Bill Text: PA HB1813 | 2011-2012 | Regular Session | Amended

---

Bill Title: Further providing for mining permit, reclamation plan and bond; and providing for land reclamation financial guarantees.

Spectrum: Moderate Partisan Bill (Republican 29-4)

Status: (Passed) 2012-10-24 - Act No. 157 [HB1813 Detail]

Download: Pennsylvania-2011-HB1813-Amended.html

---

SENATE AMENDED
PRIOR PRINTER'S NOS. 2323, 2901 PRINTER'S NO. 4149
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1813 Session of2011
INTRODUCED BY TOBASH, GOODMAN, KNOWLES, PYLE, EVERETT, GEIST, HEFFLEY, HELM, HENNESSEY, HESS, HUTCHINSON, QUINN, STERN, SWANGER, TOOHIL, MURPHY, MOUL, REED, VEREB, MAJOR, BLOOM, MUSTIO, MALONEY, M. K. KELLER, FARRY, BOBACK, REICHLEY, GILLEN, BENNINGHOFF, MASSER, KORTZ, PASHINSKI AND S. H. SMITH, AUGUST 22, 2011
SENATOR CORMAN, APPROPRIATIONS, IN SENATE, RE-REPORTED AS AMENDED, OCTOBER 1, 2012
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
20110HB1813PN4149 - 2 -
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
20110HB1813PN4149 - 3 -
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
20110HB1813PN4149 - 4 -
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
20110HB1813PN4149 - 5 -
(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
20110HB1813PN4149 - 6 -
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
20110HB1813PN4149 - 7 -
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
20110HB1813PN4149 - 8 -
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) Beginning in fiscal year 2012-2013 and upon approval of <--
the Governor 2013-2014, 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 appropriated annually by the <--
department the General Assembly to the department for transfer <--
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. The authority
to transfer funds under this clause expires June 30, 2038 2039. <--
20110HB1813PN4149 - 9 -
(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
20110HB1813PN4149 - 10 -
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.
20110HB1813PN4149 - 11 -