La. Admin. Code tit. 43 § XV-4303

Current through Register Vol. 50, No. 9, September 20, 2024

Section XV-4303 - Terms and Conditions of the Bond

A. The performance bond shall be in an amount determined by the office as provided in §4101

B. The performance bond shall be payable to the office.

C. The performance bond shall be conditioned upon faithful performance of all of the requirements of the Act, these regulations and the conditions of the permit, and shall cover the entire permit area or an identified increment of land within the permit area upon which the operator will initiate and conduct surface coal mining and reclamation operations during the initial term of the permit.

D. The duration of the bond shall be for the time period provided in §4105

E. Surety bonds shall be subject to the following conditions.

1. The office shall not accept the bond of a surety company unless the bond shall not be cancellable by the surety at any time for any reason including, but not limited to, nonpayment of premium or bankruptcy of the permittee during the period of liability. Surety bond coverage for permitted lands not disturbed may be cancelled with the consent of the office; provided, the surety gives at least 60 days notice to both the permittee and the office of the intent to cancel prior to cancellation. Such notice shall be by certified mail and shall not be effective until received by both the permittee and office. Cancellation shall not be effective for lands subject to bond coverage which are disturbed after receipt of notice, but prior to approval by the office. The office may approve such cancellation only if a replacement bond is filed by the permittee prior to the cancellation date, or the permit is amended so that the surface coal mining operations approved under the permit are reduced to the degree necessary to cover all the costs attributable to the completion of reclamation operations on the reduced permit area in accordance with Chapter 41 and the remaining performance bond liability.

2. The office shall not accept surety bonds in excess of 10 percent of the surety company's capital surplus account as shown on the balance sheet certified by a certified public accountant, unless otherwise provided by law.

3. The office shall not accept surety bonds from a surety company for any person, on all permits held by that person, in excess of three times the company's maximum single obligation as provided by state law, or, in the absence of state law, as provided in §4303. E 2

4. The office may provide in the bond that the amount shall be confessed to judgment upon forfeiture.

5. The bond shall provide that the surety and the permittee shall be liable jointly, severally and in solido.

6. The bond shall provide that:

a. the surety will give prompt notice to the permittee and the office of any notice received or action filed alleging the insolvency or bankruptcy of the surety, or alleging any violations of regulatory requirements which could result in suspension or revocation of the surety's license to do business;

b. in the event the surety becomes unable to fulfill its obligations under the bond for any reason, notice shall be given immediately to the permittee and the office;

c. upon the incapacity of a bank or surety company by reason of bankruptcy, insolvency, or suspension or revocation of a charter or license, the permittee shall be deemed to be without bond coverage and shall promptly notify the office. The office, upon notification received through the procedures of §4303. E.6.a or from the permittee, shall, in writing, notify the operator who is without bond coverage and specify a reasonable period, not to exceed 90 days, to replace bond coverage. If an adequate bond is not posted by the end of the period allowed, the operator shall cease coal extraction and shall comply with the provisions of §5429 and shall immediately begin to conduct reclamation operations in accordance with the reclamation plan. Mining operations shall not resume until the office has determined that an acceptable bond has been posted.

F. Collateral bonds, except for letters of credit, shall be subject to the following conditions.

1. The office shall obtain possession of and keep in custody all collateral deposited by the applicant, until authorized for release or replacement as provided in this Subpart.

2. The office shall value collateral at their current market value, not face value.

3. The office shall require that all collateral bonds comply with the provisions of §105Collateral Bond.

4. The office shall require that certificates of deposit be assigned to the office, in writing, and upon the books of the bank issuing such certificates.

5. The office shall not accept an individual certificate for a denomination in excess of $40,000, or maximum insurable amount as determined by FDIC and FSLIC.

6. The office shall require the banks issuing these certificates to waive all rights of set off or liens which it has or might have against those certificates.

7. The office shall only accept automatically renewable certificates of deposit.

8. The office shall require the applicant to deposit a sufficient amount of certificates of deposit to assure that the office will be able to liquidate those certificates prior to maturity, upon forfeiture, for the amount of the bond required by this Subpart.

9. The estimated bond value of all collateral posted as assurance under this Section shall be subject to a margin which is the ratio of bond value to market value, as determined by the office. The margin shall reflect legal and liquidation fees, as well as value depreciation, marketability and fluctuations which might affect the net cash available to the office to complete reclamation.

10. The bond value of collateral may be evaluated at any time, but it shall be evaluated as part of permit renewal and, if necessary, the performance bond amount increased or decreased. In no case shall the bond value of collateral exceed the market value.

11. Persons with an interest in collateral posted as a bond, and who desire notification of actions pursuant to the bond, shall request the notification in writing to the office at the time collateral is offered.

G. Letters of credit shall be subject to the following conditions.

1. The letter may only be issued by a bank organized or authorized to do business in the United States.

2. Letters of credit shall be irrevocable during their term. A letter of credit used as security in areas requiring continuous bond coverage shall be forfeited and shall be collected by the office if not replaced by other suitable bond or letter of credit at least 30 days before its expiration date.

3. The letter must be payable only to the office in part or in full upon demand and receipt from the office of a notice of forfeiture issued in accordance with Chapter 47.

4. The office shall not accept a letter of credit in excess of 10 percent of the bank's capital surplus account as shown on a balance sheet certified by a certified public accountant.

5. The office shall not accept letters of credit from a bank for any person, on all permits held by that person, in excess of three times the company's maximum single obligation as provided by state law or, in the absence of state law, as provided in §4303. E 2

6. The office may provide in the indemnity agreement that the amount shall be confessed to judgment upon forfeiture.

7. The bond shall provide that:

a. the bank will give prompt notice to the permittee and the office of any notice received or action filed alleging the insolvency or bankruptcy of the bank, or alleging any violations of regulatory requirements which could result in suspension or revocation of the bank's charter or license to do business;

b. in the event the bank becomes unable to fulfill its obligations under the letter of credit for any reason, notice shall be given immediately to the permittee and the office;

c. upon the incapacity of a bank or surety company by reason of bankruptcy, insolvency, or suspension or revocation of a charter or license, the permittee shall be deemed to be without bond coverage and shall promptly notify the office. The office, upon notification received through the procedures of §4303. G.7.a or from the permittee, shall, in writing, notify the operator who is without bond coverage and specify a reasonable period, not to exceed 90 days, to replace bond coverage. If an adequate bond is not posted by the end of the period allowed, the operator shall cease coal extraction and shall comply with the provisions of §5429 and shall immediately begin to conduct reclamation operations in accordance with the reclamation plan. Mining operations shall not resume until the office has determined that an acceptable bond has been posted.

8. Persons with an interest in the letter of credit, and who desire notification of actions pursuant to the letter, shall request the notification in writing to the office at the time the letter is offered.

La. Admin. Code tit. 43, § XV-4303

Promulgated by the Department of Natural Resources, Office of Conservation, LR 5:395 (December 1979), amended LR 6:177 (May 1980), LR 14:441 (July 1988), LR 20:447 (April 1994).

AUTHORITY NOTE: Promulgated in accordance with R.S. 30:901-932.