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Privacy Notice

The Field Office conducted a review of PADEP’s settlement agreements for third party reclamation. These agreements are with Sureties to resolve BF appeals. There are two types of settlement agreements: (1) Consent Adjudications (CA); and (2) Consent Orders and Agreements (CO&A). CA’s are settlement agreements that the Environmental Hearing Board (EHB) publishes in the Pennsylvania Bulletin, and which require a 30-day comment period prior to approval. EHB approval indicates that no provisions were identified that were contrary to law or constituted overreaching or bad faith; and that any adverse comments received during the 30-day comment period were resolved. The other type of settlement agreements are referred to as "Consent Order and Agreement" (CO&A). These agreements cover matters in litigation that have not submitted to EHB for approval, matters that have not yet been appealed and agreements for reclamation in-lieu-of cash payments for civil penalty debt. For simplification, this report will refer to both types of agreements as a CO&A.

The purpose of the study was to assess the manner in which CO&As entered into to provide third party reclamation of permits in bond forfeiture status, are reclaimed in accordance with the provisions Pennsylvania Approved State Program.

• PADEP successfully used CO&As with the surety and/or third party to complete land reclamation on forfeited sites.
• Where long-term post-mining discharges are or may be present, liability for the discharge remains with the permittee. CO&A’s generally do not provide for abatement or treatment of pollutional discharges by surety or third parties.
• CO&A’s often waive the Stage III bond release before the expiration of the 5-year liability period of § 86.151 and § 86.175 (30 CFR 800.13 and 30 CFR 816.116/817.116) PADEP indicates that the liability for the revegetation period rests with the alternative bonding system (bond pool).
• In the CO&As reviewed, PADEP did not include provisions for long-term monitoring, maintenance and operation of passive treatment systems.

The Surface Mining Control and Reclamation Act of 1977 (SMCRA) requires posting of a bond, sufficient to complete reclamation should a permittee fail to carry out his reclamation plan. This includes correcting any surface or ground water pollution resulting from the mining operation. While bonds are not released where pollutional discharges are identified, the cost of long-term treatment often greatly exceeds the bond amount. As a result, receiving streams and associated watershed areas may be degraded when a bond is forfeited and an operator stops treating discharges.

HFO conducted previous oversight reviews of the PADEP’s use of CO&As in 1997/1998 and again in early 1999. The reviews focused on permits, with post-mining pollutional discharges, where the performance bond was forfeited or in the process of forfeiture and the surety elects to perform the reclamation.

At Sections 509(b) and 515(b), SMCRA establishes that the period of bond liability shall extend for 5-years after the last year of augmented seeding or fertilizing. This liability period was established to insure the long-term success of the reclamation. This issue has been discussed with PADEP in terms of their applicability to post forfeiture reclamation agreements. At that time, PADEP agreed that the liability period applied and that the alternative bonding system (ABS) would address the financial liability for revegetation success.

PADEP published final rules for surety reclamation in 27 Pa. B., 6041-6061, November 15, 1997 (854.01), and, for a second parallel rulemaking, published final rules for surety reclamation in 27 Pa. B.6186-6190 (PA 845.01), November 29, 1997. PA-854.01 is in program amendment PA 853.01 that PADEP submitted to OSM on December 18, 1998. under the statutory provisions of Section 4(h) Act 173 as amended by Act 43 (52 P.S. § 1396.4(h). PA 845.01 is in the Pennsylvania Code.

This study reviewed 17 agreements between PADEP and surety or coal companies to determine if on-the-ground reclamation was being accomplished, if the agreements were insuring long-term success (five-year liability period) of on-the-ground reclamation and whether long-term treatment of pollutional discharges was insured.

On-the-ground reclamation was accomplished in 16 of the 17 agreements reviewed. The one remaining site exhibited inadequate revegetation; however, enough bond was held to insure replanting of the site. Of the 16 agreements where successful reclamation had be accomplished, only one provided for an extended liability period to insure success of the reclamation.

Ten of the agreements reviewed had documented post mining pollutional discharges. Of those, eight of the agreements had waived responsibility for treatment of discharges. On one of the remaining two, agreements a passive treatment system was successfully treating the discharge, but there was no provision to insure long-term maintenance of the discharge. On the last agreement PADEP negotiated a treatment trust fund to insure long-term treatment of the discharges.

Sample Selection:

Permit samples were selected from the LUMIS batch report (Forfeiture Site Summary by Status-LUFT 305RO, Primacy Sites, dated February 4, 1999- third party reclamation category with the following status codes:

CA-Reclamation under an active consent agreement;

CB-Reclamation completed under consent agreement and

CS-Reclamation completed by surety.

OSM conducted permit file reviews of the CA or CO&A for each sample selected. The agreements were reviewed to determine if reclamation was being conducted in compliance with the Approved State Program.

Data Analysis:

The Field Office's findings for each CO&A and the underlying sample permits are based on review of the agreement, as well as, file reviews and onsite inspections of the permits. PADEP personnel are usually involved in the review during the onsite inspection or file review.

1. CO&A dated May 18, 1995, with Sunbeam Coal Company-permittee: Rockwood Casualty Insurance Company-Surety and Kerry Coal Company-third party.

This CO&A covers 17 primacy permits. [Note: On pages 3-4, it states that four of the permits have known AMD (Borrell-10920102, Hall-10900107, Brake-10850101 and Tyree-10910104). Also, the Berger water supply on the Borrell permit may have been effected. None of these sites permits were selected for review.]

Permits Reviewed: The permits randomly selected for review are: CA 1, Goff preparation plant-10841602, CA 13, Jacques-10830121 and CA 14, Rodis-10860111. Knox District Office.

Third Party: Kerry Coal Company.

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: Yes

CO&A: Sunbeam is in Chapter 11 bankruptcy. PADEP waived collection of all Rockwood bonds when Kerry Coal replaced the performance bonds (page 4, paragraph L). PADEP justifies the replacement bonds with the statement that the reclamation including pollution control can be accomplished more quickly and effectively than by PADEP forfeiting the bond and conducting the reclamation (page 4, paragraph O). The release of replacement bonds is not affected by existing AMD caused by Sunbeam (page 13-17b.). Since the permits have been declared forfeit, PADEP will discontinue issuing enforcement actions against Sunbeam (page 14, paragraph 20c.). PADEP settled all outstanding penalties for a total of $1,000 (page15, paragraph 21).

The CO&A does not describe the relationship between Kerry Coal and Rockwood or how Kerry is reimbursed for the reclamation and the costs of replacement bonds. Neither Rockwood or Kerry were held responsible for AMD on permits (Borrell-10920102, Hall-10900107, Brake-10850101 and Tyree-10910104) or discharged from other permits covered by the agreement.

2. CO&A dated June 21, 1994, with Darmac Associates Corp. (DAC), Darmac Coal, Inc. (DCI), Adobe Mining Co.(Adobe), which includes three divisions, Willowbrook Mining Company (Willowbrook), H&D Coal Company (H&D), and Pengrove Coal Company (Pengrove) and with Amerikohl Mining. Adobe, DAC and DCI are known as AOI Subsidiaries.

Permit Reviewed: CA-9, Edward-43840101.

Third Party: Amerikohl Mining, Inc.

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: Yes

CO&A : This agreement allows the sureties to negotiate separate agreements with Amerikohl to allow Amerikohl to substitute bonds for the total amount of bonds listed on pages 3-6 (paragraphs D and E). Paragraphs D and E list 56 primacy permits and seven pre-primacy permits.

The sureties are: The Travelers Indemnity Company, Fireman’s Insurance Company of Newark, New Jersey and Reliance Surety Company.

On page 19, Paragraph 15, PADEP holds Amerikohl harmless for existing discharges.

3. CA dated May 12, 1994, with Travelers Indemnity Company (Travelers). This CA is tied to the CO&A dated June 21, 1994 with AOI Subsidiaries to the extent that Amerikohl will replace certain performance bonds issues by Travelers and conduct reclamation after replacement bonds are issued.

Permit Reviewed: CA-10 Guarnieri- 37830101

Third Party: Amerikohl Mining, Inc.

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: Yes

CA: This agreement allows Amerikohl to substitute bonds for Travelers performance bonds. After substitution of each bond, Travelers will be released of all liability on the permit previously covered by the bond (page 15-paragraph 5). By the CO&A dated June 21,1994, page 19-paragraph 15, PADEP holds Amerikohl harmless for any existing AMD.

4. CO&A dated February 21, 1991,with the Rockwood Insurance Company of Indiana (Rockwood) to reclaim five permits (three primacy permits) in lieu of PADEP collecting the forfeited bonds. The bonds were originally issued by the Rockwood Insurance Company of Pennsylvania, but were replaced by Rockwood Insurance Company of Pennsylvania.

Permits Reviewed: CA-7, Sleasman-56830111 and CA-8, Fenslau 56813101.

Third Party: Unknown..

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: Yes

CO&A: The CO&A provides Rockwood with the opportunity to avoid forfeiture by conducting reclamation of three primacy and two pre-primacy permits. On page 20, PADEP holds Rockwood harmless for existing discharges.

5. CO&A dated May 5, 1995, with the Peoples Bank of Pennsylvania for Peoples Bank to reclaim Daybrook coal Company’s Baum site, permit 03880123 and recover 63,500 of the $79,500 posted as letters of credit for the performance bond.

Permits Reviewed: CA-11, Baum site-03880123.

Third Party: Unknown

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: No

CO&A: The agreement requires Peoples Bank to complete the reclamation and pay $16,000 as settlement for Daybrook’s outstanding civil penalties in return for letters of credit balance of $63,500.

6. CO&A dated June 7, 1995, with Amerikohl Mining Company (Amerikohl) as a third party to the bond forfeiture of W. Thomas Mowry, D/B/A American Development Company (America) CA-12,Job 33 site-56840112. The surety, Rockwood Casualty Insurance Company (Rockwood) Rockwood has entered into separate agreements with PADEP and Amerikohl.

Permits Reviewed: CA-12, Job 33 site-56840112.

Third Party: Amerikohl.

Type of Third Party Payment for Reclamation. Amerikohl entered into agreement with Rockwood for payment of required reclamation. Amount of payment unknown.

Bond Replacement: Yes.

CO&A: Rockwood and Amerikohl have entered into separate agreement with PADEP. The general context of these agreements are stated on page 3, paragraph L. PADEP will waive collection of the $140,400 performance bond and Rockwood will pay Amerikohl a sum certain for the required reclamation. Amerikohl may install passive treatment systems, but there is no provision in the CO&A that Amerikohl has responsibility for the operation or maintenance of the passive treatment systems. The discharges are currently low flow of one to two gallons/minute. Amerikohl is allowed to negotiate with landowners to change the reclamation plan. While this is a 1995 CO&A, reclamation has been delayed until a hydrological investigation on an adjacent permit has been completed. This permit, (56733139) known as the Dunmeyer mine, was issued to Soberdash Coal & Coke Company and is being mined by PBS Coal as the subcontractor for Soberdash.

7. CO&A dated November 17, 1997, with the Utica Insurance company (Utica) to reclaim Eagleshire Corporation’s, Weaver Run Refuse pile, permit 56900202 and recover the $10,000 performance bond posted for the site.

Permit Reviewed:. CS-2,Weaver Run Refuse pile-56900202.

Third Party: Hoffman Mining.

Type of Third Party Payment for Reclamation: Unknown.

Bond Replacement: No

CO&A: The agreement requires Utica to reclaim the refuse pile area affected by Eagleshire’s operation and in return PADEP would waive collection of the $10,000 performance bond. The CO&A states that Utica is not responsible for any pollutional discharges not caused by Utica (page5). The bond was waived on March 18, 1998, four months after the date of the agreement.

8. CA approved by the Environmental Hearing Board on September 22, 1989, with Aetna Casualty Surety Company (Aetna) and Consolidation Coal Company (Consol) to resolved PADEP forfeiture action of the Renton Mine and Washery under Villa Coal Company (Villa) permit 02841305. The Renton mine has a long coal mining history and is connected to Consol through previous ownership, through other agreements and through the agreement with Aetna to guarantee the bonds posted for the Renton permit.

Permits Reviewed: CA-3, Renton mine-02841305.

Third Party: No third party.

Type of Third Party Payment for Reclamation: DNA

CA: The CA is the result of PADEP forfeiting the underground mining operation surety bond No. 64S10028838384BCA in the amount of $655,950 and mine subsidence surety bond No. 64S100288383BCA for $10,000. These bonds were issued by Aetna and are guaranteed by Consol. PADEP rescinded the forfeiture action for the subsidence bond. PADEP is waiving its rights to collect the surety bond for the underground operation ($650,950) based on Consol conducting reclamation in accordance with the CA. The CA requires certain reclamation for Phase I, II and III bond release and adherence to the bond release procedures set out in §§86.170-86.172. PADEP waived the collection of sixty percent of the bond or $399,570 of the $655,950 on December 3, 1990.

A previous CO&A for the Renton mine was executed by PADEP and Consol on November 23, 1987, and approved by the Environmental Hearing Board on December 11, 1987. This CO&A requires Consol to prevent entry into the Renton mine, treat AMD from the coal refuse area and to pump and to treat AMD that is currently pooled in the Renton mine.

9. CA dated September 25, 1996. with the Utica Mutual Insurance Company (Utica) and Robert H. Stone as Trustee for the bankruptcy estate of Mon Valley Steel Company Clyde deep mine, permit 63891301 to resolve PADEP September 28, 1995 forfeiture action of deep mine performance bond SU48695 ($489,479) and subsidence bond SU48694 ($10,000). The CA deals with reclamation but not address AMD discharges from the Clyde mine.

Permit Reviewed: CA-4, Clyde mine-63891301.

Third Party: Unknown.

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: Unknown.

CO&A: The CA provides for release of 90 percent of the bond when the PCB containing transformer and the leakage in the vicinity of the Hawkins shaft, the sealing and reclamation of the Clyde No.1 main shaft and other shafts are completed. The final 10% of the bond would be released when the revegetation standards are met. (The five year liability period for Stage III bond release is waived.) In paragraph U, page 7, the continuous discharge from the Clyde No. main drift entries and the feasibility of sealing the entries are mentioned. The CA does not discuss treatment of the discharge. A draft CO&A between PADEP and LTV (1998) discusses the Clyde mine pool and the fact that the pool must be maintained at a certain elevation or the pool will discharge at the surface.

Apparently, LTV Steel Company, Inc. and BCNR Mining Corporation operated the Clyde mine and during bankruptcy sold the mine to Mon Valley Steel Company, Inc. (Mon Valley). Mon Valley entered into a CO&A to established a Trust Fund to treat the Clyde discharge, but Mon Valley did not comply with the CO&A and went into bankruptcy.

10. CA dated September 30, 1994, with Lawrence Kemp, trustee for Darmac Associates Corp. (Darmac) Chapter 11 bankruptcy petition, to resolve PADEP forfeiture action on the Darmac’s Stitt underground mine permit 039111303. There was an opened pit but the permit was not deep mined.

Permits Reviewed: CB-5, Stitt #1 Deep mine-03911303.

Third Party: Unknown.

Type of Third Party Payment for Reclamation. Unknown.

CA: The CA required the Trustee to reclaim the site in accordance with the permit reclamation plan. PADEP would waive collection on the reclamation bond when Stage I, II and Stage III reclamation were completed. Reclamation liability periods were not required. On July 18, 1995, the Trustee requested release of: the underground mine closure bond of $18,000 (no underground mine), the demolition bond for structures, $13,000 (no structures erected), the mine subsidence bond of $10,000 (no underground workings) and 60 percent or $47,620 of the $77,000 reclamation bond. PADEP District Mining Office recommended releasing $41,010, but none of the reclamation bond. However, by mistake, PADEP Headquarter’s September,19, 1995, letter to the Trustee waived collection of all bonds ($118,710). PADEP informed the Trustee that it would fully enforce the CA regardless of the erroneous bond release.

The reclamation at this site generated citizen complaints to OSM; a lawsuit was filed. Based on the OSM visit to evaluate the CA, the site was reclaimed in accordance with the CA.

11. CA dated August 23, 1989, with Craft Coal Company to resolve PADEP February 8, 1989, bond forfeiture for CA-6,Keffer # 2 Strip, permit 26840116.

Permits Reviewed: .CA-6, Keffer # 2 Strip-26840116.

Third Party: No third party.

Type of Third Party Payment for Reclamation: No third party.

Bond Replacement: No

CA: Forfeiture was issued for failure to properly reclaim. Craft Coal corrected the violations, but did not pay the penalties for the violations. This CA is primarily a civil penalty payment agreement for this 2.6 acre permit.

12. CO&A dated June 18, 1997, with Rockwood Casualty Insurance Company (Rockwood) to Resolve Bond Forfeiture of Lobb Inc ,Narco #1 surface mine, Permit Number 18860101.

Permits Reviewed: CA15., Narco #1 Mine-18860101.

Third Party: Unknown.

Type of Third Party Payment for Reclamation: Unknown.

Bond Replacement: No.

CO&A: The CO&A provides for waiver of collection of 85% of the $200,300 bond when the site is reclaimed, planted and a passive treatment system constructed to treat a small discharge. Collection of the remaining bond would be waived when vegetation is established.

While the discharge at the time of OSM’s site review was one to 12 gal/min., in this drought period, there was evidence that the raw discharge had bypassed the treatment system. PADEP had waived collection of all bonds at the time of OSM’s July 6, 1999, site visit. The CO&A does not provide for maintenance of the passive treatment system.

13. CO&A dated February 8, 1998, with Wayne K. Baker as a third party to the bond forfeiture of Allegheny Minerals, Inc. (Allegheny) Palko mine, permit 26920111.

Permits Reviewed: CA-16,Paklo permit-26920111.

Third Party: Wayne K. Baker.

Type of Third Party Payment for Reclamation: Assignment of Bond.

Bond Replacement: No.

CO&A: Based on permit file review, this permit had been abandoned twice. Allegheny’s bonds were assigned to Wayne Backer on September 16, 1996. The area was backfilled and planted and $40,850 was release for Stage 1 in December of 1996. Allegheny applied for Stage II bond release on June 25, 1997, but the release was denied based on Allegheny failure to pay outstanding civil penalties totaling $28,637. Baker appealed PADEP denial of the Stage II bond release and PADEP declared the remaining bonds forfeit on October 8, 1997. The CO&A provides for Baker to complete the reclamation in return for PADEP waiver of collection of the remaining bond. Baker completed reclamation of the site and PADEP waived collection of the remaining bond.

14. CO&A dated June 21, 1994, with Darmac Associates Corp. (DAC), Darmac Coal, Inc. (DCI), Adobe Mining Co.(Adobe), which includes three divisions, Willowbrook Mining Company (Willowbrook), H&D Coal Company (H&D), and Pengrove Coal Company (Pengrove) and with Amerikohl Mining. Adobe, DAC and DCI are known as AOI Subsidiaries. ( See CO&A Numbers 2 and 3.). The CO&A covers H &D‘s Williams Mine, permit 61910104.

Permits Reviewed: CB-17, Williams Mine, permit-61910104.

Third Party: Amerikohl.

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: Yes.

CO&A: .This is the Darmac CO&A of No.2 and No.3 listed above and provides for Amerikohl to replace Union Pacific Insurance Company. The CO&A further releases both Amerikohl and Union Pacific from pollutional discharge liability.

15. CO&A dated January 31, 1997, with Amerikohl Mining, Inc. (Amerikohl) to reclaim Delta Mining, Inc. (Delta) Maust mine permit 56763022.

Permits Reviewed: CA 19 Maust Mine permit 56763022.

Third Party: Amerikohl.

Type of Third Party Payment for Reclamation. Unknown.

Bond Replacement: Yes

CO&A: Travelers Indemnity Company (Travelers) surety bonds on the Maust permit totaled $575,000. Under the agreement, Travels will pay Amerikohl a sum certain for the reclamation that consists of the design and construction of a passive treatment system to treat the pollutional discharges. The designed and construction costs are estimated at $340,000. Amerikohl will replace Travelers bonds and, in turn. PADEP will waive collection of Travelers bonds. The CO&A does not address long term treatment costs, monitoring frequency or responsibility for the operation of the passive system.

There is no assigned responsibility for the operation and maintenance of the passive treatment system.

16. CO&A dated May 3, 1995, with Dexter-Carpenter Coal Sales Corp.(Dexter-Carpenter) Dexter-Carpenter provided the letter of credit for $254,000 for Cambria Mills Coal Company‘s surface mine 17743033.

Permits Reviewed: CB -22, Cambria Mills permit 17743033.

Third Party: Unknown.

Type of Third Party Payment for Reclamation: Unknown.

Bond Replacement: No

CO&A: Dexter-Carpenter enter into the agreement to escape collection of the Bond. Third party reclaimed the site.

17. CO&A dated March 31, 1995, with Mid-Continent Insurance company (Mid-Continent) for the reclamation of Midway Excavating’s PAZ mine, permit 17820135.

Permits Reviewed: CA-20, Midway Excavating’s PAZ mine, permit 17820135

Third Party: Unknown.

Type of Third Party Payment for Reclamation: Unknown.

Bond Replacement: No.

CO&A: Apparently Midway Excavating failed to take any action to correct the cited violations and reclaim the site. Mid-Continent’s third party vegetation was not adequate to control runoff.