Mining Bond - Pennsylvania DEP in Pennsylvania

Brief Summary

There is no standard price tag on a Pennsylvania mining bond. DEP sets the amount permit by permit at what it would cost the state to finish your reclamation, and no ground can be disturbed until DEP approves the bond. A surety bond lets you cover that number without tying up the full amount in cash or collateral.

The Pennsylvania Department of Environmental Protection will not issue a new, revised or renewed mining permit until the operator files a reclamation bond on a DEP form, payable to the Department, and DEP approves it (25 Pa. Code 86.143 for coal). The amount is the estimated cost to DEP of completing the reclamation, restoration and abatement work under the permit, calculated with DEP's annual bond rate guidelines. DEP guidance sets coal minimums of $10,000 for bituminous mines and $5,000 for anthracite mines.

We can help with all Pennsylvania bonds!

How to Apply for a Mining Bond:

• Prepare the reclamation cost information DEP needs for the permit area.
• Get DEP's bond amount for the permit, calculated from the current bond rate guidelines or noncoal bond methods.
• Apply for a surety bond in that amount and provide company financial statements and owner indemnity for underwriting.
• Have the surety execute the bond on the DEP form, payable to the Department.
• File the bond with DEP and wait for approval before disturbing any acreage.
• Add bond when DEP adjusts the amount or the permit area expands.

Detailed Information About the Pennsylvania Mining Bond:

The amount is calculated, not listed

The biggest misunderstanding about this bond is the idea of a set amount. Under 25 Pa. Code 86.149, the standard DEP uses is the estimated cost to the Department if it had to complete the reclamation, restoration and abatement work required by the law, the regulations and the permit. DEP looks at the operation's size, topography, geology, water pollution risk, topsoil and proposed land use, the type of mining, road or stream relocation, shaft sealing, building removal, treatment facilities and subsidence correction, plus an allowance for cost changes over the preceding 5 years.

For coal permits, DEP publishes bond rate guidelines in the Pennsylvania Bulletin each year. Its conventional bonding guidance for coal (document 563-2504-001) says the total bond for a site is the sum of the costs for the component unit operations plus indirect costs, with mobilization and demobilization applied to every site. That same guidance sets the minimum bond at $10,000 for bituminous mines and $5,000 for anthracite mines. Noncoal operations are bonded under 25 Pa. Code Chapter 77, Subchapter D, with DEP using separate calculation methods for consolidated minerals, unconsolidated minerals and small operations.

When the bond has to be in place

Section 86.143 says no new, revised or renewed permit will be issued until the applicant files a bond on a DEP form, payable to the Department, and DEP approves it. An operator may not disturb surface acreage or extend underground workings before the bond is approved and the permit is issued. If more than one bond is filed for a permit, every bond applies to the entire permit area.

How long liability lasts

For coal surface mining, liability continues through mining and reclamation and for 5 years after the last revegetation work (25 Pa. Code 86.151). Underground mines carry liability for 5 years after operations and reclamation, longer for water pollution as DEP decides case by case, and 10 years after mining for subsidence from bituminous underground mines.

Surety terms

Under 86.157, the surety must be authorized to do business in Pennsylvania. The bond cannot be cancelled for nonpayment of premium or the permittee's bankruptcy during the liability period, the surety and permittee are jointly and severally liable, and the bond amount is confessed to judgment on forfeiture. On forfeiture, the surety may elect to perform the reclamation within 30 days of notice instead of paying.

Alternatives DEP offers

DEP's Bureau of Mining Programs also runs a Land Reclamation Financial Guarantee program. Its limits are 50% of the required bond amount per permit and $3,000,000 per operator, with an annual fee of 1.5% of the guarantee. A separate Remining Financial Guarantee has a $170,000 permit limit and a $510,000 operator limit, with a 1% annual fee.

Eligibility and Requirements for a Pennsylvania Mining Bond:

• A bond amount set by DEP at the estimated cost of completing reclamation under 25 Pa. Code 86.149.
• Pennsylvania Department of Environmental Protection named as obligee.
• A surety authorized to do business in Pennsylvania.
• Bond on the DEP prescribed form, not cancellable for nonpayment of premium during the liability period.
• Liability continuing through reclamation and for the period set in 25 Pa. Code 86.151.

Pennsylvania Mining Bond FAQs:

Official and Additional Resources for the Pennsylvania Mining Bond: