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Sand Dune Mining Permits and Bonds

Forms

General Information

Sand dune mining is regulated by Part 637, Sand Dune Mining, of the Natural Resources and Environmental Protection Act , 1994 PA 451, as amended (NREPA).  Other state statutes may also apply to mining activity including Part 91, Soil Erosion and Sedimentation Control of the NREPA, as well as several others depending on the location of the operation, type of mining, and other conditions.

A Sand Dune Mining Permit issued EGLE's, Oil, Gas, and Minerals (OGMD) is required in order to conduct sand mining in Designated Sand Dune Areas of the state located within 2 miles of the Great Lakes shorelines.  It is the policy of the EGLE that all permit applications shall receive a thorough and timely review, including opportunity for public input and comment.

Sand mining permit application requirements are described in Part 637 of the NREPA.  In addition to obtaining a copy of the regulations, it is essential that applicants contact the OGMD directly to determine details of the application requirements.  Often, the assistance of environmental consulting firms is utilized by permit applicants. 

When the application is received by the OGMD, the processing procedure varies somewhat depending on the nature and scope of the individual project.  The OGMD conducts a preliminary review to determine completeness and accuracy of the application when it is received.   If incomplete or otherwise deficient, the application may be returned for revision.  Based on the characteristics and scope of the project, the application may be sent to other state government agencies for review and comment.

A Public Informational Meeting may be held early in the permit review process at a location near the proposed site, particularly if it is a major or controversial project.  This will provide the opportunity for the applicant to explain the project to the public.  Public input at this stage of the process will be a part of the evaluation process, and may result in modifications of the application.

After agency review is complete, the OGMD staff submits their recommendation to the Division Director to either issue or deny the application.  Prior to issuance of the permit, a public notice of the intent to issue is made in the EGLE electronic calendar, and possibly in one or more local newspapers.  If the OGMD considers it necessary, and/or if requested by the public, a Public Hearing may be held before final approval of the permit application to receive comment from the public.  The permit application may be further modified depending on the result of the public hearing.

If and when the Sand Dune Mining permit is signed, conformance bonding according to the requirements described in the Part 637 statute, must be obtained before mining begins.  Permits are issued for a maximum period of 5 years, and can be renewed.

The sand dune mining regulations were enacted in 1976, 33 mining permit applications have been received and processed by the EGLE.  At the present time, 12 sites have an active mining permit in effect.

Bonds needed for a sand dune mining permit. 

Financial assurance requirements under Part 637, Sand Dune Mining, of the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended (NREPA); MCL 324.63701 to 324.63714 may be satisfied through any of the following instruments.  Bond amounts will vary depending on the number or size of the mining cell units to be covered.

1.    Cash Bond - This must be a certified check or money order in the appropriate amount made payable to "State of Michigan."

2.    Certificate of Deposit (CD) - made out in the sole name of "State of Michigan, Director, Department of Environment, Great Lakes, and Energy" in the appropriate amount.  A Certificate of Deposit shall have a maturity of not less than 1 year, must be non-negotiable and pay interest on maturity only (i.e. no more than one interest check per year).  The Certificate of Deposit must be automatically renewable.  The State's Federal ID Number (38-6000134) must be used on all certificates.  In order to comply with the USA Patriot Act, authorized delegates of the Supervisor of Wells can sign and return signature cards if delivered to them. However, Department employees cannot furnish their Social Security number.

The permittee retains the right to all interest accruing to the CD.  In order to receive interest payments, the permittee must complete and return an IRS W-9 form to:  Department of Management and Budget, Office of Financial Management, PO Box 30026, Lansing MI  48909.  Fax number: 517-373-6458.

Also required with a CD bond is a signed "Acceptance of Certificate of Deposit as Conformance Bond."  Please include the permitee's Federal Taxpayer Identification Number and the mailing address of the issuing bank on the Acceptance form.

3.    Letter of Credit - A letter of credit can be obtained from a local bank.  Please do not alter the language of these letters in any way.  Released letters of credit are returned to the issuing bank. 

4.    Surety Bond - The agent's power of attorney must be attached.  Only original surety bonds are acceptable.

Please submit bonds to:

Michigan Department of Environment, Great Lakes, and Energy
Oil, Gas, and Minerals Division
P.O. Box 30256
Lansing MI 48909-7756

Excerpts of the rules pertaining to sand mining bonds can be found below.  For further information regarding levels of bonding, or questions relating to the release of a bond, contact Mr. Mark Snow, Manager, Permitting and Technical Services Section, at 517-230-8233.  Questions regarding any of the above conformance bond alternatives should be directed to Ms. Jennifer Ferrigan, Bond Specialist, at 517-290-6982.

Excerpts from General Rules governing sand dune mining operations:

324.63701 Definitions.

Sec. 63701. As used in this part:

(f) "Conformance bond" means a surety bond that is executed by a surety company authorized to do business in this state, cash, certificates of deposit, letters of credit, or other securities that are filed by an operator to ensure compliance with this part, rules promulgated under this part, or conditions of a sand dune mining permit.

(i) "Interim cell-unit status" means a cell-unit as set forth in an approved progressive cell-unit mining and reclamation plan provided for in section 63706(1), in which all sand dune mining and reclamation within the cell-unit has been completed, but the vegetation has not sustained itself through 1 full growing season. A cell-unit placed in interim cell-unit status is required to retain the conformance bond provided in section 63712 until reclassification by the department as provided in section 63712(5). Each sand dune mining activity shall be limited to no more than 3 cell-units in interim cell-unit status at any 1 time.

324.63712 Conformance bond; reclassification of active cell-unit to interim cell-unit; notice of completion or acceptance of reclamation activity; compliance or approval required for mining or extraction; violation as ground for revocation of permit.

Sec. 63712.

(1) Prior to the initiation of a disturbance of land, the holder of a sand dune mining permit shall file with the department a conformance bond in favor of the state.

(2) The conformance bonds shall be filed for a maximum of 3 active cell-units and 3 cell-units in interim cell-unit status within the sand dune mining permit and shall be for an amount equal to $10,000.00 per cell-unit or $1,000.00 per each acre in the cell-units, whichever is greater, for cell-units bonded prior to June 23, 1994. For all cell-units that are bonded after June 23, 1994, the conformance bond shall be for an amount equal to $20,000.00 per cell-unit or $2,000.00 per each acre in the cell-units, whichever is greater. The bond for a cell-unit bonded prior to June 23, 1994 shall remain in effect until the cell-unit is released from the requirements of the conformance bond as provided in subsection (4) or the cell-unit boundary is revised as approved by the department. If an existing cell-unit boundary is revised, the conformance bond for the cell-unit shall be increased to the amounts provided for cell-units bonded after June 23, 1994.

(3) The conformance bonds shall be transferable to other cell-units contained within the sand dune mining permit upon faithful conformance with the approved reclamation plan as provided in section 63706.

(4) The conformance bond shall be conditioned upon the faithful performance of the requirements set forth in the approved reclamation plan as provided in section 63706. Liability under the conformance bond shall be maintained as long as the reclamation is not completed in compliance with the approved plan. The conformance bond shall remain in full force until the release of the cell-unit from the conformance bond requirements, including the period of time the cell-unit may have been placed in interim cell-unit status

(5) The department shall not reclassify a cell-unit from active to interim cell-unit status until the following minimum conditions or requirements have been met:

(a) All permitted sand dune mining activities within the cell-unit have been completed.

(b) All extraction or processing equipment has been removed from the cell-unit, except that a roadway, conveyor, or slurry pipeline corridor may be maintained through a cell-unit and the cell-unit still may be reclassified to interim cell-unit status. This roadway, conveyor, or slurry pipeline corridor shall be considered part of the plant site and shall be removed and revegetated as provided by section 63706(1)(e).

(c) All upland areas within the cell-unit that were disturbed by sand dune mining have been regraded as provided in section 63706(3)(a).

(d) All submerged grades within the cell-unit established by sand dune mining have been regraded as provided in section 63706(3)(b).

(e) All upland areas within the cell-unit that were disturbed by sand dune mining have been revegetated utilizing native or indigenous species or other plant material pursuant to the approved progressive cell-unit mining and reclamation plan as provided in section 63706(1). The vegetation that has been planted shall have germinated or taken root and cover a minimum of 80% of the upland areas disturbed by sand dune mining, and no single area exposed to the elements shall be greater than 25 square feet.

(f) The operator shall provide proper measures to aid in the establishment of growth of the planted vegetation until adequate root systems have developed to provide sustained growth.

(6) The department may reclassify an active cell-unit to interim cell-unit status upon receipt of a written request by the operator. The department shall conduct an on-site inspection of the reclamation activities that have been completed and determine if the completed reclamation activities are adequate to reclassify the active cell-unit to interim cell-unit status. The department shall schedule the on-site inspection within 45 days of the written request. The department shall notify the operator within 30 days following the date of the inspection of the department's decision to grant or deny the request for interim cell-unit status. If the department determines the reclamation activities conducted within the cell-unit do not meet the conditions and requirements for interim cell-unit status, the notification shall include information detailing the reasons for denial.

(7) If the department determines the status of an active cell-unit does not meet the conditions or requirements for reclassification to interim cell-unit status, the operator may not reapply for reclassification of the same active cell-unit until 1 year from the previous request.

(8) Notification shall be given to the operator upon completion or acceptance by the department of the reclamation activity. The notification constitutes the release of the cell-unit from the conformance bond requirements if:

(a) All permitted sand dune mining activities within the cell-unit have been completed.

(b) All extraction or processing equipment has been removed from the cell-unit, except a roadway, conveyor, or slurry pipeline corridor may be maintained through a cell-unit and the cell-unit still released from bond. This roadway, conveyor, or slurry pipeline corridor shall be considered part of the plant site and shall be removed and revegetated as provided by section 63706(1)(e).

(c) All upland areas within the cell-unit that were disturbed by sand dune mining have been regraded as provided in section 63706(3)(a).

(d) All submerged grades within the cell-unit established by sand dune mining have been regraded as provided in section 63706(3)(b).

(e) All upland areas within the cell-unit that were disturbed by sand dune mining have been revegetated utilizing native or indigenous species or other plant material pursuant to the approved reclamation plan as provided in section 63706(1).

(f) There are no areas within the revegetated portions of the cell-unit where a 10-foot by 10-foot test plot can be measured with less than 80% survival of the planted vegetation.

(g) The plant material shall be required to sustain itself through 1 full growing season.

(h) There are no areas within the revegetated portion of the cell-unit with ongoing erosion, except some wind erosion shall be allowed if the wind erosion that is occurring does not threaten the stability of the regraded slopes or the ability of the plant material to accommodate the accretion of sand.

(9) Mining or extraction of sand dune minerals from any other cell-unit contained within the sand dune mining permit is prohibited until compliance or approval is attained from the department.

(10) A violation of this section constitutes grounds for revocation of the sand dune mining permit.