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Memorandum ALSO'^~.',<Q;1= F~-~? -'K=_ -~ 0-; To: Depury Director, Operations and Technical Services From: ~""~ ant trec~, ec amation and Regulatory Policy Subject: v Colorado Bond Reduction Practices By memorandum dated October 30, 1990, the Director of the Albuquerque Field Office requested an evaluation of Colorado's bond reduction practices to determine their consistency with State and Federal requirements. Specifically, the Field Office sought guidance as to whether a State may return more than 60 percent of an operator's bond prior to meeting the Phase II bond release standards. As discussed below, the Surface Mining Control and Reclamation Act (SMCRA), the Federal regulations, and the State program do not allow bond to be reduced on lands on which reclamation has begun unless all applicable bond release requirements are met. The bond release schedules established in both section 519(c) of SMCRA and section 34-33-125(9) of the State Act require that at least 40 percent of the bond amount be retained until Phase I1 reclamation standards are met. Section 509(e) of SMCRA provides that the bond amount shall be adjusted as affected land acreage increases or decreases or the cost of future reclamation changes. The Federal rules at 30 CFR 800.15 repeat this language and, in paragraph (c), further provide that a permittee may request reduction of the bond amount by submitting evidence to the regulatory authority proving that changes in the method of operation or other circumstances have reduced the estimated cost to the regulatory authority of reclaiming the bonded area in the event of forfeiture. Although an argument could be made that performance of reclamation obligations reduces the cost of future reclamation, the structure of SMCRA, the language of the Federal regulation and the preambles to this rule clearly indicate that this is not the interpretation envisioned by Congress or the Office of Surface Mining Reclamation and Enforcement. The bond adjustment provisions are intended to be used to reduce bond amounts only if the acreage to be affected decreases, technological advances reduce the unit costs of reclamation, or changes in the mining plan (such as a decision not to remove the lowest coal seam) result in an operation of more limited extent than that originally approved and bonded. This interpretation is reinforced by section 519, which establishes criteria and schedules defining when and how bond may be released following the completion of specified reclamation activities. If the bond adjustment provisions of section 509 were interpreted as allowing bond reduction because the operator completed a portion of his or her reclamation obligations, section 519 would be rendered meaningless. Tata~~ ~.~ United States Department of the Interior e OFFICE OF SURFACE MINING Reclamation and Enforcement ~ ~ WASHINGTON, D.G 20240 r:.- JAN - g i99i