A. After a coal surface mining permit application has been approved, but before such permit is issued, the applicant shall file with the Director, on a form prescribed and furnished by the Director, a bond for performance payable to the Commonwealth and conditioned upon the faithful performance of all the requirements of this chapter and the permit. The bond shall cover that area of land within the permit area upon which the operator plans to initiate and conduct surface coal mining and reclamation operations within the initial term of the permit. As each succeeding increment of coal surface mining and reclamation operations is initiated and conducted within the permit area, the permittee shall file with the Director an additional bond to cover such increment in accordance with this section. The amount of the bond required for each bonded area shall be determined by the Director and shall (i) depend upon the reclamation requirements of the approved permit and (ii) reflect the probable difficulty of reclamation, giving consideration to such factors as topography, geology of the site, hydrology, and revegetation potential. The amount of the bond shall be sufficient to assure the completion of the reclamation plan if the work is performed by the Director in the event of forfeiture but in no case shall the bond for the entire area under one permit be less than $10,000.
B. Liability under a performance bond shall be for the duration of the coal surface mining and reclamation operation and for a period coincident with the operator’s responsibility for revegetation as required under regulations adopted pursuant to § 45.2-1017. The bond shall be executed by the operator and a corporate surety licensed to do business in the Commonwealth, except that the operator may elect to deposit cash, negotiable bonds of the United States or the Commonwealth, or negotiable certificates of deposit of any bank organized for transacting business in the United States. The cash deposit or market value of such securities shall be equal to or greater than the amount of the bond required for the bonded area.
C. Cash or securities deposited pursuant to subsection B shall be deposited upon the same terms as the terms upon which surety bonds may be deposited. Such securities shall be security for the repayment of such negotiable certificate of deposit.
D. The Director may accept a letter of credit on certain designated funds issued by a financial institution authorized to do business in the United States. Such letter of credit shall be irrevocable and unconditional, shall be payable to the Department upon demand, and shall afford the Department protection equivalent to a corporate surety’s bond. Such letter of credit shall be provided on a form and in a format established by the Director. Nothing in this section shall relieve the permittee of responsibility under the permit or the issuer of liability on the letter of credit.
E. The issuer of a letter of credit pursuant to subsection D shall give prompt notice to the permittee and the Department of any notice received or action filed alleging the insolvency or bankruptcy of the issuer, or alleging any violation of a regulatory requirement that could result in the suspension or revocation of the issuer’s charter or license to do business. In the event the issuer becomes unable to fulfill any of its obligations under the letter of credit for any reason, the issuer shall immediately notify the permittee and the Department. Upon the incapacity of an issuer by a reason of bankruptcy, insolvency, or the suspension or revocation of its charter or license, the permittee shall be deemed to be without proper performance bond coverage and shall promptly notify the Department. The Department shall then issue a notice to the permittee specifying a reasonable period not exceeding 90 days to replace bond coverage. If an adequate bond is not posted by the end of the period allowed, the permittee shall cease coal extraction and coal processing operations and shall immediately begin to conduct reclamation operations in accordance with its reclamation plan. No coal extraction or coal processing operation shall resume until the Department has determined that an acceptable bond has been posted. If an acceptable bond has not been posted by the end of the period allowed, the Department may suspend the permit until an acceptable bond is posted.
F. The Director may develop and adopt an alternative system to achieve the objectives and purposes of the bonding program established under this section.
G. The amount of the bond or deposit required and the terms of each acceptance of the applicant’s bond shall be adjusted by the Director from time to time as affected land acreages are increased or decreased or where the cost of future reclamation changes.