Frequently Asked Questions About Reclamation Sureties and Bonding

I understand that the Division of Oil, Gas and Mining is now requiring reclamation surety for small mines and exploration. Is this true?
Yes. In the past only large mining operations have been required to post reclamation sureties, but now, by law all mining operations need to be bonded to ensure reclamation. In 2003, the Utah State Legislature amended the Utah Mined Land Reclamation Act (UCA 40-8) to require reclamation sureties on all mining operations.

The Division requires all mines and exploration projects to post reclamation surety. If your mining operation does not currently have a surety for reclamation that identifies the Division as a beneficiary, you should contact the Division in order to make arrangements to provide for reclamation surety for your site.


What if I already have a surety posted with another agency?
Even though you may have a reclamation surety with another agency, such as BLM, USFS or SITLA, you will still need to contact us to name the Division of Oil Gas and Mining as co-beneficiary and to ensure that your coverage is adequate.


How do I determine the amount of surety that I need to post?
The cost of reclamation varies from site to site and is based on 1) the technical details (or lack thereof) for reclamation found in the Notice of Intent, 2) the post-mining land use, and 3) the projected third party costs to cover Division expenses under a forfeiture circumstance. Because many small mines do not have detailed reclamation plans upon which to base an accurate cost estimate, the Division uses surety estimates based upon average dollars per acre reclamation costs. These costs are then escalated for three or five years. The costs for small mines and exploration are in a memo located here.


What forms of surety are acceptable to the Division?
The Division accepts a variety of different forms of surety and you may choose the form that is most appropriate for your situation as long as it meets the regulatory requirements. Forms acceptable to the Division include corporate surety bonds from a surety company licensed to do business in Utah, federally insured certificates of deposit, cash, irrevocable letters of credit, escrow accounts, and in some cases the Board may accept written self-bonding agreements. Ultimately, the form and the amount of the surety must be approved by the Division, so it is important that you work closely with us to make sure you have the appropriate surety in place before commencing mining operations.


Are the cost estimates for exploration different than for mines?
Since exploration notices are only valid for about a year (unless extended), surety costs are not escalated beyond the current year. The memo in http://linux3.ogm.utah.gov/WebStuff/wwwroot/minerals/20110511083818.pdf gives average costs for exploration projects, including surface disturbance and drill hole plugging, but please contact the Division to determine the exact amount of reclamation surety required.


How do you determine the number of acres that need to be covered by surety at any given time? Are maps required?
One difficulty that we encounter is trying to determine the actual acreage disturbed (or proposed for disturbance) at any given mine site. All too often we have inspected a small mine site only to find that it has been expanded to the point of becoming a large mine without having the appropriate approvals. In order to avoid this situation, we are also requiring in accordance with UCA 40-8-13 1(b)(iv) that you provide accurate area maps of existing and proposed operations so that it is clear what area you are responsible for reclaiming and what area the surety covers. To help you in this regard, we have developed a list of consultants who have expressed an interest in conducting this type of work. This list is only provided as a resource and there is no obligation to use any of the firms listed. Click here for the list.


What if I reclaim an area and want to expand into another area? How does this affect my reclamation surety?
The practice of "rolling" reclamation surety monies over to another area is allowed under our program as long as the reclamation obligation on the first area has been met and that area has received a release from the Division. This release and approval of the "rollover" surety must occur prior to your disturbing a new area. This may be in the form of a partial release (for demolition, backfilling and grading) or full release (after 3 years of vegetation establishment). A form for requesting bond/site release is available on the Division's website. The rollover may not necessarily be an acre per acre trade, since it depends on the amount of reclamation completed and the amount of disturbance planned on the new area. As always, it is necessary to contact the Division to determine what surety/bond costs are appropriate for your particular site.


What is the process for submitting a cash bond?
A cash bond must be posted with U.S. funds from a bank registered to do business in the United States. Credit card payments are not allowed. The Division recommends that you submit a cashier’s check; submitting a company or personal check may result in delays until the check clears. The money must be accompanied by a properly-completed IRS form W-9 for domestic companies or form W-8 for foreign companies. The Division will reject the cash bond if it does not receive this form. The form may be submitted by hard copy or e mail (ogmminerals@utah.gov) but not by fax. The money will be deposited through the Utah State Treasurer into an account at Zions Bank where it will be held until the Division authorizes release.


Whom do I contact if I need help with the surety/bonding requirements?
If you have any questions, regarding these requirements, please contact Paul Baker, Program Manager at (801) 538-5261 or if you need assistance in completing any of the forms or in calculating appropriate surety costs contact Penny Penny Berry, Engineer Tech at (801) 538-5291.


Where can I find the forms I need to submit?
Surety forms can be found on the Minerals web site under Bonding on the FORMS page.




Acceptable Reclamation Bonding Forms

Note - Please contact us before you complete any of these bonding forms or have a bank issue a CD or Letter of Credit. Call (801) 538-5340 and ask for bonding information for the Utah Minerals Program.


OPERATORS! MINIMIZE SURETY PROCESS DELAY BY UNDERSTANDING BONDING REQUIREMENTS AND PROCESS AS PROVIDED HERE IN THIS FLOW CHART TITLED, "RECLAMATION CONTRACT AND SURETY FORMS COMPLETION AND SUBMITTAL PROCESS". CLICK HERE FOR A COPY OF THE FLOWCHART.


Certificate of Deposit
This form is a cover letter addressed to a federally insured bank issuing the Certificate of Deposit (CD). The cover letter instructs the bank who's name should be on the CD account, and how to process the interest earned on the CD. The CD is made payable to the Utah Division of Oil, Gas and Mining and is used when mining is conducted on privately owned land and minerals.


Certificate of Deposit (BLM)
This is the same as the form used for a regular certificate of deposit, but it is for mining or exploration operations subject to 43 CFR 3809 on BLM lands. The certificate of deposit secures reclamation costs.


Joint Certificate of Deposit
This form is a cover letter addressed to a federally insured bank issuing the Certificate of Deposit (CD). The cover letter instructs the bank who's name should be on the CD account, and how to process the interest earned on the CD. The CD is made payable to the Utah Division of Oil, Gas and Mining, and the joint regulatory agency when mining is conducted on private, federal and/or state owned land or minerals (i.e., Bureau of Land Management (BLM), United States Forest Service (USFS), School and Institutional Trust Lands Administration (SITLA).


Letter of Credit
This form is a letter, issued by a federally insured bank organized to do business in the United States, addressed to the Utah Division of Oil, Gas and Mining. The letter secures reclamation costs when a mining project involves privately owned land and minerals. The Letter of Credit is established in favor of the Utah Division of Oil, Gas and Mining.


Letter of Credit (BLM)
This is the same as the form used for a regular letter of credit, but it is for mining or exploration operations subject to 43 CFR 3809 on BLM lands. The letter of credit secures reclamation costs.


Joint Letter of Credit
This form is a letter, issued by a federally insured bank organized to do business in the United States, addressed to the Utah Division of Oil, Gas and Mining and the joint regulatory agency (i.e., BLM, USFS, SITLA). The letter secures reclamation costs when a mining project involves private, federal, and/or state owned land or minerals. The Letter of Credit is established in favor of the Utah Division of Oil, Gas and Mining, acting as agent for the cooperative agency (i.e., Bureau of Land Management (BLM), United States Forest Service (USFS), School and Institutional Trust Lands Administration (SITLA).


Surety (Replaces forms MR-5 and MR-6)
This is a surety bond form issued by a corporate insurance company in favor of the Utah Division of Oil, Gas and Mining and a cooperative regulatory agency (i.e., BLM, USFS, SITLA), if applicable. The surety secures reclamation costs when a mining project involves private, federal and/or state land or minerals (i.e., Fee (Private), Bureau of Land Management (BLM), United States Forest Service (USFS), School or Institutional Trust Lands Administration (SITLA).


Surety (BLM)
This is a corporate surety bond form issued by a corporate insurance company in favor of the Utah Division of Oil, Gas and Mining and the Bureau of Land Management. This form is for mining or exploration operations subject to 43 CFR 3809 on BLM lands. The surety secures reclamation costs.


MR-RC-LMO (Reclamation Contract for Large Mining Operations) This form applies only to mining operations which disturb or will disturb more than five surface acres in incorporated areas or more than ten acres in unincorporated areas at any given time and is used in conjunction with the posted surety. It is a mutually binding contract between the Division of Oil, Gas and Mining and the mining operator. The Reclamation Contract is tied directly to the surety.


MR-RC-LMO (BLM) (Reclamation Contract for Large Mining Operations on BLM lands) This form applies only to mining operations subject to 43 CFR 3809 on BLM lands which disturb or will disturb more than ten surface acres in unincorporated areas or more than five acres in incorporated areas at any given time and is used in conjunction with the posted surety. It is a mutually binding contract between the Division of Oil, Gas and Mining and the mining operator. The Reclamation Contract is tied directly to the surety.


MR-RC-SMO (Reclamation Contract for Small Mining Operations) This form applies only to mining operations which disturb or will disturb five or fewer surface acres in incorporated or ten or fewer acres in unincorporated areas at any given time and is used in conjunction with the posted surety. It is a mutually binding contract between the Division of Oil, Gas and Mining and the mining operator. The Reclamation Contract is tied directly to the surety.


MR-RC-SMO (BLM) (Reclamation Contract for Small Mining Operations on BLM lands) This form applies only to mining operations subject to 43 CFR 3809 on BLM lands which disturb or will disturb up to ten surface acres in unincorporated areas or five acres in incorporated areas at any given time and is used in conjunction with the posted surety. It is a mutually binding contract between the Division of Oil, Gas and Mining and the mining operator. The Reclamation Contract is tied directly to the surety.


MR-RC-EXP (Reclamation Contract for Exploration Activities)
This form applies only to exploration activities. "Exploration" means surface disturbing activities conducted for the purpose of discovering a deposit or mineral deposit, delineating the boundaries of a deposit or mineral deposit, and identifying regions or specific areas in which deposits or mineral deposits are most likely to exist. It is a mutually binding contract between the Division of Oil, Gas and Mining and the mining operator. The Reclamation Contract is tied directly to the surety.


MR-RC-EXP (BLM) (Reclamation Contract for Exploration Operations on BLM lands) This form applies only to exploration operations subject to 43 CFR 3809 on BLM lands and is used in conjunction with the posted surety. It is a mutually binding contract between the Division of Oil, Gas and Mining and the mining operator. The Reclamation Contract is tied directly to the surety.


MR-EXP-Drill (Drill Hole Abandonment Report for Bond Release)
This form is used to document the surface and subsurface plugging and abandonment of a drill hole for the purpose of rolling plugging costs for reclamation surety to another drill hole. Hole plugging must meet the requirements of R647-2-108. The form must be signed by a professional geologist or an officer of the company.




Bonding Worksheets

The following are Bonding Worksheets used to calculate bonds. Anyone using them should contact Wayne Western at 801-538-5263 with questions.


Bonding Demo Worksheet


Bonding Earth Worksheet


Bonding Revegitation Worksheet


Bonding Total Worksheet


Bonding Worksheets Worksheet



Annual Escalation Rates

Note - Call Peter Brinton at (801) 538-5258 or Wayne Western at (801)538-5263 and ask for escalation information for the Minerals Program

Minimize surety review delays by understanding the escalation factor and using the correct escalation factor consistent with the year the bond was calculated. The escalation factor is entered on the bonding worksheets on the "Bonding Total Worksheet". If the 2017 RS Means Heavy Construction Cost Data and Blue Book Rental Rate for Construction Equipment were used on the bond worksheets, the escalation factor from 2017 Memorandum is to be used; if the 2016 RS Means Heavy Construction Cost Data and Blue Book Rental Rate for Construction Equipment were used on the bond worksheets, the escalation factor from 2016 Memorandum is to be used, etc.


Reclamation Cost Escalation Factor

2019

2018

2017

2016

2015


Reclamation Surety Costs for Exploration and Small Mining Operations

2019

2018

2017

2016

2015





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