Financial Assurance and Bond Adjustments for Mine Sites with Post-mining
    : Upon publication of notice as final in the
    Pennsylvania Bulletin
    Surface Mining Conservation and Reclamation Act, 52 P.S. § 1396.1
    et seq
    (Surface Mining Act); The Clean Streams Law, 35 P.S. § 691.1
    seq.; the Coal Refuse Disposal
    Control Act, 52 P.S. §§ 30.51—30.66 (Coal Refuse Act); Noncoal Surface Mining Conservation
    and Reclamation Act, 52 P.S. § 3301
    et seq
    . (Noncoal Act); The Administrative Code of 1929,
    71 P.S. §§ 510.1—510-108; and the Commonwealth Attorneys Act, 71 P.S. § 732-101
    et seq
    The Surface Mining Act, The Clean Streams Law, the Coal Refuse Act, the Noncoal
    Act, and their implementing regulations require all sites to be adequately bonded. As an
    alternative financial assurance mechanism for sites with post-mining discharges, site-specific
    trust funds provide the financial assurance to cover the liability for long-term treatment of the
    The purpose of this policy is to set forth how the bonding laws are to be
    implemented for sites with a post-mining discharge by establishing guidelines for a bond
    adjustment or the establishment of a trust fund by the permittee to ensure the long-term treatment
    of the post-mining discharges.
    This guidance applies to surface coal mining, underground coal mining and
    coal refuse disposal activities with post-mining discharges.
    The policies and procedures outlined in this guidance document are intended
    to supplement existing requirements. Nothing in the policies or procedures shall affect regulatory
    The policies and procedures herein are not an adjudication or a regulation. There is no intent on
    the part of the Department to give these rules that weight or deference. This document
    establishes the framework, within which the Department shall exercise its administrative
    discretion in the future. The Department reserves the discretion to deviate from this policy
    statement if circumstances warrant.
    Vol. 12, Tab 68 (BMR/PGM Section II, Part 04, Subpart 50)
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    The Pennsylvania Surface Mining Act, the Clean Streams Law, the Coal Refuse Act, and their
    implementing regulations require all sites to be adequately bonded and the bond is conditioned
    that the permittee/operator shall faithfully perform all requirements of the law, including
    reclamation. The courts have held that reclamation includes treatment of post-mining
    discharges. The permittee is liable for, and is required to continue, the treatment of the post-
    mining discharge for as long as the discharge exists. The law also requires that the bond amount
    be sufficient for the Department to complete the reclamation in the event the permittee does not.
    When a post-mining pollutional discharge occurs the permittee is required by applicable laws to:
    1. Provide immediate interim treatment;
    2. Take measures that are necessary and available to abate the discharge.
    3. Make provisions for the sound future treatment of the discharge, if the abatement
    measures are not successful.
    Provisions for sound future treatment of the discharge include the design, approval and
    construction of a treatment facility and providing the financial assurance necessary to provide for
    the cost of treatment in perpetuity. The necessary financial assurance can be a bond (surety or
    collateral) that will be adjusted every 5 years or a trust fund.
    Where more than one discharge exists on a mine site, both the individual and cumulative impacts
    of the discharges will be evaluated before adjusting or releasing bonds. One trust can be
    established for all of the discharges associated with a mine site or for all of a permittee’s
    To satisfy the legal bonding requirements, the permittee must provide for the cost of treating any
    pollutional post-mining discharge for as long as the discharge may exist. Many discharges will
    exist for a very long time, if not perpetually. Treatment costs include the annual operation and
    maintenance costs of a treatment facility and the costs to replace the treatment system or
    components as needed.
    When a post-mining pollutional discharge occurs, the Department has the obligation and
    authority to require an amount of bond necessary to complete reclamation, restoration and any
    abatement work. This obligation and authority stems, in part, from 25 Pa. Code
    § 86.152. If
    additional bond is needed, the Department requests the permittee to provide additional bond.
    The bond amount needed for post-mining discharges will be calculated based on the cost to the
    Department to treat the discharge in perpetuity. In addition to the treatment amount, there must
    be a sufficient amount for any remaining reclamation on the permit area.
    Bonds are not, however, the ideal financial instrument for ensuring the long-term treatment of a
    post-mining pollutional discharge. Bonds are finite in nature and inherently unable to keep up
    with inflation. Every five years, when the permit is renewed, the permittee must provide
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    additional bond to keep pace with inflation. Finally, due to the uncertain term and the fact it is
    highly unlikely the bond will ever be released, many permittees will be unable to purchase the
    necessary surety bonds to meet their legal obligations.
    As an alternative to bonds, Section 4(d.2) of the Surface Mining Act authorizes the Department
    to establish alternative financial assurance mechanisms that meet the purposes and objectives of
    the bonding program. One alternative financial assurance mechanism established by the
    Department is a trust fund. Those permittees unable or unwilling to provide a surety or collateral
    bond can establish and fund a trust with a third-party trustee to manage investments and dispense
    funds. The main purpose of the trust fund is to generate sufficient income to cover the cost of
    treatment into the future. The Department is the irrevocable beneficiary of the trust. The trust is
    to be established using the Department forms containing the terms and conditions established by
    the Department.
    The trust is implemented through a negotiated Consent Order and Agreement and a companion
    Trust Agreement. The Consent Order and Agreement is entered into under the authority of the
    Surface Mining Act, The Clean Streams Law and the Commonwealth Attorneys Act. Once the
    trust is in place and fully funded, the permittee can be reimbursed from the trust for the yearly
    cost of treatment.
    In the event the permittee defaults on its legal obligations to treat the discharge, the trust funds
    will be used to treat the mine discharge. The trustee will make disbursements at the direction of
    the Department.
    A. Determining the Bond Amount
    The bond amount is based on the cost to the Department to continue treatment in the case
    where a permittee ceases treatment. The bond amount is the amount required to provide money
    to pay for the treatment in perpetuity. When a bond is forfeited and collected, the money is
    deposited in the Surface Mining Conservation and Reclamation Fund, the Clean Water Fund or
    the Coal Refuse Disposal Control Fund. In accordance with law, the State Treasurer manages
    these funds. They typically generate a very conservative rate of return. Consequently, the
    amount of a bond is greater than what would be needed in a trust where the fund is invested on
    the open market and thus would typically generate a greater rate of return.
    Because a bond has a fixed value, and the costs are expected to increase at the rate of
    inflation, in order to provide financial assurance through the term of the permit (five years) and
    to account for the time it takes to complete the bond forfeiture process (about a year), the bond
    amount is determined by doing the treatment trust calculations with the state treasury rate of
    return and projecting forward to the sixth year after permit issuance. The required bond amount
    is the projected trust value in year six. At the end of the permit term a new bond value for the
    renewal period will be calculated and additional bond may be required.
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    B. Treatment Trust Calculations
    The fundamental question is, “How much money needs to be invested to produce the
    income to pay for the costs for treatment?”
    Four factors determine the value of a trust fund to provide for the costs associated with
    treating post-mining discharges. These are:
    the annual operation and maintenance costs,
    the initial capital costs and the recapitalization costs,
    inflation, and
    the rate of return on the invested funds.
    In addition, it is prudent to have a mechanism in place to account for normal fluctuations
    in the earnings of the investment (i.e. volatility).
    1. Annual Operation and Maintenance
    The annual operation and maintenance (O&M) costs are all those costs and expenses
    associated with the day-to-day operation and maintenance of the treatment facility. Operation
    costs include, but are not limited to: chemicals, electricity, labor (including benefits), water
    sampling, sludge removal and disposal, transportation, maintenance of access roads, mowing,
    snow removal, general upkeep and contingency costs. System maintenance costs include, but are
    not limited to cleaning influent and effluent channels, inspecting the berms for rodent holes and
    repairing them, correcting short-circuiting in the ponds, repairing and maintaining all equipment
    and buildings. Sampling frequency must be established to ensure proper operation of the facility.
    Calculating accurate costs is critical to establishing the necessary trust amount. In any case, the
    cost analysis must be well documented.
    a. Actual Annual Costs
    Costs are determined, where possible, using the permittee’s actual annual costs as a
    guide. The average of the permittee’s costs for the three most recent years will generally be used
    to account for variations associated with variable flow conditions. The permittee can establish
    its annual operation and maintenance costs by providing an accounting of the costs prepared in
    accordance with Generally Accepted Accounting Principles and accompanied by an affidavit of
    the treasurer or other corporate officer responsible for the financial affairs of the permittee and
    accompanied by an affidavit of the permittee’s president attesting to the completeness and
    accuracy of the costs. It is important to note that the Department’s costs are expected to be
    higher than the permittee’s (or trustee’s) actual costs.
    The permittee’s annual operation and maintenance costs should be verified by using
    available treatment cost calculation models (e.g. AMDTreat, developed by OSM, with input
    from WV DEP and PA DEP). In those cases where the actual annual costs are unavailable or
    unreliable, the output from the treatment cost calculation model will be used for the initial
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    calculations. This cost may need to be increased to reflect the cost for the trustee to contract for
    the work
    b. Use of AMDTreat for calculating bond amounts and trust amounts
    The AMDTreat tool (or another cost calculating model) should be used for verification of
    the permittee’s costs and determining the Trust’s (or Department’s) costs (based on the fact that
    those costs will likely be higher than the permitttee’s). AMDTreat can also be used in cases
    where there is no reliable permittee cost data (e.g. the treatment system hasn’t been built yet, or
    there isn’t a long track record of treatment).
    There are over 500 variables in the AMDTreat software that may be set by the user.
    AMDTreat is a powerful tool in determining the costs for treatment. AMDTreat can be used to
    determine Annual O & M costs and the present value of future recapitalization costs.
    AMDTreat has a design module that can be useful in identifying treatment alternatives
    (and the costs associated with them). AMDTreat can be used for forward cost modeling, i.e.
    where a system is proposed and the costs must be predicted, and for reverse cost modeling, i.e.
    where a system is in place and the costs must be calculated.
    For systems that are in place, the actual values should be used. For these systems it is
    important to make sure that the default costs from AMDTreat are reasonable, or appropriately
    adjusted to reflect the real site-specific costs. For the most part, the sizing methods will be based
    on dimensions. The secondary pond component will usually be used to calculate pond costs
    since this calculation is based on dimensions.
    For proposed systems, or where actual values are not available from the permittee, it is
    necessary to be somewhat conservative in calculating costs, to assure that an adequate bond or
    trust amount is determined. The Financial Forecasting module of AMDTreat is useful for
    comparing different treatment options. The Recapitalization module can provide the present
    value of the future recapitalization costs.
    It is important to keep in mind that for active or chemical systems, the annual operation
    and maintenance costs generally control the trust amount, while for passive systems the capital
    costs have greater importance.
    Water Quality and Flow Data
    There are two flow values used for calculations in AMDTreat. For hydraulic sizing of
    facilities, the Design flow is used. A water quality spreadsheet has been developed to help
    characterize a discharge or discharges. The design flow is also called “Flow Size” in the water
    quality spreadsheet. The “average” flow is used to calculate chemical consumption. The water
    quality spreadsheet generates the median value of the flow. In most cases, the arithmetic average
    should be used for this input value in AMDTreat.
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    Sampling Costs
    Sampling costs should be based upon the actual required sampling program. Sampling
    costs may be reduced for sites where these samples can be collected during routine maintenance
    visits. Adjustments can be made to the labor and travel costs accordingly. One of the input
    parameters is the number of samples per month. This can be calculated by taking the total
    number of required samples per year and dividing by 12. If this approach is used, then 1 should
    be used as the number of sample points.
    Typically, the raw water, effluent from the treatment system and the downstream samples
    on a monthly basis are required. These points and frequency should be used as the starting point
    for determining the required monitoring. This can be adjusted based on site-specific conditions.
    For example, for a complicated active treatment system, additional sample locations and
    increased frequency is needed. For a passive treatment system with a history of good
    performance, fewer samples may be needed.
    Engineering Costs
    Generally, there is no need to include engineering costs for construction for systems that
    are in place and fully functional. However, some aspects of operation and maintenance may
    involve engineering.
    Labor costs are calculated based on the required number of site visits per month. For
    passive systems, a once per month minimum should be used as a starting point. For active
    treatment 5 visits per week should be used unless the operator-provided data indicates otherwise.
    2. Capital Improvement/Recapitalization Costs
    Capital improvement or recapitalization costs are those anticipated periodic expenditures
    necessary for the continued operation of the treatment system. The present value of the
    recapitalization costs is calculated by determining the expected average lifespan of each major
    component of the treatment system and its cost in today’s dollars. These costs are then inflated
    to each expected replacement point and the present values of the future costs are added together.
    Costs are calculated for replacement for a 75-year period. The required amount of
    recapitalization costs is recalculated on an annual basis and each time a distribution payment is
    made from the trust. An evaluation of financial data shows that calculations projected beyond 75
    years are not useful because of the variability of the data.
    For passive treatment systems, operator data should be compared to other published cost
    data. For example, the former U.S. Bureau of Mines calculated the cost of wetlands built by them
    to average about $35,000 per acre.
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    3. Inflation
    Inflation is the overall general upward price movement of goods and services in an
    economy. The Department has used an inflation rate of 3.1 % for the trust fund calculations.
    This rate of inflation was determined through averaging the rate of inflation as reported by the
    U.S. Bureau of Labor Statistics for the 75-year period from 1923 through 1997. This 75-year
    period represents the post-World War I period when the economy of the United States changed
    from an agrarian economy to the modern industrial economy. It also includes a variety of
    changes in the inflation rate that may reasonably be expected to occur in the future. The rate will
    be periodically evaluated and adjusted.
    4. Return on Investment
    Return on investment is the growth in the value of the trust due to income from its
    investments, less any fees. The expected rate of return on investment is directly related to the
    amount of risk the investor is willing to assume. This risk, and the correlating effective rate of
    return, can be modified based on the mix of investment vehicles used. The Department has used
    an average long-term rate of return for stocks listed on the New York Stock Exchange (11.2%)
    and the average rate of return for bonds of 5.25%. These rates will be periodically evaluated and
    In order to make the establishment of treatment trust funds affordable, the Department
    will consider a fairly aggressive growth trust strategy consisting of up to 80% stocks and 20%
    bonds. However the permittee can select a more conservative investment strategy. The
    investment mix is a decision that the permittee must make, but the rate of return used to calculate
    a trust amount is determined as part of the negotiation process for the Consent Order and
    Agreement and accompanying Trust Agreement.
    5. Volatility
    Volatility is the variation of the value of the investments from the anticipated value.
    Based on a volatility analysis conducted for the Department, the assumed volatility for stocks
    listed on the NYSE composite index is 20%. The assumed volatility for fixed-yield bonds is 0%.
    The volatility to be used in each case is determined based upon the investment strategy, prorating
    the volatility accordingly. For example, the volatility factor for an 80% stock, 20% fixed-yield
    bond investment strategy is 16%. Taking into account the volatility, a fully funded trust with the
    80% stock, 20% bond mix is 116% of the required funds.
    C. Calculating the Trust Amount
    The initial trust amount is determined by using a variation of the time value of money
    formula. The time value of money formula determines the present value of the costs to be
    incurred in the future. The formula is embedded in a spreadsheet that calculates the costs,
    adjusted for inflation. The annual operation and maintenance cost and capital cost for
    replacement are input into this spreadsheet. The spreadsheet calculates the bond amount and
    balance of funding in the trust.
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    The following equation is listed in the Consent Order and Agreement and is used to
    approximate the Present Value (PV) of the future operation and maintenance (O&M) of the
    treatment system:
    [(A/[E-I]) + A] x Vol
    Present Value of the O&M Costs
    Current Actual Annual Treatment Cost
    Expected annual earnings or Interest Rate (depends on investment
    Inflation Rate (0.031 (3.1%) has been used)
    The total trust amount needed is the sum of the present value of the operation and
    maintenance costs, the present value of the capital improvement/recapitalization costs, and the
    costs of the first year of treatment. This amount is then adjusted for volatility. The following
    formula will determine the total trust amount:
    Present Value of the O&M Costs
    Present Value of the Recapitalization Costs
    Note: The capital costs for a proposed system should be included, if applicable.
    A. Establishing the Trust
    The trust is established through two documents, a Consent Order and Agreement between
    the Department and the permittee and a Trust Agreement between the permittee and a trustee
    selected by the permittee and approved by the Department. Instead of a Trust Agreement, a
    participation agreement may be used.
    The trustee must be a Pennsylvania chartered or a national bank or a financial institution
    with trust powers or a trust company with offices located within the Commonwealth and the trust
    activities must be examined or regulated by a state or federal agency.
    The trust has a target value that is higher than the base value to account for the volatility.
    In addition, the annual treatment cost is in the trust account for a year before the permittee is
    reimbursed at the end of the year. The interest earned on these funds may be adequate to fund
    the Capital Improvement Account.
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    The Trust provides for annual disbursement to the operator. The disbursement is limited
    to calculated costs and subject to fund valuation. The reimbursement is the smaller of the annual
    treatment costs or the excess value in the trust.
    For permittees with multiple sites with discharges, it is advantageous to handle them in a
    single trust. Combining the money for the future treatment of multiple discharges into one trust
    fund can result in lower trustee fees.
    The standard form trust agreement and Consent Order & Agreement are available at:
    The trustee is required to provide quarterly statements of the activity and balances of the
    trust. The trustee is paid from the trust. Any tax on the earnings of the trust is to be paid by the
    permittee. A nontaxable charitable trust can be established, in which case the earnings of the
    trust would not be taxable. The trust can own real and personal property, easements, and
    B. Participation Agreement
    In cases where the trust amount is relatively small, it may make financial sense for a
    number of permittees to “pool” their trusts. In this case, rather than having a trust agreement, the
    permittee will execute a participation agreement. This agreement serves the purpose of the trust
    agreement. In this case, while there are separate accounts established by the trust manager, the
    trust is invested collectively to take advantage of the benefits of working with larger sums of
    The trust has two sub-accounts, one for operation and maintenance (the Primary Trust),
    and another for capital improvements/recapitalization (the Capital Improvement Account).
    Bond Release or Conversion to Trust Asset
    Once a trust has been established and is fully funded the bonds for the site may be
    released. A sample public notice for bond release when a trust is in place is included as
    Appendix A. In addition, after the trust is fully funded, the permittee can, at the direction of the
    DEP, be reimbursed at the end of each year, based on the calculated cost of treatment, for that
    year’s costs.
    There are two scenarios for bond release when a trust is established. The first is with a
    fully funded trust. The second is when the bond is released, but becomes an asset of the trust.
    The distinction between these releases and typical bond releases is that the public notice should
    reflect the fact that there is a trust in place. Where the bonds are released, the language in the
    brackets in the sample public notice (Appendix A) should be included.
    If the permittee is not able to fully fund the trust, then any reclamation bonds not needed
    to cover land reclamation may be amended and converted to an asset of the trust. If bonds are
    included in the trust, then, as the trust increases in value, bond liability may be reduced as the
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    trust reaches certain milestones. If there are multiple bond instruments, then the order that the
    bonds will be reduced or released will be at the Department’s discretion.
    For surety bonds to be part of the trust, written authorization of the surety is required. A
    standard surety bond rider is used to amend the surety bond. This rider amends the bond to
    allow for the proceeds from a forfeiture of the bond to be deposited in the trust. An example of
    this standard form is attached as Appendix B.
    In order for a surety bond to be part of the trust, the bond must first be released through
    the completion report process. After the bond is released and made a part of the trust, liability
    reductions of the amount of the bond are done in accordance with the Consent Order and
    D. Supporting Documentation
    Updated maps and plans are needed to support the Consent Order and Agreement and the
    Trust Agreement. These maps and plans should show the discharge location, treatment facility
    detail, sampling locations, access roads and any other site-specific features that should be
    documented (e.g. pipelines or other utilities). Efforts should be made to obtain easements from
    the landowner for access to the property required for the operation and maintenance of the
    treatment facility. Normally, the permit will remain in place with revisions to reflect the
    required treatment area. Any area that may be needed for future enhancements of the treatment
    system should also be included in the revised permit area.
    E. Annual Review
    Each year the costs associated with treating the discharge and the value of the trust are
    analyzed to determine if the objective of the trust is being met. This is a financial review that
    includes a detailed accounting of costs. If it is determined that the trust value is insufficient or
    excessive, appropriate adjustments are made to the trust. The details of the financial
    requirements of the trust are somewhat complex. They are specifically described in the Consent
    Order and Agreement and Trust Agreement.
    An annual meeting with the Department, Trustee and permittee is required by the
    Consent Order and Agreement to review the performance of the treatment system, and evaluate
    the trust amount. The treatment system evaluation should take any unusual climatic conditions
    into account. If the costs for treatment change by more than 10%, since the creation, or last
    modification, of the trust, then the trust amount should be recalculated.
    F. Trust Tracking
    The annual reporting/meeting requirement and the year-to-year performance of the trust
    are tracked in the Trust fund tracking database. While this database will be the primary means of
    tracking the trusts, some of the aspects of the trust may be tracked in eFACTS. For example, the
    Consent Order should be tracked as an enforcement action in eFACTS. The milestones should be
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    limited to the required actions by the permittee. In addition, when a permit has a trust associated
    with it, this can be added to the PF record as an operational characteristic.
    G. Anticipated discharges
    In the case where there is a discharge anticipated, but which has not yet surfaced (for
    example, potential deep mine pools) the need for a trust/bond should be determined using a
    detailed hydrologic analysis. The analysis should take into account the anticipated post-mining
    pool elevation, whether the discharge will gravity flow or require pumping, potential discharge
    location, the expected quality and quantity and the type of treatment indicated and when the
    discharge is expected to occur.
    H. Default
    If a permittee fails to continue the required treatment, then the treatment trust will take
    over. At this point, the permittee is in violation of the Consent Order and will be subject to a
    permit and license block. In most cases, upon default the permit should be revoked. The permit
    revocation will be input into the Federal Applicant/Violator System (AVS) and be a permit block
    I. Process summary
    The process of determining the trust or bond amount and establishing a trust is
    summarized as follows:
    Identify the discharge sample point(s). The mine drainage inventory data can be
    Download data from SIS and compile any additional available data
    When more than one discharge is treated in the same system, the combined
    discharge spreadsheet can be used.
    Input cost, water quality and treatment system data in AMDtreat
    Input annual O & M cost and recapitalization cost numbers from AMDtreat or
    other sources into the trust fund/bond calculator spreadsheet.
    Determine the required bond amount
    Request the bond from the permittee (this notice includes the opportunity for an
    informal conference).
    If trust negotiations are not initiated, then demand the necessary bond through
    issuance of an order
    If trust negotiations are initiated, then prepare draft Consent Order and Trust
    Meet with the permittee to finalize the numbers and Consent Order and Trust
    Enter appropriate data into eFACTS.
    Tracking the treatment trust in the Treatment Trust Database will be done throughout this
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    Notice is hereby given that
    (Company Name)
    has requested bond release
    for Surface Mine Permit No. (permit #)
    Conservation and Reclamation Act. The permit was renewed on (date)
    and is
    (location of site)
    County. Bond release of
    is requested for (# of acres)
    acres. Total bond held is
    ($ amount)
    . The release area has been reclaimed to approximate
    original contour and revegetated with grasses and legumes. Land reclamation was completed on
    the site as of (date)
    . There is a post mining pollutional discharge that has occurred and that is
    being treated by
    (description of treatment being used)
    . Pursuant to a
    Consent Order and Agreement with the Department authorized by Sections 4(d.2) and (g)(3) of
    the Surface Mining Act and by the Clean Streams Law, a trust fund has been established and
    funded as an alternative financial assurance mechanism that provides for the sound future
    treatment of the pollutional discharge. [The bond (s) has(or have) been held for the benefit of the
    trust. After the release of the bond, the value of the trust is sufficient to provide an adequate
    alternate financial assurance mechanism.]
    Written comments, objections, and requests for a public hearing or informal conference
    may be submitted to the Department of Environmental Protection, Office Name,
    District Mining
    Office, Bureau of District Mining Operations, Office address,
    within 30 days following the
    fourth and final publication of this notice, and must include the person’s name, address,
    telephone number, and a brief statement as to the nature of the objection.
    563-2504-450 / DRAFT December 15, 2007 / Page 12

    Appendix B
    This Rider is attached to and made a part of the Surety Bond-Mining (General),
    Bond No. __________, dated ____________________, __________ submitted by
    ______________________________ (“Operator” or “Principal”), License No. __________, for
    the ______________________________ (Name of Operation Facility), Permit No.
    It is hereby understood, acknowledged and agreed by the Operator and the Surety that the
    attached Surety Bond, Surety Bond-Mining (General) Bond No. _______________ is amended
    as follows:
    Under provisions of Paragraph 3 (Default), the Department of Environmental Protection,
    formerly known as the Department of Environmental Resources (“Department”), hereby
    designates ______________________________, Trustee (and any successor Trustee) of a
    certain Trust, dated ____________________, __________, as the Department’s designee for
    the purpose of declaring a forfeiture under the attached Surety Bond. The Surety Bond, as
    amended by this Rider, together with the Trust and the Consent Order and Agreement
    between the Department and the Operator dated ____________________, __________,
    comprise an alternative financial assurance mechanism established for the benefit of the
    Department pursuant to the Surface Mining Conservation and Reclamation Act to address
    Operator’s legal obligations to treat mine drainage discharges emanating from or
    hydrologically connected to sites covered by the permit(s) which are secured under the
    attached Surety Bond(s).
    In the event a forfeiture is declared by the Trustee, (or any successor Trustee), the Surety
    agrees to pay over to the Trustee the amount of the forfeited bond within thirty (30) days
    notice by certified mail from the Trustee, for deposit in the Trust.
    The Operator and the Surety understand, acknowledge and agree that the Operator’s
    reclamation obligations under the permit(s) which are secured by the attached Surety Bond,
    and which are obligations of the attached Surety Bond, include the Operator’s legal
    obligations to treat postmining discharges of mine drainage and that, notwithstanding
    Operator performing any other reclamation obligation, such legal obligations to treat
    postmining discharges of mine drainage shall continue under the attached Surety Bond
    uninterrupted, undiminished and unimpaired.
    The Operator and the Surety hereby agree that any dispute arising under the Trustee’s
    declaration of forfeiture shall be adjudicated by the Environmental Hearing Board,
    Commonwealth of Pennsylvania in accordance with the Environmental Hearing Board Act.
    563-2504-450 / DRAFT December 15, 2007 / Page 13

    The Operator and the Surety understand, acknowledge and agree that the rights and powers
    of the Trustee established by this Rider are in addition to and not in lieu of any of the rights
    and powers of the Commonwealth of Pennsylvania and/or the Department established in the
    attached Surety Bond, such rights and powers of the Commonwealth of Pennsylvania and/or
    the Department continue without change or modification, uninterrupted, undiminished and
    IN WITNESS WHEREOF, the Operator and Surety have hereunto set their hands and
    seals, intending to be legally bound hereby, as of the __________ day of
    ____________________, __________.
    Attest or Witness:
    Attest or Witness:
    563-2504-450 / DRAFT December 15, 2007 / Page 14

    563-2504-450 / DRAFT December 15, 2007 / Page 15
    Approved for the Department
    Of Environmental Protection:
    (Name and Title)
    Approved as to legality and form:
    Chief/Assistant Counsel
    Department of Environmental Protection

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