Processing Notices, Plans of Operation and Financial Guarantees under 43 CFR 3809

 

September 30, 2011

In Reply Refer To:

3809 (9310) P

 

EMS TRANSMISSION

Instruction Memorandum No. AZ-2011-029

Expires:  09/30/2014     EXPIRED

 

To:               State Leadership Team

Attention:  District and Field Managers

 

From:          Acting State Director

 

Subject:       Processing Notices, Plans of Operation and Financial Guarantees under 43 CFR 3809

 

Purpose:  This Instruction Memorandum (IM) updates IM No. AZ-2003-020.  The original IM AZ-2003-020 provided guidance for the Arizona Bureau of Land Management (BLM) District and Field Offices (FO) regarding the processing of Notices, Plans of Operation and financial guarantees under 43 CFR 3809.  This guidance was interim guidance issued in anticipation of release of a 3809 Surface Management Handbook.  The National Handbook is still pending.  The information provided in the original IM has proven to be very useful for both the FOs and interested public.  This updated IM will inform both the District and FOs, as well as 3809 operators of changes in processes and procedures.  The information provided with this IM while complying with National policy contains information specific to Arizona BLM.

 

Policy/Action:  43 CFR 3809.500 requires operators of mining operations on public lands at either the notice level or plan level of mining activity to post a financial guarantee to ensure the reclamation of public lands.  To assist operators in furnishing a financial guarantee, a handout (Attachment 3) titled “Operator Information for Casual Use, Notice and Plan Level Operations and for Providing a Financial Guarantee as Required by 43 CFR 3809” is provided with this IM.

 

 

Processing notice level operations involves a 15-day timeframe (See 43 CFR 3809.311).  During this timeframe the FO must analyze the notice to determine:

When an operator files a notice with a FO, that office must respond to the operator within 15 days.  This should be viewed as high-priority work.  Within that timeframe, the office must respond using the guidance provided by 43 CFR 3809.313 or formally acknowledge the notice as provided by 43 CFR 3809.312(a).  Attachment 1 provides a template for acknowledging a notice.  The term of a notice is 2 years from the date the bond is accepted by the State Office.

 

If the operator has not supplied a financial guarantee within 60 days from his/her receipt of the acknowledgement of the notice and he/she has not maintained contact with the FO during that period, the FO will consider the notice withdrawn (AC-424) and update LR2000 records accordingly.  It would be appropriate to follow up with a letter (not a decision) to the operator informing them that their file is closed, and that they will need to submit a new notice for review if they wish to proceed pursuant to 43 CFR 3809.

 

 

The procedures for processing a plan are similar in nature to those for processing a notice.   A plan requires review under the National Environmental Policy Act (NEPA) and a formal decision approving the plan before operations begin.  However, at the conclusion of the NEPA process, if the plan is approved, a formal decision must be sent by the FO formally stating the mitigation outlined in the Decision Record (DR) and the amount of the financial guarantee required.  The DR should not contain the amount of the financial guarantee required.  This decision should follow a similar format to Attachment 1.  In this respect, the processing of a plan and a notice are similar.

 

 

The determination of the amount of the financial guarantee required for an operation is developed from the Reclamation Cost Estimate required of the operator under either 43 CFR 3809.301(b)(4) or 43 CFR 3809.401(d).  FO personnel are required to review the estimate provided by the operator to determine the adequacy and accuracy of the estimate provided.  FO personnel can request additional information from the operator as necessary to make this determination.

 

The amount of the financial guarantee is dependent on, and restricted to, the anticipated cost to reclaim the impact of the mining operation.  Occasionally, small mining operations may be combined with recreational activities involving hiking and camping.  When it is determined that these activities are solely attributable to recreation and are not authorized under the Mining Law of 1872, the impacts of such activities are not to be included when calculating the amount of the financial guarantee for the mining operation itself.  When the recreational activity of camping extends beyond 14 days in a 90-day period, it becomes occupancy under 43 CFR 3715 and, if all necessary conditions are met, could be authorized under the Mining Law.

 

As an aid to calculating the value of the financial guarantee required by an operator, the BLM has developed a financial guarantee handout and estimator.  Both the handout and estimator are available for download at the BLM external website and the handout and depictions from the estimator are included as Attachment 3 in this document.

 

If an operator should elect to use this estimator to prepare a financial guarantee, generally the BLM will accept the calculation pending verification of the inputs to the estimator.  If an operator elects not to use the estimator, it will be the responsibility of the operator to demonstrate to the BLM’s satisfaction that his estimate is more accurate than the estimate derived from the estimator, based on a separate Reclamation Cost Estimate.  Generally, the BLM will accept the results of the estimator (pending verification of inputs) for all notice and plan level activities that do not require an Aquifer Protection Permit (APP) issued by the Arizona Department of Environmental Quality (ADEQ).  The ADEQ has provided the BLM with a checklist that operators may complete to determine if their operations would likely require an APP.

 

Operations that are conducted under an APP are often complex and beyond the scope of the simple assumptions used in the estimator.  In these situations, FO personnel must request a copy of the complete APP permit application as an aid in establishing the full amount of the financial guarantee.  Note that bonds held by the State for the APP permit do not meet the requirements for a financial guarantee under 43 CFR 3809.

 

A financial guarantee must cover all aspects of the operation that are planned by the operator, but does not necessarily cover any pre-existing disturbance.  An operator’s responsibility for any pre-existing disturbance is tied directly to his use or exploitation of that disturbance.  For example, if an excavation is on a mining claim and it predates the current operator, that operator is not responsible for the remediation or reclamation of the excavation if the excavation is not used in any way by the operator.  If, however, the operator uses the excavation or would object to the BLM reclaiming or remediating the excavation, then the cost for reclamation or remediation would be included in the financial guarantee.

 

The reclamation of mining claim access also presents another example of pre-existing disturbance that may or may not be included in the financial guarantee.  If the access clearly predates the existence of the operation and the operator does not or would not object to the BLM blocking, removing or reclaiming the access, then the operator would not be responsible for reclaiming the access and it should not be included in the determination of the financial guarantee.  If the operator constructs access to the operation or improves existing access, and the BLM determines that this access is important to maintain, the BLM may elect to retain this access after the mining operation ends.  In this case, the reclamation of the access would not be included in the financial guarantee, but the decision to retain the road by the BLM would have to be documented and must be consistent with the approved land-use plan.  If an operator constructs access or uses existing access for an operation and would object to the BLM blocking, removing or reclaiming that access, then the operator must post a financial guarantee that covers the reclamation of the access.

 

 

Operators are encouraged to conduct a thorough inventory of the proposed operations area to determine the full extent of any preexisting disturbance.  This could include pictures taken “before” and “after” the operation demonstrating the level and nature of any preexisting disturbance.

 

FO personnel must work closely with operators to determine, on a case-by-case basis, the existence of any preexisting disturbance and the extent to which an operator may be held responsible for the reclamation of that disturbance.

 

While the BLM will not specifically conduct routine inspections to determine the extent of any hazardous materials present,  FO personnel must inform operators that if preexisting disturbance involves violations of either the Resource Conservation and Recovery Act (RCRA) or the Comprehensive Environmental Response, Compensation Liability Act (CERCLA) the operators may be held responsible under those laws for the remediation of these violations, even if they are not considered part of the financial guarantee held under 43 CFR 3809.500. See H-1703-1, CERCLA Response Actions and H-3720-1, Abandoned Mine Lands (AML) Program Policy, for further guidance.

 

Posting a financial guarantee for an operation does not in any way limit the extent of an operator’s liability for reclamation.  If reclamation is complete, the financial guarantee is released, if reclamation subsequently fails, the operator is still responsible to ensure the successful reclamation of the site (See 43 CFR 3809.592).  If the amount of the financial guarantee is less than the cost to reclaim, the operator is still held responsible (See 43 CFR 3809.598).

 

 

Once the amount of the financial guarantee is determined by FO personnel, the FO must notify the operator of the final amount (See Attachment 1).  When the operator provides a financial guarantee for the stated amount, the FO will provide a receipt, and deposit the payments.  Other forms of payment such as certificates of deposit, insurance, and negotiable securities are forwarded directly to the State Office (SO) for processing.  The FO must forward the financial instrument rendered (or receipt for cash, checks or credit cards), together with a transmittal memo stating the required amount of the financial guarantee and all other documents provided by the operator to the SO (See Attachment 2).

 

FOs are allowed to collect cash, checks or other forms of financial guarantees in any amount, but the Treasury Department must be notified prior to accepting a financial guarantee of $50 million or more.  Credit cards cannot be used for an amount of $50,000 or more.  When a credit card is used for an amount larger than $50,000, the transaction must be split into two unequal amounts.  When dealing with cash, checks or credit cards, the FO must deposit the cash or check or process the credit card and forward a copy of the deposit receipt to the Lands and Minerals Group (AZ9310) together with any other documents supplied by the operator.  Cash, checks and credit cards should not be sent through the mail.  In cases involving cash, checks or credit cards, the FO will be responsible for inputting the transactions into the Collection and Billing System and insuring the monies are placed into suspense.  The FO will maintain a copy of all documents sent to the SO in the FO file.  Caution should be exercised in handling documents relating to financial guarantees as many of these documents may involve confidential information.

 

When forwarding the financial instrument to the SO, all applicable documents will be sent via hand-delivery, courier service or certified mail, return receipt requested.  Attachment 2 provides the required format for the cover memo that must be used when forwarding financial guarantees to the SO.  As an alternative you can have the operator submit personal bonds directly to AZ9310. If the operator submits a personal bond directly to the SO, then AZ9310 will need to be informed of the bond amount and associated case file number.  That means you will need to provide AZ9310 with a copy of the decision letter that notified the operator of the financial guarantee amount.

 

AZ9310 will then review the copies of the submitted financial instrument, together with all necessary forms, to ensure that they conform to the requirements of 43 CFR 3809.555.

 

AZ9310 will deal directly with the operator during adjudication of the financial guarantee and will issue a formal decision (copy to FO with supporting documents) accepting or rejecting the instrument submitted.  AZ9310 will be responsible for updating both LR2000 and the Bond and Surety systems as actions concerning the financial guarantee are taken.  The FO will still be responsible for updating LR2000 for all non-bonding 3809 actions.

 

 

The BLM will accept any of the forms of financial guarantees listed in 43 CFR 3809.555 (a-f) but will not accept a State-approved financial guarantee under 43 CFR 3809.570.  The form of financial guarantee best suited for an operator is a decision that each operator must make for themselves.  AZ9310 will work directly with operators on an individual basis to ensure that the form of the financial guarantee provided meets the requirements of 43 CFR 3809.555, but will not intervene on the behalf of any operator to secure a financial guarantee or advise an operator concerning the availability of sources that can provide financial guarantees.  The availability of sources that can provide financial guarantees varies with the credit rating and financial status of the operator.  The BLM cannot predict or advise an operator on who could likely provide the operator a financial guarantee.

 

 

The release of financial guarantees is regulated by 43 CFR 3809.590.  At or near the end of an active operation, the BLM must begin consultations with the operator to monitor the progress of required reclamation.  As reclamation proceeds, the financial guarantee would be released in accordance with the regulations.  Under the regulations, 60 percent of the reclamation bond would be released when all applicable reclamation involving earthwork, except re-vegetation has been completed.  The remaining 40 percent of the bond will be released by the BLM when those areas of the reclaimed lands slated for re-vegetation have been met or are making significant progress toward meeting the Standards for Rangeland Health (available at www.az.blm.gov) and the reclaimed operation conforms with the requirements of 43 CFR 3809.591(c)(2).  The already established procedures for establishing rangeland health should be employed for cases involving mining reclamation and a written determination of rangeland health must be present in the case file before the financial guarantee can be released.

 

The FO does not release the financial guarantee.  Instead, the FO will issue a formal decision, with full right to appeal, reducing the amount of the financial guarantee (copy to AZ9310).  This decision may be a partial reduction in the amount of the financial guarantee or a full reduction.  Once the decision has been issued and all appeals have been settled, AZ9310 will issue a formal decision to release, or amend the financial instruments held by BLM for the financial guarantee.  The FO must comply with 43 CFR 3809.590 (c) before releasing a financial guarantees for a Plan of Operations.

 

 

In cases where the operator has failed to do necessary reclamation, the FO will begin by contacting the operator to discuss the operator’s responsibility to complete reclamation.  If this contact does not produce the required reclamation, the FO will advance the case by issuing an enforcement order under 43 CFR 3715 and/or 43 CFR 3809.  If the operator does not comply with the order, the FO, in conjunction with AZ9310, will initiate forfeiture of the financial guarantee pursuant to the procedures specified at 43 CFR 3809.596.

 

 

Any e-mail communication must be included in the official file.  E-mails should not be used in lieu of the formal process as specifically required by regulation.  Processes that fall under the preview of the authorized officer (e.g. decisions) and which need official signature cannot be accomplished via e-mail.  If scanned documents are received from operators as attachments to e-mails, attachments will need to be date stamped by the person receiving the e-mail.  Documents requiring signature cannot be accepted as official documents via e-mail.  The BLM must have the original document as part of the official file.

 

Timeframe:  This policy is effective upon receipt.

 

Budget Impact:  There will be a budget impact, but the amount is undetermined at this time.

 

Background:  IM No. AZ-2003-020 was issued in anticipation of the need to review numerous Notice level operations.  The information provided was timely and pertinent and has proved invaluable to both FO and the public.  The intervening years have resulted in changes in procedures that are not reflected in IM No. AZ-2003-020.  This current IM reflects these procedural changes.

 

Manual/Handbook Sections Affected:  Bureau Manual Section 3809.

 

Contact:  If you have any questions concerning this IM, contact Jeff Garrett at 602-417-9349 or Amy Thrower at 602-417-9331.

 

Signed by:

Joan B. Losacco

FOR Raymond Suazo

Acting State Director

 

Authenticated by:
Lyn-Ayn L. Muehring
Staff Assistant

 

3 Attachments

1 - Notice Acknowledgement & Determination of Financial Guarantee (3 pp)

2 - Example Transmittal Memo (1 p)

3 - Operator Information for Casual Use, Notice and Plan Level Operations and for Providing a Financial Guarantee as Required by 43 CFR 3809 (45 pp)