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

 

December 10, 2014

In Reply Refer To:

3809 (9310) P

 

 

EMS TRANSMISSION 12/11/14

Instruction Memorandum No. AZ-2015-008

Expires:  9/30/2018

 

To:                  State Leadership Team

   Attention:  District Managers and Field Managers

 

From:              State Director

 

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

 

Purpose:  This Instruction Memorandum (IM) replaces IM No. AZ-2011-029.  The original IM provided interim guidance for Bureau of Land Management (BLM) Arizona minerals staff regarding the processing of Notices, Plans of Operation and Financial Guarantees under Agency surface management regulations at 43 CFR 3809.  Most of the guidance provided in IM No. AZ-2011-029 has been superseded by BLM Handbook H-3809-1 (Surface Management Handbook).  This updated IM will inform BLM minerals staff of those processes or procedures that are unique to the Arizona Locatable Minerals Program, or are not addressed in H-3809-1.

 

Policy/Action:  Field Office (FO) locatable minerals staff will follow the procedures outlined in H-3809-1 relating to the processing of Notices, Plans of Operation and associated Financial Guarantees.  Certain additional processes and procedures not outlined in H-3809-1 are specified below.

 

Notice Acknowledgement:  If the operator has not supplied a financial guarantee within 60 days of receipt of the acknowledgement of the Notice and has not maintained contact with the FO during that period, the FO may consider the Notice withdrawn and update LR2000 records accordingly (Action Code 424).  The FO will follow up with a letter (not a decision) informing the operator that their file is closed and they will need to resubmit their Notice or submit a new Notice or Plan of Operation for review if they wish to proceed pursuant to 43 CFR 3809.

 

The FO minerals staff can use Template 3.2-3 in H-3809-1 (p. A-5) to acknowledge that an operator has submitted a complete Notice and acceptable Reclamation Cost Estimate (RCE). 

 

The following sentence may be added to Template 3.2-3 after paragraph 6:

 

"If you do not supply a financial guarantee within 60 days from your receipt of this letter and you have not maintained contact with the BLM during that period, the BLM will consider your notice withdrawn and update our records accordingly.”

 

Determination of Financial Guarantee:  As an aid to calculating the value of the financial guarantee required for a Notice or smaller Plan of Operation, the BLM has developed a spreadsheet (Excel) based financial guarantee estimator.  The BLM has also prepared a guide entitled Operator Information for Casual Use, Notice and Plan Level Operations and for Providing a Financial Guarantee as Required by 43 CFR 3809 (Attachment 1), which contains a financial guarantee estimation worksheet and checklist that may be used by operators and FO staff.  The estimator and the guide are both available on the BLM Arizona external website at:

 

http://www.blm.gov/az/st/en/prog/mining/3809.html

 

The estimator may be used only for Notices and Plans of Operation that do not require an Aquifer Protection Permit (APP) issued by the Arizona Department of Environmental Quality (ADEQ) and plans which do not exceed 20 acres of disturbance.  If an operator elects to use this estimator to calculate the financial guarantee value, the BLM will generally accept the calculation after verifying the accuracy of the operator’s inputs to the estimator.  If an operator elects not to use the estimator, then they must demonstrate to the BLM’s satisfaction that their estimate meets all applicable requirements of 43 CFR 3809.552.

 

Operations that are conducted under an APP are often complex and beyond the scope of the 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 currently do not meet the requirements for a financial guarantee under 43 CFR 3809.570(a), and cannot be deducted from the value of the RCE determined for a Notice or Plan of Operation.

 

Preexisting mining related disturbances:  An operator is not responsible for reclaiming preexisting surface disturbance unless that operator plans to use the preexisting disturbance as part of the operation, or objects to BLM reclaiming the preexisting disturbance.  Refer to Handbook H-3809-1 section 8.8 (Pre-existing Disturbance and Facilities) for further guidance.  The FO staff should encourage operators to complete a thorough inventory of the proposed operation area and document the full extent of any preexisting disturbance, or may complete such an inventory themselves as part of an onsite visit under 43 CFR 3809.313(d).  Locatable minerals personnel will 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.

 

Forms of Financial Guarantees:  The BLM will accept any of the forms of financial guarantees listed in 43 CFR 3809.555 (a-f).  Currently, bonds held by the State of Arizona or other federal agencies working with the BLM do not meet these requirements and as such are not acceptable as substitutes for the financial guarantees required by 43 CFR 3809.555

 

(see 43 CFR 3809.570 - .573).  The operator must determine the most suitable form of financial guarantee under 43 CFR 3809.555 (a-f) and BLM minerals staff will not advise an operator on the type of financial guarantee to obtain or assist the operator in securing a guarantee.  The State Office (SO) 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.

 

Processing Financial Guarantees:  Once the amount of the financial guarantee is verified by FO personnel, the FO will notify the operator of the final amount (see Template 3.2-3 in H-3809-1, p. A-5).  The FO is allowed to collect financial guarantees in any amount, but the Treasury Department must be notified prior to accepting a financial guarantee of $50 million or more.

 

There are two general types of bonds, personal bonds and surety bonds.  A personal bond consists of BLM Form 3809-002 (Surface Management Personal Bond) and a financial guarantee.  The financial guarantee can be a guaranteed remittance (cash, personal check, corporate check, cashier’s check, certified check, credit card payment or money order), certificate of deposit, letter of credit, insurance, or certain types of negotiable securities (43 CFR 3809.555).  When submitting a personal bond, the operator must provide a completed and notarized BLM Form 3809-002 and the financial guarantee.  

 

A surety bond is issued by an authorized surety company.  Operators that utilize a surety bond are required to submit a completed and notarized BLM Form 3809-001 (Surface Management Surety Bond).  A current list of authorized companies is available online at:

 

http://www.fiscal.treasury.gov/fsreports/ref/suretyBnd/c570.htm

 

When an operator submits a guaranteed remittance, the FO will provide the operator a receipt and deposit the payment(s).  When a credit card is used for an amount of $50,000 or more, the transaction must be split into two unequal amounts.  When dealing with cash, check, money order or credit card, the FO must deposit the cash, check, or money order; or process the credit card and forward a copy of the deposit receipt to the Lands and Minerals Group at the SO (AZ9310) together with the transmittal memo (Attachment 2), the original completed and notarized BLM Form 3809-002 and any other related documents.  The FO is responsible for inputting the transactions into the Collection and Billing System and insuring the monies are placed into suspense.  

 

For operations guaranteed using a financial guarantee, such as certificates of deposit, insurance, letters of credit, or approved negotiable securities, the FO will forward the original instrument directly to the SO for processing along with a completed transmittal memo (Attachment 2), the original completed and notarized BLM Form 3809-002 and any additional supporting documentation.  All documents must be sent to AZ9310 by hand-delivery, courier service or certified mail, return receipt requested. 

 

Operators that submit a surety bond from an authorized surety company must submit the original surety and completed and notarized BLM Form 3809-001 to the appropriate FO.  The FO staff will then prepare a transmittal memo (Attachment 2) and send the original surety, BLM Form 3809-001, the transmittal memo, and any other supporting documents to AZ9310 by hand delivery, courier service or certified mail.

 

Caution must be exercised in handling documents relating to bonds and financial guarantees as many of these documents may involve proprietary or confidential information.  The FOs may maintain a copy of all bond and financial guarantee documents sent to AZ9310 in the case file, provided all proprietary or confidential information is redacted from the copies. 

 

The AZ9310 staff will review the submitted bonds and financial instrument, together with the supporting documentation, to ensure that they conform to the requirements of 43 CFR 3809.555.  The AZ9310 staff will deal directly with the operator during adjudication of the bond and financial guarantee and will issue a formal decision accepting or rejecting the instrument submitted.  Copies of this decision and supporting documents will be sent to the FO, where they will be incorporated into the case file.  The AZ9310 staff will be responsible for updating both LR2000 and the Bond and Surety systems as actions concerning the financial guarantee are taken.

 

Forfeiture of Financial Guarantee:  Circumstances under which BLM may initiate forfeiture of the financial guarantee are specified in 43 CFR 3809.595 through 599.  The FO should follow the procedure as found in Handbook H-3809-1 at 6.5.1.  If the operator fails to meet the requirements of the forfeiture decision provided under 43 CFR 3809.596, or the Interior Board of Land Appeals does not grant a stay under 43 CFR 4.21, the FO must then send copies of all supporting documentation with a cover memorandum to AZ9310 for final adjudication and collection of the forfeited amount.

 

Use of email:  Any email communication must be included in the official file.  Emails must not be used in lieu of the formal process as specifically required by regulation.  Processes that fall under the review of the authorized officer (e.g., decisions) and which need official signature cannot be accomplished via email.  Such documents must be delivered to the operator by hand, courier service, or certified mail return receipt requested.  The FO staff may send a scan of the signed documents by email as a courtesy to the operator, but such emails are not a substitute for delivery by hand, courier service, or certified mail return receipt requested.  If scanned documents are received from operators as attachments to emails, the attachments will need to be date stamped by the person receiving the email.  Documents requiring signature cannot be accepted as official documents via email.  The BLM must have the original document as part of the official file.

 

Timeframe:  This IM is effective immediately and will remain in effect until the expiration date, unless formally modified.

 

Budget Impact:  No budgetary impact is expected as a result of this policy.

 

Background:  The IM No. AZ-2011-029 was issued September 30, 2011, to provide guidance for the administration of operations conducted under the surface use regulations at 43 CFR 3809.  On September 17, 2012, BLM Handbook H-3809-1 (Surface Management) was released and has largely superseded the requirements of IM No. AZ-2011-029.  This handbook, however, does not address certain policies and procedures unique to the Locatable Minerals Program in Arizona, and does not provide current guidance on financial guarantee administration.

 

Manual/Handbook Sections Impacted:  BLM Handbook 3809-1, Surface Management.

 

Contact:  Jeff Garrett, Arizona Solid Minerals Program Lead at 602-417-9349, or for questions related to bonds and financial guarantee processing contact Amy Thrower, Land Law Examiner at 602-417-9334.

 

 

2 Attachments:

1 - Operator Information for Casual Use, Notice and Plan Level Operations and for Providing a Bond and Financial Guarantee as Required by 43 CFR 3809 (39 pp)

2 - Example Transmittal Memo (1 p)