Chapter 1501:13-7 Performance Security

1501:13-7-01 General requirements for providing performance security for coal mining and reclamation operations.

(A) Requirement to file performance security.

(1) After an application for a permit to conduct coal mining and reclamation operations has been approved under these rules, the applicant shall file with the chief performance security in compliance with these rules.

(a) If the applicant provides performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of this rule, the applicant shall file performance security for:

(i) The number of acres in the entire area to be permitted; or

(ii) The estimated number of acres to be affected in the first permit year in accordance with the requirements of paragraph (A)(6)(a) of this rule.

(b) If the applicant provides performance security without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of this rule, the applicant shall file performance security for:

(i) The entire area to be permitted; or

(ii) Each incremental mining unit to be affected in the first permit year in accordance with the requirements of paragraph (A)(6)(b) of this rule.

(c) Once coal extraction begins under an approved permit, a permittee providing performance security without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of this rule may not change to providing performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of this rule.

(2) No person shall disturb surface acreage, either by coal mining and reclamation operations conducted on the surface of land or as a result of surface impacts incidental to an underground coal mine, prior to filing with the chief performance security covering the areas of land to be affected.

(3) Liability on the performance security shall cover all coal mining and reclamation operations to be conducted within the permit area until the end of the permittee's period of reclamation responsibility.

(4) No area affected by a coal mining and reclamation operation within a permit shall be identified with a specific performance security.

(5) Performance security shall apply to the permit area and to all revisions to the permit, including incidental boundary revisions and adjacent area permits.

(6) Providing incremental performance security. When an applicant elects to file performance security incrementally:

(a) The applicant that provides performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of this rule shall as part of the permit application process:

(i) Submit to the chief a written estimate of the number of acres to be affected in the first permit year; and

(ii) Before the permit is issued, file with the chief performance security for the estimated number of acres to be affected in the first permit year;

(b) The applicant that provides performance security without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of this rule shall as part of the permit application process:

(i) Submit to the chief, on the map required under paragraph (D)(3) of rule 1501:13-4-01 of the Administrative Code, the boundaries for each incremental mining unit within the proposed permit area; and

(ii) Before the permit is issued, file with the chief performance security for each incremental mining unit that will be affected in the first permit year;

(c) Thirty days before affecting more than the number of acres or incremental mining units for which performance security has been filed with the chief, the permittee shall file additional performance security for the number of additional acres to be affected in the permit year or for the next incremental mining unit or units to be affected by the mining and reclamation operation;

(d) The permittee shall within thirty days after the end of every permit year:

(i) Identify on the annual map each incremental area or incremental mining unit for the first through most recent permit year in accordance with the requirements of these rules; and

(ii) File performance bond with the chief, concurrently with the submittal of the annual map, if one of the following circumstances applies:

(a) For permits for which performance security has been filed together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of this rule, the number of acres shown as affected and estimated to be affected on the annual map exceeds the number of acres for which performance secuirty has been provided; or

(b) For permits for which performance security has been filed without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of this rule, the incremental mining units shown as affected and estimated to be affected on the annual map exceed the incremental mining units for which performance security has been provided;

(e) Performance security filed and not yet released for any incremental area or incremental mining unit can be forfeited, in whole or part, to perform the requirements of Chapter 1513. of the Revised Code, rules adopted thereunder, and the conditions of the permit on any area affected by the permittee pursuant to the permit;

(f) After a permit is issued, a permittee that has chosen to provide incremental performance security may elect instead to provide performance security for the entire permit area and file the entire performance security required during the term of the permit; and

(g) After a permit is issued, a permittee that provides performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of this rule and that has filed the entire performance security required during the term of the permit may not change to incremental performance security.

(7) A permittee that has filed performance security for the entire permit area instead of filing performance security incrementally shall identify an incremental area or incremental mining unit at the end of each permit year in the manner prescribed in paragraph (A)(6)(d)(i) of this rule and may obtain release of performance security by incremental area or by incremental mining unit, pursuant to rule 1501:13-7-05 or rule 1501:13-7-05.1 of the Administrative Code, as applicable.

(B) Estimated cost of reclamation. The chief shall determine the estimated cost of reclamation under the initial term of the permit if the reclamation has to be performed by the division of mineral resources management in the event of forfeiture of the performance security by the permittee.

(1) The chief shall determine the estimated cost of reclamation using:

(a) The information contained in the permit application and in the approved mining and reclamation plan, as required by the chief and submitted by the applicant under rule 1501:13-4-05 of the Administrative Code, rule 1501:13-4-14 of the Administrative Code or paragraph (I) of rule 1501:13-4-12 of the Administrative Code; and

(b) After considering the topography, geology, hydrology, and revegetation potential of the area of the approved application, the probable difficulty of reclamation.

(2) The chief shall provide the applicant a copy of the estimated cost of reclamation along with the unit costs used to support the estimated cost of reclamation.

(3) The chief shall send written notice of the amount of the estimated cost of reclamation by certified mail to the applicant.

(C) Method of providing performance security. The applicant shall send written notice to the chief indicating the method by which the applicant will provide the performance security. The method of providing performance security shall apply to the entire permit. The applicant shall provide the performance security in an amount using one of the following:

(1) If the applicant provides performance security without reliance on the reclamation forfeiture fund created in section 1513.18 of the Revised Code, the applicant shall provide as performance security the amount of the estimated cost of reclamation as determined by the chief under paragraph (B) of this rule and in accordance with paragraphs (B) and (C) of rule 1501:13-7-02 of the Administrative Code.

(2) If the applicant provides performance security together with reliance on the reclamation forfeiture fund created in section 1513.18 of the Revised Code, the applicant shall, in addition to paying the tax on the severance of coal levied under division (A)(8) of section 5749.02 of the Revised Code, provide performance security in the amount required under paragraphs (A) and (C) of rule 1501:13-7-02 of the Administrative Code.

(a) To be eligible to provide performance security in accordance with paragraph (C)(2) of this rule, the applicant, an owner and controller of the applicant, or an affiliate of the applicant shall have held a permit issued under this chapter for any coal mining and reclamation operation for a period of not less than five years.

(b) In the event of forfeiture of performance security that was provided in accordance with paragraph (C)(2) of this rule, the difference between the amount of that performance security and the estimated cost of reclamation as determined by the chief under paragraph (B) of this rule shall be obtained from the money in the reclamation forfeiture fund created in section 1513.18 of the Revised Code as needed to complete the reclamation.

(D) Release of excess performance security.

(1) For a permittee that provides performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of this rule:

(a) If, upon receipt by the chief of the annual map and annual report, the number of acres affected is less than the number of acres for which performance security has been provided, the permittee may obtain a release of the excess performance security by submitting a request for release of excess performance security to the chief on a form provided by the chief; and

(b) If, upon receipt by the chief of the final map and final report, the number of acres affected is less than the number of acres for which performance security has been provided, the chief shall release the excess performance security to the permittee.

(2) For a permittee that provides performance security without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of this rule, if, upon receipt of the annual map and annual report, the chief determines that the required performance security for the next year is less than the performance security that has been provided, the permittee may obtain a release of the excess performance security by submitting a request for release of excess performance security to the chief on a form provided by the chief.

(E) Responsibilities of the chief.

(1) The chief shall prescribe and furnish forms for filing performance security.

(2) The chief shall determine the estimated cost of reclamation in accordance with paragraph (B) of this rule.

(3) The chief shall adjust the amount of the estimated cost of reclamation and the amount of a permittee's performance security provided for the permit area in accordance with paragraph (E) of rule 1501:13-7-02 of the Administrative Code.

(4) The chief may not accept a self-bond in lieu of a surety or collateral bond unless the permittee meets the requirements of rule 1501:13-7-04 of the Administrative Code.

(5) The chief shall release the permittee from his performance security obligations in accordance with rule 1501:13-7-05 or rule 1501:13-7-05.1 of the Administrative Code.

(6) The chief shall cause all or part of a performance security to be forfeited in accordance with rule 1501:13-7-06 of the Administrative Code.

(7) The chief shall require as a condition of the permit that adequate performance security coverage be in effect at all times.

Effective: 04/30/2009
R.C. 119.032 review dates: 02/06/2009 and 04/20/2014
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.08 , 1513.18
Prior Effective Dates: 5/18/81, 8/16/82 (Emer.), 10/27/82, 6/30/83, 10/1/88, 10/22/90

1501:13-7-02 Amount and duration of performance security.

(A) Performance security amount for permits for which the applicant or permittee provides performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of rule 1501:13-7-01 of the Administrative Code.

(1) The amount of the performance security shall be two thousand five hundred dollars per acre of land on which the permittee will conduct a coal mining and reclamation operation under the initial term of the permit as indicated in the application.

(2) A permittee's responsibility for repairing material damage and replacement of water supplies resulting from subsidence may be satisfied by liability insurance required under Chapter 1513. of the Revised Code if the liability insurance policy contains terms and conditions that specifically provide coverage for repairing material damage and replacement of water supplies resulting from subsidence.

(B) Performance security amount for permits for which the applicant or permittee provides performance security without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of rule 1501:13-7-01 of the Administrative Code.

(1) The amount of performance security shall be equal to the estimated cost of reclamation, as determined by the chief under paragraph (B) of rule 1501:13-7-01 of the Administrative Code, for:

(a) The land on which the permittee will conduct a coal mining and reclamation operation under the initial term of the permit; or

(b) The incremental mining units that will be affected in the first permit year, if the permittee or applicant elects to provide performance security separately for each incremental mining unit in accordance with paragraph (A)(6)(b) of rule 1501:13-7-01 of the Administrative Code.

(2) A permittee's responsibility for repairing material damage and replacement of water supplies resulting from subsidence shall be satisfied by either of the following:

(a) The purchase prior to mining of a noncancelable premium-prepaid liability insurance policy in lieu of the permittee's performance security for subsidence damage. The insurance policy shall contain terms and conditions that specifically provide coverage for repairing material damage and replacement of water supplies resulting from subsidence ; or

(b) The provision of additional performance security in the amount of the estimated cost to the division of mineral resources management to repair material damage resulting from subsidence, if the permittee will be repairing material damage, or to replace the water supplies resulting from subsidence, if the permittee will be replacing the water supplies, until the repair or replacement is completed.

(i) If repair or replacement is completed, or compensation for structures that have been damaged by subsidence is provided, by the permittee within ninety days of the occurrence of the subsidence, additional performance security is not required.

(ii) The chief may extend the ninety-day period for a period not to exceed one year if the chief determines that the permittee has demonstrated in writing that subsidence is not complete and that probable subsidence-related damage to lands or protected structures likely will continue to occur or that reasonably anticipated changes affecting the water supplies likely will occur and, as a result, the completion of repairs of subsidence-related material damage to lands or protected structures or the replacement of water supplies within ninety days of the occurrence of the subsidence would be unreasonable.

(C) Minimum amount. The amount of the performance security for coal mining and reclamation operations shall be ten thousand dollars at a minimum for the entire area under one permit and the minimum amount shall be maintained on deposit until such time as the permittee is released from all liability in accordance with rule 1501:13-7-05 or rule 1501:13-7-05.1 of the Administrative Code.

(D) Period of liability

(1) Liability under a performance security or securities applicable to a permit shall continue until all reclamation and restoration work under the requirements of Chapter 1513. of the Revised Code, these rules, and the provisions of the mining and reclamation plan has been completed, the period of extended responsibility for revegetation has expired in accordance with rule 1501:13-9-15 of the Administrative Code, and the permittee is released from liability in accordance with rule 1501:13-7-05 or rule 1501:13-7-05.1 of the Administrative Code.

(2) The performance security liability of the permittee shall include only those actions which the permittee is obligated to take under the permit, Chapter 1513. of the Revised Code and these rules, including completion of the reclamation plan, so that the land will be capable of supporting the postmining land use approved in the permit under rule 1501:13-9-17 of the Administrative Code.

(3) Implementation of an alternative postmining land use approved under paragraph (D) of rule 1501:13-9-17 of the Administrative Code which is beyond the control of the permittee, need not be covered by the performance security.

(E) Adjustment of amount.

(1) The chief shall adjust the amount of the estimated cost of reclamation determined under paragraph (B) of rule 1501:13-7-01 of the Administrative Code if the land that is affected by mining increases or decreases or if the cost of reclamation increases or decreases.

(2) For permits for which the permittee provides performance security without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of rule 1501:13-7-01 of the Administrative Code, the chief shall adjust the amount of a permittee's performance security provided in accordance with this rule if the land that is affected by mining increases or if the cost of reclamation increases and shall allow the permittee the option of reducing the amount of performance security provided in accordance with this rule if the land that is affected by mining decreases or if the cost of reclamation decreases.

(3) The chief may review at any time during the term of the permit the estimated cost of reclamation determined under paragraph (B) of rule 1501:13-7-01 of the Administrative Code and the amount of a permittee's performance security provided in accordance with this rule to determine whether an adjustment is needed, but at a minimum the chief shall review the estimated cost of reclamation and the amount of a permittee's performance security at the following times:

(a) When a permittee files an annual report and annual map with the chief in accordance with paragraphs (A) and (B) of rule 1501:13-4-07 of the Administrative Code, a letter to the chief in accordance with paragraph (C) of rule 1501:13-4-07 of the Administrative Code, or a final report to the chief in accordance with paragraph (D) of rule 1501:13-4-07 of the Administrative Code;

(b) When a permittee files an application for revision of a permit under rule 1501:13-4-06 of the Administrative Code which contains information that affects the estimated cost of reclamation;

(c) When a permittee files an application for renewal of a permit under rule 1501:13-4-06 of the Administrative Code;

(d) When a permittee files additional performance security in accordance with paragraphs (A)(6)(c) of rule 1501:13-7-01 of the Administrative Code;

(e) When a permittee's operation advances into any succeeding incremental area or incremental mining unit, or begins any new operational stage;

(f) When any event occurs on or results from a mining and reclamation operation, including subsidence, discharges, or contamination, diminution or interruption of a water supply, that affects the estimated cost of reclamation;

(g) When the chief issues a cessation order for failure to abate a violation for non-contemporaneous reclamation under paragraph (A)(3) of rule 1501:13-14-02 of the Administrative Code; and

(h) When the chief issues a show cause order to a permittee to show cause why the performance security should not be forfeited under rule 1501:13-7-06 of the Administrative Code.

(4) The chief shall notify, in writing, persons involved in performance security coverage of any performance security adjustments. For purposes of this rule a person involved in performance security coverage shall include the permittee, the surety, and any other person with a property interest in collateral posted under these rules who has in writing to the chief requested such notification at the time the collateral is posted or the interest is acquired, whichever occurs later.

(5) The permittee may request an informal conference with the chief concerning a performance security adjustment made under paragraph (E) of this rule, and the chief shall provide such an informal conference in accordance with rule 1501:13-14-05 of the Administrative Code.

(6)

(a) If the chief increases the amount of performance security under paragraph (E) of this rule, the permittee shall provide additional performance security in an amount determined by the chief.

(b) If the chief decreases the amount of performance security under paragraph (E) of this rule, the chief shall determine the amount of the reduction of the performance security and send written notice of the amount of reduction to the permittee. The permittee may reduce the amount of the performance security in the amount determined by the chief.

(7) A permittee may request a reduction in the amount of the performance security by submitting to the chief documentation proving that the permittee's method of operation or other circumstances have changed such that the amount of the performance security provided by the permittee exceeds the estimated cost of reclamation if the reclamation would have to be performed by the division of mineral resources management in the event of forfeiture of the performance security. The chief shall examine the documentation and determine whether the permittee's performance security exceeds the estimated cost of reclamation. If the chief determines that the performance security exceeds that estimated cost, the chief shall determine the amount of the reduction of the performance security and send written notice of the amount to the permittee. The permittee may reduce the amount of the performance security in the amount determined by the chief.

(8) An adjustment in the amount of performance security under paragraph (E) of this rule shall not be considered release of performance security and is not subject to division (F) of section 1513.16 of the Revised Code.

Effective: 10/28/2010
R.C. 119.032 review dates: 06/11/2010 and 10/15/2015
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.08
Prior Effective Dates: 5/18/81, 8/16/82 (Emer.), 10/27/82, 10/1/88, 4/30/09

1501:13-7-03 Form, conditions, and terms of performance security.

(A) Form of the performance security. The performance security to be submitted by the applicant or permittee shall be on forms furnished by the chief. The chief shall allow for:

(1) A surety bond;

(2) A collateral bond;

(3) Self-bonding;

(4) A trust fund; or

(5) A combination of any of these forms of performance security.

(B) Terms and conditions of the performance security.

(1) The performance security shall be in an amount determined by the chief, as provided in paragraphs (A) and (C) of rule 1501:13-7-02 of the Administrative Code for permits for which the applicant or permittee provides performance security together with reliance on the reclamation forfeiture fund, or as provided in paragraphs (B) and (C) of rule 1501:13-7-02 of the Administrative Code for permits for which the applicant or permittee provides performance security without reliance on the reclamation forfeiture fund.

(2) The performance security shall be payable to the state and conditioned upon the faithful performance of all the requirements of Chapter 1513. of the Revised Code, rules adopted thereunder, and the provisions of the applicant's approved mining and reclamation plan.

(3) Except for performance security provided in accordance with rule 1501:13-7-04 of the Administrative Code, the name of the permittee on the performance security shall be identical to the name of the permittee on the permit.

(4) The duration of the performance security shall be that described in paragraph (D) of rule 1501:13-7-02 of the Administrative Code.

(5) Surety bonds shall be subject to the following conditions:

(a) The chief shall not accept the bonds of a surety company unless the bond is noncancellable by the surety at any time for any reason including, but not limited to, non-payment of premium or bankruptcy of the permittee during the period of liability;

(b) The chief shall not accept a surety bond in excess of ten per cent of the surety company's capital surplus account;

(c) The chief shall not accept a surety bond from a surety company for any operator if the sum of such bond and all other surety bonds issued by the surety company on any and all the permits of that operator is in excess of thirty percent of the surety company's capital surplus account;

(d) The surety bond shall be issued by a corporate surety licensed to do business in Ohio;

(e) The chief may provide in the bond that the amount shall be confessed to judgment upon forfeiture as provided in section 2323.13 of the Revised Code;

(f) The bond shall provide that the surety and the permittee shall be jointly and severally liable; and

(g) The bond shall provide that:

(i) The surety will give prompt notice to the permittee and the chief of any notice received or action filed alleging the insolvency or bankruptcy of the surety, or alleging any violation of regulatory requirements which could result in suspension or revocation of the surety's license to do business; and

(ii) In the event the surety becomes unable to fulfill its obligations under the bond for any reason, notice shall be given immediately to the permittee and the chief.

(6) Collateral bonds, except for letters of credit, shall be subject to the following conditions:

(a) The chief shall deliver to the treasurer of state all collateral deposited by the permittee or applicant to be held until authorized for release or replacement as provided in these rules. The treasurer shall hold it in trust for the purposes for which it has been deposited;

(b) The chief shall value collateral at their current market value, not face value;

(c) The chief shall not accept a certificate of deposit unless it is payable to the state, both in writing and upon the records of the bank issuing such certificates;

(d) The chief shall not accept an individual certificate or cash account for a denomination in excess of the maximum insurable amount as determined by F.D.I.C. and F.S.L.I.C.;

(e) If the performance security is a cash deposit or negotiable certificates of deposit of a bank or savings and loan association, the bank or savings and loan association shall be licensed and operating in Ohio;

(f) A certificate of deposit shall be automatically renewable and issued with a maturity date of not less than twelve months;

(g) At the time a certificate of deposit is being closed and rolled over into a new certificate of deposit, the permittee shall notify the chief of any change of account numbers by submitting a revised collateral bond indemnity agreement form;

(h) The chief shall require the applicant to deposit sufficient amounts of certificates of deposit to assure that upon forfeiture the chief will be able to liquidate those certificates prior to maturity for the amount of the performance security required by rules 1501:13-7-01 to 1501:13-7-06 of the Administrative Code; and

(i) Certificates of deposit may be substituted for a cash account with the approval of the chief.

(7) Letters of credit shall be subject to the following:

(a) The letter may only be issued by a bank organized or authorized to do business in Ohio;

(b) The initial term of the letter of credit shall be for not less than one year from the issue date and shall be automatically renewable for a period of not less than one year from the scheduled expiration date, unless the bank notifies the chief by certified or registered mail at least sixty days before the expiration date that the bank will not renew the letter of credit. Upon notice of a bank's intent not to renew the letter of credit, the permittee shall replace performance security at least thirty days before the expiration date of the letter of credit agreement with other letters of credit, other forms of security supporting the collateral bond indemnity agreement, or another form of performance security. If the letter of credit is not replaced at least thirty days prior to the expiration date, the chief shall demand and obtain payment on it before it expires;

(c) The letter shall be payable to the state, in part or in full, upon written demand by the chief and, except as provided in paragraph (B)(7)(b) of this rule, accompanied by a written statement signed by the chief declaring one or more of the following:

(i) That the permittee has not faithfully performed all of the requirements of Chapter 1513. of the Revised Code, rules adopted thereunder, and the provisions of the permittee's approved mining and reclamation plan;

(ii) That the permittee has failed to replace performance security coverage in accordance with the requirements of paragraph (B)(7)(b) of this rule; or

(iii) That the permittee has failed to replace performance security at least thirty days prior to the expiration date of the letter of credit.

(d) The chief may require in the indemnity agreement that the amount shall be confessed in judgment upon forfeiture as provided in section 2323.13 of the Revised Code; and

(e) The letters of credit shall provide that:

(i) The bank will give prompt notice to the permittee and the chief of any notice received or action filed alleging the insolvency or bankruptcy of the bank, or alleging any violations of regulatory requirements which could result in suspension or revocation of the bank's charter or license to do business; and

(ii) In the event the bank becomes unable to fulfill its obligations under the letter of credit for any reason, notice shall be given immediately to the permittee and the chief.

(8) The estimated bond value of all collateral provided as performance security assurance under paragraphs (B)(6) and (B)(7) of this rule shall be subject to a margin, which is the ratio of bond value to market value, as determined by the chief. The margin shall reflect legal and liquidation fees, as well as value depreciation, marketability and fluctuations which might affect the net cash available to the chief in performing reclamation. The bond value of collateral may be evaluated at any time, but it shall be evaluated as part of permit renewal and if necessary, the performance security amount increased or decreased.

(9) Persons with an interest in a collateral bond provided as performance security, and who desire notification of actions pursuant to the collateral bond, shall request the notification in writing to the chief at the time collateral bond is offered.

(10) Trust funds for performance security under this rule shall be subject to the following conditions:

(a) The trust fund shall be in an amount equal to the estimated cost of reclamation as determined by the chief under paragraph (B) of rule 1501:13-7-01 of the Administrative Code excluding all cost of administration of the trust fund;

(b) The trust fund agreement shall be in a form approved by the chief and shall contain all terms and conditions required by the chief;

(c) The chief shall specify the investment objectives of the trust fund;

(d) Termination of the trust fund may occur only as specified by the chief upon a determination that no further reclamation is necessary, that replacement performance security has been filed, or that the administration of the trust fund in accordance with its purpose requires termination;

(e) Release of money from the trust fund may be made only upon written authorization of the chief or according to a schedule established in the agreement accompanying the trust fund; and

(f) A financial institution or other company serving as a trustee must be a bank, trust company or other financial institution with trust powers that is organized or authorized to do business in Ohio.

(11) If a surety, bank, savings and loan association, trust company, or other financial institution that holds the performance security required under this rule becomes incapacitated by reason of bankruptcy, insolvency, or suspension or revocation of its license, the permittee shall be deemed to be without performance security coverage in violation of paragraph (A) of rule 1501:13-7-01 of the Administrative Code and shall promptly notify the chief. The chief shall notify, in writing, any permittee who is without performance security to submit a plan for replacement performance security within thirty days after receipt of such notice from the chief. If performance security is not replaced within the period set forth in paragraph (B)(11)(a) or (B)(11)(b) of this rule, the permittee shall cease all coal extraction being conducted under the permit and shall immediately begin to conduct reclamation operations in accordance with the reclamation plan. Mining shall not resume until the chief has determined that an acceptable performance security has been filed in accordance with paragraph (A) of rule 1501:13-7-01 of the Administrative Code.

(a) For a permit for which performance security is provided without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of rule 1501:13-7-01 of the Administrative Code, the permittee shall provide the replacement performance security within ninety days after receipt of written notice from the chief that the permittee is without performance security.

(b) For a permit for which performance security is provided together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of rule 1501:13-7-01 of the Administrative Code, the permittee shall continue to pay the severance tax levied under division (A)(8) of section 5749.02 of the Revised Code and shall provide the replacement performance security within one year after receipt of written notice from the chief that the permittee is without performance security.

(C) Replacement of performance security.

(1) The chief may allow the permittee to replace existing performance security with other performance security, if the liability which has accrued against the permittee on the permit area is transferred to such replacement performance security and the replacement performance security meets the requirements of these rules.

(2) The chief may allow the permittee to replace existing surety or collateral bonds with a self-bond, provided that the permittee meets the requirements of self-bonding as provided in these rules.

(3) The chief shall not release existing performance security until the permittee has submitted and the chief has approved acceptable replacement performance security. A replacement of performance security pursuant to paragraph (C) of this rule shall not constitute a release of performance security.

Effective: 04/30/2009
R.C. 119.032 review dates: 02/06/2009 and 04/20/2014
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.01 , 1513.08
Prior Effective Dates: 9/1/77, 5/1/80, 5/18/81, 8/16/82 (Emer.), 10/27/82, 6/30/83, 11/26/86 (Emer.), 1/12/87 (Emer.), 3/27/87, 10/1/88

1501:13-7-04 Self-bonding.

(A) Definitions for the purposes of this rule only:

(1) "Current assets" means cash or other assets or resources which are reasonably expected to be converted to cash or sold or consumed within one year or within the normal operating cycle of the business.

(2) "Current liabilities" means obligations which are reasonably expected to be paid or liquidated within one year or within the normal operating cycle of the business.

(3) "Fixed assets" means plants and equipment, but does not include land or coal in place.

(4) "Liabilities" means obligations to transfer assets or provide services to other entities in the future as a result of past transactions.

(5) "Net worth" means total assets minus total liabilities and is equivalent to owners' equity.

(6) "Parent corporation" means a corporation which owns or controls the applicant.

(7) "Tangible net worth" means net worth minus intangibles such as goodwill and rights to patents or royalties.

(B) If the performance security is a bond, the chief may accept a self-bond from an applicant for a permit if all of the following conditions are met by the applicant or its parent corporation guarantor:

(1) The applicant designates a suitable agent to receive service of process in the state where the proposed coal mining operation is to be conducted.

(2) The applicant has been in continuous operation as a business entity for a period of not less than five years. "Continuous operation" shall mean that business was conducted over a period of five years immediately preceding the time of application.

(a) The chief may allow a joint venture or syndicate with less than five years of continuous operation to qualify under this requirement, if each member of the joint venture or syndicate has been in continuous operation for at least five years immediately preceding the time of application.

(b) When calculating the period of continuous operation, the chief may exclude past periods of interruption to the operation of the business entity that were beyond the applicant's control and that do not affect the applicant's likelihood of remaining in business during the proposed coal mining and reclamation operations.

(3) The applicant submits financial information in sufficient detail to show that the applicant meets one of the following criteria:

(a) The applicant has a current rating for its most recent bond issuance of "A" or higher as issued by either "Moody's Investor Service" or "Standard and Poor's Corporation";

(b) The applicant has a tangible net worth of at least ten million dollars, a ratio of total liabilities to net worth of two and one-half times or less, and a ratio of current assets to current liabilities of one and one-fifth times or greater; or

(c) The applicant's fixed assets in the United States total at least twenty million dollars, and the applicant has a ratio of total liabilities to net worth of two and one-half times or less, and a ratio of current assets to current liabilities of one and one-fifth times or greater.

(4) The applicant submits:

(a) Financial statements for the most recently completed fiscal year accompanied by a report prepared by an independent certified public accountant in conformity with generally accepted accounting principles and containing the accountant's audit opinion or review opinion of the financial statements with no adverse opinion;

(b) Unaudited financial statements for completed quarters in the current fiscal year; and

(c) Additional unaudited information as requested by the chief.

(C) The chief may accept a written guarantee for an applicant's self-bond from a parent corporation guarantor, if the guarantor meets the conditions of paragraph (B) of this rule as if it were the applicant. Such a written guarantee shall be referred to as a "corporate guarantee." The terms of the corporate guarantee shall provide for the following:

(1) If the applicant fails to complete the reclamation plan, the guarantor shall do so or the guarantor shall be liable under the indemnity agreement to provide funds to the chief sufficient to complete the reclamation plan, but not to exceed the performance security amount required under rule 1501:13-7-02 of the Administrative Code.

(2) The corporate guarantee shall remain in force unless the guarantor sends notice of cancellation by certified mail to the applicant and to the chief at least ninety days in advance of the cancellation date, and the chief accepts the cancellation.

(3) The cancellation may be accepted by the chief if the applicant obtains suitable replacement performance security before the cancellation date or if the lands for which the self-bond, or portion thereof, was accepted have not been disturbed.

(D) The chief may accept a written guarantee for an applicant's self-bond from any corporate guarantor, whenever the applicant meets the conditions of paragraphs (B)(1), (B)(2) and (B)(4) of this rule, and the guarantor meets the conditions of paragraphs (B)(1) to (B)(4) of this rule. Such a written guarantee shall be referred to as a "non-parent corporate guarantee." The terms of this guarantee shall provide for compliance with the conditions of paragraph (C) of this rule. The chief may require the applicant to submit any information specified in paragraph (B)(3) of this rule in order to determine the financial capabilities of the applicant.

(E) For the chief to accept an applicant's self-bond, the total amount of the outstanding and proposed self-bonds of the applicant for coal mining and reclamation operations shall not exceed twenty-five per cent of the applicant's tangible net worth in the United States. For the chief to accept a corporate guarantee, the total amount of the parent corporation guarantor's present and proposed self-bonds and guaranteed self-bonds for coal mining and reclamation operations shall not exceed twenty-five per cent of the guarantor's tangible net worth in the United States. For the chief to accept a non-parent corporate guarantee, the total amount of the non-parent corporate guarantor's present and proposed self-bonds and guaranteed self-bonds shall not exceed twenty-five per cent of the guarantor's tangible net worth in the United States.

(F) If the chief accepts an applicant's self-bond, an indemnity agreement shall be submitted subject to the following requirements:

(1) The indemnity agreement shall be executed by all persons and parties who are to be bound by it, including the parent corporation guarantor, and shall bind each jointly and severally.

(2) A corporation applying for a self-bond, and a parent or non-parent corporation guaranteeing an applicant's self-bond shall submit an indemnity agreement signed by two corporate officers who are authorized to bind their corporation. A copy of such authorization shall be provided to the chief along with an affidavit certifying that such an agreement is valid under all applicable federal and state laws. In addition, the guarantor shall provide a copy of the corporate authorization demonstrating that the corporation may guarantee the self-bond and execute the indemnity agreement.

(3) A limited liability company shall submit an indemnity agreement signed by at least one member who is authorized to bind the company. A copy of such authorization shall be provided to the chief along with an affidavit certifying that such an agreement is valid under all applicable federal and state laws.

(4) A partnership, joint venture or syndicate shall submit an indemnity agreement that binds each partner or party who has a beneficial interest, directly or indirectly, in the applicant.

(5) Pursuant to rule 1501:13-7-06 of the Administrative Code, the applicant or parent or non-parent corporate guarantor shall be required to complete the approved reclamation plan for the lands in default or to pay to the chief an amount necessary to complete the approved reclamation plan, not to exceed the performance security amount required under rule 1501:13-7-02 of the Administrative Code. The indemnity agreement shall be confessed to judgment to the amount of the bond as provided in section 2323.13 of the Revised Code.

(G) The chief may require self-bonded applicants and parent and non-parent corporate guarantors to submit an update of the information required under paragraphs (B)(3) and (B)(4) of this rule within ninety days after the close of each fiscal year following the issuance of the self-bond or corporate guarantee.

(H) If at any time during the period when a self-bond is provided, the financial conditions of the applicant or parent or non-parent corporate guarantor change so that the criteria of paragraphs (B)(3) and (D) of this rule are not satisfied, the permittee shall notify the chief immediately and shall within ninety days provide an alternate form of performance security in the same amount as the self-bond. Should the permittee fail to provide an adequate substitute performance security pursuant to rule 1501:13-7-03 of the Administrative Code, then the permittee or operator shall cease coal extraction and shall immediately begin to conduct reclamation operations in accordance to the reclamation plan. Mining operations shall not resume until the chief has determined that an acceptable performance security has been provided.

Effective: 04/30/2009
R.C. 119.032 review dates: 02/06/2009 and 04/20/2014
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.08
Prior Effective Dates: 5/18/81, 10/27/82, 10/1/88, 12/27/90

1501:13-7-05 Procedures, criteria, and schedule for release of performance security for permits reliant on the reclamation forfeiture fund.

This rule applies to a permittee that provides performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of rule 1501:13-7-01 of the Administrative Code.

(A) Procedures for seeking release of performance security.

(1) Request for approval of reclamation. After all reclamation, restoration, and abatement work in a reclamation phase, as defined in paragraph (B)(1) of this rule, is completed on the entire permit area or on an incremental area, the permittee, or any person authorized to act on his or her behalf, shall file a request with the chief for approval of that reclamation. A request for approval of a reclamation phase shall include a request for release of performance security. A request for approval of reclamation may be filed only at times or during seasons that allow the chief to evaluate properly the reclamation reported to be completed.

(2) Contents of request for approval of reclamation.

(a) Every request for approval of reclamation for a particular reclamation phase shall include:

(i) The location and the number of acres of land subject to the request;

(ii) The permit number;

(iii) The amount of performance security for the area subject to the request and the phase of reclamation sought to be released; and

(iv) A notarized statement which certifies that all applicable reclamation activities have been accomplished in accordance with the requirements of Chapter 1513. of the Revised Code, the rules adopted thereunder and the approved reclamation plan.

(b) The request for approval of reclamation phase II or any attachments to the request shall also include:

(i) The results of tests on the soil of the area requested for release for such vegetation-sustaining factors as potassium, phosphorus, and lime, and a lime recommendation;

(ii) The planting report required under rule 1501:13-9-15 of the Administrative Code;

(iii) The number of acres of the area requested for release that are reclaimed as prime farmland; and

(iv) Yield data for those acres reclaimed as prime farmland, if appropriate.

(c) The request for approval of reclamation phase III or any attachments to the request shall also state:

(i) The number of acres of the area requested for release that are reclaimed as prime farmland;

(ii) Yield data for those acres reclaimed as cropland, prime farmland, pasture or grazing land, if appropriate ; and

(iii) The number of acres of the area requested for release that are reclaimed as lands eligible for remining.

(d) With every request for approval of reclamation for a particular reclamation phase, the permittee shall submit copies of the letters the permittee has sent to adjoining property owners, local government bodies, planning agencies, and sewage and water treatment authorities or water companies in the locality in which the coal mining and reclamation activities took place, notifying them of the permittee's intention to seek release of performance security.

(3) At the time that a request for release of performance security is filed with the chief, the permittee shall publish an advertisement, described in division (F)(1) of section 1513.16 of the Revised Code, at least once a week for four successive weeks in a newspaper of general circulation in the locality of the coal mining operation. In addition to the requirements specified in division (F)(1) of section 1513.16 of the Revised Code, the advertisement shall contain the permittee's name and shall state that written comments, objections, and requests for a performance security release conference may be submitted to the chief pursuant to rule 1501:13-7-08 of the Administrative Code. The advertisement shall also provide the address to which, and closing date by which, written comments, objections and requests for performance security release conferences must be sent. Within thirty days after filing a request for release with the chief, the permittee shall submit a copy of this advertisement to the chief.

(4) After the publication required by paragraph (A)(3) of this rule and prior to the release of performance security, the permittee shall submit to the chief a notarized proof of publication from the newspaper that published the advertisement.

(5) Inspection by the chief.

(a) Within thirty days after the permittee has complied with the requirements of paragraphs (A)(1), (A)(2), and (A)(3) of this rule, the chief shall conduct an inspection and evaluation of the reclamation work involved. The surface owner, or agent or lessee of the surface owner, shall be given notice of such inspection and may participate with the chief or his or her authorized representative in making the performance security release inspection.

(b) The chief shall consider during inspection and evaluation of the reclamation:

(i) Whether the permittee has met the requirements of Chapter 1513. of the Revised Code, these rules, any orders issued during mining and reclamation, and the specifications of the approved mining and reclamation plan;

(ii) The degree of difficulty to complete any remaining reclamation;

(iii) Whether pollution of surface and subsurface water is occurring;

(iv) The probability the pollution will continue or occur again; and

(v) The estimated cost of abating the pollution.

(6) Objections to release of performance security and request for performance security release conference.

(a) Within thirty days after the last newspaper publication of the filing of the request for release, written objections to the proposed release of performance security may be filed with the chief by the following persons:

(i) A person with a valid legal interest that might be adversely affected by release of the performance security;

(ii) The responsible officer or head of any federal, state, or local government agency that:

(a) Has jurisdiction by law or special expertise with respect to any environmental, social, or economic impact involved in the operation; or

(b) Is authorized to develop and enforce environmental standards with respect to the operation.

(b) Persons who may file objections under paragraph (A)(6)(a) of this rule may also request a performance security release conference on the proposed release of performance security pursuant to rule 1501:13-7-08 of the Administrative Code.

(7) Decision of the chief; notice of review.

(a) The chief shall notify in writing the permittee and any other interested parties of his or her decision to approve or disapprove the request for release and his or her decision to release or not to release all or part of the performance security:

(i) Within sixty days after the permittee has filed a request for release and complied with the requirements of paragraphs (A)(1), (A)(2), and (A)(3) of this rule, if no performance security release conference is held pursuant to paragraph (A)(6)(b) of this rule; or

(ii) Within sixty days after the performance security release conference, if a performance security release conference is held pursuant to paragraph (A)(6)(b) of this rule.

(b) If the chief disapproves a request for release, the chief shall notify the permittee in writing, stating the reasons for disapproval, recommending corrective action necessary to secure release, and informing the permittee of his or her right to appeal this decision to the reclamation commission.

(c) Within thirty days after notification of the final decision of the chief regarding the performance security release, the permittee or any person with an interest that is or may be adversely affected may file an appeal of that decision with the reclamation commission.

(d) If the chief intends to release the performance security, the chief shall notify the municipal corporation in which the coal mining operation is located by certified mail at least thirty days before release of all or part of the performance security.

(e) The chief shall not release performance security until proceedings in review of a decision to release are terminated or, if rights to administrative and judicial review have not been exercised, until periods allowed for filing applications for review have expired.

(B) Criteria and schedule for release of performance security.

(1) Reclamation phases defined.

(a) Reclamation phase I shall be determined to be completed when, in accordance with the approved mining and reclamation plan:

(i) Backfilling and regrading have been completed; and

(ii) Drainage controls have been established.

(b) Reclamation phase II shall be determined to be completed when:

(i) Resoiling is completed and revegetation meets the standards for success for a phase II performance security release in accordance with rule 1501:13-9-15 of the Administrative Code;

(ii) The lands are not contributing suspended solids to stream flow or runoff outside the permit area in excess of the requirements of division (A)(10) of section 1513.16 of the Revised Code, these rules, permit conditions, or the mining and reclamation plan;

(iii) With respect to prime farmlands, soil replacement has been carried out in accordance with the requirements of rule 1501:13-13-03 of the Administrative Code and division (A)(7) of section 1513.16 of the Revised Code, and soil productivity has returned to the levels of yield required by rule 1501:13-4-12 of the Administrative Code;

(iv) The provisions of a plan approved by the chief for the sound future management of any permanent impoundment by the permittee or landowner are implemented to the satisfaction of the chief; and

(v) Any permanent structures to be maintained as part of the postmining land use are included in the approved reclamation plan.

(c) Reclamation phase III shall be determined to be completed when:

(i) The permittee has successfully completed all coal mining and reclamation operations in accordance with the approved reclamation plan and has met the phase III revegetation success standards in accordance with rule 1501:13-9-15 of the Administrative Code;

(ii) The permittee has achieved compliance with the requirements of Chapter 1513. of the Revised Code, these rules, and the permit; and

(iii) The applicable liability period under rule 1501:13-7-02 of the Administrative Code has expired.

(2) Approval of reclamation phase.

(a) The chief may approve a request and release liability under performance security according to the schedule set forth in paragraph (B)(3) of this rule only upon the chief's determination that reclamation in a particular phase is complete on an incremental area or the entire permit area.

(b) The chief may approve release of performance security for an incremental area when reclamation in a particular phase is complete on that incremental area even though such reclamation is not complete on other incremental areas within the same permit, provided that no release of performance security for any acreage within an incremental area may be approved until reclamation in the applicable phase is complete for all acres within that incremental area.

(c) A portion of an incremental area requiring extended liability because of augmentation or failure to achieve the crop yields for prime farmland required for phase II performance security release by rule 1501:13-9-15 of the Administrative Code may, upon approval by the chief, be separated from the rest of the incremental area and have performance security provided separately. Before determining that extended liability should apply to only a portion of the incremental area, the chief shall determine such portion:

(i) Is not significant in extent in relation to the entire area under the performance security; and

(ii) Is limited to isolated, distinguishable, and contiguous portions of the area for which performance security has been provided and does not comprise scattered or intermittent occurrences throughout the area for which performance security has been provided.

(d) If an area is separated under paragraph (B)(2)(c) of this rule, that portion shall have performance security provided separately and the applicable period of liability, in accordance with rule 1501:13-7-02 of the Administrative Code, shall commence anew. The period of liability for the remaining area shall continue in effect without extension. The amount of performance security on the original incremental area may be adjusted in accordance with rule 1501:13-7-02 of the Administrative Code.

(e) The chief may approve a request for release of performance security for reclamation phase II on areas from which temporary sedimentation ponds have not yet been removed, provided all requirements for a phase II performance security release are met.

(f) A portion of an incremental area requiring a reduced period of liability because of its classification as a remining area shall be separated from the rest of the incremental area and shall be eligible for phase III performance security release pursuant to paragraph (O) of rule 1501:13-9-15 of the Administrative Code.

(3) Schedule for release.

(a) When reclamation phase I is approved by the chief for an incremental area or the entire permit area, the chief shall release performance security liability in the amount of fifty per cent of the performance security for the incremental area or the entire permit area on which the reclamation phase I is complete.

(b) When reclamation phase II is approved by the chief for an incremental area or the entire permit area, the chief shall release performance security liability in an amount not exceeding thirty-five per cent of the original performance security for the incremental area or the entire permit area on which the reclamation phase II is complete.

(c) When reclamation phase III is approved by the chief for an incremental area or the entire permit area, the chief shall release the remaining performance security liability for the incremental area or entire permit area.

(4) Order of release. With the exception of certificates of deposit, trust funds, and cash, which shall be released in any manner and order as determined by the chief, other forms of performance security shall be released under paragraph (B)(3) of this rule in the order in which they were filed, and according to the following order by form of performance security:

(a) Self bond submitted under rule 1501:13-7-04 of the Administrative Code;

(b) The surety bond filed earliest in the permit term, followed by surety bond filed later in the permit term;

(c) The letter of credit filed earliest in the permit term, followed by letters of credit filed later in the permit term; and

(d) Any remaining collateral bond, in the order in which it was filed.

Effective: 10/28/2010
R.C. 119.032 review dates: 06/11/2010 and 10/15/2015
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.08 , 1513.16
Prior Effective Dates: 8/16/82 (Emer.), 10/27/82, 10/1/88, 6/14/90, 10/22/90, 8/5/91, 11/27/93, 2/15/03, 4/30/09

1501:13-7-05.1 Procedures, criteria, and schedule for release of performance security for permits not reliant on the reclamation forfeiture fund.

This rule applies to a permittee that provides performance security without reliance on the reclamation forfeiture fund in accordance with paragraph (C)(1) of rule 1501:13-7-01 of the Administrative Code.

(A) Procedures for seeking approval of a reclamation phase and release of performance security.

(1) Request for approval of reclamation.

(a) After all reclamation, restoration, and abatement work in a reclamation phase, as defined in paragraph (B)(1) of this rule, is completed on the entire permit area or on an entire incremental mining unit, the permittee, or any person authorized to act on his or her behalf, shall file a request with the chief for approval of that reclamation. A request for approval of a reclamation phase for the entire permit area or for an entire incremental mining unit shall include a request for release of performance security.

(b) After all reclamation, restoration, and abatement work in reclamation phase I or reclamation phase II, as defined by paragraph (B)(1) of this rule, is completed on a designated area within a permit area or incremental mining unit, the permittee may file a request for approval of reclamation phase I or reclamation phase II for that designated area. A request for approval under this paragraph shall not include a request for release of performance security.

(c) A request for approval of reclamation may be filed only at times or during seasons that allow the chief to evaluate properly the reclamation reported to be completed.

(2) Contents of request for approval of reclamation.

(a) Every request for approval of reclamation for a particular reclamation phase shall include:

(i) The location and the number of acres of land subject to the request;

(ii) The permit number;

(iii) A notarized statement which certifies that all applicable reclamation activities have been accomplished in accordance with the requirements of Chapter 1513. of the Revised Code, the rules adopted thereunder and the approved reclamation plan; and

(iv) If the request for approval of reclamation includes a request for release of performance security, the amount of performance security for the area subject to the request and the phase of reclamation sought to be released.

(b) The request for approval of reclamation phase II or any attachments to the request shall also include:

(i) The results of tests on the soil of the area requested for approval for such vegetation-sustaining factors as potassium, phosphorus, and lime, and a lime recommendation;

(ii) The planting report required under rule 1501:13-9-15 of the Administrative Code;

(iii) The number of acres of the area requested for approval that are reclaimed as prime farmland; and

(iv) Yield data for those acres reclaimed as prime farmland, if appropriate.

(c) The request for approval of reclamation phase III or any attachments to the request shall also state:

(i) The number of acres of the area requested for approval and release that are reclaimed as prime farmland;

(ii) Yield data for those acres reclaimed as cropland, prime farmland, pasture or grazing land, if appropriate ; and

(iii) The number of acres of the area requested for release that are reclaimed as lands eligible for remining.

(d) With every request for approval of reclamation for a particular reclamation phase, the permittee shall submit copies of the letters the permittee has sent to adjoining property owners, local government bodies, planning agencies, and sewage and water treatment authorities or water companies in the locality in which the coal mining and reclamation activities took place, notifying them of the permittee's request for reclamation phase approval and, when included, the permittee's request for release of performance security.

(3) At the time that a request for approval of a reclamation phase or a request for release of performance security is filed with the chief, the permittee shall publish an advertisement, described in division (F)(1) of section 1513.16 of the Revised Code, at least once a week for four successive weeks in a newspaper of general circulation in the locality of the coal mining operation. In addition to the requirements specified in division (F)(1) of section 1513.16 of the Revised Code, the advertisement shall contain the permittee's name and shall state that written comments, objections, and requests for a reclamation phase approval conference or a performance security release conference may be submitted to the chief pursuant to rule 1501:13-7-08 of the Administrative Code. The advertisement shall also provide the address to which, and closing date by which, written comments, objections and requests for a reclamation phase approval conference or a performance security release conference must be sent. Within thirty days after filing a request for approval of a reclamation phase or a request for approval of a release with the chief, the permittee shall submit a copy of this advertisement to the chief.

(4) After the publication required by paragraph (A)(3) of this rule and prior to the approval of the reclamation phase or the release of performance security, the permittee shall submit to the chief a notarized proof of publication from the newspaper that published the advertisement.

(5) Inspection by the chief.

(a) Within thirty days after the permittee has complied with the requirements of paragraphs (A)(1), (A)(2), and (A)(3) of this rule, the chief shall conduct an inspection and evaluation of the reclamation work involved. The surface owner, or agent or lessee of the surface owner, shall be given notice of such inspection and may participate with the chief or his or her authorized representative in making the reclamation phase approval inspection.

(b) The chief shall consider during inspection and evaluation of the reclamation:

(i) Whether the permittee has met the requirements of Chapter 1513. of the Revised Code, these rules, any orders issued during mining and reclamation, and the specifications of the approved mining and reclamation plan;

(ii) The degree of difficulty to complete any remaining reclamation;

(iii) Whether pollution of surface and subsurface water is occurring;

(iv) The probability the pollution will continue or occur again; and

(v) The estimated cost of abating the pollution.

(6) Objections to approval of reclamation phase or to release of performance security and request for reclamation phase approval conference or performance security release conference.

(a) Within thirty days after the last newspaper publication of the filing of the request for approval of a reclamation phase or the request for release of performance security, written objections to the proposed reclamation phase approval or proposed performance security release may be filed with the chief by the following persons:

(i) A person with a valid legal interest that might be adversely affected by approval of the reclamation phase or by release of the performance security;

(ii) The responsible officer or head of any federal, state, or local government agency that:

(a) Has jurisdiction by law or special expertise with respect to any environmental, social, or economic impact involved in the operation; or

(b) Is authorized to develop and enforce environmental standards with respect to the operation.

(b) Persons who may file objections under paragraph (A)(6)(a) of this rule may also request a reclamation phase approval conference on the proposed approval or a performance security release conference on the proposed release of performance security pursuant to rule 1501:13-7-08 of the Administrative Code.

(7) Decision of the chief; notice of review.

(a) The chief shall notify in writing the permittee and any other interested parties of his or her decision to approve or disapprove a reclamation phase or a request for release and his or her decision to release or not to release all or part of the performance security:

(i) Within sixty days after the permittee has filed a request for approval of a reclamation phase or for release of performance security and complied with the requirements of paragraphs (A)(1), (A)(2), and (A)(3) of this rule, if no reclamation phase approval conference or performance security release conference is held pursuant to paragraph (A)(6)(b) of this rule; or

(ii) Within sixty days after the reclamation phase approval conference or performance security release conference, if a reclamation phase approval conference or performance security release conference is held pursuant to paragraph (A)(6)(b) of this rule.

(b) If the chief disapproves a reclamation phase or a request for release, the chief shall notify the permittee in writing, stating the reasons for disapproval, recommending corrective action necessary to secure approval or release, and informing the permittee of his or her right to appeal this decision to the reclamation commission.

(c) Within thirty days after notification of the final decision of the chief regarding the reclamation phase or the performance security release, the permittee or any person with an interest that is or may be adversely affected may file an appeal of that decision with the reclamation commission.

(d) If the chief intends to release the performance security, the chief shall notify the municipal corporation in which the coal mining operation is located by certified mail at least thirty days before release of all or part of the performance security.

(e) The chief shall not release performance security until proceedings in review of a decision to release are terminated or, if rights to administrative and judicial review have not been exercised, until periods allowed for filing applications for review have expired.

(B) Criteria and schedule for release of performance security.

(1) Reclamation phases defined.

(a) Reclamation phase I shall be determined to be completed when, in accordance with the approved mining and reclamation plan:

(i) Backfilling and regrading have been completed; and

(ii) Drainage controls have been established.

(b) Reclamation phase II shall be determined to be completed when:

(i) Resoiling is completed and revegetation meets the standards for success for a phase II performance security release in accordance with rule 1501:13-9-15 of the Administrative Code;

(ii) The lands are not contributing suspended solids to stream flow or runoff outside the permit area in excess of the requirements of division (A)(10) of section 1513.16 of the Revised Code, these rules, permit conditions, or the mining and reclamation plan;

(iii) With respect to prime farmlands, soil replacement has been carried out in accordance with the requirements of rule 1501:13-13-03 of the Administrative Code and division (A)(7) of section 1513.16 of the Revised Code, and soil productivity has returned to the levels of yield required by rule 1501:13-4-12 of the Administrative Code;

(iv) The provisions of a plan approved by the chief for the sound future management of any permanent impoundment by the permittee or landowner are implemented to the satisfaction of the chief; and

(v) Any permanent structures to be maintained as part of the postmining land use are included in the approved reclamation plan.

(c) Reclamation phase III shall be determined to be completed when:

(i) The permittee has successfully completed all coal mining and reclamation operations in accordance with the approved reclamation plan and has met the phase III revegetation success standards in accordance with rule 1501:13-9-15 of the Administrative Code;

(ii) The permittee has achieved compliance with the requirements of Chapter 1513. of the Revised Code, these rules, and the permit; and

(iii) The applicable liability period under rule 1501:13-7-02 of the Administrative Code has expired.

(2) Approval of request for release of performance security.

(a) The chief may approve a request for release of performance security and may release liability under performance security according to the schedule set forth in paragraph (B)(3) of this rule only upon the chief's determination that reclamation in a particular phase is complete on an incremental mining unit or the entire permit area.

(b) The chief may approve release of performance security for an incremental mining unit when reclamation in a particular phase is complete on that incremental mining unit even though such reclamation is not complete on other incremental mining units within the same permit, provided that no release of performance security for any acreage within an incremental mining unit may be approved until reclamation in the applicable phase is complete for all acres within that incremental mining unit.

(c) A portion of an incremental mining unit requiring extended liability because of augmentation or failure to achieve the crop yields for prime farmland required for phase II performance security release by rule 1501:13-9-15 of the Administrative Code may, upon approval by the chief, be separated from the rest of the incremental mining unit and have performance security provided separately. Before determining that extended liability should apply to only a portion of the incremental mining unit, the chief shall determine such portion:

(i) Is not significant in extent in relation to the entire area under the performance security; and

(ii) Is limited to isolated, distinguishable, and contiguous portions of the area for which performance security has been provided and does not comprise scattered or intermittent occurrences throughout the area for which performance security has been provided.

(d) If an area is separated under paragraph (B)(2)(c) of this rule, that portion shall have performance security provided separately and the applicable period of liability, in accordance with rule 1501:13-7-02 of the Administrative Code, shall commence anew. The period of liability for the remaining area shall continue in effect without extension. The amount of performance security on the original incremental mining unit may be adjusted in accordance with rule 1501:13-7-02 of the Administrative Code.

(e) The chief may approve a request for release of performance security for reclamation phase II on areas from which temporary sedimentation ponds have not yet been removed, provided all requirements for a phase II performance security release are met.

(f) A portion of an incremental mining unit requiring a reduced period of liability because of its classification as a remining area shall be separated from the rest of the incremental mining unit and shall be eligible for phase III performance security release pursuant to paragraph (O) of rule 1501:13-9-15 of the Administrative Code.

(3) Schedule for release.

(a) When reclamation phase I is approved by the chief for an incremental mining unit or the entire permit area, the chief shall release performance security liability in an amount of up to fifty per cent of the performance security for the incremental mining unit or the entire permit area on which the reclamation phase I is complete.

(b) When reclamation phase II is approved by the chief for an incremental mining unit or the entire permit area, the chief shall release performance security liability in an amount of up to thirty-five per cent of the original performance security for the incremental mining unit or the entire permit area on which the reclamation phase II is complete.

(c) When reclamation phase III is approved by the chief for an incremental mining unit or the entire permit area, the chief shall release the remaining performance security liability for the incremental mining unit or entire permit area.

(4) Order of release. With the exception of certificates of deposit, trust funds, and cash, which shall be released in any manner and order as determined by the chief, other forms of performance security shall be released under paragraph (B)(3) of this rule in the order in which they were filed, and according to the following order by form of performance security:

(a) Self bond submitted under rule 1501:13-7-04 of the Administrative Code;

(b) The surety bond filed earliest in the permit term, followed by surety bond filed later in the permit term;

(c) The letter of credit filed earliest in the permit term, followed by letters of credit filed later in the permit term; and

(d) Any remaining collateral bond, in the order in which it was filed.

Effective: 10/28/2010
R.C. 119.032 review dates: 06/11/2010 and 10/15/2015
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.08 , 1513.16
Prior Effective Dates: 04/30/09

1501:13-7-06 Performance security forfeiture criteria and procedures.

(A) Performance security forfeiture criteria. The chief shall forfeit performance security under the procedures contained in paragraph (C) of this rule whenever any of the following criteria applies:

(1) The permittee failed to comply with a notice of violation issued for failure to complete any phase of reclamation within the time required by the mining and reclamation plan and any time extensions given for good cause; or

(2) The coal mining and reclamation operations on the area under performance security are abandoned; or

(3) The permittee lacks the ability to continue to operate in compliance with the requirements of Chapter 1513. of the Revised Code, these rules, or the permit; or

(4) The permittee defaults on the conditions under which the performance security was accepted.

(B) Opportunity to show cause why performance security should not be forfeited.

(1) Before performance security is forfeited under the criteria of paragraph (A)(2) or (A)(3) of this rule, because of abandonment of the coal mining and reclamation operation or inability of the permittee to comply, the chief shall order the permittee to show cause why the operation should not be deemed abandoned or why the permittee has the ability to comply with the requirements of Chapter 1513. of the Revised Code.

(2) The show cause order shall:

(a) Identify the coal mining and reclamation operations covered by the performance security to be forfeited;

(b) Give notice of the time, date, place, and purpose of the show cause hearing at which the permittee may show cause why the operation should not be deemed abandoned or why the permittee has the ability to comply with the requirements of Chapter 1513. of the Revised Code; and

(c) Be issued at least twenty-one days before the show cause hearing is held.

(3) If the chief determines that the show cause order sent by certified mail is not received by the permittee within seven days after the order is mailed, the chief shall, as soon as possible, publish notice of the date, time, place, and purpose of the show cause hearing in a newspaper of general circulation in the locality of the operation.

(C) Forfeiture procedures. When performance security is to be forfeited, the chief shall issue a performance security forfeiture order to the permittee.

(1) The chief shall identify in the performance security forfeiture order the entire permit area or, when applicable, the incremental area or the incremental mining unit, for which performance security is to be forfeited. The order shall forfeit all remaining performance security on deposit for the permit.

(2) The performance security forfeiture order may include the terms of a reclamation agreement with the chief which, if complied with, shall result in avoidance of the forfeiture. The terms of the agreement shall include performance of reclamation operations and abatement of all unabated violations in accordance with a compliance schedule which meets the conditions of the permit, the reclamation plan, Chapter 1513. of the Revised Code and these rules, and a timetable specified by the chief.

(a) If the permittee fails to enter into a reclamation agreement within twenty days of the issuance of a performance security forfeiture order containing such agreement, the chief shall immediately forfeit the performance security and notify the permittee's surety, if applicable, of the permittee's failure to comply.

(b) If the permittee demonstrates to the chief's satisfaction within twenty days of the issuance of a performance security forfeiture order that the permittee has the ability to meet the terms and conditions of the reclamation agreement contained in the performance security forfeiture order, the chief shall monitor compliance with the terms and conditions of the reclamation agreement.

(i) Upon the permittee's satisfactory performance under the terms and conditions of the reclamation agreement, the chief shall rescind the performance security forfeiture order.

(ii) Upon the permittee's failure to comply with any of the terms or conditions of the reclamation agreement, the chief shall immediately forfeit the performance security and notify the permittee's surety, if applicable, of the permittee's failure to comply.

(c) The surety's time to elect to reclaim under paragraph (E) of this rule shall not begin to run until the permittee has failed to enter into an agreement under paragraph (C)(2) of this rule or has failed to comply with the terms of such agreement, and the surety has been notified of such failure.

(3) The performance security forfeiture order shall be sent by certified mail, return receipt requested, and shall inform the permittee and surety of the reasons for the forfeiture.

(4) In the event that the permittee does not enter into a reclamation agreement or fails to comply with the terms of a reclamation agreement under paragraph (C)(2) of this rule, when the performance security filed with the division of mineral resources management is supported by or in the form of:

(a) Cash, certificates of deposit or negotiable government bonds, then the order shall declare the cash, certificates of deposit, or negotiable government bonds property of the state;

(b) A letter of credit, then the order shall inform the permittee that the state will immediately draw on the letter of credit;

(c) A self-bond, then the order shall inform the permittee that the state will immediately take appropriate collection actions on the self-bond; or

(d) A trust fund, then the order shall inform the permittee that the state will proceed as set forth in the terms of the trust agreement.

(5) If the performance security filed with the division of mineral resources management is in the form of a surety bond, the chief shall also issue a performance security forfeiture order to all sureties involved, and, in addition to the requirements of paragraphs (C)(1) and (C)(3) of this rule, the order shall inform each surety of its rights and the extent of its obligations and liabilities for the entire permit area or, when applicable, for the incremental area or the incremental mining unit.

(D) Issuance of a performance security forfeiture order does not relieve a permittee from the responsibility for complying, and does not prevent the permittee from being subject to civil penalties for not complying with any order or notice of violation issued for conditions existing on the entire permit area or, when applicable, on the incremental area or the incremental mining unit.

(E) Reclamation by the surety.

(1) Within sixty days after it receives a performance security forfeiture order, or within sixty days of notification of the permittee's failure to elect to enter into a reclamation agreement under paragraph (C)(2) of this rule or the permittee's failure to comply with the terms of a reclamation agreement under paragraph (C)(2) of this rule, each surety:

(a) Shall notify the chief that it will not complete reclamation and shall make payment under the surety bond for the full amount of its liability under the surety bond; or

(b) Shall notify the chief that it will complete reclamation and shall submit to the chief a plan, including a timetable for performing reclamation in accordance with the reclamation plan and the requirements of Chapter 1513. of the Revised Code and these rules.

(2) The chief may allow the surety to complete reclamation if the surety can demonstrate an ability to complete reclamation in accordance with Chapter 1513. of the Revised Code, these rules and the reclamation plan.

(3) A surety completing a reclamation phase on the entire permit area or, when applicable, on the incremental area or incremental mining unit, may obtain a release of its performance security obligation in the same manner as a permittee or operator pursuant to division (F) of section 1513.16 of the Revised Code.

(4) The rights of a surety to perform reclamation shall be terminated if the surety fails to:

(a) Notify the chief within sixty days after receipt of the performance security forfeiture order, or within sixty days of notification of the permittee's failure to elect to enter into a reclamation agreement under paragraph (C)(2) of this rule or the permittee's failure to comply with the terms of a reclamation agreement under paragraph (C)(2) of this rule, that it will or will not perform reclamation.

(b) Submit a reclamation timetable at the same time it notifies the chief that it will perform reclamation; or

(c) Commence, continue, or complete reclamation in accordance with the reclamation timetable.

(5) When the chief determines that the rights of a surety shall be terminated, the chief shall issue an order terminating the rights of the surety and demanding payment from the surety for the entire amount of performance security filed with the chief by the surety for the entire permit area or, when applicable, for the incremental area or incremental mining unit.

(F) Reclamation by the chief.

(1) After receiving the moneys collected under paragraph (C) or (E) of this rule, the chief shall proceed to reclaim the entire permit area or, when applicable, the incremental area or the incremental mining unit, in accordance with:

(a) The requirements of section 1513.18 of the Revised Code if the permit that was forfeited was not a permanent program permit; or

(b) In accordance with Chapter 1513. of the Revised Code, these rules and the approved reclamation plan if the permit that was forfeited was a permanent program permit.

(2) Any revisions that the chief wishes to make to the approved reclamation plan of a permanent program permit on which the performance security has been forfeited shall be made in accordance with paragraph (E) of rule 1501:13-4-06 of the Administrative Code. As used in paragraph (F) of this rule,"permanent program permit" means any permit issued after August 16, 1982, and any permit issued between September 1, 1981 and August 16, 1982 that was subsequently revised to meet the criteria of the approved program.

Effective: 04/30/2009
R.C. 119.032 review dates: 02/06/2009 and 04/20/2014
Promulgated Under: 119.03
Statutory Authority: 1513.02 , 1513.16
Rule Amplifies: 1513.02 , 1513.13 , 1513.16 , 1513.18
Prior Effective Dates: 4/2/82, 10/27/82, 10/1/88, 1/1/93

1501:13-7-06.1 Tax credit for reclamation outside an applicant's permit area.

(A) Applicability. This rule shall apply to a permittee providing performance security together with reliance on the reclamation forfeiture fund in accordance with paragraph (C)(2) of rule 1501:13-7-01 of the Administrative Code who wishes to claim a tax credit under section 5749.11 of the Revised Code. This rule sets forth the terms and conditions under which the chief may approve an application to perform reclamation pursuant to section 1513.171 of the Revised Code.

(B) Identification of potential reclamation projects.

(1) The chief shall identify forfeited permits that may be eligible for reclamation under this rule.

(2) The chief may exclude a forfeited permit from eligibility under this rule due to the status of existing mining plans, pending abandoned mined lands contracts, or other issues related to reclamation planning.

(C) Permittee eligibility. Only a permittee in good standing pursuant to Chapter 1513. of the Revised Code shall be eligible to perform reclamation under this rule. No permittee is eligible if he or she:

(1) Has a demonstrated pattern of willful violations of Chapter 1513. of the Revised Code or rules adopted thereunder;

(2) Has an outstanding failure to abate cessation order;

(3) Is delinquent in performing reclamation on a permit; or

(4) Is blocked from obtaining a permit by the applicant violator system.

(D) Application to perform reclamation for severance tax credit.

(1) A permittee with a valid permit issued under these rules and in good standing pursuant to paragraph (C) of this rule may submit to the chief, on a form provided by the chief, an application to perform reclamation on land or water resources that are not within the applicant's permit area and that have been adversely affected by past coal mining for which the performance security was forfeited.

(2) The application shall include:

(a) The permittee's name, address, and telephone number;

(b) A statement of any current coal mining permits in the United States held by the permittee and the permittee's valid permit number or numbers;

(c) A description of the area or areas to be reclaimed;

(d) Identification of the owner of the land;

(e) A reclamation plan that describes the work to be done to reclaim the land or water resources, including:

(i) A description of how the plan is consistent with local physical, environmental, and climatological conditions; and

(ii) The measures to be taken during the reclamation to ensure the protection of water systems;

(f) An estimate of the total cost of the reclamation; and

(g) An estimated timetable for accomplishing the reclamation.

(3) The chief shall approve, disapprove, or approve with modifications an application submitted under this rule.

(E) Contract for reclamation. If an application is approved under paragraph (D)(3) of this rule, the chief shall prepare a contract for reclamation pursuant to section 1513.27 of the Revised Code.

(F) Beginning of reclamation. The chief shall notify, in writing, the owner of the land or water resources on which the reclamation work is to be performed, including the date on which the reclamation work is scheduled to begin and the timetable for accomplishing the reclamation.

(G) Reclamation tax credit certificate.

(1) Upon the completion of the reclamation to the satisfaction of the chief, including all contract specifications for the project, the chief shall conduct a substantial completion inspection, during which he or she will complete an accounting of the final actual costs of the project.

(2) The chief shall issue a numbered reclamation tax credit certificate showing the amount of the credit and the identity of the recipient. The amount of the credit shall be equal to the final actual costs of the project as determined under paragraph (G)(1) of this rule, provided the final actual costs do not exceed the estimated cost of reclamation as determined by the chief pursuant to paragraph (E)(3) of rule 1501:13-7-02 of the Administrative Code.

(3) Prior to the close of the fiscal quarter in which a tax credit certificate is issued under paragraph (G)(2) of this rule, the chief shall certify to the tax commissioner the amount of the credit and the identity of the recipient.

Effective: 10/28/2010
R.C. 119.032 review dates: 10/15/2015
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.171

1501:13-7-07 Liability insurance.

(A) An application for a permit shall contain a certificate issued by an insurance company authorized to do business in this state certifying that the applicant has a public liability insurance policy in force for those coal mining and reclamation operations for which the permit is sought or evidence that the applicant has satisfied other state self-insurance requirements or, for reclamation operations, evidence that an agent performing reclamation for the applicant has a public liability insurance policy.

(B) The public liability insurance policy shall:

(1) Be in effect during the term of the permit or any renewal, including the length of all reclamation operations;

(2) Provide for personal injury and property damage protection in amounts adequate to compensate any persons injured or property damaged as a result of coal mining and reclamation operations, including the use of explosives. The minimum insurance coverage for bodily injury and property damage shall be three hundred thousand dollars for each occurrence and five hundred thousand dollars in the aggregate; and

(3) Include a rider requiring that the insurer notify the chief whenever substantive changes are made in the policy, including any termination or failure to renew.

R.C. 119.032 review dates: 05/12/2005 and 05/12/2010

Promulgated Under: 119.03

Statutory Authority: 1513.02

Rule Amplifies: 1513.07

Prior Effective Dates: 10/27/82, 8/19/89

1501:13-7-08 Reclamation phase approval conference and performance security release conference.

(A) Procedure for requesting a reclamation phase approval conference or a performance security release conference.

(1) The following persons may request a reclamation phase approval conference or a performance security release conference:

(a) A person with a valid legal interest which may be adversely affected by approval of a reclamation phase or release of performance security, pursuant to rule 1501:13-7-05 or 1501:13-7-05.1 of the Administrative Code; or

(b) The responsible officer or head of any federal, state or local government agency that:

(i) Has jurisdiction by law or special expertise with respect to any environmental, social, or economic impact involved in the operation; or

(ii) Is authorized to develop and enforce environmental standards with respect to the operation.

(2) Within thirty days after the last publication of the notice required by paragraph (A)(3) of rule 1501:13-7-05 or by paragraph (A)(3) of rule 1501:13-7-05.1 of the Administrative Code, a person listed in paragraph (A)(1) of this rule may file written objections to the proposed reclamation phase approval or the proposed performance security release and request a conference with the chief.

(3) If written objections are filed and a conference is requested, the chief shall inform all interested parties of the time and place of the conference and shall hold the conference within thirty days after receipt of the request for the conference.

(4) The date, time, and location of the conference shall be advertised by the chief in a newspaper of general circulation in the locality of the coal mining operation proposed for reclamation phase approval or performance security release at least once a week for two consecutive weeks.

(5) The conference shall be held in the locality of the coal mining operation proposed for reclamation phase approval or performance security release or in Franklin county at the option of the person requesting the conference.

(6) An electronic or stenographic record shall be made of the conference proceeding, unless waived by all parties. Such record shall be maintained and shall be accessible to all parties until at least five years after expiration of the period during which the permit is covered by any portion of a reclamation performance security.

(7) In the event that all parties requesting the conference stipulate agreement prior to the requested conference and withdraw their request, the conference need not be held.

(B) Procedure at reclamation phase approval conference or performance security release conference.

(1) A party to a conference may appear in person, or be represented by his or her attorney or such other representative as is permitted to practice before the division, and may present his or her objections to the proposed reclamation phase approval or the proposed performance security release either orally or in writing.

(2) The conference shall be conducted by the chief or a representative of the chief.

(C) Decision of the chief regarding reclamation phase approval or performance security release.

(1) The chief shall issue his or her decision to approve or disapprove a reclamation phase or a performance security release in accordance with paragraph (A)(7) of rule 1501:13-7-05 or paragraph (A)(7) of rule 1501:13-7-05.1 of the Administrative Code.

(2) Within thirty days after notification of the final decision of the chief regarding the reclamation phase approval or performance security release, the permittee or any person with an interest that is or may be adversely affected may appeal the decision to the reclamation commission pursuant to Chapter 1513. of the Revised Code.

Effective: 04/30/2009
R.C. 119.032 review dates: 02/06/2009 and 04/20/2014
Promulgated Under: 119.03
Statutory Authority: 1513.02
Rule Amplifies: 1513.16
Prior Effective Dates: 10/1/88