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decided: May 4, 1983.


Appeal from the Order of the Environmental Hearing Board in the case of Morcoal Company v. Commonwealth of Pennsylvania, Department of Environmental Resources, No. 79-189-B.


Allan E. MacLeod, Wymard & Dunn, for petitioner.

Diana J. Stares, with her, Ward T. Kelsey and Elissa A. Parker, for respondent.

Judges Rogers, Williams, Jr. and Craig, sitting as a panel of three. Opinion by Judge Rogers.

Author: Rogers

[ 74 Pa. Commw. Page 109]

Morcoal Company has filed a petition for review of an order and adjudication of the Environmental Hearing

[ 74 Pa. Commw. Page 110]

Board (EHB) upholding the action of the Department of Environmental Resources (DER) forfeiting bonds covering surface mining sites allegedly abandoned and unreclaimed by Morcoal and denying Morcoal's surface mining license for the year 1980.

Prior to 1979, Morcoal held a license as a surface mining operator in Pennsylvania and operated five surface mines in Westmoreland County. Before commencing coal mining operations on each of the five sites, Morcoal applied for, and received from the DER, mine drainage and mining permits under the Clean Streams Law, Act of June 22, 1937, P.L. 1987, as amended, 35 P.S. §§ 691.1-691.1001 (Clean Streams Law) and the Surface Mining and Conservation Act, Act of May 31, 1945, P.L. 1198, as amended, 52 P.S. §§ 1396.1-1396-25 (Mining Act). Additionally, Morcoal posted performance bonds with its applications for the mining permits pursuant to Section 4 of the Mining Act, 52 P.S. § 1396.4(d). The parties have stipulated that the condition of each of the bonds was that if Morcoal should perform all of the requirements of the Mining Act, the Clean Streams Law, the rules and regulations of the Environmental Quality Board, and the provisions and conditions of the permits the obligation should be void; otherwise to remain in full force and effect. The aggregate amount of the forfeitures seems to be $47,000.00.

At each of the five sites, Morcoal removed coal from the site creating vast open pits and then abandoned the mines, removing all mining and earthmoving equipment. Morcoal reclaimed none of the sites. At one site, two pits were left open, exposing highwalls thirty feet high and, according to the testimony of a mine inspector for the DER, attracted children who swim in the accumulated pool of acid drainage. At another site, Morcoal left behind an open pit, which

[ 74 Pa. Commw. Page 111]

    is subject to landslides, erosion, and untreated discharges of acid mine drainage. At still another site, Morcoal's subcontractor, upon discovering that the coal did not meet its buyer's requirements, abandoned the site with no erosion controls or revegetation, causing silting of a nearby stream. On a site called Special Project 506 where Morcoal was to reclaim a previously-mined area within six months of permit issuance, Morcoal not only failed to reclaim the site, but abandoned it after removing coal and destroying land previously suitable for cultivation.

On July 23, 1979, the DER filed a complaint against Morcoal in this Court pursuant to The Clean Streams Law and the Mining Act. On October 10, 1979 this Court issued an injunction against Morcoal requiring it to pump, collect and treat acid mine drainage on the site covered by one of the permits.

Notice of the bond forfeitures was sent to Morcoal on or about November 19, 1979. Morcoal failed to correct violations cited by DER mine inspectors or to complete reclamation work in the bonded areas. Despite the forfeiture action taken by the DER and the denial by the DER of Morcoal's 1979 license application, which was never appealed, Morcoal applied for a 1980 surface mining operator's license which the DER of course denied. As noted, the EHB upheld DER's action and this appeal followed. At oral argument in this Court, Morcoal conceded that the matter of the denial of its application for the 1980 license was moot.

The appellant states six principal questions for our consideration:

I Whether the bonds at issue are indemnity bonds or penal bonds;

II Whether the DER action comported with due process;

[ 74 Pa. Commw. Page 112]

III Whether the bonds for one of the sites should have been forfeited when Morcoal had entered into a private contract with another company, ...

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