The PA Anthracite Council reported in its May newsletter: “Pennsylvania’s anthracite and bituminous coal mining industries are seeking changes to the way the Department of Environmental Protection calculates coal mine reclamation bond rates.
"Currently, the Department calculates annual coal mine bond rates using the lowest three bids submitted by contractors to Bureau of Abandoned Mine Reclamation for each site designated for reclamation.
“The bids cover such areas as moving material for backfilling, grading, revegetation, tree planting and other areas of land reclamation.
“This calculation system was put into place in 2000 when Pennsylvania switched from a bond pool bonding method to a site specific conventional (full cost) bonding method.
“Both anthracite and bituminous coal operators have expressed concerns about the Department’s decision to use the lowest three bids instead of just the lowest winning bid to establish its bond rate structure.
“Operators claim that using the lowest three bids needlessly adds excessive bonding costs to operator’s material handling costs since the Department is only paying based on the lowest winning bid price.
“Based on figures provided by DEP, there seems to be some validity to the industry’s concerns.
“According to Shawn Frye, PE, chief Engineer for Blaschak Coal Corp, the average of the lowest three bids used by the Department are 21.2 percent higher than if the Department used only the single lowest winning bid.
“However, by using just the lowest two bids, bonding costs would yield a bond rate that is only 10.9 percent higher than current calculations.
“During a recent meeting of the Mining and Reclamation Advisory Board’s Reclamation Committee representatives from the coal mining industry met with DEP officials to discuss bond rate calculation methodology.
“While the Department has expressed a reluctance to use only the single lowest bid in its bond rate calculations, the industry did offer a compromise.
“Bobby Burns, who is the anthracite industry representative to the Mining and Reclamation Advisory Board, suggested that the Department develop a sliding scale.
“He recommended that the Department utilize the single lowest bid on projects receiving only one to three bids. He suggested that on projects receiving four to five bids, the Department utilize the two lowest bids in its calculations.
“Finally, he recommended that on projects with six or more bidders that DEP use the three lowest bids when calculating bond rate guidelines.
“Additionally, during the meeting, Rodd White, PE, Head of Lehigh Engineering, LLC and consulting engineer for Reading Anthracite Company and its affiliates, raised a question regarding the Department’s 2019 calculations pointing out a potential error in the calculations.
“The Department reviewed the numbers and discovered a $0.20 per cubic yard grading error in its calculations. The discovery and correction of the error resulted in more than $12 million in savings to the industry in bond costs for 2019.
“Moving forward, the Department was open to industry comments and is planning a review of its bond rate calculation mythology. However, any changes to the bond rate guidelines as a result of any changes to methodology will be enacted in April of 2020 when DEP published new Bond Rate Guidelines.”
For more information on programs, initiatives and upcoming events, visit the PA Anthracite Council website. Click Here for the Council’s latest newsletter.
Visit DEP’s Mine Site Reclamation Bond Rates webpage for more information on how the Department calculates the rates.
(Written by Duane Fergley, Executive Director, PA Anthracite Council, from May newsletter.)
[Editor’s Note: This is a good example of cooperation between industry and DEP to help resolve an issue.]
No comments:
Post a Comment