Natural Resources, Oil, Gas and Mining; Non-Coal

Section R647-2-111

Surety

Notice of Proposed Rule

(Amendment)

DAR File No.: 35184
Filed: 08/29/2011 08:55:40 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of the rule is to establish requirements for mineral mine operators to post a reclamation surety before commencing exploration operations. The rule change will add a required step for the Board to annually approve an average reclamation rate per acre as a result of S.B. 15 which passed during the Legislature's 2011 General Session.

Summary of the rule or change:

Section R647-2-111 establishes requirements for a mineral mining operation to post a reclamation surety with the Division prior to commencement of exploration operations. The change adds a requirement upon the Board to annually approve an average reclamation rate per acre after a Division presentation and public comment opportunity.

State statutory or constitutional authorization for this rule:

• Subsection 40-8-14(1)

Anticipated cost or savings to:

the state budget:

The statute and rule change codify the existing Division practice of reporting to the Board during the prior two years, so no cost or savings impact to the state budget.

local governments:

No local government costs or savings are anticipated, since this rule impacts only the Division and the Board.

small businesses:

Small businesses who conduct exploration for minerals would not incur a cost or savings, since the burden for this rule change is upon the Division to present to the Board for approval.

persons other than small businesses, businesses, or local governmental entities:

Persons other than small businesses, businesses, or local government entities would not be impacted by this rule since it requires the Division to report to the Board.

Compliance costs for affected persons:

There are no compliance costs for mineral mining operators since the rule requirement is for the Division to report to the Board for approval. The Division has presented the information to the Board for the past two years.

Comments by the department head on the fiscal impact the rule may have on businesses:

Businesses will not be fiscally impacted by this rule amendment.

Michael Styler, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Natural Resources
Oil, Gas and Mining; Non-CoalRoom 1210
1594 W NORTH TEMPLE
SALT LAKE CITY, UT 84116-3154

Direct questions regarding this rule to:

• Steve Schneider at the above address, by phone at 801-538-5328, by FAX at 801-359-3940, or by Internet E-mail at steveschneider@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/17/2011

Interested persons may attend a public hearing regarding this rule:

• 09/29/2011 09:00 AM, UBATC, 450 N 2000 W, Vernal, UT

This rule may become effective on:

10/26/2011

Authorized by:

John Baza, Director

R647. Natural Resources; Oil, Gas and Mining; Non-Coal.

R647-2. Exploration.

R647-2-111. Surety.

1. After receiving notification that the notice of intention is approved or complete, but prior to commencement of operations, the operator must post a reclamation surety with the Division.

1.11. Failure to furnish and maintain reclamation surety may, after notice and opportunity for a Board hearing, result in a withdrawal of the notice of intention as provided for in Section 40-8-16.

2. The Division will not require a separate surety where a reclamation surety in a form and amount acceptable to the Division is held by other governmental entities, provided that the cost estimate is accurate and the Division is named as co-beneficiary. Cooperative Agreements may be developed and entered into according to Section 40-8-22.

3. As part of the review of the notice of intention, the Division shall determine the required surety amount based on:

3.11. Site-specific calculations or estimates by the Division reflecting the cost the Division or a third party would incur to reclaim the site;

3.12. Site-specific calculations or estimates by the operator reflecting the cost the Division or a third party would incur to reclaim the site, if accurate and verifiable by the Division; or

3.13. The average dollars per acre costs for reclamation for similar operations, as determined by the Division, based upon approved surety amounts for current large mining operations.

3.14. In determining or verifying the amount of surety under [Sections]Subsections 3.11 or 3.12, the Division shall use cost data from current sureties for large mining operations, adjusted as necessary to reflect the nature and scope of operations and reclamation under the notice of intention.

3.15. For the average dollars per acre in Subsection 3.13, the Board will annually approve the figure after a formal presentation from the Division and an opportunity for public comment.

4. The operator shall submit a completed Reclamation Contract (FORM MR-RC) with the required surety. The form and amount of the reclamation surety must be approved by the Division. Acceptable forms may include:

4.11. A corporate surety bond from a surety company that is licensed to do business in Utah, that is listed in "A.M. Best's Key Rating Guide" at a rating of A- or better or a Financial Performance Rating (FPR) of 8 or better, according to the "A.M. Best's Guide". All surety companies also will be continuously listed in the current issue of the U.S. Department of the Treasury Circular 570. Operators who do not have a surety bond with a company that meets the standards of subsection 4.11 will have 120 days from the date of Division notification after enactment of the changes to subsection 4.11 to achieve compliance or face enforcement action. When the Division in the course of examining surety bonds, notifies an operator that a surety company guaranteeing its performance does not meet the standards of subsection 4.11., the operator has 120 days after notice from the Division by mail to correct the deficiency, or face enforcement action;

4.12. Federally-insured certificate of deposit payable to the State of Utah, Division of Oil, Gas and Mining;

4.13. Cash;

4.14. An irrevocable letter of credit issued by a bank organized to do business in the United States;

4.15. Escrow accounts; and

4.16. The Board may accept a written self-bonding agreement in the case of operators showing sufficient financial strength.

5. Surety shall be required until such time as reclamation is deemed complete by the Division. The Division shall promptly conduct an inspection when notified by the operator that reclamation is complete. The full release of surety shall be evidence that the operator has reclaimed as required by the Act.

5.11. A partial release of surety can be made by the Division if it determines that a substantial phase or segment of reclamation such as demolition, backfilling or regrading has been successfully performed and the residual amount of retained surety is determined to be adequate to insure completion of reclamation.

 

KEY: minerals reclamation

Date of Enactment or Last Substantive Amendment: [May 25, 2011]2011

Notice of Continuation: June 2, 2008

Authorizing, and Implemented or Interpreted Law: 40-8-1 et seq.