WEST virginia legislature
2020 regular session
House Bill 4816
By Delegates Hanshaw (Mr. Speaker) and Miley
[Introduced February 11, 2020; Referred to the Committee on Energy then the Judiciary]
A BILL to amend and reenact §22-3-11 of the Code of West Virginia, 1931, as amended, relating to removing the provisions for self-bonding; and providing for removal of the applicant insuring a bond without separate surety.
Be it enacted by the Legislature of West Virginia:
Article 3. Surface coal Mining and Reclamation Act.
§22-3-11. Bonds; amount and method of bonding; bonding requirements; special reclamation tax and funds; 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 secretary, 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 not less than $1,000 nor more than $5,000 for each acre or fraction of an acre: Provided, That the minimum amount of bond furnished for any type of reclamation bonding shall be $10,000. 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 secretary an additional bond or bonds to cover the increments in accordance with this section: Provided, however, 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.
(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 secretary 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 department. The
cash deposit or market value of the securities or certificates shall be equal
to or greater than the penal sum of the bond. The secretary shall, upon receipt
of any 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 deposit 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 secretary, 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
specified in this subsection having value equal to or greater than the sum of
(2) The secretary 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 secretary may
accept the bond of the applicant itself without separate surety when the
applicant demonstrates to the satisfaction of the secretary 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)(d) 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)(e) All bond
releases shall be accomplished in accordance with the provisions of section 23
of this article. (g)(f)(1) The
Special Reclamation Fund previously created is continued. The Special
Reclamation Water Trust Fund is created within the State Treasury into and from
which moneys shall be paid for the purpose of assuring a reliable source of
capital and operating expenses for the
treatment of water discharges from forfeited sites where the secretary has obtained or applied for an
NPDES permit as of the effective date of this article. The moneys accrued in
both funds, any interest earned thereon and yield from investments by the State
Treasurer or West Virginia Investment Management Board are reserved solely and
exclusively for the purposes set forth in this section and §22-1-17 of this
(2) The funds shall be administered by the secretary, who is authorized to expend the moneys in both funds for the reclamation and rehabilitation of lands which were subjected to permitted surface mining operations and abandoned after August 3, 1977, where the amount of the bond posted and forfeited on the land is less than the actual cost of reclamation, and where the land is not eligible for abandoned mine land reclamation funds under §22-2-1 et seq. of this code. The secretary may also expend an amount not to exceed 10 percent of the total annual assets in both funds to implement and administer the provisions of this article and, as they apply to the Surface Mine Board, §22B-1-1 et seq. and §22B-4-1 et seq. of this code.
(3)(A) A tax credit shall
be granted against the tax imposed by subsection
(i)(h) of this
section to any mine operator who performs reclamation or remediation at a bond
forfeiture site which otherwise would have been reclaimed using funds from the
Special Reclamation Fund or Special Reclamation Water Trust Fund. The credit
authorized pursuant to this subdivision is retroactive and may be claimed for
reclamation or remediation performed on or after January 1, 2012: Provided,
That for reclamation or remediation performed prior to July 13, 2013, no tax
credit may be granted unless a written application for the tax credit was
submitted to the Tax Commissioner prior to September 1, 2014. The amount of
credit shall be determined as provided in this section.
(B) The amount of a reclamation tax credit granted under this subsection shall be equal to the amount that the Tax Commissioner determines, based on the project costs, as shown in the records of the secretary, that would have been spent from the Special Reclamation Fund or Special Reclamation Water Trust Fund to accomplish the reclamation or remediation performed by the mine operator, including expenditures for water treatment.
(C) To claim the credit, the mine operator shall, from time to time, file with the Tax Commissioner a written application seeking the amount of the credit earned. Within 30 days of receipt of the application, the Tax Commissioner shall issue a certification of the amount of tax credit, if any, to be allocated to the eligible taxpayer. Should the amount of the credit certified be less than the amount applied for, the Tax Commissioner shall set forth in writing the reason for the difference. Should no certification be issued within the 30-day period, the application will be deemed certified. Any decision by the Tax Commissioner is appealable pursuant to the provisions of the West Virginia Tax Procedure and Administration Act set forth in §11-10-1 et seq. of this code. Applications for certification of the proposed tax credit shall contain the information and be in the detail and form as required by the Tax Commissioner.
(h)(g) The Tax
Commissioner may promulgate rules for legislative approval pursuant to the
provisions of §29A-3-1 et seq. of this code to carry out the purposes of
this subdivision two, subsection (g)(f) of this section. (i)(h)(1) Rate,
deposits and review.
(A) For tax periods commencing on and after July 1, 2009, every person conducting coal surface mining shall remit a special reclamation tax of 14 and four-tenths cents per ton of clean coal mined, the proceeds of which shall be allocated by the secretary for deposit in the Special Reclamation Fund and the Special Reclamation Water Trust Fund.
(B) For tax periods commencing on and after July 1, 2012, the rate of tax specified in paragraph (A) of this subdivision is discontinued and is replaced by the rate of tax specified in this paragraph. For tax periods commencing on and after July 1, 2012, every person conducting coal surface mining shall remit a special reclamation tax of 27 and nine-tenths cents per ton of clean coal mined, the proceeds of which shall be allocated by the secretary for deposit in the Special Reclamation Fund and the Special Reclamation Water Trust Fund. Of that amount, 15 cents per ton of clean coal mined shall be deposited into the Special Reclamation Water Trust Fund.
(C) The tax shall be levied upon each ton of clean coal severed or clean coal obtained from refuse pile and slurry pond recovery or clean coal from other mining methods extracting a combination of coal and waste material as part of a fuel supply.
(D) Beginning with the tax period commencing on July 1, 2009, and every two years thereafter, the special reclamation tax shall be reviewed by the Legislature to determine whether the tax should be continued: Provided, That the tax may not be reduced until the Special Reclamation Fund and Special Reclamation Water Trust Fund have sufficient moneys to meet the reclamation responsibilities of the state established in this section.
(2) In managing the special reclamation program, the secretary shall: (A) Pursue cost-effective alternative water treatment strategies; and (B) conduct formal actuarial studies every two years and conduct informal reviews annually on the Special Reclamation Fund and Special Reclamation Water Trust Fund.
(3) Prior to December 31, 2008, the secretary shall:
(A) Determine the feasibility of creating an alternate program, on a voluntary basis, for financially sound operators by which those operators pay an increased tax into the Special Reclamation Fund in exchange for a maximum per-acre bond that is less than the maximum established in subsection (a) of this section;
(B) Determine the feasibility of creating an incremental bonding program by which operators can post a reclamation bond for those areas actually disturbed within a permit area, but for less than all of the proposed disturbance and obtain incremental release of portions of that bond as reclamation advances so that the released bond can be applied to approved future disturbance; and
(C) Determine the feasibility for sites requiring water reclamation by creating a separate water reclamation security account or bond for the costs so that the existing reclamation bond in place may be released to the extent it exceeds the costs of water reclamation.
(4) If the secretary determines that the alternative program, the incremental bonding program or the water reclamation account or bonding programs reasonably assure that sufficient funds will be available to complete the reclamation of a forfeited site and that the Special Reclamation Fund will remain fiscally stable, the secretary is authorized to propose legislative rules in accordance with §29A-3-1 et seq. of this code to implement an alternate program, a water reclamation account or bonding program or other funding mechanisms or a combination thereof.
special reclamation tax shall be collected by the Tax Commissioner in the same
manner, at the same time and upon the same tonnage as the minimum severance tax
imposed by §11-12B-1 et seq. of this code is collected: Provided,
That under no circumstance shall the special reclamation tax be construed to be
an increase in either the minimum severance tax imposed by said article or the
severance tax imposed by article 13 of said chapter. (k)(j) Every person
liable for payment of the special reclamation tax shall pay the amount due
without notice or demand for payment. (l)(k) The Tax
Commissioner shall provide to the secretary a quarterly listing of all persons
known to be delinquent in payment of the special reclamation tax. The secretary
may take the delinquencies into account in making determinations on the
issuance, renewal or revision of any permit. (m)(l) The Tax
Commissioner shall deposit the moneys collected with the Treasurer of the State
of West Virginia to the credit of the Special Reclamation Fund and Special
Reclamation Water Trust Fund. (n)(m) At the
beginning of each quarter, the secretary shall advise the Tax Commissioner and
the Governor of the assets, excluding payments, expenditures and liabilities,
in both funds. (o)(n) To the
extent that this section modifies any powers, duties, functions and
responsibilities of the department that may require approval of one or more
federal agencies or officials in order to avoid disruption of the federal-state
relationship involved in the implementation of the federal Surface Mining
Control and Reclamation Act, 30 U.S.C. §1270 by the state, the modifications
will become effective upon the approval of the modifications by the appropriate
federal agency or official.
NOTE: The purpose of this bill is to remove the language relating to self-bonding to ensure the DEP can utilize bonding funds for mining reclamation to protect the state’s interests and funds for safe mining reclamation.
Strike-throughs indicate language that would be stricken from a heading or the present law, and underscoring indicates new language that would be added.