2 Colo. Code Regs. § 407-2-3
Current through Register Vol. 47, No. 16, August 25, 2024
Rule 2 CCR 407-2-3 - PERFORMANCE BOND REQUIREMENTS3.01INTRODUCTIONThis Rule sets forth minimum requirements and responsibilities for filing and maintaining performance bonds for surface coal mining and reclamation operations, and coal exploration, in accordance with the Act. The Rule includes minimum requirements for determining the amounts and periods of liability for performance bonds; it establishes minimum standards for the form, conditions and terms of performance bonds; it sets forth minimum provisions for criteria, schedule and procedures for release of performance bonds; it establishes provisions to be applicable whenever a proceeding for the forfeiture of all or any part of a performance bond, as a result of a failure to meet the conditions upon the bond, is initiated; and it sets forth special requirements for construction of certain mine drainage control facilities.
3.02PERFORMANCE BOND REQUIREMENTS FOR SURFACE COAL MINING AND RECLAMATION OPERATIONS3.02.1General Requirements.(1) After an application for a permit, or for a revised permit, has been approved by the Division or the Board under Rule 2, but before such permit is issued, the applicant shall file with the Division, on a form prescribed and furnished by the Board, a performance bond payable to the State of Colorado. 113(1) The performance bond will be conditioned upon the faithful performance of all the requirements of the Act, these Rules, the reclamation plan and the permit. The amount, duration, form, conditions, and terms of the performance bond shall conform to 3.02. 113(1),(2),(3)
(2) An operator shall not disturb surface acreage or extend any underground shafts, tunnels or operations prior to approval of the permit and receipt of approval from the Division of a performance bond covering the surface acreage to be affected.(3) The performance bond shall cover the area of land within the permit area upon which surface coal mining and reclamation operations are to be initiated and conducted. 113(1)(4) Liability on the performance bond shall continue until the entire reclamation plan required under the Act, these Rules, and the provisions of the permit have been completed, and until the permittee is released from any further liability pursuant to 3.03. In any case, liability on a performance bond covering a permit area shall continue for a period not less than that specified in 3.02.3. 113(1),(2)(5) After the amount of the bond has been determined for the permit area in accordance with 3.02.2, the applicant shall file either:(a) The entire performance bond amount required during the term of the permit; or(b) A cumulative bond schedule listing the areas to be covered by bond and the sequence of anticipated release of bond liability amount through phases of reclamation, as described in (6) below, and the bond amount required for the first increment of the schedule. The amount of bond required for the first increment, and therefore, to obtain the permit, shall include the full reclamation cost of the initial area being affected, but shall apply to the entire permit area.(6) When the applicant elects to file a cumulative bond schedule, such schedule shall identify the initial and successive areas for bonding on the permit application map submitted for approval as provided in 2.05.2, and shall specify the proportion of the total bond amount, required for the entire permit area, which will be filed prior to commencing operations on each incremental area. This cumulative bond schedule must correspond to the increments of the mining schedule approved in the permit. Each scheduled incremental bond amount must be filed with the Division at least thirty (30) days prior to the commencement of surface coal mining and reclamation operations in the incremental area corresponding to that bond amount. The schedule shall be supported by a detailed estimated timetable for accomplishment of the reclamation plan, and a detailed estimate of the cost per acre of reclamation for each incremental area. Any permittee who mines an increment prior to submission and approval of bond for that increment shall be in violation of these Rules.(7) The bond liability of the permittee shall include those actions which he is obliged to take under the permit, including completion of the reclamation plan in such a manner that the land will be capable of supporting a post mining land use approved under 4.16.3. When an alternative land use of industrial or commercial, or residential is approved, the Division shall require a bond amount sufficient to insure that the land could be reclaimed to a condition capable of supporting the pre mine land use, should the alternative land use prove to be infeasible in the event of bond forfeiture. Implementation of an alternative post mining land use approved under 4.16.3, which is beyond the control of the permittee, need not be covered by the bond.3.02.2Determination of Bond Amount.(1) The amount of the bond shall be sufficient to assure the completion of the reclamation plan if the work had to be performed by the Board, through independent contractors, in the event of forfeiture. 113(1) The amount required for each bonded area shall depend upon the reclamation requirements of the approved permit and shall reflect the probable difficulty of reclamation, giving consideration to such factors as topography, geology of the site, hydrology, and revegetation potential. The amount of the performance bond shall be determined by the Division as part of the decision on permit approval as described in 2.07 and shall be subject to review by the Board as described in 2.07. 113(1), 114
(2) In order to assure sufficiency, the amount shall be based on, but not be limited to: (a) The estimated costs submitted by the applicant in accordance with 2.05.4. 113(1)(b) The additional estimated costs to the Board which may arise from applicable public contracting requirements or the need to bring personnel and equipment to the permit area after its abandonment by the permittee to complete the reclamation plan. 113(1)(c) All additional estimated costs necessary, expedient, and incident to the satisfactory completion of the requirements identified in 3.02. 113(1)(d) Such other cost information as may be required by or available to the Division. 113(1)(3) In no case shall the bond for the entire area under one permit be less than $10,000. 113(1)(4) The amount of the performance bond required shall be adjusted for good cause as affected land acreages are increased or decreased or when the cost of future reclamation changes including the cost of abating any violation for which a notice of violation has been issued. The Division shall review the amount of bond required for a permit area and the terms of acceptance of the bond at the time permit reviews are conducted under 2.08.3 or every two and one-half years, whichever is more frequent. The procedures for any adjustment shall include: 113(5)(a) Notification of the permittee of any proposed bond adjustment and provide the permittee with an opportunity for an informal conference on the adjustment;(b) Issuance of a written proposed decision by the Division to adjust the bond amount, publication of notice of the proposed decision in a newspaper of general circulation in the locality of the mining operation once a week for two weeks following issuance of the decision, and notification of the permittee, the surety and any person with a property interest in the collateral who has requested notification;(c) An opportunity for a formal hearing pursuant to Rule 2.07.4(3);(5) A permittee may request reduction of the required performance bond amount upon submission of evidence to the Division proving to the Division that the permittee's method of operation or other circumstances will reduce the maximum estimated cost to the Division to complete the reclamation responsibilities and therefore warrant a reduction of the bond amount. The request and demonstration shall be in the form of a permit revision application, or technical revision application, as appropriate. Bond adjustments which involve undisturbed land or revision of the cost estimate of reclamation are not considered bond release subject to procedures of 3.03.(6) The amount of bond, as determined under this Rule and as adjusted from time to time, is an estimate of the cost of completing the relevant reclamation plan. It does not operate to any extent as a limitation upon the obligation of the permittee to complete the reclamation plan, the cost of which may exceed or be less than the amount of bond.3.02.3 Period of Liability for Performance Bond.(1) Liability under the bond(s) applicable to a permit shall be for the duration of the surface coal mining and reclamation operations, for a period coincident with the permittee's responsibility for revegetation requirements in 4.15 and paragraph (2) below, and shall continue until release of the bond(s) in accordance with 3.03. 113(2)(2) The permittee shall assume responsibility for successful revegetation under a performance bond for a minimum period beginning after the last year of augmented seeding, fertilizing, irrigation or other work. 120(2)(t)(a) In areas where the annual average precipitation is more than twenty-six (26) inches, this minimum period of liability shall continue for five years, with the exception of (c) below.(b) In areas where annual average precipitation is twenty- six (26) inches or less, the minimum period of liability shall continue for ten years, with the exception of (c) below.(c) For lands with approved industrial or commercial, or residential post mining land use, the minimum period of liability shall continue until the permittee demonstrates that development of such land use has substantially commenced and is likely to be achieved, and until compliance with the revegetation requirement of 4.15.10(2) or alternative requirements of 4.15.10(3) is demonstrated.(d) The period of liability shall begin again whenever augmented seeding, fertilizing, irrigation or other work is required or conducted on the site prior to bond release, with the exceptions described in 4.15.7(5).(e) A portion of the bonded area requiring reinitiation of the extended liability period because of augmentation may be separated from the original area and bonded separately upon approval by the Division. Before approving such a separation, the Division shall determine the separated area:(i) Is not significant in extent in relation to the entire area under bond; and(ii) Is limited to a distinguishable contiguous portion of the bonded area.(3) If the Board approves a post mining cropland use, in accordance with 4.16.3(9), the applicable five-year or ten- year period of responsibility for revegetation shall commence at the date of initial planting for such post mining cropland use. 120(2)(t)(4) When the Board issues a written finding approving post mining cropland use under 4.16.3(9) as part of the mining and reclamation plan, the provisions of 4.15.9 shall apply, as shall the requirement for an extended period of responsibility as described in (2) and (3) above. 120(2)(t)(5) For purposes of paragraph (2) above, the annual average precipitation can be determined either:(a) By interpolation, using standard techniques, from 'Mean Annual Precipitations,' Map p. 97, The National Atlas of the United States, U.S. Department of the Interior, Geological Survey, 1970; or from 'Climatic Atlas of the United States,' U.S. Dept. of Commerce, National Oceanic and Atmospheric Administration, 1974, or from long-term precipitation averages from "Climatological Data," U.S. Department of Commerce, National Oceanic and Atmospheric Administration; or from other official records; or(b) Based on 10 years of continuous and reliable precipitation records from stations located in or adjacent to the mine plan area.3.02.4Form, Conditions, and Terms of Performance Bonds.(1) The Board shall allow for the following forms of performance bonds except that the Board may, in its discretion, allow for conditioned acceptance of performance bonds as described in 3.02.4(2)(c)(ix): 113(2),(3),(4) (a) A surety bond, in which case the bond shall be executed by the applicant and a corporate surety licensed to do business in this State pursuant to 3.02.4(2)(b); 113(2)(b) A collateral bond, in which case the applicant shall deposit cash, negotiable bonds of the United States government or any political subdivision of this State, negotiable certificates of deposit or an irrevocable letter of credit of any bank or other savings institution organized or transacting business in the United States, pursuant to 3.02.4(2)(c) and (d). 113(2)(c) A self bond, which the Division may accept without separate surety when the applicant demonstrates to the satisfaction of the Division that he/she has the financial means sufficient to self bond for reclamation pursuant to 3.02.4(2)(e). 113(3)(d) An alternative bonding system approved by the Division pursuant to 3.02.4(2)(f); and(e) Any combination of the above bond forms which shall, in the aggregate, conform to the requirements for bonding as specified in paragraph (2) below.(2) Terms and conditions of the bond. (a) Replacement of bonds. 113(2),(3) (i) The Division may allow the permittee to replace an approved performance bond with any form or forms of performance bond described in 3.02.4, if the liability which is accrued against the permittee on the permit area is transferred to such replacement bonds, and if the requirements described in this Rule are otherwise met.(ii) The Division shall not release existing performance bonds until the permittee has submitted and the Division has approved acceptable replacement performance bonds. A replacement of performance bonds pursuant to 3.02 shall not constitute a release of bond under 3.03. 113(2),(3)(b) Surety bonds shall be subject to the following conditions: 113(2) (i)(A) The Division shall not accept the bond of a surety company unless the bond shall not be cancelable by the surety company, for any disturbed lands within the permit area, at any time for any reason including, but not limited to, non-payment of premium or bankruptcy of the permittee during the period of liability. Surety bond coverage for permitted lands not disturbed may be cancelled by the surety, with prior consent of the Division, provided the surety gives at least ninety (90) days notice to both the permittee and the Division of the surety's intent to cancel prior to cancellation. Such notice shall be by certified mail and the notice shall not be effective until received by both the permittee and the Division. The Division will advise the surety company, within 30 days after receipt of the notice of intent to cancel, whether the bond may be cancelled on an undisturbed area. Such cancellation shall not be effective for any lands subject to the respective bond coverage which are disturbed prior to the effective date of the cancellation.(B) Upon the effective date of cancellation, the surety company shall not be liable for any further surface land disturbance within the area of the permit area covered by the cancelled bond. However, the surety company shall still be liable for all reclamation work on the permitted land that was required by these Rules up to the date of the cancellation. If the permittee is unable to secure a replacement bond approved by the Division as described in (C) below, prior to the effective date of cancellation of the original bond, his permit shall be suspended, revoked or amended to include only those operations for which the remaining bond liability is sufficient.(C) The Division may approve further surface disturbance in the permit area caused by the permittee, after the date of cancellation of the surety, only if a replacement bond is filed by the permittee and approved by the Division prior to the cancellation date. The permittee may elect to file a cumulative bond schedule for the replacement bond, and the form of the replacement bond shall comply with 3.02.4(1)(a)-(e).(ii) The Division shall not accept surety bonds in excess of 10 percent of the surety company's paid-up capital or guaranty fund and surplus on any one risk as set forth in 10-3-102 C.R.S.(iii) The Division 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 limit specified in (ii) above.(iv) The bond shall provide that the surety and the permittee shall be jointly and severally liable.(v) The bond shall provide that: (A) The surety will give prompt notice to the permittee and the Division of any notice received or action filed alleging the insolvency or bankruptcy of the surety or permittee, 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 Division; and(C) Upon the incapacity of a surety by reason of bankruptcy, insolvency or suspension or revocation of its license, the permittee shall be deemed to be without bond coverage in violation of 3.02.1(2). The Division shall issue a notice of violation against any permittee who is without bond coverage. The notice shall specify a reasonable period to replace bond coverage, not to exceed 90 days. During this period, the Division shall conduct additional inspections, as necessary, to ensure continuing compliance with other permit requirements. Such notice of violation, if abated within the period allowed, shall not be counted as such for purposes of determining "patterns of violations" under 5.03.3 and need not be reported as a past violation in permit applications under 2.03.5. If such a notice of violation is not abated in accordance with the schedule, a cessation order shall be issued; or the Division shall amend the relevant permit to include only those operations for which any other or remaining bond liability is sufficient.(c) Collateral bonds shall be subject to the following conditions: 113(2)(i) The Division shall obtain possession of and keep in custody all collateral deposited by the applicant, until authorized for release or replacement as provided in this Rule.(ii) The Division shall value collateral at its current market value subject to adjustment for legal and liquidation fees, as well as value depreciation, marketability, and fluctuations which might affect the net cash available to complete reclamation. The value of the collateral may be evaluated at any time, but it shall be evaluated as part of permit renewal and, if necessary, adjusted.(iii) The Division shall require that certificates of deposit be assigned to the State of Colorado in writing, and upon the books of the bank issuing such certificates.(iv) The Division shall not accept an individual certificate for a denomination in excess of $100,000, or maximum insurable amount as determined by F.D.I.C. and F.S.L.I.C.(v) The Division shall require the banks issuing these certificates to waive all rights of setoff or liens which it has or might have against those certificates.(vi) The Division shall only accept certificates of deposit which are automatically renewable.(vii) The Division shall require the applicant to deposit sufficient amounts of certificates of deposit to assure that the Division will be able to liquidate those certificates prior to maturity, upon forfeiture, for the amount of the bond required by this Rule.(viii) Cash or securities posted as bond shall be deposited by the Treasurer of the State of Colorado in separate escrow accounts, to be known as reclamation surety accounts, and interest accruing on said funds shall be paid to the permittee annually as follows: 113(4)(A) In the case of negotiable bonds and negotiable certificates of deposit, the interest rate paid on such collateral shall be that rate which accrues per the document submitted to the State.(B) In the case of cash, the State retains the right to charge a nominal and reasonable fee against said accrued interest for administrative costs.(ix) Real property posted as a collateral bond shall meet the following criteria: 113(2) (A) The applicant shall grant the State a mortgage or perfected first-lien security interest in real property located in the State.(B) The instrument creating such mortgage or security interest shall grant to the State a lien sufficient to secure the right and power in the State to foreclose upon said property pursuant to Colorado law, concurrent with the issuance of a notice of forfeiture under 3.04, to sell or otherwise dispose of the property by a public or private transaction, and to establish the State as the first and prior secured creditor with respect to such property, so as to assure the State of a preferred claim over all other creditors in case of bankruptcy. The property subject to the security interest shall not be subject to any conflicting or prior security interest. The instrument creating the interest in real property shall be recorded as authorized for fee interests. In order for the Division to evaluate the adequacy of the property offered to satisfy this requirement, the applicant shall submit a schedule of the real property which will be pledged to secure the obligations under the collateral bond agreement. The schedule shall include:
(I) A description of the property;(II) The value of the property. The property shall be valued at fair market value as determined by an appraisal conducted by appraisers appointed by the Division. The appraisal shall be expeditiously made, and a copy thereof furnished to the Division and the applicant. The reasonable expense of the appraisal shall be borne by the applicant; and(III) Proof of the applicant's possession of, and title to, the unencumbered real property within the State which is offered to secure the obligations under the bond. Such proof shall include:1. If the real property interest to be pledged arises under a Federal or State lease, a status report prepared by an attorney, satisfactory to the Division as disinterested and competent to so evaluate the asset, and an affidavit from the lessor establishing that the leasehold could be transferred to the State upon forfeiture;2. If the real property interest to be pledged is a fee estate, a current commitment for title insurance from a title insurance company licensed in this State, satisfactory to the Division, insuring title to said real property in the applicant; and3. The property may include land which is part of the permit area. Land pledged as security shall not be disturbed under a permit while it is serving as security under this section.4. Proof the person granting the security interest holds possession of, and title to, personal property within the State which is offered to secure the obligation of the applicant under the collateral bond. Evidence of such ownership shall be submitted in a form satisfactory to the Division. The personal property offered shall not include: a. Property in which a security interest is held by any person;b. Goods which the applicant sells in the ordinary course of his or her business;d. Securities which are not negotiable bonds of the U.S. Government or general revenue bonds of the State; ore. Certificates of deposit which are not federally insured or where the depository is unacceptable to the Division.(C) The bond value of any real property shall be adjusted for any legal or liquidation fees or other costs or value uncertainties that might affect the net cash available to complete the reclamation work.(x) Persons with an interest in collateral posted as bond, and who desire notification of actions pursuant to the bond, shall request the notification in writing to the Division at the time collateral is offered. However, the foregoing sentence shall not be in derogation of any such person's rights by law to notice of any such actions.(d) Irrevocable letters of credit shall be subject to the following conditions: 113(2) (i) The letter may be issued by a bank organized or authorized to do business in the U.S. and located in the state of Colorado, except that the bank need not be located in the state of Colorado if the letter of credit can be exercised at an affiliate or subsidiary located in the state of Colorado, or is confirmed by a bank located in the state of Colorado, or at the Board's discretion is determined to be an acceptable letter of credit;
(ii) The letter shall be irrevocable, except prospectively, and then only upon the anniversary date of the letter and upon the giving, to the Division and the permittee, of at least ninety days prior notice of the intention to revoke. Letters of credit which have been prospectively revoked shall be forfeited and collected by the Division if not replaced by other suitable bond at least 30 days prior to the expiration date of the letter.(iii) The letter must be payable to the State of Colorado in part or in full upon demand and receipt from the Division of a notice of forfeiture issued in accordance with 3.04.(iv) The Division 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.(v) The Division shall not accept letters of credit from a bank for any person, on all permits held by that person, in excess of 30 percent of the bank's capital surplus account as shown on a balance sheet certified by a Certified Public Accountant.(vi) The letter shall provide that: (A) The bank will give prompt notice to the permittee and the Division of any notice received or action filed alleging the insolvency or bankruptcy of the bank or permittee, 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 Division; and(C) Upon the incapacity of a bank by reason of bankruptcy, insolvency or suspension or revocation of its charter or license, the permittee shall be deemed to be without performance bond coverage in violation of 3.02.1(2). The Division shall issue a notice of violation against any permittee who is without bond coverage. The notice shall specify a reasonable period to replace bond coverage, not to exceed 90 days. During this period, the Division shall conduct additional inspections, as necessary, to ensure continuing compliance with other permit requirements. Such notice of violation, if abated within the period allowed, shall not be counted as such for purposes of determining "patterns of violations" under 5.03.3 and need not be reported as a past violation in permit applications under 2.03.5. If such a notice of violation is not abated in accordance with the schedule, a cessation order shall be issued; or the Division shall amend the relevant permit to include only those operations for which any other or remaining bond liability is sufficient.(vii) The letter shall be automatically renewable upon each anniversary date unless notice is given pursuant to Rule 3.02.4(2)(d)(ii). 113(3)(e) Self-bonds shall be subject to the following conditions:(i) The Division may accept a self-bond from an applicant for a permit if all of the following conditions are met by the applicant or its corporation guarantor: (A) The applicant designates a suitable agent to receive service of process in the State where the proposed surface coal mining operation is to be conducted.(B) The applicant has been in continuous operation as a business entity for a period of not less than 5 years. Continuous operation shall mean that business was conducted over a period of 5 years immediately preceding the time of application. (I) The Division may allow a joint venture or syndicate with less than 5 years of continuous operation to qualify under this requirement, if each member of the joint venture or syndicate has been in continuous operation for at least 5 years immediately preceding the time of application.(II) When calculating the period of continuous operation, the Division may exclude past periods of interruption to the operation of the business entity that were beyond the applicant's control and that do not affect the applicant's likelihood of remaining in business during the proposed surface coal mining and reclamation operations.(C) The applicant submits financial information in sufficient detail to show that the applicant meets one of the following criteria: (I) The applicant has a current rating for its most recent bond issuance of "A" or higher as issued by either Moody's Investor Service or Standard and Poor's Corporation;(II) The applicant has a tangible net worth of at least $10 million, a ratio of total liabilities to net worth of 2.5 times or less, and a ratio of current assets to current liabilities of 1.2 times or greater; or(III) The applicant's fixed assets in the United States total at least $20 million, and the applicant has a ratio of total liabilities to net worth of 2.5 times or less, and a ratio of current assets to current liabilities of 1.2 times or greater.(D) The applicant submits: (I) Financial statements for the most recently completed fiscal year accompanied by a report prepared by an independent certified public accountant in conformity with generally accepted accounting principles and containing the accountant's audit opinion or review opinion of the financial statements with no adverse opinion;(II) Unaudited financial statements for completed quarters in the current fiscal year; and(III) Additional unaudited information as requested by the Division.(ii) The Division may accept a written guarantee for an applicant's self-bond from a parent corporation guarantor, if the guarantor meets the conditions of paragraphs (i)(A) through (i)(D) of this section as if it were the applicant. Such a written guarantee shall be referred to as a "corporate guarantee." The terms of the corporate guarantee shall provide for the following:(A) If the applicant fails to complete the reclamation plan, the guarantor shall do so or the guarantor shall be liable under the indemnity agreement to provide funds to the Division sufficient to complete the reclamation plan, but not to exceed the bond amount.(B) The corporate guarantee shall remain in force unless the guarantor sends notice of cancellation by certified mail to the applicant and to the Division at least 90 days in advance of the cancellation date, and the Division accepts the cancellation. The cancellation may be accepted by the Division if the applicant obtains suitable replacement bond before the cancellation date or if the lands for which the self-bond, or portion thereof, was accepted have not been disturbed.(iii) The Division may accept a written guarantee for an applicant's self-bond from any corporate guarantor, whenever the applicant meets the conditions of paragraphs (i)(A), (i)(B), and (i)(D) of this section, and the guarantor meets the conditions of paragraphs (i)(A) through (i)(D) of this section. Such a written guarantee shall be referred to as a "non-parent corporate guarantee." The terms of this guarantee shall provide for compliance with the conditions of paragraphs (ii)(A) and (ii)(B) of this section. The Division may require the applicant to submit any information specified in paragraph (i)(C) of this section in order to determine the financial capabilities of the applicant.(iv) For the Division to accept an applicant's self-bond, the total amount of the outstanding and proposed self-bonds of the applicant for surface coal mining and reclamation operations shall not exceed 25 percent of the applicant's tangible net worth in the United States. For the Division to accept a corporate guarantee, the total amount of the parent corporation guarantor's present and proposed self-bonds and guaranteed self-bonds for surface coal mining and reclamation operations shall not exceed 25 percent of the guarantor's tangible net worth in the United States. For the Division to accept a non-parent corporate guarantee, the total amount of the non-parent corporation guarantor's present and proposed self-bonds and guaranteed self-bonds for surface coal mining and reclamation operations shall not exceed 25 percent of the guarantor's tangible net worth in the United States.(v) If the Division accepts an applicant's self-bond, an indemnity agreement shall be submitted subject to the following requirements: (A) The indemnity agreement shall be executed by all persons and parties who are to be bound by it, including the parent corporation guarantor, and shall bind each jointly and severally.(B) Corporations applying for a self-bond, and parent and non-parent corporations guaranteeing an applicant's self bond shall submit an indemnity agreement signed by two corporate officers who are authorized to bind their corporations. A copy of such authorization shall be provided to the Division along with an affidavit certifying that such an agreement is valid under all applicable Federal and State laws. In addition, the guarantor shall provide a copy of the corporate authorization demonstrating that the corporation may guarantee the self-bond and execute the indemnity agreement.(C) If the applicant is a partnership, joint venture, or syndicate, the agreement shall bind each partner or party who has a beneficial interest, directly or indirectly, to the applicant.(D) Pursuant to Section 3.04, the applicant, parent or non-parent corporate guarantor shall be required to complete the approved reclamation plan for the lands in default or to pay the Division an amount necessary to complete the approved reclamation plan, not to exceed the bond amount. If permitted under State law, the indemnity agreement when under forfeiture shall operate as a judgment against those parties liable under the indemnity agreement.(vi) The Division may require self-bonded applicants, parent and non-parent corporate guarantors to submit an update of the information required under paragraphs (i)(C) and (i)(D) of this section within 90 days after the close of each fiscal year following the issuance of the self-bond or corporate guarantee.(vii) If at any time during the period when a self-bond is posted, the financial conditions of the applicant, parent or non-parent corporate guarantors change so that the criteria of paragraph (i)(C) and (iv) of this section are not satisfied, the permittee shall notify the Division immediately and shall within 90 days post an alternate form of bond in the same amount as the self-bond. Should the permittee fail to post an adequate substitute bond, the provisions of Section 3.02.4(2)(b)(v) shall apply.(f) The Board, through rule- making, shall recommend to the Secretary for approval of an alternative bonding system when it has determined such a system achieves the following objectives:(i) The alternative assures completion of the reclamation plan if it had to be performed by the Board, through independent contractors, in the event of forfeiture or default of any permittee participating in the alternative at any time;(ii) The alternative assures the ready availability of sufficient economic resources to complete the reclamation plan for all permit areas which may be in default at any time; and(iii) The alternative provides a substantial economic incentive for the permittee participating in the alternative to comply with all the reclamation requirements of the permittee's permit.3.03RELEASE OF PERFORMANCE BONDS3.03.1Criteria and Schedule for Release of Performance Bonds.(1) The Division, or the Board where an adjudicatory hearing is held pursuant to 3.03.2(6), shall release a performance bond, in whole or in part, when it is satisfied the reclamation covered by the bond or portion thereof has been accomplished as required by these Rules and according to the schedule set forth in (2) below. 125(9)(2) The maximum amount under performance bonds applicable to an increment or a permit area which may be released shall be limited to the following schedule:(a) Up to sixty percent of the applicable bond amount shall be released when the permittee successfully completes backfilling, regrading, and drainage control in accordance with the approved reclamation plan; 125(9)(a)(b) Up to eighty- five percent of the applicable bond amount shall be released upon the establishment of vegetation which supports the approved post mining land use and which meets the approved success standard for cover, pursuant to 4.15.8, meets applicable productivity standards for prime farmlands or alluvial valley floors pursuant to 3.03.1(3)(b), or croplands pursuant to 4.15.9. With the exception of prime farmlands, evaluation of vegetation establishment pursuant to this paragraph is based on statistically valid data collected during a single year of the liability period; and 125(9)(b)(c) The remaining portion of the bond amount shall be released when the permittee has successfully completed all surface coal mining reclamation operations in accordance with this approved reclamation plan, and the final inspection and procedures of 3.03.2 have been satisfied. This shall not be before the expiration of the period specified for revegetation responsibility in 3.02.3. 125(9)(c), 120(2)(t)(3)(a) When determining the amount of bond to be released, the Board or Division shall retain that amount of bond for the revegetated area which would be sufficient for a third party to cover the cost of reestablishing revegetation at any time during the period specified for permittee responsibility for revegetation described in 3.02.3. 125(9)(b)(b) No more than sixty (60) percent of the bond shall be released so long as the lands to which the release would be applicable are contributing suspended solids to streamflow or runoff outside the permit area in excess of pre mining levels as determined by baseline data or in excess of levels determined on adjacent non mined areas; until soil productivity for prime farmlands has returned to equivalent levels of yield as non mined land of the same soil type on the surrounding area under equivalent management practices as determined from the soil survey performed under 2.04.12 and 2.06.6 and the success determination methodology of 4.25.5(3)(a); or, on alluvial valley floors, until the essential hydrologic functions and agricultural productivity have been reestablished. 125(9)(b), 110(2)(q) 114(2)(e)(I)(c) Where a silt dam is to be retained as a permanent impoundment as described in 4.05.6 or 4.05.9, more than sixty (60) percent of the bond may be released only so long as provisions for sound future maintenance by the permittee or the landowner have been made with the Division. 125(9)(b), 120(2)(h)(d) The Division shall not release any amount under performance bonds applicable to a permit if such release would reduce the total remaining amount under performance bonds to an amount less than that necessary for the Division to complete the approved reclamation plan.(e) When the permit includes an alternative post mining land use plan for industrial or commercial, or residential use, approved pursuant to 4.16.3, the Division shall require the maintenance of bond coverage throughout the applicable liability period, sufficient for the Division to achieve compliance with the standards for revegetation applicable to the pre mining land use under 4.15, in the event the alternative post mining land use is not developed in the event of bond forfeiture.(4) No bond shall be fully released until all reclamation requirements of these Rules and the Act are fully met, and in no case shall the total bond amount applicable to a permit area be less than $10,000, in accordance with 3.02.2(3), until bond for the entire permit area is fully released. No acreage shall be released from the permit area until all surface coal mining and reclamation operations on that acreage have been completed in accordance with the approved reclamation plan. 125(9)(c)(5) Release of bond coverage for liability associated with temporary drainage and sediment control facilities including impoundments and conveying systems shall be authorized only after final inspection, acceptance, and approval by the Division. Such approval shall be granted based on determination by the Division that backfilling and grading, top soiling, and reseeding of such facilities have been completed in compliance with the approved plan. Vegetative cover must be adequate to control erosion and similar to the reclaimed area or surrounding undisturbed area. Reclaimed temporary drainage control facilities shall not be subject to the extended liability period of 3.02.3(2) or the bond release criteria of 3.03.1(2).3.03.2 Procedures for Seeking Release of Performance Bond(1) Bond release application and contents. The permittee may file a request with the Division for the release of all or part of a performance bond pursuant to the criteria and schedule described in Rule 3.03.1. Prior to filing the request, the permittee shall send written notice of his intention to seek release from bond to adjoining property owners, surface owners, appropriate local government bodies, municipalities, regional planning commissions, boards of county commissioners, county planning agencies, sewage and water treatment authorities, and water conservancy and water conservation districts in the locality in which the surface coal mining operations took place and other governmental agencies as directed by the Division.
Such a request shall include:
(a) Copies of the above written notices which must be submitted to the Division within (30) days of the filing of the request for release. The permittee is encouraged, however, to file these copies with the request to avoid any unnecessary inspections under 3.03.2(2) and delay. 125(1)(b) As part of the bond release request, the permittee shall submit a copy of an advertisement to be placed by the permittee at least once a week for four successive weeks in a newspaper of general circulation in the locality of the surface coal mining operations. Such advertisement shall contain a notification of the precise location of the land affected, the number of acres of land for which the bond release is sought, the name of the permittee, permit number and date approved, the type and amount of the bond filed and the portion sought to be released, the type and appropriate dates of reclamation work performed, and a description of the results achieved as they relate to the permittee's approved reclamation plan. The advertisement shall also state that written comments, objections, and requests for a public hearing or informal conference may be submitted to the Division; provide the address of the Division; and give the date by which said comments, objections, and requests must be received. 125(1)(c) Within thirty (30) days after the last publication required in (b) above, the permittee shall submit to the Division proof of such publications.(d) Upon submission of the proof of publication, the Division shall, within 10 days of receipt, review the application and determine if it is complete. The Division shall notify the operator of its decision within said 10 day period and if deemed incomplete, the operator shall be given the opportunity to amend, review, or otherwise make said application complete.(e) A notarized statement which certifies that all applicable reclamation activities have been accomplished in accordance with the requirements of the Act, the rules and the approved reclamation program. Such certification shall be submitted for each application or phase of bond release.(2) Inspection and Evaluation by the Division. Upon receipt of a complete request for the release of a performance bond the Division shall, within thirty (30) days or as soon thereafter as the Division determines weather conditions permit, conduct an inspection and evaluation of the reclamation work involved. Such evaluation shall consider, among other things, the results of inspections and monitoring conducted pursuant to 4.05.13 and 5.02, the degree of difficulty to complete any remaining reclamation, and whether pollution of surface or subsurface water is occurring, the probability of future occurrence of such pollution, and the estimated cost of abating such pollution. The written results of such inspection and evaluation shall be made immediately available for public inspection in the offices of the Division. "As soon thereafter as weather conditions permit" means that the Division must be able to evaluate properly the reclamation operations alleged to have been completed and, therefore, may be subject to seasonal limitations. The surface owner and agent or lessee, if any, shall be given reasonable notice of such inspection, and may participate with the Division in making the inspection. The Division may arrange with the permittee to allow access to the permit area, upon request by any person with an interest in bond release, for the purpose of gathering information relevant to the proceeding. 125(2)
(3) Objections to Requested Release. 125(3) Any person with a valid legal interest which might be adversely affected by release of the bond, or any Federal, State, or local government agency which has jurisdiction by law or special expertise with respect to any environmental, social, or economic impact involved in the operation, or is authorized to develop and enforce environmental standards with respect to such operations, shall have the right to file written objections to or comments upon the requested release from bond and file a request for an informal conference with the Division within thirty (30) days of the last publication of the notice required in (1)(b) above, or within thirty (30) days of the completed inspection, whichever is later. Upon receipt of any such objection or comments, copies thereof shall be transmitted to the permittee.
(4) Informal Conference on Objections to Requested Release. 125(8) Without prejudice to the rights of any person who might be adversely affected, the permittee, or the responsibilities of the Division pursuant to this Rule, the Division shall hold an informal conference as provided in 2.07.3(6) to resolve any written comments or objections on the request for release, when such a conference is requested.
(a) The purpose of an informal conference is to provide an opportunity to resolve disagreements prior to a proposed decision to release by the Division; and therefore, potentially avoid an adjudicatory hearing pursuant to 3.03.2(6).(b) Notice of an informal conference shall be published in a newspaper of general circulation in the locality of the conference, at least two weeks before the date of the conference.(c) The informal conference shall be held within thirty (30) days from the date of the notice; and shall conclude by the sixtieth day following the inspection and evaluation required in 3.03.2(2).(d) The requirements of 24-4-105(6) C.R.S. (Colorado Administrative Procedures Act) shall not apply to the conduct of the informal conference.(e) An electronic or stenographic record shall be made of the conference and the record maintained for access by the parties, until final release of the bond, unless recording is waived by all of the parties to the conference.(5) Decision by the Division. 125(4)(a) The Division shall provide written notification to the permittee, the surety, any person with an interest in collateral who has previously requested notification and any other interested parties of its proposed decision to release or not release all or part of the performance bond, together with written reasons for such proposed decision, recommended corrective actions necessary to secure release, and of their right to request a public hearing as described in 3.03.2(6) within sixty (60) days after the date of completion of the inspection and evaluation required in 3.03.2(2). Further, the Division shall publish written notice of its proposed decision once a week for two consecutive weeks in a newspaper of general circulation in the locality of the surface coal mining operation and shall immediately provide written notification of its proposed decision by certified mail to the board of county commissioners of the county in which the surface coal mining operation is located. The Division shall publish its proposed decision in its monthly mailing under 1.03.3(2).(b) If no request for an adjudicatory hearing as provided in (6) below is received within the time periods specified therefore, the proposed decision of the Division shall be final. 125(5)(6) Adjudicatory Hearing on Proposed Decision to Release. 125(6) (a) The Board shall hold an adjudicatory hearing on the proposed decision of the Division upon the receipt of a written request for hearing from any person with a valid legal interest which might be adversely affected by the proposed decision of the Division or from the responsible officer or head of any Federal, State, or local government agency which has jurisdiction by law or special expertise with respect to any environmental, social, or economic impact involved in the operation or which is authorized to develop and enforce environmental standards with respect to such operations. The request for an adjudicatory hearing must state with specificity the reasons why the hearing is requested and must be received within thirty (30) days of the first publication of the proposed decision by the Division. Prior to the adjudicatory hearing, the Board shall give reasonable notice to all interested parties of the time and place of the hearing and shall publish the date, time, and location of such hearing in a newspaper of general circulation in the locality of the surface coal mining operation for two consecutive weeks after receipt of a request for hearing and twice a week for two consecutive weeks before the hearing. In addition, the Board shall place notice of such hearing in its monthly mailing under 1.03.2(2). The Board shall hold an adjudicatory hearing on the proposed decision of the Division within thirty (30) days of the receipt of any written request for such hearing and shall render a written decision affirming or reversing, in whole or in part, the decision of the Division within thirty (30) days following the conclusion of the adjudicatory hearing. The hearing shall be held in the locality of the permit area, or the State capitol, at the option of the objector.(b) The adjudicatory hearing on the proposed decision of the Division shall be conducted pursuant to 24-4-105, C.R.S. For the purpose of such hearing, the Board shall have the authority and is hereby empowered to administer oaths, subpoena witnesses or written or printed materials, compel the attendance of witnesses and production of the materials, and take evidence, including, but not limited to, inspections of the land affected and other surface coal mining operations carried on by the permittee in the general vicinity. A verbatim record of each adjudicatory hearing required by this Rule shall be made and a transcript made available on the request of any party to such hearing or by order of the Board. While the decision of the Board will be final, denial shall not preclude resubmission of an application for bond release. 125(7)3.03.3Termination of Jurisdiction(1) The Division may terminate its jurisdiction over the reclaimed site of a completed surface coal mining and reclamation operation, or increment thereof, upon its determination in writing that all requirements of these Rules and the Act have been successfully completed and where a performance bond was required, the Division has made a final decision in accordance with Rule 3.03 to release the performance bond fully.(2) The Division shall reassert jurisdiction over a site as referenced in 3.03.3(1) if it is demonstrated that the bond release or written determination referenced in 3.03.3(1) was based upon fraud, collusion, or misrepresentation of a material fact.3.04FORFEITURE OF PERFORMANCE BONDS3.04.1Criteria.(1) The Board shall declare all or an appropriate part of a performance bond for any permit as forfeited if the Board determines that any of the following circumstances exist: (a) The permittee has violated any of the terms or conditions of the bond and has failed to take adequate corrective action;(b) The permittee has failed to conduct the surface mining and reclamation operations in accordance with the Act, these Rules and the permit within the time required, and that it is necessary, in order to fulfill the requirements of the permit and the reclamation plan, to have someone other than the permittee correct or complete reclamation;(c) The permit has been suspended or revoked, and neither the permittee nor the surety has assumed liability for completion of the reclamation work under a compliance schedule approved under 3.04.1(2); or(d) The permittee or surety has failed to comply with a compliance schedule approved under 3.04.1(2).(2) The Board may withhold declaration of forfeiture if the permittee and the surety, if applicable, agree to a compliance schedule to correct the violations of the permit or to comply with the bond conditions. Such a compliance schedule shall provide for completion of reclamation within a reasonable time specified by the Board. The Board shall not agree to a compliance schedule if:(a) The permittee has become insolvent, failed in business, been adjudicated a bankrupt, filed a petition in bankruptcy or for a receiver, or had a receiver appointed by any court; or(b) A creditor of the permittee has attached or executed a judgment against the permittee's equipment, materials, facilities at the permit area or on any collateral pledged to the State; and(c) The permittee cannot demonstrate or prove the ability to continue to operate in compliance with the Act, these Rules and the permit.3.04.2Procedures.(1) In the event forfeiture of all or part of a bond is declared by the Board pursuant to 3.04, the Division shall: (a) Send written notification by certified mail, return receipt requested, to the permittee, and the surety on the bond, if applicable, of the Board's determination to forfeit all or part of the bond and the reasons for the forfeiture, including a finding of the amount to be forfeited;(b) Advise the permittee and the surety, if applicable, of any rights of appeal under State law that may be available from that determination; and(c) Proceed in an action for collection of the amount forfeited on the bond as provided by the applicable laws for the collection of defaulted bonds or other debts; and(d) If an appeal is filed, defend the action.(2) The written determination to forfeit all or part of the bond including the reasons for forfeiture and the amount to be forfeited, shall be a final decision by the Board.(3) The Board may declare forfeited any or all of a bond for an entire permit area in order to satisfy the requirements of 3.04.(4) Proceeds of forfeited bonds shall be deposited by the Division in a separate reclamation account available to the Division. Said proceeds shall be used by the Division for reclamation of the area covered by the bond. Said reclamation shall include all costs and administrative expenses associated with the conduct of reclamation activities required to complete the applicable approved reclamation plan. Forfeited amounts received by the Division in excess of such costs and expenses shall be refunded to the permittee or to the surety, whichever is appropriate. 124(4)(5) Bond forfeiture may be avoided if the surety company can demonstrate the ability to complete the reclamation plan to the Division. No bond shall be totally released prior to successful completion of all reclamation under the terms of the permit, including the applicable liability periods of 3.02.3, and release in accordance with 3.03 has occurred.(6) If the amount of the bond is insufficient to pay for the full cost of reclamation, the permittee shall be liable for the balance. The Division may complete necessary reclamation to the extent the forfeited funds permit and recover from the permittee, by means of civil proceedings and remedies all reclamation costs in excess of the forfeited amount to complete the remaining reclamation.3.04.3Determination of the Forfeiture Amount.The Board shall either: 124(4)
(1) Determine the amount of the bond to be forfeited on the basis of the estimated cost to the Division or its contractor to complete the reclamation plan and other regulatory requirements in accordance with these Rules and the permit; or(2) Declare forfeited the entire amount of the bond for which liability is outstanding.3.05PERFORMANCE BOND REQUIREMENTS FOR COAL EXPLORATION3.05.1General Requirements.(1) Exploration involving removal of 250 tons or less of coal. 117(1)(a) 113(1) (a) Upon a determination by the Division, as described in 2.02.2(3) and (4), that substantial disturbance of the natural land surface will occur by exploration involving the removal of 250 tons or less of coal, and before the initiation of that exploration, the applicant shall file with the Division, on a form prescribed and furnished by the Board, a performance bond payable to the State of Colorado. Coal exploration, as set forth in 1.04(22), includes disturbance resulting from the gathering of environmental data before beginning surface coal mining and reclamation operations.(b) No person shall initiate or conduct coal exploration involving removal of 250 tons or less of coal prior to receipt of approval from the Division of a performance bond covering the surface acreage to be affected unless the Division has determined there will be no substantial disturbance of the natural land surface.(2) Exploration involving removal of more than 250 tons of coal. 117(4),(5)(a) After receipt of written approval from the Division of coal exploration involving removal of more than 250 tons of coal as described in 2.02.4, and before the initiation of that exploration, the applicant shall file with the Division, on a form prescribed and furnished by the Board, a performance bond payable to the State of Colorado. 113(1)(b) No person shall initiate or conduct coal exploration involving removal of more than 250 tons of coal prior to the receipt of written approval of the Board or Division, and receipt of approval from the Division of a performance bond covering the surface acreage to be affected.(3) The performance bond will be conditioned upon the faithful performance of an exploration operation in accordance with all the requirements of 4.21. The amount, duration, form, conditions, and terms of the bond shall conform to 3.05.2, 3.05.3, and 3.05.4. 113(1),(2)(4) The performance bond shall cover the area of land surface affected by the coal exploration.(5) Liability on the performance bond shall continue until the requirements of 4.21 have been met and the person conducting the exploration operation is released from any further liability pursuant to 3.05.5.(6) After the amount of the bond has been determined by the Division in accordance with 3.05.2, the applicant shall file with the Division the entire performance bond amount required for the proposed exploration.(7) The Division, at its discretion, may allow for the filing of a statewide bond for coal exploration. Such a statewide bond must conform with 3.05.4 and would provide the State with the assurance of completion of the reclamation required by all the exploration activities carried out by that person in the State. The person filing such a statewide bond must otherwise comply with all the provisions of 3.05 and 2.02 for each area to be explored, including, but not limited to: filing a notice of intent or application for written approval, whichever is applicable; an activity report for each 180 day period; the final written report; and the certification of completion. The person filing such a bond must show the Division that his posted bond is sufficient to cover all the outstanding and proposed disturbance for which he is or will be liable.3.05.2Determination of Bond Amount.(1) The amount of the bond shall be sufficient to assure the satisfactory reclamation of the exploration disturbance if the work had to be performed by the Board, through independent contractors, in the event of forfeiture. The amount required for each exploration operation shall depend upon the reclamation requirements set forth in the narrative description for exploration involving removal of 250 tons or less of coal as described in 2.02.2(2), or in the exploration and reclamation operation plan for exploration involving removal of more than 250 tons of coal as described in 2.02.3(1), whichever is relevant. This amount shall reflect the probable difficulty of reclamation, giving consideration to such factors as topography, geology of the site, hydrology, and revegetation potential, as applicable.
(2) The amount of the bond shall be determined by the Division as part of the decision (2.02.2) on whether the proposed exploration will substantially disturb the natural land surface, when 250 tons or less of coal are removed, or as part of the decision (2.02.4) on written approval, when more than 250 tons of coal are removed. The determined bond amount shall be subject to review by the Board as described in 2.07.(3) In order to assure an amount sufficient, the Division's determination shall be based on, but not be limited to:(a) The estimated costs of the reclamation work described in (1) above;(b) The additional estimated costs to the Board which may arise from applicable public contracting requirements or the need to bring personnel and equipment to the exploration area after its abandonment in the case of forfeiture; 113(1)(c) All additional estimated costs necessary, expedient, and incident to the satisfactory completion of the requirements of 4.21; 113(1)(d) Such other cost information as may be required by or available to the Division. 113(1)(4) The amount of the performance bond required shall be adjusted by the Division from time to time for good cause in accordance with 3.02.2(4).3.05.3Period of Liability for Bond.Liability under the bond(s) applicable to an exploration operation shall be for the duration of that operation, for a period coincident with the responsibilities of 4.21 and 2.02.6, and shall continue until release of the bond(s) in accordance with 3.05.5.
3.05.4Form, Conditions and Terms of Bond.(1) Form of the bond. The Board shall allow for the forms of bond described in 3.02.4.(2) General terms and conditions. (a) The bond shall be in an amount determined by the Division as described in 3.05.2.(b) The bond shall be payable to the State of Colorado.(c) The bond shall be conditioned upon the faithful performance of the exploration operation in accordance with all the requirements of 4.21, and shall cover the area of land surface affected by the coal exploration.(d) The duration of the bond shall be for the time period specified in 3.05.3.(e) Replacement of existing approved bond shall be the same as that for a permittee as described in 3.02.4(2).3.05.5Release of Bonds.(1) Criteria for release of bonds. The Division, or the Board when an adjudicatory hearing is held pursuant to 3.05.5(2)(f), shall release a bond, in whole or in part, when it is satisfied the reclamation covered by the bond, or portion thereof, has been accomplished as required by 4.21, the additional performance standards and design requirements established by the Division pursuant to 4.21, and in the case of exploration involving removal of more than 250 tons of coal, the conditions of approval set by the Division pursuant to 2.02.4(3). 125(2) Procedures for seeking release of bond. (a) The person responsible for conducting the coal exploration operation may file a request with the Division for the release of all or part of a bond pursuant to the criteria described in (1) above.(b) Upon the receipt of the request for release, the Division may, within thirty (30) days, or as soon thereafter as the Division determines weather conditions permit, conduct an inspection and evaluation of the reclamation work involved, similar in nature to that described in 3.03.2(2). "Weather conditions permit" means that the Division must be able to properly evaluate the reclamation alleged to have been completed, and, therefore, may request any reasonable information it deems necessary regarding the operations under the bond.(c) The Division shall provide written notification to the person responsible for the exploration operation of its proposed decision to release or not release all or part of the bond together with a written explanation for such proposed decision within thirty (30) days of the request for release, the receipt of the information it has requested regarding the release, or within thirty (30) days of the inspection and evaluation, if any, as described in (b) above, whichever is later. Further, the Division shall publish written notice of its proposed decision once a week for two successive weeks in a newspaper of general circulation in the locality of the exploration operation and shall immediately provide written notification of its proposed decision by certified mail to the board of county commissioners of the county in which the operation is located. If no request for an adjudicatory hearing as provided in (f) below is received within the specified time period, the proposed decision of the Division shall be final.
(d) Objections to the requested release or the proposed decision may be filed by any person, as described in 3.03.2(3), within thirty (30) days of the last publication of notice required in (c) above. Upon receipt of any such objections, copies thereof shall be transmitted to the person responsible for the exploration operation.(e) Without prejudice to the rights of any person who might be adversely affected, the person responsible for the exploration operation, or the responsibilities of the Division pursuant to this Rule, the Division shall hold an informal conference as described in 3.03.2(4) when such a conference is requested.(f) The Board shall hold an adjudicatory hearing on the proposed decision of the Division, if a request for such hearing is received within thirty (30) days of the last publication of notice of the proposed decision by the Division or within thirty (30) days of the informal conference, if any, whichever is later, as set forth in 3.03.2(6), except that the notice of such hearing shall be published in a newspaper of general circulation in the locality of the exploration operation.3.05.6Forfeiture of Bonds.(1) The Board shall declare all or part of a performance bond for any exploration operation as forfeited if the Board finds that the person responsible for the exploration operation has: (a) Violated any of the terms and conditions of the bond; or(b) Failed to comply with a compliance schedule approved under 3.05.6(2).(2) The Board may withhold declaration of forfeiture if the person responsible and the surety, if applicable, agree to a compliance schedule to correct the violation or to otherwise comply with the bond conditions. Such a compliance schedule shall provide for completion within a reasonable amount of time specified by the Board. The Board shall not agree to a compliance schedule if: (a) The person responsible has become insolvent, failed in business, been adjudicated a bankrupt, filed a petition in bankruptcy or for a receiver, or had a receiver appointed by any court; or(b) A creditor of the person responsible has attached or executed a judgment against his equipment, materials, exploration facilities or on any collateral pledged to the State; and(c) The person responsible cannot demonstrate or prove the ability to continue to operate in compliance with the Act and these Rules.(3) Procedures. (a) In the event forfeiture of all or part of a bond is declared by the Board pursuant to 3.05, the Division shall: (i) Send written notification by certified mail, return receipt requested, to the person responsible for the exploration operation, and the surety on the bond, if applicable, of the Board's determination to forfeit all or part of the bond and the reasons for the forfeiture, including a finding of the amount to be forfeited;(ii) Advise the person responsible and the surety, if applicable, of any rights of appeal under State law that may be available from that determination;(iii) Proceed in an action for collection of the amount forfeited on the bond as provided by applicable laws for the collection of defaulted bonds or other debts; and(iv) If an appeal is filed, defend the action.(b) The written determination to forfeit all or part of a bond, including the reasons for forfeiture and the amount to be forfeited, shall be a final decision by the Board.(c) The Board may declare forfeited any or all of a bond for the entire area affected by an exploration operation, in order to satisfy the requirements of 3.05.(d) Proceeds of forfeited bonds shall be deposited by the Division in a separate reclamation account available to the Division. Said proceeds shall be used by the Division for reclamation of the area covered by the bond. Said reclamation shall include all costs and administrative expenses associated with the conduct of the applicable reclamation activities required by 4.21. Forfeited amounts received by the Division in excess of such costs and expenses shall be refunded to the person responsible or to the surety, whichever is appropriate.(4) Determination of the forfeiture amount. The Board shall either:
(a) Determine the amount of the bond to be forfeited on the basis of the estimated cost to the Division or its contractor to complete the reclamation and other regulatory requirements in accordance with these Rules; or(b) Declare forfeited the entire amount of the bond for which liability is outstanding.3.06SPECIAL BONDING REQUIREMENTS FOR CONSTRUCTION OF MINE DRAINAGE CONTROL FACILITIES3.06.1Bond Requirements.Performance bond liability shall include construction of impoundments, conveying systems, and treatment facilities for mine drainage planned in accordance with 4.05.2, 4.05.8, and 4.05.10. Bond liability with respect to mine drainage shall extend to the construction and ultimate removal of facilities described in the permit application or reclamation plan as associated with the treatment of mine drainage. The bond amount determination made under 3.02.2 shall not include continuous treatment, monitoring, or potential unpredictable expenses resulting from mine drainage.
3.06.2Bond Release.Release of bond coverage for the liabilities described in 3.06.1 shall be authorized only after final inspection, acceptance, and approval by the Division, and shall not be subject to the extended liability period of 3.02.3(2) or the bond release criteria of 3.03.1(2). Procedures for seeking bond release shall be conducted in accordance with 3.03.2.
3.06.3Applicability of Other Sections.Except to the extent that provisions of other sections of Rule 3 conflict with 3.06, all other portions of Rule 3 shall apply to the mine drainage control facilities subject to Rule 3.06.1.