CHAPTER 6 NEW 3809 REQUIREMENTS RELATING TO FINANCIAL GUARANTEES, INSPECTION, ENFORCEMENT, AND APPEALS

JurisdictionUnited States
Review and Analysis of the New BLM Surface Management (3809) Regulations
(2001)

CHAPTER 6
NEW 3809 REQUIREMENTS RELATING TO FINANCIAL GUARANTEES, INSPECTION, ENFORCEMENT, AND APPEALS

Michael S. Giannotto
Valerie E. Ross
Shea & Gardner
Washington, D.C.

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I. FINANCIAL GUARANTEES

A. Generally

1. No financial guarantees are required for operations that qualify as casual use.

2. Financial guarantees are now required for all new notice-level activities.

a. This is a change from the pre-existing rules.

3. Financial guarantees are now mandated all plan-level activities (under the pre-existing rules, financial guarantees were discretionary, although, in practice, they were required for all plans of operations). The requirements for such guarantees have changed, however.

B. Transition Rules

1. Notice-level activities

a. Unless modifies (see below), operations conducted under existing notices (those on file by January 20, 2001) are grandfathered under the existing rules, and therefore do not require financial guarantees.
b. A financial guarantee is required for operations conducted pursuant to notices filed on or after January 20, 2001.
c. If, after January 20, 2001, an operator modifies a pre-January 20, 2001 notice, a financial guarantee is required for the entire modified operation. The guarantee must be posted before operations begin under modified notice.

2. Plan-level activities

a. For plans of operations approved prior to January 20, 2001, operators must determine if their existing financial guarantee satisfies the requirements of the new 3809 regulations (detailed below).

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(1) If the existing guarantee does satisfy the new requirements, the operator need do nothing more.
(2) If the existing guarantee does not satisfy the new requirements, the operator must post a financial guarantee that does satisfy the new requirements by July 19, 2001.
b. For plans of operations approved on or after January 20, 2001, operators must post financial guarantees before beginning operations.
C. Types of Financial Guarantees

1. Individual financial guarantees that cover estimated reclamation costs for the areas covered by a single notice or plan of operations.

2. Blanket financial guarantees that cover estimated reclamation costs for the areas covered by more than one notice or plan of operations.

3. State-approved financial guarantees.

D. Individual Financial Guarantees

1. An individual financial guarantee must cover:

a. The estimated reclamation costs measured by what a third-party would charge BLM to reclaim the areas disturbed by the operations in accordance with the reclamation plan.
b. The cost of any interim stabilization and maintenance that would be necessary for the operation to comply with environmental requirements while a third-party contract for reclaiming the property is developed.
c. The cost of constructing and maintaining any water treatment or other facilities necessary to meet federal and State environmental standards. BLM may require a trust fund or other funding mechanism to ensure the continuation of long-term treatment necessary to maintain water quality standards as well as other needed long-term post mining maintenance.

2. The following individual financial guarantees are permitted:

a. Surety bonds;
b. Cash deposited and maintained in a Federal depository account of the US Treasury by BLM;

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c. Irrevocable letters of credit;
d. Certificates of deposit or savings accounts;
e. US, State, or Municipal securities or bonds;
f. Investment-grade securities; and
g. Insurance.

3. If the form of financial guarantee is securities or bonds, the operator must annually certify to BLM the market value of these financial instruments, and must take corrective action if the market value declines to less than 90 percent of the required amount of the financial guarantee.

E. State-Approved Financial Guarantees

1. If an operation is covered by a State-approved financial guarantee, a...

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