Bonding

PURPOSE: This rule sets forth bonding requirements pursuant to sections 444.772 and 444.778, RSMo. (1) Bond Requirements. All permit applications must include a bond for the appropriate amount payable to the state of Missouri, which remains in effect until mined acreages have been reclaimed, approved, and released by the commission or director, or until replaced with a bond of equal amount. (A) Operations mining more than five thousand (5,000) tons per year of gravel or any quantity of either limestone, barite, traprock, granite, tar sand, clay, sandstone, oil shale, sand, shale, and all others defined in section 444.765(11), RSMo must file an eight thousand-dollar ($8,000) bond with the commission. The eight thousand-dollar ($8,000) bond covers up to eight (8) acres of permitted area. Each additional acre permitted over eight (8) acres shall be bonded at five hundred dollars ($500) per acre. Multiple sites totaling eight (8) acres or less may be covered by a single eight thousand-dollar ($8,000) bond if they are part of a single permit. (B) Operators who mine less than five thousand (5,000) tons of gravel yearly from all sites covered by a single permit shall file a bond with the commission at the rate of five hundred dollars ($500) per acre for each permitted acre. (C) In-Stream Sand and Gravel Operations. 1. Initially, an in-stream sand and gravel operator will not be required to submit bond due to the lack of reclamation responsibility. 2. If it is determined, upon inspection and subsequent review and analysis by the staff director, that a reclamation responsibility exists, the permittee will be required to obtain an amended permit on the area of reclamation responsibility, and post the appropriate bond, as described in subsections (1)(A) and (B) of this rule. A reclamation responsibility is defined as a mining activity causing accelerated bank erosion, headcutting upstream or in adjacent streams, excessive sedimentation downstream, impeded stream flow, or other circumstances requiring corrective action, but only where there is clear evidence that the mining or reclamation activity within the permit area is the primary cause of this reclamation responsibility. 3. Bond releases shall be handled in accordance with sections (4)–(7) of this rule. The bond would be released once the problem that caused the reclamation responsibility is reclaimed or corrected. Only those problems within a permit area or those operations within a permit area that are determined to be the primary cause of problems within and outside the permit area need to be reclaimed or corrected. The permittee shall not be required to conduct reclamation operations outside the permit area. Still, work that could be accomplished within the permit area to alleviate those problems that developed outside the permit area would be required before bond release. (2) Types of Bonds. The director may accept surety bonds and collateral bonds secured by certificates of deposit (CDs). (A) Surety bonds shall be signed by the operator as principal and the surety bonds must be issued by a good and sufficient corporate surety licensed to do business in Missouri. Persons obligating the surety must be certified by power of attorney. 1. Upon the incapacity of a surety by reason of bankruptcy, insolvency or suspension or revocation of its license, the permittee shall be deemed without a bond coverage in violation of this rule and section 444.778, RSMo. 2. The commission may suspend the permit if the operator fails to make substitution of surety within sixty (60) days after receiving notice from the commission, until the substitution is made. 3. The commission also may issue a notice of violation if no substitution is made in sixty (60) days and the permittee continues to operate. The notice of violation shall specify a reasonable period to replace bond coverage, not to exceed ninety (90) days. During this period, the director and his/her staff may conduct inspections to ensure continued compliance with other permit requirements, the regulations and the law. If a notice of violation is not abated in accordance with the schedule, the director may pursue forfeiture of the operator’s bond. (B) Collateral bonds secured by CDs shall be subject to the following conditions: 1. The bonds shall be submitted on a form provided by the commission as provided by section 444.778.1., RSMo. A CD must be assigned to the state of Missouri; 2. Interest on a CD shall be paid to the permittee; 3. No single CD shall exceed the sum of two hundred and fifty thousand dollars ($250,000.00), nor shall any permittee submit CD aggregating more than two hundred and fifty thousand dollars ($250,000.00) from a single bank or financial institution. The issuing bank or financial institution must be insured by the Federal Deposit Insurance Corporation; 4. The CD shall be kept in the custody of Missouri until the bond is released by the commission or director; and 5. The permittee shall give prompt notice to the commission of any insolvency or bankruptcy of the issuer of the certificate. (C) Personal bonds secured by letters of credit shall be subject to the following conditions: 1. The bond and the letters of credit shall be submitted on forms provided by the commission; 2. Letters of credit shall be irrevocable during their terms. A letter of credit used as security in areas requiring continuous bond coverage shall be forfeited and shall be collected by the regulatory authority if not replaced by other suitable bond or letter of credit at least thirty (30) days before its expiration date; 3. The beneficiary of the letter of credit shall be the state of Missouri; 4. The letter of credit shall be issued by a bank or trust company located in the United States. If the issuing bank or trust company is located in another state, a bank or trust company located in Missouri must confirm the letter of credit. Confirmations shall be irrevocable and on a form provided by the director; 5. The letter of credit shall be governed by Missouri law. The Uniform Customs and Practice for Documentary Credits, fixed by the International Chamber of Commerce, shall not apply; 6. The letter of credit shall provide that the director may draw upon the credit by making a demand for payment, accompanied by his/her statement that the commission has declared the permittee’s bond forfeited; 7. The issuer of a letter of credit or confirmation shall warrant that the issuance will not constitute a violation of any statute or regulation which limits the amount of loans or other credits which can be extended to any single borrower or customer or which limits the aggregate amount of liabilities which the issuer may incur at any one (1) time from issuance of letters of credit and acceptances; 8. The bank issuing the letter(s) of credit for bonding purposes shall give prompt notice to the commission and the permittee of any insolvency or bankruptcy of the bank; and 9. The bond shall be forfeitable upon revocation of the underlying permit. (D) The replacement of surety and performance bonds shall be subject to the following: 1. Permit holders may replace existing bonds with replacement bonds at any time; and 2. Existing performance bonds will not be released until the permittee has submitted and the director has approved acceptable replacement performance bonds. A replacement of performance bonds pursuant to this section shall not constitute a release of liability under section 444.775, RSMo. (3) In addition to these bonding requirements, for each acre or portion of an acre permitted on or after August 28, 1990, where topsoil has been removed, either by discarding or selling, an additional bond at four thousand five hundred dollars ($4,500) per acre shall be filed with the Missouri Mining Commission, unless the area does not require replacement of topsoil for revegetation. If more than twelve inches (12") of topsoil exists on the site, or if the commission approves a soil substitution plan, the excess may be sold without posting the additional bond. (4) An operator may file with the commission or director a bond release request for permitted bonded acres which are not disturbed at any time. If approved by the commission, the bond will be reduced at the rate at which it was posted, following a field inspection of the area to verify that no disturbance has occurred. (5) When an operator succeeds another at an operation, the commission or director may release the first operator after the successor operator obtains a permit and posts the bonds required by law and assumes, in writing, all outstanding reclamation liability and requirements at the site(s) transferred to the successor operator. All areas disturbed by the first operator that have not been transferred to the successor operator shall remain the liability of the first operator. (6) To file a request for bond release on an operation, an operator must apply, in writing, to the commission for release of the bond or portion of the bond. This application shall be on a form provided by the commission and shall be accompanied by a map showing the area requested for release. The operator shall also send notice to the owner(s) of the land upon which the application for release has been filed, unless the operator is the owner of the land that is under permit. Said notice shall contain a copy of the release application and a statement that the landowner(s) may submit a request for a formal hearing to the Missouri Mining Commission if s/he believes that the land affected by surface mining does not meet the performance standards listed in 10 CSR 40-10.050. The notice shall also inform the landowner(s) that s/he will have thirty (30) days from the date that the land reclamation program receives the operator’s application for release to make the request for a formal hearing. The application for release and the notification letter to the landowner(s) shall be mailed out simultaneously in order to provide the landowner with as much notice time as possible. (7) If, after being inspected, an area is found by the commission or director to qualify for a bond release, the bond will be reduced proportionately, but not below the eight thousand dollar ($8,000) minimum required. An area shall qualify for bond release when the operator has fulfilled all reclamation obligations specified in the approved permit, Land Reclamation Act, the rules in this chapter, and all other applicable laws. (8) Whenever an increase in acreage permitted requires an increase in bond, additional bond and bond form(s) reflecting the increase shall be submitted as required by this rule. (9) The bond shall be forfeitable upon permit revocation or upon the operator’s failure to renew the permit on affected acres not reclaimed or for any violation of these rules. In the event the bond is forfeited, the commission may pursue all legal remedies to obtain the bond and to complete reclamation. AUTHORITY: sections 444.767, 444.772, and 444.784, RSMo 2016.* Original rule filed Aug. 2, 1991, effective Feb. 6, 1992. Amended: Filed June 1, 1994, effective Nov. 30, 1994. Amended: Filed April 1, 2004, effective May 30, 2005. Amended: Filed March 26, 2018, effective Nov. 30, 2018. *Original authority: 444.767, RSMo 1971, amended 1990, 1993, 2001; 444.772, RSMo 1971, amended 1984, 1990, 1992, 2001; and 444.784, RSMo 1971, amended 1990, 2001.