2022-04-18_REVISION - C2010089 - Laserfiche WebLink

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ISSUE 2: Tech-007"Five Percent Rule"Introduces Unnecessary Risk of Underfunding Reclamation Performance Bonds PROBLEM DESCRIPTION: Through its use of the "Five Percent Rule,"DOGM's calculations introduce additional uncertainty which could result in a posted bond amount lower than that required to ensure the cost of reclamation is covered in the event of bond forfeiture. The "Five Percent Rule" is established and implemented by DOGM through Tech-007. Specifically, Tech-007 § 7, sets forth the "Five Percent Rule" which allows DOGM to use its discretion with respect to adjusting the bond amount"if the cumulative difference between the revised reclamation cost and the approved bond amount is less than 5%.0 Further, this provision explains that DOGM "believes those increases in the reclamation costs of up to 5%can be made without compromising reclamation success,"B No federal provision or state counterpart exists to authorize this discretion provided to DOGM. However, SMCRA, the Federal regulations, and the Utah program ultimately require the bond amount to be "sufficient to assure the completion of the reclamation plan if the work had to be performed by [DOGM] in the event of forfeiture. . . ."9 Additionally,the Utah rules establish that DOGM "will require in the permit that adequate bond coverage be in effect at all tintes."10 The problem arises where a permittee's revised reclamation cost exceeds the posted bond amount. When this situation occurs, as applied, the "Five Percent Rule"contradicts the requirements under SMCRA, the Federal regulations, and the Utah program by providing DOGM with discretion to deem the posted bond amount as sufficient, when State and Federal law would require a bond adjustment to ensure sufficient funds exist to cover the revised cost of reclamation, regardless of the performance bond amount being within five percent of the reclamation cost estimate. DOGM's implementation of the"Five Percent Rule" is without statutory or regulatory basis and conflicts with SMCRA and the Utah program requirements by introducing unnecessary risk, beyond the inherent uncertainty associated with reclamation cost estimation, that the posted bond amount will be insufficient to complete the reclamation plan. CRITERIA FOR RESOLUTION: DOGM shall remove the "Five Percent Rule" provision within Tech-007. Upon finalization of the revisions to Tech-007 and notification to operators, DOGM shall consistently implement the new guidance in accordance with its approved State program. ACTION SEQUENCE: 0 DOGM shall remove the "Five Percent Rule"provision from Tech-007. ❑ DOGM shall incorporate all changes into a final version of Tech-007 and submit it to DFB for review. ❑ DFB shall review the document to ensure consistency and resolution of issues outlined within this Action Plan. ❑ DFB shall provide any comments on DOGM's Tech-007 guidance, as revised. 7 Tech-007 at 11. 81d. 9 30 U.S.C. § 1259(a),30 C.F.R. §800.14(b),Utah Code Ann. §40-10-15,and UAC R645-301-830.200, 10 UAC R645-301-812.700(emphasis added). 6