Ohio Administrative Code|Rule 1501:13-7-03 | Form, conditions, and terms of performance security.

                                                
(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) Except for performance security provided in accordance with
			 rule 1501:13-7-04 of the Administrative Code, 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 percent 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.


Last updated November 30, 2021 at 2:30 PM