H. B. 2761

(By Delegates Mezzatesta, Cann,
Michael and Williams)

[Introduced January 14, 1998; referred to the

Committee on the Judiciary then Finance.]

A BILL to amend and reenact sections eleven and twelve, article three, chapter twenty-two of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to surface coal mining and reclamation; removal of requirement that reclamation related liabilities of state have to exceed accrued amount in reclamation fund before reclamation fund tax is collected; removal of five thousand dollar per acre limit for bonding.

Be it enacted by the Legislature of West Virginia:
That sections eleven and twelve, article three, chapter twenty-two of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted to read as follows:

§22-3-11. Bonds; amount and method of bonding; bonding requirements; special reclamation tax and fund; prohibited acts; period of bond liability.

(a) After a surface-mining permit application has been approved pursuant to this article, but before a permit has been issued, each operator shall furnish a penal bond, on a form to be prescribed and furnished by the director, payable to the state of West Virginia and conditioned upon the operator faithfully performing all of the requirements of this article and of the permit. The penal amount of the bond shall be one thousand dollars for each acre or fraction thereof. The bond shall cover (1) the entire permit area, or (2) that increment of land within the permit area upon which the operator will initiate and conduct surface-mining and reclamation operations within the initial term of the permit. If the operator chooses to use incremental bonding, as succeeding increments of surface mining and reclamation operations are to be initiated and conducted within the permit area, the operator shall file with the director an additional bond or bonds to cover such increments in accordance with this section: Provided, That once the operator has chosen to proceed with bonding either the entire permit area or with incremental bonding, the operator shall continue bonding in that manner for the term of the permit: Provided, however, That the minimum amount of bond furnished shall be ten thousand dollars.
(b) The period of liability for bond coverage begins with issuance of a permit and continues for the full term of the permit plus any additional period necessary to achieve compliance with the requirements in the reclamation plan of the permit.
(c) (1) The form of the bond shall be approved by the director and may include, at the option of the operator, surety bonding, collateral bonding (including cash and securities), establishment of an escrow account, self-bonding or a combination of these methods. If collateral bonding is used, the operator may elect to deposit cash, or collateral securities or certificates as follows: Bonds of the United States or its possessions, of the federal land bank, or of the homeowners' loan corporation; full faith and credit general obligation bonds of the state of West Virginia, or other states, and of any county, district or municipality of the state of West Virginia or other states; or certificates of deposit in a bank in this state, which certificates shall be in favor of the division. The cash deposit or market value of such securities or certificates shall be equal to or greater than the penal sum of the bond. The director shall, upon receipt of any such deposit of cash, securities or certificates, promptly place the same with the treasurer of the state of West Virginia whose duty it is to receive and hold the same in the name of the state in trust for the purpose for which the deposit is made when the permit is issued. The operator making the deposit is entitled from time to time to receive from the state treasurer, upon the written approval of the director, the whole or any portion of any cash, securities or certificates so deposited, upon depositing with him or her in lieu thereof, cash or other securities or certificates of the classes herein specified having value equal to or greater than the sum of the bond.
(2) The director may approve an alternative bonding system if it will (A) reasonably assure that sufficient funds will be available to complete the reclamation, restoration and abatement provisions for all permit areas which may be in default at any time, and (B) provide a substantial economic incentive for the permittee to comply with all reclamation provisions.
(d) The director may accept the bond of the applicant itself without separate surety when the applicant demonstrates to the satisfaction of the director the existence of a suitable agent to receive service of process and a history of financial solvency and continuous operation sufficient for authorization to self-insure.
(e) It is unlawful for the owner of surface or mineral rights to interfere with the present operator in the discharge of the operator's obligations to the state for the reclamation of lands disturbed by the operator.
(f) All bond releases shall be accomplished in accordance with the provisions of section twenty-three of this article.
(g) The special reclamation fund previously created is continued. The moneys accrued in the fund, including interest, are reserved solely and exclusively for the purposes set forth in this subsection. The fund shall be administered by the director, and he or she is authorized to expend the moneys in the fund for the reclamation and rehabilitation of lands which were subjected to permitted surface-mining operations and abandoned after the third day of August, one thousand nine hundred seventy-seven, where the amount of the bond posted and forfeited on such land is less than the actual cost of reclamation. The director shall develop a long-range planning process for selection and prioritization of sites to be reclaimed so as to avoid inordinate short-term obligations of the assets in the fund of such magnitude that the solvency of the fund is jeopardized. The director may use an amount, not to exceed twenty-five percent of the annual amount of the fees collected, for the purpose of designing, constructing and maintaining water treatment systems when they are required for a complete reclamation of the affected lands described in this subsection. The director may also expend an amount not to exceed ten percent of the total annual assets in the fund to implement and administer the provisions of this article, articles two and four of this chapter and, as they apply to the surface mine board, articles one and four, chapter twenty-two-b of this code.
Every person conducting coal surface-mining operations shall contribute into the fund a sum equal to three cents per ton of clean coal mined. This fee shall be collected by the state tax commissioner in the same manner, at the same time, and upon the same tonnage as the minimum severance tax imposed by article twelve-b, chapter eleven of this code is collected: Provided, That under no circumstance shall this tax be construed to be an increase in either the minimum severance tax imposed by said article twelve-b or the severance tax imposed by article thirteen of said chapter eleven. Every person liable for payment of this special tax shall pay the amount due without notice or demand for payment. The tax commissioner shall provide to the director a quarterly listing of all persons known to be delinquent in payment of the special tax. The director may take such delinquencies into account in making determinations on the issuance, renewal or revision of any permit. Such tax shall be collected whenever the liabilities of the state established in this subsection exceed the accrued amount in the fund. The tax commissioner shall deposit the fees collected with the treasurer of the state of West Virginia to the credit of the special reclamation fund. The moneys in the fund shall be placed by the treasurer in interest bearing account with the interest being returned to the fund on an annual basis. At the beginning of each quarter, the director shall advise the state tax commissioner and the governor of the assets, excluding payments, expenditures and liabilities, in the fund.
§22-3-12. Site-specific bonding; legislative rule; contents of legislative rule; legislative intent; expiration of rule; reporting.

(a) Notwithstanding the provisions of section eleven of this article, the director may establish and implement a site-specific bonding system in accordance with the provisions of this section.
(b) Such site-specific bonding system shall be established by a legislative rule proposed by the director. The rule shall be proposed for promulgation in accordance with the provisions of article three, chapter twenty-nine-a of this code, except as the provisions of this section otherwise direct. The notice of the proposed promulgation and the text of the proposed rule shall be filed in the state register in compliance with the requirements of section five, article three, chapter twenty-nine-a of this code: Provided, That such filing shall be made on or before the thirtieth day of June, one thousand nine hundred ninety-two: Provided, however, That a period for receiving public comment on the merits of such rule shall be afforded, which period shall extend for not less than sixty days next following the filing of the proposed rule in the state register. The notice establishing the period for public comment shall also fix a date, time and place for a hearing for public comment at which both written and oral presentations may be made, and such hearing shall be held after the thirtieth day of the public comment period but before the forty-sixth day of such comment period. The provisions of section nine, article three, chapter twenty-nine-a of this code to the contrary notwithstanding, after the close of the public comment period, the director shall proceed to agency approval and final adoption of the rule, including any amendments made by the director prior to such final adoption, without further hearing or public comment. No such amendment may change the main purpose of the rule. Such final adoption shall occur on or before the first day of November, one thousand nine hundred ninety-two, and such rule shall become effective, and have the full force and effect of law on and after the first day of December, one thousand nine hundred ninety-two, without submission to the Legislature. Such rule shall continue in effect until the first day of May, one thousand nine hundred ninety-three, or until sooner modified, codified or abrogated by the Legislature. Such rule shall may not be promulgated as an emergency legislative rule.
(c) A legislative rule proposed or promulgated pursuant to this section must provide, at a minimum, for the following:
(1) The penal amount of a bond shall be not less than one thousand dollars nor more than five thousand dollars per acre or fraction thereof.
(2) Any such bond, subject to the limitations of subdivision (1) of this subsection, shall reflect a relative potential cost of reclamation associated with the activities proposed to be permitted, which cost would not otherwise be reflected by bonds calculated by merely applying a specific dollar amount per acre for all permits.
(3) Such bond, subject to the provisions of subdivision (1) of this subsection, shall also reflect an analysis under the legislative rule of various factors, as applicable, which affect the cost of reclamation, including, but not limited to: (A) The general category of mining, whether surface or underground; (B) mining techniques and methods proposed to be utilized; (C) support facilities, fixtures, improvements and equipment; (D) topography and geology; and (E) the potential for degrading or improving water quality.
(d) A legislative rule proposed or promulgated pursuant to the provisions of this section may, in addition to the requirements of subsection (c) of this section, provide for a consideration of other factors deemed relevant by the director. For example, such rule may provide for the following:
(1) A consideration as to whether the bond relates to a new permit application, a renewal of an existing permit, an application for an incidental boundary revision, or the reactivation of an inactive permit;
(2) A consideration of factors which may result in environmental enhancement, as in a case where remining may improve water quality or reduce or eliminate existing highwalls, or a permitted operation may create or improve wetlands; or
(3) An analysis of various factors related to the specific permit applicant, including, but not limited to: (A) The prior mining experience of the applicant with the activities sought to be permitted; and (B) the history of the applicant as it relates to prior compliance with statutory and regulatory requirements designed to protect, maintain or enhance the environment in this or any other state.
(e) It is the intent of the Legislature that a legislative rule proposed or promulgated pursuant to the provisions of this section shall be constructed so that when the findings of fact by the division of environmental protection with respect to the proposed mining activity and the particular permit applicant coincide with the particular factors or criteria to be considered and analyzed under the rule, the rule will direct a conclusion as to the amount of the bond to be required, subject to rebuttal and refutation of the findings by the applicant. To the extent practicable, the rule shall limit subjectivity and discretion by the director and the division in fixing the amount of the bond.
(f) On or before the thirty-first day of December, one thousand nine hundred ninety-one, and every ninety days thereafter, the director shall report in writing to the joint committee on government and finance of the Legislature or its designated subcommittee as to the progress of the division in developing or implementing, as the case may be, the provisions of this section.

NOTE: The purpose of this bill is remove the requirement that the reclamation related liabilities of the state have to exceed the accrued amount in the reclamation fund before the reclamation fund tax is collected from surface coal mine operators and to remove the five thousand dollar per acre limit for bonding.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.