Ohio Administrative Code
Title 1501:13 - Division of Mineral Resources Management - Coal
Chapter 1501:13-7 - Performance Security
Section 1501:13-7-03 - Form, conditions, and terms of performance security
Universal Citation: OH Admin Code 1501:13-7-03
Current through all regulations passed and filed through December 16, 2024
(A) Form of the performance security. The performance security to be submitted by the applicant or permittee shall be on forms furnished by the chief. The chief shall allow for:
(1) A surety bond;
(2) A collateral bond;
(3) A trust fund; or
(4) A combination of any of these forms of
performance security.
(B) Terms and conditions of the performance security.
(1) The performance security shall be in an
amount determined by the chief, as provided in paragraphs (A) and (C) of rule
1501:13-7-02
of the Administrative Code for permits for which the applicant or permittee
provides performance security together with reliance on the reclamation
forfeiture fund, or as provided in paragraphs (B) and (C) of rule
1501:13-7-02
of the Administrative Code for permits for which the applicant or permittee
provides performance security without reliance on the reclamation forfeiture
fund.
(2) The performance security
shall be payable to the state and conditioned upon the faithful performance of
all the requirements of Chapter 1513. of the Revised Code, rules adopted
thereunder, and the provisions of the applicant's approved mining and
reclamation plan.
(3)
The name
of the permittee on the performance security shall be identical to the name of
the permittee on the permit.
(4)
The duration of the performance security shall be that described in paragraph
(D) of rule
1501:13-7-02
of the Administrative Code.
(5)
Surety bonds shall be subject to the following conditions:
(a) The chief shall not accept the bonds of a
surety company unless the bond is noncancellable by the surety 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;
(b) The chief shall not accept a surety bond
in excess of ten per cent of the surety company's capital surplus
account;
(c) The chief shall not
accept a surety bond from a surety company for any operator if the sum of such
bond and all other surety bonds issued by the surety company on any and all the
permits of that operator is in excess of thirty per cent of
the surety company's capital surplus account;
(d) The surety bond shall be issued by a
corporate surety licensed to do business in Ohio;
(e) The chief may provide in the bond that
the amount shall be confessed to judgment upon forfeiture as provided in
section
2323.13
of the Revised Code;
(f) The bond
shall provide that the surety and the permittee shall be jointly and severally
liable; and
(g) The bond shall
provide that:
(i) The surety will give prompt
notice to the permittee and the chief of any notice received or action filed
alleging the insolvency or bankruptcy of the surety, or alleging any violation
of regulatory requirements which could result in suspension or revocation of
the surety's license to do business; and
(ii) 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 chief.
(6) Collateral bonds, except for letters of
credit, shall be subject to the following conditions:
(a) The chief shall deliver to the treasurer
of state all collateral deposited by the permittee or applicant to be held
until authorized for release or replacement as provided in these rules. The
treasurer shall hold it in trust for the purposes for which it has been
deposited;
(b) The chief shall
value collateral at their current market value, not face value;
(c) The chief shall not accept a certificate
of deposit unless it is payable to the state, both in writing and upon the
records of the bank issuing such certificates;
(d) The chief shall not accept an individual
certificate or cash account for a denomination in excess of the maximum
insurable amount as determined by F.D.I.C. and F.S.L.I.C.;
(e) If the performance security is a cash
deposit or negotiable certificates of deposit of a bank or savings and loan
association, the bank or savings and loan association shall be licensed and
operating in Ohio;
(f) A
certificate of deposit shall be automatically renewable and issued with a
maturity date of not less than twelve months;
(g) At the time a certificate of deposit is
being closed and rolled over into a new certificate of deposit, the permittee
shall notify the chief of any change of account numbers by submitting a revised
collateral bond indemnity agreement form;
(h) The chief shall require the applicant to
deposit sufficient amounts of certificates of deposit to assure that upon
forfeiture the chief will be able to liquidate those certificates prior to
maturity for the amount of the performance security required by rules
1501:13-7-01
to
1501:13-7-06
of the Administrative Code; and
(i)
Certificates of deposit may be substituted for a cash account with the approval
of the chief.
(7)
Letters of credit shall be subject to the following:
(a) The letter may only be issued by a bank
organized or authorized to do business in Ohio;
(b) The initial term of the letter of credit
shall be for not less than one year from the issue date and shall be
automatically renewable for a period of not less than one year from the
scheduled expiration date, unless the bank notifies the chief by certified or
registered mail at least sixty days before the expiration date that the bank
will not renew the letter of credit. Upon notice of a bank's intent not to
renew the letter of credit, the permittee shall replace performance security at
least thirty days before the expiration date of the letter of credit agreement
with other letters of credit, other forms of security supporting the collateral
bond indemnity agreement, or another form of performance security. If the
letter of credit is not replaced at least thirty days prior to the expiration
date, the chief shall demand and obtain payment on it before it
expires;
(c) The letter shall be
payable to the state, in part or in full, upon written demand by the chief and,
except as provided in paragraph (B)(7)(b) of this rule, accompanied by a
written statement signed by the chief declaring one or more of the following:
(i) That the permittee has not faithfully
performed all of the requirements of Chapter 1513. of the Revised Code, rules
adopted thereunder, and the provisions of the permittee's approved mining and
reclamation plan;
(ii) That the
permittee has failed to replace performance security coverage in accordance
with the requirements of paragraph (B)(7)(b) of this rule; or
(iii) That the permittee has failed to
replace performance security at least thirty days prior to the expiration date
of the letter of credit.
(d) The chief may require in the indemnity
agreement that the amount shall be confessed in judgment upon forfeiture as
provided in section
2323.13
of the Revised Code; and
(e) The
letters of credit shall provide that:
(i) The
bank will give prompt notice to the permittee and the chief 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;
and
(ii) 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
chief.
(8) The
estimated bond value of all collateral provided as performance security
assurance under paragraphs (B)(6) and (B)(7) of this rule shall be subject to a
margin, which is the ratio of bond value to market value, as determined by the
chief. 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 chief in performing reclamation. 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 security amount increased or
decreased.
(9) Persons with an
interest in a collateral bond provided as performance security, and who desire
notification of actions pursuant to the collateral bond, shall request the
notification in writing to the chief at the time collateral bond is
offered.
(10) Trust funds for
performance security under this rule shall be subject to the following
conditions:
(a) The trust fund shall be in an
amount equal to the estimated cost of reclamation as determined by the chief
under paragraph (B) of rule
1501:13-7-01
of the Administrative Code excluding all cost of administration of the trust
fund;
(b) The trust fund agreement
shall be in a form approved by the chief and shall contain all terms and
conditions required by the chief;
(c) The chief shall specify the investment
objectives of the trust fund;
(d)
Termination of the trust fund may occur only as specified by the chief upon a
determination that no further reclamation is necessary, that replacement
performance security has been filed, or that the administration of the trust
fund in accordance with its purpose requires termination;
(e) Release of money from the trust fund may
be made only upon written authorization of the chief or according to a schedule
established in the agreement accompanying the trust fund; and
(f) A financial institution or other company
serving as a trustee must be a bank, trust company or other financial
institution with trust powers that is organized or authorized to do business in
Ohio.
(11) If a surety,
bank, savings and loan association, trust company, or other financial
institution that holds the performance security required under this rule
becomes incapacitated by reason of bankruptcy, insolvency, or suspension or
revocation of its license, the permittee shall be deemed to be without
performance security coverage in violation of paragraph (A) of rule
1501:13-7-01
of the Administrative Code and shall promptly notify the chief. The chief shall
notify, in writing, any permittee who is without performance security to submit
a plan for replacement performance security within thirty days after receipt of
such notice from the chief. If performance security is not replaced within the
period set forth in paragraph (B)(11)(a) or (B)(11)(b) of this rule, the
permittee shall cease all coal extraction being conducted under the permit and
shall immediately begin to conduct reclamation operations in accordance with
the reclamation plan. Mining shall not resume until the chief has determined
that an acceptable performance security has been filed in accordance with
paragraph (A) of rule
1501:13-7-01
of the Administrative Code.
(a) For a permit
for which performance security is provided without reliance on the reclamation
forfeiture fund in accordance with paragraph (C)(1) of rule
1501:13-7-01
of the Administrative Code, the permittee shall provide the replacement
performance security within ninety days after receipt of written notice from
the chief that the permittee is without performance security.
(b) For a permit for which performance
security is provided together with reliance on the reclamation forfeiture fund
in accordance with paragraph (C)(2) of rule
1501:13-7-01
of the Administrative Code, the permittee shall continue to pay the severance
tax levied under division (A)(8) of section
5749.02
of the Revised Code and shall provide the replacement performance security
within one year after receipt of written notice from the chief that the
permittee is without performance security.
(C) Replacement of performance security.
(1) The chief may allow the permittee to
replace existing performance security with other performance security, if the
liability which has accrued against the permittee on the permit area is
transferred to such replacement performance security and the replacement
performance security meets the requirements of these rules.
(2) The chief shall not release existing
performance security until the permittee has submitted and the chief has
approved acceptable replacement performance security. A replacement of
performance security pursuant to paragraph (C) of this rule shall not
constitute a release of performance security.
Disclaimer: These regulations may not be the most recent version. Ohio may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
