KRC Inquires About Frontier's Mining Bond Coverage

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KRC Inquires About Frontier's Mining Bond Coverage  Posted: November 15, 2001



National Citizens? Coal Law Project

A Project of the Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

(502) 875-2428

(502) 875-2845 fax



November 9, 2001



Carl Campbell, Commissioner

Department for Surface Mining

Reclamation & Enforcement

#2 Hudson Hollow

Frankfort, KY 40601



Dear Commissioner:


I am writing to inquire as to the status of any pending administrative or enforcement actions relating to the performance bonds for existing Addington Enterprises/AEI mining permits, as well as any others in the Commonwealth for which Frontier (or its subsidiaries) is the surety on the performance bonds.


It is my understanding that those companies who hold mining permits for which Frontier is surety, have been given notice of the obligation to replace those bonds. I would appreciate your clarification of these issues:


1. How many permits hold bonds issued or insured by Frontier, and of those, how many are surface; underground or other types of permits, and how many disturbed acres are there for which Frontier (or its subsidiaries) is surety?


2. Have the operators and permittees for each of these permits, both active and inactive, been given notice of the obligation to replace the performance bonds, and when is that replacement due? If you could provide a copy of those notices, I would appreciate it, and of course, pay the costs of locating and copying the documents.


3. Does DSMRE plan to issue Notices of non-compliance requiring immediate cessation of further coal extraction activities on the date by which replacement bonds? It would appear that 405 KAR 10:030 Section 2(5)(c)3, establishes ninety (90) days as the outside deadline for bond replacement before the obligation to cease coal extraction and coal processing and to begin reclamation and permanent abandonment of the operations after reclamation. The phrase "not to exceed ninety (90) days" is clear in its mandate, and the use of the word "shall" evidences a mandatory intent with respect to both the Cabinet?s and the permittee?s obligations.


The regulatory history of the federal regulatory counterpart to this regulation makes clear that the ninety-day period is the outside limit. OSM provided the notice and a reasonable time for replacement of bond in response to industry concerns that the operator be given a reasonable period to replace bond coverage before a NOV issued, and the ninety days was in fact the time period proposed by industry and adopted by OSM as a reasonable period in which to secure replacement bond. 48 Fed. Reg. 32945 (July 19, 1983). The preamble to the 1983 rule is clear that "[i]f the bond is not replaced by the end of that period, the operator must cease coal extraction . . . and immediately begin to reclaim the permit area[.]" Id. at 32946.


It would seem, then, the Cabinet is obligated to require immediate cessation of extraction and processing on the ninetieth day, unless replacement bond or surety is provided. It appears also that, since replacement bonds are due for both active and inactive operations, that with respect to inactive mines, reclamation must immediately begin and permanent abandonment follow.


While I understand that there is always a concern with the disruption of ongoing operations by regulatory action when replacement bonds are not provided, the law does not admit of any extensions of time to provide replacement bonds. Allowing continued operation and disturbance of new areas without bond protection places other permittees at an unfair disadvantage as well, and increases the acreage of exposed areas that may not be adequately reclaimed in the event of forfeiture, as well as complicating future enforcement action by removing the threat of bond forfeiture.


Thank you in advance for clarifying the current status of the agency?s actions on this matter.









By Kentucky Resources Council on 11/15/2001 5:32 PM
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