Administrative Rules of Montana
Department 17 - ENVIRONMENTAL QUALITY
Chapter 17.24 - RECLAMATION
Subchapter 17.24.11 - Strip and Underground Mine Reclamation Act: Bonding, Insurance, Reporting, and Special Areas
Rule 17.24.1109 - BONDING: LETTERS OF CREDIT
Universal Citation: MT Admin Rules 17.24.1109
Current through Register Vol. 6, March 22, 2024
(1) Letters of credit are subject to the following conditions:
(a) The letter must be issued by a bank
organized or authorized to do business in the United States.
(b) The letter must be irrevocable prior to a
release by the department in accordance with ARM
17.24.1111.
(c) The letter must be payable to the
department in part or in full upon demand and receipt from the department of a
notice of forfeiture issued in accordance with ARM
17.24.1117.
(d) The letter must not be for an amount in
excess of 10% of the bank's capital surplus account as shown on a balance sheet
certified by a certified public accountant for the most recent annual reporting
period.
(e) Using the balance sheet
referenced in (1)(d) and a certified income and revenue sheet, the bank must
meet the three following criteria:
(i) the
bank must be earning at least a 1% return on total assets (net income/total
assets = 0.01 or more);
(ii) the
bank must be earning at least a 10% return on equity (net income/total
stockholders equity = 0.1 or more); and
(iii) capital or stockholders' equity must be
at least 5.5% of total assets ((total stockholders equity [capital stock +
capital surplus + retained earnings])/total assets = 0.055 or more).
(f) The bank's qualifications must
be reviewed yearly prior to the time the letter of credit is renewed.
(g) The department may 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.
(h) The department may provide in the
indemnity agreement that the amount must be confessed to judgment upon
forfeiture, if this procedure is authorized by state law.
(i) The department shall provide that:
(i) the bank shall give prompt notice to the
permittee and the department of any notice received or action filed alleging
the insolvency or bankruptcy of the bank or permittee, or alleging any
violations of regulatory requirements that could result in suspension or
revocation of the bank's charter or license to do business;
(ii) in the event the bank becomes unable to
fulfill its obligations under the letter of credit for any reason, the bank
shall immediately give notice to the permittee and the department;
and
(iii) upon the incapacity of a
bank by reason of bankruptcy, insolvency or suspension or revocation of its
charter or license, or upon the inability of a bank to fulfill its obligation
under the letter of credit for any reason, the permittee must be deemed to be
without performance bond coverage and shall promptly notify the department.
Upon notification received through the procedures of (a) and (b) or from the
permittee, the department 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 ARM
17.24.522 and shall immediately
begin to conduct reclamation operations in accordance with the reclamation
plan. Mining operations must not resume until the department has determined
that an acceptable bond has been posted.
AUTH: 82-4-205, MCA; IMP: 82-4-223, 82-4-232, 82-4-235, MCA
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