Title of Regulation: 4VAC25-145. Regulations on the Eligibility of Certain Mining Operators to Perform Reclamation Projects (amending 4VAC25-145-10 through 4VAC25-145-40).

Statutory Authority: §§ 45.1-161.3 and 45.1-261.1 of the Code of Virginia.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: July 4, 2012.

Effective Date: July 19, 2012.

Agency Contact: Michael Skiffington, Program Support Manager, Department of Mines, Minerals and Energy, 1100 Bank Street, 8th Floor, Richmond, VA 23219, telephone (804) 692-3212, FAX (804) 692-3237, or email mike.skiffington@dmme.virginia.gov.

Basis: The Department of Mines, Minerals and Energy is authorized to promulgate regulations necessary to the performance of its duties under § 45.1-161.3 of the Code of Virginia. Section 45.1-261.1 of the Code of Virginia mandates the Director of Department of Mines, Minerals and Energy to promulgate regulations to implement the process by which operators can perform reclamation work in the Commonwealth.

Purpose: This regulatory action is the result of a periodic review of the regulation. The amendments to the regulation are necessary to ensure it remains easily understandable for operators and the general public. The regulation is required by statute. Public health and safety will be protected by clarifying the requirements operators must meet in order to provide reclamation services in the Commonwealth. Poorly reclaimed sites are a public safety concern and this action will help ensure sites are reclaimed properly.

Rationale for Using Fast-Track Process: This rulemaking should be noncontroversial because no substantive changes are proposed. Technical changes are proposed to ensure the references made in the regulation are up to date and to ensure the regulation remains clearly written.

Substance: There are no substantive changes to the regulation, only technical ones.

Issues: The primary advantage to this regulation would be ensuring the regulation is technically correct and easy to understand for operators and the general public. There are no disadvantages.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Department of Mines, Minerals and Energy (Department) proposes to add clarifying language, update citations, and repeal obsolete language.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. The proposed addition of clarifying language, updating of citations, and repealing of obsolete language will not change requirements, rules, or opportunities and thus will produce no new cost. The proposed changes may improve the publics understanding of the existing requirements, rules, and opportunities and thus will likely be beneficial to that extent.

Businesses and Entities Affected. There are approximately 29 licensed non-underground coal mine operators in the Commonwealth.¹ The Department estimates that fewer than five of these operators have any potential interest in reclamation projects and thus would be affected by these regulations.

Localities Particularly Affected. Coal mining in the Commonwealth primarily occurs in the following seven counties: Buchanan, Dickenson, Lee, Russell, Scott, Tazewell, and Wise.

Projected Impact on Employment. The proposed amendments are unlikely to significantly affect employment.

Effects on the Use and Value of Private Property. The proposed amendments are unlikely to significantly affect the use and value of private property.

Small Businesses: Costs and Other Effects. The proposed amendments will not increase costs for small businesses.

Small Businesses: Alternative Method that Minimizes Adverse Impact. The proposed amendments will not increase costs for small businesses.

Real Estate Development Costs. The proposed amendments are unlikely to significantly affect real estate development costs.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

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1 Data source: Department of Mines, Minerals and Energy

Agency's Response to Economic Impact Analysis: The Department of Mines, Minerals and Energy concurs with the economic impact analysis conducted by the Department of Planning and Budget.

Summary:

The amendments add clarifying language, update citations, and repeal obsolete language.

4VAC25-145-10. Definitions.

"Department" means the Department of Mines, Minerals and Energy.

"Director" means the Director of the Department of Mines, Minerals and Energy.

"Division" means the Division of Mined Land Reclamation.

"Net worth" means total assets less total liabilities including funds pledged or otherwise obligated to the Commonwealth or other in effect at any time during the contract period and any other contingent liabilities that might materially affect the Commonwealth's ability to realize the amount of bond required in the event of forfeiture.

"Operator" means any person engaging in coal surface mining operations whether or not such coal is sold within or without the Commonwealth.

"Reclamation project" means any work contracted out by or on behalf of the division for reclamation of eligible lands and waters, and defined in § 45.1-262 of the Code of Virginia and funded by the Federal Office of Surface Mining or reclamation of mined lands where the operator who mined the land has had his bond covering the land forfeited to the division or otherwise defaulted on his reclamation obligation and the project is funded either by the forfeited bond or the Virginia Coal Surface Mining Reclamation Fund.

"Relevant mining experience" means at least three years of satisfactory mining and reclamation work in the Commonwealth under Chapters 17 or Chapter 19 of Title 45.1 of the Code of Virginia or a combination of both. The operator shall have active reclamation work experience for two of the three years.

"State reclamation program" means Articles 4 and 5 of Chapter 19 of Title 45.1 of the Code of Virginia, as well as reclamation done by or for the Commonwealth and funded by the forfeited bond of an operator.

4VAC25-145-20. Satisfactory mining and reclamation work Operator requirements.

A. Operators must demonstrate relevant mining experience in order to bid on or be awarded contracts for any reclamation project in the Commonwealth. An operator may demonstrate satisfactory mining and reclamation work to the division by showing (i) that the operator has obtained partial or complete bond release on a coal surface mining permit obtained pursuant to Chapter 17 or 19 of Title 45.1 of the Code of Virginia under his control, or that all reclamation work on any active permit operated or controlled by the operator is up-to-date up to date; and (ii) that no coal surface mining permit under his control has any outstanding violations of any federal, state or local agency's laws, rules, regulations or ordinances unless the operator submits proof to the division that such violations have been corrected or are being corrected to the satisfaction of the agencies citing of such violations.

B. No operator shall be allowed to bid on or be awarded contracts for any reclamation project in the Commonwealth if:

1. The director of the department, after opportunity for a hearing, finds that the operator controls or has controlled mining operations with a demonstrated pattern of willful violations of the Federal Act or State Reclamation Program of such nature and duration with such resulting environmental damage as to indicate an intent not to comply with the Federal Act, P.L. 95-87 or State Reclamation Program.

2. The operator has had a coal surface mining permit revoked or suspended and has not been re-instated by the director; has had his bond forfeited,; or has received an order to show cause why his permit should not be revoked or suspended.

4VAC25-145-30. Compliance with other laws and obligations.

A. The operator bidding or seeking to bid on reclamation projects shall comply with all other applicable laws, ordinances, orders, rules and regulations of any federal, state or local agency with jurisdiction over the operator's mining or reclamation activities.

B. The operator shall comply with all applicable requirements of the division with regard to bidding on reclamation projects in the Commonwealth, excepting any requirements waived by § 45.1-161.1 of the Code of Virginia and this regulation.

4VAC25-145-40. Financial information; bonding.

A. Any operator bidding or seeking to bid on reclamation projects in the Commonwealth shall submit prior to the bidding, certification by a CPA certified public accountant, that the company has a net worth of at least $1 million in order to qualify for 50% reduction in the performance bond. Certification of at least $500,000 will qualify the applicant for a reduction of 25% of the performance bond. Net worth under $500,000 will not be eligible for any adjustment in the bid and performance bond.

B. The director, or his designee, after reviewing the information contained in the CPA statements certification described in subsection A of this section, shall adjust the bid and performance bonds accordingly unless he has information available to him that would contradict the net worth.

C. Net worth means total assets less total liabilities including funds pledged or otherwise obligated to the Commonwealth or other in effect at any time during the contract period and any other contingent liabilities that might materially affect the Commonwealth's ability to realize the amount of bond required in the event of forfeiture.