65 Pa. Commw. 223 | Pa. Commw. Ct. | 1982
Opinion by
American Casualty Company of Reading, Pennsylvania (Petitioner) appeals from an adjudication of the Environmental Hearing Board (EHB) which held that the Department of Environmental Resources (DER) properly forfeited five bonds issued by Petitioner as surety to the Commonwealth of Pennsylvania to guarantee compliance by Blue Coal Corporation (Blue Coal) with the requirements of the Anthracite Strip Mining and Conservation Act (Anthracite Act).
The complex facts in this case are, for the most part, undisputed. In 1966
Mining under each of the four permits was performed by Blue Coal, which frequently contracted with other companies for labor and equipment. It is undisputed that all of the areas covered by the bonds here at issue were affected by the mining activities. The record also establishes that over a period of time each of the permits was amended to increase the acreage to be mined, which in turn required some additional bonding. Pursuant to Section 11 of the Anthracite Act, 52 P.S. §681.11, the permits required backfilling of the permitted areas which was to be accomplished within six months after the operation was completed or abandoned. ■
Notice of the forfeitures here at issue was sent to Petitioner on or about November 21, 1978. The forfeiture action was taken due to the failure of Blue Coal to complete reclamation work in the bonded areas. Prior to the actual forfeitures, DER had taken
Four issues have been raised for our consideration:
1) whether DER’s forfeiture action was timely; 2) whether Petitioner’s obligation has been discharged by reason of DER’s alleged negligence in the enforcement of the provisions of the Act; 3) whether Blue Coal’s use of contract miners has discharged Petitioner’s obligation as surety on the bonds and 4) whether the bonds at issue are indemnity bonds or penal bonds. Each of these issues was raised before the EHB and in each instance, rulings favorable to DER were entered.
We also note that both the Anthracite Act and SMCRA require that the bonds be executed on forms prescribed and furnished by the department.
I. Timeliness of Forfeitures
The bonds in this case were executed on forms furnished by DMMI. The forms provided that liability on the bonds would continue “for the duration of [strip] mining at the operation registered hereunder” and for five years thereafter, unless earlier released. The parties have stipulated that: with regard to permit 30-6 the extraction of coal ceased in the area covered by Petitioner’s bond at the end of 1971; with regard to permits 30-21 and 30-88, no coal was extracted from the areas covered by Petitioner’s bonds after January, 1971; and there was no coal extracted from permit area 30-48 after January, 1970. The record also establishes, however, that with the exception of permit area 30-48 coal extraction was performed within the permitted areas, although not on the portions bonded by Petitioner, at least until the beginning of 1974.
Petitioner argues that since no coal was extracted after 1971 from the actual acreage that its bonds covered, the forfeitures which occurred in 1978, more than five years later, were untimely. DER argues that the term “strip mining” should be construed broadly to include reclamation thus rendering the forfeitures timely; the EHB agreed and adopted an interpretation that the five-year period “would seem to run at the earliest from the operator’s filing of a completion report” after reclamation as required by Section 15 of the Anthracite Act, 52 P.S. §681.15. Since the only completion report filed in this matter was one filed in 1975,
An examination of the language in the bonds at issue here reveals that they are what the law regards as statutory bonds. Thus, the instant bonds recite that
NOW THE CONDITION OF THIS OBLIGATION IS SUCH THAT IF THE ABOVE bound operator or principal shall faithfully perform all of the requirements of the Act of Assembly, approved June 27, 1947, P.L. 1095, as amended, known as the ‘Anthracite Strip Mining and Conservation Act,’ then this obligation shall be null and void, otherwise to be and remain in full force and effect in accordance with the provisions of said Act of Assembly and Amendments thereto.
Principles of law applicable to statutory bonds are set forth in 12 Am. Jur. 2d Bonds §26 (1964) as follows:
While a bond is none the less a contract because it is required by statute, statutory bonds are construed in the light of the statute creating the obligation secured and the purposes for which the bond is required, as expressed in the statute. It is a generally accepted principle that the statute which provides for the giving of a bond becomes a part of the bond and imports into the bond any conditions prescribed by the statute but not in fact included in the bond as written. If the statute prescribes the conditions of the bond, they will be read into the bond to determine liability thereunder although the bond does not include all of them. It is presumed that the intention of*231 the parties was to execute such a bond as the law required. This rule is frequently applied in cases where the principal on the bond applies for and receives the contract, privilege, or benefit authorized by the statute on the condition expressed in the statute that the principal execute a bond in the terms provided by the statute. (Footnotes omitted.)
Reclamation is required under Sections 5, 11 and 14 of the Act, 52 P.S. §§681.5, 681.11 and 681.14. Petitioner contends, nevertheless, that its liability is limited by other language in the bond which reads as follows:
Liability upon this bond shall accrue in proportion to the area of land affected by open pit mining at the rate .of five hundred ($500.00) dollars per acre but in no case shall such liability be for an amount less than five thousand ($5,000.00) dollars, as provided in said Act of Assembly as amended, and shall continue thereon for the duration of open pit mining at the operation registered hereunder [sic] for a period of five (5) years thereafter, unless the area of land affected for which liability has been charged against the bond has been backfilled and leveled and reports filed by the inspector certifying that it has been done in the manner prescribed by law....
Petitioner argues that the plain meaning of that language is that once open pit mining has ceased within the acreage specified in the bond, the clock begins to run and five years thereafter the bond obligation becomes unenforceable. Such a construction would mean, of course, that Petitioner’s guarantee of compliance by Blue Coal with the Act’s requirements regarding reclamation would only remain in effect for five years after the actual extraction of coal ceased in
While we must admit that Petitioner’s position is not without merit, we, nevertheless, hold that unless and until the bonded area is reclaimed and a certificate filed in accordance with the provisions of the Act, the condition of the bond has not been fulfilled. We hold, accordingly, that EHB did not err when it ruled that the forfeiture proceedings were timely.
II. Discharge through DER negligence
Petitioner’s next argument is that DER should be precluded from collecting on the bonds because of its negligence in failing to enforce the backfilling requirements of the Anthracite Act to the prejudice of Petitioner. EHB held that Petitioner has failed to establish DER’s negligence. After a review of the record, we agree. While the enforcement actions taken by DER in the instant case were not entirely successful, we can find no reason to disturb the EHB’s conclusion that “DER energetically enforced the Anthracite Act.” The actions taken by DER, outlined infra, clearly undercut any merit to Petitioner’s argument. Furthermore, DER owed Petitioner no duty of active diligence in proceeding against Blue Coal
III. Use of Contract Mining Companies
The third issue before us relates solely to permit areas 30-6 and 30-21. Petitioner contends that Blue Coal had nearly completed reclamation work on those areas covered by Petitioner’s bonds when Blue Coal entered into a contract with another mining corporation, Lucky Strike Coal Company, Inc., which corporation redisturbed the bonded areas without Petitioner’s knowledge or consent. Petitioner argues that DER dealt with Lucky Strike as a separate operator and that Petitioner’s obligations were significantly altered by the involvement of Lucky Strike in the areas covered by the subject bonds. Petitioner contends that it must, therefore, be discharged from its obligation on the three bonds on areas 30-6 and 30-21. We cannot agree.
A careful reading of the stipulations made by counsel for Petitioner and DER at the hearings before the EHB reveal that rough grading had been completed ,6n. areas 30-6 and 30-21
IV. Nature of the bonds
The final issue presented requires a determination of whether the subject bonds are penal or indemnity bonds. The import of the distinction is that if the bonds are penal in nature, damages need not be established in order to recover the full amount of the bond. If the bonds instead are indemnity bonds then DER whould have to prove actual damages sustained in order to collect on the bonds. The nature of the bonds must be determined from the language of the bond as well as the Anthracite Act. See Commonwealth v. Eclipse Literary and Social Club, 117 Pa. Superior Ct. 339, 178 A. 341 (1935).
As a general rule, and in the absence of provisions to the contrary, where a bond is given to a public body and is conditioned on compliance with a specific statute, the full penalty of the bond may be recovered in the event of a breach. Fresh Grown Preserves Corp. v. United States, 144 F.2d 136 (4th Cir. 1944) and 12 Am. Jur. 2d Bonds §44 (1964). The reason for this construction was set forth in Commonwealth v. J. & A. Moeschlin, Inc., 314 Pa. 34, 44, 170 A. 119, 123 (1934) as follows: “[Djamages to the obligee would in such circumstances be difficult or impossible of ascertainment and proof, and hence in such cases it is said
The Anthracite Act requires the filing of bonds conditioned on the faithful performance of all of the Act’s requirements. Section 17 of the Act, 52 P.S. §681.17 provides that:
If the operator fails or refuses to comply with the requirements of the act as to any area for which liability has been provided in the bond, the Secretary of [DER] shall declare such portion of the bond forfeited.... Such moneys or securities so forfeited and collected shall be used ... to pay the cost of backfilling and other acts required by this act, and the cost of planting as required by ... this act.
As we have noted, supra, the obligation set forth in the bond is compliance with all of the requirements of the Act.
There is no dispute that all of the lands covered by the bonds here are in need of further reclamation. We conclude both from the language of the Act and the bonds that the bonds are penal in nature and that DER need not prove damages in order to collect on the bonds. Neither the bonds nor the Act require proof of actual damages sustained prior to collection. Although there can be little doubt that the actual cost of backfilling and planting could be proved in this case, we think the intent of the Anthracite Act is to allow the forfeiture and collection of bonds for the failure to comply with all of the requirements of the Act, which are not limited to backfilling and planting. It is our opinion that the bonds are intended to be
We, accordingly, affirm the EHB.
Order
And Now, this 10th day of March, 1982, the order of the Environmental Hearing Board, dated January 16, 1981, is hereby affirmed.
The Act of June 27, 1947, P.L. 1095, as amended, 52 P.S. §§681.1-681.22. The Anthracite Act has been repealed insofar as it is inconsistent with the Surface Mining Conservation and Reclamation Act (SMCRA), Act of May 31, 1945, P.L. 1198, as amended, 52 P.S. §§1396.1-1396.25. The partial repeal took effect January 1, 1972, the effective date of the Act of November 30, 1971, P.L. 554 which substantially amended the SMCRA to make it applicable to anthracite as well as bituminous coal surface mining.
Two of these permits were originally issued to Glen Alden Corporation in 1963-64. Rlue Coal acquired Glen A1 den’s assets in 1966 and took over responsibility for the two permits.
DMMI administered the Anthracite Act until the powers and duties of DMMI were transferred to DER by Section 1901-A of The Administrative Code of 1929, Act of April 9, 1929, P.L. 177, as amended, added by Section 20 of the Act of December 3, 1970, P.L. 834, 71 P.S. §510-1.
When Blue Coal acquired the assets of Glen Alden Corporation in 1966 the relevant bonds were amended and Blue Coal was added as a principal thereto. Petitioner issued one bond on permit 30-6 with a face value of $5000, two bonds on permit 30-21 with face values of $5000 and $9500, one bond for $5000 on permit 30-48 and one bond for $6000 on permit 30-88.
See note 1, supra.
Under the Act, the “department” was DMMI; under SMCRA, it is DER.
A completion report was, in fact, filed for permit area 30-21 on July 28, 1975. That report was later approved by DER as to
With respect to Petitioner’s contention that such an interpretation may extend their liability indefinitely, we note that Petitioner’s remedy would be to institute appropriate proceedings to terminate their liability when they would be of the opinion that such liability should be terminated.
This initial grading, interestingly, was also accomplished by a corporation under contract with Blue Coal.
We believe that the case of Pennsylvania Turnpike Commission v. United States Fidelity and Guaranty Co., 412 Pa. 222, 194 A. 2d 423 (1963) relied upon by Petitioner is inapposite since that case involved the interpretation of an official bond. Liability on an official bond is generally limited to actual damages sustained.