Section 800.24. Combined surety/escrow bonding

(a) The division may accept a combined surety/escrow bonding schedule provided that:

(1) A surety bond payable to the division is posted in the amount determined under 4VAC25-130-800.14 or 4VAC25-130-801.12 for reclamation of each successive increment, and

(2) An interest-bearing escrow account payable to the division with a predetermined deposit amount and frequency is established.

(b) Conditions of the combined surety/escrow bonding method shall be as follows:

(1) Surety bond.

(i) The term of the surety bond shall be not less than two years.

(ii) The amount of the surety bond shall always be sufficient to cover the difference between the escrow balance and the total reclamation cost.

(iii) The surety bond may be reduced in amount, but the liability remaining shall depend on the escrow-deposit rate which shall be subject to provisions of 4VAC25-130-800.15 and 4VAC25-130-800.30.

(iv) The surety bond shall be noncancellable by the surety during the bond term.

(v) Surety bond coverage may be released by the division without applying the bond-release criteria of 4VAC25-130-800.40 at any time during the bond term, provided provisions of Paragraph (b)(2)(vi) of this section are met or are in accordance with the provisions of bond replacement under 4VAC25-130-800.30.

(vi) The surety bond is subject to the conditions of bond forfeiture of 4VAC25-130-800.50, including noncompliance with the escrow account provisions of Paragraph (b)(2) of this section.

(2) Escrow account.

(i) The terms and conditions of the escrow account shall be developed jointly by the permittee, surety, and the division. For the purposes of this section, the development of the escrow account shall be based on a production basis in an amount not less than that required to make the escrow account equal to or greater than the bond requirement within the term of the surety bond as agreed on jointly by the permittee, the surety, and the division. Deposits to the escrow account by the permittee shall be made monthly and so reported to the division. Failure to make deposits on schedule shall be just cause for action by the division.

(ii) A certified escrow account balance statement shall be provided quarterly to the surety and the division.

(iii) Provisions of the escrow account shall be in accordance with 4VAC25-130-800.23.

(iv) The deposit amount shall be adjusted to provide for changing reclamation costs in accordance with 4VAC25-130-800.15. However, when the escrow account equals or exceeds the total bonding amount, the monthly payment of the permittee shall continue, at the option of the division, in an amount necessary to provide for any foreseeable adjustments.

(v) The escrow account shall be subject to the bond forfeiture conditions of 4VAC25-130-800.50.

(vi) The escrow account balance shall equal the initial bond amount, plus any adjustments required by Paragraph (b)(2)(i), 120 days prior to surety bond termination, unless the total amount required has been previously reduced through the bond release procedures of 4VAC25-130-800.40.

(vii) Release of liability under the escrow account shall be subject to the provisions of 4VAC25-130-800.40.

(c) Provisions of 4VAC25-130-800.40 may be applied to both surety and escrow bond coverage during the bond term.

(d) The surety/escrow combination may be repeated successively or amended during the term by replacing the escrow account with a surety bond, and reestablishing the escrow terms and deposit rate, subject to division approval.

Historical Notes

Derived from VR480-03-19 § 800.24, eff. December 15, 1981; amended, eff. June 28, 1982; October 28, 1982; December 14, 1982; October 11, 1983; December 27, 1983; May 8, 1984; June 22, 1984; August 2, 1984; October 16, 1985; January 7, 1987; July 22, 1987; November 25, 1987; October 12, 1988; December 26, 1990; July 1, 1991; July 17, 1991; November 20, 1991; July 7, 1992; May 5, 1993; October 19, 1994.

Statutory Authority

§§ 45.1-161.3 and 45.1-230 of the Code of Virginia.