R 425.302 Assurance instruments.

Rule 302. (1) An assurance instrument shall consist of any of the following: (a) A trust fund or escrow account as described in R 425.303. (b) A surety bond as described in R 425.304. (c) An irrevocable letter of credit as described in R 425.305. (d) A certificate of deposit or time deposit account as described in R 425.306. (e) Other equivalent financial instruments approved by the department. (2) All assurance instruments shall be issued or maintained by entities that are not affiliated with the operator and shall not be invested in the activities regulated under this permit. (3) Assurance instruments shall include a provision requiring the issuing institution to give prompt notice to the department and permittee of any action alleging bankruptcy or insolvency of the issuing institution or a violation that would result in suspension or revocation of the license of the issuing institution. (4) The operator shall be responsible for all administrative costs involved in establishing and maintaining assurance instruments. (5) An assurance instrument shall be payable to the state of Michigan. (6) The permittee shall execute an agreement with the department that stipulates that the department may draw upon the assurance instrument under the conditions described in subrules (13) and (15) of this rule. The agreement shall be executed on a form approved by the department. (7) The assurance instrument required by this rule may be satisfied in whole or in part by assurance instruments required by other parts of the act if those instruments address the remediation activities required under part 632 of the act. (8) The operator may submit a written request to the department to adjust the amount of an assurance instrument provided the total value of all assurance instruments equals or exceeds the amount required under the mining permit. If the request meets the requirements of these rules, then the department shall within 60 days after receiving the request approve the adjustment. (9) A permittee may replace an existing assurance instrument with another approved assurance instrument or instruments that provides equivalent coverage, subject to approval by the department. (10) A financial institution shall not cancel, terminate, or suspend an assurance instrument without first giving the permittee and the department notice at least 90 days before the effective date of the cancellation, termination, or suspension. Such cancellation, termination, or suspension shall not affect any liability that shall have accrued under the assurance instrument before the effective date of cancellation, termination, or suspension unless the permittee provides a replacement assurance instrument approved by the department or unless the department shall otherwise release the assurance instrument. (11) A permittee is without the required financial assurance if filing of bankruptcy of the trustee or issuing institution, a suspension or revocation of the authority of the trustee institution to act as trustee, or a suspension or revocation of the authority of the institution issuing an assurance instrument to issue such instruments. (12) A permittee shall provide an alternative assurance instrument or instruments under the following conditions: (a) At least 30 days before the effective date of cancellation, termination, or suspension of an assurance instrument by the permittee or financial institution. (b) Within 30 days of the date the permittee becomes aware that a financial institution has become ineligible to provide or guarantee an assurance instrument due to bankruptcy or insolvency of the issuing institution or a violation that would result in suspension or revocation of the license of the issuing institution. (13) If a permittee fails to provide an alternative assurance instrument when required under subrule (12) of this rule, the department may do the following: (a) Immediately draw upon the assurance instrument or instruments. (b) Order the immediate suspension of any or all mining activities at the permitted site, including the removal of metallic product from the site, pursuant to section 63211(5) of the act. The permittee shall not resume the suspended mining activities until the department has determined that an acceptable replacement assurance instrument or instruments have been provided. (14) If the department draws upon an assurance instrument or instruments under subrule (13) of this rule, and the permittee subsequently provides an alternative assurance instrument or instruments approved by the department, then the department shall refund to the issuing financial institution or the permittee the forfeited funds, less any costs associated with the forfeiture. (15) The department may draw upon an assurance instrument to undertake action necessary to curtail or remediate any damage to the environment or public health under subrule (16) of this rule or to recover costs the department has incurred. (16) The department shall expend money from assurance instruments only for the recovery of costs described in R 425.301(2). (a) If the department takes action necessary to curtail and remediate any damage to the environment or public health under Sec. 63221(5) of the act, then the department shall file a claim for recovery of costs with the permittee. If the permittee fails to fully reimburse the department for the costs of such actions within 60 days after filing of the claim, then the department may recover its unreimbursed costs from the assurance instrument or instruments. (b) For any part of the department's costs not recovered from the permittee or the assurance instrument or instruments, the attorney general, acting for and on behalf of the department, may bring suit for the payment of the claim against the permittee and the financial institutions that executed an assurance instrument or instruments; provided, the liability of any financial institution for costs under the claim shall not exceed the value of the financial instrument or instruments provided by the institution under the provisions for financial assurance under these rules. (17) A permittee shall notify the department, by certified mail, of the commencement of a voluntary or involuntary proceeding under the bankruptcy provisions of Public Law 95- 598, 11 U.S.C. Section 1 to 151302, naming the permittee as debtor, within 10 days after commencement of the proceeding.