A California reclamation bond is a type of “financial assurance” required by the California Department of Conservation, Office of Mine Reclamation under the “SMARA”. SMARA is an acronym for the Surface Mining and Reclamation Act of 1975. SMARA was enacted by the California Legislature in part to address to prevent or minimize the negative impacts of surface mining to public health, property and the environment.
The California reclamation bond requirement is to support the goals of SMARA to maintain water and air quality, minimize flooding, erosion, damage to wildlife and aquatic habitats caused by surface mining. SMARA’s California financial assurance requirements apply to anyone, including government agencies, engaged in surface mining operations in California (including those on federally managed lands) which disturb more than one acre or remove more than 1,000 cubic yards of material. The California reclamation bond and SMARA rules apply to prospecting and exploratory activities, dredging and quarrying, streambed skimming, borrow pitting, and the stockpiling of mined materials. SMARA requires that each mining operation have a surety bond to ensure that reclamation is performed in accordance with the approved reclamation plan. The California reclamation bond must be on the form approved by the State which is written as a non-cancelable obligation. Even if a change of ownership occurs, the existing bond will remain in force until a replacement is approved. SMARA requires that the bond be adjusted annually. The adjustments account for new lands disturbed, inflation and for reclamation of lands accomplished in accordance with the approved reclamation plan PRC 2773.1(a)(3). Thus, the California reclamation bond is calculated from the state of the mining operation each year (the cost to reclaim should the operation close during that year), not calculated from the final anticipated state of the land at the planned end of mining. The Office of Mining Reclamation provides a very helpful guide to reclamation California financial assurance instruments that can explain the process in depth. Also, while the professional mining or “wildcatter” should be skillful in preparing reclamation estimates, the Office offer access to formulas for calculating the California reclamation bond amount on its website. In addition to the reclamation plan assurance the bond obligation also guarantees the payment of costs and reasonable expenses and fees, including reasonable attorney fees, incurred by the Obligee (county in which the mine is located) and in the alternative, the Department of Conservation, Office of Mine Reclamation as well as some strict notice requirements required of the surety.
California surety bond leader is a premier resource for any operation requiring reclamation bonding. Although this particular type of obligation is very unattractive to surety companies because of its long term, non-cancelable and onerous terms, we offer reclamation bond capacity for oil, coal, uranium, metal mining, and hydraulic fracturing “fracking” operations. Visit us at https://suretyone.com/reclamation-bond call (800) 373-2804, or email Underwriting@SuretyOne.com for a California reclamation bond application or further information regarding your surety needs.
