45.1-241 - Performance bonds.
§ 45.1-241. Performance bonds.
A. After a coal surface mining permit application has been approved, butbefore such permit is issued, the applicant shall file with the Director on aform prescribed and furnished by the Director, a bond for performance payableto the Commonwealth and conditioned upon faithful performance of all therequirements of this chapter and the permit. The bond shall cover that areaof land within the permit area upon which the operator will initiate andconduct surface coal mining and reclamation operations within the initialterm of the permit. As succeeding increments of coal surface mining andreclamation operations are initiated and conducted within the permit area,the permittee shall file with the Director an additional bond or bonds tocover such increments in accordance with this section. The amount of the bondrequired for each bonded area shall depend upon the reclamation requirementsof the approved permit, shall reflect the probable difficulty of reclamationgiving consideration to such factors as topography, geology of the site,hydrology, and revegetation potential, and shall be determined by theDirector. The amount of the bond shall be sufficient to assure the completionof the reclamation plan if the work has to be performed by the Director inthe event of forfeiture, but in no case shall the bond for the entire areaunder one permit be less than $10,000.
B. Liability under the bond shall be for the duration of the coal surfacemining and reclamation operation and for a period coincident with theoperator's responsibility for revegetation as required under regulationspromulgated pursuant to § 45.1-242. The bond shall be executed by theoperator and a corporate surety licensed to do business in the Commonwealth,except that the operator may elect to deposit cash, negotiable bonds of theUnited States Government or of the Commonwealth, or negotiable certificatesof deposit of any bank organized for transacting business in the UnitedStates. The cash deposit or market value of such securities shall be equal toor greater than the amount of the bond required for the bonded area.
C. The Director may accept the bond of the applicant itself without separatesurety when the applicant demonstrates to the satisfaction of the Director,pursuant to regulations, the existence of a suitable agent to receive serviceof process and a history of financial solvency and continuous operationsufficient for authorization to self-insure or bond such amount. The Directormay also accept a letter of credit on certain designated funds issued by afinancial institution authorized to do business in the United States. Theletters of credit shall be irrevocable, unconditional, shall be payable tothe Department upon demand, and shall afford to the Department protectionequivalent to a corporate surety's bond. The issuer of the letter of creditshall give prompt notice to the permittee and the Department of any noticereceived or action filed alleging the insolvency or bankruptcy of the issuer,or alleging any violations of regulatory requirements which could result insuspension or revocation of the issuer's charter or license to do business.In the event the issuer becomes unable to fulfill its obligations under theletter of credit for any reason, the issuer shall immediately notify thepermittee and the Department. Upon the incapacity of an issuer by a reason ofbankruptcy, insolvency or suspension or revocation of its charter or license,the permittee shall be deemed to be without proper performance bond coverageand shall promptly notify the Department, and the Department shall then issuea notice to the permittee specifying a reasonable period, which shall notexceed ninety days, to replace bond coverage. If an adequate bond is notposted by the end of the period allowed, the permittee shall cease coalextraction and coal processing operations and shall immediately begin toconduct reclamation operations in accordance with the reclamation plan. Coalextraction and coal processing operations shall not resume until theDepartment has determined that an acceptable bond has been posted. If anacceptable bond has not been posted by the end of the period allowed, theDepartment may suspend the permit until acceptable bond is posted. The letterof credit shall be provided on the form and format established by theDirector. Nothing herein shall relieve the permittee of responsibility underthe permit or the issuer of liability on the letter of credit. The Directoris further authorized to develop and promulgate an alternative system thatwill achieve the objectives and purposes of the bonding program establishedunder this section.
D. Cash or securities so deposited shall be deposited upon the same terms asthe terms upon which surety bonds may be deposited. Such securities shall besecurity for the repayment of such negotiable certificate of deposit.
E. The amount of the bond or deposit required and the terms of eachacceptance of the applicant's bond shall be adjusted by the Director fromtime to time as affected land acreages are increased or decreased or wherethe cost of future reclamation changes.
(1979, c. 290; 1984, c. 590; 1997, c. 285; 1998, c. 692.)