actions 
possible to remediate acid mine drainage, including chemical treatment 
where appropriate.
    Since this revised provision still makes it mandatory that West 
Virginia use the special reclamation fund to complete reclamation at 
bond forfeiture sites, the Director finds that subsection 12.4(d), as 
revised, is consistent with the requirements of section 509(c) of SMCRA 
and 30 CFR 800.11(e) of the Federal regulations and is hereby approved.
    (3) At subsection 12.4(e) [previously 12.4(d)(1)], the State 
proposes to provide that the operator, permittee, or other responsible 
party be liable for all costs in excess of the amount forfeited. The 
Director of WVDEP may commence civil, criminal, or other appropriate 
action to collect such costs.
    The Federal regulations at 30 CFR 800.50(d)(1) require that the 
operator be liable for costs in excess of the amount forfeited. They 
allow the regulatory authority to recover from the operator all costs 
of reclamation in excess of the amount forfeited. Although West 
Virginia does not define ``other responsible party,'' it is commonly 
understood that it would include any other person who may be 
responsible for the mining operation.
    West Virginia's proposed requirement is neither specifically 
authorized nor prohibited by SMCRA. However, it is consistent with the 
principles and purposes of SMCRA to ensure the reclamation of surface 
areas disturbed by coal mining. See SMCRA section 102(e). Therefore, 
since the proposed provision does not conflict with any Federal 
requirements under SMCRA, the Director finds that the proposed revision 
does not render subsection 12.4(e) inconsistent with SMCRA or the 
Federal regulations, and he is approving it.
    e. West Virginia deleted existing subsection 12.4(e) pertaining to 
the effective date of the provisions within subsection 12.4 relating to 
water quality. Because the date has long since passed, the Director 
finds this deletion will not render the West Virginia program less 
effective than the Federal regulations.
10. CSR Sec. 38-2-12.5: Water Quality Enhancement
a. Prioritization of Forfeited Sites
    West Virginia proposes to add a new subsection 12.5 to implement 
that portion of Sec. 22-3-11(g) of the West Virginia Code which 
authorizes WVDEP to prioritize bond forfeiture sites for reclamation 
purposes. Subsection 12.5(a) requires the Director of WVDEP to 
establish an inventory of all sites for which bonds have been 
forfeited. The inventory is to include data relating to the quality of 
water being discharged from the sites. Subsection 12.5(b) requires a 
priority listing of these sites based upon the severity of the 
discharges, the quality of the receiving stream, effects on downstream 
water users, and other factors determined to affect the priority 
ranking.
    Subsection 12.5(c) provides that, until the legislature supplements 
or adjusts the special reclamation fund, the Director of WVDEP can 
selectively choose sites from the inventory for water quality 
enhancement projects. Subsection 12.5(d) provides that, in selecting 
sites for water improvement projects, the Director must consider 
relative benefits and costs of the projects.
    Subsection 12.5(e) required the Director of WVDEP to submit to the 
legislature, a detailed report and inventory of acid mine drainage from 
bond forfeiture sites. The report, which was submitted on December 31, 
1993, includes cost estimates for long-term chemical treatment of 
drainage from each site and proposals for supplementing and adjusting 
the special reclamation fund to pay for this treatment (Administrative 
Record No. 952).
    For the reasons set forth in finding A.1.b.(1), and subject to the 
same stipulations, subsection 12.5 is not inconsistent with the 
reclamation requirements of 30 CFR 800.50(b)(2) and 800.11(e), except 
as discussed in finding B.10.b. below. Subsections 12.5 (a), (b), (c) 
and (e) are hereby approved.
b. Limitation on Water Treatment at Bond Forfeiture Sites
    Subsection 12.5(d) also provides that expenditures from the special 
reclamation fund for water quality enhancement projects may not exceed 
25 percent of the fund's gross annual revenue. For the reasons set 
forth in finding A.1.b.(2), the Director finds that this limitation is 
inconsistent with 30 CFR 800.11(e) and is hereby disapproved. Also, the 
Director is requiring that the State revise subsection 12.5(d) to 
remove the 25 percent limitation or to otherwise provide for the 
treatment of polluted water discharged from all existing and future 
bond forfeiture sites.

C. The West Virginia Alternative Bonding System

    On October 1, 1991 (Administrative Record No. WV-878), OSM notified 
West Virginia in accordance with 30 CFR 732.17 that its regulatory 
program no longer met all Federal requirements. Since 1989, OSM's 
annual reviews of West Virginia's alternative bonding system had found 
the system to be incapable of meeting the Federal requirements at 30 
CFR 800.11(e) since its alternative bonding system liabilities exceeded 
assets. As of June 30, 1990, the special reclamation fund liabilities 
exceeded assets by $6.2 million. Also, a 1993 actuarial study by the 
accounting firm of Deloitte and Touche estimated that, by 1997, the 
State's special reclamation fund would have a deficit 

[[Page 51910]]
of $13.8 million (Administrative Record No. 952). This estimate did not 
include the cost of water treatment on bond forfeiture sites.
    In addition, on December 31, 1993, the WVDEP submitted an ``Acid 
Mine Drainage Bond Forfeiture Report'' to the West Virginia 
legislature, as required by CSR Sec. 38-2-12.5(e) (Administrative 
Record No. WV-952). The report identified acidic discharges from 89 
bond forfeiture sites, which produce approximately 10 percent of the 
acid mine drainage in the State. Under the best-case scenario, the 
WVDEP estimated that treatment to neutralize only the discharges from 
bond forfeiture sites that are affecting receiving streams would 
require approximately $2 million annually. Treatment of all discharges 
from all sites to meet Federal and State effluent limitations and water 
quality standards would cost approximately $4.7 million annually.
    Furthermore, State records show that, as of June 30, 1994, 243 bond 
forfeiture sites containing 10,996 acres have not been completely 
reclaimed. The State estimates that the total liabilities of the fund 
exceed total assets by $22.2 million. This estimate does not include 
the cost of treating polluted water discharged from bond forfeiture 
sites. On July 20, 1994, the West Virginia Supreme Court ruled that the 
treatment of acid mine drainage is a component of reclamation and that 
the WVDEP has a mandatory nondiscretionary duty to utilize moneys from 
the special reclamation fund, up to 25 percent of the annual amount, to 
treat acid mine drainage at forfeiture sites when the proceeds from 
forfeited bonds are less than the actual cost of reclamation (WVHC v. 
WVDEP, No. 22233, July 20, 1994).
    An alternative bonding system cannot be allowed to incur a deficit 
if it is to have available adequate revenues to complete the 
reclamation of all outstanding bond forfeiture sites. Alternative 
bonding systems must include reserves and revenue-raising mechanisms 
adequate to ensure completion of the reclamation plan and fulfillment 
of the permittee's obligations, including any water treatment needs.
    Although the proposed site-specific bonding rates are significantly 
higher than the State's old flat rate bond of $1,000 per acre and the 
State is proposing to increase its special reclamation tax from one 
cent to three cents per ton of mined coal to generate more revenue for 
the fund, State records indicate that the proposed bonding rates and 
the increase in revenues to the special reclamation fund are still 
insufficient to ensure complete reclamation, including treatment of 
polluted water.
    Therefore, the Director finds that West Virginia's alternative 
bonding system no longer meets the requirements of 30 CFR 800.11(e). 
Furthermore, it is not achieving the objectives and purposes of the 
conventional bonding program set forth in section 509 of SMCRA since 
the amount of bond and other guarantees under the West Virginia program 
are not sufficient to assure the completion of reclamation. Hence, the 
Director is requiring West Virginia to eliminate the deficit in the 
State's alternative bonding system and to ensure that sufficient funds 
will be available to complete reclamation, including the treatment of 
polluted water, at all existing and future bond forfeiture sites. The 
Director has taken and will take similar actions in all other states 
with deficits in alternative bonding systems.

IV. Summary and Disposition of Comments

Public Comments

    The Director solicited public comments and provided an opportunity 
for public meetings on the proposed amendment on three separate 
occasions. Public meetings were held on September 7, 1993, October 27, 
1994, and May 30, 1995 (Administrative Record Nos. WV-906, WV-958, and 
WV-983). Comments on the special reclamation fund and bonding 
provisions were received from GAI Consultants, Inc. (GAI); West 
Virginia Coal Association (WVCA); West Virginia Mining and Reclamation 
Association (WVMRA); Arch of West Virginia (AWV); Buffalo Coal Company, 
Inc. (BCC); National Council of Coal Lessors, Inc. (NCCL); West 
Virginia Highlands Conservancy (WVHC); the West Virginia Chapters of 
Trout Unlimited (TU) and the Sierra Club (SC); National Citizens Coal 
Law Project (NCCLP), and the Downstream Alliance (DA).
    Following is a summary of the substantive comments received on the 
proposed amendment. Comments identifying errors of a purely 
typographical or editorial nature and comments voicing general support 
or opposition to the proposed amendments but devoid of any specific 
statements are not discussed. The summarized comments and responses to 
the comments are organized by the section of the amended statutes and 
regulations to which they pertain. All citations to the State statutes 
and regulations in comments and responses have been adjusted to reflect 
the nomenclature of the August 18, 1994, version of the statutes and 
the May 16, 1995, version of the regulations.

WVSCMRA Sec. 22-3-11(c)(2): Alternative Bonding System

    WVCA, WVMRA, and the WVHC commented on WVSCMRA Sec. 22-3-11(c)(2) 
which provides that the Director of the WVDEP may approve an 
alternative bonding system under certain conditions. The State has not 
proposed any revisions to this section of the West Virginia statute. In 
acting on State program amendments, OSM only addresses those sections 
of a State's laws and regulations were revisions are proposed by a 
State. OSM will take the comments received into consideration when 
reviewing the State's statute and rules pursuant to 30 CFR 732.17.

WVSCMRA Sec. 22-3-11(g): Special Reclamation Fund

    1. Comment: WVHC did not generally support the revisions proposed 
for the special reclamation fund. WVHC stated the belief that ``the 
state has a mandatory duty to treat water as a part of the approved 
reclamation plan at all forfeited sites, and that the alternative 
bonding system/special reclamation fund is to provide the State 
sufficient money to complete all reclamation, at all times, at any and 
all forfeited sites, including water treatment where necessary to meet 
effluent limitations and water quality standards.'' This belief was 
also expressed by the SC which added that the 25 percent limit applied 
to expenditures for water treatment explicitly weakens the Federal 
requirement for full and prompt reclamation.
    WVHC commented that the provisions of section 509(c) of SMCRA, the 
provisions of 30 CFR 800.11(e) of the Federal regulations, and the West 
Virginia Supreme Court Decision in the Mandamus action (WVHC v. WVDEP, 
No. 22233, July 20, 1994) supported its belief [See Administrative 
Record No. WV-930 for a copy of the referenced decision]. WVHC pointed 
out that the actuarial study of 1993 was not an acceptable assessment 
of the adequacy of the special reclamation fund since it asserted the 
State was not liable for water treatment at bond forfeiture sites. WVHC 
further urged OSM to require the State resolve the issue of inadequate 
funds, assess additional monies for the special reclamation fund, and 
expend the monies to reclaim existing bond forfeiture sites.
    In general, WVHC believed that the codification language used by 
OSM left several unanswered questions and that findings contained in 
the preamble would be forgotten.

[[Page 51911]]

    Response: As discussed in finding A.1.b.(2), the Director is 
requiring West Virginia to amend its program to remove the 25 percent 
limitation or to otherwise provide for treatment of polluted water 
discharged from all bond forfeiture sites. Also, as discussed in 
finding A.1.b.(4)(c), the Director is requiring the State to remove the 
provision that allows collection of the special reclamation tax only 
when the bond forfeiture liabilities of the State exceed the fund's 
assets.
    This rulemaking does not attempt to answer all potential questions 
about bonding and the reclamation of bond forfeiture sites but only to 
address the proposed revisions to the West Virginia program. The 
findings contained in this preamble should be read in conjunction with 
the codification section to fully understand the Director's decision.
    2. Comment: The WVHC commented that OSM should not only disapprove 
as part of the State program the provision limiting the use of monies 
for water treatment at bond forfeiture sites but should also require 
the State to remove the restricting language from its rules and law. 
WVHC stated that in the eyes of State legislature and State Courts the 
provision would continue to be implemented until removed from State law 
and regulations. WVHC added that without clear and decisive direction 
and actions on the part of OSM, there will be no significant 
improvement in the West Virginia program.
    Response: As discussed in finding A.1.b.(2), the director is 
requiring West Virginia to remove the 25 percent limitation on the use 
of special reclamation funds for water treatment at bond forfeiture 
sites from its statute and regulations or to otherwise provide for the 
treatment of polluted water discharged from all bond forfeiture sites.
    3. Comment: WVMRA generally supported the proposed bonding 
revisions for Sec. 22-3-11(g). WVMRA argued that the special 
reclamation fund revisions, including the 25 percent set aside for 
water treatment systems, were not OSM issues since there are no Federal 
requirements in these areas. The question of water treatment at 
forfeiture sites was thought to be a Clean Water Act issue which should 
be handled by the State under the NPDES program. WVMRA pointed out that 
West Virginia's bonding provisions were more stringent than Federal 
government bonding requirements and cited the State's requirement for 
penal bonds as an example. WVMRA commented that ``the bonding program 
has been consistent with insuring compliance with the State law and all 
regulations promulgated thereunder for more than the 17 year history 
since PL 97-87 was passed.''
    WVMRA argued that West Virginia has adequate funds to guarantee 
that the performance standards of the Act are carried out, and 
referenced two actuarial studies as support for this view. WVMRA stated 
that any requirements beyond the performance standards of the Act are 
not germane to the bonding requirements. WVMRA also stated that ``any 
attempt to burden the State of West Virginia, and more particular (sic) 
its mining industry, with rules and regulations not supported by 
Federal or State law, will not be tolerated nor can the State of West 
Virginia be held to any standard not imposed upon other States, 
including Tennessee, in which OSM administers the program.'' [WVMRA 
referenced text in a letter dated January 15, 1993, to David Callaghan 
from former OSM Director Harry Snyder pertaining to requirements for 
water treatment as support for its comments. Since this letter was 
subsequently rescinded by Acting OSM Director W. Hord Tipton by letter 
dated January 25, 1993, it no longer reflects OSM policy and is, 
therefore, not being discussed.]
    Response: Section 509(c) of SMCRA authorizes the Secretary, acting 
through OSM, to approve an alternative bonding system if it will 
achieve the objective and purposes of the otherwise mandatory 
conventional bonding program. The Federal regulations at 30 CFR 
800.11(e)(1) require funds to be sufficient to assure completion of the 
reclamation plans for all bond forfeiture sites, which includes 
treatment to meet State and Federal water quality requirements. The 
Secretary conditionally approved an alternative bonding system as part 
of the West Virginia program on January 21, 1981 (46 FR 5924), with 
subsequent final approval on March 1, 1983 (48 FR 8448). West 
Virginia's approved alternative bonding system includes the special 
reclamation fund as one source of money for completing the reclamation 
plan for a bond forfeiture site. Also, 30 CFR 732.17(g) requires 
changes to laws or regulations that make up the approved State program 
be submitted to the Director as an amendment. Therefore, the revisions 
pertaining to West Virginia's special reclamation fund are OSM issues, 
and OSM is required to make a determination as to whether these 
revisions are consistent with section 509(c) of SMCRA and the 
implementing Federal regulations at 30 CFR 800.11(e). The Director 
disagrees that only performance standards of the Act are germane to 
bonding requirements. See discussion in findings A.1.b.(2). The 
Director also disagrees that the West Virginia alternative bonding 
system has adequate funding. See discussion in finding A.1.b.(4)(c).
    4. Comment: The WVHC expressed concern that withdrawals from the 
Special Reclamation Fund for administrative purposes for programs other 
than bond forfeiture reclamation will deplete the Fund.
    Response: As discussed in finding A.1.b(3), the State in Sec. 22-3-
11(g) is proposing to limit the use of the Special Reclamation Fund. 
The Director of the WVDEP will have discretionary power to allocate up 
to 10 percent of the total annual assets of the Fund to administrative 
costs incurred under the abandoned mine land program, the mining and 
reclamation program, the minerals other than coal program, and the 
Surface Mine Board. While most of these expenditures are unrelated to 
the reclamation of bond forfeiture sites, the Director of OSM does not 
have the authority under SMCRA to restrict the use of the Fund to only 
bond forfeiture reclamation. However, the State is accountable for 
ensuring that adequate moneys are available in the special reclamation 
fund to complete the reclamation of all forfeiture sites in a timely 
manner. Under West Virginia's approved alternative bonding system, any 
drawdown of the fund for administrative purposes unrelated to bond 
forfeiture reclamation must be compensated for by higher site-specific 
bonds, a higher special reclamation tax or both.
    5. Comment: The WVMRA commented that OSM had overstated the 
magnitude of the backlog in forfeiture sites that need to be reclaimed 
by failing to note that of the 243 forfeiture sites, 43 have been 
granted Phase I release, 17 have been granted Phase II release and 12 
of the forfeitures were for technicalities like failure to have proper 
insurance. Also, the special reclamation fund was believed to be 
financially sound since as of April 30, 1995, there was a balance of 
over $8 million with interest accumulating at a rate of $250,000 per 
quarter. Annual payments into the fund by coal operators was more than 
$3.7 million. Reclamation costs on forfeiture sites were $2,820 per 
acre in 1994--the lowest per acre cost in the history of the program.
    Response: The Director acknowledges that some sites on the list of 
bond forfeiture sites have been partially reclaimed, however, there is 
still a substantial backlog in reclamation work even after allowing for 
these sites. The State's estimate that, as of June 30, 1994, total 
liabilities of the special 

[[Page 51912]]
reclamation fund exceeded assets by $22.2 million takes into account a 
cash balance in the fund.

WVSCMRA Sec. 22-3-23(c)(3)  Colombo Amendment

    WVCA, WVMRA, and SC commented on WVSCMRA Sec. 22-3-23(c)(3). The 
State has not proposed any revisions to this section of the West 
Virginia statute. In acting on State program amendments, OSM only 
addresses those sections of a State's laws and regulations where 
revisions are proposed by a State. OSM and the State met on August 16, 
1995, to resolve differences concerning this provision and to address 
other matters. OSM is conducting a survey of potential Colombo sites to 
determine the scope and nature of the problem. The WVDEP has agreed to 
cooperate with OSM by providing information they may have and to not 
release additional sites under the Colombo provision. The disapproval 
of WVSCMRA Sec. 22-3-23(c)(3) found at 30 CFR 948.12(e) and the program 
set aside at 30 CFR 948.13(c) remain in effect.

CSR Sec. 38-2-11.2(e)  Bond Liability for Permits Transferred, 
Assigned, or Sold Under the Provisions of CSR Sec. 38-2-3.25

    Comment: AWV pointed out that the provision does not give the 
Director of WVDEP the authority to increase bond amounts to address 
deficiencies in permits which are transferred or assigned. AWV further 
argued that ``this provision should not apply to permits which are 
assigned pursuant to 38 W.Va. C.S.R. Sec. 3.25(c), since liability 
under the bond and permit under such an arrangement remains with the 
original permittee.'' AWV stated that ``the suggestion that bonds, in 
themselves, can be transferred is misleading and inconsistent with 
other provisions in the regulations.'' AWV also suggested that the 
provision should be rewritten to clarify that permits instead of bonds 
are transferred and to allow the Director of WVDEP to require bond 
adjustment as an alternative to the proposed requirement for assumption 
of liability.
    Response: The intent of this provision is to ensure that the person 
who is to receive the permit has adequate financial resources to manage 
long-term environmental liabilities associated with mining such as 
water treatment. It is within the State's authority to require such a 
demonstration prior to permit transfer. Although the Director agrees 
that the provision could be clarified, as discussed in finding B.1.b, 
the new provision at CSR Sec. 38-2-11.2(e) is not inconsistent with the 
Federal bonding requirements at 30 CFR Part 800 or the Federal 
permitting requirements at Sec. 774.17(b)(3).

CSR Sec. 38-2-11.6  Site-Specific Bonding

    Comment: AWV expressed support for West Virginia's efforts to 
implement site-specific bonding in order to improve its regulatory 
program. However, AWV stated that ``the regulation should more clearly 
identify how the bonding changes will be implemented and 
administered.''
    Subsection 11.6(a): AWV commented that the provisions of subsection 
11.6 should only apply to permits issued after its effective date. AWV 
further commented that considering bond is limited to $5,000 per acre, 
West Virginia should add language to subsection 11.6(a) to clarify the 
procedures for calculating bond when more than one permit includes the 
same area. The DA believed that the $5,000 per acre limit on site-
specific bonds contradicted SMCRA because such a bond is insufficient 
to enable the regulatory authority to complete reclamation, especially 
in the case of underground mines where there is liability for acid mine 
drainage and subsidence. The WVHC commented that site-specific bonds 
should be required where coal extraction is complete and for operations 
that are eligible for or have received Phase I bond release.
    Subsection 11.6 (c), (d), (e), and (f): AWV stated that ``a general 
concern with respect to all of the subsection 11.6 tables is that the 
factors 0.2, 0.6, and 1.0 produce too many extreme and inequitable 
results, thereby distorting the significance of some criteria.'' In 
support of its concern, AWV presented three examples and argued that: 
(1) factoring under subsection 11.6(c)(1)(B) for three excess spoil 
disposal fills is three times higher than a plan for two, while six 
fills is the same as three; (2) the provisions at subsection 
11.6(c)(2)(C)(ii) and (iii) differentiate between conventional and 
highwall auger mining even though the cost per linear foot to reclaim 
the highwall would not differ and (3) the provisions at subsection 
11.6(d)(1)(A) do not consider the vicinity of backfill material when 
factoring for shaft or slope entry backfills. AWV also noted a 
typographical error and some inconsistencies in the provisions of 
subsection 11.6(c).
    Subsection 11.6(c)(5)(A): AWV commented that West Virginia should 
clarify the terms ``active permit'' and ``last full calendar year'' as 
it relates to this provision. AWV also commented that West Virginia 
should add a provision to this subsection specifying that violations 
pending review or appeal would not be considered.
    Subsection 11.6(v)(5)(B): AWV pointed out that the percentages used 
for contemporaneous reclamation were discretionary since they were not 
defined. AWV also commented that consideration of an operation's 
``contemporaneous reclamation'' status should not be limited to the 
permit application review period.
    Subsection 11.6(c)(6)(B): AWV commented that national and local 
reclamation awards should not be a consideration since they often 
depend on other factors not related to success of reclamation. AWV 
further suggested that WVDEP factor in the amount of disturbed land 
reclaimed in a 24-month period instead of awards.
    Subsection 11.6(g): AWV suggested that West Virginia add language 
in subparagraph (2) to allow the Director of WVDEP to not hold an 
informal conference if he agreed that ``the amount proposed by the 
applicant is appropriate.''
    Response: Under an alternative bonding system, a State has 
considerable latitude in setting site-specific bond amounts and 
administering the program. The State may even choose to place a limit 
on the per-acre amount of the site-specific bond. The most important 
factor that has to be considered is whether the alternative bonding 
system has adequate revenue to cover the cost of reclamation of those 
sites that may be forfeited and that it provides substantial economic 
incentive for the operator to comply with all reclamation requirements. 
As discussed in finding B.5., the Director found the State's provisions 
for site-specific bonding are not inconsistent with the requirements of 
section 509(c) of SMCRA and 30 CFR 800.11(e) of the Federal 
regulations.

CSR Sec. 38-2-11.7  Environmental Security Account for Water Quality

    1. Comment: WVCA commented that ``OSM appears to mischaracterize 
the scope and purpose of this proposed rule, which allows WVDEP to 
create an Environmental Security Account. OSM states that this 
regulation does not provide any authority for WVDEP to issue permits 
for discharges that will violate effluent limitations or water quality 
standards `without treatment.' See 58 Fed. Reg. at 42909. If by the 
phrase `without treatment' OSM means to say that this proposed 
regulation prohibits WVDEP from issuing permits for operations which 
may generate acid mine drainage, it is simply wrong. Nothing in either 
Sec. 38-2-11.7 or SMCRA contains any such prohibition. 

[[Page 51913]]
While both SMCRA and the WVSCMRA require operators to avoid production 
of acid mine drainage, they both also specifically recognize water 
treatment as one avoidance technique. See 30 U.S.C. 
Secs. 1265(b)(10)(A)(ii); W. Va. Code Secs. 22-3-13(b)(10)(A)(ii) &-
14(b)(9)(A)(ii).''
    Response: West Virginia included this provision in paragraph (h), 
which reads ``nothing in this subsection shall authorize in any way the 
issuance of a permit in which acid mine drainage is anticipated, and 
which would violate applicable effluent limitations or water quality 
standards without treatment.'' The Federal Register notice stated that 
this language was part of the proposed State rule. Paragraph (h) of CSR 
Sec. 38-2-11.7 clarifies the intent of the West Virginia State 
legislature when it authorized the Director of WVDEP to study the 
desirability of establishing an environmental security account and in 
promulgating rules to implement such an account. OSM has not 
mischaracterized the State's proposed rule since the exact language 
used by the West Virginia State legislature was repeated in the Federal 
Register
    2. Comment: WVHC expressed concern that the language in subsection 
11.7(f) would allow statutory changes to become effective without the 
approval of OSM. WVHC commented that ``while the Supreme Court of W.V. 
has reiterated the legal requirement of OSM approval of all statutes 
and regulations pertaining to the approved program in footnote 23 of 
the Mandamus decision of July 1994 (WVHC v. WVDEP, No. 22233, July 20, 
1994), there are frequent debates and sometimes heated discussions of 
this matter in Legislative Committee meetings.''
    Response: As discussed in finding B.6., any regulations proposed to 
implement the environmental security account as a bonding mechanism for 
water quality or to otherwise incorporate it into the coal regulatory 
program must be approved by OSM. Also, 30 CFR 732.17(g) prohibits the 
implementation of any statutory or regulatory changes to a State 
program without prior OSM approval.

CSR Sec. 38-2-12.2  Requirement to Release Performance Bonds

    1. Comment: Subsection 12.2(a)(1) AWV commented that ``subsection 
11.5(a)(1) of these proposed rules states that a general bond in the 
amount of seven hundred fifty dollars ($750) per acre will serve as 
sufficient financial assurance that the revegetation requirements of 
Section 9 of the regulations will be satisfied. Consistent with this 
statement, AWV believes that 38 W.V.A. C.S.R. Sec. 12.2(c)(1) should be 
modified as that upon meeting the requirements for a Phase I bond 
release, a site-specified reassessment should be conducted. Assuming 
these requirements are met, the bond amount should be reduced to $750 
per acre, as specified in Subsection 11.5(a)(1), instead of the minimum 
60 percent bond release now in effect.''
    Response: Subsection 11.5(e) provides that the operator will apply 
for bond release in accordance with section 23 of the Act and 
subsection 12.2 only after completion of all mining and reclamation on 
the permit area. In accordance with the State's open-acre limit bonding 
requirements at subsection 11.5, the State does not plan to release the 
open-acre bond at the completion of the backfilling and grading of each 
open-acre unit. This bond will be rolled over to the next increment.
    2. Comment: Subsection 12.2(e) WVMRA commented that OSM does not 
have any water quality or chemical treatment requirements for bond 
releases. BCC and WVMRA both commented that this provision is more 
stringent than the OSM requirement since bond cannot be reduced or 
released if chemical treatment is required.
    Response: The Director disagrees that the Federal regulations do 
not have any water quality or chemical treatment requirements for bond 
releases. Section 519(b) of SMCRA and the implementing Federal 
regulations at 30 CFR 800.40(b)(1) require the regulatory authority, 
when evaluating bond release requests, to consider whether pollution of 
surface and ground water is occurring, the probability of any 
continuing pollution, and the estimated cost of abating such pollution. 
Furthermore, section 519(c)(3) of SMCRA and the implementing Federal 
regulations at 30 CFR 800.40(c)(3) provide that no bond shall be fully 
released until all the reclamation requirements of SMCRA and the permit 
are fully met. These requirements include abatement of surface and 
ground water pollution resulting from the operation. Both SMCRA and the 
Federal regulations effectively require that discharges from the site 
be in compliance with all applicable effluent limitations as a 
prerequisite for bond release. Therefore, as discussed in finding B.7., 
the revised bond release provisions either remain substantively the 
same as the Federal regulations at 30 CFR 800.40 or do not conflict 
with any Federal requirements or adversely impact other aspects of the 
West Virginia program.

CSR Sec. 38-2-12.3  Bond Adjustments

    Comment: WVHC commented that the State's proposed amendment 
satisfies 30 CFR 800.15(d) by providing for bond adjustment in the case 
of increased area being added to the permit. However, the amendment 
should also include language to more adequately reflect compliance with 
30 CFR 800.15(a) as well. ``The state must be able to adjust the bond 
`from time to time' not only as the area is increased or decreased, but 
also `where the cost of future reclamation changes', e.g., at renewal 
time, or at any time during the life of a permit that some unforeseen 
or unanticipated complication arises that would cause the cost of 
reclamation to increase.''
    Response: As discussed in finding B.8.b., mandatory review for bond 
adequacy is limited to the States with conventional bonding programs 
since those States have no other source of funds other then the bond 
for completion of the reclamation in the event of forfeiture. 
Therefore, since West Virginia has an alternative bonding system with 
mandatory participation, which includes other sources of moneys for 
reclaiming bond forfeiture sites, the requirement to review bonds for 
adequacy is not mandatory. However, bond adjustment would be advisable 
so as to ensure the long-term financial soundness of an alternative 
bonding system.

CSR Sec. 38-2-12.4  Forfeiture of Bonds

1. Comments: Subsection 12.4(a)
    a. GAI stated its opposition to the requirements that all bond 
amounts be forfeited rather than an amount based on the estimated total 
cost of achieving the reclamation plan requirements. GAI commented that 
all bonds not required to reclaim should be returned, since subsection 
12.4(e) allows WVDEP to sue for all costs in excess of the amount 
forfeited.
    Response: As discussed in finding A.1.a., West Virginia's proposed 
requirement that the total bond by forfeited, rather than an amount 
based on the estimated cost of reclamation, is not inconsistent with 
any Federal requirements.
    b. WVCA commented that OSM should find the provision at subsection 
12.4(a), which would require WVDEP to forfeit the entire amount of 
reclamation bonds irrespective of the actual cost to reclaim mine 
sites, both unauthorized by the WVSCMRA and inconsistent with SMCRA. 
WVCA further stated that this regulation was intended to dovetail with 
a statutory amendment which the WVDEP proposed, but which was 

[[Page 51914]]
rejected by the West Virginia Legislature in the 1992/1993 legislative 
session. WVCA explained that the Circuit Court of Kanawha County 
recently ruled that the WVSCMRA does not allow WVDEP to forfeit the 
entire amount of a reclamation bond, but only so much as is necessary 
to cover the estimated costs of reclamation (Vaco Enterprises, Inc., v. 
Callaghan, Civil Action No. 92-Misc-256 (Kanawha County, Nov. 9, 1992).
    WVCA further commented that OSM has rejected this form of bond 
release since 30 CFR 800.50(d)(2) specifically provides that in the 
event the amount of performance bond forfeited was more than the amount 
necessary to complete the reclamation, the unused funds would be 
returned. WVCA then referenced a Federal court decision in In Re: 
Permanent Surface Mining Regulation Litigation, 14 Env't Rep. Cas. 
(BNA) 1083, 1100-1101 (D.D.C. 1980). WVCA stated that ``based on the 
court's directive, OSM expressly rejected any notion that reclamation 
bonds are penal in nature. OSM wrote that: `OSM views a reclamation 
bond as one guaranteeing the performance of reclamation work. 
Therefore, it is not a penal bond. Upon forfeiture, only the amounts 
necessary to complete the reclamation work can be used by the 
regulatory authority.' 48 FR 32932, 32957 (July 19, 1983).''
    Response: At the time WVCA submitted its comments on September 13, 
1993, the referenced Circuit Court ruling was meaningful to the 
proposed amendment being reviewed by OSM. However, this amendment was 
revised with West Virginia's submitted dated August 18, 1994. The 
August 1994 submittal contained House Bill 4065 which was passed by the 
West Virginia legislature on or before March 12, 1994. In it, the West 
Virginia legislature approved the use of penal bonds, thereby 
effectively superseding the Circuit Court ruling. As discussed in 
finding A.1.a., the legislature's action creating penal bonds is not 
inconsistent with section 509 of SMCRA and the Federal implementing 
regulations pertaining to performance bonds.
2. Comments: Subsection 12.4(b)
    WVHC commented that the State's duty to meet the requirements of 
subsection 14.5 when reclaiming bond forfeiture sites had been replaced 
with meeting the requirements of subsection 12.5. Subsection 12.5 
establishes an inventory of all sites where bonds have been forfeited 
and a priority listing of sites to receive water treatment whereas 
subsection 14.5 establishes water quality standards for active mining 
operations.
    Response: For the reasons given in finding B.9.c., the Director is 
approving this revision.
3. Comments: Subsection 12.4(c)
    a. GAI argued that instead of West Virginia looking for ``the most 
effective method to control acid mine drainage'' that they should be 
looking for ``the most cost effective method.'' GAI explained that one 
methodology may cost $100,000 and another may cost $3,000,000 with only 
one-tenth of one percent difference in remediation between the two 
methods.
    Response: The Director agrees with the desirability of seeking the 
most cost-effective treatment, so long as the site is brought into 
compliance with applicable effluent limitations and water quality 
standards. It is noted that subsection 12.5(d) requires the Director of 
WVDEP to take into consideration the relative benefits and costs of 
water enhancement projects for bond forfeiture sites.
    b. Comment: WVHC stated that subsection 12.4(c) limits reclamation 
and the amount of acid mine drainage treatment to the amount of money 
available. WVHC commented that SMCRA 509(c) and 30 CFR 800.11(e) 
require that the amount of money be sufficient to match the problem 
rather than the other way around as this proposal suggests. WVHC stated 
that the last sentence of subsection 12.4(c) should be dropped from the 
rule.
    Response: As discussed in finding C., the Director is requiring 
West Virginia to eliminate the deficit in the State's alternative 
bonding system and to ensure that sufficient money will be available to 
complete reclamation, including the treatment of polluted water, of all 
existing and future bond forfeiture sites.
    c. Comment: WVMRA also did not support the revision at subsection 
12.4(c) which requires the Director of WVDEP to take the most effective 
actions possible to remediate acid mine drainage, including chemical 
treatment where appropriate. WVMRA stated that there are no Federal or 
State programs which require mandatory water treatment.
    Response: The Director disagrees with the commenter. See finding 
A.1.b.(2) for a discussion of this issue.
    d. WVHC also commented that in its September 1, 1994, submission, 
WVDEP has added the phrase to reclaim the site ``in accordance with the 
approved reclamation plan or modification thereof.'' WVHC commented 
that this could easily allow changes in reclamation plans after 
forfeiture to relieve the agency of any undesired expense in land or 
water reclamation requirements without public notice or involvement. 
WVHC stated that the words ``or modification thereof'' are 
inappropriate and should be eliminated. WVHC pointed out that the State 
must be held responsible through the alternative bonding system for the 
same reclamation plan that it permitted and bonded. Doubts were also 
expressed on whether the State would make the proper distinction 
between significant and insignificant permit revisions.
    Response: As discussed in finding B.9.d.(1), the Director is 
approving West Virginia's proposed amendment revising CSR Sec. 38-2-
12.4(c) to require that bond forfeiture sites be reclaimed in 
accordance with the approved reclamation plan or modifications thereof. 
The Director believes that regulatory authorities need to have the 
flexibility to modify reclamation plans for forfeiture sites since 
existing approved plans may be technically impossible to implement and 
may not satisfy the changing interests of surface landowners. This most 
often happens when forfeiture occurs before mining is completed. All 
modifications to the reclamation plan by the regulatory authority must 
be consistent with the approved State permanent program.
    The remainder of the comment pertaining to public notice and 
involvement in reclamation plan modifications goes beyond the scope of 
this proposed change by West Virginia since the proposed revision 
merely acknowledges that modification of reclamation plans can occur. 
The amendment is silent as to public participation in the modification 
process.
    4. Comment: Subsection 12.4(d) WVHC commented that this section 
also ends with the sentence that provides for limiting acid mine 
drainage treatment to the funds available. WVHC also stated that the 
words ``in accordance with the approved reclamation plan'' should be 
included, and the last sentence of subsection 12.4(d) should be 
deleted.
    Response: Since subsection 12.4(c) provides that reclamation for 
bond forfeiture sites will be completed in accordance with the approved 
reclamation plan, West Virginia does not have to repeat this provision 
in paragraph (d).
    5. Comment: Subsection 12.4(e) NCCL expressed concerns pertaining 
to the insertion of the language ``or other responsible party'' into 
this subsection. NCCL stated that ``WVDEP proposes to amend the 
regulation to provide that the `operator, permittee or other 
responsible party shall be liable for all costs in excess of the [bond] 
amount forfeited.' 

[[Page 51915]]
The term `other responsible party' is not defined. We believe that this 
undefined term is either redundant or intended by WVDEP to extend the 
scope of the surface mining laws to land owners and other persons that 
SMCRA was intended to protect.''
    NCCL stated that ``the term `operator' is defined in broad terms to 
include all persons who either should obtain a permit or who engage in 
surface mining and reclamation. This term thus includes all persons who 
might be liable for reclamation costs incurred by an operator, 
including those persons who might individually be liable for the 
violations of corporations. Accordingly, there is no need to create 
another category of `other responsible persons.' We are concerned that 
in situations where a specific bond is insufficient to cover the cost 
of reclaiming a site, including potential long term treatment of acid 
mine drainage, WVDEP will decline to use the State Special Reclamation 
Fund to treat water and will instead try to impose these costs on 
landowners pursuant to revised subsection 12.4(e). Whatever its 
motivation, the WVDEP's actions are absolutely inconsistent with the 
goals of SMCRA.''
    NCCL further stated that ``West Virginia has an alternative bonding 
system as provided in 30 CFR 800.11(e) funded by a mix of site-specific 
bond and `bond pool' (i.e., the State Special Reclamation Fund) monies. 
Despite the bifurcated funding mechanism of this system, the full costs 
of reclamation are and must nonetheless be borne exclusively by the 
operators either through site-specific bonds or the special reclamation 
fund (which operators alone fund through a severance fee).'' NCCL also 
commented that ``the incentives to reclaim are absent or diminished 
when reclamation costs may be transferred from operators to other 
parties such as area landowners, which Congress intended to protect, 
nor hold liable for, surface mining operations. See 30 U.S.C. 
Sec. 1202(b).''
    NCCL also stated that ``OSM has even recognized in promulgation of 
its expansive `ownership and control' regulations that direct liability 
for reclamation costs and for compliance with SMCRA belongs solely to 
the operator or permittee.'' To support this statement, NCCL presented 
discussions from two Federal Register notices (54 FR 18438-43, April 
28, 1989, and 53 FR 38868-85, October 3, 1988).
    Response: As discussed in finding B.9.d.(3), the proposed 
requirement in CSR Sec. 38-2-12.4(e) is not prohibited by SMCRA. Also, 
under the Federal Clean Water Act, a permittee, operator and/or 
landowner can be held responsible for the treatment of point source 
discharges that do not meet NPDES effluent limitations after 
forfeiture.

CSR Sec. 38-2-12.5 Water Quality Enhancement

    1. Comment subsection 12.5(d): BCC commented that the proposal for 
supplementing and adjusting the special reclamation fund to pay for 
long-term acid mine drainage treatment from forfeiture sites goes far 
beyond any OSM counterpart.
    WVMRA commented that ``this policy sets a priority and inventory 
and makes some recommendations, but there is no legal guidance from OSM 
regarding what such a program should include. This makes evaluation of 
this policy impossible.''
    Response: As discussed in finding B.10.a., subsection 12.5 is being 
approved to the extent that it provides only for a ranking of sites for 
reclamation without compromising the requirement that all sites be 
properly reclaimed in a timely manner.
    2. Comment subsection 12.5(d): WVHC stated that the alternative 
bonding system fund must be increased to address the liability rather 
than the liability being adjusted to match the funds available.
    Response: As discussed in finding B.10.b., the Director is 
requiring the State to revise subsection 12.5(d) to remove the 25 
percent limitation or to otherwise provide for the treatment of 
polluted water discharged from bond forfeiture sites.

Retroactive Approval of Amendment

    Comment: The WVCA and the WVMRA objected to the proposed provision 
at 30 CFR 948.15(o)(1) which would make OSM's approval of the State's 
program amendment retroactive. WVMRA commented that OSM had no 
authority to retroactively approve the amendment.
    Response: As discussed in the Director's Decision (Subsection V), 
the Director believes he has ample cause and legal basis for making his 
decision on this amendment retroactive to the dates when the proposed 
revisions were submitted to OSM.

Federal Agency Comments

    Pursuant to section 503(b)(1) of SMCRA and 30 CFR 732.17(h)(11)(i), 
OSM solicited comments on the proposed amendment from various Federal 
agencies with an actual or potential interest in the West Virginia 
program on four different occasions (Administrative Record Nos. WV-891, 
WV-897, WV-936, and WV-942). Comments were received from the U.S. 
Bureau of Land Management, the Mine Safety and Health Administration, 
the U.S. Bureau of Mines, and the U.S. Army Corps of Engineers. These 
Federal agencies acknowledged receipt of the amendments, but generally 
had no comment or acknowledged that the revisions were satisfactory.

Environmental Protection Agency (EPA)

    Pursuant to 30 CFR 732.17(h)(11)(ii), OSM is required to obtain the 
written concurrence of the EPA with respect to those provisions of the 
proposed program amendment that relate to air or water quality 
standards promulgated under the authority of the Clean Water Act (33 
U.S.C. 1251 et seq.) or the Clean Air Act (42 U.S.C. 7401 et seq.).
    On July 2 and August 3, 1993 (Administrative Record Nos. WV-892 and 
WV-896), OSM solicited EPA's concurrence with the proposed amendment. 
On October 17, 1994 (Administrative Record No. WV-949), EPA gave its 
written concurrence with a condition based on subsection 5.4(b)(4) of 
West Virginia's regulations. This conditional concurrence does not 
pertain to the bonding requirements, which are the subject of this 
rulemaking. Therefore, EPA's concurrence will be discussed in the third 
and final rulemaking on the proposed amendment.
    Pursuant to 30 CFR 732.17(h)(11)(i), the Director solicited 
comments on the proposed amendment from EPA on four different occasions 
in 1993 and 1994 (Administrative Record Nos. WV-891, WV-897, WV-936, 
and WV-942). In its letter dated October 17, 1994 (Administrative 
Record No. WV-949), EPA submitted the following comments on the 
proposed amendment provisions pertaining to the bonding requirements.
    1. Comment: EPA commented that ``the matrices on Tables 1 and 4 
[CSR Sec. 38-2-11.6, Site-Specific Bonding] provide a method for 
determining reclamation bonds with a maximum of $5,000 per acre. It is 
noted that the maximum portions which can be attributed for water 
quality concerns are based on overburden/ material analyses and are 
only $400 for surface mines and $800 for refuse disposal sites. It is 
also understood that, under current State regulations, a maximum of 
only 25 percent of the Special Reclamation Fund, or bond pool, can be 
used for treatment of forfeiture sites. Considering the experience to 
date for long-term treatment of acid discharges from bond forfeiture 
sites, the above funding sources are very inadequate. It is apparent 
that the answer for preventing 

[[Page 51916]]
future acid mine drainage is to scrutinize proposed mining permits for 
their acid drainage potentials and deny permits to those with higher 
potentials. For proposed mines with lower acid drainage potentials, 
funding from the site-specific bonds, Special Reclamation Fund or other 
alternative sources should be increased to amounts to provide for the 
contingency of long-term treatment.''
    Response: As discussed in finding A.1.b.(2), the Director is 
requiring West Virginia to amend its program to provide for the 
treatment of polluted water discharging from all bond forfeiture sites.
    Also, as discussed in finding A.1.b.(4)(c), the Director 
disapproved the proposal that would allow the special reclamation fund 
to incur a deficit. Furthermore, as discussed in finding C., the 
Director found the State's alternative bonding system is not achieving 
the objectives and purposes of the conventional bonding program as set 
forth in section 509 SMCRA, and he is requiring the State to eliminate 
the deficit in the State's alternative bonding system and to ensure 
that sufficient money will be available to complete reclamation, 
including treatment of polluted water, at existing and future bond 
forfeiture sites.
    2. Comment: EPA also expressed concern about the potential for acid 
seepage from backfills after Phase I bond is released pursuant to the 
provisions of section 12.2(c)(1), where 60 percent of the total bond 
may be released. EPA recommended that ``Phase I bond release for mines 
with acid potential be delayed for a year or sufficient period after 
backfilling to determine if acid seepage will occur.'' EPA further 
recommended withholding of the entire bond if acid seepage did occur 
after this period.
    Response: The Director finds that EPA's recommendations have merit. 
However, nothing in SMCRA or the Federal regulations require Phase I 
bond release to be delayed in order to determine if acid seepage will 
occur. It should be noted that compliance with the State's existing 
toxic handling and hydrologic reclamation plan requirements should 
prevent postmining acid seeps from occurring. Further, subsection 
14.7(d) provides that after treatment facilities are removed, a one-
year history of meeting applicable effluent limitations is required to 
establish that the hydrologic balance is being preserved.

State Historical Preservation Officer and the Advisory Council on 
Historic Preservation (ACHP)

    Pursuant to 30 CFR 732.17(h)(4), OSM solicited comments on the 
proposed amendment from the West Virginia Division of Culture and 
History and the ACHP on four different occasions (Administrative Record 
Nos. WV-891, WV-897, WV-936, and WV-942). Neither agency commented on 
the proposed amendment.

V. Director's Decision

    Based on the above findings, the Director is approving with certain 
exceptions and additional requirements the proposed amendment as 
submitted by West Virginia on June 28, 1993, as modified on July 30, 
1993; August 18, 1994; and September 1, 1994, and May 16, 1995. As 
discussed in the findings, there are some exceptions to this approval. 
The Director also is requiring the State to make additional changes to 
certain provisions to ensure that the program is no less stringent than 
SMCRA and no less effective than the Federal regulations.
    As discussed in findings A.1.b.(1) and B.10.a., the Director is 
approving those portions of Sec. 22-3-11(g) of WVSCMRA and CSR Sec. 39-
2-12.5 that concern prioritization of forfeited sites only to the 
extent that these provisions authorize the ranking and prioritization 
of bond forfeiture sites for reclamation purposes. Nothing in this 
decision shall be construed as compromising the requirement that all 
bond forfeiture sites be properly reclaimed in a timely manner.
    In addition, as discussed in findings A.1.b.(2), A.1.b.(4)(c), and 
B.10.b., the Director is not approving Sec. 22-3-11(g) of WVSCMRA and 
CSR Sec. 39-2-12.5(d) to the extent that they limit expenditures on 
water treatment at bond forfeiture sites to 25 percent of the assets of 
the special reclamation fund and authorize collection of the special 
reclamation tax only when the fund's liabilities exceed its assets.
    As discussed in finding A.1.b.(3), the Director is approving 
Sec. 22-3-11(g) of WVSCMRA concerning administrative expenses only to 
the extent that the special reclamation fund can withstand all 
authorized administrative cost withdrawals without hampering the 
State's ability to complete the reclamation of bond forfeiture sites in 
a timely manner and in accordance with their approved reclamation 
plans.
    As discussed in finding B.5., the Director is approving CSR 
Sec. 38-2-11.6 with the stipulation that nothing in these regulations 
or this approval may be construed as altering or authorizing a variance 
or deviation from the permitting requirements and performance standards 
of the approved West Virginia program.
    The Director is amending 30 CFR Part 948 to codify this decision. 
Under 30 CFR 732.17(g), no changes in State laws or regulations may 
take effect for purposes of the State program unless and until they are 
approved as a program amendment. With respect to those changes in State 
laws and regulations approved in this document, the Director is making 
the effective date of his approval retroactive to the date upon which 
they took effect in West Virginia for purposes of State law. He is 
taking this action in recognition of the extraordinarily complex nature 
of the review and approval process for this particular amendment, the 
significance of its provisions to the adequacy of the alternative 
bonding system, and the need to affirm the validity of State actions 
taken during the interval between State implementation and the decision 
being announced today. Retroactive approval of these provisions is in 
keeping with the purposes of SMCRA relating to State primary and 
environmental protection.
    To assure consistency with 30 CFR 732.17(g), which states that 
``[no] * * * change to laws or regulations shall take effect for 
purposes of a State program until approved as an amendment,'' the 
Director's approval of the revisions, as noted in the codification 
below, includes West Virginia's previous and ongoing implementation of 
these revisions. The changes approved in this rulemaking strengthen the 
West Virginia program and, as such, are consistent with SMCRA and the 
Federal regulations at 30 CFR 732.17(g).
    Retroactive approval of the revisions is appropriate because no 
detrimental reliance on the previous West Virginia laws or regulations 
has occurred for the period involved. OSM is approving these changes 
back only to the dates from which West Virginia began enforcing them. 
As support for his decision, the Director cites the rationale employed 
by the United States Claims Court in McLean Hosp. Corp. v. United 
States, 26 Cl. Ct. 1144 (1992). In McLean, the Court held that 
retroactive application of a rule was appropriate where the rule was 
identical in substance to guidelines which had been in effect anyway 
during the period in question. Therefore, the Court concluded, the 
plaintiff could not ``claim that it relied to its detriment on a 
contrary rule.'' 26 Cl. Ct. at 1148. Likewise, since the Director is 
approving changes which the State has 

[[Page 51917]]
been enforcing there can be no claim of detrimental reliance on any 
contrary West Virginia statutes or regulations in this instance.
    Making portions of the approval retroactive does not require 
reopening of the comment period under section 553(b)(3) of the 
Administrative Procedure Act (APA), 5 U.S.C. Sec. 553(b)(3). The 
public, in general, and the coal industry in West Virginia in 
particular have had sufficient notice of these revised statutory and 
regulatory revisions to support retroactive OSM approval. Retroactive 
approval constitutes an acknowledgement of statutory and regulatory 
revisions which West Virginia has been implementing since the 
respective approval dates of these revisions at the State level, and 
would have been expected as a natural outgrowth of the proposal. The 
retroactive approval does not apply to earlier versions of these 
provisions to the extent that such provisions were inconsistent with 
Federal requirements.
    Furthermore, ``good cause'' exists both under section 553(b)(3)(B) 
of the APA, 5 U.S.C. Sec. 553(b)(3)(B), for retroactive approval (if 
notice were not sufficient) and under section 553(d)(3) of the APA, 5 
U.S.C. Sec. 553(d)(3), for not delaying the effective date of the 
approval for 30 days after the publication of this Federal Register 
decision document. As noted in the findings above, most of these 
bonding revisions are needed to improve the efficacy and financial 
status of West Virginia's bonding program in general, and its 
alternative bonding system in particular. See, for example, findings 
A.1.a. (penal bonding), A.1.b.(4)(a) (increase in the special 
reclamation tax), and B.5 (site-specific bonding). Failure to make OSM 
approval of these salutary provisions retroactive could cause 
significant disruption to the orderly enforcement and administration by 
West Virginia of its bonding program, particularly if the funding of 
the alternative bond system was affected. The Director believes that 
the desire to avoid such unfortunate consequences, coupled with the 
lack of any prejudice to the public or to the regulated community, are 
sufficient bases to constitute ``good cause.''

Effect of Director's Decision

    Section 503 of SMCRA provides that a State may not exercise 
jurisdiction under SMCRA unless the State submits and obtains the 
Secretary's approval of a regulatory program. Similarly, 30 CFR 
732.17(a) requires that the State submit any alteration of an approved 
State program to OSM for review as a program amendment. Thus, any 
changes to the State program are not enforceable until approved by OSM. 
The Federal regulations at 30 CFR 732.17(g) prohibit any unilateral 
changes to approved State programs. In oversight of the West Virginia 
program, the Director will recognize only the statutes, regulations and 
other materials approved by OSM, together with any consistent 
implementing policies, directives and other materials, and will require 
the enforcement by West Virginia of only such provisions. The 
provisions that the Director is approving today will take effect on the 
specified dates for purposes of the West Virginia program.

VI. Procedural Determinations

Executive Order 12866

    This rule is exempted from review by the Office of Management and 
Budget (OMB) under Executive Order 12866 (Regulatory Planning and 
Review).

Executive Order 12778

    The Department of the Interior has conducted the reviews required 
by section 2 of Executive Order 12778 (Civil Justice Reform) and has 
determined that, to the extent allowed by law, this rule meets the 
applicable standards of subsections (a) and (b) of that section. 
However, these standards are not applicable to the actual language of 
State regulatory programs and program amendments since each such 
program is drafted and promulgated by a specific State, not by OSM. 
Under sections 503 and 504 of SMCRA (30 U.S.C. 1253 and 1255) and 30 
CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State 
regulatory programs and program amendments submitted by the States must 
be based solely on a determination of whether the submittal is 
consistent with SMCRA and its implementing Federal regulations and 
whether the other requirements of 30 CFR Parts 730, 731, and 732 have 
been met.

National Environmental Policy Act

    No environmental impact statement is required for this rule since 
section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency 
decisions on proposed State regulatory program provisions do not 
constitute major Federal actions within the meaning of section 
102(2)(C) of the National Environmental Policy Act (42 U.S.C. 
4332(2)(C)).

Paperwork Reduction Act

    This rule does not contain information collection requirements that 
require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 
3507 et seq.).

Regulatory Flexibility Act

    The Department of the Interior has determined that this rule will 
not have a significant economic impact on a substantial number of small 
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
The State submittal which is the subject of this rule is based upon 
corresponding Federal regulations for which an economic analysis was 
prepared and certification made that such regulations would not have a 
significant economic effect upon a substantial number of small 
entities. Accordingly, this rule will ensure that existing requirements 
previously promulgated by OSM will be implemented by the State. In 
making the determination as to whether this rule would have a 
significant economic impact, the Department relied upon the data and 
assumptions for the corresponding Federal regulations.

List of Subjects in 30 CFR Part 948

    Intergovernmental relations, Surface mining, Underground mining.

    Dated: September 27, 1995.
Allen D. Klein,
Regional Director, Appalachian Regional Coordinating Center.

    For the reasons set out in the preamble, Title 30, Chapter VII, 
Subchapter T of the Code of Federal Regulations is amended as set forth 
below:

PART 948--WEST VIRGINIA

    1. The authority citation for Part 948 continues to read as 
follows:

    Authority: 30 U.S.C. 1201 et seq.

    2. Section 948.15 is amended by adding paragraph (o) to read:


Sec. 948.15  Approval of regulatory program amendments.

* * * * *
    (o)(1) General description and effective dates. Except as noted in 
paragraph (o)(3) of this section, the amendment submitted by West 
Virginia to OSM by letter dated June 28, 1993, as revised by submittals 
dated July 30, 1993; August 18, 1994; September 1, 1994; and May 16, 
1995, is approved to the extent set forth in paragraph (o)(2) of this 
section. These portions of the amendment pertain to bonding 
requirements; the Director will announce a decision on the other 
provisions of the amendment at a later time. The effective dates of the 
Director's approval of the provisions identified in paragraph (o)(2) of 
this section are set forth below:
    (i) March 10, 1990, for the statutory changes submitted to OSM by 
letter 

[[Page 51918]]
dated June 28, 1993 (Administrative Record No. WV-888);
    (ii) December 1, 1992, for the rule changes submitted to OSM by 
letter dated June 28, 1993 (Administrative Record No. WV-889);
    (iii) May 2, 1993, for the rule changes submitted to OSM by letter 
dated July 30, 1993 (Administrative Record No. WV-893);
    (iv) June 11, 1994, for the statutory changes submitted to OSM by 
letter dated August 18, 1994 (Administrative Record No. WV-933); and
    (v) October 4, 1995, for the rule changes submitted to OSM by 
letters dated September 1, 1994, and May 16, 1995 (Administrative 
Record Nos. WV-937 and WV 979B).
    (2) Approved revisions. Except as noted in paragraph (o)(3) of this 
section, the following provisions of the amendment described in 
paragraph (o)(1) of this section are approved:
    (i) Revisions to the West Virginia Surface Coal Mining and 
Reclamation Act.

Sec.  22-3-11(a)  Bond Requirements.                                    
Sec.  22-3-11(g)  Special Reclamation Fund.                             
                                                                        

(The provision authorizing annual diversions of up to 10 percent of 
the fund's assets for administrative costs associated with various 
State regulatory and reclamation programs is approved only to the 
extent that these withdrawals do not hamper the State's ability to 
complete the reclamation of bond forfeiture sites in a timely manner 
in accordance with the approved reclamation plans.)

Sec.  22-3-12...  Site-Specific Bonding.                                
                                                                        

    (ii) Revisions to the West Virginia Code of State Regulations 
(CSR).

Sec.  38-2-11.2.  General Requirements for All Bonds.                   
Sec.  38-2-11.3.  Collateral Bonds.                                     
Sec.  38-2-11.4.  Incremental Bonding.                                  
Sec.  38-2-11.5.  Open-Acre Limit Bonding.                              
Sec.  38-2-11.6.  Site-Specific Bonding.                                
                                                                        

(These regulations are approved with the stipulation that nothing in 
CSR Sec. 38-2-11.6 or the Director's approval of this subsection may 
be construed as altering or authorizing a variance or deviation from 
the permitting requirements and performance standards of the 
approved West Virginia program.)

Sec.  38-2-11.7...  Environmental Security Account.                     
Sec.  38-2-12.2...  Requirement to Release Bonds.                       
Sec.  38-2-12.3...  Bond Adjustments.                                   
Sec.  38-2-12.4(a)  Bond Forfeiture.                                    
Sec.  38-2-12.4(a)  Bond Forfeiture.                                    
 (2)(B).                                                                
Sec.  38-2-12.4(c)  Bond Forfeiture.                                    
Sec.  38-2-12.4(d)  Bond Forfeiture.                                    
 , (e).                                                                 
Sec.  38-2-12.5...  Water Quality Enhancement.                          
                                                                        

(These regulations are approved with the stipulation that nothing in 
CSR Sec. 38-2-12.5 or the Director's approval of this subsection may 
be construed as compromising the program requirement that all bond 
forfeiture sites be fully reclaimed in a timely manner.)
    (3) Exceptions.
    (i) Section 22-3-11(g) of the Code of West Virginia is not approved 
to the extent that it limits special reclamation fund expenditures on 
water treatment at bond forfeiture sites to 25 percent of the fund's 
annual fee collections and authorizes collection of the special 
reclamation tax only when the fund's liabilities exceed its assets.
    (ii) Subsection 38-2-12.5(d) of the West Virginia Code of State 
Regulations is not approved to the extent that it limits expenditures 
on water treatment at bond forfeiture sites to 25 percent of the 
special reclamation fund's gross annual revenue.
    3. Section 948.16 is revised by removing and reserving paragraph 
(ww) and by adding paragraphs (jjj), (kkk), and (lll) to read:


Sec. 948.16  Required regulatory program amendments.

* * * * *
    (jjj) By December 1, 1995, West Virginia must submit either a 
proposed amendment or a description of an amendment to be proposed, 
together with a timetable for adoption, to revise Sec. 22-3-11(g) of 
the Code of West Virginia and Sec. 38-2-12.5(d) of the West Virginia 
Code of State Regulations to remove the limitation on the expenditure 
of funds for water treatment or to otherwise provide for the treatment 
of polluted water discharged from all bond forfeiture sites.
    (kkk) By December 1, 1995, West Virginia must submit either a 
proposed amendment or a description of an amendment to be proposed, 
together with a timetable for adoption, to remove the provision of 
Sec. 22-3-11(g) of the Code of West Virginia that allows collection of 
the special reclamation tax only when the special reclamation fund's 
liabilities exceed its assets.
    (lll) By December 1, 1995, West Virginia must submit either a 
proposed amendment or a description of an amendment to be proposed, 
together with a timetable for adoption, to eliminate the deficit in the 
State's alternative bonding system and to ensure that sufficient money 
will be available to complete reclamation, including the treatment of 
polluted water, at all existing and future bond forfeiture sites.
[FR Doc. 95-24580 Filed 10-3-95; 8:45 am]
BILLING CODE 4310-05-M