THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY TOBASH, GOODMAN, KNOWLES, PYLE, EVERETT, GEIST, HEFFLEY, HELM, HENNESSEY, HESS, HUTCHINSON, QUINN, STERN, SWANGER AND TOOHIL, AUGUST 22, 2011

REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY, AUGUST 22, 2011  

AN ACT

Amending the act of May 31, 1945 (P.L.1198, No.418), entitled,

as amended, "An act providing for the conservation and

improvement of land affected in connection with surface

mining; regulating such mining; providing for the

establishment of an Emergency Bond Fund for anthracite deep

mine operators; and providing penalties," further providing

for mining permit, reclamation plan and bond; and providing

for land reclamation financial guarantees.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 4(d) of the act of May 31, 1945

(P.L.1198, No.418), known as the Surface Mining Conservation and

Reclamation Act, amended December 18, 1992 (P.L.1384, No.173),

is amended to read:

Section 4.  Mining Permit; Reclamation Plan; Bond.--* * *

(d)  Prior to commencing surface mining, the permittee shall

file with the department a bond for the land affected by each

operation on a form to be prescribed and furnished by the

department, payable to the Commonwealth and conditioned that the

permittee shall faithfully perform all of the requirements of

this act and of the act of June 22, 1937 (P.L.1987, No.394),

known as "The Clean Streams Law," the act of January 8, 1960

(1959 P.L.2119, No.787), known as the "Air Pollution Control

Act," the act of September 24, 1968 (P.L.1040, No.318), known as

the "Coal Refuse Disposal Control Act," and, where applicable,

of the act of July 31, 1968 (P.L.788, No.241), known as the

"Pennsylvania Solid Waste Management Act," the act of July 7,

1980 (P.L.380, No.97), known as the "Solid Waste Management

Act," or the act of November 26, 1978 (P.L.1375, No.325), known

as the "Dam Safety and Encroachments Act": Provided, however,

That an operator posting a bond sufficient to comply with this

section of the act shall not be required to post a separate bond

for the permitted area under each of the acts hereinabove

enumerated: And provided further, That the foregoing proviso

shall not prohibit the department from requiring additional bond

amounts for the permitted area should such an increase be

determined by the department to be necessary to meet the

requirements of this act. The amount of the bond required shall

be in an amount determined by the department based upon the

total estimated cost to the Commonwealth of completing the

approved reclamation plan, or in such other amount and form as

may be established by the department pursuant to regulations for

an alternate coal bonding program which shall achieve the

objectives and purposes of the bonding program. Said estimate

shall be based upon the permittee's statement of his estimated

cost of fulfilling the plan during the course of his operation,

inspection of the application and other documents submitted,

inspection of the land area, and such other criteria as may be

relevant, including, but not limited to, the probable difficulty

of reclamation giving consideration to such factors as

topography, geology of the site, hydrology, the proposed land

use and the additional cost to the Commonwealth which may be

entailed by being required to bring personnel and equipment to

the site after abandonment by the permittee, in excess of the

cost to the permittee of performing the necessary work during

the course of his surface mining operations. When the plan

involves the reconstruction or relocation of any public road or

highway, the amount of the bond shall include an amount

sufficient to fully build or restore the road or highway to a

condition approved by the Department of Transportation. No bond

shall be filed for less than ten thousand dollars ($10,000.00)

for the entire permit area. Liability under such bond shall be

for the duration of the surface mining at each operation, and

for a period of five full years after the last year of augmented

seeding and fertilizing and any other work to complete

reclamation to meet the requirements of law and protect the

environment, unless released in part prior thereto as

hereinafter provided. The bond or collateral required herein

must be in an amount and on a form containing such terms and

conditions as approved by the department and may be a surety

bond executed by the operator and a corporate surety licensed to

do business in this Commonwealth and approved by the secretary;

it may be cash; it may be automatically renewable irrevocable

letters of credit which may be terminated by the bank at the end

of the term only upon the bank giving ninety (90) days' prior

written notice to the permittee and the department; it may be

negotiable bonds of the United States Government or the

Commonwealth of Pennsylvania, the Pennsylvania Turnpike

Commission, The General State Authority, the State Public School

Building Authority or any municipality within this Commonwealth;

it may be a life insurance policy which is and states on its

face that it is fully paid and noncancelable with a cash

surrender value irrevocably assigned to the department at least

equal to the amount of the required bonds and which shall not be

borrowed against and shall not be utilized for any other purpose

than financial assurance assuring reclamation; it may be an

annuity or trust fund of which the department is the irrevocably

named beneficiary; it may be a land reclamation financial

guarantee consistent with section 19.2 of this act and the

department's regulations implementing the land reclamation

financial guarantee program; or it may be other instruments

which the Environmental Quality Board may authorize through

regulation. The stated amount of irrevocable letters of credit

and the market value of negotiable securities shall be equal at

least to the amount of the required bond. Combinations of

bonding instruments may be allowed pursuant to regulations

adopted by the Environmental Quality Board. The secretary shall,

upon receipt of any such deposit of cash, letters of credit or

negotiable bonds immediately place the same with the State

Treasurer, whose duty it shall be to receive and hold the same

in the name of the Commonwealth, in trust, for the purposes for

which such deposit is made. The State Treasurer shall at all

times be responsible for the custody and safekeeping of such

deposits. The permittee making the deposit shall be entitled

from time to time to demand and receive from the State

Treasurer, on the written order of the secretary, the whole or

any portion of any collateral so deposited, upon depositing with

him, in lieu thereof, other collateral of the classes herein

specified having a market value at least equal to the sum of the

bond, and also to demand, receive and recover the interest and

income from said negotiable bonds as the same becomes due and

payable: Provided, however, That where negotiable bonds,

deposited as aforesaid, mature or are called, the State

Treasurer, at the request of the permittee, shall convert such

negotiable bonds into such other negotiable bonds of the classes

herein specified as may be designated by the permittee: And,

provided further, That where notice of intent to terminate a

letter of credit is given, the department shall give the

permittee thirty (30) days' written notice to replace the letter

of credit with other acceptable bond guarantees as provided

herein, and if the permittee fails to replace the letter of

credit within the thirty (30) day notification period, the

department shall draw upon and convert such letter of credit

into cash and hold it as a collateral bond guarantee; or the

department, in its discretion, may accept a self-bond from the

permittee, without separate surety, if the permittee

demonstrates to the satisfaction of the department a history of

financial solvency, continuous business operation and continuous

efforts to achieve compliance with all United States of America

and Pennsylvania environmental laws, and, meets all of the

following requirements:

(1)  The permittee shall be incorporated or authorized to do

business in Pennsylvania and shall designate an agent in

Pennsylvania to receive service of suits, claims, demands or

other legal process.

(2)  The permittee or if the permittee does not issue

separate audited financial statements, its parent, shall provide

audited financial statements for at least its most recent three

(3) fiscal years prepared by a certified public accountant in

accordance with generally accepted accounting principles. Upon

request of the permittee, the department shall maintain the

confidentiality of such financial statements if the same are not

otherwise disclosed to other government agencies or the public.

(3)  During the last thirty-six (36) calendar months, the

applicant has not defaulted in the payment of any dividend or

sinking fund installment or preferred stock or installment on

any indebtedness for borrowed money or payment of rentals under

long-term leases or any reclamation fee payment currently due

under the Federal Surface Mining Control and Reclamation Act of

1977, 30 U.S.C. § 1232, for each ton of coal produced in the

Commonwealth of Pennsylvania.

(4)  The permittee shall have been in business and operating

no less than ten (10) years prior to filing of application

unless the permittee's existence results from a reorganization,

consolidation or merger involving a company with such longevity.

However, the permittee shall be deemed to have met this

requirement if it is a majority-owned subsidiary of a

corporation which has such a ten (10) year business history.

(5)  The permittee shall have a net worth of at least six

times the aggregate amount of all bonds applied for by the

operator under this section.

(6)  The permittee shall give immediate notice to the

department of any significant change in managing control of the

company.

(7)  A corporate officer of the permittee shall certify to

the department that forfeiture of the aggregate amounts of self-

bonds furnished for all operations hereunder would not

materially affect the permittee's ability to remain in business

or endanger its cash flow to the extent it could not meet its

current obligations.

(8)  The permittee may be required by the department to

pledge real and personal property to guarantee the permittee's

self-bond. The department is authorized to acquire and dispose

of such property in the event of a default to the bond

obligation and may use the moneys in the Surface Mining

Conservation and Reclamation Fund to administer this provision.

(9)  The permittee may be required to provide third party

guarantees or indemnifications of its self-bond obligations.

(10)  The permittee shall provide such other information

regarding its financial solvency, continuous business operation

and compliance with environmental laws as the department shall

require.

(11)  An applicant shall certify to the department its

present intention to maintain its present corporate status for a

period in excess of five (5) years.

(12)  A permittee shall annually update the certifications

required hereunder and provide audited financial statements for

each fiscal year during which it furnishes self-bonds.

(13)  The permittee shall pay an annual fee in the amount

determined by the department of the cost to review and verify

the permittee's application for self-bonding and annual

submissions thereafter.

* * *

Section 2.  The act is amended by adding a section to read:

Section 19.2.  Land Reclamation Financial Guarantees.--(a)

The department shall establish a program to provide land

reclamation financial guarantees to qualified operators to

insure reclamation of suitable surface mining activities

permitted under this act. A land reclamation financial guarantee

may be used by an operator to satisfy the bonding obligation

required by section 4(d).

(b)  (1)  The department shall assess and collect premiums

for land reclamation financial guarantees from qualified

operators who choose to obtain such guarantees. The amount of

the premium, to be determined by the department and established

by regulation, shall be sufficient to assure the financial

stability of the land reclamation financial guarantee program

and to cover the department's costs to administer the program.

(2)  A special account is established in the Surface Mining

Conservation and Reclamation Fund to be known as the Land

Reclamation Financial Guarantee Account. The account shall be

used to support land reclamation financial guarantees. Premium

payments shall be deposited into the account and to pay the cost

of reclamation in the event of operator forfeiture.

(3)  (i)  Except as noted in this section, the department

shall use all the funds previously appropriated and collected

for the sum-certain financial guarantees authorized pursuant to

section 213 of the act of June 22, 2001 (P.L.979, No.6A), known

as the "General Appropriation Act of 2001," as principal funds

for the land reclamation financial guarantee program established

by this section.

(ii)  Any existing sum-certain financial guarantee previously

issued by the department shall be converted into a land

reclamation financial guarantee established by this section and

the funds in the Land Reclamation Financial Guarantee Account

shall be used to cover obligations for all existing sum-certain

financial guarantees previously issued by the department.

(4)  The department may transfer up to five hundred thousand

dollars ($500,000) of the funds appropriated for the sum-certain

financial guarantees authorized pursuant to section 213 of the

"General Appropriation Act of 2001," into the Remining Financial

Assurance Fund for use in supporting remining financial

guarantees issued by the department pursuant to section 4.12.

(5)  The department may transfer interest earned on the funds

in the Land Reclamation Financial Guarantee Account into the

Reclamation Fee O&M Trust Account established pursuant to 25 Pa.

Code §§ 86.17 (relating to permit and reclamation fees) and

86.187 (relating to use of money) to be used to supplement the

funding of the Reclamation Fee O&M Trust Account.

(6)  Consistent with the requirement in this section to

assure the financial stability of the land reclamation financial

guarantee program, premiums collected and deposited in the Land

Reclamation Financial Guarantee Account may be transferred by

the department into the Reclamation Fee O&M Trust Account

established pursuant to 25 Pa. Code §§ 86.17 and 86.18 to be

used to supplement the funding of the Reclamation Fee O&M Trust

Account.

(7)  For a 25-year period beginning in 2011, up to two

million dollars ($2,000,000) annually collected from the Gross

Receipts Tax on sales of electric energy in Pennsylvania

authorized by Article XI of the act of March 4, 1971 (P.L.6,

No.2), known as the "Tax Reform Code of 1971," may be

transferred by the department to the Reclamation Fee O&M Trust

Account established pursuant to 25 Pa. Code §§ 86.17 and 86.187

to be used to supplement the funding of the Reclamation Fee O&M

Trust Account.

(c)  When determining eligibility for a land reclamation

financial guarantee, the department shall consider both site and

operator eligibility, including factors such as:

(1)  The environmental and safety hazards of the site for

which a guarantee is proposed.

(2)  The availability of coal reserves at the site.

(3)  The operator's long-term financial stability.

(4)  The operator's prior denial of coverage, if any, by

surety bond companies.

(5)  The operator's length of time in business and compliance

history.

(6)  Any other factor the department considers indicative of

an operator's ability to complete reclamation and pay required

premiums under the program.

(d)  (1)  The department shall determine the total amount of

financial guarantees that can be supported by the Land

Reclamation Financial Guarantee Account based on loss reserves

established by the application of the historical rate of mine

operator bond forfeitures, plus a reasonable margin of safety to

protect the account from the risk of forfeiture.

(2)  The department shall establish, by regulation,

underwriting methods adequate to insure the account against the

risk of forfeiture of the guarantees.

(e)  (1)  The land reclamation financial guarantee program

established by this section may be discontinued immediately upon

publication of notice in the Pennsylvania Bulletin if twenty-

five per cent or greater of the outstanding bond obligation for

the land reclamation financial guarantees program is subject to

forfeiture.

(2)  The Land Reclamation Financial Guarantee Account shall

be the sole source of funds underwriting the land reclamation

financial guarantees program and the Commonwealth shall not be

obligated to expend any funds beyond the amount in the Land

Reclamation Financial Guarantee Account.

(f)  The Environmental Quality Board shall promulgate

regulations to implement the land reclamation financial

guarantee program and the provisions and requirements of this

section.

Section 3.  This act shall take effect in 60 days.