81 FR 61612 - Petition To Initiate Rulemaking; Ensuring That Companies With a History of Financial Insolvency, and Their Subsidiary Companies, Are Not Allowed To Self-Bond Coal Mining Operations

DEPARTMENT OF THE INTERIOR
Office of Surface Mining Reclamation and Enforcement

Federal Register Volume 81, Issue 173 (September 7, 2016)

Page Range		61612-61615
FR Document		2016-21440
We, the Office of Surface Mining Reclamation and Enforcement (OSMRE), are announcing our final decision on a petition for rulemaking that was submitted by WildEarth Guardians. The petition requested that we revise our current regulations to better ensure that self-bonded companies provide sufficient information to guarantee that reclamation obligations are adequately met and that the self-bonded entity is financially solvent. The Director has decided to grant the petition, although we do not intend to propose the specific rule changes requested in the petition. We will initiate a rulemaking to address this issue as discussed more fully below.
Federal Register, Volume 81 Issue 173 (Wednesday, September 7, 2016)
[Federal Register Volume 81, Number 173 (Wednesday, September 7, 2016)]
[Rules and Regulations]
[Pages 61612-61615]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-21440]


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DEPARTMENT OF THE INTERIOR

Office of Surface Mining Reclamation and Enforcement

30 CFR Part 800

[Docket ID: OSM-2016-0006; S1D1S SS08011000 SX064A000 167S180110; S2D2S 
SS08011000 SX064A000 16XS501520]


Petition To Initiate Rulemaking; Ensuring That Companies With a 
History of Financial Insolvency, and Their Subsidiary Companies, Are 
Not Allowed To Self-Bond Coal Mining Operations

AGENCY: Office of Surface Mining Reclamation and Enforcement, Interior.

ACTION: Decision on petition for rulemaking.

-----------------------------------------------------------------------

SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement 
(OSMRE), are announcing our final decision on a petition for rulemaking 
that was submitted by WildEarth Guardians. The petition requested that 
we revise our current regulations to better ensure that self-bonded 
companies provide sufficient information to guarantee that reclamation 
obligations are adequately met and that the self-bonded entity is 
financially solvent. The Director has decided to grant the petition, 
although we do not intend to propose the specific rule changes 
requested in the petition. We will initiate a rulemaking to address 
this issue as discussed more fully below.

DATES: September 7, 2016.

ADDRESSES: Copies of the petition and other relevant materials 
comprising the

[[Page 61613]]

administrative record of this petition are available for public review 
and copying at the Office of Surface Mining Reclamation and 
Enforcement, Administrative Record, Room 252 SIB, 1951 Constitution 
Avenue NW., Washington, DC 20240.

FOR FURTHER INFORMATION CONTACT: Michael Kuhns, Division of Regulatory 
Support, 1951 Constitution Ave. NW., Washington, DC 20240; Telephone: 
202-208-2860; Email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. How does the petition process operate?
II. What is the substance of the petition?
III. What do our current regulations regarding self-bonding require?
IV. What comments did we receive and how did we address them?
V. What is the Director's decision?
VI. Procedural Matters and Determinations

I. How does the petition process operate?

    On March 3, 2016, we received a petition from WildEarth Guardians 
(petitioner) requesting that OSMRE amend its self-bonding regulations 
at 30 CFR 800.23 to ensure that companies with a history of financial 
insolvency, and their subsidiary companies, are not allowed to self-
bond coal mining operations. WildEarth Guardians submitted this 
petition pursuant to section 201(g) of the Surface Mining Control and 
Reclamation Act of 1977 (SMCRA), 30 U.S.C. 1201(g), which provides that 
any person may petition the Director of OSMRE to initiate a proceeding 
for the issuance, amendment, or repeal of any regulation adopted under 
SMCRA. OSMRE adopted regulations at 30 CFR 700.12 to implement this 
statutory provision.
    In accordance with our regulation at 30 CFR 700.12(c), we 
determined that WildEarth Guardians' petition set forth ``facts, 
technical justification and law'' establishing a ``reasonable basis'' 
for amending our regulations. Therefore, on May 20, 2016, we published 
a document in the Federal Register (81 FR 31880) seeking comments on 
whether we should deny the petition or whether the changes proposed by 
petitioners, or other changes beyond what the petitioners have 
proposed, should be made. On June 20, 2016, we published a document 
extending the comment period 30 days, until July 20, 2016 (81 FR 
39875). We received 117,191 comments during the public comment period.
    After reviewing the petition and public comments, the Director has 
decided to grant WildEarth Guardians' petition. Pursuant to 5 U.S.C. 
553(e) and section 201(c)(2) of SMCRA, 30 U.S.C. 1211(c)(2), we plan to 
initiate rulemaking and publish a notice of proposed rulemaking with an 
appropriate public comment period. Although we are still considering 
the content of the proposed rule, we expect that it will contain 
updates and improvements to our regulations to ensure that reclamation 
obligations are adequately met and that any self-bonded entity is 
financially solvent. However, OSMRE does not intend to propose the 
petitioner's suggested rule language because it did not address 
important issues such as the process for evaluating applications for 
self-bonds, monitoring the financial health of self-bonded entities, 
and providing a mechanism for replacing self-bonds with other types of 
financial assurances if the need arises.

II. What is the substance of the petition?

    The WildEarth Guardians' petition for rulemaking requests that 
OSMRE amend its self-bonding regulations at 30 CFR 800.23 to ensure 
that companies with a history of financial insolvency, and their 
subsidiary companies, are not allowed to self-bond coal mining 
operations. The petition claims that current rules allow regulatory 
authorities (RAs) to accept self-bond guarantees from subsidiary 
companies that are technically insolvent due to the financial status of 
their parent corporations, potentially shifting the financial burden 
for substantial mine reclamation costs to American taxpayers in the 
event the companies do not have the financial resources to complete 
their mine reclamation obligations.
    In its petition, WildEarth Guardians provides draft regulatory 
language that it alleges will ensure that any entity, including non-
parent corporate guarantors, will be subject to appropriate financial 
scrutiny before being allowed to self-bond. Specifically, WildEarth 
Guardians requests that we revise our self-bonding regulations to 
define the term ``ultimate parent corporation,'' limit the total amount 
of present and proposed self-bonds to not exceed twenty-five (25) 
percent of the ultimate parent corporation's tangible net worth in the 
United States, and require that both the self-bonding applicant and its 
parent corporation meet any self-bonding financial conditions in 30 CFR 
800.23, including the requirement that neither have filed for 
bankruptcy in the last five (5) years.

III. What do our current regulations regarding self-bonding require?

    Our current regulations at 30 CFR 800.23 set minimum standards for 
accepting a self-bond from an applicant. Paragraph (a) provides 
definitions for the terms ``current assets,'' ``current liabilities,'' 
``fixed assets,'' ``liabilities,'' ``net worth,'' ``parent 
corporation,'' and ``tangible net worth.'' Paragraph (b) sets out the 
conditions that an applicant must meet before it can be eligible to 
self-bond. The applicant must designate a suitable agent to receive 
service of process, paragraph (b)(1); demonstrate continuous operation 
as a business entity for at least 5 years, paragraph (b)(2); submit 
financial information satisfying at least one of three financial tests, 
paragraph (b)(3); and submit various audited and unaudited financial 
statements, paragraph (b)(4). Paragraph (c) allows an RA to accept a 
written guarantee for an applicant's self-bond from a parent or 
``corporate'' guarantor as long as the guarantor meets the conditions 
of paragraphs (b)(1) and (b)(4) of 30 CFR 800.23 and sets out the terms 
for a corporate guarantee. Paragraph (d) states that, in order for an 
RA to accept an applicant's self-bonds, the total amount of the 
outstanding and proposed self-bonds of the applicant must not exceed 
twenty-five (25) percent of the applicant's tangible net worth in the 
United States. Paragraph (e) provides the requirements for any 
indemnity agreements. Paragraph (f) allows an RA to require self-bonded 
applicants, parent and non-parent corporate guarantors to submit an 
update of the information required under paragraphs (b)(3) and (b)(4) 
of this section within 90 days after the close of each fiscal year 
following the issuance of the self-bond or corporate guarantee. 
Finally, paragraph (g) requires that, if at any time during the period 
when a self-bond is posted, the financial conditions of the applicant, 
parent or non-parent corporate guarantor change so that the criteria of 
paragraphs (b)(3) and (d) are not satisfied, the permittee must notify 
the RA and, within 90 days, post an alternate form of bond in the same 
amount as the self-bond. This paragraph also provides that if the 
permittee fails to post an adequate substitute bond, the regulatory 
provisions of Sec.  800.16(e), addressing bond procedures in the event 
of bankruptcy or insolvency, will apply.

IV. What comments did we receive and how did we address them?

    We received 117,191 comments on the petition for rulemaking. These 
comments can be divided into two major groups: those in favor of the 
rulemaking (over 99%) and those opposed (less than 1%, or fourteen 
unique comments).
    Supporters of the petition expressed concern that the current self-
bond

[[Page 61614]]

regulations do not adequately protect the public from the risk that a 
self-bonded entity could declare bankruptcy and not have the funds to 
complete reclamation. These commenters pointed to multiple recent 
bankruptcies of self-bonded companies as evidence of the need for OSMRE 
to revise its self-bonding regulations to prevent those companies from 
qualifying for self-bonding just prior to declaring bankruptcy. Many 
commenters also expressed a desire for OSMRE to take some type of 
immediate action (such as banning self-bonding or providing guidance) 
until there is sufficient time to complete the formal rulemaking 
process. In support of the request for more immediate action, 
commenters pointed to the large amount of self-bonding by financially 
unstable companies that is at risk of becoming worthless in the ongoing 
bankruptcies.
    Opponents of rulemaking asserted that most coal companies have a 
history of solvency and that even those companies currently in 
bankruptcy have continued to meet their reclamation obligations. 
Commenters also stated that they believed SMCRA and OSMRE's 
implementing regulations at 30 CFR 800.23 already provide adequate 
criteria for self-bonding and that the language proposed by petitioners 
would violate section 525 of the federal bankruptcy code, 11 U.S.C. 
525(a), by discriminating against bankrupt entities. Commenters also 
expressed concern that more stringent self-bonding regulations would 
unnecessarily limit the flexibility of state RAs in determining whether 
to allow self-bonding. They assert that this would simply shift 
reclamation liability from one type of bonding instrument (self-
bonding) to another (surety, letter of credit, collateral, or some 
other financial assurance), which the commenters allege would 
exacerbate current stresses on the coal market. Several commenters 
requested that OSMRE deny the petition and allow additional time for us 
to work with the Interstate Mining Compact Commission and state 
regulatory authorities to find a non-regulatory solution to the self-
bonding problem.

V. What is the Director's decision?

    After reviewing the petition and supporting materials, and after 
careful consideration of all comments received, OSMRE has decided to 
grant the petition. However, we do not plan to propose adoption of the 
specific regulatory changes suggested by the petitioner. Instead, we 
are examining broader regulatory changes to 30 CFR part 800 to update 
OSMRE's bonding regulations and ensure the completion of the 
reclamation plan if the regulatory authority has to perform the work in 
the event of forfeiture.
    It is undisputed that the coal market is dramatically different 
from when our current self-bonding regulations were drafted. Diminished 
global demand for coal, competition from low cost shale gas, and the 
unprecedented and continuing retirement of coal-fired power plants are 
clear signs that the energy industry is undergoing a major 
transformation. It is incumbent upon OSMRE to protect the public's 
interests in connection with self-bonding. Without a rigorous financial 
investigation, both before accepting self-bond and throughout the 
duration of a self-bond, it is impossible to ensure that the public 
will be adequately protected from the risk that a self-bonded entity 
will have insufficient funds to complete all of the required 
reclamation.
    During our evaluation of the petition and the comments, we 
discovered instances where self-bond applicants did not provide 
sufficient financial information for state RAs to make informed 
decisions about whether that applicant was financially stable enough to 
self-bond. We also discovered that, because the financial condition of 
some companies changed so quickly, state RAs have experienced 
difficulties requesting and/or receiving additional financial 
information from a self-bonded entity when the RA becomes aware that 
the financial situation of that entity has changed, and enforcing the 
requirement that a self-bonded entity notify the RA and obtain 
replacement bond when it no longer qualifies for self-bonding under the 
regulations. Our current regulations look at companies' historical 
performance in order to assess their future solvency instead of using 
criteria that are more forward looking. For example, some companies 
qualified for self-bonding just months before the company declared 
bankruptcy, in part by providing year-old financial data that did not 
reflect the dramatic changes in the coal market and the declining 
financial health of those self-bonded entities in the intervening year. 
In other instances, the financial information came too late or too 
slowly for RAs to take enforcement action before the company declared 
bankruptcy. Once a self-bonded company files for bankruptcy, obtaining 
replacement bonds becomes significantly more difficult. We have 
concluded that the current regulations do not require use of the most 
appropriate financial tests, both before a self-bond is approved and 
during the life of a self-bond.
    In light of these findings, OSMRE will consider proposing a number 
of changes to our regulations. We anticipate reviewing the definitions 
in 30 CFR 800.23(a), as well as reviewing the existing financial tests 
and documentation required under 30 CFR 800.23(b), to ensure that the 
self-bond applicant is financially stable. We also will consider 
developing a systematic review process for ascertaining whether self-
bonded entities remain financially healthy and for spotting any adverse 
trends that might necessitate replacing a self-bond with a different 
type of financial assurance. We will also consider if we need to 
provide an independent third party review of the self-bonding entity's 
annual financial reports and certification of the current and future 
financial ability of the self-bonding entity. Lastly, we may propose 
additional procedures for replacing self-bonds in the event that a 
company no longer meets the financial tests and to clarify the 
penalties for an entity's failure to disclose a change in financial 
status.
    As mentioned above, we may also propose revisions to other bonding 
requirements, and explore the possibility of the creation of new 
financial assurance instruments to provide industry more options. We 
will likely explore the potential of requiring diversified financial 
assurances. Relying on just one type of financial assurance, such as 
self-bond or a surety bond from just one company, could be risky in an 
uncertain financial market. We are also likely to explore ways to make 
sure there is sufficient collateral to cover all reclamation 
obligations. Under our current regulations, the same small set of 
assets has been used as collateral for multiple liabilities. In a 
number of cases, the aggregate amount of these liabilities has been far 
greater than the value of the assets used as collateral, with the 
result that reclamation obligations are at risk of not being met. We 
will explore ways to address this problem, such as assessing the merits 
of requiring that a percentage of all bonds be supported by collateral 
that is not subject to any other lien nor used as collateral for any 
other mine or other liability. In addition, we need to explore the 
possibility of establishing criteria to create a greater incentive for 
self-bonded companies to timely complete reclamation and apply for 
final bond release. Companies that have surety bonds either pay a fee 
for the bond or have some sort of collateral that is being held by the 
surety company. These frozen assets give them an incentive to complete 
reclamation that self-bonded companies do not have. Finally, we will 
examine concerns raised over certain

[[Page 61615]]

sureties' reliance on a cash-flow basis to cover the cost of 
reclamation when their bonds are forfeited.
    We believe that carefully considered revisions to our regulations 
will better (1) ensure the completion of the reclamation plan as 
required in section 509(a) of SMCRA, 30 U.S.C. 1259(a), (2) guarantee 
that an applicant demonstrates a history of financial solvency and 
continuous operation sufficient for authorization to self-insure as 
required in section 509(c) of SMCRA, 30 U.S.C. 1259(c), and (3) assure 
that surface coal mining operations are conducted to protect the 
environment, 30 U.S.C. 1202(d).
    As we begin to examine broader regulatory changes, we will seek 
specific input from the many stakeholders about their ideas of how to 
improve our regulations. The state RAs have many years of experience 
with self-bonding and we will ask that they provide specific 
suggestions on how to improve our regulations to ensure they have 
adequate financial assurance to complete reclamation of each mine.

VI. Procedural Matters and Determinations

    This document is not a proposed or final rule, policy, or guidance. 
Therefore, it is not subject to the Regulatory Flexibility Act, the 
Small Business Regulatory Enforcement Fairness Act, the Paperwork 
Reduction Act, the Unfunded Mandates Reform Act, or Executive Orders 
12866, 13563, 12630, 13132, 12988, 13175, and 13211. We will conduct 
the analyses required by these laws and executive orders when we 
develop a proposed rule.
    In developing this document, we did not conduct or use a study, 
experiment, or survey requiring peer review under the Information 
Quality Act (Pub. L. 106-554, section 15).
    This document is not subject to the requirement to prepare an 
Environmental Assessment or Environmental Impact Statement under the 
National Environmental Policy Act (NEPA), 42 U.S.C. 4332(2)(C), because 
no proposed action, as described in 40 CFR 1508.18(a) and (b), yet 
exists. This document only announces the Director's decision to grant a 
petition and initiate rulemaking. We will prepare the appropriate NEPA 
compliance documents as part of the rulemaking process.

    Dated: August 19, 2016.
Glenda H. Owens,
Assistant Director, Office of Surface Mining Reclamation and 
Enforcement.
[FR Doc. 2016-21440 Filed 9-6-16; 8:45 am]
BILLING CODE 4310-05-P
61612 Federal Register / Vol. 81, No. 173 / Wednesday, September 7, 2016 / Rules and Regulations

Federal Register
Country Entity License requirement License review policy citation

Sovfracht Managing Company, LLC, a.k.a., For all items subject Presumption of denial 81 FR [INSERT FR
the following four aliases: to the EAR. (See PAGE NUMBER]
—LLC Sovfracht Management Company; § 744.11 of the September 7, 2016.
—Management Company Sovfrakht Ltd.; EAR).
—Sovfracht Management Company; and
—Sovfracht Management Company, LLC.
Dobroslobodskaya, 3 BC Basmanov,
Moscow 105066, Russia.
Sovfracht-Sovmortrans Group, a.k.a., the fol- For all items subject Presumption of denial 81 FR [INSERT FR
lowing two aliases: to the EAR. (See PAGE NUMBER]
—Sovfracht-Sovmortrans; and § 744.11 of the September 7, 2016.
—Sovfrakht-Sovmortrans. Rakhmanovskiy EAR).
Lane, 4, bld.1, Morskoy House, Moscow
127994, Russia; and Dobroslobodskaya,
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sia.

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Technopole Company, 5–183 Entuziastov For all items subject Presumption of denial 81 FR [INSERT FR
Street, Dubna, Moscow Region, Russia to the EAR. (See PAGE NUMBER]
141980; and 12 Aviamotornaya Street, § 744.11 of the September 7, 2016.
Moscow, Russia 111024. EAR).

* * * * * *

Vostokgazprom, OAO, a.k.a., the following For all items subject See § 746.5(b) of the 81 FR [INSERT FR
two aliases: to the EAR when EAR. PAGE NUMBER]
—Otkrytoe Aktsionernoe Obshchestvo used in projects September 7, 2016.
‘Vostokgazprom’; and specified in § 746.5
—Vostokgazprom. d.73 ul.Bolshaya of the EAR.
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634009, Russia.

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—Yamalgazinvest; and used in projects September 7, 2016.
—Zakrytoe Aktsionernoe Obshchestvo specified in § 746.5
‘Yamalgazinvest’. d. 41 korp. 1 prospekt of the EAR.
Vernadskogo, Moscow 117415, Russia.

* * * * * * *

Dated: September 1, 2016. DEPARTMENT OF THE INTERIOR SUMMARY: We, the Office of Surface
Eric L. Hirschhorn, Mining Reclamation and Enforcement
Under Secretary of Commerce for Industry Office of Surface Mining Reclamation (OSMRE), are announcing our final
and Security. and Enforcement decision on a petition for rulemaking
[FR Doc. 2016–21431 Filed 9–6–16; 8:45 am] that was submitted by WildEarth
30 CFR Part 800 Guardians. The petition requested that
BILLING CODE 3510–33–P
we revise our current regulations to
[Docket ID: OSM–2016–0006; S1D1S better ensure that self-bonded
SS08011000 SX064A000 167S180110; companies provide sufficient
S2D2S SS08011000 SX064A000 information to guarantee that
16XS501520] reclamation obligations are adequately
met and that the self-bonded entity is
Petition To Initiate Rulemaking; financially solvent. The Director has
Ensuring That Companies With a decided to grant the petition, although
History of Financial Insolvency, and we do not intend to propose the specific
Their Subsidiary Companies, Are Not rule changes requested in the petition.
Allowed To Self-Bond Coal Mining We will initiate a rulemaking to address
ehiers on DSK5VPTVN1PROD with RULES

Operations this issue as discussed more fully
AGENCY: Office of Surface Mining below.
Reclamation and Enforcement, Interior. DATES: September 7, 2016.
ACTION: Decision on petition for
ADDRESSES: Copies of the petition and
rulemaking.
other relevant materials comprising the

VerDate Sep<11>2014 14:50 Sep 06, 2016 Jkt 238001 PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 E:\FR\FM\07SER1.SGM 07SER1
61614 Federal Register / Vol. 81, No. 173 / Wednesday, September 7, 2016 / Rules and Regulations

regulations do not adequately protect of the reclamation plan if the regulatory to our regulations. We anticipate
the public from the risk that a self- authority has to perform the work in the reviewing the definitions in 30 CFR
bonded entity could declare bankruptcy event of forfeiture. 800.23(a), as well as reviewing the
and not have the funds to complete It is undisputed that the coal market existing financial tests and
reclamation. These commenters pointed is dramatically different from when our documentation required under 30 CFR
to multiple recent bankruptcies of self- current self-bonding regulations were 800.23(b), to ensure that the self-bond
bonded companies as evidence of the drafted. Diminished global demand for applicant is financially stable. We also
need for OSMRE to revise its self- coal, competition from low cost shale will consider developing a systematic
bonding regulations to prevent those gas, and the unprecedented and review process for ascertaining whether
companies from qualifying for self- continuing retirement of coal-fired self-bonded entities remain financially
bonding just prior to declaring power plants are clear signs that the healthy and for spotting any adverse
bankruptcy. Many commenters also energy industry is undergoing a major trends that might necessitate replacing a
expressed a desire for OSMRE to take transformation. It is incumbent upon self-bond with a different type of
some type of immediate action (such as OSMRE to protect the public’s interests financial assurance. We will also
banning self-bonding or providing in connection with self-bonding. consider if we need to provide an
guidance) until there is sufficient time Without a rigorous financial independent third party review of the
to complete the formal rulemaking investigation, both before accepting self- self-bonding entity’s annual financial
process. In support of the request for bond and throughout the duration of a reports and certification of the current
more immediate action, commenters self-bond, it is impossible to ensure that and future financial ability of the self-
pointed to the large amount of self- the public will be adequately protected bonding entity. Lastly, we may propose
bonding by financially unstable from the risk that a self-bonded entity additional procedures for replacing self-
companies that is at risk of becoming will have insufficient funds to complete bonds in the event that a company no
worthless in the ongoing bankruptcies. all of the required reclamation. longer meets the financial tests and to
Opponents of rulemaking asserted During our evaluation of the petition clarify the penalties for an entity’s
that most coal companies have a history and the comments, we discovered failure to disclose a change in financial
of solvency and that even those instances where self-bond applicants status.
companies currently in bankruptcy have did not provide sufficient financial
information for state RAs to make As mentioned above, we may also
continued to meet their reclamation
informed decisions about whether that propose revisions to other bonding
obligations. Commenters also stated that
they believed SMCRA and OSMRE’s applicant was financially stable enough requirements, and explore the
implementing regulations at 30 CFR to self-bond. We also discovered that, possibility of the creation of new
800.23 already provide adequate criteria because the financial condition of some financial assurance instruments to
for self-bonding and that the language companies changed so quickly, state provide industry more options. We will
proposed by petitioners would violate RAs have experienced difficulties likely explore the potential of requiring
section 525 of the federal bankruptcy requesting and/or receiving additional diversified financial assurances. Relying
code, 11 U.S.C. 525(a), by financial information from a self-bonded on just one type of financial assurance,
discriminating against bankrupt entities. entity when the RA becomes aware that such as self-bond or a surety bond from
Commenters also expressed concern the financial situation of that entity has just one company, could be risky in an
that more stringent self-bonding changed, and enforcing the requirement uncertain financial market. We are also
regulations would unnecessarily limit that a self-bonded entity notify the RA likely to explore ways to make sure
the flexibility of state RAs in and obtain replacement bond when it no there is sufficient collateral to cover all
determining whether to allow self- longer qualifies for self-bonding under reclamation obligations. Under our
bonding. They assert that this would the regulations. Our current regulations current regulations, the same small set
simply shift reclamation liability from look at companies’ historical of assets has been used as collateral for
one type of bonding instrument (self- performance in order to assess their multiple liabilities. In a number of
bonding) to another (surety, letter of future solvency instead of using criteria cases, the aggregate amount of these
credit, collateral, or some other financial that are more forward looking. For liabilities has been far greater than the
assurance), which the commenters example, some companies qualified for value of the assets used as collateral,
allege would exacerbate current stresses self-bonding just months before the with the result that reclamation
on the coal market. Several commenters company declared bankruptcy, in part obligations are at risk of not being met.
requested that OSMRE deny the petition by providing year-old financial data that We will explore ways to address this
and allow additional time for us to work did not reflect the dramatic changes in problem, such as assessing the merits of
with the Interstate Mining Compact the coal market and the declining requiring that a percentage of all bonds
Commission and state regulatory financial health of those self-bonded be supported by collateral that is not
authorities to find a non-regulatory entities in the intervening year. In other subject to any other lien nor used as
solution to the self-bonding problem. instances, the financial information collateral for any other mine or other
came too late or too slowly for RAs to liability. In addition, we need to explore
V. What is the Director’s decision? take enforcement action before the the possibility of establishing criteria to
After reviewing the petition and company declared bankruptcy. Once a create a greater incentive for self-bonded
supporting materials, and after careful self-bonded company files for companies to timely complete
consideration of all comments received, bankruptcy, obtaining replacement reclamation and apply for final bond
OSMRE has decided to grant the bonds becomes significantly more release. Companies that have surety
petition. However, we do not plan to difficult. We have concluded that the bonds either pay a fee for the bond or
ehiers on DSK5VPTVN1PROD with RULES

propose adoption of the specific current regulations do not require use of have some sort of collateral that is being
regulatory changes suggested by the the most appropriate financial tests, held by the surety company. These
petitioner. Instead, we are examining both before a self-bond is approved and frozen assets give them an incentive to
broader regulatory changes to 30 CFR during the life of a self-bond. complete reclamation that self-bonded
part 800 to update OSMRE’s bonding In light of these findings, OSMRE will companies do not have. Finally, we will
regulations and ensure the completion consider proposing a number of changes examine concerns raised over certain

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Document Created: 2016-09-07 11:50:20
Document Modified: 2016-09-07 11:50:20
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Decision on petition for rulemaking.
Dates		September 7, 2016.
Contact		Michael Kuhns, Division of Regulatory Support, 1951 Constitution Ave. NW., Washington, DC 20240; Telephone: 202-208-2860; Email: [email protected]
FR Citation		81 FR 61612
81 FR 61612 - Petition To Initiate Rulemaking; Ensuring That Companies With a History of Financial Insolvency, and Their Subsidiary Companies, Are Not Allowed To Self-Bond Coal Mining Operations

DEPARTMENT OF THE INTERIOROffice of Surface Mining Reclamation and Enforcement

Federal Register Volume 81, Issue 173 (September 7, 2016)

DEPARTMENT OF THE INTERIOR
Office of Surface Mining Reclamation and Enforcement
