R 425.307 Statement of financial responsibility.

Rule 307. (1) The statement of financial responsibility under R 425.301(3) shall consist of the following: (a) A written statement signed by the operator's chief financial officer that lists data that show that the operator meets the criteria specified in subrule (2) of this rule, and states that the data are derived from an independently audited year-end financial statement. (b) An independent certified public accountant's report on examination of the operator's financial statement for the latest completed fiscal year stating that the accountant has compared the data listed in the statement provided under subdivision (a) of this subrule with the amounts in the corresponding year-end financial statement and that the accountant asserts the operator's statement of financial responsibility meets the criteria of subrule (2) of this rule and nothing came to the attention of the accountant that caused the accountant to believe that the financial statements should be adjusted. (2) The statement of financial responsibility under R 425.301(3) shall meet all of the following criteria: (a) The operator must satisfy 1 of the following 3 conditions: (i) A current rating for its senior unsecured debt of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A, or Baa as issued by Moody's. (ii) A ratio of total liabilities to tangible net worth less than 1.5. (iii) A ratio of the sum of net income plus depreciation, depletion and amortization, minus $10 million, to total liabilities greater than 0.10. (b) The operator shall have a tangible net worth not less than 25% of the financial assurance required under R 425.301 plus $10 million. (c) The operator shall have total assets located in North America of not less than 25% of the sum of the financial assurance required under R 425.301 plus the financial assurance requirements of other parts of the act and equivalent or substantially equivalent federal or state regulations. Declared mineral reserves, except for mineral reserves at the permitted site, may be utilized in determining current assets only to the extent that the value of the reserves exceeds the projected costs of development and production. (3) For determining qualifications for use of a statement of financial responsibility, liabilities as determined under subrule (2) of this rule shall include responsibilities of the operator for reclamation or remediation, or both, at other mining operations owned or operated by the operator. (4) Within 90 days after the end of each fiscal year after the effective date of a mining permit, a permittee who utilizes a statement of financial responsibility to satisfy the requirements of this rule shall submit to the department documents described in subrule (1) of this rule for the fiscal year just completed. (5) If a corporate parent or affiliate of the operator meets the requirements of subrules (1) and (2) of this rule, then the operator may use its parent or affiliate to provide the financial assurance allowed under this rule. The department shall not approve an operator's use of a corporate parent or affiliate as acceptable financial assurance under this rule unless the parent or affiliate also provides the department with a guarantee of the amount sought to be assured through the statement of financial responsibility. The guarantee shall be in a form acceptable to the department. (6) If the permittee has reasonable knowledge at any time before the year-end review under subrule (4) of this rule that it ceases to meet the requirements of subrule (2) of this rule, then the permittee shall within 10 days notify the department. (7) The permittee shall provide alternate financial assurance within 60 days after the date on which the permittee finds, under subrule (4), (5), or (6) of this rule, that it no longer meets the requirements of subrule (2) of this rule. (8) The department may, based on a reasonable belief that a permittee no longer meets the requirements of subrule (2) of this rule, require reports of financial condition at any time from the permittee in addition to the information required by subrule (2) of this rule. If the department finds, on the basis of a review of such reports or other information, that the permittee no longer meets the requirements of subrule (2) of this rule, then the department shall notify and inform the permittee in writing. Within 30 days of the notification, the permittee shall provide alternate financial assurance as specified in part 632 of the act. (9) Failure of a permittee to comply with the requirements of subrule (4) to (8) of this rule shall be cause for the department to order the immediate suspension of any or all mining activities at the permitted site, including the removal of metallic product, pursuant to section 63211(5) of the act. The permittee shall not resume mining operations until the department has determined that an acceptable replacement assurance instrument or instruments have been provided.