                                 CODE OF VIRGINIA

 PERFORMANCE BONDS (§ 45.2-1016)

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&#8217;s responsibility for revegetation as required under regulations
adopted pursuant to &#xA7; 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&#8217;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&#8217;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&#8217;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.

HISTORY: 1979, c. 290, § 45.1-241; 1984, c. 590; 1997, c. 285; 1998, c. 692;
2014, cc. 111, 135; 2021, Sp. Sess. I, c. 387.