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

Current through Register Vol. 13, July 5, 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.