[Federal Register Volume 62, Number 40 (Friday, February 28, 1997)]
[Rules and Regulations]
[Pages 9093-9103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5016]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3800

[WO-660-4120-02-24 1A]
RIN 1004-AC40


Mining Claims Under the General Mining Laws; Surface Management

AGENCY: Bureau of Land Management, Interior.

ACTION: Final rule.

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SUMMARY: The Bureau of Land Management (BLM) is amending its surface 
management regulations at 43 CFR subpart 3809. The final rule requires 
submission of financial guarantees for reclamation of all hardrock 
mining operations greater than casual use, increases the types of 
financial instruments acceptable to satisfy the requirement for a 
financial guarantee, and amends the noncompliance section of the 
regulations to require the filing of plans of operations by operators 
who have a record of noncompliance. In addition, the final rule removes 
section 3809.1-8 on existing operations, which is no longer applicable, 
because all activities that were in operation in 1980 and continue in 
operation have now complied with this section.

EFFECTIVE DATE: March 31, 1997.

ADDRESSES: Inquiries or suggestions should be sent to the Solid 
Minerals Group at Director (320), Bureau of Land Management, Room 501 
LS, 1849 C Street, N.W., Washington, D.C. 20240.

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

SUPPLEMENTARY INFORMATION: On July 11, 1991 (56 FR 31602), BLM 
published a proposed rule to require submission of financial guarantees 
for reclamation for all hardrock mining operations greater than casual 
use, to designate additional financial instruments that would satisfy 
the requirement for a financial guarantee, and to amend the 
noncompliance section of the regulations to require the filing of plans 
of operations by operators who have a record of noncompliance. The 
extended 90-day comment period expired on October 9, 1991. The BLM 
received 218 comments on the proposed rule, including 3 citizen-
petitions with numerous signatures. Of these comments, 58 were from 
public interest groups, 51 were from business entities or associations, 
22 were from government agencies, and 135 were from individuals, not 
including the petitions. All of the comments were

[[Page 9094]]

carefully considered in developing this final rule.
    Three basic points of view as to the proposed rule emerged in the 
comments. First, a number of comments dealt with the adequacy of the 
bond levels, self-certification, and the number of financial 
instruments acceptable under the rule. The comments stated that the 
bond levels set in the proposed rule were too low, and that BLM should 
require full cost bonding for both notices and plans of operation. 
Those expressing concern regarding self-certification and the number of 
financial instruments believe the proposed rule could lead to less 
security. Others simply objected to self-bonding in any form. Second, 
mining associations and some individuals agreed that the proposed rules 
were necessary, but argued that the $5,000 bond for notice level 
operations is excessive. Third, many of the individuals argued that the 
proposal discriminates against small miners and would force them out of 
business, if implemented.
    In response to the comments regarding bond levels, BLM has amended 
the rule to require bonds for 100 percent of the amount that would be 
needed to pay for reclamation by a third-party contractor using 
equipment from an off-site location. This will ensure that, if the 
bonded party fails to perform its reclamation responsibilities, BLM 
will have access to adequate funds through these financial guarantee 
arrangements to reclaim the lands, and thereby protect the interest of 
the public, including Federal taxpayers. Calculation of the amount is 
at the operator's expense, and must be certified by a third-party 
professional engineer registered to practice in the State in which the 
operations are proposed. However, this engineer's certification is not 
required when the requirement for a financial guarantee is met by 
providing evidence of an instrument held or approved by a State agency.
    The comments suggesting that the bonds were insufficient also 
raised several other issues. For example, they asserted that the rule 
did not contain detailed reclamation and bond release language. 
Detailed guidance on reclamation is beyond the scope of this rule. 
However, the final rule addresses concerns about bond release in 
section 3809.1-9(m), as discussed below. Under the subpart 3809 
regulations, further guidance on the standards for reclamation and bond 
release will be dealt with on a case-by-case basis at the time a notice 
provided for under section 3809.1-3 or a plan of operations provided 
for under section 3809.1-4 is received and reviewed, and would be 
covered as part of the review of reclamation measures incorporated into 
the notice or plan.
    The majority of the individual comments objected to the $5,000 
minimum bond required for a notice level operation. They stated that 
the $5,000 self-certification would be an unnecessary regulation, 
because reclamation of any damage caused by small miners occurs 
naturally during the first winter. Those who identified themselves as 
recreational miners considered the proposal to be unfair, because it 
requires too great an expenditure. Many individual comments opposed the 
$5,000 financial guarantee, arguing that even self-certification would 
be burdensome and force small miners and prospectors out of business. 
Two individual comments favored the proposal, citing firsthand 
experience of the environmental impact of small mining operations.
    The proposed rule was drafted with the assumption that notice-level 
operators likely would use the full 5 acres allowed and certify the 
existence of the full $5,000 guarantee for the entire acreage at the 
$1,000 per acre exploration level cap. The final rule requires the 
financial guarantee to cover 100 percent of the estimated costs of 
reclamation, with the minimum acceptable amount being $1,000 for each 
acre or fraction thereof disturbed.

Specific Comments

    In the following portion of the preamble, comments will be 
discussed as they relate to various specific sections of the rule.

Section 3809.0-5  Definitions

    This section of the proposed rule would have added definitions for 
the terms ``exploration operations'' and ``mining operations,'' and 
redesignated the other paragraphs to accommodate these additions. These 
proposed definitions were to be used to differentiate between the 
maximum guarantee amounts ordinarily to be required. However, since the 
rule has been changed elsewhere in accordance with public comments to 
require financial guarantees to cover 100 percent of the estimated 
costs of reclamation for all operations other than casual use, these 
definitions are no longer needed. Therefore, the proposed revisions to 
section 3809.0-5 are omitted in the final rule.

Section 3809.0-9  Information Collection

    This section codifies the note that appeared at the beginning of 
Group 3800, and revises it to comply with current OMB regulations. A 
notice of BLM's request for approval of the information collections in 
subparts 3802 and 3809 was published in the Federal Register on March 
5, 1996. Three comments responded to the notice, two within the public 
comment period. Two of the comments supported the information 
collection. A third objected to perceived redundancies in the 
information collection proposal. The supposed repetitiveness was only 
apparent; similar information is to be collected under each of two 
subparts covered by the request, but will not be collected twice for 
the same operation. The comment also seemed to treat the notice as 
pertaining to a proposed rule rather than in part to existing 
regulations, and objected to provisions dealing with aircraft 
operations in subpart 3802, arguing that BLM lacked jurisdiction. 
However, BLM managers do in fact manage aircraft landing areas in 
wilderness study areas under subpart 3802. These comments did not lead 
to changes in the information collection. The estimated public 
reporting burden is estimated to be 16 hours per response for notices 
and 32 hours per response for plans of operations.

Section 3809.1-9  Financial Guarantees

    This section states clearly that obtaining a bond or other 
financial guarantee is a prerequisite to operating on an unpatented 
mining claim under a notice or plan of operations. It lists the types 
of guarantees that are acceptable, and requires that they cover the 
entire estimated cost of reclamation. It requires that operators report 
their financial guarantees to BLM and include certain enumerated 
information with the report. The section also provides for partial 
release under the guarantees when phases of reclamation are completed, 
and states the consequences of default or bond deficiency.
    A new paragraph (a) has been added to this section in the final 
rule to make it clear that initiating operations under a notice or 
conducting operations under a plan of operations without a required 
financial guarantee is prohibited by regulation. Among other remedies 
available to the government, such conduct may be prosecuted under 
section 303(a) of the Federal Land Policy and Management Act (FLPMA), 
which provides criminal penalties for the knowing and willful violation 
of the regulations.
    Proposed paragraph (a) is redesignated as (b) in the final rule. 
This paragraph, as proposed, removed language from the current 
regulations

[[Page 9095]]

exempting notice level operations from posting a financial guarantee. 
One comment observed that almost any normal mining activity exceeds the 
definition of casual use in subpart 3809 and implied that the paragraph 
excepting casual use from bonding requirements serves no use. No change 
is made in the final rule as a result of this comment. Much exploratory 
activity that does not require a notice to be submitted can and does 
take place on public lands, whether on mining claims or not: for 
example, exploratory activity that does not require mechanized earth-
moving equipment or explosives.
    Section 3809.1-9(c). Proposed paragraph (b), which has been 
redesignated as paragraph (c) in the final rule, would have: (1) 
Required certification of a financial guarantee, (2) established a 
guarantee amount of $5,000, (3) allowed a choice of financial 
instruments, (4) provided that the guarantee may be met by providing 
evidence of a State-held bond, (5) required the certification to 
accompany the filed notice, (6) permitted the authorized officer to 
return incomplete notices for failure to have the certification, (7) 
required the funds to remain available until the authorized officer has 
absolved the operator of reclamation responsibilities, and (8) held the 
operator to the reclamation standards in section 3809.1-3(d).
    A number of comments addressed the various proposed requirements in 
this paragraph of the proposed rule.
    (1) Certification of a financial guarantee.
    Two comments suggested that a better course of action would be for 
the BLM to have the guarantee in hand rather than a certification that 
a guarantee exists. They cited a perceived tendency for small operators 
who commit violations to leave the vicinity or not restart operations 
on public lands, because many miners only have one operation in their 
lifetime and the possibility of not being able to obtain a financial 
guarantee for future operations is not a credible deterrent. They also 
cite the high cost of prosecutions.
    We acknowledge the potential for such problems. The model for this 
proposal is the self-certification system used in administering State 
requirements for automobile insurance. Citizens do not customarily hand 
the policy to the State, but certify that it has been obtained and is 
available for use. Failure to have the insurance brings the imposition 
of penalties by the State. Notices and plans of operation will be 
required to contain the social security number of the operator or the 
employer identification number of operators or agents. Ultimately, 
however, the mining claimant will be responsible for the activity on 
the mining claim.
    There will be a lower administrative cost using the certificate 
system since collecting the actual financial instruments necessarily 
would require funding for the administrative overhead to accept, sort, 
and process the instruments, and maintain facilities for secure 
storage. Second, the sanctions for noncompliance can be severe, and can 
in appropriate cases include criminal penalties authorized by Section 
303(a) of FLPMA for knowing and willful violations of these 
regulations. These sanctions will be used against operators who abandon 
operations after committing violations.
    This rule also incorporates the maximum penalties provided for in 
the Sentencing Reform Act of 1989 (18 U.S.C. 3571 et seq.). Penalty 
provisions such as those in FLPMA that provide for up to a year in jail 
or a fine of $1,000 for violators are classified as Class A 
misdemeanors under 18 U.S.C. 3571, and the Sentencing Reform Act 
provides for fines for Class A misdemeanors of up to $100,000 for 
individuals and $200,000 for organizations.
    (2) The guarantee amount of $5,000.
    This provision of the proposed rule generated the largest number of 
comments. Many stated that the proposed $5,000 guarantee would be 
excessive, burdensome, discriminatory, and damaging to small operators. 
On the other hand, other comments stated that the amount was 
insufficient for complete reclamation.
    In drafting the proposed rule, it was assumed that notice level 
operators would use the full 5 acres allowed and be bonded for the same 
at the proposed exploration level cap, which was $1,000 per acre. Many 
comments suggested that financial guarantee requirements should be 
based on actual acreage disturbed. This suggestion has been adopted in 
the final rule. The final rule requires bonding sufficient to cover 100 
percent of the estimated costs of reclamation with a $1,000 minimum 
rate for each acre disturbed. The minimum acceptable amount will be 
$1,000 if the area disturbed is less than one acre.
    (3) Allowing for a choice of financial instruments.
    Individual and industry association comments generally approved of 
the option to choose the financial instrument. Environmental groups 
expressed reservations as to the use of instruments with greater 
associated risk, such as mortgages on mining properties and liens on 
equipment. We acknowledge the increased risk associated with these 
types of instruments. In response, the rule has been amended to remove 
the provision for the use of mortgages on mining property and first 
liens on equipment.
    One comment suggested that whatever financial instrument is 
approved, it must be redeemable by the Secretary. For plan level 
operations, the suggestion is a logical extension of the BLM holding 
the guarantee. The rule has been amended to incorporate this change for 
plan-level operations. For notice-level activities, this would be an 
unnecessary administrative burden on the operator and the authorized 
officer. The authorized officer does not hold the guarantee for notice-
level activities, but rather the certification. If the comment were 
adopted in the final rule, operators would be required to get the 
instrument released by the authorized officer, creating an unnecessary 
administrative burden. Therefore, the comment is not adopted for 
notice-level activities.
    (4) The guarantee may be met by providing evidence of a State-held 
bond.
    This continues the provisions of the existing regulations.
    (5) The certification is required to accompany the filed notice.
    (6) The authorized officer may return incomplete notices for 
failure to have the certification.
    One comment observed that nothing in the regulations requires the 
notice to be complete and that the notice does not have to be approved, 
adding that the provision regarding the notice should be modified to 
create a completeness review or a notice approval process. The comment 
observed that the situation renders the return of the notice 
irrelevant. As a clarification and to achieve the same purpose as the 
return of a notice submitted without a financial guarantee certificate, 
the final rule incorporates language at section 3809.1-9(a) stating 
that conducting operations under either a plan or a notice prior to 
submission of the appropriate financial guarantee is prohibited. 
Section 3809.3-2 on noncompliance has been amended by adding paragraph 
(f) to set forth the penalties contained in the statute for those who 
commit prohibited acts. For notices filed after the effective date of 
the regulations, the certification set out in paragraph (c) of this 
section must accompany the notice. For existing notices on file with 
BLM that cover active ongoing operations predating the effective date 
of this rule (including operations suspended due to weather), no 
certification is required until a new notice is filed. For existing 
notices on file with BLM, the claimant or operator will have to provide 
the certification before initiating operations.

[[Page 9096]]

    (7) The funds are required to remain available until the authorized 
officer has absolved the operator of reclamation responsibilities.
    As discussed below, in response to comments, a procedure for phased 
release or reduction of bonds as reclamation phases are completed has 
been included in section 3809.1-9(m) of the final rule.
    (8) The operator is held to the reclamation standards in section 
3809.1-3(d).
    Among the general comments were several statements that BLM should 
develop ``clear reclamation standards'' and, as a Federal agency, 
should take the lead in ``defining performance standards.'' The BLM 
currently has regulations at 43 CFR 3809.1-3(d) and 3809.1-5(c) that 
govern reclamation standards. Reexamination of their adequacy is beyond 
the scope of this rule.
    Section 3809.1-9(d). This paragraph was paragraph (c) in the 
proposed rule, and has been redesignated as (d) in the final rule. In 
the final rule, this provision requires the certification for notice-
level operations to include the name, home address, home and office 
phone number, and social security or employer identification number of 
the operator, mining claimant, or its agent. It requires the operator, 
mining claimant, or its agent to make various statements about the 
financial guarantee as part of the certification, including: (1) That 
the mining claimant or operator for whom the individual is submitting 
the certification is responsible for the reclamation; (2) that the 
financial guarantee exists in the required amount, and its location; 
(3) that the guarantee will be delivered on demand within 45 days; (4) 
a statement acknowledging that surrender of the guarantee does not 
absolve the operator, mining claimant, or agent, from responsibility 
and does not release or waive any claim BLM may have under the 
Comprehensive Environmental Response, Compensation, and Liability Act 
of 1980, as amended, 42 U.S.C. 9601 et seq., or any other applicable 
statutes, or any regulations; and (5) a statement acknowledging that 
failure to have the guarantee as certified, or failure to provide the 
guarantee upon demand by the authorized officer may result in 
prosecution under the appropriate Federal statutes.
    Many of the comments that generally objected to the proposed rule 
also objected to the content of this certification, suggesting that it 
assumed all operators were guilty until proven innocent. The purpose of 
the regulation is, however, to create a set of known standards by which 
to judge the performance of the notice-level operator with respect to 
having and maintaining the financial guarantee. Because BLM is not now 
requiring notice operators to supply the guarantee itself to BLM, but 
only to certify its existence, it is important that the operator 
understands fully and acknowledges his or her obligations in this 
regard.
    One comment stated that 45 days (plus an additional 45 days, if 
authorized) was too long a period of time for the Government to wait 
for the guarantee. The time period is retained in the final rule 
because some instruments allowed under the rule may take time to be 
liquidated.
    One statement observed that there was some confusion in determining 
the responsible party in the proposed language. The purpose of the 
provision is to designate a responsible party. That party may be a 
representative of a corporate operator. If an individual can speak for 
the corporation in filing a notice and a guarantee, then the same 
individual can bind the company to do the reclamation.
    Proposed section 3809.1-9(d), redesignated as (e) in the final 
rule, requires each of the statements included with the certification 
to be initialed and dated. Failure to initial each statement will 
result in return of the certificate. One comment stated that this was 
unnecessary and that the signing and the dating of the entire 
certificate should suffice. Another comment noted that this procedure 
was overly bureaucratic. Section 3809.1-9(e) is retained in the final 
rule, because these separate acknowledgments will serve to establish 
the knowledge and legal accountability of mining claimants and 
operators who will be permitted under the regulations to self-certify 
that they have adequate financial guarantees.
    Proposed section 3809.1-9(e), redesignated as (f) in the final 
rule, has been amended for clarification to limit its application to 
notice-level operators.
    Proposed paragraphs (f) and (g) of section 3809.1-9, redesignated 
as (g) and (h) in the final rule, would have required the plan-level 
operator to post a bond, and required the authorized officer to set the 
amount at a level sufficient to pay for reclamation if the plan-level 
operator fails to perform the work. However, the bond requirements for 
exploration and mining would have been limited to $1,000 and $2,000 per 
acre, respectively, except that operators in noncompliance with 
submitted plans of operations and notices would have been required to 
post 100 percent bonds.
    Numerous comments opposed the provisions for bond caps in the 
proposed rule. Many stated that the caps were far too low. One comment 
stated that they were too high. Another stated that there should be no 
bonds required of operators who do not have a record of noncompliance.
    The BLM has reviewed the bonding requirements proposed in light of 
the comments and has decided to amend the bond amounts based on these 
comments. The financial guarantee requirements in the rule have been 
amended to require the guarantee to cover 100 percent of the estimated 
costs of reclamation. The final rule also states the minimum amount 
required for a financial guarantee, $1,000 per acre for notice-level 
activities and $2,000 per acre for plan-level activities. The role for 
financial guarantees required and held by BLM will be to ensure that 
money sufficient to cover full reclamation costs is available.
    Proposed section 3809.1-9(h) would have required those portions of 
operations utilizing cyanide or other leach solutions to be bonded at 
100 percent. Several comments said that the failure to include vat 
leach and other facilities storing or receiving solutions containing 
cyanide or other leach solutions in this section was improper. One 
comment considered the entire proposal onerous and objected to the 
inclusion of other leach solutions. Other comments suggested that this 
section be made discretionary. These comments are resolved by changes 
made elsewhere in the final rule, which requires all plan-level 
operations to be covered by 100 percent financial guarantees. A 
separate specific 100 percent bonding requirement for cyanide and 
similar operations is therefore no longer necessary--it is subsumed in 
the general requirement. Accordingly, this paragraph has been removed 
in the final rule.
    Section 3809.1-9(i), as proposed, would have allowed the authorized 
officer to review and accept or reject any of the types of financial 
instruments offered by the plan level operator, including first lien 
security interests on mining equipment. Several comments questioned the 
use of this instrument, as well as first mortgages and first deeds of 
trust, as too risky. Upon reflection, we agree. The provisions for 
allowing such instruments as guarantees have been removed in the final 
rule. However, this paragraph has been amended in the final rule to 
make clear that, for purposes of the financial guarantee requirements 
of this section, BLM will honor the financial guarantees chosen by the 
affected State, if the BLM finds

[[Page 9097]]

that the instrument held by the State provides the same guarantee as 
that required by the final rule.
    Section 3809.1-9(j) allows for review of operations conducted under 
an approved plan of operations and readjustment of the financial 
guarantee. The final rule allows the operator to submit a new (and less 
expensive, if available) form of guarantee subject to the approval of 
the authorized officer. This was generally supported by the comments.
    Section 3809.1-9(k) allows the use of traditional instruments and 
expands the list to include a large number of non-traditional 
instruments. Most of the comments that addressed this provision 
generally supported it, some suggesting that second mortgages should be 
added to the list. One comment suggested that any instrument acceptable 
to the State should be acceptable to BLM. So long as the State holds 
the instrument the BLM will not intervene, but for security interests 
to be held by the United States, acceptable instruments are limited to 
those listed in the regulations. One comment suggested that taking a 
first mortgage on a mining property might lead to difficulties and 
potential liability risk to the United States from with hazardous 
materials. Upon reflection, we agree. Therefore, mortgages and liens on 
real property will not be acceptable as financial guarantees under this 
final rule.
    Some comments generally disapproved of this expansion of possible 
security instruments, stating that there appeared to be no problem in 
getting traditional surety bonds. Contrary to this view, it appears 
that there may be a problem for the smaller operator. These same 
comments also took exception to the use of instruments that might not 
be entirely liquid and which upon liquidation may not cover the full 
amount. While the list of acceptable instruments is expanded to include 
State and municipal bonds, the final rule also incorporates changes to 
ensure that the security provided at the time required is not reduced 
by market fluctuations in the value of government-issued and commercial 
securities. The BLM has determined that the risk associated with 
expanding the range of choice of security instruments is acceptable. 
Whatever additional risk may be involved is offset, at least somewhat, 
by the amendment requiring that financial guarantees be equal to an 
independent professional engineer's estimate of reclamation costs. It 
is important to recall, in this connection, that the financial 
guarantee and the duty to reclaim are backed up by criminal penalties, 
and by the provision that the operator is not free of liability if the 
guarantee is cashed in and found insufficient.
    By irrevocable letter of credit, section 3809.1-9(k)(3) means a 
letter of credit, such as described in 43 CFR 3104.1(c)(5), that 
identifies the Secretary of the Interior as sole payee with full 
authority to demand immediate payment in case of default. It must be 
subject to automatic renewal for periods of not less than 1 year if the 
mining claimant or operator fails to notify the proper BLM office of 
its nonrenewal and replacement by other suitable financial guarantee 
before the originally stated or any extended expiration date. Such 
letters of credit must also provide that they can be forfeited and 
collected by the authorized officer if not replaced by other suitable 
financial guarantee before their expiration date.
    Section 3809.1-9(l) continues the current practice of accepting 
blanket statewide and nationwide bonds found in the existing 
regulations. This provision was generally supported in some comments, 
and generally opposed, without stated rationale, in others. No change 
is made in the final rule. Failure to reclaim will lead to forfeiture 
of an appropriate portion of the statewide or nationwide bond and could 
result in the loss of the ability to obtain any future bonds.
    Section 3809.1-9(m) covers reclamation and bond release. Two 
comments suggested that BLM allow for bond reduction as reclamation 
steps are completed. Upon reflection, we agree.
    Section 3809.1-9(m) in the final rule includes a procedure for 
phased release or reduction of bonds as reclamation phases are 
completed, as suggested in the comments. A guarantee will not be 
released until successful revegetation has been demonstrated. 
Limitations are also placed on release of financial guarantees in order 
to protect water quality.
    Paragraphs (n) through (p) of section 3809.1-9, were added to the 
final rule based on public comment. They describe the procedures used 
by BLM to collect financial guarantees in order to carry out or 
contract for any needed reclamation not performed by the operator or 
mining claimant. These sections are being incorporated in the final 
rule to ensure a degree of uniformity in the procedures used by the 
various offices of the BLM in the collection and use of financial 
guarantees, and to complete the logical sequence of events encouraging 
reclamation.
    Section 3809.1-9(n) of the proposed rule, redesignated as paragraph 
(q) in the final rule, covers release of the operator from the 
financial guarantee or a portion thereof upon patenting of a mining 
claim. One comment suggested requiring all portions of the patented 
claim not then being mined to be reclaimed and the part still being 
mined to be covered by the State requirements prior to title transfer. 
Such requirements would be unnecessary, because most States have mining 
and reclamation programs that require reclamation of private lands, 
including lands obtained through patents from the United States. As 
elsewhere, references to the mining claimant have been added in this 
paragraph to make it consistent with other provisions in the final 
rule.
    Section 3809.3-1. This proposed section added a requirement in 
paragraph (b) for the State Director to review the list of appropriate 
and legal financial instruments available in the State and to publish 
it on a yearly basis. No significant comments were noted. However, this 
section has been amended editorially for purposes of brevity and 
clarity in the final rule.
    Section 3809.3-2(e). This proposed section explained what is meant 
by a record of noncompliance, imposed mandatory BLM-held bonding on 
operators with a record of noncompliance, made State-held bonds 
unacceptable for those with records of noncompliance, and allowed the 
BLM to require all existing and subsequent notice-level operations by 
such an operator to be conducted only under a plan. It also allowed the 
State Director to determine the length of time that an operator will be 
held to the mandatory plan provisions (not less than 1 year and not 
more than 3 years).
    One comment objected to the proposed language stating that 
financial guarantees held by the State would not be acceptable and 
would result in the double bonding of operators by the State and the 
BLM. We acknowledge this possibility, but additional security is 
justified when operators have compiled a record of noncompliance. No 
change to accommodate this comment is made in the final rule.
    Two comments stated that provisions of section 3809.3-2(e) do not 
allow for due process. One suggested alternative language that 
incorporated ``due process'' while the other suggested that the 
language of the existing section (e) would be more balanced in 
protecting the due process rights, because it uses ``may'' rather than 
``shall.'' The rule applies to an operator who ignores a notice of 
noncompliance. The appeals section of the existing regulations (not 
amended in this rule) includes opportunity for appeal at two levels, 
State Director and Interior Board of

[[Page 9098]]

Land Appeals. This provides sufficient protection of a party's due 
process rights.
    One comment stated that the language in the proposed section would 
allow an operator to move across a State line and start with a clean 
record. This result was not intended in the proposed rule, and nothing 
in the rule requires such a narrow reading. The BLM's recordkeeping 
system allows proscriptions imposed in one State to be maintained BLM-
wide.
    One comment suggested alternative language to define when an 
operator has compiled a record of noncompliance and to provide 
additional clarity to the rule:
    1. To make it clear that operators who establish a record of 
noncompliance will be considered in active noncompliance until the 
necessary actions required by the notice of noncompliance have been 
completed;
    2. To include a 30-day time frame for the conversion of existing 
notices to plans;
    3. To include 90-day deadlines for the filing of the mandatory 
financial guarantees with the authorized officer, specifying that 
failure to provide the guarantee will result in the withdrawal of all 
existing plan approvals;
    4. To provide that BLM will approve no new or additional plans or 
plan amendments of operators who have established a record of 
noncompliance and who remain in active noncompliance;
    5. To extend the prohibition to proprietors, partners, principals, 
managers, directors, or officers of the operator in active 
noncompliance who are responsible for the continuing noncompliance.
    Another comment suggested that an operator who has a record of 
noncompliance should be denied all additional approvals until all prior 
reclamation commitments have been satisfied and all costs incurred by 
the surety companies or the government have been reimbursed.
    The suggestion that would have BLM bar an operator or mining 
claimant in noncompliance, and its responsible affiliates, from 
obtaining new or additional approvals has not been adopted in the final 
rule. The BLM will study this suggestion further and may propose such a 
change in a future rulemaking. With limited modifications to the 
suggested language, the remaining suggestions are adopted, so that 
proposed section 3809.3-2(e) is revised in the final rule.
    Section 3809.3-2(f) is added merely to reiterate the penalties 
contained in Section 303 of FLPMA for those who violate the regulations 
of subpart 3809. In response to a comment that discussed the weakness 
of the proposed language authorizing the return of incomplete notices, 
a new paragraph 3809.1-9(a) is being added to prohibit the conduct of 
operations without posting the appropriate financial guarantees. Then, 
to notify the public of the penalties associated with the violation of 
the regulations in subpart 3809, and to codify the penalties contained 
in FLPMA, the noncompliance section is also amended by adding paragraph 
(f). This paragraph incorporates the maximum penalties provided for in 
the Sentencing Reform Act of 1984 (18 U.S.C. 3571 et seq.), in order to 
bring the rule into compliance with law, and to avoid the misleading 
impression created by the current regulations that penalties are 
limited to the minimal amounts provided for in FLPMA. Penalty 
provisions such as those in FLPMA that provide for up to a year in jail 
or a fine of $1,000 for violators are classified as Class A 
misdemeanors under 18 U.S.C. 3561, and the Sentencing Reform Act 
provides for fines for Class A misdemeanors of up to $100,000 for 
individuals and $200,000 for organizations. As noted in the rule, the 
Sentencing Reform Act also authorizes the imposition of alternative 
fines based upon a doubling of the pecuniary gain to the defendant or 
loss to other persons resulting from a violation.
    The principal author of this final rule is Richard Deery of the 
Solid Minerals Group, assisted by Ted Hudson of the Regulatory 
Management Group, BLM.

Compliance With the National Environmental Policy Act

    It is hereby determined that this final rule does not constitute a 
major Federal action significantly affecting the quality of the human 
environment, and that no detailed statement pursuant to Section 
102(2)(C) of the National Environmental Policy Act (NEPA) of 1969 (42 
U.S.C. 4332(2)(C)) is required. It has been determined that this final 
rule is categorically excluded from further environmental review 
pursuant to 516 Departmental Manual (DM), Chapter 2, Appendix 1, Item 
1.10. This item states that ``Policies, directives, regulations, and 
guidelines of an administrative, financial, legal, technical, or 
procedural nature * * *'' are categorically exempt. Because this rule 
addresses financial guarantees, we believe that it falls into this 
category, thereby obviating any further review under NEPA. It has also 
been determined that the proposal would not significantly affect the 10 
criteria for exceptions listed in 516 DM 2, Appendix 2. Pursuant to the 
Council on Environmental Quality regulations (40 CFR 1508.4) and 
environmental policies and procedures of the Department of the 
Interior, ``categorical exclusions'' means a category of actions that 
do not individually or cumulatively have a significant effect on the 
human environment and that have been found to have no such effect in 
procedures adopted by a Federal agency and for which neither an 
environmental assessment nor an environmental impact statement is 
required.

Compliance With Executive Order 12866

    This rule has been reviewed under Executive Order 12866. The 
Department of the Interior has found, based on the economic analysis 
contained in a Determination of Effects of Rule that is available for 
inspection in the office of the Solid Minerals Group at the address 
given in ADDRESSES, above, that this document is not likely to result 
in an annual effect on the economy of $100 million or more or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities.
    The current surface management regulations at 43 CFR subpart 3809 
provide for 3 levels of activity involving surface use of public lands 
for mineral exploration and mining: (1) Casual use, causing no 
noticeable surface disturbance, which does not require notification to 
BLM of the activity; (2) notice-level activity, exceeding the threshold 
of casual use but not disturbing more than 5 acres per calendar year, 
which requires a notice to BLM before proceeding but no BLM approval or 
operator financial guarantee; (3) plan-level activity, disturbing more 
than 5 acres annually, which requires a plan approved by BLM, full NEPA 
compliance, and, since 1990, full cost financial guarantees.
    Except for Arizona, Nevada, Alaska, and Utah, the public lands 
States all require some bonding for notice-level mining and mineral 
exploration activities. Under this rule, BLM will accept these State 
bonds in satisfaction of the Federal bonding requirement in most 
circumstances for notice-level activities--most operations at this 
level are bonded at ``full cost bonding'' under State laws. It follows 
that this rule will have an effect on notice-level activities in 
primarily the four States mentioned above. The effects on activities in 
these States cannot be assigned to specific localities within the 
States, and are presumed to be distributed evenly

[[Page 9099]]

throughout each State for purposes of this analysis.
    BLM expects that corporate operators will use nationwide or 
statewide financial instruments, and that individual and other small 
operators will use project-specific financial instruments. The total 
economic effect of this rule is projected to be $17.10 million. The 
Determination of Effects includes details on how BLM reached this 
conclusion.
    The benefits attributable to this rule result from avoiding future 
costs through mandatory bonding. While these savings are not 
predictable in the strict benefit-cost analysis sense, we discuss them 
here. Primarily, savings will be derived from marginal activities with 
limited capitalization being postponed or not carried out, and failures 
will not occasion reclamation costs to the public. Remaining operations 
would be financially stronger and less likely to fail, and if bonds are 
in place, public costs of failure will be minimized. Other savings will 
be caused by the discouraging of illegal activities or non-mining 
industrial activities that are sometimes disguised as mining on public 
lands. The bonding requirement will tend to reduce the initiation of 
such activities and pay for costs of cleanup.
    The final rule will not adversely affect the ability of the mineral 
industry to compete in the world marketplace, nor should it affect 
investment or employment factors locally. Major corporations, large-
scale companies with world-wide operations and lines of credit with 
commercial banks can easily absorb any additional financial 
responsibility created by the rule.
    ``Junior companies,'' large limited partnerships or wholly-owned 
domestic subsidiaries of venture capital-based mining companies, many 
of which are based in Canada, tend to grow or merge into smaller major 
corporations, or to fail. Generally regarded as risk takers, they are 
often found in frontier areas and are willing to acquire properties 
overlooked or discarded by majors. Their options for complying with the 
rule will range from resorting to established lines of credit to 
posting company assets as collateral to internal cash flows. The 
amended dollar amounts for notices in the final rule will benefit these 
operators by encouraging them to minimize surface disturbance and 
reduce the amount of reclamation liability.
    Individuals and other small operators will have the fewest options 
for funding financial guarantees: operating cash flows, individual or 
company assets. The likely effect of this rule will be to limit the 
number of notice-level operations for each such operator at any one 
time. They may elect to restrict activities under a notice to only the 
most promising mineral prospects or to attempt to option out the 
property to a junior or major company with a lease agreement that 
includes a clause requiring the lessee to obtain and maintain the 
necessary financial guarantee with BLM.

Compliance With Regulatory Flexibility Act

    The Department has determined under the Regulatory Flexibility Act 
(5 U.S.C. 601 et seq.) that the final rule will not have a significant 
economic impact on a substantial number of small entities. The reasons 
for this determination are stated here and may also be found in the 
Determination of Effects cited above.
    For the purposes of this analysis, a small entity is considered to 
be an individual, small firm, or partnership at arm's length from the 
control of any parent companies. The juniors and majors (not considered 
small entities), as discussed in the previous paragraphs, and entities 
under their direct control, have access to lines of credit and internal 
corporate cash flows that are not available to small entities.
    The economic effect on these small operators will be either to 
require them to acquire a financial guarantee for each new notice or 
avoid new operations on claims for which they do not acquire a 
financial guarantee. Since small entities often hold several 
properties, the practical effect will be the elimination of new 
activities on certain claims, especially the marginal ones, and the 
removal of some properties from their inventory of holdings, or else 
operators will attempt to lease the claim to a junior or major company 
that has the financial resources to post financial guarantees. 
Therefore, the short-term impact of this rule on small entities will be 
to curtail some of their prospective notice-level activities.

Compliance With Executive Order 12630

    The Department certifies that this final rule does not represent a 
governmental action capable of interference with constitutionally 
protected property rights. It does not provide for the taking of any 
property rights or interests. Therefore, as required by Executive Order 
12630, the Department of the Interior has determined that the rule 
would not cause a taking of private property.

Compliance With Paperwork Reduction Act

    The information collection requirement(s) contained in this rule 
have been approved by the Office of Management and Budget for approval 
as required by 44 U.S.C. 3501 et seq., and assigned clearance number 
1004-0176.

Compliance With Unfunded Mandates Reform Act

    BLM has determined that this rule is not significant under the 
Unfunded Mandates Reform Act of 1995, because it will not result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. 
Further, this rule will not significantly or uniquely affect small 
governments.

Compliance With Executive Order 12988

    The Department has determined that this rule meets the applicable 
standards provided in sections 3(a) and 2(b)(2) of Executive Order 
12988.

List of Subjects in 43 CFR Part 3800

    Administrative practice and procedure, Environmental protection, 
Intergovernmental affairs, Mines, Public lands-mineral resources, 
Reporting and recordkeeping requirements, Surety bonds, Wilderness 
areas.

    For the reasons stated in the preamble, and under the authorities 
cited below, Part 3800, Subchapter C, Chapter II, Title 43 of the Code 
of Federal Regulations is amended as set forth below.

    Dated: February 24, 1997.
Sylvia V. Baca,
Assistant Secretary of the Interior.

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

    Authority: 16 U.S.C. 351; 16 U.S.C. 460y-4; 30 U.S.C. 22; 31 
U.S.C. 9701; 43 U.S.C. 154; 43 U.S.C. 299; 43 U.S.C. 1201; 43 U.S.C. 
1740; 30 U.S.C. 28k.

Subpart 3809--Surface Management

    2. The authority citation for 43 CFR subpart 3809 is removed.
    3. Section 3809.0-9 is added to read as follows:


Sec. 3809.0-9  Information collection.

    (a) The collections of information contained in subpart 3809 have 
been approved by the Office of Management and Budget under 44 U.S.C. 
3501 et seq. and assigned clearance number 1004-0176. BLM will use the 
information in regulating and monitoring mining and exploration 
operations on public lands. Response to requests for information is

[[Page 9100]]

mandatory in accordance with 43 U.S.C 1701 et seq. The information 
collection approval expires December 31, 1999.
    (b) Public reporting burden for this information is estimated to 
average 16 hours per response for notices and 32 hours per response for 
plans of operations, including the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information. 
Send comments regarding this burden estimate or any other aspect of 
this collection of information, including suggestions for reducing the 
burden, to the Information Collection Clearance Officer (783), Bureau 
of Land Management, Washington, D.C. 20240, and the Office of 
Management and Budget, Attention Desk Officer for the Interior 
Department, Office of Information and Regulatory Affairs, Office of 
Management and Budget, Washington, DC 20503, referring to information 
collection clearance number 1004-0176.


Sec. 3809.1-8  [Removed]

    4. Section 3809.1-8 is removed.
    5. Section 3809.1-9 is revised to read as follows:


Sec. 3809.1-9  Financial guarantees.

    (a) No operator or claimant shall--
    (1) Initiate operations under a notice without providing the 
authorized officer certification of the existence of the appropriate 
financial guarantee as required by paragraph (c) through (f) of this 
section; or
    (2) Conduct operations under a plan of operations without providing 
the authorized officer with the appropriate financial guarantee as 
required by paragraphs (g) through (j) of this section.
    (b) No financial guarantee is required for operations that 
constitute casual use under Sec. 3809.1-2.
    (c) No operations conducted under a notice in accordance with 
Sec. 3809.1-3 shall be initiated until the operator or mining claimant 
provides to the authorized officer a certification that a financial 
guarantee exists to ensure performance of reclamation in accordance 
with the requirements of Sec. 3809.1-3(d). Each certification must be 
accompanied by a calculation of reclamation costs of the proposed 
activities covered by the notice, as if third party contractors were 
performing the reclamation after the site is vacated by the operator. 
This calculation must be certified at the operator's or mining 
claimant's expense by a third party professional engineer registered to 
practice within the State in which the activities are proposed. 
However, when the requirement for a financial guarantee is met by 
providing evidence of an instrument held by a State agency as provided 
in this paragraph, the certificaton of costs by a third party 
professional engineer is not required. The financial guarantee must be 
sufficient to cover 100 percent of the estimate of the costs of 
reclamation, as calculated above, required by State and Federal laws 
and regulations, and may be in any of the forms described in paragraphs 
(k) and (l) of this section. In calculating the amount of the financial 
guarantee, each acre of disturbance or fraction thereof shall require 
not less than $1,000. The financial guarantee may also be met by 
providing evidence of an appropriate instrument held or approved by a 
State agency pursuant to State law or regulations so long as the 
instrument is equivalent to that required by this section, is 
redeemable by the Secretary, acting by and through BLM, and covers the 
same area covered by the notice. The certification must accompany the 
notice submitted to the proper BLM office having jurisdiction over the 
land in which the claim or project area is located. Failure to submit a 
complete certification will render the notice incomplete and it will be 
returned by the authorized officer. The financial guarantee covered by 
the certification must be available, until replaced by another adequate 
financial guarantee with the concurrence of the authorized officer or 
until released by the authorized officer, for the performance of such 
reclamation as required by Sec. 3809.1-3. Such reclamation shall also 
include all reasonable measures identified as the result of the 
consultation required by the authorized officer under Sec. 3809.1-3(c). 
If there is a material change in any financial guarantee on which the 
operator or mining claimant's certification is based, the operator or 
mining claimant must submit an amended certification to the authorized 
officer within 45 days after the material change occurs.
    (d) The certification submitted by the operator, mining claimant, 
or its authorized agent, for any operations conducted under a notice, 
shall include:
    (1) The name, home address, office and home telephone numbers, and 
social security number or employer identification number of the 
operator, mining claimant, or authorized agent;
    (2) A statement that the mining claimant or operator for whom the 
individual is submitting the certification will be responsible for the 
required reclamation;
    (3) A statement that the authorized officer will be notified at the 
completion of reclamation operations to arrange for a final inspection;
    (4) A statement that the financial guarantee in the amount of the 
estimated reclamation costs, as calculated under Sec. 3809.1-9(c), or 
$1,000 per acre or fraction thereof of disturbance as described in the 
attached notice, whichever is greater, exists, followed by a complete 
description of the financial guarantee and its location;
    (5) A statement that the financial guarantee in the amount of the 
estimated reclamation costs, as calculated under Sec. 3809.1-9(c), or 
$1,000 per acre or fraction thereof of disturbance, whichever is 
greater, will be delivered to the authorized officer within 45 days of 
a demand for its surrender, following failure to complete reclamation, 
unless an additional period of time not to exceed 45 days is granted in 
writing by the authorized officer;
    (6) A statement acknowledging that surrender of the financial 
guarantee will not release the operator, mining claimant, or authorized 
agent from responsibility to ensure completion of the reclamation 
should the amount of the guarantee be insufficient to complete all 
required reclamation;
    (7) A statement acknowledging that release of the requirement to 
maintain the financial guarantee does not release or waive any claim 
the Bureau of Land Management may have against any person under the 
Comprehensive Environmental Response, Compensation, and Liability Act 
of 1980, as amended, 42 U.S.C. 9601 et seq., or any other applicable 
statutes or any applicable regulations; and
    (8) A statement acknowledging that non-existence of the financial 
guarantee or the failure to provide the guarantee upon demand for its 
surrender by the authorized officer may result in prosecution under 18 
U.S.C. 1001, 43 U.S.C. 1733, or other appropriate authorities.
    (e) Each statement required by paragraph (d) of this section to be 
included with the certification must be initialed and dated by the 
individual submitting the certification. Failure to initial all 
statements will result in the certification and the notice being 
returned as incomplete by the authorized officer.
    (f) At any time, the authorized officer may require the notice-
level operator or mining claimant to demonstrate the existence of the 
guarantee set out in the certification described in paragraph (c) of 
this section.
    (g) Each operator or mining claimant who conducts operations under 
an approved plan of operations shall furnish to the authorized officer 
a

[[Page 9101]]

financial guarantee in an amount specified by the authorized officer. 
In determining the amount of the guarantee, the authorized officer 
shall consider the estimated cost of reasonable stabilization and 
reclamation of areas disturbed, including the cost to the BLM of 
conducting the reclamation, using either contract or government 
personnel.
    (h) For activities conducted under a plan of operations, the 
financial guarantee must be sufficient to cover 100 percent of the 
costs of reclamation required by State and Federal statutes and 
regulations and calculated as if third party contractors were 
performing the reclamation after the site is vacated by the operator. 
This calculation must be certified at the operator's or mining 
claimant's expense by a third party professional engineer registered to 
practice within the State in which the activities are proposed, but 
when the requirement for a financial guarantee is met by providing 
evidence of an instrument held or approved by a State agency, the 
certification of costs by a third party professional engineer will not 
be required. This calculation must be agreed to by the authorized 
officer. In no case shall the financial guarantee be less than $2,000 
per acre or fraction thereof.
    (i) In lieu of requiring the financial guarantee as provided in 
paragraph (g) of this section, the authorized officer may accept 
evidence of an existing financial guarantee under State law or 
regulations, if it is redeemable by the Secretary, acting by and 
through the authorized officer, and held or approved by a State agency 
for the same area covered by the plan of operations, upon determining 
that the instrument held or approved by the State provides the same 
guarantee as that required by this section, regardless of the type of 
financial instruments chosen by the State. The operator or mining 
claimant proposing a plan of operations may offer for the approval of 
the authorized officer any of the financial instruments listed in 
paragraphs (k) and (l) of this section. The authorized officer may 
reject any of the submitted financial instruments, but will do so by 
decision in writing, with a complete explanation of the reasons for the 
rejection, within 30 days of the offering. If the State makes a demand 
against the financial guarantee, thereby reducing the available 
balance, the operator or mining claimant must replace the amount of 
reduced financial guarantee with another financial guarantee instrument 
acceptable under this subpart.
    (j) In the event that an approved plan is modified in accordance 
with 3809.1-7, the authorized officer will review the initial financial 
guarantee for adequacy and, if necessary, require the operator or 
mining claimant to adjust the amount of the financial guarantee to 
cover the estimated cost of reasonable stabilization and reclamation of 
areas disturbed under the plan as modified. Operators or mining 
claimants with an approved financial guarantee may request the 
authorized officer to accept a replacement financial instrument at any 
time after the approval of an initial instrument. The authorized 
officer shall review the offered instrument for adequacy and may reject 
any offered instrument, but will do so by a decision in writing, with a 
complete explanation of the reasons for the rejection, within 30 days 
of the offering.
    (k) Provided that the State Director has determined that it is a 
legal financial instrument within the State where the operations are 
proposed, the financial guarantee may take the form of any of the 
following:
    (1) Surety bonds, including surety bonds arranged or paid for by 
third parties.
    (2) Cash in an amount equal to the required dollar amount of the 
financial guarantee, to be deposited and maintained in a Federal 
depository account of the United States Treasury by the authorized 
officer.
    (3) Irrevocable letters of credit from a bank or financial 
institution organized or authorized to transact business in the United 
States.
    (4) Certificates of deposit or savings accounts not in excess of 
the maximum insurable amount as set by the Federal Deposit Insurance 
Corporation.
    (5)(i) Any instrument listed in paragraph (k)(5)(i)(A) or (B) of 
this section having a market value of not less than the required dollar 
amount of the financial guarantee and maintained in a Securities 
Investors Protection Corporation insured trust account by a licensed 
securities brokerage firm for the benefit of the Secretary of the 
Interior, acting by and through the authorized officer.
    (A) Negotiable United States Government, State and Municipal 
securities or bonds.
    (B) Investment-grade rated securities having a Standard and Poor's 
rating of AAA or AA or an equivalent rating from a nationally 
recognized securities rating service.
    (ii) Notwithstanding the provision in paragraph (c) of this section 
that an operator or mining claimant conducting operations under a 
notice need only provide the authorized officer with a certification of 
the existence of the required financial guarantee, and notwithstanding 
the provision in paragraph (g) of this section that an operator or 
mining claimant conducting operations under an approved plan of 
operations must furnish the required financial guarantee to the 
authorized officer, any operator or mining claimant who chooses to use 
the instruments permitted under this paragraph (k)(5) in satisfaction 
of such provisions, must provide the authorized officer, prior to the 
initiation of such operations and by the end of each quarter of the 
calendar year thereafter, a certified statement describing the nature 
and market value of the instruments maintained in that account, and 
including any current statements or reports furnished by the brokerage 
firm to the operator or mining claimant concerning the asset value of 
the account.
    (iii) The operator or mining claimant must review the market value 
of the account instruments by no later than December 31 of each year to 
ensure that their market value continues to be not less than the 
required dollar amount of the financial guarantee. When the market 
value of the account instruments has declined by more than 10 percent 
of the required dollar amount of the financial guarantee, the operator 
or mining claimant must, within 10 days after its annual review or at 
any time upon the written request of the authorized officer, provide 
additional instruments, as defined in paragraphs (k)(5)(i)(A) and (B), 
to the trust account so that the total market value of all account 
instruments is not less than the required dollar amount of the 
financial guarantee. The operator or mining claimant must send a 
certified statement to the authorized officer within 45 days thereafter 
describing the actions taken by the operator or mining claimant to 
raise the market value of its account instruments to the required 
dollar amount of the financial guarantee. The operator or mining 
claimant must include copies of any statements or reports furnished by 
the brokerage firm to the operator or mining claimant documenting such 
an increase.
    (iv) Whenever, on the basis of a review conducted under paragraph 
(k)(5)(iii) of this section, the operator or mining claimant ascertains 
that the total market value of its trust account instruments exceeds 
110 percent of the required dollar amount of the financial guarantee, 
the operator or mining claimant may request and the authorized officer 
will authorize a written release of that portion of the account that 
exceeds 110 percent of the required financial guarantee, if the 
operator or mining claimant is in compliance with the terms and

[[Page 9102]]

conditions of its notice or approved plan of operations.
    (l) In place of the individual financial guarantee on each separate 
operation, a blanket financial guarantee covering statewide or 
nationwide operations may be furnished at the option of the operator or 
mining claimant, if the terms and conditions are determined by the 
authorized officer to be sufficient to comply with the regulations in 
this subpart.
    (m) When all or any portion of the reclamation has been completed 
in accordance with a notice submitted pursuant to Sec. 3809.1-3 or an 
approved plan of operations, the operator or mining claimant may notify 
the authorized officer that such reclamation has occurred and may 
request a reduction in the financial guarantee or BLM approval of the 
adequacy of the reclamation, or both. Upon any such notification, the 
authorized officer will promptly inspect the reclaimed area with the 
operator. The authorized officer will notify the operator, in writing, 
whether the financial guarantee can be reduced, the reclamation is 
acceptable, or both. The authorized officer may reduce the financial 
guarantee by an appropriate amount, not to exceed 60 percent of the 
total estimated costs of reclamation as calculated in accordance with 
paragraph (c) or (h) of this section, if the authorized officer 
determines that a portion of the reclamation has been completed in 
accordance with applicable requirements, including, but not limited to, 
requirements for backfilling, regrading, establishment of drainage 
control, and stabilization and neutralization of leach pads, heaps, 
leach-bearing tailings, and similar facilities. The authorized officer 
will not release that portion of the financial guarantee equal to 40 
percent of the total estimated costs of reclamation until the area 
disturbed by operations has been revegetated to establish a diverse, 
effective, and permanent vegetative cover, and until any effluent 
discharged from the area has met, without violations and without the 
necessity for additional treatment, applicable effluent limitations and 
water quality standards for not less than 1 full year. Any such release 
of the financial guarantee does not release or waive any claim BLM may 
have against any person under the Comprehensive Environmental Response, 
Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601 et 
seq., or under any other applicable statutes or any applicable 
regulations.
    (n) If an operator or mining claimant refuses or is unable to 
conduct reclamation as provided in the reclamation measures 
incorporated into its notice or approved plan of operations or the 
regulations in this subpart, if the terms of the notice or decision 
approving a plan of operation are not met, or if the operator or mining 
claimant defaults on the conditions under which the financial guarantee 
rests, the authorized officer shall take the following action to 
require the forfeiture of all or part of a financial guarantee for any 
area or portion of an area covered by the financial guarantee:
    (1) Send written notification by certified mail, return receipt 
requested, to the operator or mining claimant that provided the 
financial guarantee, and the surety on the financial guarantee, if any, 
and the State agency holding the financial guarantee, if any, informing 
them of the decision to require the forfeiture of all or part of the 
financial guarantee. The notification must include the reasons for the 
forfeiture and the amount to be forfeited. The amount shall be based on 
the estimated total cost of achieving the reclamation plan requirements 
for the area or portion of the area affected, including the 
administrative costs of the Bureau of Land Management.
    (2) In the written notification, advise the operator or mining 
claimant and surety, if applicable, of the conditions under which 
forfeiture may be avoided. Such conditions may include, but are not 
limited to----
    (i) Written agreement by the operator, mining claimant, or another 
party to perform reclamation operations in accordance with a compliance 
schedule which meets the conditions of the notice or decision approving 
a plan of operations and the reclamation plan, and a demonstration that 
such party has the ability to satisfy the conditions; or
    (ii) Written permission from the authorized officer to a surety to 
complete the reclamation, or the portion of the reclamation applicable 
to the bonded phase or increment, if the surety can demonstrate an 
ability to complete the reclamation in accordance with the reclamation 
measures incorporated in a notice or approved plan of operations.
    (o) In the event the operator or mining claimant fails to meet the 
requirements of the written notification provided under paragraph (n) 
of this section, the authorized officer will--
    (1) Proceed immediately to collect the forfeited amount as provided 
by applicable laws for the collection of defaulted bonds or other debts 
if actions to avoid forfeiture have not been taken, or if an appeal has 
not been filed under Sec. 3809.4, or if such appeal is filed and the 
decision appealed is confirmed.
    (2) Use funds collected from financial guarantee forfeiture to 
implement the reclamation plan, or portion thereof, on the area or 
portion of the area to which bond coverage applies.
    (p)(1) In the event the estimated amount forfeited is insufficient 
to pay for the full cost of reclamation, the operator or mining 
claimant is liable for the remaining costs. The authorized officer may 
complete or authorize completion of reclamation of the bonded area and 
may recover from the operator or mining claimant all costs of 
reclamation in excess of the amount forfeited.
    (2) In the event the amount of financial guarantee forfeited was 
more than the amount necessary to complete reclamation, the unused 
funds shall be returned, within a reasonable amount of time, by the 
authorized officer to the party from whom they were collected.
    (q) When a mining claim is patented, the authorized officer will 
release the operator or mining claimant from the portion of the 
financial guarantee that applies to operations within the boundaries of 
the patented land. The authorized officer shall release the operator or 
mining claimant from the remainder of the financial guarantee, 
including the portion covering approved means of access outside the 
boundaries of the mining claim, when the operator or mining claimant 
has completed acceptable reclamation. However, existing access to 
patented mining claims, if across Federal lands, shall continue to be 
regulated under the approved plan and shall include a financial 
guarantee. The provisions of this paragraph do not apply to patents 
issued on mining claims within the boundaries of the California Desert 
Conservation Area (see Sec. 3809.6).
    6. Section 3809.3-1 is amended by revising paragraph (b) to read as 
follows:


Sec. 3809.3-1  Applicability of State law.

* * * * *
    (b) Each State Director will publish a notice identifying all legal 
financial guarantees that may be accepted by any authorized officer 
under his or her jurisdiction, after consultation with the appropriate 
State authorities to determine which of the financial instruments in 
Sec. 3809.1-9(k) are allowable under State law to satisfy the financial 
assurance requirements relating to the reclamation requirements of that 
State. This list will be updated annually.
* * * * *
    7. Section 3809.3-2 is amended by revising paragraph (e) and adding 
paragraph (f) to read as follows:

[[Page 9103]]

Sec. 3809.3-2  Noncompliance.

* * * * *
    (e) An operator or mining claimant who compiles a record of 
noncompliance is one who has been served with a notice of 
noncompliance, whose response period has passed, and who has not 
commenced the actions required by the authorized officer within the 
time frames set forth in the notice of noncompliance. An operator or 
mining claimant with a record of noncompliance will continue in 
noncompliance status until the actions required in the notice of 
noncompliance have been completed. Any operator or mining claimant with 
a record of noncompliance must submit a plan of operations within 30 
days under Sec. 3809.1-9 of this subpart for all existing and 
subsequent operations that would otherwise be conducted pursuant to a 
notice under Sec. 3809.1-3 of this subpart. Operators or mining 
claimants with a record of noncompliance will be required to post 
financial guarantees with the authorized officer under Sec. 3809.1-9 
within 90 days after notification for all existing disturbance for 
which said operators or mining claimants are responsible. Failure to 
post such financial guarantees within the prescribed 90 days will 
result in the withdrawal of approval of all existing plans of 
operation, except that the authorized officer may approve actions 
proposed by an operator with a record of noncompliance to resolve the 
cause of the noncompliance or to protect public safety or health or 
prevent further unnecessary or undue environmental degradation. 
Financial guarantees held by a State will not be acceptable for 
purposes of this section, and the calculation must be certified at the 
operator's or mining claimant's expense by a third party professional 
engineer registered to practice within the State in which the 
activities are proposed, and agreed to by the authorized officer. The 
requirements of this paragraph continue in force until the operator or 
mining claimant has come into and remained in compliance with them and 
the regulations of this subpart for a period of not less than 1 
calendar year but not more than 3 calendar years. The duration of the 
requirement will be determined by the State Director.
    (f)(1) Any person constituting an operator, mining claimant, or its 
authorized agent, who knowingly and willfully violates any provision of 
this subpart is subject to arrest and trial by a United States 
magistrate and, if convicted, shall be subject to a fine of not more 
than $100,000, or the alternate fine provided for in the applicable 
provisions of 18 U.S.C. 3571, or imprisoned for no more than twelve 
months, or both.
    (2) Any organization constituting an operator, mining claimant, or 
its authorized agent, that knowingly and willfully violates any 
provision of this subpart is subject to criminal prosecution and, if 
convicted, shall be subject to a fine of not more than $200,000, or the 
alternative fine provided for in the applicable provisions of 18 U.S.C. 
3571.

[FR Doc. 97-5016 Filed 2-27-97; 8:45 am]
BILLING CODE 4310-84-P